Did Cracker Barrel Face a Nationwide Overtime Lawsuit That the Ninth Circuit Narrowed on Jurisdiction Grounds?

Current and former Cracker Barrel servers filed a nationwide wage-and-hour lawsuit alleging violations of labor laws related to tip pooling practices.

Case: Harrington, et al. v. Cracker Barrel Old Country Store, Inc.

Court: U.S. Court of Appeals for the Ninth Circuit

Ninth Circuit Docket Nos.: 23-15650 and 24-1979

Decision Date: July 1, 2025

Trial Court: U.S. District Court for the District of Arizona

District Court Case No.: 2:21-cv-00940-DJH

Get to Know the Plaintiffs in the Case:

The plaintiffs, Andrew Harrington, Katie Liammaytry, Jason Lenchert, and Dylan Basch, are current and former Cracker Barrel employees who allege violations related to pay practices for tipped workers.

Learn More About the Defendant in the Case:

The defendant, Cracker Barrel Old Country Store, Inc., is a restaurant chain incorporated and headquartered in Tennessee.

Case History: Harrington, et al. v. Cracker Barrel Old Country Store, Inc.

The case was filed in Arizona District Court as an FLSA collective action under 29 U.S.C. § 216(b). The district court authorized notice to a proposed collective that included servers in multiple states where Cracker Barrel allegedly used a tip-credit pay model, using the standard two-step conditional certification process.

Cracker Barrel objected to nationwide notice, arguing that some workers may be subject to arbitration agreements and that the Arizona court lacked personal jurisdiction over claims by out-of-state opt-ins with no connection to Arizona. The district court still authorized nationwide notice based on an Arizona-based named plaintiff. Cracker Barrel responded by obtaining an interlocutory appeal. As a result, the case ended up in the Ninth Circuit Court.

What is the Main Question Considered in the Case?

The main issue was whether the Supreme Court’s Bristol-Myers Squibb personal-jurisdiction framework applies to FLSA collective actions in federal court. The court needed to decide if it must evaluate personal jurisdiction for each opt-in plaintiff’s claim instead of relying on a named plaintiff’s forum connection to support claims nationwide.

Summary of the Allegations: Harrington, et al. v. Cracker Barrel Old Country Store, Inc.

The plaintiffs alleged that Cracker Barrel violated the FLSA regarding wages for tipped employees, particularly in its use of the federal tip credit. Although the Ninth Circuit’s opinion focused on procedural issues, the case was a nationwide wage-and-hour dispute over tip-credit practices.

The Ninth Circuit’s Ruling in Harrington, et al. v. Cracker Barrel Old Country Store, Inc.

The Ninth Circuit made three key holdings:

• The two-step conditional certification process is permissible. The panel found the district court did not abuse its discretion by using this procedure at the preliminary stage.

• If the validity of arbitration agreements is genuinely disputed, the district court is not required to resolve arbitrability for absent employees before authorizing notice.

• The Ninth Circuit held that Bristol-Myers applies to FLSA collectives. When a court relies on specific jurisdiction, it must determine whether each opt-in plaintiff’s claim is sufficiently connected to the defendant’s contacts with the forum state. The panel vacated the nationwide notice order and remanded the case because the district court did not conduct the Bristol-Myers analysis.

• In a separate memorandum disposition issued the same day, the Ninth Circuit also addressed Cracker Barrel’s motion to compel arbitration as to one plaintiff’s claims.

Why This Was a Landmark Wage-and-Hour Case in 2025

The decision in this wage and hour case didn’t change overtime law, but it reshaped where and how nationwide wage and hour cases can be litigated in the Ninth Circuit.

1. Limits nationwide FLSA collectives filed outside an employer’s home state.

2. Affects early case strategy

FAQ: Harrington, et al. v. Cracker Barrel Old Country Store, Inc.

Q: What is an FLSA “collective action”?

A: It is a procedure under the FLSA that allows employees to pursue overtime or minimum-wage claims together, but workers generally must opt in by filing a written consent.

Q: What did the Ninth Circuit actually “narrow” in this case?

A: The court narrowed the ability to send nationwide notice from a forum that may not have personal jurisdiction over the claims of out-of-state workers. The district court must evaluate jurisdiction for each opt-in claim when the case relies on specific jurisdiction.

