Last November we learned that Judge Richard Posner of the 7th
Circuit Court of Appeals is not categorically opposed to class
actions, even when the defendant claims that individual facts
predominate over classwide issues. In a case called Butler v.
Sears, which involved class allegations about mold-prone
Whirlpool washing machines, Sears had claimed Whirlpool modified
the design on various washing machine models, so owners'
experiences varied too widely to permit the suit to proceed as a
class action. But Posner's succinct, tightly reasoned opinion
concluded that the key question is efficiency. "Is it more
efficient, in terms both of economy of judicial resources and of
the expense of litigation to the parties, to decide some issues
on a class basis or all issues in separate trials?" he wrote. In
the moldy washer case, he said, it made sense to resolve whether
the machines were defective in a single proceeding (or perhaps
subclass proceedings) rather than to force hundreds of owners to
On Monday we learned that Posner does not believe economic
efficiency justifies every collective action. In particular, he
said that a trial involving unpaid overtime claims by a small
group of DirectSat employees wouldn't prove anything tangible
about the damages claims of 2,341 home satellite dish repair and
installation technicians. Even though DirectSat technicians are
covered by wage-and-hour laws, they work on a per-job basis
rather than at an hourly rate, "more like independent
contractors than employees," Posner wrote. If the opt-in class
proposed by three technicians and their lawyers at Axley
Brynelson had sought declaratory or injunctive relief based on
DirectSat's supposed practice of shortchanging workers by
discouraging them from recording time spent on activities such
as calling customers, Posner said, it might not have mattered
that individual technicians work at varying efficiencies and put
varying effort into the job.
But because the class (technically, the collective group)
wanted to collect money damages, Posner wrote in a 14-page opinion, plaintiffs' lawyers would have to show some way to
calculate those damages short of holding 2,341 minitrials. Their
suggestion of trying the claims of 42 supposedly representative
plaintiffs is no solution, the judge said on behalf of a
three-judge panel that also included Judges William Bauer and
Ann Williams, since they offered no evidence that the selected
technicians were representative of larger subclasses.
"They continue on appeal to labor under the misapprehension
that testimony by 42 unrepresentative 'representative'
witnesses, supplemented by other kinds of evidence that they
have been unable to specify, would enable a rational
determination of each class member's damages," Posner wrote.
"They must think that like most class action suits this one
would not be tried - that if we ordered a class or classes
certified, DirectSat would settle. That may be a realistic
conjecture, but class counsel cannot be permitted to force
settlement by refusing to agree to a reasonable method of trial
should settlement negotiations fail."
Posner did suggest an alternative for workers like the
DirectSat technicians, who are supposedly out several thousand
dollars each. Thousand-dollar claims might not justify
individual private litigation against their employer, but the
Department of Labor can get them the same money damages,
according to the judge.
Posner stopped well short of concluding that all
wage-and-hour collective actions are unjustified. The DirectSat
techs work unusually individualized schedules, and Posner found
that their lawyers responded to a reasonable request from the
trial court for a case management plan "rather truculently." The
judge cites all kinds of complications in establishing a
collective damages theory but doesn't say it would be
Nevertheless, if you're prosecuting an overtime class action
in the 7th Circuit, it would be a good idea to be able to show
that the workers in the case suffered similar damages.
I left messages for Michael Modl of Axley, who argued the
appeal for the plaintiffs, and Miguel Estrada of Gibson, Dunn &
Crutcher, who represented DirectSat at the 7th Circuit. Neither
got back to me.
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