A New York federal court recently declined to certify under Rule 23 of the Federal Rules of Civil Procedure (“Rule 23”) six classes of salaried “apprentices” at Chipotle restaurants asserting claims for overtime pay under New York Labor Law (“NYLL”) and parallel state laws in Missouri, Colorado, Washington, Illinois, and North Carolina, on the theory that they were misclassified as exempt executives in Scott et al. v. Chipotle Mexican Grill, Inc. et al., Case No. 12-CV-8333 (S.D.N.Y. Mar. 29, 2017).  The Court also granted Chipotle’s motion to decertify the plaintiffs’ conditionally certified collective action under Section 216(b) of the Fair Labor Standards Act (“FLSA”), resulting in the dismissal without prejudice of the claims of 516 plaintiffs who had opted in since June 2013.

The putative class and collective action of apprentices working in certain of Chipotle’s 2,000-plus restaurants nationwide were provisionally employed while being trained to become general managers of new Chipotle locations. The Scott action challenged Chipotle’s blanket exempt classification of the apprentice position, claiming that the duties plaintiffs actually performed during the majority of their working time were not managerial, and therefore, as non-exempt employees they were entitled to receive overtime pay.

According to their motion papers, the named plaintiffs’ work experience was common to all apprentices in each of the six state-specific classes they sought to certify. While the Court acknowledged that certain factors supported class and collective treatment of plaintiffs’ claims – such as a singular job description and corporate policies that applied nationwide and Chipotle’s classification of all apprentices as exempt – a number of factors impacting apprentices’ daily activities rendered a class and collective action certification of plaintiffs’ state and federal wage and hour claims inappropriate.

Denial of Rule 23 Class Certification

Applying Rule 23(a), the Court held that there was commonality and typicality among the plaintiffs and their claims. First, the question of whether apprentices were misclassified could be answered with common proof, particularly as Chipotle uniformly classified all apprentices as exempt, used a company-wide job description, and expected that their core duties would be the same regardless of the market in which the apprentice worked. The predominance requirement was also satisfied because the plaintiffs’ claims were based on the same legal theory and factual predicates, i.e., that Chipotle misclassified apprentices, depriving them of overtime pay to which they would otherwise be entitled.  The parties did not dispute the numerosity and adequate representation prongs of Rule 23(a) were met.

Rampant differences among the named plaintiffs and the opt-in plaintiffs led the Court to conclude that plaintiffs could not satisfy the predominance and superiority requirements of Rule 23(b). For example, of the six named plaintiffs, no two had like experiences in terms of what managerial duties they performed and how frequently they performed other non-exempt tasks on a daily basis.  The testimony of the opt-in plaintiffs also “rang dissonantly from the record” when it came to their performance of managerial tasks.  Factors like store structure, sales volume, staff size and managerial style affected the amount of time apprentices spent making personnel decisions, scheduling, supervising, and training, resulting in wide divergence among opt-in plaintiffs across the country.

The Court found that these differences were fatal to plaintiffs’ motion for class certification because: (1) plaintiff’s entitlement to relief would require individualized proof; and (2) the significant variation between the state laws under which the plaintiffs’ claims were brought would effectively require the court to conduct numerous “mini-trials” to determine whether Chipotle misclassified each individual apprentice as exempt. The Court therefore denied the motion for class certification under Rule 23.

Section 216(b) Decertification of Collective Action

Turning to Chipotle’s motion to decertify the FLSA collective action, the Court drew on its comparison of the named plaintiffs and opt-ins and concluded that apprentices had “vastly different” levels and amounts of authority in exercising managerial tasks. According to the Court, such disparities in job duties “seem[ed] axiomatic” given that the 516 opt-in plaintiffs worked in 37 states across Chipotle’s nine geographic regions.  In light of such differences, it would be difficult for Chipotle to rely on representative proof while asserting its defenses based on the “executive” and “administrative” exemptions from overtime pay.  For these reasons, the Court granted Chipotle’s motion to decertify the conditional collective action.

As shown in Scott, the question of whether misclassification claims may be certified to proceed on a class and collective action basis under Rule 23 and Section 216(b) will not be answered definitively by generic job classifications and/or job descriptions.  Rather, courts will assess the individualized work experiences of the named plaintiffs and opt-ins to determine whether generalized proof will be conducive to a class-wide resolution of those claims.  Employers and practitioners defending against such motions should focus their opposition on identifying differences and variation among the named plaintiffs and opt-in plaintiffs, and using outliers to highlight divergence among individual plaintiffs.  Otherwise, a court could find that the proposed class is homogeneous enough to warrant class and collective action certification.