A Dutiful Result: Finding Differences in Management Duties, Federal Court Decertifies Nationwide FLSA Collective Action Brought By Dollar Tree Store Managers
Any employer that has faced a putative FLSA collective action in Florida, Georgia, or Alabama since 2008 should be aware of Morgan v. Family Dollar Stores, Inc., a case in which the Eleventh Circuit upheld a $35 million trial verdict against the Family Dollar chain and refused to reverse a pretrial decision to allow the store manager misclassification case to proceed collectively in the first place. Plaintiffs have since rung the Morgan bell often and indiscriminately, likening their cases to Morgan because of perceived similarities among the employees in their cases and those who sued Family Dollar. An employer decided to classify all individuals in a position as exempt? “That happened in Morgan, too!” The employer had a manual describing its expectations of the employees in its stores? “So did Family Dollar!” Morgan, these plaintiffs have exclaimed, has required that employees like these must be “similarly situated,” the key requirement to proceed collectively. After all, the Eleventh Circuit upheld the multi-million dollar verdict against Family Dollar.
But could they be wrong? Would a district court in the Eleventh Circuit ever again decertify a store manager misclassification case? The answer is yes. The latest example surfaced early last week, arising from the very district court from which Morgan arose. In a 21-page ruling, The Honorable Scott Coogler, of the Northern District of Alabama, decertified the conditionally-certified class in Knott et al. v. Dollar Tree Stores, Inc., which included 260+ Store Managers of various Dollar Tree stores who urged the court to deny decertification in their case because it was “nearly identical” to Morgan.
It all began six years ago, when Susie Knott, a former Store Manager of a Dollar Tree in Tuscaloosa, Alabama, filed an FLSA collective action alleging that Dollar Tree misclassified her and all of its other Store Managers as overtime-exempt. She alleged that the Store Managers—who, as the highest-ranking employees at their respective stores, were classified as exempt managers—were misclassified because their managerial duties were in fact “non-existent or extremely minimal.” Each store’s management, she alleged, “was left to the District Manager[s],” not to the Store Managers themselves. In 2007, she convinced the court to conditionally certify her alleged class and to authorize her attorneys to distribute notice of the lawsuit to Dollar Tree’s Store Managers across the country.
After what Judge Coogler described as “a war” between the parties over discovery, Dollar Tree moved to decertify Knott’s conditionally certified collective action. The company argued that the evidence developed during discovery proved that Store Managers were not similarly situated because their duties varied significantly across the class, and that the duties that varied were the very ones that would ultimately dictate whether Dollar Tree properly classified each as overtime-exempt. For example, Store Managers’ involvement in adjusting employees’ pay rates, evaluating them, training them, disciplining them, and securing the store would eventually be the duties examined to determine whether each was exempt, and the evidence showed—according to Dollar Tree—clear variation from manager to manager.
Knott simply could not sustain her burden to establish that she and those managers who opted into her case were similarly situated despite all of the evident variations among them. She argued that every Dollar Tree store was controlled tightly and identically, and that Store Managers like her spent over half of their time on non-management tasks (e.g., sweeping the parking lot, running the cash register, stocking shelves). She also argued that the company could not possibly prevail at decertification because they had in fact classified everyone the same, as if everyone performed the same duties. Judge Coogler didn’t buy it.
In granting Dollar Tree’s decertification motion, the court found that Knott and the other Store Managers failed to establish that they were similarly situated. The evidence revealed too many differences in their management duties. While some “may have performed uniform tasks mandated by a corporate manual, others routinely exercised their independent judgment and the amount of time they spent performing managerial duties is a matter of individual inquiry.” “While the differences in the amount of time spent on any individual act of ‘management,’ such as training associates, might not seem material,” the judge explained, “as a whole [they] could … lead to differing conclusions as to each employee’s ‘primary duty.’” Morgan could not save the class, even though Knott argued that her case was “nearly identical” to the one that sparked that lightning-rod ruling.
On that point, Judge Coogler’s sage ruling speaks volumes. He recognized that the Eleventh Circuit in Morgan did not hold that the district court in that case got it right. Rather, the appellate court “simply decid[ed] that the district court had not abused its discretion by finding the multiple plaintiffs similarly situated.” In other words, the Eleventh Circuit held only that the district court had not gotten it completely wrong—it had not committed clear error when it denied Family Dollar’s motion to decertify. The point? Even in a case “nearly identical” to Morgan, provable differences in management duties across a class will justify decertification.
Given the landscape of FLSA litigation in the Eleventh Circuit and across the country, it would not be shocking to see Knott appeal this ruling, be it in the weeks to come or after her claims are resolved. As many courts considering the case have noted, however, Morgan does not require a collective action trial of every misclassification case with arguably similar facts. And if the Eleventh Circuit were to apply the same abuse-of-discretion in Knott’s case as it did in Morgan, Dollar Tree—and employers that take heart in its decertification victory—almost certainly will not be disappointed.