Court Opinion

ID: 4113560
Source: CourtListenerOpinion
Date Created: 2017-01-05 21:01:01.043768+00
Date Added: 2024-06-11T07:46:13.433657
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 15-3258
DEMIKO MCCASTER and
JENNIFER CLARK,
                                               Plaintiffs-Appellants,

                                v.

DARDEN RESTAURANTS, INC.,
and GMRI, INC.,
                                              Defendants-Appellees.
                    ____________________

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

   ARGUED FEBRUARY 18, 2016 — DECIDED JANUARY 5, 2017
                ____________________

   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
2                                                          No. 15-3258

separation in violation of the Illinois Wage Payment and
Collection Act (“IWPCA” or “the Act”), 820 ILL. 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 im-
permissible “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 prohib-
its the forfeiture of accrued earned vacation pay upon sepa-
ration if the employee is otherwise eligible for paid vacation
under the employer’s employment policy. During the rele-
vant 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

1 Darden owned the restaurants through its wholly owned subsidiary
GMRI, Inc., also a defendant. We will refer to the defendants collectively
as “Darden.”
No. 15-3258                                                 3

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 im-
posed 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” termi-
nology 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 ver-
sion, 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 deter-
mining employee start dates, hours worked, leaves of ab-
sence, termination dates, rehire dates, and other basic pay-
roll 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
4                                                  No. 15-3258

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 contain-
ing 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 ap-
peal, but they provide no good reason to disturb it. Regard-
less, 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 action[] 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 fail-
safe class. The judge also rejected the plaintiffs’ proposed
alternative definition because it failed to meet the require-
ments 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.
No. 15-3258                                                   5

The judge agreed and granted the motion. McCaster settled
his individual claim with Darden but reserved the right to
appeal the denial of class certification. This appeal followed.
                        II. Discussion
    The plaintiffs seek reversal of the judge’s decision deny-
ing class certification. Clark also asks us to reverse the
judge’s decision rejecting her IWPCA claim on the merits.
The latter issue is quite straightforward, so we’ll take it up
first.
A. Clark’s IWPCA Claim
   Clark admits that she received all the vacation pay she
was owed under Darden’s old policy. After June 1, 2008, she
was ineligible to receive paid vacation. The company’s new
vacation-pay policy, which took effect on that date, covers
only full-time employees, defined as those who work at least
30 hours per week. Clark did not qualify because she
worked part-time.
     Clark concedes the point but argues that if an employer
provides paid vacation to its full-time employees on a pro
rata length-of-service basis, it may not deny this same bene-
fit to its part-time employees. The district judge rejected this
novel interpretation of the IWPCA, and rightly so. It has no
support in the text of the Act, its implementing regulations,
or in Illinois cases interpreting it.
   The relevant provision of the IWPCA states:
       [W]henever … [an] employment policy pro-
       vides for paid vacations, and an employee re-
       signs or is terminated without having taken all
       vacation time earned in accordance with such
6                                                             No. 15-3258

        contract of employment or employment policy, the
        monetary equivalent of all earned vacation
        shall be paid to him or her as part of his or her
        final compensation at his or her final rate of
        pay and no … employment policy shall provide for
        forfeiture of earned vacation time upon separation.
820 ILL. COMP. STAT. 115/5 (emphases added). This text
plainly doesn’t mandate paid time off; by its terms, the Act
merely prohibits the forfeiture of accrued earned vacation
pay. Whether an employee has earned paid vacation in the
first place depends on the terms of the employer’s employ-
ment policy.
    The Illinois Department of Labor has promulgated regu-
lations carrying this anti-forfeiture rule into effect. In rele-
vant part the regulations state that “[w]henever an … em-
ployment policy provides for paid vacation earned by length
of service, vacation time is earned pro rata as the employee
renders service to the employer.” ILL. ADMIN. CODE tit. 56,
§ 300.520(a) (2016). 2
   Taken together, the statute and regulation require that if
an employer awards paid vacation on a length-of-service