Q: Does this decision mean workers can never bring nationwide FLSA cases?

A: Not necessarily. It means plaintiffs must choose a forum that can support jurisdiction over the broader set of claims (for example, where the employer is subject to general jurisdiction) or tailor the collective to workers whose claims have a sufficient connection to the forum.

Q: Did the Ninth Circuit decide whether Cracker Barrel violated wage laws?

A: No. The opinion addressed procedural issues—notice, arbitration timing, and personal jurisdiction—not the ultimate merits of the wage claims.

If you believe you were denied overtime pay, paid under an unlawful tip-credit practice, or not compensated for all hours worked, the wage-and-hour attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help you evaluate your options under federal and state law. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss potential unpaid wage claims.

Did the Logan Inn’s Tip Pool Violate Wage Laws? Third Circuit Ruling Reshapes FLSA Settlements

In 2025, the Third Circuit issued a precedential decision on Lundeen v. 10 W. Ferry St. Operations LLC, clarifying the FLSA’s opt-in rule as a procedural requirement.

Case: Lundeen v. 10 W. Ferry St. Operations LLC

Court: U.S. Court of Appeals for the Third Circuit

Appellate Docket No.: No. 24-3375

District Court: U.S. District Court, Eastern District of Pennsylvania

District Court Case No.: 2:24-cv-00109-JDW

Get to Know the Parties: Lundeen v. 10 W. Ferry St. Operations LLC

Graham Lundeen, the plaintiff, worked as a bartender and server for the defendant at New Hope’s Logan Inn in Pennsylvania from September 2021 through December 2022. He filed the case on behalf of himself and other similarly situated hourly bartenders and servers.

A Brief History of the Case:

Lundeen filed the original wage and hour complaint in January 2024 in the Eastern District Court of Pennsylvania, alleging federal and state labor law violations related to the Inn’s tip-pooling policy. Filed as a hybrid case, the two claims proceeded separately - the FLSA claim as a collective action (opt-in) and the PMWA claim as a class action (opt-out). Parties agreed to a conditional certification of the FLSA collective, and notice was issued to eligible workers. (Lundeen and 9 others filed written consents). After discovery and a settlement conference, the parties proposed a settlement in June 2024. The proposal included an opt-out class settlement to resolve state wage claims and release FLSA claims for class members who did not opt out, even if they never opted in to the FLSA collective. The district court denied preliminary approval, stating that, under labor law, written consent to serve as a party plaintiff is required, so the settlement cannot require class members who did not opt in to release FLSA claims. The Third Circuit vacated the district court’s decision and remanded the case.

What Was the Main Question in the Case?

The central question was whether the FLSA’s opt-in requirement in 29 U.S.C. § 216(b) prohibits an opt-out Rule 23 class settlement from releasing unasserted FLSA claims held by class members who never opted into the FLSA collective.

Summary of the Allegations

Lundeen alleged that the Logan Inn operated a tip pool funded by bartenders’ tips, but, according to the complaint, the bar manager (a salaried supervisory employee) allegedly also received distributions from this pool. The plaintiff argued that this practice violated both federal and Pennsylvania wage laws.

What is a Tip Pool?

A tip pool is a shared fund of tips redistributed among a designated set of workers. Employees collect all or a portion of their tips into a shared fund/tip pool, with the original intent to ensure an equitable distribution of gratuities. However, the tip pool creates the opportunity for mismanagement that can lead to dissatisfaction and labor law complaints.

The Third Circuit’s Decision

The Third Circuit vacated the order and remanded so the district court could consider the settlement for fairness under Rule 23. While § 216(b) sets the procedure for litigating FLSA claims (opt-in), it does not determine the conditions for waiving or releasing claims through settlement.

FAQ: Wage and Hour Violations

Q: Why was Lundeen v. 10 W. Ferry St. Operations LLC a landmark wage and hour case in 2025?

A: The case addresses resolving hybrid cases, a recurring issue in wage and hour litigation, efficiently and fairly.

Q: What does this case change for wage-and-hour settlements?

A: It provides precedential support for resolving hybrid cases through an opt-out Rule 23 settlement that can include FLSA releases, subject to judicial review for fairness and adequate notice.

Q: What is Rule 23?

A: Courts use the familiar Rule 23 framework to evaluate settlements for notice, opportunity to opt out, objections, and judicial review.

