7th Circuit reverses, orders Jimmy John’s wage class-action to go

Jimmy John’s assistant store managers nationwide may proceed with class-action overtime pay litigation against franchisees, the 7^th Circuit Court of Appeals ruled Thursday, delivering a reversal of an Illinois decision that had restricted their suits.

The ruling allows Jimmy John’s assistant managers to proceed with suits against the 98 percent of Jimmy John’s sandwich shops that are franchises. The ruling arises from three class-action suits from Illinois and Ohio that were consolidated for this ruling from the appellate court in Chicago.

The suits generally allege that assistant managers were misclassified as employees exempt from overtime pay in violation of the Fair Labor Standards Act and related state wage-and-hour laws. The suits seek a putative class of all Jimmy John’s assistant managers at company-owned stores and franchises, back overtime pay and other damages.

The 7^th Circuit’s ruling Thursday reversed an Illinois district court order that had barred plaintiffs from pursuing their complaints against their franchisee employers until claims against the Jimmy Johns corporate defendants had been resolved. The panel held the District Court lacked the authority to enjoin these cases.

“Jimmy John’s does not cite to a single case in which a non‐(Multi-District Litigation) court has enjoined parallel litigation in circumstances like this. Each case that Jimmy John’s relies on is distinguishable because they involved MDL proceedings; pending or final class settlements and judgments; duplicative litigation between the same parties; or some combination thereof,” Judge Joel Flaum wrote for the panel in In Re: Jimmy John’s Overtime Litigation, 17-1655.

The panel agreed with the assistant managers that Judge Charles P. Kocoras of the District Court for the Northern District of Illinois blocked litigants from pursuing their cases without considering the traditional factors for granting an injunction and without making required findings of facts and conclusions of law.

“The record does not suggest that the franchisee cases were filed to evade the district court’s pretrial orders. Rather, plaintiffs repeatedly told the district court they were filing the franchisee cases because the statute of limitations was running against those claims,” Flaum wrote, noting plaintiffs had agreed to stay the franchisee cases if the statute of limitations was tolled pending the instant litigation.

Headquartered in Champaign, Illinois, Jimmy Johns has more than 2,500 U.S. locations and dozens in Indiana. The 7^th Circuit observed in a footnote that just 2 percent of the chain’s eateries are company-owned.