On Monday, February 4, the Seventh Circuit decided Espenscheid v. DirectSat, Inc. (PDF). The decision is notable for two holdings. First, Judge Posner held, rather summarily, that there is no good reason to distinguish certification of opt-in FLSA collectives from opt-out Rule 23 classes, and that the same standards should apply. That is welcome news for defense practitioners, as some courts have suggested, without much justification, that certification under the FLSA may not require as rigorous an analysis.
More striking, however, is the decision’s main holding that where damages cannot be proved without consulting each class member, the class should not be certified (or should be decertified). Plaintiffs in Espenscheid proposed to present testimony from 42 of the 2,341 class members, though they were coy about how those 42 were chosen. There was no suggestion, in any event, that the 42 were chosen randomly or that any test of statistical significance was applied to that figure.
The court held that the proposed approach was inadequate, because the actual damages incurred by class members likely varied from person to person, so that an accurate award would require evidence from all 2,341 class members. That need for individualized evidence of damages precluded class certification.
It is not hard to find cases rejecting this argument, and holding instead that variation in damages does not preclude class certification. Espenscheid does not acknowledge any of these decisions.
Because the plaintiffs here alleged that they had been denied overtime pay, and there apparently was no dispute about their nonexempt status or entitlement to overtime for hours worked in excess of 40, liability and damages questions were closely related. In such cases, at least, Espenscheid offers an interesting new argument in opposing class certification, or seeking decertification of a conditionally certified FLSA collective.