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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Starbucks Corporation    SBUX

STARBUCKS CORPORATION

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Starbucks : California District Court Denies Certification Of Off-The-Clock Case

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02/12/2020 | 05:11am EDT

We've commented in the past that off-the-clock cases can make poor candidates for class certification, particularly when the employer's policies require that employees perform work only while clocked in. A recent case involving a decade-old dispute again illustrates the basic problems with these kinds of claims.

In Troester v. Starbucks Corp., Case No. CV 12-07677-CJC(PJWx) (C.D. Cal. Jan. 27, 2020), the plaintiff worked as an hourly shift supervisor at a company-owned Starbucks restaurant. While it was undisputed that Starbucks paid him for the time in its system, and while Starbucks policy required that employees perform all work while on the clock, he contended that he spent 4-10 minutes per shift off the clock performing tasks like sending sales data to company headquarters, locking the door, and escorting coworkers to their cars. He brought suit under the usual series of California claims for unpaid wages, inaccurate wage statements, unfair competition, and the like.

The case had an extensive procedural history, but ultimately Starbucks moved for partial summary judgment on certain of the California claims, and the plaintiff moved for class certification. The court granted the company's motion with respect to wage statements and liquidated damages under California law, leaving the claims for unpaid wages and for the derivative claim of unfair competition. It denied, however, the plaintiff's motion to certify these remaining claims.

Interestingly, the defendant did not challenge Rule 23(a) commonality, a basis that might have been successful, but based its opposition entirely on the lack of predominance under Rule 23(b)(3). In addressing whether the proposed class was sufficiently cohesive to meet that requirement, the court first noted that company policy prohibited off-the-clock work. This left the matter as the proverbial "policy to violate the policy" claim, where the contention is that there was a custom or practice of violating the company's formal policy. These claims are easy to allege but hard to state as a class.

And the evidence reflected why. The testimony showed that practices varied by store, manager and even period of time. Closing procedures varied between the individual store and layout. There was even a difference among time periods caused in part by a change in the company's computer system. The time locking up a store and turning on the alarm system varied based on the individual mechanisms and individual store practice. The time spent walking baristas to their cars varied not only because of local customs, but because many baristas took public transportation rather than drive. These variations made resolution of the claims on a class basis impracticable. As the court concluded, "[t]he individualized experiences of the class members make managing a single trial extremely difficult if not impossible." The court denied certification.

The most recent decision highlights the fundamental problem with off-the-clock claims, particularly when the employer's published policy is lawful. While the case was decided under Rule 23, these claims usually suffer the same defects in collective actions under the FLSA. Unfortunately, as in this case, the litigation before reaching this point was long and difficult, as would also likely have been the case under the FLSA's two-step paradigm.

The bottom line: Off-the-clock and "policy-to-violate-the-policy" claims ordinarily should not be certified, but it may take years of litigation to reach that point.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Mr Gregory Mersol
BakerHostetler
E-mail: mkohuth@bakerlaw.com
URL: www.bakerlaw.com

© Mondaq Ltd, 2020 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com, source Business Briefing

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Financials (USD)
Sales 2020 26 335 M
EBIT 2020 3 850 M
Net income 2020 2 644 M
Debt 2020 9 914 M
Yield 2020 2,46%
P/E ratio 2020 31,2x
P/E ratio 2021 22,1x
EV / Sales2020 3,40x
EV / Sales2021 3,07x
Capitalization 79 647 M
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