Jimmy John’s Can’t Pause Wage Lawsuits Against Franchisees

From labor disputes cases to labor and employment publications, for your research, you’ll find solutions on Bloomberg Law®. Protect your clients by developing strategies based on Litigation...

By Jay-Anne B. Casuga

Jimmy John’s can’t block franchisee employees involved in overtime class actions alleging the company is a joint employer from pursuing separate wage-and-hour lawsuits against franchisee businesses alone, a federal appeals court ruled.

The U.S. Court of Appeals for the Seventh Circuit reversed an Illinois district judge’s order temporarily preventing assistant store managers who opted into a nationwide Fair Labor Standards Act collective action against Jimmy John’s from proceeding in 13 separate overtime lawsuits in 12 federal courts against franchisees. The workers allege they were misclassified as exempt from federal and state wage-and-hour laws.

“The impact in this case is obviously significant because while the case in Chicago is proceeding against Jimmy John’s—on whether it’s a joint employer with franchisees—the various franchisee cases that were put on ice can go forward,” Seth Lesser, a partner with Klafter, Olsen & Lesser in Rye Brooke, N.Y., told Bloomberg Law Dec. 15. Lesser is one of the attorneys representing Jimmy John’s employees.

The judge lacked the authority to issue an anti-suit injunction that would pause those cases until the employees’ collective action claims against Jimmy John’s were resolved, the Seventh Circuit said.

“Plaintiffs are not barred from suing their franchisee employers under the FLSA simply because they have also sued Jimmy John’s as the franchisor,” the court said.

Lawsuits against franchisers and franchisees have been a hot-button issue of late, with a number of high-profile cases pending against fast-food companies, including McDonald’s and Domino’s. Many of those cases turn on whether a franchiser can be held liable as a joint employer. The Republican-majority at the National Labor Relations Board recently reverted back to a narrower definition of joint employment that could have implications in other areas of employment law.

‘Pretty Unique’ Ruling, Attorney Says

Lesser said he doesn’t believe the Seventh Circuit’s ruling will have much of an impact on other litigation.

“This was a pretty unique and unusual stay ruling to say the least,” he said. “As far as I know, there are no similar cases anywhere.”

The likelihood that anti-suit injunctions will be sought or granted in other wage-and-hour cases involving franchisers and franchisees “seems to be pretty low,” Lesser said.

“Courts enjoining other courts are not really favored,” he said. “It’s almost an affront to another court, whether it’s state or federal.”

Attorneys representing Jimmy John’s told Bloomberg Law that the company has no comment on the ruling. The Jimmy John’s Franchisee Association, which isn’t a party in the case, told Bloomberg Law that it doesn’t comment on ongoing litigation involving its members.

Paul W. Mollica and Justin M. Swartz of Outten & Golden in Chicago and New York, and Douglas M. Werman of Werman Salas in Chicago also represent the workers. Gerald L. Maatman Jr., Peter J. Wozniak, and Matthew J. Gagnon of Seyfarth Shaw in Chicago represent Jimmy John’s.

The case is In re Jimmy John’s Overtime Litig. , 2017 BL 447811, 7th Cir., No. 17-1655, anti-suit injunction reversed 12/14/17 .

To contact the reporter on this story: Jay-Anne B. Casuga in Washington at jcasuga@bloomberglaw.com

To contact the editor responsible for this story: Terence Hyland at thyland@bloomberglaw.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

Request Labor & Employment on Bloomberg Law