SouthEast Waffles tries to block wage-and-hour lawsuit

Troubled restaurant company asks bankruptcy court to void complaint against ex-CEO Shaub, who is accused of routinely docking managers' pay and making them work unpaid overtime

Email | Print By E. Thomas Wood

Jim Shaub

Nashville-based SouthEast Waffles LLC, whose plunge into bankruptcy has provoked angry recriminations from creditors, now wants a judge to keep some of its current and former middle managers from opening a new legal front against it with claims of unpaid overtime and improper salary deductions.

In an appeal filed on Friday (copy at this link), SouthEast Waffles asks the U.S. Bankruptcy Court in Nashville to declare void a lawsuit filed last month in the federal court of the Northern District of Alabama.

John William Fortner, a former division manager for SouthEast Waffles based in the Birmingham area, sued former SouthEast Waffles CEO Jim Shaub personally after filing an earlier complaint against the company that Fortner withdrew when SouthEast Waffles filed for bankruptcy in late August.

The lawsuit (linked here) seeks class-action status incorporating all district, division, regional and area managers operating the company's franchised Waffle House restaurants across Tennessee, Kentucky, Alabama and Mississippi. It claims that SouthEast Waffles wrongly classified its managers as exempt from laws requiring time-and-a-half payment for overtime.

It also asserts that the company has a routine policy of improperly docking managers' wages for amounts "representing cash losses and/or inventory losses at the restaurants."

Federal labor regulations state that an employer can lose its right to exempt a class of employees from overtime rules "if it has an 'actual practice' of making improper deductions from salary." The lawsuit claims that SouthEast Waffles engages in such an "actual practice."

The Fortner case seeks up to three years of back wages as well as other damages.

In seeking to have the case thrown out, SouthEast Waffles argues that its filing violated the "automatic stay" against legal action that the company enjoys while under bankruptcy protection. Even though the lawsuit names Shaub individually rather than the company, SouthEast Waffles says it will have to defend Shaub, and would be obliged to pay any judgment awarded, under the terms of the company's operating agreement.

Barbara Holmes and Glenn Rose of the Nashville firm Harwell Howard Hyne Gabbert & Manner filed the appeal on behalf of SouthEast Waffles.