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Judge Posner Looks Askance at Wage-and-Hour Class Action

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by Publius
Posted February 05, 2013, 6:27 PM

Alison Frankel writes at Thomson Reuters:

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 litigate individually.

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." . . .

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