Nerland v. Caribou Coffee Co., Inc.
| Decision Date | 17 May 2007 |
| Docket Number | No. 05-CV-1847 (PJS/JJG).,05-CV-1847 (PJS/JJG). |
| Citation | 564 F.Supp.2d 1010 |
| Parties | Nathan NERLAND, Daniel Williams-Goldberg, and James Geckler, individually and on behalf of all others similarly situated, Plaintiffs, v. CARIBOU COFFEE COMPANY, INC., Defendant. |
| Court | U.S. District Court — District of Minnesota |
Charles Nauen, Jonathan Cuneo and William Gengler, for Plaintiffs.
Joseph Sokolowski, Lindsay Zamzow and Michael Ross, for Defendant.
ORDER ADOPTING REPORT AND RECOMMENDATION
This matter is before the Court on the parties' objections to Magistrate Judge Jeanne J. Graham's April 6, 2007 Report and Recommendation ("R & R"). Judge Graham recommends denying defendant's motion for decertification of the federal-law class, granting plaintiffs' motion for certification of a state-law class, and denying plaintiffs' motion to reopen the opt-in period for the federal-law class. The Court has conducted a de novo review under 28 U.S.C. § 636(b)(1) and Fed. R.Civ.P. 72(b). Based on that review, the Court finds that no oral argument is necessary and adopts Judge Graham's thorough R & R. At bottom, the Court agrees with Judge Graham that, just as defendant was able to determine on a collective basis that all of its store managers were employed "in a bona fide executive ... capacity," so, too, this Court can determine on a collective basis whether defendant's decision was correct.
Judge Graham recommends certifying the state class under Fed.R.Civ.P. 23(b)(3), which requires that notice be given to class members. Accordingly, the parties are directed to meet and confer for the purpose of drafting a mutually acceptable notice to all potential state class members that complies with Rule 23. The draft of the notice must be submitted to the Court within fifteen days of the date of this order.
Because the state class members who will receive this notice should have already received a notice about the federal opt-in claim, the new notice must explain why the class members are receiving a second notice and, in particular, highlight the difference between the opt-in procedure applicable to the federal claim and the opt-out procedure applicable to the state claim. In the event that the parties are unable to agree on a draft notice, each party must submit a draft within fifteen days from the date of this order, and the Court will then select the most appropriate notice.
ORDERBased on all of the files, records, and proceedings herein, the Court ADOPTS Judge Graham's Report and Recommendation [Docket No. 554]. IT IS HEREBY ORDERED THAT:
1. Defendant's motion for decertification [Docket No. 400] is DENIED.
2. Plaintiffs' motion to reopen the opt-in period [Docket no. 526] is DENIED.
3. Plaintiffs' motion for class certification [Docket No. 472] is GRANTED to the extent described in the R & R.
4. As described above, the parties are directed to meet and confer for the purpose of drafting a notice to all potential state class members, and must submit a draft notice within fifteen days from the date of this order.
This is a case about overtime compensation. Plaintiffs are former and current store managers of Defendant Caribou Coffee, Inc. ("Caribou"), who claim Caribou improperly deprived them of overtime pay by misclassifying them under the executive exemption of the federal Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq., and the Minnesota Fair Labor Standards Act ("MFLSA"), Minn.Stat. § 177.21, et seq. Plaintiffs seek to adjudicate their claims collectively and seek the Court's final approval to proceed in that manner. Caribou contends its store managers are properly classified under the statutory requirements for overtime exemptions, and that any determination of whether a particular plaintiff has been improperly classified as exempt from overtime compensation requires an examination of the store manager's individual daily employment circumstances, making collective adjudication of the plaintiffs' claims improper.
