Boswell v. Panera Bread Co.

Citations: 311 F.R.D. 515; 92 Fed. R. Serv. 3d 1384; 2015 U.S. Dist. LEXIS 144149; 2015 WL 6445396Docket: Case No. 4:14-CV-01833-AGF

Court: District Court, E.D. Missouri; October 23, 2015; Federal District Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Several motions are before the Court, including Plaintiffs’ motion for class certification, their motion to strike Defendants’ pre-certification offers of judgment, and Defendants’ motion to dismiss the case as moot or to stay proceedings pending a Supreme Court decision in Campbell-Ewald Co. v. Gomez. After oral arguments on September 18, 2015, the Court granted Plaintiffs’ class certification motion and denied the other motions.

Plaintiffs, Mark Boswell and David Lutton, former Joint Venture General Managers (JV GMs) for Defendants Panera, LLC and Panera Bread Company, filed this lawsuit on behalf of themselves and other potential class members, alleging Panera failed to pay them fully as per their employment agreements. Each JV GM had an Employment Agreement that included a Compensation Plan, stipulating a modest salary and a one-time buyout payment at the end of five years, contingent upon certain conditions, including continued employment and compliance with the Agreement.

The Agreements stated that they were at-will and could be terminated by either party at any time. However, to qualify for the JV GM Buyout, certain criteria had to be met, including not being in breach of the Agreement. Plaintiffs contend that Panera unlawfully modified these Agreements to impose a cap on the buyout without written consent, thereby withholding owed payments. They bring claims for breach of contract and fraud under Missouri law. Additionally, Boswell and Lutton assert individual claims for fraud and unjust enrichment linked to the implementation of a new operating system, alleging they were misled about profit credits associated with the system.

Plaintiffs filed a motion for class certification on April 13, 2015, seeking to define the class as all individuals employed as "Joint Venture General Managers" (JV GM) at Panera or its affiliates who received a capped JV GM Buyout payment from October 29, 2009, to the trial date. A capped payment refers to an amount less than the total determined by the employee’s compensation plan. They have identified 61 individuals fitting this definition and provided their signed Agreements as evidence. During oral arguments, it was noted that approximately 10 additional JV GMs may exist without executed Agreements, and these individuals would be excluded from the class if no Agreements are found.

Plaintiffs argue their claims of classwide breach of contract and fraud meet the requirements of Federal Rule of Civil Procedure 23(b)(3). They assert the class is sufficiently numerous, with at least 61 members, making individual joinder impractical. The claims center around the interpretation of a uniform contract under Missouri law, where it is undisputed that all class members met the Agreement conditions necessary for receiving a buyout, albeit at incorrect amounts. They argue that common questions predominate, especially regarding the uniform representations of the cap, Panera's intent, and class members' reliance on these representations as evidenced by their signed Agreements.

Plaintiffs believe that the class representatives and counsel can adequately represent the class, citing the absence of conflicts and the experience of the counsel. They contend that a class action is the superior method for resolving these claims, with damages calculable from Panera's buyout reports, which detail the difference between capped and uncapped amounts. They also seek punitive damages for the fraud claim.

Panera opposes class certification, arguing that the presence of integration or no-oral-modification clauses in the Agreements complicates classwide resolution of the breach of contract claims, as Missouri law allows for subsequent oral modifications. Panera claims that some Agreements were altered through oral agreements, particularly in markets outside North Carolina, where putative class members were informed of the cap during corporate presentations.

Panera claims that information regarding changes to its buyout program was accessible on its intranet, and asserts that the lack of objections from putative class members after learning about a cap indicates their agreement and intent to novate their Agreements. Panera argues that the named Plaintiffs are not representative of the class since they did not attend presentations about the buyout. It contends that the breach of contract claims require individualized assessments to determine if each class member met conditions for receiving a buyout, including being an employee, performing JV GM duties, and not breaching their Agreements. Specifically, Panera states that named Plaintiff Boswell did not meet these conditions as he was serving as Market Training Manager at the time he received his buyout, and thus cannot assert a breach of contract claim. Panera also maintains that it cannot waive contractual conditions due to a non-waiver clause in the Agreements, and admits to having no evidence of any other class member failing to meet these conditions.

Furthermore, Panera argues that individual evidence regarding representations made to class members and their reliance on those representations will predominate the classwide fraud claims. The claims by Boswell and Lutton concerning oral representations about the Panera 2.0 system are intertwined with class claims, making them atypical. Plaintiffs counter that any alleged oral modifications to the buyout cap are legally ineffective due to lack of consideration, asserting that continued at-will employment does not suffice under Missouri law. They emphasize that modifications are unenforceable as they are not documented in writing, as required by the Agreements’ integration clauses and the statute of frauds. Plaintiffs maintain that the buyouts, payable only after five years, cannot be performed within one year, thus necessitating written agreements. They argue that the issue of enforceability of the oral agreements is common to the class and suitable for classwide resolution. Additionally, the named Plaintiffs assert their typicality to the class, arguing that their situation mirrors that of other class members since they too learned about the cap and continued to work without objection.

