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McCaster v. Darden Restaurants, Inc.

United States Court of Appeals, Seventh Circuit

January 5, 2017

Demiko McCaster and Jennifer Clark, Plaintiffs-Appellants,
Darden Restaurants, Inc., and GMRI, INC., Defendants-Appellees.

          Argued February 18, 2016

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 13 C 8847 - Samuel Der-Yeghiayan, Judge.

          Before Wood, Chief Judge, Kanne and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         From roughly 2004 to 2012, Demiko McCaster and Jennifer Clark worked on and off at two Illinois eateries owned by Darden Restaurants. After quitting for good, they brought this proposed class action alleging that Darden failed to pay them pro rata vacation pay upon separation in violation of the Illinois Wage Payment and Collection Act ("IWPCA" or "the Act"), 820 III. Comp. Stat. 115/1-15. The district judge declined to certify their proposed class and granted summary judgment for Darden on Clark's individual claim. McMaster then settled his claim with Darden but reserved the right to appeal the denial of class certification.

         We affirm. The judge was right to deny class certification. The plaintiffs' proposed class definition described an impermissible "fail safe" class, and their proposed alternative did not satisfy the requirements of Rule 23 of the Federal Rules of Civil Procedure. And Clark's individual claim fails. The IWPCA doesn't mandate paid time off. It merely prohibits the forfeiture of accrued earned vacation pay upon separation z/the employee is otherwise eligible for paid vacation under the employer's employment policy. During the relevant time period, Darden's policy on paid vacation covered only full-time employees. Clark was ineligible because she worked part-time.

         I. Background

         Darden operates more than 75 casual dining restaurants throughout Illinois under the brand names Olive Garden, Red Lobster, LongHorn Steakhouse, and several others.[1] The plaintiffs worked intermittently as hourly employees at Darden-owned restaurants for a period of time spanning roughly eight years. McCaster worked periodically at a Red Lobster in 2004 and 2005 and more steadily from mid-2007 to early 2009. Clark worked at an Olive Garden from mid-2004 to October 2008 and again from 2009 to mid-2012.

         During this time, Darden paid eligible employees an "anniversary payment" when they reached the annual anniversary of their hiring date. This anniversary payment essentially functioned as paid vacation-or at least that's how Darden treated it for purposes of the obligations imposed by the IWPCA. When an employee ceased working for the company, Darden would include in the employee's final paycheck the pro rata amount of anniversary pay he had earned prior to the date of separation. This pro rata date-of-separation payment comports with how the IWPCA requires employers to treat earned vacation pay. So from now on we'll drop the company's "anniversary pay" terminology and just call this vacation pay.

         Two basic versions of the vacation-pay policy are at issue here. Under the first version-in effect prior to June 1, 2008-all employees were eligible. Under the second version, vacation pay was limited to full-time employees, defined as those who worked at least 30 hours per week. This second version of the policy took effect on June 1, 2008. Individual restaurant managers were responsible for determining employee start dates, hours worked, leaves of absence, termination dates, rehire dates, and other basic payroll information that contributed to an employee's eligibility for earned vacation pay.

         In this proposed class action, McCaster alleged that while the first policy was in effect, Darden failed to pay him accrued vacation pay when he left his job at Red Lobster, even though he had earned about 12 vacation hours. Clark, for her part, received all the vacation pay she was owed while the first policy was in effect; she alleged that after June 1, 2008, Darden did not pay her any vacation pay at all when she separated from employment.

         In discovery Darden produced five spreadsheets containing statewide payroll information during the relevant time period. As the plaintiffs interpret this data, more than 1, 200 employees left Darden's employ without receiving the pro rata vacation pay they were owed. This interpretation, however, rests entirely on a "declaration" from a paralegal who works at the law firm of one of the plaintiffs' attorneys. The judge struck the declaration because the paralegal had no personal knowledge of the data, lacked the expertise to interpret it, and the plaintiffs had not designated her as an expert witness. The plaintiffs challenge that ruling on appeal, but they provide no good reason to disturb it. Regardless, the paralegal's declaration is immaterial to our decision.

         The plaintiffs moved for class certification and proposed the following class definition: "All persons separated from hourly employment with [Darden] in Illinois between December 11, 2003, and the conclusion of this actionf] who were subject to Darden's Vacation Policy ... and who did not receive all earned vacation pay benefits." The district judge rejected this definition because it described an improper failsafe class. The judge also rejected the plaintiffs' proposed alternative definition because it failed to meet the requirements of Rule 23.

         In the meantime Darden moved for partial summary judgment on Clark's individual IWPCA claim. The company argued that no violation of the Act had occurred because during the relevant time period, only full-time employees were eligible for vacation pay and Clark worked part-time. The judge agreed and granted the motion. McCaster settled his individual claim ...

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