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Scott v. Chipotle

Area of Law:

Labor law. Salaried apprentices brought a class action alleging Chipotle’s failure to pay overtime and spread-of-hours compensation in violation of the Fair Labor Standards Act and/or the New York Minimum Wage Act.

Grounds:

Defendants moved to strike portions of the expert reports submitted by plaintiffs’ experts John A. Gordon and Dr. Phillip Johnson arguing that the testimony was an improper matter for expert opinion, used improper methodology, and relied on insufficient data.

Plaintiffs moved to strike portions of the rebuttal report submitted by Chipotle’s expert Robert W. Crandall arguing improper methodology, insufficient data, opinion on legal issues, and exceeding the scope of the rebuttal.

Outcome:

Granted in part and denied in part.

Defendants’ motion to strike portions of Gordon’s report was granted with respect to the parts of his report that impute motives to the defendants and where he testified about the actual duties and work performed by apprentices, but denied as to all other grounds. Defendants’ motion to strike Dr. Johnson’s testimony regarding potential subclasses of plaintiffs was granted, but remaining objections to his testimony were denied.

Plaintiffs’ motion to strike portions of Mr. Crandall’s testimony was granted to the extent he testified to legal argument or legal conclusions, and with respect to his use of benefits data in his hourly rate calculation, but denied as to all other grounds.

Analysis:

Defendants’ motion:

a. Gordon’s testimony:

The court allowed Gordon’s testimony about how Chipotle organizes its operations, whether such structure is typical in the industry, how choices Chipotle makes affect costs and revenue, Chipotle’s growth and its effect on staffing and management. This testimony was not, as defendants argued, a merely a narrative account of the record evidence. This testimony would lay down the foundation and assist the trier of fact in understanding Chipotle’s business model, comparing Chipotle’s practices and financial success to those restaurants that implement a franchise model, and explaining common business practices related to cost savings. But Gordon may not assign Chipotle’s motivation or intent behind its business model, which, without dispositive support, would amount to counsel’s argument.

Gordon was precluded from testifying about the actual work performed by apprentices or how that work affects staffing models, because he had no support for this testimony.

b. Johnson’s testimony:

Chipotle disputed the reliability of the hourly rate formula derived by Dr. Johnson, offered as a means to compare the salaries of exempt apprentices with the wages of non-exempt employees. Chipotle argued that Dr. Johnson’s hourly wage formula is flawed because he ignored any bonuses or other benefits to apprentices, considered only their salaries, and also applied a multiplier of 1.5 to hours worked over 40 per week. The court allowed the formula, finding the methodology sufficiently supported, particularly given the opportunity of cross-examination at trial. The court also allowed Dr. Johnson’s assumption that on average, apprentices worked a minimum of 50 hours per week, because it was supported by data.

Dr. Johnson’s charts were not unduly prejudicial to plaintiffs. The charts provided permissible comparisons and Chipotle could challenge Dr. Johnson’s methodology and assumptions on cross-examination.

The court excluded Dr. Johnson’s testimony re subclasses of apprentices because this testimony contained no expert analysis.

Plaintiffs’ motion:

The court precluded Crandall from merely repeating or summarizing evidence without independent analysis, e.g. repeating witnesses’ prior statements. Such testimony employed no methodology or analysis. But the court denied the motion to strike the charts illustrating the percentage of managerial duties performed by apprentices, or the expert testimony related to job descriptions, performance evaluations, or deposition and declarant statements generally. This testimony would be helpful in evaluating the probative value of plaintiffs’ experts’ opinion that apprentices’ work experiences were uniform. But the expert could not go a step further and opine on the legal issue of class certification.

The court allowed testimony regarding the “wide variations” in Chipotle’s staffing and employment data, which was based on Crandall’s 17 years of experience conducting labor studies and working as a labor economics consultant. Plaintiffs’ challenge went to the weight of the testimony, not its admissibility. Further, Chipotle offered this testimony as rebuttal evidence, and Crandall was under no obligation to create models or methods of his own. The court found no evidence of cherry-picking of his data.

In a footnote, plaintiffs also moved to strike portions of Crandall’s declaration that allegedly exceeded the scope of a rebuttal report. The court denied the motion, because (i) arguments made only in a footnote are generally deemed to be waived; and the testimony fell within the permissible bounds of rebuttal testimony.

With respect to hourly rate calculations, the court found it was unreasonable for Crandall to rely upon the benefits data provided by Chipotle, without an independent verification of the accuracy of the data. Crandall was allowed to opine that benefits should be included in any hourly rate analysis, but not to rely on the value predicted from the Chipotle data.