Plaintiffs assert that conditions precedent to a buyout payment do not hinder class certification as they can be established through common evidence. The primary condition for receiving a buyout was the delivery of positive annual profits by JV GMs over the last two years of their contracts, which Plaintiffs claim can be verified through Panera’s internal reports. They argue that all class members, having received a buyout, met the necessary conditions of employment and compliance with agreements. Plaintiffs further contend that Panera acknowledged these conditions when determining buyout eligibility and that by making the payments, Panera accepted the class members’ performance, thus discharging further obligations. 

Panera's only challenge to this assertion relates to Boswell's performance, which Plaintiffs counter by arguing that any change in duties was at Panera's request, and Panera cannot enforce conditions it obstructed. They maintain that issues of individual reliance do not impede class certification for fraud claims, as reliance is established by each member’s signature on the Agreements. The central issue for these claims will be whether Panera intended to comply with the Agreements at the time of their execution, a matter deemed common to the class. 

Regarding the offers of judgment made by Panera to the named Plaintiffs after the class certification motion, Plaintiffs rejected these offers, asserting they did not provide complete relief, particularly due to the lack of punitive damages for their fraud claims. They argued that these offers appeared to undermine the class action by creating a conflict of interest. In response, Panera contended the offers would have fully compensated the named Plaintiffs for their individual claims, emphasizing that punitive damages are not applicable in this contract-based scenario and that no class action had been certified at that time.

Panera contends that the offers made to Plaintiffs provided complete relief, rendering the case moot and lacking subject matter jurisdiction, thus moving to dismiss the class action. Alternatively, Panera seeks a stay pending the Supreme Court's decision in *Campbell-Ewald Co. v. Gomez*, which addresses whether an offer of complete relief moots a case, particularly in a class action context. Plaintiffs counter that their claims remain viable because an unaccepted offer does not moot a claim and assert that the offers did not provide complete relief. They argue Panera's motions to dismiss or stay should be denied. During oral arguments, Plaintiffs indicated that if the Court denies Panera's motions, their own motion to strike would also be moot, as it seeks to prevent dismissal based on the offers. They acknowledge, however, that if they receive a judgment less favorable than Panera’s offer, they may still be responsible for Panera's costs under Federal Rule of Civil Procedure 68. The Court's analysis begins with Panera's mootness argument in light of Rule 68 offers, which allow defendants to propose judgment terms, and assesses whether such offers render Plaintiffs' claims moot under Article III’s jurisdictional requirements, which necessitate that cases involve live controversies with legally cognizable interests.

The burden of proving mootness lies with Panera, as established in Kennedy Bldg. Assocs. v. Viacom, Inc. A case is considered moot when the plaintiff has obtained all requested relief and lacks a personal stake in the lawsuit outcome. Despite Panera's claims that unaccepted offers moot the Plaintiffs’ claims, the Court questions whether these offers provided complete relief for individual claims. Plaintiffs have demonstrated a potential entitlement to additional damages due to alleged fraud, where a contractual promise made without intent to fulfill it constitutes misrepresentation under Missouri law. The Court finds that Plaintiffs' allegations against Panera—asserting knowledge of false promises intended to induce contract entry—are sufficient to state fraud claims, and punitive damages could be pursued if the evidence supports it. The Court is not convinced that Panera has offered complete relief, and even if it had, existing case law does not definitively categorize the claims as moot. Panera's reference to Genesis Healthcare Corp. v. Symczyk, which involved unaccepted offers and the mootness of unclassified FLSA claims, does not compel dismissal of the current action, as the Supreme Court did not resolve whether unaccepted offers moot claims and assumed mootness for the sake of argument.

Four dissenting justices in Genesis, led by Justice Kagan, argued that an unaccepted offer of judgment cannot moot a case, emphasizing that such offers are legally considered nullities, as per Rule 68, which states unaccepted offers are withdrawn. Justice Kagan advised the circuit court to reconsider its mootness theory and warned other courts against adopting it. Following Genesis, all circuit courts that addressed this issue affirmed that unaccepted offers do not moot a named plaintiff's claims. Before Genesis, some circuits had ruled that offers of complete relief could moot individual claims; however, they generally noted that this did not apply to claims made on behalf of a class if certification was timely sought. The Eighth Circuit has not established that unaccepted offers moot putative class actions, previously ruling that judgment against a putative class representative on an offer of payment is only appropriate if class certification is denied and the offer fully satisfies the representative's claims. Most district courts in the Eighth Circuit have adhered to this principle. In a notable Eighth Circuit case, Anderson, while the court observed that full payment might moot claims, it ultimately did not need to decide on mootness due to denied class certification and subsequent settlement. Consequently, the court found no compelling authority for dismissing Plaintiffs' claims based on Panera’s offers, which were deemed insufficient for complete relief, leading to the denial of Panera's motion to dismiss.

