Nothing succeeds like success. Four years ago, in Morgan v. Family Dollar Stores, Inc., 551 F.3d 1233 (11th Cir. 2008), the Eleventh Circuit upheld a $35+ million jury award against the Family Dollar store discount chain for allegedly misclassifying its store managers as exempt. Predictably, retailers, already a target (no pun intended) of such litigation, were faced with a renewed wave of lawsuits contending that their operations fit perfectly within the Morgan mold.
By facial comparison, the case of Knott v. Dollar Tree Stores, Inc.pdf., Case No. 7:06-CV-1553-LSC (N.D. Ala. Sept. 19, 2012), must have looked like a lay-down for the plaintiffs. Like Morgan, it involved store managers for a nationwide dollar store chain. Like Morgan, it was filed in the Eleventh Circuit and, in fact, was filed in the same district court. As in Morgan, that same court granted conditional certification. The two defendants even had similar names. But this would-be clone action suffered a very different end.
The plaintiffs argued, of course, that their case was just a replay of Morgan and they doubtless framed their case and went about discovery to make the case look as much like Morgan as possible. They asserted that operational controls and limited budgets forced the store managers to spend the majority of their time doing manual, non-exempt work. The employer relied on the primary duties test under the executive exemption to show that even when the store managers were performing manual work they were also supervising. It also pointed to differences among the managers due to the size of store, location, level of responsibility and local economic pressures.
The district court followed Morgan, but noted that all Morgan had held was that the lower court there had not abused its discretion in certifying the class. Put another way, while the Morgan decision had affirmed certification, it had not necessarily required it.
Moreover, the court found important distinctions between the two cases in that it found the evidence that the class members were similarly situated was relatively weak while there was significant evidence of differences among them. Interestingly, the court refused to rely on the testimony of those claiming to have the weakest responsibility because the use of such a sample “would be unfair to Dollar Tree.” Indeed, it questioned whether letting the matter proceed as a collective action would compromise the company’s due process rights.
Finding that the plaintiffs were not similarly situated, the court decertified the class. The Knott decision is significant because it shows that conditional certification is not the end of the class issues in FLSA litigation and that even with strong authority at their back prevailing on the class issues, plaintiffs are not guaranteed a favorable outcome.
The Bottom Line: Even in the Eleventh Circuit, holding a class of retail store managers together is still a difficult proposition.