Falcon v. Starbucks Corp.

• Decision Date: 15 January 2008
• Docket Number: Civil Action No. H-05-0792.
• Citation: 580 F.Supp.2d 528
• Parties: James FALCON, on Behalf of Himself and Others Similarly Situated, Plaintiffs, v. STARBUCKS CORPORATION and Does 1 through 100, Defendants.
• Court: U.S. District Court — Southern District of Texas

Page 528

580 F.Supp.2d 528

James FALCON, on Behalf of Himself and Others Similarly Situated, Plaintiffs, v. STARBUCKS CORPORATION and Does 1 through 100, Defendants.

Civil Action No. H-05-0792.

United States District Court, S.D. Texas, Houston Division.

January 15, 2008.

Martin A. Shellist, Daryl John Sinkule, Shellist Lazarz LLP, Robert R. Debes, Jr., The Debes Law Firm, Houston, TX, for Plaintiffs.

Daniel L. Nash, Jessica W. Paniccia, Joel M. Cohn, Nathan J. Oleson, Akin Gump Strauss Hauer & Feld, Washington, DC, Fraser A. McAlpine, Akin Gump et al., Houston, TX, Gregory W. Knopp, Akin Gump Strauss Hauer & Feld LLP, Los Angeles, CA, for Defendants.

Does 1 through 100, pro se.

MEMORANDUM AND ORDER

KEITH P. ELLISON, District Judge.

Pending before the Court is Defendants' Motion to Decertify Collective Action. For the reasons provided below, Defendants' motion, Docket No. 134, is DNIED.

I. PROCEDURAL HISTORY

Plaintiff Falcon is a former Assistant Store Manager of Defendant Starbucks Corporation ("Starbucks"). In March 2005, Falcon filed a putative collective action on behalf of himself and others similarly situated pursuant to section 16(b) of the Fair Labor Standards Act (FLSA). 29 U.S.C. § 216(b). In his Amended Complaint, (Doc. No. 23), Falcon alleged that Starbucks had failed to pay him and other Assistant Store Managers (ASMs) overtime wages for all hours worked in excess of forty hours per week as required by the FLSA. 29 U.S.C. § 207.

At the first step of the two-stage process used by most district courts to determine whether putative class members are similarly situated so that they may proceed collectively, see, e.g., Mooney v. Aramco Servs. Co., 54 F.3d 1207, 1213-14 (5th Cir.1995); Reyes v. Texas Ezpawn, L.P., No. V-3-128, 2007 WL 101808, at *2 (S.D.Tex. Jan. 8, 2007), the Court granted Plaintiff's Motion for Conditional Class Certification (Doc. No. 53) and declined to reconsider that decision (Doc. No. 61). Accordingly, Plaintiff sent notice to 11,000 putative class members, informing "Assistant Store Managers who were employed by Starbucks at any time during the time period of January 3, 2003 and the present who were denied overtime compensation for hours worked in excess of forty (40) in a work week" of their right to participate in the lawsuit (Doc. No. 61.) 372 individuals opted to join the collective class; 17 of these opt-ins were dismissed by agreement of the parties for failure to participate in discovery, leaving 355 opt-in Plaintiffs. The 355 opt-ins are current and former Starbucks employees who worked at stores in 30 states; the majority of the opt-ins worked in California. By agreement of the parties, eighteen of the opt-ins were deposed; Defendants chose ten of the eighteen, and Plaintiffs chose eight. (Mtn. Decert. Hr'g 35, Dec. 28, 2007.) Parties also deposed Starbucks corporate representatives including Christine Deputy, Vice President of Partner Resources for the Western Division, Amy Christensen, Regional Director of Operations, Cynthia Chrispell, Regional Vice President Western Division, Gretchen Frampton, Project Specialist, and Robert Dawson, Project Specialist.

Defendants now bring this Motion to Decertify, arguing that collective action treatment is inappropriate because Plaintiffs are not similarly situated, the defenses to Plaintiffs' claims are individualized, and litigating these claims as a single action would be unfair to Defendants and unmanageable at trial.

II. FACTUAL BACKGROUND

Defendant Starbucks operates more than 6,500 retail stores in the United States. (Mot.Decert.4). The stores are organized into geographic districts of eight to nine stores. (Chrispell Tr. 40-60.) Each district is managed by a district manager, who reports to a regional director of operations; regional directors, in turn, report to a regional vice president, and the regional vice president reports to a division vice president. (Id.) Each store is staffed by "partners" including entry level baristas, shift supervisors, assistant store managers, and store managers. (Id. at 24.) Not every store employs an ASM. (Id.)