A motion to stay proceedings is within the court's authority to manage its dockets efficiently, taking into account the potential prejudice or hardship to parties and the interest of judicial economy. In this case, the court denies the motion to stay, finding that a pending Supreme Court decision in Campbell-Ewald is unlikely to impact its jurisdiction, especially since Panera has not provided complete relief to the plaintiffs. Delaying the proceedings would unduly prejudice the plaintiffs, who have fully briefed and argued their class certification motion.

Regarding class certification, it is an exception to the general rule of individual litigation, requiring compliance with Rule 23. The four prerequisites under Rule 23(a) include numerosity, commonality, typicality, and adequacy of representation. Additionally, under Rule 23(b)(3), the court must determine that common questions predominate over individual questions and that a class action is the superior method for resolving the dispute. Plaintiffs bear the burden of demonstrating that they meet these requirements. The district court must conduct a thorough analysis to ensure compliance with Rule 23, which often overlaps with the merits of the case, but merits questions are only considered to the extent they relate to Rule 23 certification.

Class definition has been revised to include all natural persons employed as Joint Venture General Managers (JV GM) with Panera or its affiliates who signed a Joint Venture General Manager Compensation Plan and received a capped JV GM Buyout payment between October 29, 2009, and the trial date. A "capped" payment is defined as one that is less than the total amount specified in the Compensation Plan.

For numerosity, the court emphasizes that a class action can be maintained if the class is so numerous that joining all members is impracticable, which does not require impossibility but rather significant difficulty. Relevant factors for this determination include class size, nature of the action, claim size, and convenience of individual suits. A class with over forty members typically meets the numerosity requirement. In this case, the proposed class of at least 61 individuals from multiple states satisfies this criterion.

Regarding commonality, Rule 23(a)(2) necessitates that there are common questions of law or fact among class members. The Supreme Court has noted that a class complaint must generate common answers that address central issues of the litigation. While individual factual differences may exist, they do not preclude class action if there are overarching common legal questions. The court recognizes that the plaintiffs' claims of breach of contract and fraud involve common questions derived from uniform representations in a form contract, which many courts have deemed suitable for class treatment.

Numerous courts have determined that claims arising from form contracts are suitable for class action treatment, as highlighted by cases like Dupler v. Costco and Smilow v. Southwest Bell Mobile Systems. In this case, central issues include whether Panera breached its Agreements by imposing a buyout cap and if it intended to comply with the Agreements when entering them. These questions are applicable to all class members, as they signed nearly identical Agreements with the same buyout provision, leading to uniform experiences regarding the capped buyout.

Rule 23(a)(3) of the Federal Rules of Civil Procedure stipulates that the claims of representative parties must be typical of the class's claims. Typicality ensures that class members share similar grievances, having faced the same alleged unlawful treatment. The adequacy and typicality criteria help assess the economic feasibility of a class action and whether the interests of absent class members will be adequately represented.

While a named representative's pursuit of individual claims does not inherently create a conflict, it raises the question of whether such claims undermine their motivation to pursue class claims. In this instance, the Court sees no reason to believe that Plaintiffs Boswell and Lutton's individual claims for fraud and unjust enrichment related to the Panera 2.0 system will detract from their commitment to the class-wide claims. Their individual success may only influence the damage calculations. Additionally, Panera acknowledges the ease of calculating these damages, having already included them in offers of judgment. The Court also finds that the named Plaintiffs are not atypical simply because they did not receive the same corporate presentation regarding the buyout cap as others.

Panera’s defenses of oral modification or novation will be applicable to all class members, including the named Plaintiffs, based on their continued employment after being informed of a cap. The named Plaintiffs received knowledge of this cap prior to their buyout and also continued working without objection. Although the timing and format of their awareness differed from that of other class members, existing case law does not suggest that these factors affect the validity of the modification or novation defense. 

Additionally, Panera's argument regarding Boswell’s alleged failure to meet conditions precedent for a buyout does not make him atypical. Panera's evidence for this claim is based on Boswell taking on new duties due to a position transfer initiated by Panera, raising questions about Panera's reliance on this condition to negate liability. Legal precedent indicates that a party cannot benefit from a condition they have obstructed. 

