Overtime plaintiffs get legal smackdown (suspended)

Remember the 2016 Overtime Rule? They sued over that?

Last summer, I wrote about Alvarez v. Chipotle Mexican Grill, Inc., a class and collective action alleging that Chipotle violated the Overtime Rule issued by the Obama Administration in May 2016, as well as the New Jersey wage and hour statute. The lawsuit was filed in federal court in New Jersey.

The plaintiffs, who were managers and other employees whom Chipotle treated as exempt, claimed that they were non-exempt from the overtime requirements of the Fair Labor Standards Act because their salaries were below the threshold of $47,476 a year, or $913 a week, set forth in the Overtime Rule. (Therefore, they argued, they were entitled to overtime for hours in excess of 40 in any workweek since December 1, 2016.)

There was only one problem with the FLSA part of the lawsuit: As our readers know, the Overtime Rule was enjoined nationwide by Judge Amos Mazzant and never went into effect. Accordingly, Chipotle filed a motion in Judge Mazzant's court (in Texas) to have the plaintiffs and their lawyers held in contempt of court.

The plaintiffs argued that Judge Mazzant's injunction applied only to state employers. (The lawsuit that resulted in the injunction was brought on behalf of state employers and not private companies.) According to Joseph Sellers, one of the attorneys for the plaintiffs, “The Administrative Procedure Act provides that rules, once they are issued for final publication [in this case on May 23, 2016] with an effective date [Dec. 1, 2016], automatically go into effect on that date unless the court issues a final adjudication vacating that rule . . . The Department of Labor doesn't implement the rule. The rule goes into effect on its own.”   

Judge Mazzant was not persuaded. He found that even though the Chipotle workers were not part of the litigation that led to his injunction, the DOL represented the interests of all workers who would be affected by the Overtime Rule. As a result, he said, they were bound by the injunction.

Then he granted Chipotle's motion for contempt, saying, ”[The plaintiffs] sued to enforce the Final Rule in direct violation of the Court’s order. . . . In doing so, they recklessly disregarded a duty owed to the Court -- the longstanding and elementary duty to obey its orders, including a nationwide injunction.”

He ordered the lawyers to withdraw their New Jersey lawsuit within seven days, and to pay Chipotle’s attorneys' fees and expenses incurred in pursuing its contempt case in Texas.

Attorneys for the plaintiffs filed a motion to stay the contempt order pending appeal. On Friday, Judge Mazzant agreed to an interim stay, saying that he has a three-week trial that will prevent him from immediately giving the plaintiffs' motion the consideration it deserves.

We will continue to monitor and will keep you posted.

Robin Shea has more than 20 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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