Gillespie v. Cracker Barrel Old Country Store Inc.

• Decision Date: 31 March 2023
• Docket Number: CV-21-00940-PHX-DJH
• Parties: Ashley Gillespie, et al., Plaintiffs, v. Cracker Barrel Old Country Store Incorporated, Defendant.
• Court: U.S. District Court — District of Arizona

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Ashley Gillespie, et al., Plaintiffs, v. Cracker Barrel Old Country Store Incorporated, Defendant.

No. CV-21-00940-PHX-DJH

United States District Court, D. Arizona

March 31, 2023

ORDER

DIANE J. HUMETEWA, UNITED STATES DISTRICT JUDGE

This action arises out of the Fair Labor Standards Act, 29 U.S.C §§ 201 et seq. (“FLSA”). Plaintiffs Andrew Harrington (“Harrington”) Katie Liammaytry (“Liammaytry”), Jason Lencerht (“Lencerht”), and Dylan Basch (“Basch”) (collectively “Plaintiffs”) have filed a Second Amended Motion for Conditional Certification (“Second Motion to Certify”) (Doc 76).^[1] Defendant Cracker Barrel Old Country Store Incorporated (“Cracker Barrel”) has filed a Motion to Compel Individual Arbitration and Dismiss Second Amended Complaint with Prejudice (“Motion to Dismiss and Compel Arbitration”) (Doc. 77).^[2] The Court must decide whether the matter should be conditionally certified as a collective action under the FLSA notwithstanding Cracker Barrel's Arbitration Agreement. For the following reasons, the Court grants in part Plaintiffs' Second Motion to Certify and denies Cracker Barrel's Motion to Dismiss and Compel Arbitration.

I. Background

This matter concerns Plaintiffs' ongoing collective efforts against Cracker Barrel for allegedly violating provisions of the FLSA that govern wages for tipped-employees. Plaintiffs have filed three complaints: the “Original Complaint” (Doc. 1), the First Amended Complaint (“FAC”) (Doc. 57), and the Second Amended Complaint (“SAC”) (Doc. 74). Plaintiffs previously attempted to certify this matter as a collective action under the FLSA, but were unsuccessful due to Cracker Barrel's Arbitration Agreement (the “Agreement”) (Doc. 77-3 at 2-6). (See generally Doc. 47). For context, the Court provides a brief overview of each complaint.

A. The Original Complaint (Doc. 1) and the Court's 2021 Order (Doc. 47)

The named plaintiffs in the Original Complaint were Ashley (Jade) Gillespie (“Gillespie”), a former Arizona Cracker Barrel employee; Tonya Miller, a current South Carolina Cracker Barrel employee; Tami Brown, a current North Carolina Cracker Barrel employee; and Sarah Mangano, a current Pennsylvania Cracker Barrel employee (collectively the “Original Plaintiffs”). (Doc. 1 at ¶¶ 6-9). In its November 12, 2021, Order (the “2021 Order”), the Court found Cracker Barrel's Arbitration Agreement was valid and enforceable and that the Original Plaintiffs were subject to the Agreement. (Doc. 47 at 9). Accordingly, the Court granted Cracker Barrel's First Motion to Dismiss and Compel Arbitration (Doc. 21) and denied the Original Plaintiffs' First Motion for Conditional Certification (Doc. 8) without prejudice. (Doc. 47). The Original Plaintiffs were dismissed so that they may pursue their claims in arbitration. (Id. at 10). However, the Court permitted them leave to file a first amended complaint because some opt-in plaintiffs were capable of voiding the Agreement due to their status as minors. (Id.)

B. The First Amended Complaint (Doc. 57) and the Court's 2022 Order (Doc. 73)

The named Plaintiffs in the FAC were Harrington, a former Ohio Cracker Barrel employee; Liammaytry, a former North Carolina Cracker Barrel employee; and Lencerht, a current Florida Cracker Barrel employee (collectively the “FAC Plaintiffs”).

(Doc. 57 at ¶¶ 6-8). All of the FAC Plaintiffs were alleged to be minors when they signed the Agreement, but neither of them worked in any of the fourteen Cracker Barrel stores in Arizona. (Doc. 73 at 2, 5). Accordingly, in its July 22, 2022, Order (the “2022 Order”), the Court granted Cracker Barrel's Motion to Dismiss (Doc. 62) for lack of personal jurisdiction. (Doc. 73). It also denied as moot the FAC Plaintiffs' Amended Motion for Conditional Certification (Doc. 58) and Motion for Partial Dismissal (Doc. 60). (Id.)

C. The Operative Second Amended Complaint (Doc. 74)

In their SAC-presumably to address the personal jurisdiction concerns and deficiencies of the FAC-Plaintiffs added Basch as a fourth plaintiff with Harrington, Liammaytry, and Lencerht. (Doc. 74 at ¶¶ 6-9). Basch has worked in the Goodyear and Chandler Cracker Barrel restaurants located in Arizona since March 26, 2019, and continues to do so. (Doc. 74-2 at ¶ 2; Doc. 77 at 6). Cracker Barrel records indicate that Basch was born in January 2003 (Doc. 77-1 at ¶ 9), thus he was sixteen-years-old when he joined Cracker Barrel. (Doc. 74-2 at ¶ 4).