The Court finds that such defenses against Boswell do not undermine his typicality or distract from the class claims. The typicality requirement is confirmed, as is the adequacy requirement under Rule 23(a)(4), which assesses common interests and the vigorous representation of the class by qualified counsel. The named Plaintiffs align with the class's objectives in pursuing breach of contract and fraud claims, demonstrating no conflict of interest with other class members, and showing a commitment to effectively advocate for the class. Thus, adequacy is satisfied, leading into considerations of predominance under Rule 23(b)(3).

Certification of a class action is permitted only if common questions of law or fact predominate over individual issues, as established in Comcast. The predominance inquiry focuses on whether liability can be proven with common evidence or varies among members. Rule 23(b)(3) requires that common questions, not individual claims, dominate. In this case, the plaintiffs' claims for breach of contract and fraud can be supported by common evidence regarding a form contract and Panera's conduct. 

Panera's objections, asserting individual issues through defenses of contract modification or novation, do not undermine class certification. The court finds that the defense of continued at-will employment lacks individual predominance under Missouri law, which does not recognize it as valid consideration for modifying a contract. The court emphasizes that even if Panera's defenses were valid, they could be addressed through common evidence, as all class members were informed of a cap related to their employment without objection. Variations in when class members learned about the cap do not materially affect the defenses. If Panera can demonstrate that the agreement was modified or novated based on its communications and the continued employment of class members, it would prevail on the contract claims for the entire class.

The Court determines that individual issues regarding class members' fulfillment of conditions precedent will not dominate the litigation. Panera's claim that only Boswell failed to meet these conditions is deemed insufficient and unlikely to prevail. Even if individual waiver evaluations are necessary, the proposed class can still meet the predominance requirement under Rule 23(b)(3), as courts typically do not deny class action status due to available affirmative defenses against individual members. Additionally, other named class representatives are not affected by this defense.

Regarding the fraud claims, individual reliance issues will not predominate. Although individual circumstances often complicate fraud claims, those based on uniform misrepresentations, such as in form contracts, are treated differently. Reliance may be established through common circumstantial evidence, such as the signing of agreements and acceptance of employment. Courts have consistently held that common questions prevail in cases of uniform misrepresentations. Here, since each class member signed an SLA containing the alleged misrepresentation, reliance can be demonstrated collectively. The request for punitive damages does not undermine predominance, as it relates to Panera’s motives in a manner that can be assessed across the class.

Plaintiffs seek punitive damages based on Defendants’ intentional violation of easements, which can be assessed on a class-wide basis without needing individual interactions with class members. The court finds that common issues predominate in this case. Under Rule 23(b)(3), the court evaluates whether a class action is the superior method of adjudication, considering factors such as the class members' interest in individual lawsuits, existing litigation, the appropriateness of the forum, and class action manageability. The court concludes that a class action is superior, noting no existing litigation against Defendants on these issues and that all claims fall under Missouri law, supporting the choice of forum. The court has no manageability concerns and determines that Plaintiffs have met the requirements for class certification. Consequently, the court denies Defendants’ motion to dismiss or stay the action, denies as moot Plaintiffs’ motion to strike Defendants’ pre-certification offers of judgment, and grants Plaintiffs’ motion for class certification. Mark Boswell, David Lutton, and Vickie Snyder are appointed as class representatives, while Dennis Egan and Bert Braud are designated as class counsel. The parties must confer to agree on a proposed class notice within 14 days, submitting any unresolved issues to the court. The court also permitted an additional deposition of Panera’s corporate representative and requested relevant deposition excerpts from Plaintiffs, which they submitted as a full transcript, prompting Defendants to request the exclusion of unrelated portions.

The Court has disregarded the Plaintiffs’ supplemental brief and limited its review of the deposition transcript to two authorized topics. Panera acknowledges that all class members’ Agreements contain a choice-of-law provision enforcing Missouri law for any disputes, including fraud claims. Plaintiffs conceded that if they succeed on both contract and fraud claims, they cannot receive double recovery. Panera admits that no written modifications were made regarding the claims. It offered to pay each named Plaintiff an additional $1,000 beyond the difference between their capped and uncapped buyouts. The Seventh Circuit's ruling in Damasco, which stated that an offer of relief can moot individual claims if made before a class certification motion, has been overruled by Chapman, which clarifies that an unaccepted offer does not moot any claims. Panera's defenses related to modification and novation raise common questions. Despite Panera questioning the qualifications of the Plaintiffs’ former counsel, the Plaintiffs have now engaged new lead counsel experienced in class actions, with no evidence suggesting incompetence. Under Missouri law, oral modification clauses lack preclusive effect unless formalities are observed, and modifications require mutual assent and consideration to be enforceable. Novation also necessitates mutual agreement and the extinguishment of the previous contract.