Demiko McCaster v. Darden Restaurants, Inc.

In the

United States Court of Appeals

For the Seventh Circuit

____________________

No. 15-3258

DEMIKO MCCASTER and

JENNIFER CLARK,

Plaintiffs-Appellants,

v.

DARDEN RESTAURANTS, INC.,

and GMRI, INC.,

Defendants-Appellees.

____________________

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division.

No. 13 C 8847 — Samuel Der-Yeghiayan, Judge.

____________________

ARGUED FEBRUARY 18, 2016 — DECIDED JANUARY 5, 2017

____________________

Before WOOD, Chief Judge, KANNE and SYKES, Circuit

Judges.

SYKES, Circuit Judge. From roughly 2004 to 2012, Demiko

McCaster and Jennifer Clark worked on and off at two

Illinois eateries owned by Darden Restaurants. After quitting

for good, they brought this proposed class action alleging

that Darden failed to pay them pro rata vacation pay upon

2 No. 15-3258

separation in violation of the Illinois Wage Payment and

Collection Act (“IWPCA” or “the Act”), 820 ILL. COMP. STAT.

115/1-15. The district judge declined to certify their proposed

class and granted summary judgment for Darden on Clark’s

individual claim. McMaster then settled his claim with

Darden but reserved the right to appeal the denial of class

certification.

We affirm. The judge was right to deny class certification.

The plaintiffs’ proposed class definition described an im-

permissible “fail safe” class, and their proposed alternative

did not satisfy the requirements of Rule 23 of the Federal

Rules of Civil Procedure. And Clark’s individual claim fails.

The IWPCA doesn’t mandate paid time off. It merely prohib-

its the forfeiture of accrued earned vacation pay upon sepa-

ration if the employee is otherwise eligible for paid vacation

under the employer’s employment policy. During the rele-

vant time period, Darden’s policy on paid vacation covered

only full-time employees. Clark was ineligible because she

worked part-time.

I. Background

Darden operates more than 75 casual dining restaurants

throughout Illinois under the brand names Olive Garden,

Red Lobster, LongHorn Steakhouse, and several others. 1 The

plaintiffs worked intermittently as hourly employees at

Darden-owned restaurants for a period of time spanning

roughly eight years. McCaster worked periodically at a Red

Lobster in 2004 and 2005 and more steadily from mid-2007

1 Darden owned the restaurants through its wholly owned subsidiary

GMRI, Inc., also a defendant. We will refer to the defendants collectively

as “Darden.”

No. 15-3258 3

to early 2009. Clark worked at an Olive Garden from mid-

2004 to October 2008 and again from 2009 to mid-2012.

During this time, Darden paid eligible employees an

“anniversary payment” when they reached the annual

anniversary of their hiring date. This anniversary payment

essentially functioned as paid vacation—or at least that’s

how Darden treated it for purposes of the obligations im-

posed by the IWPCA. When an employee ceased working

for the company, Darden would include in the employee’s

final paycheck the pro rata amount of anniversary pay he

had earned prior to the date of separation. This pro rata

date-of-separation payment comports with how the IWPCA

requires employers to treat earned vacation pay. So from

now on we’ll drop the company’s “anniversary pay” termi-

nology and just call this vacation pay.

Two basic versions of the vacation-pay policy are at issue

here. Under the first version—in effect prior to June 1,

2008—all employees were eligible. Under the second ver-

sion, vacation pay was limited to full-time employees,

defined as those who worked at least 30 hours per week.

This second version of the policy took effect on June 1, 2008.

Individual restaurant managers were responsible for deter-

mining employee start dates, hours worked, leaves of ab-

sence, termination dates, rehire dates, and other basic pay-

roll information that contributed to an employee’s eligibility

for earned vacation pay.

In this proposed class action, McCaster alleged that while

the first policy was in effect, Darden failed to pay him

accrued vacation pay when he left his job at Red Lobster,

even though he had earned about 12 vacation hours. Clark,

for her part, received all the vacation pay she was owed

4 No. 15-3258

while the first policy was in effect; she alleged that after

June 1, 2008, Darden did not pay her any vacation pay at all

when she separated from employment.

