Daily Labor Report®

Chipotle’s Settlement Primed to Derail Possible SCOTUS Case (1)

Jan. 5, 2021, 9:12 PM; Updated: Jan. 5, 2021, 10:06 PM

Chipotle Mexican Grill Inc. has reached a tentative settlement with workers who accused the company of failing to pay them overtime wages in a case that’s lined up for potential U.S. Supreme Court review.

The company and the workers told the high court last week that they plan to withdraw the case if the deal to resolve the lawsuit is finalized and wins approval from a federal district court. They asked the justices to put the case on hold in the meantime.

Withdrawing the case would deny the Supreme Court an opportunity to consider the proper legal test for deciding whether workers have enough in common to sue employers collectively under a federal wage-and-hour law.

Chipotle had asked the justices to review the U.S. Court of Appeals for the Second Circuit’s decision reviving a Fair Labor Standards Act collective action that alleged it failed to pay “apprentice” workers the overtime wages they’re due. The justices are scheduled to consider the petition during their Jan. 8 conference, though they’re likely to postpone that in light of the tentative settlement.

The FLSA permits “similarly situated” workers to band together and sue companies for violating the law’s requirements. But neither the statute nor the high court have defined that standard, leading to a deep split among circuits and “widespread confusion in the lower courts,” Chipotle said in a legal brief.

The Second Circuit calls for certifying FLSA collective actions as long as there’s a common question of law or fact that’s material to the outcome of the workers’ claims. The circuit court vacated a federal judge’s ruling that had decertified a collective of more than 500 Chipotle workers.

Chipotle argues that courts should be able to also consider dissimilarities between workers and related procedural factors. A majority of circuits to consider the issue use some type of flexible, multi-factor approach, the company said.

Chipotle’s lawyer, Kannon Shanmugam of Paul Weiss Rifkind Wharton & Garrison, declined to comment. The workers’ attorney, Wayne Outten of Outten & Golden, didn’t immediately respond to a request for comment.

The case is Chipotle Mexican Grill, Inc. v. Scott, U.S., No. 20-257, joint motion filed 12/31/20.

(Updated with response from company attorney in eighth paragraph.)

To contact the reporter on this story: Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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