A labor-law class action filed against Big Lots (Johnson v. Big Lots) for alleged violations of the federal Fair Labor Standards Act (FLSA) has important consequences for retailers nationwide. First, the lawsuit appears to be the only complete trial involving assistant store managers in a collective action; second, and most significant, it also appears to be the only case where the court has “decertified” (reversed) a collective action following trial, but before a final decision on the case has been rendered.
In 2004, two Big Lots assistant store managers filed a lawsuit in Louisiana against the retailer, which operates some 1,400 stores in 46 states. The plaintiffs alleged that the Columbus, Ohio-based chain had misclassified them as exempt and therefore owed unpaid overtime for hours worked over 40 in a work week.
But because the plaintiffs also claimed that thousands of current and former Big Lots employees could be impacted by the supposed misclassification, the case made headlines. And it brought Big Lots face to face with huge potential liabilities.
Chain Store Age talked with Paul Bittner, an attorney with Columbus, Ohio-based Schottenstein, Zox & Dunn, which defended Big Lots at trial and helped secure what ultimately would be a landmark decision for retailers.
“Once the original case was filed in Louisiana in 2004, the plaintiffs sought from the court a preliminary determination that the case should be treated as a collective action,” Bittner said. A collective action, he explained, is distinct from a class action in that participants have to opt in to the collective action, whereas, in a class action, “you have to opt out or your claims are automatically a part of the action.”
After a look at the collective-action argument, which contended that all Big Lots assistant store managers across the country were misclassified as exempt, the judge agreed with the plaintiffs and ruled that the case would go forward as a collective action.
“This gave the plaintiffs an opportunity to invite others to join the action,” Bittner said. “About 940 people—both current and former Big Lots assistant store managers—joined.”
Nearly three years since the initial filing, in August 2007, the judge denied Big Lots’ motion to decertify the collective action. Big Lots was faced with a daunting decision: settle the case or go to trial.
“Settlement wasn’t an option,” Bittner said. “The amount of money these 940 people were claiming they were entitled to in unpaid overtime was substantial. Big Lots felt that the assistant store manager job was properly classified and that it hadn’t done anything wrong,” he said.
The case proceeded to trial in May 2008. “We presented evidence of numerous examples—as many as the court would allow us to present—of Big Lots assistant store managers that were clearly exempt under the law,” Bittner added.
In what the attorneys believe was an unprecedented move, after the court heard all of the evidence at trial, it reversed the collective-action decision it had made years earlier and decertified the case. In its 56-page decision, the court stated that “The record developed through trial brought into clearer relief how problematic collective adjudication of this matter is, necessitating fresh consideration.”
Today, litigation continues—but it is no longer a collective action. Individual assistant store managers who believe they have been misclassified by Big Lots can still bring a claim against the retailer. But the group claim—and the staggering potential liability that stemmed from it—is off the table.
“If I were a retailer,” said Bittner, “what would be most significant to me about this case is that, while I understand an individual can bring a claim against me should he or she disagree with a job description or classification, I now know the individual shouldn’t be able to establish a collective action because of it.”