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Nancy C. LaBella, CSR, RMR, CRR

Official Court Reporter

219 South Dearborn Street, Room 1222

Chicago, Illinois 60604

(312) 435-6890

Nancy_LaBella@ilnd.uscourts.gov

1

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

MARISOL VELEZ, individually and )

on behalf of all similarly )

situated persons, )

)

Plaintiffs, )

)

v. ) No. 12 C 4857

)

LONGHORN STEAKS, INC., and )

DARDEN RESTAURANTS, INC., d/b/a )

LONGHORN STEAKHOUSE, ) Chicago, Illinois

) August 20, 2012

Defendants. ) 9:30 a.m.

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE RONALD A. GUZMAN

APPEARANCES:

For the Plaintiffs: ROBIN POTTER & ASSOCIATES, P.C.

BY: MS. ROBIN B. POTTER

MS. STACEY L. SCANLON

111 East Wacker Drive

Suite 2600

Chicago, Illinois 60601

(312) 861-1800

For the Defendants: LITTLER MENDELSON, P.C.

BY: MR. JOHN ANTHONY YBARRA

MS. AMY SCHAEFER RAMSEY

321 North Clark Street

Suite 1000

Chicago, Illinois 60654

(312) 372-5520

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(Proceedings heard in open court:)

THE CLERK: 12 C 4857, Velez v. Longhorn Steaks,

Incorporated.

MS. SCANLON: Good morning, your Honor. Stacey

Scanlon on behalf of the plaintiff.

MS. POTTER: Good morning, Judge. Robin Potter, also

on behalf of the plaintiffs.

MR. YBARRA: Good morning, your Honor. John Ybarra

on behalf of defendants.

MS. RAMSEY: Amy Ramsey on behalf of defendants.

THE COURT: Good morning.

The complaint as it stands right now has how many

plaintiffs?

MS. SCANLON: One plaintiff on behalf of a class of

employees as well.

THE COURT: Any opt-ins yet?

MS. POTTER: Judge, that's what we're seeking here,

your Honor's order to permit us to issue class notice so we

can start that process where people can opt in.

THE COURT: Well, I'm just wondering if you had any

opt-ins before you issued --

MS. POTTER: We don't have a class list from the

defendants.

THE COURT: It happens sometimes. You get --

MS. POTTER: Sometimes.

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THE COURT: Okay. So we have one plaintiff. Are you

alleging a representative action and a Rule 23 class?

MS. POTTER: Yes, Judge.

THE COURT: Okay.

MS. POTTER: We've learned from your great teachings

and the Seventh Circuit's in Ervin, and so we do have both

classes.

THE COURT: Thank you, I think.

MS. POTTER: No. Thank you.

THE COURT: And you want to split up discovery and

spend the next four months doing discovery on just the

precertification issue?

MR. YBARRA: We do, your Honor. We want to do -- on

behalf of the defense, we want to do very limited

precertification discovery. Frankly, we can do it in less

than 120 days -- we can do it in 90 days -- to get that done

and determine what, if anything, should be done with

plaintiffs' request, which the Court has denied without

prejudice at this point, to issue notice and/or certification.

THE COURT: Well, what would you do in terms of

discovery in 90 days on the certification -- on the

preliminary certification issue?

MR. YBARRA: Take the plaintiff -- we've got one

plaintiff. Take the plaintiff's dep.

THE COURT: Okay.

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MR. YBARRA: If the plaintiff identifies any other

persons with knowledge, take those, take those depositions;

but, again --

THE COURT: When you say persons with knowledge, what

do you mean?

MR. YBARRA: Well, for example, there is a mention of

another individual, whose name escapes me at this very moment,

who may have knowledge. Right now we've got one plaintiff

from one restaurant. There's a mention of another individual

from another restaurant nearby. We take those two plaintiffs'

depositions. And that's what I see doing out of the box.

Very limited written discovery to the extent they have --

they've talked to anybody else, they've interviewed anyone

else that does have knowledge of these allegations, to the

extent it existed outside that single restaurant, we would do

that, with just probably ten interrogatories, ten document

requests and probably an equal number of requests to admit.

That's my disc- -- that's my limited discovery I see doing,

Judge.

THE COURT: Is it going to resolve anything? Suppose

you take those depositions, you take the deposition of the one

plaintiff; says I don't know anyone else; I just do my job

here; I know they do it to me.

MR. YBARRA: Uh-huh.

THE COURT: So does that preclude a preliminary

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certification, which is essentially a tool for finding out if

there are any other people in the same type of situation that

have been subjected to the same type of conduct?