Q: What Can You Do If Your Employer Violates Labor Law?

A: If you believe your employer’s business policies or standard practices violate labor law, reach out to an experienced local employment law attorney to discuss your options.

Q: What is the difference between an FLSA “collective action” and a Rule 23 “class action”?

A: In an FLSA collective action, workers must generally opt in by filing a written consent. In a Rule 23 class action, workers are included unless they opt out after receiving notice.

Q: Did the Third Circuit rule that the settlement in Lundeen was automatically fair?

A: No. The court did not approve the settlement. It held only that § 216(b) does not prohibit the settlement structure and remanded the case for a full Rule 23 fairness review.

If you believe your tips were improperly diverted, your employer used an unlawful tip credit, or you were denied legally owed wages, the employment law attorneys contactat Blumenthal Nordrehaug Bhowmik De Blouw LLP can help you assess your wage-and-hour rights and options. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss pursuing unpaid compensation and accountability under the law.

Did Lion Farms Violate Migrant Farmworker Protections? A 2025 Landmark Federal Enforcement Case

In 2025, the federal enforcement case against Lion Farms LLC concluded with a consent judgment and permanent injunction. The employer and its owners were ordered to pay $128,899.50 in back wages and civil money penalties for alleged violations affecting migrant and seasonal agricultural workers.

Case: Chavez-DeRemer v. Lion Farms, LLC

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

Case No.: 1:25-cv-00312-KES-EPG (also listed as 1:2025cv00312)

More About the Plaintiff: Chavez-DeRemer v. Lion Farms, LLC

The U.S. Secretary of Labor, Lori Chavez-DeRemer, took action through the Department of Labor to address claims that MSPA and its rules were violated. The U.S. Department of Labor investigated a crash involving workers on February 23, 2024, which prompted the action.

Defendants in the Case: Chavez-DeRemer v. Lion Farms, LLC

The defendants are Lion Farms LLC and its owners and operators: Bruce Lion, Alfred Lion, and Daniel Lion.

A Brief Case History: Chavez-DeRemer v. Lion Farms, LLC

After a car accident on February 23, 2024, that killed seven employees and seriously hurt another while they were on their way to work, the U.S. Department of Labor's Wage and Hour Division looked into Lion Farms. The Department said the employer did not follow the federal government's rules for transporting migrant and seasonal agricultural workers.

The Secretary of Labor filed the lawsuit on March 14, 2025, in the Eastern District of California. The case was resolved by a Consent Judgment and Permanent Injunction entered on August 26, 2025.

What Did the Court Need to Take Into Account?

In this enforcement action, the court had one main question to consider. Did Lion Farms and its owners comply with MSPA regulations? (Particularly the regulations pertaining to safe transportation, accurate wage-statement disclosures, and lawful wage payments).

What Were the Case's Alleged Violations?

The Department of Labor alleged the following MSPA violations:

• Unsafe or illegal transportation practices, including use of vehicles and drivers that did not meet MSPA licensing and insurance requirements.

• Charging workers a transportation fee that investigators deemed unlawful due to the alleged transportation violations.

• Failure to provide required wage statement information, such as workers’ permanent addresses and the employer’s identification number.

Unpaid wages: The agency calculated $39,013 in back wages owed to 12 employees.

The consent judgment also references alleged MSPA violations from October 16, 2022 through February 24, 2024.

What Was the Outcome of the Case?

The August 26, 2025 consent judgment:

1. Entered judgment totaling $128,899.50, consisting of: $39,013.00 in back wages, and $89,886.50 in civil money penalties.

2. Imposed a permanent injunction requiring future compliance and prohibiting further MSPA violations.

Why This 2025 Wage-and-Hour Enforcement Case Was Historic

Regarded as a landmark case for 2025, this wage-and-hour enforcement combined back pay/wage relief, significant civil money penalties, and a permanent injunction in a matter involving alleged safety and pay violations affecting vulnerable agricultural workers, despite the fact that MSPA is a farmworker protection statute rather than the FLSA.

FAQ: Chavez-DeRemer v. Lion Farms, LLC

Q: What is MSPA?

A: MSPA is a federal law setting protections for migrant/seasonal agricultural workers. Protections include requirements regarding disclosures, wage statements, and certain working-condition safeguards (including transportation safety standards).