Three motions are currently before this Court. In the first, Caribou Coffee Company, Inc.'s Motion for Decertification (Doc. No. 400), defendant seeks a court order finding plaintiffs are not "similarly situated" as required under the FLSA, and ordering decertification of the conditional FLSA collective action in this case. Plaintiffs oppose decertification of the FLSA collective action, and have filed a Motion for Class Certification (Doc. No. 472), seeking Rule 23 certification of a Minnesota class for the collective adjudication of the state MFLSA claims. In the third pending motion, Plaintiffs' Motion for Order to Reopen Opt-In Period to Eligible Class Members (Doc. No. 526), plaintiffs seek permission to reopen the opt-in period associated with the FLSA collective action in order to send opt-in notices to newly hired/promoted Caribou store managers. These matters have been referred to the undersigned pursuant to 28 U.S.C. § 636 and D. Minn. LR 72.1. For the reasons stated herein, the undersigned recommends defendant's motion for decertification of the FLSA collective action be denied, plaintiffs' motion for certification of a Minnesota state class be granted as modified herein, and plaintiffs' request to reopen the opt-in period be denied.
Caribou is the second largest speciality coffee company in the United States, with 345 stores in 13 states.1 Over 150 Caribou stores are in Minnesota. Each Caribou store has one store manager. Caribou store managers are all salaried employees, and are all classified as employees who are "exempt" from overtime compensation pursuant to applicable federal and state labor laws. The position of store manager is the only position at a Caribou store classified as exempt from overtime pay. Caribou utilizes a single job description for all of its store managers, the substance of which has changed little during the time period relevant to this lawsuit. Caribou operates under a uniform supervisory structure whereby store managers report to and are supervised by district managers, who in turn report to regional directors of operations. Caribou is currently divided into four regions. Each region ranges in size from as few as one district to twelve districts. Currently there are approximately forty to forty-five districts total. District sizes range from five to eighteen stores. Between May 2002 and May 2005, approximately 650 Store Managers have either worked for or are presently working for Caribou.
Plaintiffs assert claims for unpaid overtime compensation under the FLSA and the MFLSA on behalf of themselves and all other former and current Caribou store managers2 during the period of May 2002 to the present for the claims under the FLSA, and May 2003 to the present for the claims under the MFLSA.3 ). Plaintiffs contend Caribou willfully misclassified and continues to misclassify its store managers as exempt employees for purposes of the FLSA and the MFLSA, and, as a result, denied and continues to deny its store managers overtime compensation to which they claim they are entitled. (See id.). Plaintiffs seek damages for unpaid overtime compensation, equitable relief and attorneys fees. (See id.).
Plaintiffs previously sought and received conditional certification of a FLSA collective action from United States Magistrate Judge Franklin Noel, and notice of the pendency of the collective action was sent to potential claimants. (See Doc. No. 45). Approximately 300 consent notices have been received. The Court authorized individualized discovery for eighty-five randomly selected opt-in plaintiffs through completion of questionnaires and a limited number of depositions. (See Doc. No. 380). The contents of these questionnaires, along with the depositions and the discovery exchanged between the named plaintiffs and defendant comprise the factual record presented to the Court for the purposes of the instant motions.
Caribou moves to decertify the conditional collective action on the grounds that plaintiffs' challenge to their status as exempt employees requires a fact intensive inquiry and discovery has established that the named and opt-in plaintiffs are not "similarly situated" for the purposes of the FLSA collective action. Plaintiffs respond that discovery has revealed the named plaintiffs and the opt-in plaintiffs are similarly situated for the purposes of adjudicating their claims collectively under the FLSA, and that decertification would be both improper and inefficient.
There is little dispute that the central issue to be decided here is the legality of Caribou's classification of its store managers as employees exempt from overtime compensation under the executive exemption of the FLSA. Under the FLSA, all covered employees must be paid one and one-half times their regular rate of pay for hours worked in excess of forty per week. 29 U.S.C. § 207(a)(1). An employer that violates this provision can be held liable for unpaid overtime compensation plus an equal amount as liquidated damages. 29 U.S.C. § 216(b). Employers are not, however, required to provide overtime benefits to any employee employed in a bona fide executive capacity (those employees are referred to as "exempt"). 29 U.S.C. § 213(a)(1). Caribou classifies its store managers under the executive exemption, meaning they are not required to pay the store managers overtime compensation no matter how many hours they work in a week.
Employees may bring suit under the FLSA on their own behalf and on behalf of all those who are "similarly situated." See id. Section 216(b) sets forth two requirements for the adjudication of claims as collective actions: (1) the plaintiffs must...
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