MR. YBARRA: It might, your Honor. For example, it

may be -- whatever it is -- limited to this restaurant, maybe

to this individual. This other person that they've mentioned

may prove out the same thing. I'm sure that they'll take a

couple of depositions of a 30(b)(6) and/or managers in that

restaurant. And if it turns out the policies are all

consistent with lawful treatment under the Fair -- of these

people for their -- for tipping, et cetera, and off-the-clock

time, if everything is consistent with the law, if it turns

out there's no indication of any pattern at all, even within

that restaurant, of doing things contrary to lawful policies,

then that would be relevant to this Court to consider in terms

of whether there's any basis to proceed at all with classwide

discovery on a national basis that involves 357 restaurants

across the USA. That would be very relevant, your Honor, to

determine whether or not we have to do that type of full scope

discovery that the plaintiffs propose doing over the course of

the next year.

MS. POTTER: Judge, that would turn the FLSA on its

head. It's not what the Congress envisioned. It's not what

the courts in this district envisioned. You issue the 216(b).

The defendants then have a two-step process where they're

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allowed to decertify if, in fact -- after seeing who opts in

after the dust settles. That's all.

This is a simple case, a simple process. Notice

issues. If people believe they're in the class, they opt in.

Then defendants can take their deps and do a decert. If --

the defendants have inverted the law, creating new law that

doesn't exist here.

MR. YBARRA: And very briefly --

MS. POTTER: The two-step process is what gives these

defendants that right. And instead of foreclosing, as your

Honor said --

THE COURT: I think what's -- well, I don't know what

counsel's response is going to be; I shouldn't say that. But

the only question or concern I have here is sort of the size

of the undertaking at this point. It's a national chain.

MS. POTTER: Well, Judge, how this works is simple.

We get the class list. We do the mailing. We collect the

forms. There's no imposition or burden on the defendant.

They produce the list. We do the rest. When the dust

settles, we see who opts in. We turn over those opt-in forms

to the Court. And then that's when that process of merits

discovery begins, not before.

We've met our burden under 216(b). That's all we

have to do. We've cited the Madden case. We cited the Vander

Vennet case. That's how it works in this district.

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MR. YBARRA: Well, your Honor, I wish it was that

simple; but it really isn't. Their -- it's a lighter burden,

but it's an existent burden. It isn't just plaintiff files

their motion; they automatically get it. Congress did very

clearly hold that there was a burden there, otherwise why even

make a motion? It would just be part of the opening

complaint. So there is a burden there.

And this isn't a case in which we're talking about

ten restaurants or ten restaurants in northern Illinois. This

is a nationwide case. And there is a burden on us. When they

send out notice -- these are current and former employees. So

this is going to start litigation in our restaurants across

the country based on, you know, what's in a complaint and

affidavit without us doing a shred of discovery.

THE COURT: It's not going to start litigation. It's

just going to send out a notice.

MS. POTTER: Correct.

MR. YBARRA: Notice is going to our employees in our

restaurants and -- but -- and whatever that causes that we

will have to deal with, it's very clear that there is a burden

there that we should have some limited opportunity to oppose.

And plaintiffs are proposing that we get the right to do

absolutely nothing before this nationwide notice goes out.

And so, therefore, we should be allowed to do the very limited

discovery I outlined.

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And if it turns out that the Court feels that, you

know, based on that limited being done in the next 90 days,

that notice should go out, then notice goes out. But we

should have some opportunity to meaningfully respond to that.

And that's what Congress envisioned, as this Court and the

Seventh Circuit has.

MS. SCANLON: Your Honor, we think, respectfully,

Mr. Ybarra is referring to the second step of the

decertification process -- or the certification process.

Right now we're at the notice stage where it's a very lenient

standard as set forth in the Seventh Circuit case law. We

think notice should be issued, especially because these

people's claims are running. The statute of limitation is

running on all of these other --

THE COURT: Are you willing to enter into a

stipulation as to the statute of limitations?

MR. YBARRA: Yes. The list --

MS. POTTER: That wouldn't matter, Judge, in the FLSA

because of people moving, memories fading. And a tolling

agreement should enter, but notice is still necessary to get

people to opt in so we can start that investigation that

Mr. Ybarra speaks of that really goes on in the second stage

as to who -- the similarly situated practices. We've met our

burden. There's no question about it. Taking the plaintiff's

deposition to say who do you know in Tennessee is irrelevant

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under the law. We've pled. They have a nationwide

practice --

THE COURT: Let me tell you what I'm thinking because

it just seems to me this is a commonsense way to do this. And

I agree with you; I think taking the plaintiff's deposition

means next to nothing.