Q: What monetary relief did the court order in the Chavez-DeRemer v. Lion Farms, LLC case?

A: The consent judgment totaled $128,899.50 ($39,013.00 in back wages and $89,886.50 in civil money penalties).

Q: What is a consent judgment?

A: A consent judgment is a court order entered based on the parties’ agreement. It is binding and enforceable even though it resolves the case without a trial.

Q: Did the court’s order include future compliance requirements?

A: Yes. The order included a permanent injunction designed to prevent future violations and require compliance going forward.

If you believe you were denied earned wages, charged improper work-related fees, or not provided required wage information, the employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help you understand your options. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss potential recovery of unpaid wages and legal accountability.

Did Innovative Wall Systems Shortchange Workers on Overtime and Travel Time?

In recent news, the wage and hour enforcement case alleging that Innovative Wall Systems, Inc. engaged in multiple labor law violations came to an end with the Court ruling in favor of the plaintiff.

Case: Lori Chavez-Deremer v. Innovative Wall Systems

Court: U.S. District Court for the Southern District of California

Case No.: 3:25-cv-02240-GPC-DDL (also listed as 3:2025cv02240)

Filed: August 28, 2025

Disposition: Consent Judgment signed September 11, 2025 and filed September 12, 2025

Presiding Judge: Gonzalo P. Curiel

Get to Know the Plaintiff in the Case:

The plaintiff is Lori Chavez-DeRemer, in her official capacity as the U.S. Secretary of Labor, bringing the action under federal enforcement authority of the Fair Labor Standards Act (FLSA). minimum wage, overtime, and recordkeeping violations affecting 580 workers. The case serves as a solid reminder to employers that, even when workers are paid on a per-unit or production basis, accurate time records must be maintained and overtime premiums must be paid when employees exceed 40 hours in a workweek.

Who Was the Defendant in the Case?

The defendant, Innovative Wall Systems, Inc., is a California corporation doing business as Alta Drywall, and Jason Shane Bellamy (identified in public summaries as the company’s president and CEO).

A Brief History of the Case: Lori Chavez-Deremer v. Innovative Wall Systems

The U.S. Department of Labor’s Wage and Hour Division conducted an investigation into Innovative Wall Systems’ timekeeping and pay practices.

Aug. 28, 2025: The Department of Labor filed an enforcement lawsuit against Innovative Wall Systems in the Southern District of California.

Aug. 28, 2025: Notice of settlement was filed (same day complaint was filed).

Sept. 11, 2025: Consent of judgment was signed.

Sept. 12, 2025: Consent of judgment was filed.

The consent judgment imposed injunctive relief (prohibiting future FLSA violations), back wages, liquidated damages, and a civil money penalty.

What Were the Labor Law Violation Allegations?

Federal investigators alleged that Innovative Wall Systems failed to accurately record compensable time, including pre- and post-shift work, travel time (to and from job sites), and Saturday work. The complaint also alleged that the company failed to pay accurate overtime wages and that its problematic timekeeping practices resulted in wage-and-hour violations.

The Outcome of the Wage and Hour Action: Court-Ordered Relief

The consent judgment required the company to pay $790,000 in back wages to affected employees, liquidated damages, and a civil penalty.

Becoming a Landmark Wage-and-Hour Case of 2025

What makes this particular wage and hour case a landmark case of 2025? There are several reasons. First, it was a big case, in terms of the number of affected workers and the reach of the ripples it made in the industry. The alleged violations affected 580 identified workers. Second, the case also serves as an obvious example of how quickly federal enforcement can yield binding injunctive and monetary relief, with the exceedingly rapid progression from filing to settlement. Third, the case’s allegations centered on travel time as “compensable time,” a common sore spot in labor law in the construction industry. And fourth, the fact that a civil money penalty was included underscores that the government did not view this as a minor or technical offense, but a serious one that needed a heavy-handed consequence.

FAQ: Chavez-Deremer v. Innovative Wall Systems

Q: What is “travel time” and when can it be compensable?

A: Certain travel time can be compensable under wage-and-hour law, including (in many settings) travel that occurs during the workday, such as travel between jobsites (depending on the facts and the applicable rules).

Q: What are my rights regarding overtime pay in California?

