Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—DMinn: Fair Labor Standards Act Suit Against Jani-King Transferred to Franchisor’s Home State, (May 30, 2013)

By John W. Arden, J.D., LL.M.

A putative collective action brought by an operations manager for Jani-King of Minnesota, Inc. for misclassifying him as an exempt employee and failing to pay him overtime compensation, in violation of the Fair Labor Standards Act, was transferred by the federal district court in Minneapolis to the federal district court in Dallas, where the franchisor was incorporated and headquartered (Von Brugger v. Jani-King of Minnesota, Inc., May 28, 2013, Ericksen, J.).

From 1996 to 2012, George von Brugger worked for janitorial services franchisor Jani-King of Minnesota, Inc., Jani-King, Inc., and Jani-King International, Inc.—most recently as an assistant operations manager or an operations manager. He asserted that the Fair Labor Standards Act required the defendants to compensate non-exempt employees at a rate of at least 1.5 times the regular rate of pay for work performed in excess of 40 hours per week, that the defendants intentionally misclassified him as exempt and paid him as a salaried employee, that he worked more than 40 hours per week, and that the defendants refused to pay him overtime compensation.

Von Brugger filed an action in the federal district court in Minneapolis on behalf of himself and all persons who worked as assistant operations managers, as operations managers, or in similar jobs for the defendants and affiliate corporations at any time up to three years prior to the date of the filing. The three defendants—Texas corporations with headquarters in Texas—moved to transfer the action to the federal district court in Dallas.

If the case proceeded as a national collective action, the federal district court in Dallas seemed to be the only appropriate venue, according to the court. That district court should decide whether to certify the putative collective action.

Of the more than 130 current or former assistant operations managers or operations managers of the affiliated corporations, only five work or worked for Jani-King of Minnesota. A substantial number of the potential opt-in plaintiffs work or worked for affiliate corporations located in the northeastern United States or in California, the court found. The remaining potential opt-in plaintiffs were employed by affiliate corporations in Colorado, Florida, Michigan, Missouri, New Mexicao, Oklahoma, Texas, and Nevada. This geographical distribution of the potential opt-in plaintiffs tempers the deference that would ordinarily be given to von Brugger’s choice of forum, according to the court.

The limited information about potential witnesses revealed that those who will provide essential testimony are located in Texas. While von Brugger identified several individuals located in Minnesota who he expects will testify about his daily activities and the contacts between Jani-King of Minnesota and the parent companies, the defendants identified several individuals who reside in Texas and are expected to testify about the policies and guidelines that affect all of the affiliate corporations. The national scope of the claims indicated that witnesses in Texas would provide critical testimony.

Von Brugger asserted that he could not afford to bring his case in Texas or to travel to Texas, since he had not been employed since his August 2012 termination. A party who opposes transfer on the ground of financial hardship must substantiate the claim, something that von Brugger had not done, the court found.

For the convenience of the parties and witnesses and in the interest of justice, the district court transferred the action to the federal district court in Dallas.

The case is Civil No. 13-05 (JNE/FLN).

Attorneys: Eric D. Satre (Jones Satre & Weimer, PLLC) for George von Brugger. Charles F. Knapp and Andrew B. Murphy (Faegre Baker Daniels LLP) for Jani-King of Minnesota, Inc., Jani-King, Inc., and Jani-King International, Inc.

Companies: Jani-King of Minnesota, Inc.; Jani-King, Inc.; Jani-King International, Inc.

Cases: FranchisingDistribution MinnesotaNews