MS. POTTER: Yes.

THE COURT: I shouldn't say that, but it's not

necessarily dispositive of anything.

I would think that, say, a 45-day period for sending

out a limited number of notices to a -- I hesitate to say

representative sample because this is not going to be a

scientific process -- but to a sample of employees to see what

kind of responses you get. If you get back no responses, if

you take a limited number of depositions and there's

absolutely no indication of any pattern of conduct, then I

think there's a real issue; and that's what precertification,

I think, is supposed to do at a very low, minimum level. When

you're undertaking a large notice process such as this with a

large number of individuals and a huge number of sites, I

don't think that's inappropriate.

MS. POTTER: Judge, I don't know how many -- this is

a very small class. It's servers. That's all. These are not

every employee of Longhorn Darden. It's the Longhorn

Steakhouse servers.

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And our problem is that when you get a class list and

you do a mailing, then you get a percentage of returns, which

is usually very small. And the burden -- and then to

interfere with the right of certain class members to get

notice and you pick at random, I do confess I've never seen

that. I've just only seen notice to all similarly situated.

And the amount of returns could be very tiny; 10 percent, 20

percent. That's how it goes in 216(b) collective actions.

So I would, with all due respect, Judge, just ask

that we --

THE COURT: How many notices do you contemplate

sending out?

MS. POTTER: I don't know the size of the class

because Mr. Ybarra hasn't given us a class list, but I don't

think it's very large.

THE COURT: How many notices will they be sending

out?

MR. YBARRA: Well, we're talking about a notice -- a

notice to the class that would go out?

THE COURT: Yes.

MR. YBARRA: Well, we're talking 357 restaurants

with -- over the course of --

THE COURT: How many actual notices?

MR. YBARRA: 387 restaurants.

THE COURT: How many people?

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MR. YBARRA: With, let's say, 10 to 20 servers.

Probably five to 7,000 notices.

THE COURT: Ten to 20 servers you think in each --

MR. YBARRA: When we go back over the statute of

limitations period, your Honor, yes.

MS. POTTER: Judge, we issued notice in the Sprint

case, which is a certified class before her Honor Judge

Finnegan, and we issued 56,000 notices. It's -- without a

blink. It's a question of printing.

MR. YBARRA: Your Honor, what you're suggesting is --

in terms of allowing us to send out a very limited number of

deposition notices is a perfect solution. If I'm wrong, then

we're going to be proven in 45 days, then -- we're going to be

proven wrong very quickly before we go issuing thousands and

thousands of class notices.

THE COURT: I think that that's a commonsense -- to

me it's a commonsense way to approach it. My concern is that

it may not really get me anywhere.

MS. POTTER: Well, we don't mind, Judge, that process

as envisioned by the law after notice issues. When you get

your opt-ins filed, then you do a representative sampling of

depositions. Usually it's no more than 15 percent or so, or

even less. That's how we do that. But -- it's exactly what

the law envisions, but not at this stage.

MR. YBARRA: Well, your Honor --

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THE COURT: I know what you're saying. But the

question is, how do we shrink that down to give them some

ability to contest at the precertification stage --

MS. POTTER: Well, we --

THE COURT: -- because it's not -- it can't be and

it's not a simply "we file and we get the notice."

MS. POTTER: We're not suggesting that. We're

suggesting we met our collective action burden of similarly

situated. And so you can't arbitrarily say people in

Tennessee get notice but not in Illinois. When the class is

this small, if I take his numbers, it's 3,500 maybe or 7,000.

That's tiny.

THE COURT: Here's what I'm going to do -- and I'm

going to leave it up to them -- I'll give you 45 days to

respond. I think she's right. I think they have essentially

come up to or are very close to the bar that they have to

meet. But I'll give you 45 days to see if you can find

information to contradict that.

MR. YBARRA: Very good.

THE COURT: And then we'll issue a ruling on the

precertification and on the notification.

Now, I assume that if indeed the ruling is that we're

going to go ahead with notification, we're not going to have

any problems with identifying the class?

MR. YBARRA: Of course not, Judge. If your Honor

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orders after -- after doing 45 days of limited discovery and

giving us a very brief time to file our opposition -- we

haven't even had a chance to do that -- if the Court orders

notice, we're going to respond to your Honor very quickly.