A: In California, most employees are entitled to receive overtime pay for hours worked over 8 in a day or 40 in a week. Specific exemptions may apply, so it’s essential to consult with an attorney to understand your rights.

Q: How can I determine if I am misclassified as an exempt employee?

A: Misclassification can occur when employers incorrectly classify employees as exempt from overtime. If you believe you should be eligible for overtime pay, consider speaking with an employment attorney who can review your job duties and classification.

Q: What does it mean when a case ends in a “consent judgment”?

A: A consent judgment is basically a settlement that becomes a court order. The parties agree to specific terms, the judge signs off, and those terms are enforceable—so failing to follow them can lead to serious consequences.

Q: Does a consent judgment mean the employer admitted wrongdoing?

A: Not always. Many consent judgments resolve a dispute without a full trial or a formal admission of fault. But the bottom line is the same: once the court enters it, the order is binding.

If you believe you were denied overtime, shorted on travel time or other compensable hours, or paid in a way that did not meet minimum wage and overtime requirements, the wage-and-hour attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help evaluate your potential claims. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss your options for pursuing unpaid wages and accountability under the law.

Did a Federal Court Block the DOL’s 2025 Overtime Salary Threshold Increase Nationwide?

For employers and salaried workers alike, the Department of Labor’s 2024 overtime rule promised a major shift in who would qualify for overtime pay starting January 1, 2025. But a federal court in Texas ultimately set aside and vacated the rule nationwide, preventing the planned 2025 salary-threshold increase from taking effect and resetting compliance expectations across the country. Below is a case-study summary of State of Texas v. U.S. Department of Labor, the decision frequently described as a “national vacatur” because it did more than block enforcement for a single plaintiff; it invalidated the rule nationwide.

Case: State of Texas v. U.S. Department of Labor

Court: United States District Court, Eastern District of Texas (Sherman Division)

Case No.: Civil No. 4:24-cv-499-SDJ (lead case), consolidated with 4:24-cv-468-SDJ

Decision Date: November 15, 2024

Judge: District Judge Sean D. Jordan

Outcome: The “2024 Rule” was set aside and vacated

The Plaintiff in the Case: The State of Texas

The lead plaintiff was the State of Texas, joined in the consolidated litigation by a coalition of employer and trade-organization plaintiffs challenging the Department of Labor’s overtime rule as exceeding the agency’s statutory authority.

Get to Know the Defendant in the Case: U.S. Department of Labor

The defendant was the U.S. Department of Labor and agency officials responsible for implementing and enforcing the overtime rule (including the Department's leadership and the Wage and Hour Division).

A Brief Case History: State of Texas v. U.S. DOL

In April 2024, the U.S. Department of Labor finalized a rule that revised the salary thresholds for “white-collar” FLSA exemptions for executive, administrative, and professional employees. Under the new rule, a two-step salary threshold increase was implemented alongside an automatic updating mechanism:

On July 1, 2024, salary thresholds increased from $684/week ($35,568/year) to $844/week ($43,888/year)

On January 1, 2025, salary thresholds were scheduled to increase to $1,128/week ($58,656/year)

In addition, highly compensated employees (HCE) were also going to see an increase; with the salary threshold scheduled to rise to $151,164/year on January 1, 2025, and undergo automatic updates beginning in 2027.

Challenging the Rule in Court: Texas v. U.S. DOL

Responding to the new rule affecting salary thresholds for white-collar exemptions under FLSA, Texas filed a lawsuit attempting to stop it before it went into effect. In June 2024, the court issued an injunction preventing the Department from enforcing the rule against Texas as an employer. However, the July 1, 2024 increase continued to apply to other employers nationwide.

The cases were consolidated and proceeded on cross-motions for summary judgment. On November 15, 2024, Judge Jordan granted summary judgment for the plaintiffs and issued a memorandum opinion and order that set aside and vacated the 2024 Rule.

The federal government appealed the ruling to the Fifth Circuit. The dispute remained active into 2025.

What is the Main Question in the Case?

The main question in the case was whether the U.S. Department of Labor exceeded its authority to define and “delimit” the FLSA executive, administrative, and professional exemptions when it issued the 2024 rule raising salary thresholds and adding an automatic updating mechanism.

What Were the Allegations and Arguments in the Case?

