More Than Morgan: Federal Court Decertifies Nationwide FLSA Collective Action Despite Arguments Likening it to Plaintiff-Friendly Result in Morgan v. Family Dollar
Last month, we reported on a ruling handed down by Judge Scott Coogler, a U.S. District Court Judge in Alabama, decertifying a nationwide FLSA collective action of store managers who claimed that they were misclassified as overtime-exempt. As is common in store manager cases under the FLSA, the plaintiffs in that case, Knott v. Dollar Tree Stores, essentially argued that they should be thought of as managed rather than managing—this, despite the fact that each was the highest-ranking employee in his or her store. Who ran the stores, one might ask? The district managers…the regional managers…the corporate manual…anyone but the store managers, the plaintiff-store managers argued. In decertifying the collective, Judge Coogler made clear not only that the FLSA’s executive exemption was in play, but also that its duty-specific nature left no room to force Dollar Tree to argue the defense on a one size fits all basis.
One month later, we can report a nearly identical result in a remarkably similar case: on Monday, Judge Coogler decertified another nationwide collective action of store managers for a large retail chain, Dollar General Stores, who alleged that they were misclassified due to the prevalence of their non-management duties. The named plaintiff, Cynthia Richter, won conditional certification in March 2007, and thousands of current and former store managers joined the litigation thereafter. Over five years later, Judge Coogler’s decertification order means that those who joined the case will likely be dismissed.
Richter is an important decision, in part because of the district court’s handling of Morgan v. Family Dollar, a store manager misclassification case in which the Eleventh Circuit upheld a $35 million verdict and refused to reverse a pretrial decision denying the employer’s decertification motion. Since it came down in 2008, plaintiffs have cited Morgan routinely and indiscriminately in their efforts to resist decertification, often drawing upon facts from that case that could be established against any large employer—a uniform classification decision was made, a single job description existed, a handbook was in place.
Morgan was the strategy in Richter, where the plaintiffs argued, among other things, that: (i) the employer made a single decision to classify the manager position as exempt, rather than on an employee-by-employee basis—just like in Morgan; (ii) the managers were expected to adhere to a company handbook and operating manual—just like in Morgan; (iii) the employer had one job description for the manager position—just like in Morgan; and (iv) the managers spent much of their time on non-management work—just like in Morgan. These facts were “virtually identical” to Morgan, the plaintiffs argued, and therefore necessitated the same result.
Judge Coogler offer a multifold rejection of the plaintiffs’ Morgan offensive. First, the district judge explained, Morgan merely upheld the trial court’s decision permitting the store managers in that case to proceed to trial collectively as something less than an “abuse of discretion.” “It does not necessarily follow,” Judge Coogler explained, “that a contrary ruling would have been an abuse of the district court’s discretion.” In other words, just because denying decertification was not utterly wrong does not necessitate that it was right.
Second, Judge Coogler rejected the plaintiffs’ assertions that evidence that they spent over half their time on non-management duties was similar to Morgan and sufficient to bind them together for trial. Judge Coogler correctly noted that, under the FLSA, even employees who spend over half their time on non-exempt work may be exempt. Moreover, even if the plaintiffs spent similar amounts of time on management duties, the relative importance of each type of work could lead to differing determinations on their “primary duty,” the touchstone of exempt status. For example, the plaintiffs managed entirely different stores, which impacted the nature and extent of their exempt work (e.g., larger stores have more associates to manage, stores in high-crime areas require a greater focus on asset protection, etc.).
Third, and perhaps most importantly, in considering the fairness of forcing Dollar General to a collective action trial, Judge Coogler rejected the argument that because the company made a universal classification decision, like the defendant in Morgan, the court could and should try its exemption defense on a universal basis. The exemption turns on an assessment of an employee’s actual management duties—it could work for one store manager and not another. Recognizing this, Judge Coogler explained that while a single, massive trial might be most efficient, such efficiency “cannot be obtained at the expense of Dollar General’s due process rights.” This reasoning is especially important because it is remarkably similar to the Supreme Court’s due process holding in Wal-Mart v. Dukes, which, as we have discussed before, is a game-changing case whose application in the FLSA arena is still being decided.
Judge Coogler’s decision is an important one. At a time when plaintiffs have come to reflexively cite Morgan to raise and preserve massive collectives, his ruling recognizes that Morgan did not hold that the trial court got it right in permitting an FLSA collective action trial, but rather that it had not gotten it completely wrong. And a time when Dukes’ applicability in collective actions is still being charted, his ruling draws upon the very due process concerns annunciated in that case, which dictate that it is not okay to trade the right of a litigant—even a corporate litigant—to defend itself for some measure of efficiency or cost savings.