In discovery Darden produced five spreadsheets contain-

ing statewide payroll information during the relevant time

period. As the plaintiffs interpret this data, more than 1,200

employees left Darden’s employ without receiving the pro

rata vacation pay they were owed. This interpretation,

however, rests entirely on a “declaration” from a paralegal

who works at the law firm of one of the plaintiffs’ attorneys.

The judge struck the declaration because the paralegal had

no personal knowledge of the data, lacked the expertise to

interpret it, and the plaintiffs had not designated her as an

expert witness. The plaintiffs challenge that ruling on ap-

peal, but they provide no good reason to disturb it. Regard-

less, the paralegal’s declaration is immaterial to our decision.

The plaintiffs moved for class certification and proposed

the following class definition: “All persons separated from

hourly employment with [Darden] in Illinois between

December 11, 2003, and the conclusion of this action[] who

were subject to Darden’s Vacation Policy … and who did not

receive all earned vacation pay benefits.” The district judge

rejected this definition because it described an improper fail-

safe class. The judge also rejected the plaintiffs’ proposed

alternative definition because it failed to meet the require-

ments of Rule 23.

In the meantime Darden moved for partial summary

judgment on Clark’s individual IWPCA claim. The company

argued that no violation of the Act had occurred because

during the relevant time period, only full-time employees

were eligible for vacation pay and Clark worked part-time.

No. 15-3258 5

The judge agreed and granted the motion. McCaster settled

his individual claim with Darden but reserved the right to

appeal the denial of class certification. This appeal followed.

II. Discussion

The plaintiffs seek reversal of the judge’s decision deny-

ing class certification. Clark also asks us to reverse the

judge’s decision rejecting her IWPCA claim on the merits.

The latter issue is quite straightforward, so we’ll take it up

first.

A. Clark’s IWPCA Claim

Clark admits that she received all the vacation pay she

was owed under Darden’s old policy. After June 1, 2008, she

was ineligible to receive paid vacation. The company’s new

vacation-pay policy, which took effect on that date, covers

only full-time employees, defined as those who work at least

30 hours per week. Clark did not qualify because she

worked part-time.

Clark concedes the point but argues that if an employer

provides paid vacation to its full-time employees on a pro

rata length-of-service basis, it may not deny this same bene-

fit to its part-time employees. The district judge rejected this

novel interpretation of the IWPCA, and rightly so. It has no

support in the text of the Act, its implementing regulations,

or in Illinois cases interpreting it.

The relevant provision of the IWPCA states:

[W]henever … [an] employment policy pro-

vides for paid vacations, and an employee re-

signs or is terminated without having taken all

vacation time earned in accordance with such

6 No. 15-3258

contract of employment or employment policy, the

monetary equivalent of all earned vacation

shall be paid to him or her as part of his or her

final compensation at his or her final rate of

pay and no … employment policy shall provide for

forfeiture of earned vacation time upon separation.

820 ILL. COMP. STAT. 115/5 (emphases added). This text

plainly doesn’t mandate paid time off; by its terms, the Act

merely prohibits the forfeiture of accrued earned vacation

pay. Whether an employee has earned paid vacation in the

first place depends on the terms of the employer’s employ-

ment policy.

The Illinois Department of Labor has promulgated regu-

lations carrying this anti-forfeiture rule into effect. In rele-

vant part the regulations state that “[w]henever an … em-

ployment policy provides for paid vacation earned by length

of service, vacation time is earned pro rata as the employee

renders service to the employer.” ILL. ADMIN. CODE tit. 56,

§ 300.520(a) (2016). 2

Taken together, the statute and regulation require that if

an employer awards paid vacation on a length-of-service

2 This regulation has been repeatedly affirmed as a reasonable interpre-

tation of the IWPCA. See People ex rel. Ill. Dep’t of Labor v. Gen. Elec. Co.,

806 N.E.2d 1143, 1149 (Ill. App. Ct. 2004); Mueller Co. v. Dep’t of Labor,

543 N.E.2d 518, 520 (Ill. App. Ct. 1989) (explicitly reaffirming Golden Bear

after amendments were made to the IWPCA); Golden Bear Family Rests.,

Inc. v. Murray, 494 N.E.2d 581, 588 (Ill. App. Ct. 1986).

