Co-authored by Gerald L. Maatman, Jr. and Matthew J. Gagnon

In a huge win for restaurant companies everywhere, Judge William Dimitrouleas of the U. S. District Court for the Southern District of Florida recently decertified a nationwide collective action against Darden Restaurants, Inc. – the corporate home of such iconic brands as Olive Garden and LongHorn Steakhouse – in Mathis et al. v. Darden Restaurants, Inc., Case No. 12-CV-61742, 2014 U.S. Dist. LEXIS 124631 (S.D. Fla. Sept. 1, 2014).  In July 2013, the Court had conditionally certified a nationwide collective action alleging that Darden required servers and bartenders to work “off-the-clock” and paid them the tip-credit wage for time spent on non-tip producing tasks.  The collective action spanned all 50 states and included over 218,000 putative class members.  More than 20,000 employees chose to opt-in to the suit.

While the Court may have been willing to certify a collective under the lenient standard applied at the conditional certification stage, anyone familiar with Darden and how it treats its employees knew that this collective action would ultimately be decertified.  And indeed, when Darden moved to decertify the collective action a year later, the Court sided with Darden, finding no evidence of a company policy that required employees to work off-the-clock or that resulted in employees being paid the tip credit rate improperly.

In a by-the-book decision, Judge Dimitrouleas applied the three factors identified by the Eleventh Circuit in Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233, 1261 (11th Cir. 2008), as relevant to the decertification decision, including: (1) the existence of disparate factual and employment settings; (2) the existences of individualized defenses; and (3) fairness and procedural considerations.

The Court found that the opt-in plaintiffs worked under hopelessly disparate factual and employment settings.  The collective action encompassed two job titles, bartenders and servers, in over 1,995 restaurants spread across 50 states.  The relevant policies and practices relating to off-the-clock work and wages would differ by job title, state, brand (Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, and Red Lobster), specific restaurant, and manager.  Moreover, the opt-in plaintiffs asserted various combinations of claims relating to the tip-credit, off-the-clock work, and overtime.  This meant that there were six different combinations of claims that each opt-in plaintiff could make.  Given these differences, the Court found that this factor alone weighed heavily in favor of decertification.

Second, the Court held that Darden had multiple individualized defenses that would preclude collective adjudication.  For example, liability could depend on whether employees had received instructions from managers who were acting outside the scope of their authority and contrary to well-established company policies and practices.  Employees may also have voluntarily engaged in off-the-clock work in defiance of Darden’s official policies, or they may have unreasonably failed to avail themselves of the opportunities provided by the company to recover unpaid compensation.  In sum, although some factual issues – such as the existence and communication to employees of uniform nationwide policies – could be determined on a class-wide basis, the majority of material issues relating to Darden’s defenses were highly individualized.

Finally, the Court noted that a collective action of plaintiffs’ claims would be unmanageable and procedurally unfair to Darden.  In short, the circumstances of each individual employee were too dissimilar to justify a collective action, and plaintiffs’ proposed use of representative evidence or damage models could not account for the material distinctions among class members.  Yet, if the case were to proceed as a collective action, Darden would be subject to all-or-nothing liability for large groups of employees despite the material differences in working conditions and individual defenses.

Implications For Employers

This case shows how important it is for an employer not to give up even after an adverse conditional certification decision, and to move forward and present its evidence to the Court in a decertification setting.  In this case, the Court had concluded that although certification was warranted under the “fairly lenient standard” at the conditional certification stage, the more developed record at the decertification stage demonstrated that plaintiffs were not in fact similarly situated, and that a nationwide collective action would not be practical, efficient, or fair.  Although it took another year of hard-fought discovery, Darden’s willingness to stand its ground and defend its reputation paid off.