The plaintiffs argued that the 2024 rule exceeded the FLSA's limits because it raised the salary level so significantly that it would override the duties-based inquiry Congress wrote into the statute, effectively making exemption status turn primarily on pay level rather than job duties for millions of workers. Additionally, the court had to consider the automatic updating mechanism and arguments that it would unlawfully allow future salary threshold increases without undergoing the notice-and-comment rulemaking process that generally governs such major regulatory changes.

The Court’s Decision: Texas v. U.S. DOL

The court ruled for Texas and the other plaintiffs and held that the Department’s rule exceeded its statutory authority, granting summary judgment and ordering that the 2024 Rule be “set aside and vacated.” Since the rule was vacated, the planned salary threshold for January 1, 2025 did not take effect. The ruling also nullified the prior July 1, 2024 increase, so thresholds reverted to pre-rule status.

What Makes this Wage-and-Hour Decision a Landmark Case?

Although the order was issued in late 2024, its practical impact landed squarely in 2025. The DOL’s rule was designed around a major January 1, 2025, increase in the salary threshold and a new standard for recurring updates. By vacating the rule nationwide, the Court changed the compliance landscape overnight, particularly for employers that had prepared for (or already completed) reclassifications and pay adjustments in anticipation of the 2025 increase scheduled under the 2024 rule.

Just as importantly, the decision is frequently cited for its remedy: rather than limiting relief to the plaintiffs, the court vacated the rule itself—functionally removing it from the books nationwide, at least unless and until it is revived through appellate review or future rulemaking.

FAQ: Texas v. U.S. DOL

Q: What did the DOL’s 2024 overtime rule try to change?

A: It raised the minimum salary level for the executive, administrative, and professional exemptions from $684/week to $844/week (July 1, 2024), then planned to raise it again to $1,128/week on January 1, 2025, and also increased the HCE threshold—plus it added automatic updates beginning in 2027.

Q: What did the court do in State of Texas v. U.S. Department of Labor?

A: The court granted summary judgment for the plaintiffs and ordered that the 2024 Rule be set aside and vacated.

Q: Did the decision only apply in Texas?

A: No. The earlier injunction was limited to Texas as an employer, but the November 15, 2024 order vacated the rule, and it has since been widely understood to apply nationwide.

Q: What salary threshold applied after the rule was vacated?

A: The salary level reverted to $684/week ($35,568/year) for the standard salary threshold, and the HCE threshold reverted to $107,432/year.

Q: Was the decision appealed?

A: Yes. The federal government appealed the ruling to the Fifth Circuit, and the litigation remained active into 2025.

If you believe you were misclassified as exempt, denied overtime, or not paid for all hours worked, the wage-and-hour attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help assess your potential claims and explain your options under federal and state law. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss how you may be able to pursue unpaid wages and accountability.

The E.M.D. Suit: A Misclassification Complaint that Reshaped Overtime Exemption Disputes

The E.M.D Sales, Inc. v. Carrera case went all the way to the U.S. Supreme Court, where the Court's 2025 decision reshaped how overtime exemption disputes are proven under the FLSA (Fair Labor Standards Act). At the center of the case is whether workers classified as “outside sales” were improperly denied overtime, and what level of proof employers must meet to defend an exemption.

The Supreme Court case, E.M.D. Sales Inc. v. Carrera arose from an FLSA overtime lawsuit originally filed in Maryland (U.S. District Court for the District of Maryland).

Case: Carrera v. E.M.D. Sales, Inc.

Court: U.S. District Court, District of Maryland

Case No.: 1:17-cv-03066-JKB

Where the Case Started: District Court

The case began as an overtime lawsuit filed in 2017 in the U.S. District Court for the District of Maryland: Carrera et al. v. E.M.D. Sales, Inc. et al., Civil No. JKB-17-3066 (1:17-cv-03066). The plaintiffs, Faustino Sanchez Carrera, Magdaleno Gervacio, and Jesus David Muro, worked as sales representatives. The group sued their employer and its CEO, claiming they failed to pay overtime wages (violating the Fair Labor Standards Act (FLSA)). However, E.M.D. argued the workers were exempt as “outside salesmen.”

The Two Parties in the Case: Carrera v. E.M.D. Sales, Inc.

