The parent company of Olive Garden and Red Lobster and other chain restaurant brands has won a legal victory after a
federal appeals panel refused to certify a class action over unpaid
vacation time, saying the restaurant group’s change to its “anniversary pay”
policies shouldn't subject it to a class action lawsuit.
Illinois residents Demiko McCaster and Jennifer Clark worked
for Darden Restaurants intermittently from 2004 to 2012. After quitting, they
filed a class action complaint in federal court in Chicago.
The lawsuit centered on Darden’s practice of awarding “anniversary
payments” to employees on the anniversary of their initial hire date. According
to court documents, Darden made the payments to all employees until 2008, when
it shifted its policy to include only full-time employees working at least 30
hours a week.
Eligibility decisions rested with individual restaurant
managers. McCaster alleged Darden owed him 12 hours of vacation pay when he
left his job at Red Lobster. Clark said she got everything she was owed under
the pre-2008 terms, but got no vacation pay when she left the company under the
While the company didn’t officially classify the anniversary
pay as vacation pay, court documents indicated the company used the anniversary
payments to satisfy obligations imposed by Illinois state law, and would pay
out prorated “anniversary pay” on the final paycheck of employee’s who left the
company, similar to paid vacation time.
Chicago federal Judge Samuel Der-Yeghiayan declined to
certify the class action, and then granted summary judgment in favor of Darden
on Clark’s individual complaint, prompting the plaintiffs to appeal to the U.S.
Seventh Circuit Court of Appeals. McCaster has settled his claim with Darden,
but in his deal reserved the right to appeal denial of class certification.
Seventh Circuit Judge Diane Wood and Circuit Judges Michael Kanne
and Diane Sykes heard arguments in the case Feb. 18 and issued a decision Jan.
The Seventh Circuit judges said Der-Yeghiayan was right to
reject Clark’s argument that an employer must offer prorated vacation benefits
to part-time employees if it does so for full-time workers. They said the law
prevents only mandatory forfeiture of accrued vacation pay; it does not
guarantee such benefits to part-time workers.
Clark cited a 1986 Illinois Appellate Court opinion in Golden Bear Family Restaurants v. Murray,
but the Seventh Circuit judges said that case differed from this one, as the
Golden Bear case dealt with a restaurant chain which had instituted a policy
linking the payment of prorated earned vacation time to being employed on an “arbitrary
date.” In this case, the judges said, Darden has not failed to pay anyone
benefits owed under its employee contract.
The judges said Der-Yeghiayan was right to refuse to certify
the classes, agreeing with the lower court judge that the proposed class of
employees – including anyone who worked at Darden restaurants since 2003 and “who
did not receive all earned vacation pay benefits” – fit the definition of a
so-called “failsafe class.” In such a legal maneuver, plaintiffs can be
included in classes only if they have a valid claim. This essentially would
leave defendants unable to win, as plaintiffs removed from the class cannot be
In response, the plaintiffs had argued the court could have
adjusted the putative class description to exclude the problematic clause and
But the judges noted Der-Yeghiayan also deemed the claim
failed to actually identify “any unlawful conduct on Darden’s part that spans
the entire class and caused all class members to suffer the same injury.”
Ultimately, the judges noted, there is no allegation Darden
has corporate policies that violate state law. If some employees’ pay was not
handled properly, that conduct would constitute a violation, but it would not
jeopardize the entire company policy.
McCaster and Clark were represented in the action by attorneys with the firms of Werman Salas P.C. and the Law Office of Jamie Golden Sypulski, of Chicago.
Darden Restaurants was represented by the firm of Seyfarth Shaw, of Chicago.