Articles from November 2012

Vallabhapurapu v. Burger King: $19 Million ADA Settlement Approved; Average Award of Over $20K per Class Member

A California federal judge has granted final approval to a settlement that is estimated to pay the average class member nearly $23,000. The $19 million settlement, one of 2012’s largest per-person settlements, was entered into between fast food giant Burger King and plaintiffs who alleged that Burger Kings fell short of ADA compliance, specifically as to wheelchair and scooter access. See Vallabhapurapu v. Burger King Corp., No. 11-0667 (N.D. Cal. Oct. 29, 2012) (Order Granting Motion for Final Approval). The settlement includes substantial injunctive and monetary components, and the negotiated attorneys’ fees are a modest twenty-five percent of the settlement fund. See Joint Final Approval Motion (Oct. 12, 2012). The settlement amount refers only to the cash component, as the parties do not even attempt to value the substantial injunctive components.

In addition to remedial architectural improvements that will bring the 77 Burger King locations covered by the settlement into ADA compliance, the settlement also provides for surveys and other monitoring devices to confirm the efficacy of those improvements. Joint Motion at 7-8. The court’s final approval order lauds the negotiated injunctive relief, noting that “the injunctive relief includes . . . the elimination of all accessibility barriers and the use of mandatory checklists with specific accessibility items for remodeling, alterations, repairs, and maintenance.” Order at 2. Reflecting the settlement’s generous terms, there were no objections and only one class member opted out of receiving the cash payment. Order at 4.

The settlement’s monetary component is approximately double that of comparable ADA settlements. See Joint Motion at 13. Class member payments will be determined as a function of the number of store visits they made, up to a maximum of six, and will be calculated with reference to information provided on the claim forms sent to class members.

Matamoros v. Starbucks: First Circuit Upholds
$14-Million Judgment in Tip Pooling Class Action

Emboldened by having successfully reversed a massive verdict in a similar case, Starbucks appealed a Massachusetts trial court’s $14-million judgment resulting from allegations that shift supervisors impermissibly shared tips that properly belonged to Starbucks’ baristas. See Matamoros v. Starbucks Corp., Nos. 12-1189, 12-1277 (1st Cir. Nov. 9, 2012).

In an opinion sprinkled with sardonic asides about Starbucks’ purportedly employee-friendly work atmosphere, the court noted that, while Starbucks “euphemistically describes the employees who staff its shops as ‘partners’”, there is a sharp division between the baristas who actively receive and process customer orders and the shift supervisors who predominantly manage the baristas. Id. at 2-3.

In 2009, Starbucks succeeded in reversing a nearly $100 million judgment concerning essentially the same issue. See Chau v. Starbucks, 174 Cal. App. 4th 688 (2009). California’s Fourth Appellate district held that “the trial court erred in ruling that Starbucks’s tip-allocation policy violated California law. The applicable statutes do not prohibit Starbucks from permitting shift supervisors to share in the proceeds placed in collective tip boxes.” Id. at 691. The same team of Akin Gump attorneys that represented Starbucks in the California action joined forces with local counsel from Boston-based Goodwin Procter, which included James Rehnquist, son of the former Chief Justice. This time, however, they failed to win a victory for the coffee behemoth.

The First Circuit focused principally on that portion of the Massachusetts Tips Act providing that only those with “no managerial responsibility” are eligible to share in tips. After addressing and disposing of each of Starbucks’ arguments supporting the notion that its shift supervisors lack managerial responsibility — arguments that were by turns characterized as “hair-splitting” and “disingenuous” — the First Circuit’s de novo review concluded that “the evidence canvassed above describing the work actually performed by the shift supervisors makes it pellucid that shift supervisors possess managerial responsibility. Any other conclusion would blink reality.” Matamoros at 14.

Butler v. Sears: Posner-Authored Decision Reverses Denial of Certification

The Seventh Circuit’s conservative reputation, like that of its most famous judge, Richard Posner, continues to be called into doubt, particularly as to class actions. Earlier this year, in McReynolds v. Merrill Lynch, Judge Posner distinguished the Supreme Court’s Wal-Mart v. Dukes decision, essentially demanding that judges apply the same analytical rigor to denying class certification motions as they do to granting them. See 672 F.3d 482 (7th Cir. 2012). Now, in Butler v. Sears, Posner has set out to “clarify the concept of ‘predominance’ in class action litigation”—the criterion that perhaps most often determines whether or not a class certification motion will be granted. See Butler v. Sears, Roebuck & Co., Nos. 11-8029, 12-8030, slip op. at 2 (7th Cir. Nov. 13, 2012).

In one of the underlying actions, the trial court denied certification as to a class of consumers alleging that various models of Whirlpool front-loading washing machines, purchased from Sears, grew mold in their washer drums. In the other, the court granted certification to a class alleging that a central control unit defect caused the washing machines to suddenly stop working. The Posner opinion reversed the certification denial and upheld the ruling granting certification.

In clarifying the predominance standard, which despite being much litigated has few clearly stated maxims or formal frameworks, Posner draws from his law and economics background and states that “[p]redominance is a question of efficiency.” Butler at 4.  He notes that, while members of the mold class purchased as many as 27 different models of the washing machines, a central question unites the entire class: “[W]ere the machines defective in permitting mold to accumulate and generate noxious odors?” Id.  Posner treats the predominance inquiry as a straightforward cost-benefit analysis, with a succinctly stated conclusion: “A class action is the more efficient procedure for determining liability and damages in a case such as this involving a defect that may have imposed costs on tens of thousands of consumers, yet not a cost to any one of them large enough to justify the expense of an individual suit.” Id. With that—essentially the mission statement for all class actions—the Seventh Circuit reversed the trial court’s certification denial.

Similarly compact is the analysis upholding the granting of certification as to the class alleging the defective control unit: “The principal issue is whether the control unit was indeed defective. The only individual issues—issues found in virtually every class action in which damages are sought—concern the amount of harm to particular class members.” Id. at 8. 

Posner opinions tend to be frequently cited, and Butler should be no exception.  Although this decision is extremely concise at less than 2,000 words, the consumer plaintiffs’ bar will likely be eager to use it to support class certification motions and appellate challenges to denials of certification.

Maxwell v. Tyson Foods: Parties Settle off-the-Clock Claims

The parties have reached a settlement in an FLSA collective action alleging that certain Tyson Foods employees were not paid for the time they spent putting on and taking off protective clothing before and after clocking in. See Maxwell v. Tyson Foods, Inc., No. 08-00017 (S.D. Iowa Oct. 31, 2012) (Memo ISO Joint Motion for Preliminary Approval). Commonly referred to as a “donning and doffing” case, such allegations are frequently seen where job duties necessitate substantial protective gear and/or pre- and post-work safety procedures, as was the case for Tyson employees working on the production line. Tyson is best known for its chicken products, the processing of which exposes employees to various dangers, including automated slicers and bacteria.

The $950,000 settlement will be divided among two groups, all from a single Tyson plant in Council Bluffs, Iowa: (1) a class of 1,199 employees who used knives as part of their job, and (2) a class of 76 employees who did not. The per-employee award for the non-knife users is approximately 75% of that of the other class, since the knife users required extra safety equipment and thus spent more time donning and doffing. The settlement provides compensation for periods of unpaid work that defendants frequently argue are “de minimis” — in this case, the average employee worked just a few minutes a day off-the-clock. As such, Maxwell exemplifies an instance where the workers’ rights can only be practically vindicated through the mechanism of a collective or class action.