The plaintiffs who originally filed the suit are Faustino Sanchez Carrera, Jesus David Muro, and Magdaleno Gervacio, who worked as sales representatives for E.M.D. Sales. The plaintiffs alleged they regularly worked more than 40 hours in one week but were denied overtime pay, a practice that violates the Fair Labor Standards Act (FLSA). The defendants are E.M.D. Sales, Inc., a food-products distributor, and its CEO, Elda M. Devarie. The company maintained that the plaintiffs were properly treated as exempt “outside sales” employees and therefore not entitled to overtime under the FLSA.

After the Bench Trial: Circuit Court

After the bench trial in March 2021, the district court ruled in favor of the employees, finding that E.M.D. failed to meet the clear-and-convincing standard for the outside sales exemption under that circuit's law. Both parties appealed to the U.S. Court of Appeals for the Fourth Circuit. The Fourth Circuit affirmed and maintained the heightened proof standard (U.S. Court of Appeals for the Fourth Circuit, Case Nos.: 21-1897 and 21-1924).

Petitioning the U.S. Supreme Court:

After the Fourth Circuit affirmed and maintained the District Court’s decision in E.M.D. Sales, Inc. v. Carrera, E.M.D. petitioned the U.S. Supreme Court, which granted certiorari (June 17, 2024), heard argument (November 5, 2024), and decided the case (January 15, 2025). In doing so, the U.S. Supreme Court held that employers need only prove FLSA exemptions by a preponderance of the evidence.

The Main Question in the Case:

The central legal question was what burden of proof an employer must meet to establish that an employee falls within an exemption to the Fair Labor Standards Act (FLSA). Here, the “outside sales” exemption is used to deny overtime pay. Specifically, the Supreme Court addressed whether an employer must prove an exemption by clear and convincing evidence (a heightened standard applied by the Fourth Circuit) or by the ordinary civil standard, preponderance of the evidence.

A Summary of the Allegations in the Case:

The plaintiffs—three sales representatives—alleged that E.M.D. Sales denied them overtime pay required by the Fair Labor Standards Act (FLSA), even though they routinely worked more than 40 hours per week. They contended their day-to-day work did not fit the “outside sales” exemption because much of their time was spent on non-exempt tasks tied to servicing existing accounts (rather than primarily making sales away from the employer’s place of business).

E.M.D. Sales disputed the claim and maintained the workers were properly classified as exempt outside sales employees, meaning the company argued overtime was not owed under the FLSA.

FAQ: E.M.D. Sales Inc. v. Carrera

Q: What is the “outside sales” exemption under the FLSA?

A: It is an overtime exemption that can apply when an employee’s primary duty is making sales (or obtaining orders/contracts), and the employee is customarily and regularly working away from the employer’s place of business.

Q: In E.M.D.Sales, Inc. v. Carrera: What was the Supreme Court’s decision?

A: The Court held that employers must prove exemptions under FLSA using the ordinary civil standard (preponderance of the evidence) rather than a heightened clear and convincing standard.

Q: Did the decision in this case result in a change to the definition of “outside sales exemption?”

A: No, the definition of “outside sales exemption” remained the same. However, the Court’s decision addressed the strength of evidence the employer must provide to establish that an exemption applies.

Q: What is the practical meaning of “preponderance of the evidence”?

A: This phrase means the employer must show it is more likely than not that the exemption applies based on the evidence presented in the case.

Q: What should employees and employers take away from this case?

A: Employees should understand that exemption disputes are heavily fact-driven (what the job actually requires day-to-day). Employers should ensure that job duties, supervision, and documentation align with any exemption they rely on, because they still bear the burden of proving it.

If you believe you were misclassified as exempt and denied overtime pay, or you were not paid for all hours worked, the employment law attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can evaluate your wage-and-hour claims and explain your options. Contact the firm’s offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago to discuss how you may be able to recover unpaid wages and pursue accountability under the law.

Can a Company Be Liable for Wrongful Death Based on a Teen’s Interactions With an AI Chatbot?

In Raine v. OpenAI Inc., a family filed a wrongful death lawsuit alleging that a teenager’s interactions with an AI chatbot contributed to his death.

Case: Raine v. OpenAI Inc.

Court: California Superior Court, San Francisco County

Case No.: CGC25628528

The Plaintiff: Raine v. OpenAI Inc.