Basch was onboarded through Cracker Barrel's routine online employee training program, during which he was presented with Cracker Barrel's Arbitration Agreement through the “ADR^[3] Sign-Off” module. (Doc. 77-1 at ¶¶ 3, 6). Cracker Barrel's Human Resources Director explained that “[o]nce an employee is presented with the Arbitration Agreement to read and review, he or she is instructed to ‘Please close this document and mark “complete” to signify you have read, understood and will comply with the agreement.['] If the employee closes the [] Agreement, the employee is presented with a screen that allows the employee to click ‘Mark Complete.' Once the employee clicks ‘Mark Complete,' [Cracker Barrel] makes a record of the date and time at which he or she agreed to comply with the [] Agreement.” (Id. at ¶ 7).

Cracker Barrel's records reflect that Basch electronically completed the Agreement on October 19, 2019, seven months after he started employment. (Doc. 77-2). On August 10, 2022, Basch submitted the SAC to this Court with an attached declaration stating: “I have still not seen any such agreement forcing me to arbitrate claims against Cracker Barrel (rather than pursuing in court), but to any extent such an agreement exists, I am canceling or voiding it.” (Doc. 74-2) Basch purports to void the Agreement with Cracker Barrel on the basis that he was a minor when he allegedly entered into the Agreement.

Plaintiffs are all current or former tipped-employees and bring the following four counts against Crack Barrel in the SAC:

Count I for failure to pay tipped-employees minimum wages for work performed on non-tipped duties that exceed 20% of their work time under 29 U.S.C. §§ § 203(m), 206;

Count II for failure to timely inform tipped employees of the tip credit requirements under 29 U.S.C. § 203(m);

Count III for failure to pay tipped-employees minimum wages for “off-the-clock” work under 29 U.S.C. §§ 206, 207; and

Count IV for lack of good faith and willfully violating the FLSA under 29 U.S.C. § 255(a).

(Doc. 74 at ¶¶ 85-105). Plaintiffs bring these Counts on behalf of themselves and other similarly situated employees as a collective action under 29 U.S.C. §§ 206 216(b). (Id. at ¶¶ 76-77).

II. Discussion

The Court must determine whether Plaintiffs' SAC should be conditionally certified as a collective action under the FLSA notwithstanding Cracker Barrel's Arbitration Agreement. Because it is dispositive, the Court will first consider Cracker Barrel's Motion to Dismiss and Compel Arbitration. Cracker Barrel moves to dismiss the SAC for either lack of personal jurisdiction or failure to state a claim for which relief can be granted. The Court will then turn to Plaintiffs' Second Motion to Certify.

A. Cracker Barrel's Motion to Dismiss and Compel Arbitration (Doc. 77)

Cracker Barrel once again moves to dismiss the SAC and seeks to compel the Plaintiffs to arbitrate their claims. Cracker Barrel argues newly-added plaintiff Basch fails to state a claim for relief because he is subject to the Arbitration Agreement. (Doc. 77 at 6-10).

Cracker Barrel further reasons that if Basch is subject to the Agreement, then the Court again lacks personal jurisdiction over Harrington, Liammaytry, and Lencerht's claims because they do not arise out of Arizona. (Id. at 5 (citing the Court's 2022 Order (Doc. 73) dismissing the FAC for lack of personal jurisdiction over Harrington, Liammaytry, and Lencerht)). The Court will consider each of Cracker Barrel's arguments in turn.

1. Whether the Second Amended Complaint Confers Specific Personal Jurisdiction over Cracker Barrel

First, Cracker Barrel argues the Court lacks personal jurisdiction over Harrington, Liammaytry, and Lencerht's claims because they were not employed in Arizona. (Docs. 77 at 5; 81 at 9-10). This Court has already settled various issues pertaining to personal jurisdiction in its 2022 Order. It confirmed it does not have general personal jurisdiction over Cracker Barrel. (Doc. 73 at 5). It also explained it has specific personal jurisdiction over claims against Cracker Barrel when there are allegations by a named plaintiff who worked in an Arizona restaurant. (Id. at 3).

For example, the Court explained “the defense of lack of personal jurisdiction was not available to Cracker Barrel when it filed its [F]irst Motion to Dismiss” because “the original complaint included allegations of a Plaintiff who worked in Arizona restaurant” through Gillespie. (Id.) The Court indeed found, as Cracker Barrel argues, that “there [were] insufficient connections between [Harrington, Liammaytry, Lencerht], Cracker Barrel, and this forum to justify the exercise of specific personal jurisdiction.” (Id.) This is because although “Cracker Barrel purposefully directs some activities to Arizona because it operates restaurants here[,]” the claims set forth by Harrington, Liammaytry, and Lencerht “do not arise out of Cracker Barrel's operation of restaurants in Arizona” to establish specific personal jurisdiction. (Id. at 5).

In light of the 2022 Order, the addition of Basch-a current Arizona Cracker Barrel employee-as a plaintiff cures the personal jurisdiction deficiencies as to Harrington Liammaytry, and Lencerht. (Id. at 3). The SAC therefore establishes the Court's personal jurisdiction over Cracker Barrel by virtue...