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Class Certification Denied in Large Restaurant Chain Lawsuit

Class Certification DeniedTed Anderson in the Los Angeles office of Welch Consulting headed a team tasked with analyzing time records for employees of a large restaurant chain to determine whether there was evidence of a common practice of malicious edits. Dr. Anderson submitted an expert report in the matter, and his findings were cited by Judge Charles A. Shaw as justification for denying class certification.

The lawsuit alleged that managers' edits of the restaurant chain’s hourly employee time records resulted in the company’s failure to pay for all time worked. Specifically, plaintiffs claimed that managers maliciously edited time records to avoid meal violation penalties and payment of overtime. The restaurant chain denied the claims, insisting managers' edits were appropriate and all work time was paid. Expert reports and deposition testimony regarding class certification were presented in the matter.

Before plaintiffs’ claims and the issue of commonality could be addressed, extensive data work was required. Dr. Anderson was provided with roughly 2 gigabytes of electronic time clock data for 39 restaurants. The data was received in about 28,000 separate files that had to be processed from their native form and turned into analyzable final time punch and manager edit data. The Welch team then created an algorithm to match the manager edits to the final time punches from the payroll system and determine each manager’s editing sequence for a given shift. Once this process was complete, Dr. Anderson was able to identify managers’ inserted, deleted, and changed time punches from the raw employee swiped times in approximately 500,000 shifts.

 

Class Action Denied - Shifts with Managerial Edits

Dr. Anderson and his team then performed several analyses with the data to assess commonality among the purported class members. They examined the frequency of edits, compared the amount of time added by the edit process to the amount of time removed by edits, analyzed inserted meal breaks, and compared managers’ shortening and lengthening of meal breaks.

The first key finding was that managerial edits were rare among class members. About 97% of shifts were unedited while only 2% of shifts had managerial edits that reduced paid time and approximately 1% of shifts had time-adding managerial edits.

Class Action Denied - Statistical Variation By Store


Second, Dr. Anderson demonstrated substantial and statistically significant variation in the instance of managerial edits, when compared across stores and even within shifts in the same store. Judge Charles A. Shaw referred to these findings in his ruling:

“Additionally, [Dr.] Anderson’s analysis revealed significant variation in the incidence of time edits from store-to-store and, within in a store, from shift-to-shift. The question of whether [the restaurant chain] improperly “shaved” plaintiffs and the purported class members’ time cannot be resolved on a class-wide basis through common evidence, or even on an employee-by-employee basis, but must be resolved on a time punch-by-time punch basis. These highly individualized, fact intensive issues predominate over common questions and preclude class certification.”
 
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