EAST ST. LOUIS – A potential class action for Jimmy John’s employees has suddenly turned into a dispute about whether Chief U.S. District Judge Nancy Rosenstengel understands statistics.
Plaintiff Donald Conrad moved for reconsideration of her order excluding an expert’s report on wages on March 23, claiming she didn’t understand it.
Jimmy John’s opposed the motion on March 26, claiming she did.
Rosenstengel excluded the report of economist Hal Singer in February, finding he mixed hourly and daily wages.
She found the discrepancy made his statistical regressions unreliable.
“This error is material,” Rosenstengel wrote. “Comparing inflated estimates of average wages leads to inflated estimates of impact.”
Conrad claims Jimmy John’s suppressed wages by prohibiting employees from finding work at its other locations.
Jimmy John’s lifted the prohibition in 2018.
Conrad alleges antitrust violations on behalf of about 600,000 persons who worked at about 2,800 locations.
He retained Singer, who compared wages when the provision was in effect to wages after the provision was halted.
Singer stated that 87 to 91 percent of class members suffered antitrust injury.
He stated that 100 percent suffered injury as Jimmy John’s reduced compensation broadly across the class.
He claimed the no poaching provision gave stores more labor market power than they otherwise would have enjoyed.
Economist Janusz Ordover reviewed the report for Jimmy John’s and challenged the mixture of hourly pay and shift pay.
He compared it to measuring people in feet and inches.
Economist Justin McCrary also reviewed the report for Jimmy John’s and stated that interests of brands and stores can diverge.
He claimed franchisors must strike a balance between expanding and ensuring that each franchisee remains committed to the brand.
He claimed 88 percent of requests for release from the provision were granted.
In rebuttal, Singer called the wage mixture mathematically irrelevant and claimed 14 million data points effectively washed the error away.
Rosenstengel found his report unreliable and found the reports of Ordover and McCrary reliable.
She found McCrary removed Singer’s variables and found Singer’s model affirmed his own findings.
“The plaintiffs did not attempt refuting this in their reply brief,” she wrote.
In Conrad’s motion for reconsideration, Dean Harvey of San Francisco wrote, “The order misunderstands Dr. Singer’s impact regression.”
Harvey claimed the descriptions Singer provided were mere summaries of raw data, “before Dr. Singer inputted that data into his impact regression.
“Dr. Singer designed his impact regression with multiple safeguards to ensure that this data issue would not bias his results.”
He claimed Rosenstengel applied contradictory standards to Ordover and Singer.
“Dr. Ordover created an endogenous right hand side variable to guess whether the wage rate in a particular pay record was hourly or per shift, and Dr. Singer did not,” he wrote.
“When Dr. Singer argued that this new variable introduced endogeneity bias, causing Dr. Ordover’s regressions to yield unreliable and reduced estimates of wage suppression, the court did not require Dr. Ordover to disprove that possibility.
“Rather, it required Mr. Conrad to affirmatively prove this, and overlooked that he did exactly that.
“This important case should not be resolved on the basis of mistakes of fact and law.”
Rachel Brass of San Francisco opposed the motion for Jimmy John’s, claiming Conrad repeated arguments Rosenstengel correctly rejected.
“There was no error of misapprehension, and plaintiff’s effort to manufacture one after the fact is disingenuous at best,” Brass wrote.
She claimed Conrad relied on an expert whose work was infected by an obvious flaw and Conrad stuck by the decision after Jimmy John’s raised criticism.
She claimed he made a choice and must live with it.
“This error should have been immediately obvious to Dr. Singer given that his summary statistics showed absurdly high hourly wages,” she wrote.
She claimed Singer’s model couldn’t establish impact even for Conrad, much less for more than 600,000 employees.
Derek Brandt of McCune Wright in Edwardsville filed the suit in 2018.
Richard McCune at the firm’s office in Ontario, California also represents Conrad.
So do Leigh Perica and Connor Lemire of the firm’s Edwardsville office.
Russell Scott of Belleville acts as local counsel for Jimmy John’s.
Rosenstengel hasn’t set a trial date.