I’ve noted before that Judge Posner of the Seventh Circuit has been particularly prolific in writing class certification opinions.  His latest one, Espenscheid v. DirectSat USA, Inc., No. 12-1943, 2013 U.S. App. LEXIS 2409 (7th Cir. Feb. 4, 2013), makes some key points about the usefulness of trial plans in evaluating whether class treatment is proper and regulatory action being a potentially superior form of relief to a class action.  This latest opinion also contains some dicta about Rule 23(b)(2) that reiterates a conclusion reached in another recent Posner decision. 

Espenscheid was a hybrid of a class action suit and a collective action under the Fair Labor Standards Act.  The putative class consisted of employees of DirectSat who drive around to people’s homes, climb on roofs and install and repair satellite dishes.  They were paid by the job, not by the hour, but needed to keep track of their hours to make sure they were paid at least minimum wage plus overtime where applicable.  Allegedly, the employees were required to do unpaid work, told not to write down some of their time, and in some cases were not paid minimum wage and/or were not paid overtime.  Id. at *5-6, 7-8.  The district court initially certified several subclasses, but later decertified all of them when, after the plaintiffs were asked to submit a trial plan, it became clear the case could not be tried as a class action.  The Seventh Circuit affirmed.

Here are some highlights from the decision: 

  • Trial Plan:  The Seventh Circuit endorsed the district court’s decision to ask the plaintiffs’ counsel for a trial plan, remarking that “[t]his was a reasonable request . . . given the difficulty of trying a class action.”  Id. at *14.  The plaintiffs’ proposal was to have 42 class members testify at trial, but there was no showing that those 42 would be statistically or otherwise properly representative of the class, or that their experience properly could be extrapolated to the class as a whole.  The court wrote that “[t]o extrapolate from the experience of the 42 to that of the 2341 [class members] would require that ll 2341 have done roughly the same amount of work, including the same amount of overtime work, and had been paid the same wage.  No one thinks there was such uniformity.”  Id. at *9 (citations omitted).  This is a great example of how a trial plan can aid a court in evaluating whether class treatment is proper.  Defendants may want to ask for one.  While it may not always be an effective defense strategy, in many cases the plaintiff’s trial plan will be unworkable or will violate the defendant’s due process or Seventh Amendment rights. 
  • Regulatory Action as an Alternative to a Class Action:  Judge Posner suggested that the plaintiffs and their counsel had “overlooked a promising alternative to class action treatment in a case such as this . . . to complaint to the Department of Labor.”  Id. at *16.  Judge Posner noted that the Department of Labor has brought a number of enforcement actions on the type of issues presented by this case and has been successful in doing so.  Id.  From a defendant’s perspective, this is a potential argument against superiority.  Class treatment may not be the superior method of adjudication where it is particularly cumbersome and time-consuming for the judicial system and a state regulator (such as an insurance department, in the case of an insurance company) has adequate power to address the type of concern presented by the allegations in the class action. 
  • Rule 23(b)(2):  Judge Posner suggested in dicta that perhaps the plaintiffs could have sought only injunctive or declaratory relief under Rule 23(b)(2), which potentially could avoid the problem of individualized issues in determining damages.  Judge Posner’s recent decision in Johnson v. Meriter Health Servs. Employee Retirement Plan, 702 F.3d 364 (7th Cir. 2012) (my blog post) speaks to these issues.  But I wonder whether that is really an end-run around the rule that class actions that are in effect seeking damages (which would be the real objective of the declaratory or injunctive relief) belong under 23(b)(3), in order to protect class members’ rights to have notice and the opportunity to opt-out.  And how would a declaration or injunction establish liability as to any particular class member?  In this kind of case it seems that the most that could be ordered would be some kind of advisory opinion that would not resolve any particular individual’s claim.