A Chicago federal judge on Wednesday said Groupon Inc sales representatives cannot pursue a class-action lawsuit over the Internet commerce company's failure to pay for overtime before and after its 2011 initial public offering.
U.S. District Judge Edmond Chang said the roughly 1,500 representatives' claims, job duties and alleged injuries were too disparate to justify letting them sue as a group over allegations that Groupon violated Illinois' minimum wage law.
Chang noted that Groupon did eventually adopt more uniform management policies, and that these could "serve as markers" for the plaintiffs to pursue a smaller class action.
He gave the plaintiffs until Sept. 23 to propose a narrower class, or else pursue their claims on an individual basis.
More than 100 Groupon sales representatives are pursuing related claims under the federal Fair Labor Standards Act.
Douglas Werman, a partner at Werman Salas representing the plaintiffs, said: "We're disappointed in the court's decision, and believe it is factually and legally flawed. We are currently evaluating our options."
Groupon spokesman Bill Roberts said the Chicago-based company is pleased with the decision.
Class actions can enable plaintiffs to pursue larger recoveries at lower cost than if they sued individually.
A 2011 U.S. Supreme Court decision involving Wal-Mart Stores Inc, which Chang cited, made it harder for many plaintiffs to pursue such cases.
According to Wednesday's decision, the Groupon lawsuit sought class certification covering the periods Aug. 19, 2008 to March 19, 2011, and Aug. 23, 2011 to the present, when Groupon paid no overtime.
The lawsuit also sought certification for the interim five-month period when Groupon paid overtime, but allegedly less than it was supposed to pay.
Known for its "daily deals," Groupon has under Chief Executive Eric Lefkofsky been trying to evolve into an e-commerce retailer better able to compete with rivals such as Amazon.com Inc.
Groupon went public at $20 per share on Nov. 4, 2011, but have not traded that high since February 2012. The shares on Wednesday closed up 7 cents at $6.53 on the Nasdaq.
The case is Dailey et al v. Groupon Inc, U.S. District Court, Northern District of Illinois, No. 11-05685.
(Reporting by Jonathan Stempel in New York; Editing by David Gregorio)