Seventh Circuit: A 'Shapeless, Free-Wheeling' Trial Plan Is Grounds For Decertifying Class

Keywords: Seventh Circuit, Class action, employers, plaintiffs

The Seventh Circuit's recent decision in Espenscheid v. DirectSat USA, LLC authored by Judge Posneris full of good news for employers and other class-action defendants.

The case is a hybrid collective action under the Fair Labor Standards Act (pdf) and opt-out Rule 23(b)(3) class action asserting state-law wage-and-hour claims. The plaintiffs a group of home satellite-dish installers who were paid by the job rather than by the hour sued their employer for allegedly failing to ensure that they were paid the federal minimum wage and time-and-a-half for overtime work. The district court initially certified the collective and class actions, but decertified them after seeing the plaintiffs' trial plan. The Seventh Circuit affirmed.

There's a lot to like about the decision:

The court holds that the standard for certifying an opt-in collective actions is the same as the standard for certifying an opt-out class action under Rule 23. That's great news for employers. Other courts have held that the standard for certifying collective actions is more lenientin our view, more loosey-gooseythan the requirements of Rules 23(a) and (b)(3). See, e.g., O'Brien v. Ed Donnelly Enters., Inc., 575 F.3d 567, 584-85 (6th Cir. 2009). The Seventh Circuit approved of the district court's decision requiring the plaintiffs to submit a "specific plan for litigating the case" as it had been initially certified. Such a request is "reasonable," the court explained, "given the difficulty of trying a class action." The court's approval of this growing trend of requiring plaintiffs to submit detailed trial plans benefits defendants in all types of class actions; such plans often smoke out individualized issues and make clear that the proposed class would be hopelessly unmanageable at trial. Because the trial plan submitted by class counsel confirmed that calculating damages would require individualized inquiries, the Seventh Circuit held that the class was properly decertified. That's great news: Many courts have disregarded individualized issues as to damages by invoking the mantra that they pose no obstacle to class certification. These courts, of course, virtually never have to try these cases, which almost invariably settle after certification. But the Seventh Circuit recognized that "2341 separate evidentiary hearings" on damages one for every technician "might swamp the Western District of Wisconsin with its...