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Chipotle Must Turn Over Report In OT Suit, Judge Says

Law360—Vin Gurrieri

A New York magistrate judge on Thursday refused Chipotle Mexican Grill Inc.'s bid to set aside an earlier order that a consultant's report sought by the plaintiffs in an overtime wage suit be turned over, saying it is not protected by attorney-client privilege as the fast-food chain had maintained.

U.S. Magistrate Judge Sarah Netburn let stand a portion of her March 27 ruling that required Chipotle to turn over a report by consultant Cinda Daggett, which looked at the activities of four employees who were considered apprentices to see whether they could be seen as having been misclassified, that was delivered to the burrito chain's counsel. The report was determined by the judge as not privileged because Daggett was not an agent of Messner Reeves LLC, Chipotle’s counsel at the time.

Chipotle challenged the finding in late April, citing emails between Daggett and Chipotle's attorney  ... as well as an unsigned blank confidentiality agreement that Chipotle allegedly gave to Daggett. But the judge on Thursday didn't buy the company's new evidence.

“The court finds that Chipotle’s motion is procedurally improper, its new evidence is unpersuasive, and Chipotle has not shown that the Daggett report was privileged,” Judge Netburn said. “Chipotle’s motion is denied on procedural grounds and on the merits.”

Initially launched in November 2012, the suit accuses the burrito maker of illegally denying apprentices overtime and classifying them as managerial workers even though they spent most of their time on tasks like filling orders and operating cash registers.

Chipotle has argued that its employees meet the legal standards of being part of management and enjoy the salaries and benefits that come with such positions, according to court documents.

An amended complaint was filed in February 2013 that added additional named plaintiffs. The court certified the collective action in June 2013, and in September, the two sides sparred over depositions.

Although Judge Netburn's March 27 order required Chipotle to turn over the Daggett report, the judge determined that a number of emails between Chipotle executives and Mountain State Employers Counsel, to whom Chipotle reached out for a second opinion regarding the classification of employees, were protected.

On April 22, Chipotle filed an application under Rule 60(b) of the Federal Rules of Civil Procedure seeking relief from the judge's finding that the Daggett report and analysis is not privileged.

But in her ruling Thursday, Judge Netburn said preliminarily that Chipotle had no basis to bring the motion under that federal rule because the company has already filed an objection to the March 27 order under Rule 72(a) that is pending before U.S. District Judge Andrew L. Carter Jr., who is overseeing the case.

“It is unfair to the plaintiffs to allow Chipotle to seek multiple 'bites at the apple' by effectively appealing the same order twice,” Judge Netburn said.

In looking at the merits of Chipotle's motion, Judge Netburn was also unpersuaded by the company's challenge to her earlier ruling. The judge determined that the emails between Daggett and Shunk do not show, as Chipotle contends, that the Daggett report was used by Messner Reeves to provide legal advice to Chipotle. 

In regards to the purported confidentiality agreement sent to Daggett, Judge Netburn said that it was not signed or dated, and nothing in the exhibit links it to Daggett — meaning it is not clear that the agreement is at all related to present issue of the report. Even assuming the agreement was sent to Daggett and that she signed it, that too “merely supports the court’s understanding that Daggett was working directly for Chipotle,” according to the judge.

“The agreement is a form contract from Chipotle, not Messner,” the judge said. “Were Daggett working exclusively for Messner, the agreement would more likely be one between her and the law firm.”

The judge also noted that Chipotle failed to submit any evidence either that Messner Reeves revised its legal advice in light of the report or that the report was anything more than business advice.

“Chipotle’s newly proffered arguments and evidence, alone, are not enough to show that the Daggett report constituted part of Messner’s legal advice to Chipotle,” Judge Netburn said. “Chipotle’s new evidence does not alter the court’s previous analysis.”

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The plaintiffs are represented by Gregg Shavitz and Keith Stern of the Shavitz Law Group PA, Brian Schaffer and Frank Mazzaferro of Fitapelli & Schaffer LLP, and Justin Swartz, Ossai Miazad and Melissa L. Stewart of Outten & Golden LLP. 

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The case is Scott v. Chipotle Mexican Grill Inc., case number 1:12-cv-08333, in the U.S. District Court for the Southern District of New York.