No. 15-3258 7

basis, employees are entitled to payment for accrued, un-

used earned vacation on a pro rata basis upon separation. 3

Clark hangs her hat on Golden Bear Family Restaurants,

Inc. v. Murray, 494 N.E.2d 581 (Ill. App. Ct. 1986), but that

case is easily distinguished from this one. The employment

policy at issue in Golden Bear provided that paid vacation

time accrued daily but separating employees did not receive

payment for accrued earned vacation unless they were

“actively on the payroll … on the Wednesday preceding

January 1.” 4 Id. at 583. The court held that this condition—

active employment on a specific calendar date—worked a

forfeiture of accrued earned vacation pay in violation of the

IWPCA and the pro rata regulation. Id. at 589.

Another Illinois appellate decision makes it clear that

Golden Bear stands for the proposition that a length-of-

service paid-vacation policy violates the IWPCA’s anti-

forfeiture rule when it conditions payment of accrued

earned vacation to employment status on a specific date. See

3 Illinois courts contrast length-of-service vacation policies with “forward

looking” vacation policies, which provide vacation to employees for a

given year at the beginning of that year. Under the latter policy, the

amount of vacation time employees receive in a given year is not contin-

gent on how much they work that year. See, e.g., General Electric,

806 N.E.2d at 1152 (“[B]ecause an employee was given all of his or her

vacation days for the year on the first of the year, the policy was forward-

looking … .”). As we’ve noted, Darden concedes that its policy is a

length-of-service policy.

4 The opinion actually quotes the policy as limiting vacation pay to

employees who were “actively on the payroll … on the Wednesday

proceeding January 1.” Golden Bear Family Rests., 494 N.E.2d at 583

(emphasis added). The word “proceeding” is obviously a typographical

error.

8 No. 15-3258

Mueller Co. v. Dep’t of Labor, 543 N.E.2d 518, 521 (Ill. App. Ct.

1989) (explaining that accepting the employer’s position

“would require us to find an employee ‘earns’ his vacation

benefits for a whole year on the basis of his employment

status on a single day, … [which] would defy the common

understanding of the word ‘earn’ and we decline to adopt

it”).

The policy at issue here differs fundamentally from the

policy challenged in Golden Bear. Under the June 1, 2008

policy, full-time Darden employees who separate from the

company receive payment for earned vacation pro rata

based on length of service, as the IWPCA and its implement-

ing regulation require. So if a full-time employee ceases

work in the middle of a year, he receives vacation pay in

proportion to how long he has worked that year. In marked

contrast to the Golden Bear policy, this one doesn’t condition

receipt of earned vacation pay to employment status on an

arbitrary date. It simply limits the paid-vacation benefit to

full-time employees. Nothing in the IWPCA or the imple-

menting regulation prohibits this.

Under the policy that was in effect on and after June 1,

2008, Clark was ineligible for paid vacation because she did

not work full-time. Because she did not earn any paid vaca-

tion in the first place, no violation of IWPCA’s anti-forfeiture

rule occurred.

B. Class Certification

We review the judge’s decision denying class certification

for abuse of discretion. Suchanek v. Sturm Foods, Inc., 764 F.3d

750, 755 (7th Cir. 2014). An abuse of discretion can occur

“when a district court commits legal error or makes clearly

No. 15-3258 9

erroneous factual findings.” Chi. Teachers Union, Local No. 1

v. Bd. of Educ., 797 F.3d 426, 433 (7th Cir. 2015) (quoting

Reliable Money Order, Inc. v. McKnight Sales Co., 704 F.3d 489,

498 (7th Cir. 2013)). The plaintiffs had the burden to satisfy

the district court that their case met the requirements for

class certification under Rule 23. Bell v. PNC Bank, Nat’l

Ass’n, 800 F.3d 360, 373 (7th Cir. 2015).

