Court Refuses to Certify Wage and Overtime Class Action Against Steak ‘N Shake

A federal court in Georgia has denied a request to certify a nationwide class of Steak ‘n Shake hourly employees in a dispute over alleged violations of the Fair Labor Standards Act, finding that class members are not similarly situated to the named plaintiffs or to each other. Beecher v. Steak ‘n Shake Operations, Inc., No. 11-04102 (N.D. Ga., decided September 27, 2012). The putative class would have involved some 65,000 employees working in more than 400 corporate restaurants in five different U.S. regions. They alleged that restaurant managers were authorized to and did in fact change time records in bad faith and thus did not compensate them for all of their work or paid them less than minimum wage.

According to the court, the evidence showed that restaurant managers had
a number of legitimate reasons for altering time records. For example, if the
clock in/clock out times did not correctly reflect the actual hours worked,
changes would be made for payroll purposes, or if the reported tips were too
low, upward adjustments could be made to avoid the need for a minimum
wage differential payment. The court stated, “Even assuming, arguendo,
that there exists a nationwide practice of reviewing and sometimes revising
hours clocked in and out, and tips received, that is not enough glue to hold
this proposed class together; neither is the fact that Defendant generally
discourages managers from allowing overtime work. Defendant has not
only explained why it does this, but Defendant has also come forward with
the individual time records for Plaintiffs. Via these time records and related
declarations, Defendant has undercut some of Plaintiffs’ broad assertions that
all hourly-paid employees were not properly compensated.”

The court also noted that a class action would be unmanageable as it would involve “calling numerous supervisors from individual stores to attest to each and every change to an individual Plaintiff’s payroll record” as well as “correction-by-correction mini-trials of more than 2 million corrections made to time and tip records of the putative class.” Given the class size, lack of cohesion among claims and the plaintiffs’ failure “to identify a nationwide policy or commonality among the proposed members,” the court concluded that they failed to show that they and potential class members were similarly situated.