Sub sandwich restaurant chain Jimmy John’s will pay just $1.84 million to settle a nearly six-year-long court fight over a class action lawsuit, which accused the company of shorting its assistant store managers pay by allegedly misclassifying them as management employees, ineligible for overtime pay.
According to settlement documents, $1.1 million of that total will go to pay the plaintiffs’ lawyers who brought the case.
On Feb. 15, lawyers for the Jimmy John’s assistant store managers (ASMs) filed a motion in Chicago federal court, asking a judge to sign off on the deal to end the litigation.
From left: Attorneys Seth Lesser and Gerald Maatman
| Klafter Olsen & Lesser; Seyfarth Shaw
The court action dates to 2014, when lawyers representing ASMs first filed suit against the Illinois-based Jimmy John’s in different federal courts, beginning with actions filed in Chicago. They were followed by nearly identical lawsuits in federal courts in Ohio and Florida.
The lawsuits were then consolidated and transferred to Chicago federal court.
The lawsuits accused Jimmy John’s of allegedly violating the federal Fair Labor Standards Act by classifying its ASMs as management employees, exempt from overtime and other wage requirements under the FLSA.
The ASMs asserted the classification was improper, because Jimmy John’s ASMs rarely, if ever, actually manage anyone or anything. Rather, they estimated at least 90% of ASM duties are little different from those of hourly employees, who qualify for overtime under FLSA.
However, in 2018, a federal judge substantially sliced the potential reach of the lawsuits, and trimmed the potential financial recovery available to plaintiffs.
In that decision, U.S. District Judge Charles Kocoras blocked most of the ASMs from suing Jimmy John’s Enterprises, the parent franchisor company, declaring he believed the Jimmy John’s franchisees who actually paid the ASMs should be considered their sole employers under the FLSA.
Only ASMs directly employed by Jimmy John’s Enterprises were allowed to continue suing JJE.
The plaintiffs had sought to rope the larger Jimmy John’s franchisor organization into the case. They argued, because JJE, as franchisor, owns the brand and sets standards for its franchisees to follow, that company should be considered the ASMs “joint employer,” and thus owe money for the alleged federal labor law violations.
In a memorandum filed Feb. 15 supporting the settlement, the plaintiffs’ lawyers referenced that decision, indicating it dealt a substantial blow to their case.
Two years after that decision, the two sides entered mediation, resulting in the settlement to end the lawsuits.
Under the settlement, $272,500 of the $1.84 million would be set aside to pay 66 ASMs directly employed by JJE who opted-in to participate in the legal actions.
ASMs employed by Jimmy John’s franchisees who opted-in would each receive $300 in Jimmy John’s gift cards, according to the settlement.
The remaining $1.39 million would be used to pay lawyers and costs associated with prosecuting the lawsuit and administering the settlement funds.
In a memorandum supporting the settlement, plaintiffs’ lawyers estimated they should have been owed $5.9 million in fees under more typical fee-setting methods. They claimed they spent $800,000 in costs to prosecute the case.
Plaintiffs have been represented in the action by a team of lawyers from several firms. These included attorneys Seth R. Lesser and Fran L. Rudich, of the firm of Klafter Olsen & Lesser LLP, of Rye Brook, NY; Kathleen Currie Chavez, Kevin P. Noll, Peter L. Currie and Robert M. Foote, of Foote Mielke Chavez & O’Niel, of suburban Geneva; Justin M. Swartz and Michael N. Litrownik, of Outten & Golden LLP, of New York; Alan L. Quiles and Gregg I. Shavitz, of the Shavitz Law Group P.A., of Boca Raton, Fla.; Myron M. Cherry, of Myron M. Cherry & Associates, of Chicago; Douglas M. Werman and Maureen A. Salas, of Werman Salas P.C., of Chicago; and Drew Legando and Jack Landskroner, of Landskroner Grieco Merriman LLC, of Cleveland.
“The Fee Fund will compensate Plaintiffs’ Counsel for but a fraction of time and expense that they put in the case,” the plaintiffs’ lawyers wrote in their memorandum.
Jimmy John’s has been represented in the action by attorneys Gerald L. Maatman Jr. and Matthew J. Gagnon, of the firm of Seyfarth Shaw LLP, of Chicago.
Judge Kocoras has not yet ruled on the settlement request.