Dukes Dooms Domino’s Delivery Drivers’ Class Action

by BakerHostetler

The Eighth Circuit recently reaffirmed one of the central holdings of Dukes v. Wal-Mart—commonality is no longer a “rubber stamp.” In Luiken v. Domino’s Pizza, a Domino’s delivery driver sought to represent a class of about 1,600 fellow drivers in an action against the pizza giant for wrongfully withholding tips. No. 12-1216, 2013 U.S. App. LEXIS 2393, at *1-2 (8th Cir. Feb. 4, 2013). The suit arose from a $1.00 delivery charge implemented by Domino’s in Minnesota starting in 2005. The charge was applied to each delivery, and none of it went to delivery drivers. The company disclosed the charge to customers in varying ways, depending on the method of order. For example, online purchasers were informed that “Delivery charge will apply,” while credit card users signed receipts with the charge included in the pre-tip “Amount” line. Moreover, some drivers explained the delivery charge to customers while others did not.

Luiken sued Domino’s claiming that the delivery charge violated Minnesota gratuity laws. Under Minnesota statute, any gratuity “deposited in or about a place of business for personal services rendered by an employee is the sole property of the employee.” (Minn. Stat. § 177.24 Subdiv. 3). A “gratuity,” which under the statute is not limited to “tips”, includes “an obligatory charge assessed to customers…which might reasonably be construed by the…customer…as being a payment for personal services rendered by an employee….” (quoting Minn. Stat. § 177.23 Subdiv. 9). According to Luiken, the delivery charge constituted a “gratuity” and was therefore the sole property of Domino’s delivery drivers. Id.

The district court certified a Rule 23(b)(3) class of delivery drivers, and the Eighth Circuit reversed.  According to the Eighth Circuit, the certified class did not meet the commonality requirement. The court’s analysis centered on the fact that a service charge constitutes a “gratuity” for purposes of the statute only if it could “reasonably be construed” by the customer as payment for personal services. “The customer’s circumstances determine whether the delivery charge might reasonably be construed as a payment for personal services.”  For example, “[s]ome pizza customers asked about the charge and some did not; some employees volunteered that it was not a gratuity and some did not.” “[C]ontext can be critical in applying” a reasonableness standard such as this, and therefore commonality was lacking. 

The Eighth Circuit likened the lack of commonality in Luiken to that in Dukes.  Class certification was inappropriate in Dukes because “the plaintiffs did not identify ‘a common mode of exercising discretion [among Wal-Mart managers] that pervade[ed] the entire company.’” Id. at *14 (quoting Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011)). As such, “‘demonstrating the invalidity of one manager’s use of discretion [would] do nothing to demonstrate the invalidity of another’s.’” Similarly, whether the delivery charge in Luiken “might reasonably be construed as a payment for personal services in one transaction does not determine whether it might reasonably be construed that way in another transaction.”

Luiken shows that lower courts have taken to heart the Supreme Court’s admonition that: “‘What matters to class certification…is not the raising of common ‘questions’—even in droves—but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers.’” Dukes, 131 S. Ct. at 2551 (quoting Nagareda, Class Certification in the Age of Aggregate Proof, 84 N.Y.U. L. Rev. 97, 132 (2009)).

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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