2 This regulation has been repeatedly affirmed as a reasonable interpre-
tation of the IWPCA. See People ex rel. Ill. Dep’t of Labor v. Gen. Elec. Co.,
806 N.E.2d 1143, 1149 (Ill. App. Ct. 2004); Mueller Co. v. Dep’t of Labor,
543 N.E.2d 518, 520 (Ill. App. Ct. 1989) (explicitly reaffirming Golden Bear
after amendments were made to the IWPCA); Golden Bear Family Rests.,
Inc. v. Murray, 494 N.E.2d 581, 588 (Ill. App. Ct. 1986).
No. 15-3258                                                               7

basis, employees are entitled to payment for accrued, un-
used earned vacation on a pro rata basis upon separation. 3
    Clark hangs her hat on Golden Bear Family Restaurants,
Inc. v. Murray, 494 N.E.2d 581 (Ill. App. Ct. 1986), but that
case is easily distinguished from this one. The employment
policy at issue in Golden Bear provided that paid vacation
time accrued daily but separating employees did not receive
payment for accrued earned vacation unless they were
“actively on the payroll … on the Wednesday preceding
January 1.” 4 Id. at 583. The court held that this condition—
active employment on a specific calendar date—worked a
forfeiture of accrued earned vacation pay in violation of the
IWPCA and the pro rata regulation. Id. at 589.
    Another Illinois appellate decision makes it clear that
Golden Bear stands for the proposition that a length-of-
service paid-vacation policy violates the IWPCA’s anti-
forfeiture rule when it conditions payment of accrued
earned vacation to employment status on a specific date. See

3 Illinois courts contrast length-of-service vacation policies with “forward
looking” vacation policies, which provide vacation to employees for a
given year at the beginning of that year. Under the latter policy, the
amount of vacation time employees receive in a given year is not contin-
gent on how much they work that year. See, e.g., General Electric,
806 N.E.2d at 1152 (“[B]ecause an employee was given all of his or her
vacation days for the year on the first of the year, the policy was forward-
looking … .”). As we’ve noted, Darden concedes that its policy is a
length-of-service policy.
4 The opinion actually quotes the policy as limiting vacation pay to
employees who were “actively on the payroll … on the Wednesday
proceeding January 1.” Golden Bear Family Rests., 494 N.E.2d at 583
(emphasis added). The word “proceeding” is obviously a typographical
error.
8                                                   No. 15-3258

Mueller Co. v. Dep’t of Labor, 543 N.E.2d 518, 521 (Ill. App. Ct.
1989) (explaining that accepting the employer’s position
“would require us to find an employee ‘earns’ his vacation
benefits for a whole year on the basis of his employment
status on a single day, … [which] would defy the common
understanding of the word ‘earn’ and we decline to adopt
it”).
    The policy at issue here differs fundamentally from the
policy challenged in Golden Bear. Under the June 1, 2008
policy, full-time Darden employees who separate from the
company receive payment for earned vacation pro rata
based on length of service, as the IWPCA and its implement-
ing regulation require. So if a full-time employee ceases
work in the middle of a year, he receives vacation pay in
proportion to how long he has worked that year. In marked
contrast to the Golden Bear policy, this one doesn’t condition
receipt of earned vacation pay to employment status on an
arbitrary date. It simply limits the paid-vacation benefit to
full-time employees. Nothing in the IWPCA or the imple-
menting regulation prohibits this.
    Under the policy that was in effect on and after June 1,
2008, Clark was ineligible for paid vacation because she did
not work full-time. Because she did not earn any paid vaca-
tion in the first place, no violation of IWPCA’s anti-forfeiture
rule occurred.
B. Class Certification
    We review the judge’s decision denying class certification
for abuse of discretion. Suchanek v. Sturm Foods, Inc., 764 F.3d
750, 755 (7th Cir. 2014). An abuse of discretion can occur
“when a district court commits legal error or makes clearly
No. 15-3258                                                                   9

