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Whole Foods Loses Bid to Trim Employee Class Action

The D.C. Circuit rejected a bid by Whole Foods on Tuesday to winnow a potential $200 million class action over employee bonuses.

WASHINGTON (CN) — The D.C. Circuit rejected a bid by Whole Foods on Tuesday to winnow a potential $200 million class action over employee bonuses.

“Because the class in this case has yet to be certified, Whole Foods’ motion to dismiss the putative class members is premature,” U.S. Circuit Judge David Tatel wrote for a divided three-judge panel. “Only after the putative class members are added to the action ... should the district court entertain Whole Foods’ motion to dismiss the non-named class members.”

Originally filed in 2016, the case takes aim at the incentive-based bonus program at Whole Foods. The Texas-based grocer uses a gainsharing model to divide budget surpluses among department employees, but lead plaintiff

Michael Molock says Whole Foods avoids payouts by shifting labor costs between store departments.

In a bid to limit damages exposure, meanwhile, Whole Foods argued that the suit should involve only those employees who reside in Washington, D.C., where the case was filed.

GreenbergTraurig attorney Gregory Casas, who represented the chain at oral arguments in September, leaned on the 2017 Supreme Court case Bristol-Myers Squibb Co. v. Superior Court of California to make that argument.

Refusing to dismiss nonresidents at this juncture, however, the Clinton-appointed Tatel said such a decision would be premature before the class has even been certified.

Matt Wessler, an attorney for the class at Gupta Wessler, welcomed the ruling.

“We're pleased the D.C. Circuit affirmed and made clear that defendants cannot use Bristol-Myers to try to dismiss class actions at the beginning of the case,” Wessler said in an email.

While the class prevailed Tuesday, U.S. Circuit Judge Laurence Silberman wrote in dissent that he saw two reasons to grant Whole Foods’ motion.

For one, he said, the plaintiffs forfeited the claim as to the motion’s timeliness by failing repeatedly to raise the issue to the District Court.

Second, he added, “the majority’s conclusion rests on the flawed premise that Whole Foods sought to dismiss the nonresident putative class ‘members’ and ‘their claims’ for lack of personal jurisdiction.” Silberman wrote.

“Whole Foods did not actually do that,” he continued. “Whole Foods moved to dismiss the claims in the named plaintiffs’ complaint, contending that Bristol-Myers required that those claims ‘should be limited to alleged injuries occurring within the District of Columbia, pursuant to Federal Rule of Civil Procedure 12(b)(2).’ That is a run-of-the-mill attack on class certification at the pleading stage, and such a motion was not premature.”

Casas declined to comment on pending litigation Tuesday.

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