Hunton Employment & Labor Perspectives

This month, the Southern District of Florida declined to certify a nationwide class of Denny’s servers alleging the restaurant chain had violated the minimum wage and tip credit provisions of the Fair Labor Standards Act (FLSA) on the basis that the named plaintiff failed to provide enough evidence that the servers were similarly situated.

Plaintiff Lindsay Rafferty worked as a server at a Denny’s restaurant in Akron, Ohio from February 2012 through October 2018.  On November 13, 2019, Rafferty filed a lawsuit against Denny’s alleging that the restaurant paid its employee servers a sub-minimum hour wage under the tip credit provisions of the FLSA and that Denny’s required its servers to perform non-tipped “sidework.”

Rafferty sought to conditionally certify a nationwide class of approximately 8,400 Denny’s servers, identifying servers with similar claims that worked at Denny’s locations in Vermont, Virginia, Massachusetts, California and Hawaii.  Rafferty submitted six affidavits from the putative class members swearing they had similar duties, were paid under the same pay plan, and were paid at a tip credit rate for the performance of “sidework.”  The complaint included a long list of the types of “sidework” Denny’s required servers to perform, including taking out trash, cleaning tasks, host duties, preparing delivery order, and prepping food items.  Rafferty also alleged that servers were required to perform non-tipped work related to their tipped server positions, such as cleaning and setting tables, toasting bread and making coffee.

U.S. District Judge Donald L. Graham denied the motion for conditional certification on the basis that Rafferty failed to identify a uniform corporate-wide policy that violated the FLSA.  In its response, Denny’s emphasized that the class of employees Rafferty sought to represent contains individuals who worked at different locations, in different states, for different managers, and in different working conditions.  The decision noted that Denny’s operates 170 restaurant locations that are run by different managers, with “sidework” that was at the base of Rafferty’s claims being assigned by each location’s manager.  The Court determined that Rafferty failed to establish that she was similarly situated to other Denny’s servers across the U.S. because the putative class members were subject to different policies and practices established by different location managers.

Judge Graham’s order denying conditional certification also stated Rafferty had not shown a willingness from others to join the suit.  Despite the case pending for nearly a year, only 6 additional servers filed consent forms to opt-in and that, along with Rafferty, represent only 7 of Denny’s 170 corporate-owned restaurants.

Rafferty had previously filed her lawsuit in the Northern District of Ohio in October 2018 but the Court ruled that because Denny’s was neither incorporated nor had its headquarters in Ohio, Rafferty’s class would be limited to only those servers working in Ohio.  The Court based its decision on the 2017 US Supreme Court case Bristol-Myers Squibb Co. v. Superior Court of Cal., holding that “exercising personal jurisdiction over Denny’s for claims of any out-of-state putative collective member would violate due process.”  In response, Rafferty voluntarily dismissed her case and re-filed in the Southern District of Florida.

This decision is essential for restaurants operating locations nationwide, in multiple states and at multiple locations, as different decision-makers relating to the allegedly unlawful conduct, and variations in job duties, working conditions, and policies at different locations, is a critical consideration in defeating class certification.

The cases discussed are Rafferty v. Denny’s Inc., Case No. 1:19-cv-24706 (S.D. Fl. Nov. 13, 2019) and Rafferty v. Denny's, Inc., Docket No. 5:18-cv-02409 (N.D. Ohio Oct 17, 2018)