Verdicts & Settlements June 4, 2009: Panera to pay $500,000 to settle wage lawsuit

St. Louis-based Panera Bread Co. agreed to pay $500,000 to settle a wage and hour class action lawsuit filed on behalf of general managers who work in the company's California cafes.

U.S. District Judge Jean C. Hamilton approved the settlement in a May 5 order.

According to settlement documents, the plaintiffs' attorneys will receive $146,887 in fees and costs, and the lead plaintiff, Pati Johns, will receive $7,500. The parties also agreed to pay $1,000 to the California Labor and Workforce Development Agency to settle claims of civil penalties under California law. And $25,000 will be set aside for the administrator's costs; any amount remaining after 60 days of the effective date of the settlement will be given to charity if a further pro rata distribution to the class is cost-prohibitive.

The lawsuit began as a nationwide class action suit alleging violations under the Fair Labor Standards Act and California law. It was originally filed in federal court in San Francisco, but Panera had it moved to the St. Louis federal court last summer.

The suit alleged that Panera misclassified its general managers as exempt from overtime requirements, but they performed the duties of nonexempt employees. During two days of mediation in November, the plaintiffs' lawyers agreed to drop the federal claims from the suit and limit its scope to violations of California law. In exchange, Panera agreed to set aside $500,000 in a settlement fund.

According to settlement papers, the amended suit was filed on behalf of about 70 general managers working in California cafes. Attorney Richard M. Paul III, of Stueve Siegel Hanson in Kansas City, told Hamilton that the class plaintiffs will receive roughly $75 for every workweek they were employed as general managers between Jan. 1, 2005, and Jan. 20, 2009.

The settlement papers provide that 80 percent of each class member's award will be treated as wages, and 20 percent will be treated as interest and civil penalties under California's Private Attorney General Act of 2004.

Proceeding to trial potentially was risky for the plaintiffs. Court documents point out that Panera provided evidence that more than a dozen of its current general managers spend more than 50 percent of their time on exempt duties, which qualifies them for an overtime exemption.

The class was represented by lawyers from Girard Gibbs in San Francisco in addition to lawyers from the Kansas City firm. Hal Wellford and Kimberly Yates, of Littler Mendelson's St. Louis office, appeared in court on behalf of Panera.

The settlement is not confidential. But the agreement states the parties and their lawyers may not publicize or otherwise "directly or indirectly provide the press ... with information about" the settlement. The parties and lawyers also agreed not to post information about the settlement on their Web sites or to "cause or allow" that information to be posted on any other Web site.

Panera, which is based in Richmond Heights, a St. Louis County municipality, has 1,264 company-owned and franchise-operated cafes in 40 states and in Canada. The cafes operate under the name St. Louis Bread Co. in St. Louis.

$500,000 settlement

Fair Labor Standards Act

Court: U.S. District Court for the Eastern District of Missouri

Case Number/Date: 4:08-cv-1105/May 5, 2009

Judge: Jean C. Hamilton

Mediator: Mark Rudy, of San Francisco

Caption: Pati Johns, individually, and on behalf of a class of other similarly situated employees, v. Panera Bread Co. and Panera LLC

Plaintiffs' Attorneys: Dylan Hughes, Eric H. Gibbs, and Geoffrey A. Munroe, Girard Gibbs, San Francisco; George A. Hanson, Richard M. Paul III and Todd E. Hilton, Stueve, Siegel, Hanson, Kansas City

Defendant's Attorneys: Harry W. "Hal" Wellford Jr. and Kimberly A. Yates, Littler Mendelson, St. Louis; Margaret Hart Edwards, Littler Mendelson, San Francisco; Michael Mankes, Littler Mendelson, Boston