The initial skirmish on appeal centers on whether the

proposed class definition describes an impermissible “fail

safe” class. A case can’t proceed as a class action if the

plaintiff seeks to represent a so-called fail-safe class—that is,

a class that “is defined so that whether a person qualifies as

a member depends on whether the person has a valid

claim.” Messner v. Northshore Univ. HealthSystem, 669 F.3d

802, 825 (7th Cir. 2012). A fail-safe class is impermissible

because “a class member either wins or, by virtue of losing,

is defined out of the class and is therefore not bound by the

judgment.” Id.

McCaster and Clark sought to represent a class of “[a]ll

persons separated from hourly employment with [Darden]

in Illinois between December 11, 2003, and the conclusion of

this action[] who were subject to Darden’s Vacation Policy …

and who did not receive all earned vacation pay benefits.” (Em-

phasis added.) Under this definition class membership

plainly turns on whether the former employee has a valid

claim. That is a classic fail-safe class, and the district judge

properly rejected it. 5

5 Our decision in Ross v. RBS Citizens, N.A., 667 F.3d 900 (7th Cir. 2012),

cert. granted, judgment vacated, 135 S. Ct. 1722 (2013), is not to the contrary.

In Ross we accepted a class defined as employees “who were subject to

10 No. 15-3258

As we’ve explained elsewhere, however, the problem of

a fail-safe class “can and often should be solved by refining

the class definition rather than by flatly denying class certifi-

cation on that basis.” Id. In their fallback argument in the

district court, the plaintiffs suggested that the defect in their

class definition could be cured by simply excising the phrase

“and who did not receive all earned vacation pay benefits.”

With this language removed, the proposed class would be

defined as “[a]ll persons separated from hourly employment

with [Darden] in Illinois between December 11, 2003, and

the conclusion of this action[] who were subject to Darden’s

Vacation Policy.”

This alternative is indeed free from fail-safe concerns.

Still, the judge rejected it, this time for failure to satisfy the

requirements of Rule 23. That was not an abuse of discretion.

“A district court may certify a case for class-action treat-

ment only if it satisfies the four requirements of Federal Rule

of Civil Procedure 23(a)—numerosity, commonality, typical-

ity, and adequacy of representation—and one of the condi-

tions of Rule 23(b).” Jamie S. v. Milwaukee Pub. Schs., 668 F.3d

481, 493 (7th Cir. 2012) (citing FED. R. CIV. P. 23). The plain-

tiffs sought certification under Rule 23(b)(3), which requires

defendants’ unlawful compensation policies.” Id. at 906. But the indefi-

niteness in that class definition was substantially ameliorated by the

content of the judge’s certification order. Id. More fundamentally, the

Supreme Court vacated our decision in Ross, and on remand the case

was settled before it could be revisited. A vacated panel opinion has no

precedential force. County of Los Angeles v. Davis, 440 U.S. 625, 634 n.6

(1979); United States v. Love, 706 F.3d 832, 840 (7th Cir. 2013). We suggest-

ed otherwise in a stray footnote in Bell v. PNC Bank, Nat’l Ass’n, 800 F.3d

360, 375 n.3 (7th Cir. 2015), but we now clarify that Ross has no preceden-

tial value.

No. 15-3258 11

that “questions of law or fact common to class members

predominate over any questions affecting individual mem-

bers.” Predominance is “similar to Rule 23(a)’s requirements

for typicality and commonality, [but] ‘the predominance

criterion is far more demanding.’” Messner, 669 F.3d at 814

(quoting Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 623

(1997)). The judge focused most of his attention on the

commonality question under Rule 23(a). This inquiry over-

laps with Rule 23’s other requirements and is ultimately

dispositive here.