MS. POTTER: Judge, what is to occur in that 45 days?

I mean, this is going to be a massive point of contention.

MR. YBARRA: I don't see it --

MS. POTTER: Unless it's very --

THE COURT: What's going to happen in the next 45

days?

MR. YBARRA: I am going to issue -- just as I

outlined to the Court. I'm going to issue very limited

interrogatories and document requests. I'm going to notice up

these two individuals that they have. I'm going to find out

where they got this locally created sidework policy with the

smiley face.

This -- part of this is how much sidework are these

people doing; are they allegedly -- this server, how much is

she doing and is she allegedly doing it off the clock. What's

attached to their brief is a sidework policy that was locally

created, some type of Word document that this young lady

apparently picked up from the restaurant with a smiley face on

it. It's not a company policy or anything. So that's why I'm

starting at that restaurant, and I'm going to figure out what

this -- maybe she got it from somebody else. I don't know.

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But I'm going to do ten interrogatories, ten document

requests. I'm going to take these two people's depositions.

If they've got somebody that they have, some manager or

management person, we're going to produce those people for

depositions. And I'm going to come back, finish up in 45

days, and then I'm going to file my opposition brief so that

I'm going to be -- we're going to be ready to bring it back

before the Court within 60 days and get your Honor's ruling.

MS. POTTER: Judge, if I might? I mean, with all due

respect, this really just turns collective actions on their

head because for now we should have some kind of limited

notice at least to do what your Honor said or class list so we

can start the investigation we need.

THE COURT: Give them a class list.

MS. POTTER: Thank you. And --

THE COURT: You can start getting your notifications

ready.

MS. POTTER: Thank you. If we could have that in

seven days on a computerized format, Excel sheet, that would

be great. 14 days at most.

MR. YBARRA: What's going to be sent out, Judge? We

don't -- there shouldn't be anything sent out until your Honor

has ruled on that notice. And you're going to do -- you're

going to order that, I'm sure, within 60 days.

MS. POTTER: We're allowed to start our fact

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investigation. The class list should be turned over.

THE COURT: Let them have the class list.

MS. POTTER: And we can --

THE COURT: They can prepare the notifications.

MS. POTTER: Thank you.

MR. YBARRA: May we --

THE COURT: If indeed I find that you have rebutted

the precertification conclusion, there's no harm, no foul.

They're not going to use that information for anything else.

You can put it in the order.

MR. YBARRA: That they may not use that information

for anything other than their --

MS. POTTER: This case.

MR. YBARRA: -- investigation?

But no notice is going out, nothing is going to be

sent out to the --

THE COURT: No, no notice is going out.

MR. YBARRA: -- class?

THE COURT: Exactly.

MR. YBARRA: Okay. Very good, your Honor.

MS. POTTER: Judge, can we get that in a reasonable

prompt period of, say, seven days?

MR. YBARRA: Well, your Honor, we will --

THE COURT: I'm sorry?

MS. POTTER: What is the date by which defendants

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will turn that over? Seven days?

MR. YBARRA: Your Honor --

THE COURT: 14 days is fine.

MS. POTTER: That's great.

MR. YBARRA: Thank you, your Honor.

MS. POTTER: And, Judge, I heard counsel say they did

not object to tolling, so does the statute toll from the date

of filing the complaint?

THE COURT: Do you have any objection to that?

MR. YBARRA: I have no objection to filing from the

date -- for example, your Honor, the date they -- that your

Honor ruled on -- that denied this without prejudice until the

date your Honor rules -- actually rules on the motion.

MS. POTTER: Judge, I mean --

MR. YBARRA: That's the period that we're covered

here.

MS. POTTER: Well, we did file it with the complaint

but that's --

MR. YBARRA: Is it a -- your Honor --

MS. POTTER: We did file it with the complaint.

MR. YBARRA: From the date they filed it, your Honor,

to the date that your Honor rules, that's fine.

THE COURT: Okay.

MS. POTTER: And, your Honor, we're not foreclosed

from, therefore, issuing our discovery as well to the

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defendants in this 45 days, our limited discovery? We want

the policies. We want the timekeeping records. We want the

payroll records.

MR. YBARRA: Well, I do object to -- policies, your

Honor, no problem whatsoever. But for giving payroll records

and records -- that's what we're trying to avoid, if it can

be, is doing discovery on thousands and thousands of people at

this point for the next 60 days. I would have no objection,

for example, to doing it in that restaurant, the payroll

records for these, I'm guessing, 20 people, the 20 servers in

that restaurant, giving the payroll records and personnel

records for those people.