erroneous factual findings.” Chi. Teachers Union, Local No. 1
v. Bd. of Educ., 797 F.3d 426, 433 (7th Cir. 2015) (quoting
Reliable Money Order, Inc. v. McKnight Sales Co., 704 F.3d 489,
498 (7th Cir. 2013)). The plaintiffs had the burden to satisfy
the district court that their case met the requirements for
class certification under Rule 23. Bell v. PNC Bank, Nat’l
Ass’n, 800 F.3d 360, 373 (7th Cir. 2015).
    The initial skirmish on appeal centers on whether the
proposed class definition describes an impermissible “fail
safe” class. A case can’t proceed as a class action if the
plaintiff seeks to represent a so-called fail-safe class—that is,
a class that “is defined so that whether a person qualifies as
a member depends on whether the person has a valid
claim.” Messner v. Northshore Univ. HealthSystem, 669 F.3d
802, 825 (7th Cir. 2012). A fail-safe class is impermissible
because “a class member either wins or, by virtue of losing,
is defined out of the class and is therefore not bound by the
judgment.” Id.
    McCaster and Clark sought to represent a class of “[a]ll
persons separated from hourly employment with [Darden]
in Illinois between December 11, 2003, and the conclusion of
this action[] who were subject to Darden’s Vacation Policy …
and who did not receive all earned vacation pay benefits.” (Em-
phasis added.) Under this definition class membership
plainly turns on whether the former employee has a valid
claim. That is a classic fail-safe class, and the district judge
properly rejected it. 5

5 Our decision in Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012),
cert. granted, judgment vacated, 135 S. Ct. 1722 (2013), is not to the contrary.
In Ross we accepted a class defined as employees “who were subject to
10                                                            No. 15-3258

    As we’ve explained elsewhere, however, the problem of
a fail-safe class “can and often should be solved by refining
the class definition rather than by flatly denying class certifi-
cation on that basis.” Id. In their fallback argument in the
district court, the plaintiffs suggested that the defect in their
class definition could be cured by simply excising the phrase
“and who did not receive all earned vacation pay benefits.”
With this language removed, the proposed class would be
defined as “[a]ll persons separated from hourly employment
with [Darden] in Illinois between December 11, 2003, and
the conclusion of this action[] who were subject to Darden’s
Vacation Policy.”
    This alternative is indeed free from fail-safe concerns.
Still, the judge rejected it, this time for failure to satisfy the
requirements of Rule 23. That was not an abuse of discretion.
     “A district court may certify a case for class-action treat-
ment only if it satisfies the four requirements of Federal Rule
of Civil Procedure 23(a)—numerosity, commonality, typical-
ity, and adequacy of representation—and one of the condi-
tions of Rule 23(b).” Jamie S. v. Milwaukee Pub. Schs., 668 F.3d
481, 493 (7th Cir. 2012) (citing FED. R. CIV. P. 23). The plain-
tiffs sought certification under Rule 23(b)(3), which requires

defendants’ unlawful compensation policies.” Id. at 906. But the indefi-
niteness in that class definition was substantially ameliorated by the
content of the judge’s certification order. Id. More fundamentally, the
Supreme Court vacated our decision in Ross, and on remand the case
was settled before it could be revisited. A vacated panel opinion has no
precedential force. County of Los Angeles v. Davis, 440 U.S. 625, 634 n.6
(1979); United States v. Love, 706 F.3d 832, 840 (7th Cir. 2013). We suggest-
ed otherwise in a stray footnote in Bell v. PNC Bank, Nat’l Ass’n, 800 F.3d
360, 375 n.3 (7th Cir. 2015), but we now clarify that Ross has no preceden-
tial value.
No. 15-3258                                                  11

