Overview
Cohen Milstein successfully represented McDonald’s workers in California and New York class action lawsuits in federal and state courts claiming the fast-food giant was unlawfully denying payment for work and other benefits required by the law by failing to provide legally mandated meal periods and rest breaks, failing to pay overtime for overnight shifts, and failing to reimburse workers for the time and expense of cleaning required uniforms. Several of these lawsuits involved novel joint-employer issues, as McDonald’s operates through franchises. One of these suits involved a two week-long bench trial brought under the California Private Attorneys General Act statute, in which aggrieved employees are effectively deputized as private attorneys general pursuing labor code violations. PAGA is a novel and uncharted area of law. As a result, we successfully established legal precedents under PAGA and wage and hour law.
CALIFORNIA
Ochoa v. McDonald’s Corporation & The Edward J. Smith and Valerie S. Smith Family Limited Partnership, Case No. 3:14-cv-02098- JD (N.D. Cal.)
Approximately six weeks before trial was scheduled to begin against McDonald’s in December 2016, Plaintiffs and McDonald’s reached a settlement of the claims against McDonald’s franchise owners, The Edward J. Smith & Valerie S. Smith Family Limited Partnership.
Earlier in the year, the Honorable James Donato of the U.S. District Court for the Northern District of California denied McDonald’s request to dismiss the case. The court further ruled that the Plaintiffs could proceed to trial on the legal theory that McDonald’s could be held jointly liable for workplace violations in the Smiths’ stores because Smith, as a franchisee of the fast food company, was ostensibly an agent of McDonald’s. The court allowed this theory to proceed on a classwide basis for all hourly workers in Smith’s stores.
The settlement provides class members with over 100% of the economic damages they suffered, as well as a significant portion of the corresponding legal penalties and a portion of the losses the class members experienced on claims that could not proceed as class claims. Significantly, the settlement also leaves in place rulings recognizing McDonald’s liability for the violations of its franchisee under the ostensible-agency doctrine and the hourly crew members’ ability to proceed to trial as a class.
In response to media inquiries, Cohen Milstein’s Joseph M. Sellers described the settlement as follows:“This is a historic settlement and the first case in the country in which McDonald’s has committed to paying workers for labor violations they suffered in a franchisee-operated store. As a result of this settlement, more than 800 workers will receive monetary relief from McDonald’s itself, in addition to more than $500,000 received from an earlier settlement with the franchisee. From these two settlements combined, workers recovered more than 100% of their economic losses. Additionally, McDonald’s has agreed to create a training program that will help ensure crew members are properly paid in the future.”
Salazar v. McDonald’s Corporation & The Bobby O. Haynes, Sr. & Carole R. Haynes Family Limited Partnership, Case No. 3:14-cv-02096-RS (N.D. Cal.)
The Salazar case, which is substantively similar to the Ochoa case, was filed by Plaintiff workers on behalf of a class of crew members who have worked at stores operated by a different McDonald’s franchisee.
After receiving rulings dismissing the Plaintiffs’ individual and class claims by the Honorable Richard Seeborg in the U.S. District Court for the Northern District of California, the Plaintiffs have appealed this case to the U.S. Court of Appeals for the Ninth Circuit. Plaintiffs look forward to the opportunity to litigate the issue of McDonald’s joint-employment liability before the Circuit court and anticipate a favorable ruling for workers within this Circuit.
Hughes v. McDonald’s Corporation & Fremak Arches/Marpenny Corporation, Case No. RG14717085 (Sup. Crt. Alameda Cnty., Cal.)
Hughes v. McDonald’s Corporation also raises the issue of McDonald’s liability for workplace violations in stores owned and operated by a franchisee. The parties reached a settlement of this case in the summer of 2016, and the Alameda County Superior Court granted final approval of this settlement on March 24, 2017.
Sanchez v. McDonald’s Corporation, Case No. BC499888 (Sup. Crt., Los Angeles Cnty., Cal.)
Maria Sanchez filed the original lawsuit in January 2013, alleging several violations of both state and federal labor laws. A year later, David Cruz, Ines Mendez Merino and Jonathan Valentin joined the suit. The court subsequently certified a class of workers who incurred but were not paid for overtime on overnight shifts.
On April 20, 2017, after a two week-long California Private Attorneys General Act (PAGA) bench trial, the Honorable Ann I. Jones Superior Court of California, County of Los Angeles ruled that McDonald’s Restaurants of California was liable for failure to compensate workers for overtime on overnight shifts at McDonald’s company-run stores, in violation of California labor laws. A trial on damages began on May 23, 2017 and continued into early June. On July 6, 2017, the court issued a statement of decision ruling that McDonald’s was liable to the plaintiffs for $750,000 in damages and penalties under PAGA.
On October 7, 2020, the Superior Court of California for Los Angeles County granted final approval of a $26 million settlement. The class consists of all hourly non-managerial workers at corporate-owned McDonald’s restaurants in California dating back to Jan. 24, 2009. Excluded from the class are individuals who opted out of the suit.
As part of the agreement, McDonald’s agreed to revise some of its timekeeping practices and provide training sessions on wage policies for managers and hourly workers at corporate-run restaurants in California. The company also agreed to provide hourly workers with new uniforms when their old ones get worn out, among other things.
California’s PAGA statute—in which aggrieved employees are effectively deputized as private attorneys general pursuing labor code violations— is still considered a novel and uncharted area of law. Through the Sanchez litigation, we helped establish legal precedents under PAGA and wage and hour law.
NEW YORK
Beard, et al. v. McDonalds Corporation, et al., Case No. 14-cv-1664 (E.D.N.Y.)
Plaintiffs claimed that McDonald’s forced workers to clean their Golden Arches uniforms on their own time and on their own dime, thereby driving many workers’ wages below the legal minimum wage.
On October 31, 2016, the Honorable Nicholas G. Garaufis of the U.S. District Court for the Eastern District of New York granted final approval to a classwide settlement of $1.5 million. This settlement provides compensation to workers for time and cost spent cleaning their uniforms. Settlement funds were distributed in early 2017.