THE COURT: Sounds to be a good compromise to me.

MS. POTTER: Well, I guess our problem with that,

Judge, is we know that there are policies and practices in the

different stores that emanate from Longhorn centrally. So we

need those policies and practices.

MR. YBARRA: Well, I said -- I'm sorry. I didn't

mean to interrupt, Robin, but we're going to give any company

policies that applied --

THE COURT: He agreed to the policies.

MR. YBARRA: Yes.

MS. POTTER: Right. And in terms of -- I mean,

Judge, if we could at least get the payroll records and

timekeeping records for Illinois, that would be --

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THE COURT: No, you can have that after we issue the

go-ahead on the precertification notifications.

MS. POTTER: Now, my only --

THE COURT: You can start your discovery then at that

point.

MS. POTTER: Okay. Judge, my only concern too about

taking the deposition of a non-party -- I mean, we understand

your Honor has ordered the named plaintiff; but it's highly

irregular at this point -- we're not in full discovery. I

don't even know -- this is a non-party.

THE COURT: It's not irregular. If he's got

information that bears upon the issue before the Court,

they're entitled to take his deposition. If He's got that

information; they get the deposition.

MS. POTTER: Precert?

THE COURT: I'm sorry?

MS. POTTER: Precertification they get --

precertification?

THE COURT: Well, that's the issue.

MS. POTTER: Okay.

THE COURT: The issue is should there be a

precertification ruling. And if this person has information

on that, they're entitled to take his deposition. I don't

care if he's a party or he lives in Hong Kong.

MS. POTTER: That's fine, Judge.

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THE COURT: It doesn't matter.

All right. So you both have some limited discovery.

You've got a 45-day period for taking the discovery with

respect to the precertification issue. In 60 days your

responsive brief on the certification issue --

precertification issue will be filed. And we'll issue a

ruling by mail.

MR. YBARRA: Very good.

MS. POTTER: We did also, Judge, suggest in the

discovery order the exchange of 26(a)(1)s. And it's our

proposal that that be done somewhat promptly and that -- we

typically exchange the relevant documents, but I understand

that may not be possible. But at least for the plaintiff --

MS. RAMSEY: We agreed to the 27th, and we'll

promptly respond to discovery requests and collect the

documents. That shouldn't be a problem.

MR. YBARRA: I don't think we have a disagreement,

Judge.

THE COURT: I don't think so either. Okay.

MR. YBARRA: Thank you, your Honor.

THE COURT: Wait. We need a status hearing. So make

it another 15 days after that.

MS. RAMSEY: One additional matter, if we could, your

Honor.

The complaint lists Longhorn Steaks as a defendant.

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And we've noted in footnotes in a couple of pleadings thus far

that that entity doesn't exist. I'm not sure if there's

anything we can or should do at this point in time.

MS. POTTER: We'll work with counsel on the misnomer.

We have no problem with correcting that as needed.

THE COURT: I would think you wouldn't.

MS. POTTER: No, not at all.

MR. YBARRA: Very good, your Honor.

THE CLERK: Status hearing, November 14th at 9:30.

MS. POTTER: Judge, if I might check? I think I'm in

Cuba at that time. I do regret -- and I can't -- Groucho Marx

said you can't be in two places at once.

What time would that be?

THE CLERK: November 14th at 9:30.

MS. POTTER: I'm not in town, Judge.

THE COURT: When are you going to be in town?

MS. POTTER: I don't leave until -- I can be here the

8th or sooner.

THE COURT: That won't give us enough time. After

the 14th of November then.

MS. POTTER: The -- I will be back the 20th, by the

20th.

THE CLERK: November 21st at 9:30.

MR. YBARRA: Is that the week of Thanksgiving?

THE CLERK: Yes.

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MR. YBARRA: I'm sorry. That is my vacation week

because the kids are off from school.

THE CLERK: The next week?

MR. YBARRA: I'm back.

THE CLERK: November 28th at 9:30.

MS. POTTER: John, are you here on the 19th?

MR. YBARRA: I --

MS. POTTER: That's a Monday.

THE COURT: The 28th, folks.

MR. YBARRA: Thank you very much.

THE COURT: Call the next case.

MR. YBARRA: Thank you, your Honor.

MS. POTTER: Thank you, Judge.

* * * * *

I certify that the foregoing is a correct transcript from the

record of proceedings in the above-entitled matter.

/s/ Nancy C. LaBella_ August 22, 2012

Official Court Reporter

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