Hunton Employment & Labor Perspectives

An Alabama federal judge granted AutoZone's request to dismiss nearly 500 current and former store managers from a nationwide collective action that the national auto-parts chain had misclassified them as exempt under the Fair Labor Standards Act (“FLSA”) and denied them overtime, holding those plaintiffs had missed the three-year statute of limitations and that plaintiffs had failed to establish equitable tolling should apply to save their claims.

Prior to the instant lawsuit, Carr et al v. Autozoners LLC et al., a group of store managers filed an FLSA collective action in 2010 in the district of Arizona, Taylor v. AutoZone, Inc., alleging that AutoZone improperly classified them as exempt and failed to pay them overtime. Approximately 1,500 opt-in plaintiffs joined that action. The named plaintiffs in Taylor settled their claims against AutoZone and stipulated to the decertification of the collective action and the dismissal of the opt-in plaintiffs’ claims without prejudice.  In response to concerns from the Arizona court that statute of limitations issues could preclude opt-in plaintiffs from pursuing their claims in subsequent actions, the parties entered a tolling agreement whereby AutoZone agreed that the statute of limitation was tolled for the opt-in plaintiffs’ claims during the pendency of the Taylor action and that the statute would start running again upon dismissal of their claims without prejudice.

Approximately one month later, a group of opt-in plaintiffs from Taylor filed the Carr case.  The court conditionally certified a class of current and former AutoZone store managers, excluding managers from California and Puerto Rico (where they were classified as non-exempt), employed from February 27, 2012 (3 years prior to the filing date of Carr) to the present, as well as individuals who had filed opt-in consents in Taylor.  Over 1,600 class members opted into Carr, including more than 300 that had previously opted into the Taylor action.

AutoZone moved for summary judgment seeking dismissal of hundreds of store managers from the case on statute of limitations grounds, both for failure to meet the two-year limitation for standard FLSA claims and the three-year limitations period for willful FLSA violations.  The Court found that a question of fact existed on the issue of willfulness based on the record, and refused to grant summary judgment dismissing plaintiffs whose claimed were purportedly barred by the two-year statute of limitations, as the three-year limitations period could apply.

With respect to whether opt-in plaintiffs whose claims would be barred even if the three-year statute of limitations applied, plaintiffs countered that the court should apply the doctrine of equitable tolling to find the statute of limitations tolled for opt-in plaintiffs upon the filing of the complaint in Carr.  Generally, in an FLSA collective action, the filing of a lawsuit does not toll the statute of limitations for all putative class members and the statute runs until a class member files his or her personal opt-in consent form.  In order for a court to apply equitable tolling, plaintiffs must demonstrate that that some extraordinary circumstance prevented timely filing despite diligently pursuing their rights.

Plaintiffs in Carr argued that equitable tolling was appropriate because the length of time that elapsed between the filing of Carr only month after Taylor was dismissed in Arizona in 2015 and potential class members did not receive notice of the pending collective action until 2017.

The Court pointed out that the standard is whether the potential opt-in plaintiff acted diligently in pursuing their claims, not the named plaintiffs who were already party to the case.   Accordingly, the Court disregarded the prompt initiation of the Carr action following Taylor as a factor supporting equitable tolling. The Court further held that the purported delay until 2017 in reaching a court-approved notice of the action did not justify the “extreme remedy” of equitable tolling given that dozens of opt-in notices were filed in 2015 and 2016 before the class was conditionally certified, which showed opt-in plaintiffs were aware of and could have pursued their claims before a court-approved notice was issued.  The court also pointed out that plaintiffs failed to cite to any authority that litigation delays associated with FLSA collective actions are an “extraordinary circumstance” that could warrant application of the doctrine of equitable tolling.  Accordingly, the Court refused to apply equitable tolling to extend the three-year FLSA statute of limitations to include the claims of nearly 500 potential plaintiffs in the lawsuit.

The Carr decision is an important reminder for employers that, in the absence of a tolling agreement, the standard for plaintiffs to establish equitable tolling is a high bar that is often reserved for cases involving circumstances where plaintiffs are affirmatively misled into allowing the statutory period to lapse, or where the plaintiffs had no reasonable way of discovering the alleged wrong before the end of the period.   Absent highly unusual circumstances, until an opt-in plaintiff files his or her consent to join, that person’s individual statute of limitations continues to run.