The Supreme Court has explained that “[c]ommonality

requires the plaintiff to demonstrate that the class members

‘have suffered the same injury’” at the hands of the same

defendant. Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 349–

50 (2011) (quoting Gen. Tel. Co. of Sw. v. Falcon, 457 U.S. 147,

157 (1982)). But it’s not enough for the plaintiffs to show that

class members “have all suffered a violation of the same

provision of law.” Id. at 350. Instead they must show that

“the same conduct or practice by the same defendant gives

rise to the same kind of claims from all class members.”

Suchanek, 764 F.3d at 756. “The critical point is ‘the need for

conduct common to members of the class.’” Id. (quoting In re

IKO Roofing Shingle Prods. Liab. Litig., 757 F.3d 599, 602 (7th

Cir. 2014)). Put somewhat differently, the class members’

claims must depend on a common contention that is “capa-

ble of classwide resolution.” Wal-Mart, 564 U.S. at 350.

The plaintiffs haven’t satisfied this bedrock requirement

for class certification. Their proposed alternative class con-

sists of all separated employees from December 11, 2003, to

the present. But they haven’t identified any unlawful con-

duct on Darden’s part that spans the entire class and caused

12 No. 15-3258

all class members to suffer the same injury. Even on appeal

they haven’t pointed to any unlawful practice or act com-

mon to the class (as they have alternatively defined it). They

do not contend, for example, that Darden’s pre- or post-

June 1, 2008 vacation-pay policies facially violate the

IWPCA. Nor have they alleged that Darden had a statewide

practice of withholding payment of accrued earned vaca-

tion—much less supplied evidence that could support such a

finding. Rather, they simply argue that some separated

employees like McCaster did not receive all the vacation pay

they were due under the applicable policy. That may be true,

and if so, those individual cases of nonpayment would be

IWPCA violations. But establishing those violations (if there

were any) would not involve any classwide proof.

The plaintiffs do suggest one possible common question:

whether Darden’s vacation-pay policies—both before and

after June 1, 2008—are length-of-service policies subject to

the pro rata requirement of the IWPCA and its implement-

ing regulation. That is indeed a common question, but it’s

not at issue here.

The Supreme Court noted in Wal-Mart that “[a]ny com-

petently crafted class complaint literally raises common

‘questions.’” Id. at 349 (quoting Richard A. Nagareda, Class

Certification in the Age of Aggregate Proof, 84 N.Y.U. L. REV.

97, 131–32 (2009)). The Court took pains to clarify that not

any common question will suffice to support class certifica-

tion. Instead, a putative class-action plaintiff must identify a

common question, the answer to which “will resolve an

issue that is central to the validity of each one of the claims

in one stroke.” Id. at 350.

No. 15-3258 13

McCaster and Clark haven’t done that. As we’ve already

explained, the common question they proposed for resolu-

tion is really no question at all. There’s no need to decide

whether Darden’s “anniversary pay” policies are length-of-

service policies to which the IWPCA’s pro rata requirement

applies. They are. Darden treats them as such. The case thus

raises only an amalgam of individual IWPCA pay claims by

McCaster, Clark, and other separated employees dating

from late 2003 to the present. These claims may (or may not)

be valid based on the employee’s particular circumstances;

resolving them depends entirely on each employee’s indi-

vidual work history at a Darden restaurant and the specific

payroll practices of the managers of the restaurants where

they worked. In other words, resolving the proposed class

members’ claims doesn’t center on any question common to

the class, but instead turns entirely on facts specific to each

individual class member’s claim.

The plaintiffs’ failure to satisfy the commonality re-

quirement is fatal to their request for class certification. That

necessarily means that they have not satisfied Rule 23(a)’s

typicality requirement, much less the more strenuous pre-

dominance requirement of Rule 23(b)(3). Class certification

was properly denied.

AFFIRMED.