EAST ST. LOUIS – Chief U.S. District Judge Nancy Rosenstengel denied certification of a national class alleging that Jimmy John’s restaurants suppressed wages through a ban on taking jobs at other Jimmy John’s locations.
She posted her decision on the docket on July 23, and sealed the order, giving the parties seven days to submit a joint redacted version.
The class would have included about 600,000 persons at about 2,800 locations.
Thirteen lawyers represent plaintiff Donald Conrad, nine from California.
Eight California lawyers and Russell Scott of Belleville represent Jimmy John’s.
Jimmy John’s dropped its “no poaching” rule nationwide in 2018, under threat of antitrust prosecution in Washington State.
In that year, Derek Brandt of McCune Wright in Edwardsville filed suit in district court to recover wage losses of Sylas Butler.
Butler withdrew as lead plaintiff and Conrad replaced him in 2019.
Conrad retained Hal Singer of Washington, D.C., who compared wages when the rule was in effect to wages after it was halted.
He found 87 to 91 percent of the class suffered antitrust injury and 100 percent suffered injury as Jimmy John’s broadly reduced compensation.
He claimed the rule gave stores more labor market power than they otherwise would have enjoyed.
For Jimmy John’s, economic expert Justin McCrary stated that interests of brands and stores could diverge.
He stated that Jimmy John’s must strike a balance between expanding and ensuring that each franchisee remains committed to the brand.
He claimed franchisees granted 88 percent of requests for release from the rule.
Another expert for Jimmy John’s, Janusz Ordover, exposed the mixture of wages.
He compared it to measuring people in feet and inches.
Singer submitted a rebuttal calling the mixture mathematically irrelevant.
He claimed 14 million data points effectively washed the error away.
This February, Rosenstengel found his error material and his report unreliable.
“Comparing inflated estimates of average wages leads to inflated estimates of impact,” Rosenstengel wrote.
She found McCrary and Ordover reliable.
Conrad’s counsel Dean Harvey of San Francisco moved for reconsideration in March, claiming Rosenstengel didn’t understand Singer’s report.
“Dr. Singer designed his impact regression with multiple safeguards to ensure that this data issue would not bias his results,” Harvey wrote.
“This important case should not be resolved on the basis of mistakes of fact and law.”
For Jimmy John’s, Rachel Brass of San Francisco responded that Singer’s error should have been obvious given the absurdly high hourly wages.
She claimed Conrad made a choice and must live with it.
She claimed he couldn’t establish impact for himself, much less for 600,000.
Rosenstengel denied reconsideration in April.
“Simply put, the court did not misapprehend Dr. Singer’s report,” she wrote.