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In re Jimmy John's Overtime Litigation

United States Court of Appeals, Seventh Circuit

December 14, 2017

In Re: Jimmy John's Overtime Litigation

          Argued November 8, 2017

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division Nos. 14-cv-5509, 15-cv-1681 and 15-cv-6010 - Charles P. Kocoras, Judge.

          Before Wood, Chief Judge, and Flaum and Hamilton, Circuit Judges.

          Flaum, Circuit Judge.

         Plaintiffs-appellants brought this collective and class action lawsuit against Jimmy John's[1] on behalf of all assistant store managers nationwide for violations of the Fair Labor Standards Act ("FLSA"). Although the vast majority of plaintiffs work in stores owned by franchisees, [2] they claim that Jimmy John's is their joint employer. Two years into this litigation, plaintiffs also filed separate lawsuits against their franchisee employers in federal district courts across the country asserting the same claims. The district court subsequently enjoined plaintiffs from pursuing their lawsuits against the franchisee employers until their claims against Jimmy John's were resolved. We reverse.

         I. Background

         A. Consolidation

         This consolidated class and collective action began as three separate lawsuits.

         On July 18, 2014, plaintiff Emily Brunner filed a complaint in the Northern District of Illinois against Jimmy John's and her franchisee employer for violations of the FLSA and Illinois state wage and hour laws. Brunner, an assistant store manager at a Jimmy John's sandwich shop, alleged that she was misclassified as exempt from federal and state wage-and-hour laws and sought unpaid overtime. Brunner brought the suit as a putative class and collective action on behalf of all assistant store managers who worked at both franchisee-owned and corporate-owned Jimmy John's restaurants nationwide.

         On February 25, 2015, plaintiff Alexander Whiton filed a separate class action complaint in the Northern District of Illinois that asserted the same claims against Jimmy John's and his franchisee employer. On March 12, 2015, the district court consolidated the Whiton action with the Brunner action.

         On March 2, 2015, plaintiff Scott Watson filed a complaint in the Southern District of Ohio that asserted the same claims on behalf of the same putative class. Watson did not name any franchisee defendants, but rather only named Jimmy John's in its capacity as the corporate franchisor. In July 2015, the Southern District of Ohio transferred the Watson action to the Northern District of Illinois.

         On January 14, 2016, the Watson action was consolidated with Brunner and Whiton. Since then, the three cases have proceeded together under the caption In re: Jimmy John's Overtime Litigation.

         B. Certification and Notice

         In late 2015, before Watson was consolidated with Brunner and Whiton, the district courts presiding over the two cases conditionally certified nationwide collective actions.

         Because the two collective actions covered the same people and claims, the district courts ordered the parties to meet and confer to coordinate a process for giving notice to putative members. During the negotiations, Jimmy John's claimed that it did not maintain employment records for franchisee employees and thus did not have contact information for the vast majority of putative collective members. The parties disagreed about whether Jimmy John's could reasonably obtain that information from non-party franchisees, which led to an impasse in the negotiations about the notice process. Before they could reach an agreement, counsel for the Watson plaintiffs issued 280 subpoenas to franchisees in an effort to collect contact information.

         Ultimately, Watson was consolidated with Brunner and Whiton to facilitate and expedite the notice process. After further negotiations, the parties agreed that Jimmy John's would send a letter to the non-party franchisees asking for contact information for their assistant managers. Then, Jimmy John's would provide any contact information it received to the claims administrator. In turn, the claims administrator would disclose to both parties the contact information for members who opted into the collective action. Plaintiffs could issue third-party subpoenas to non-party franchisees who did not voluntarily disclose the contact information. In February 2016, the court entered an order reflecting the parties' agreement.

         Approximately 660 individuals joined the FLSA collective action. Of those, about 600 work at stores operated by franchisees, and 60 work at corporate-owned stores.

         C. Bifurcated Discovery

         Shortly after the cases were consolidated, the district court stayed all pending claims against the franchisee defendants until it decided whether Jimmy John's could be held liable as a joint employer. In March 2016, the district court judge reiterated that he wanted to resolve the joint-employer issue first. To that end, he ordered plaintiffs to earmark their discovery requests as either joint-employer-related or merits-related.

         In the months that followed, Jimmy John's complained that plaintiffs were improperly commingling merits discovery with joint-employer discovery. In response, the district court bifurcated discovery into two phases. The district judge set a discovery deadline of December 2, 2016 and ordered the parties to focus solely on discovery related to the joint-employer issue. The district court allowed the parties to depose thirty named and opt-in plaintiffs, the franchisees that employed them, and the Jimmy John's corporate representatives for those franchisees.

         By the time joint-employer discovery ended, the parties had deposed twenty named and opt-in plaintiffs who were collectively employed by thirteen franchisees. Although plaintiffs were entitled to depose all thirteen franchisees, they only deposed five. Shortly before the discovery cut-off date, plaintiffs cancelled the remaining eight franchisee depositions.

         D. The Franchisee Cases

         Shortly after the close of joint-employer discovery, three opt-in plaintiffs filed collective action lawsuits against their franchisee employers in other federal district courts, asserting the same misclassification claims. Specifically, Patrick Coyne sued his franchisee employer in the Eastern District of Missouri on December 15, 2016; Jared Ruder sued his franchisee employer in the District of Arizona on December 19, 2016; and Sebastian Lucas sued his franchisee employer in the Central District of Illinois on December 20, 2016. Jimmy John's was not named as a defendant in any of those lawsuits.

         These plaintiffs claim they needed to pursue actions against their franchisee employers because the FLSA statute of limitations was running continuously on those claims. They also contend that they could not have originally sued their franchisee employers in the Northern District of Illinois because that court lacked personal jurisdiction over the out-of-state franchisees and lacked venue over the out-of-district franchisees. Jimmy John's does not dispute this contention.

         E. The Anti-Suit Injunction

         Jimmy John's moved to enjoin those three plaintiffs from pursuing their lawsuits against the franchisee employers until their claims against Jimmy John's were resolved.

         At the initial hearing on that motion, the district court asked plaintiffs' counsel whether he had considered moving for stays in the franchisee ...


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