that “questions of law or fact common to class members
predominate over any questions affecting individual mem-
bers.” Predominance is “similar to Rule 23(a)’s requirements
for typicality and commonality, [but] ‘the predominance
criterion is far more demanding.’” Messner, 669 F.3d at 814
(quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623
(1997)). The judge focused most of his attention on the
commonality question under Rule 23(a). This inquiry over-
laps with Rule 23’s other requirements and is ultimately
dispositive here.
    The Supreme Court has explained that “[c]ommonality
requires the plaintiff to demonstrate that the class members
‘have suffered the same injury’” at the hands of the same
defendant. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349–
50 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147,
157 (1982)). But it’s not enough for the plaintiffs to show that
class members “have all suffered a violation of the same
provision of law.” Id. at 350. Instead they must show that
“the same conduct or practice by the same defendant gives
rise to the same kind of claims from all class members.”
Suchanek, 764 F.3d at 756. “The critical point is ‘the need for
conduct common to members of the class.’” Id. (quoting In re
IKO Roofing Shingle Prods. Liab. Litig., 757 F.3d 599, 602 (7th
Cir. 2014)). Put somewhat differently, the class members’
claims must depend on a common contention that is “capa-
ble of classwide resolution.” Wal-Mart, 564 U.S. at 350.
    The plaintiffs haven’t satisfied this bedrock requirement
for class certification. Their proposed alternative class con-
sists of all separated employees from December 11, 2003, to
the present. But they haven’t identified any unlawful con-
duct on Darden’s part that spans the entire class and caused
12                                                 No. 15-3258

all class members to suffer the same injury. Even on appeal
they haven’t pointed to any unlawful practice or act com-
mon to the class (as they have alternatively defined it). They
do not contend, for example, that Darden’s pre- or post-
June 1, 2008 vacation-pay policies facially violate the
IWPCA. Nor have they alleged that Darden had a statewide
practice of withholding payment of accrued earned vaca-
tion—much less supplied evidence that could support such a
finding. Rather, they simply argue that some separated
employees like McCaster did not receive all the vacation pay
they were due under the applicable policy. That may be true,
and if so, those individual cases of nonpayment would be
IWPCA violations. But establishing those violations (if there
were any) would not involve any classwide proof.
    The plaintiffs do suggest one possible common question:
whether Darden’s vacation-pay policies—both before and
after June 1, 2008—are length-of-service policies subject to
the pro rata requirement of the IWPCA and its implement-
ing regulation. That is indeed a common question, but it’s
not at issue here.
    The Supreme Court noted in Wal-Mart that “[a]ny com-
petently crafted class complaint literally raises common
‘questions.’” Id. at 349 (quoting Richard A. Nagareda, Class
Certification in the Age of Aggregate Proof, 84 N.Y.U. L. REV.
97, 131–32 (2009)). The Court took pains to clarify that not
any common question will suffice to support class certifica-
tion. Instead, a putative class-action plaintiff must identify a
common question, the answer to which “will resolve an
issue that is central to the validity of each one of the claims
in one stroke.” Id. at 350.
No. 15-3258                                                   13

    McCaster and Clark haven’t done that. As we’ve already
explained, the common question they proposed for resolu-
tion is really no question at all. There’s no need to decide
whether Darden’s “anniversary pay” policies are length-of-
service policies to which the IWPCA’s pro rata requirement
applies. They are. Darden treats them as such. The case thus
raises only an amalgam of individual IWPCA pay claims by
McCaster, Clark, and other separated employees dating
from late 2003 to the present. These claims may (or may not)
be valid based on the employee’s particular circumstances;
resolving them depends entirely on each employee’s indi-
vidual work history at a Darden restaurant and the specific
payroll practices of the managers of the restaurants where
they worked. In other words, resolving the proposed class
members’ claims doesn’t center on any question common to
the class, but instead turns entirely on facts specific to each
individual class member’s claim.
   The plaintiffs’ failure to satisfy the commonality re-
quirement is fatal to their request for class certification. That
necessarily means that they have not satisfied Rule 23(a)’s
typicality requirement, much less the more strenuous pre-
dominance requirement of Rule 23(b)(3). Class certification
was properly denied.
                                                      AFFIRMED.