In October 2002, Starbucks reclassified all ASMs for purposes of the FLSA from "exempt" to "non-exempt," making all ASMs throughout the country eligible for overtime.¹ (Chrispell Tr. 318.) Although Starbucks anticipated that ASMs would continue to work more than 40 hours after the reclassification (Chrispell Tr. 309-310), it did not increase store labor budgets (Chrispell Tr. 394 (agreeing that store managers were "effectively told" after the reclassification that "no matter how much work is done, now you still have to do it with the same labor budget dollars you had before").) Following the reclassification, ASMs were, by default, scheduled for 40 hours a week.² (Chrispell Tr. 188, 316.) After the reclassification, Starbucks discouraged overtime. (See, e.g., Chrispell Tr. 188; Chizmadia Tr. 63-64, 112; Johnston Tr. 54-57; Fernandez Tr. 60; Copeland Decl. Ex. 2, ¶ 4.)

As part of the reclassification, Starbucks issued a new job description for all ASMs that became effective in October 2002. (Chrispell Tr. 269-74; Frampton Tr. 25-27; Deputy Tr. 11-12; Debes Ex. 23.) To "roll out" the new job description to partners, a national team selected facilitators to teach regional and district managers how to uniformly implement the description in their territories.³ (Pls.' Resp. to Mot. Decert. 11). Under the new job description, ASMs continued to direct and monitor other partners while "on the floor," assist subordinate partners in serving customers, and lead and assist them in the performance of operational tasks such as cleaning, stocking, and cash management. (Mot. Decert. 5.) To the extent that ASMs performed baristas tasks such as preparing drinks, they were allowed to delegate those tasks to subordinate employees.⁴ (Mot.Decert.5-6.) Starbucks recognized, however, that ASMs might not be comfortable with such delegation at first due to the company culture "that said we're all in this together." (Chrispell Tr. 292.) The new job description made Store Managers accountable for management functions (Chrispell Tr. 269), but Store Managers could still delegate managerial functions to ASMs for purposes of training (Chrispell Tr. 270). As one Starbucks Regional Director of Operations explained, "[e]ssentially what changed is a store manager owns all of the functions in a store. An assistant manager can train in any of those areas." (Christensen Tr. 44.) Although there were no specific duties that ASMs could not perform pursuant to the new job description that they had been allowed to perform under the old description, "they wouldn't be doing them as sole owner of those job responsibilities. They would be doing them for a period of time and then move on to the next one ...." (Christensen Tr. 56.) Although the job description did not contain any time limitations, Store Managers were not supposed to permanently delegate managerial tasks such as preparing schedules, inventory control, and payroll. (Frampton Tr. 78-84; Chrispell Tr. 269-74.) As of September 2005, however, there was still "confusion as to what the assistant store manager (ASM) role can and cannot do."⁵ (Internal Mem., Debes Ex. 26.)

Starbucks had an official written policy of prohibiting off-the-clock work. (see New Hire Paperwork, Oleson Ex. 22 at 25 ("Working `off the clock' is strictly prohibited.").) The "time worked is time paid" policy is stated clearly in the company's Partner Resources Manual (Oleson Ex. 21 at 3.6). The Manual also requires partners to report any violation of the prohibition against off-the-clock work and states that managers who violate the policy will be subject to corrective action "up to and including termination of employment." (Partner Resources Manual, Oleson Ex. 21 at 3.7.) Partners who fail to report offthe-clock work are also officially subject to corrective action. (Id.) ASMs were trained on the "time worked is time paid" policy. (See, e.g., Kooyenga Tr. 29-30; Crociani Tr. 195-96.) ASMs were required to record their work by punching in and out for shifts and breaks and were officially allowed to note any unrecorded work in a "punch communication log." (See, e.g., Partner Resources Manual at 3,7; Olson Tr. at 85.) Store Managers were to make corrections from the log into the payroll system. Starbucks also provided all partners with a toll-free "Standards of Business Conduct Helpline" that allowed partners to "ask questions or report concerns," and assures partners that Starbucks "does not tolerate retaliation."⁶ (Standards of Business Conduct, Oleson Ex. 23 ("We are also counting on you to let us know if you see or learn something that suggests the Standards or the law have been violated.").) There is evidence that Starbucks took corrective action when partners complained that managers had manipulated time records or did not credit employees for time worked. (See, e.g., Falcon Tr. 27-28, 157-161; Masse Tr. 93-94; Debes Ex. 25.)

Plaintiffs allege that despite the official "time worked is time paid" policy, Starbucks managers enforced an unwritten policy of encouraging or allowing ASMs to work off the clock in order to control overtime costs. (See, e.g., Falcon Tr. 62 (stating that prohibition against off-the-clock work was "the idea but not the reality"); Carpenter Tr. 70 (stating that written policy was not enforced); Lambert Tr. 41 ("it felt as if there was ... a wink after that. Time worked equals time paid—`wink'—we all know that."); Masse Tr. 38-39 (claiming that "time worked is time paid policy" was not enforced in stores); Johnston Tr. 65 ("The policy may have been one thing on paper, but the policy in practice was completely polar opposite of the paper"); Olson Tr. 91 ("That was the best practice ... at all stores ... that I've worked in: That even though Starbucks' standards are time worked equaled time paid ... that wasn't how it was."); Brantley Tr. 54 (saying he...