The plaintiffs are the family of Adam Raine, a California high school student who died by suicide at age 16. The family alleges that interactions with ChatGPT played a role in his death and that OpenAI should be held responsible under wrongful death and related civil theories.

Who Are the Defendants in the Case?

OpenAI Inc. is the defendant in this case. OpenAI is an artificial intelligence company that develops and operates ChatGPT, a consumer-facing chatbot product. The family also sued OpenAI’s chief executive officer in connection with the same events.

A Brief History of the Raine v. OpenAI Case

The family filed suit in San Francisco County Superior Court, asserting claims that include wrongful death, product liability, and negligence. In response, OpenAI filed court papers disputing the allegation that ChatGPT caused the death and describing the teen as having had significant risk factors for self-harm before using the product. OpenAI’s filing also claims that ChatGPT repeatedly encouraged the teen to seek support from trusted individuals and crisis resources, stating that this occurred more than 100 times.

Following the wrongful death lawsuit, OpenAI announced changes to ChatGPT, including added controls that allow parents to limit how teenagers use the chatbot and alerts if the system determines a teenager may be in distress. The case remains active, and the court has not yet issued final findings designating liability.

The Main Question in the Case

Can OpenAI be held legally responsible for wrongful death and related civil claims based on a teenager’s interactions with an AI chatbot?

The Allegations: Raine v. OpenAI Inc.

Based on the verified summary you provided, the lawsuit includes allegations such as:

1. Wrongful Death: The family of the deceased teen alleges the product’s conduct and/or failures contributed to their child’s death and that the defendant should be held liable for the resulting loss.

2. Product Liability: The complaint asserts the consumer product was unsafe as designed, lacked adequate safeguards, and failed to provide adequate warnings for foreseeable use and misuse.

3. Negligence: The lawsuit also alleges negligence, which typically centers on whether the company acted reasonably in designing, deploying, monitoring, and updating a product used by the public, including minors.

OpenAI disputes these allegations and argues that the product was not the cause of the death based on the overall chat history and the teen’s preexisting risk factors described in its filing.

OpenAI’s Defense Position as Described in the Court Filing

The company’s response to the wrongful death lawsuit emphasized several key themes:

* Tragedy acknowledged, causation denied: OpenAI described the death as a tragedy but asserted it was not caused by ChatGPT, citing the full chat history as evidence.

* Safety prompts and directing the user to seek help: OpenAI stated that ChatGPT directed the teen to connect with crisis resources and trusted individuals more than 100 times.

* Preexisting risk factors: OpenAI asserted the teen exhibited significant risk factors for self-harm before he ever used ChatGPT.

* Company changes after the lawsuit: After the suit was filed, OpenAI announced new controls for parents and alert mechanisms for potential teen distress.

When considering the defensive arguments, the court will have to consider the evidence, any applicable legal standards, and its own evaluation of foreseeability, causation, and duty.

FAQ: Raine v. OpenAI Inc.

Q: What is a wrongful death claim?

A: A wrongful death claim is a civil action brought by certain surviving family members or representatives seeking damages after a person dies due to another party’s alleged wrongful act or neglect.

Q: What does “product liability” usually mean in a lawsuit like this?

A: Product liability claims generally allege a product was unsafe due to design, inadequate warnings, or insufficient safeguards, and that the unsafe condition contributed to harm.

Q: Does an AI company automatically become liable if a user is harmed after using the product?

A: Not automatically. Liability typically depends on duty, breach, causation, and damages, along with defenses such as warnings, safety measures, user conduct, and whether the harm was foreseeable and substantially caused by the product.

Q: What is the case’s current posture based on what’s been shared?

A: The case has been filed, and OpenAI has responded with arguments disputing causation and emphasizing safety prompts. The court has not yet made final findings on liability.

Q: Why do companies change products after lawsuits are filed?

A: Companies sometimes update safeguards, warnings, and controls in response to risk concerns, public scrutiny, or internal reviews. Those changes do not necessarily determine liability, but they can become part of the broader story in litigation.

If you lost a loved one and believe a company’s product design, safety failures, or negligent conduct contributed to that death, the wrongful death attorneys at Blumenthal Nordrehaug Bhowmik De Blouw LLP can help. Contact one of our offices in Los Angeles, San Diego, San Francisco, Sacramento, Riverside, or Chicago today to learn how to pursue accountability and justice.