Feb 5, 2013
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The Death of FLSA Class Actions Has Been Greatly Exaggerated

I got this tweet this morning, from my old law school compatriot and plaintiff’s employment attorney, Walker Lawrence:

After some technical issues,1 I got to the case in question – Espenscheid v. DirectSat USA, LLC. And, needless to say, it’s not good for the plaintiffs. The 7th Circuit affirmed de-certification (i.e. broke up the class action) because damages couldn’t be calculated for all of them as a whole. But FLSA group action death knell? Meh.

In Espenscheid, three employees sued the company collectively – an FLSA version of a class action – on behalf of themselves and 2,341 of their colleagues. They claimed that DirectSat had failed to pay them appropriately for overtime and had forced them to work through lunch and other breaks. The problem was, the employees weren’t paid hourly. They were paid per job. This isn’t a problem in and of itself – you can still file a wage-and-hour case if you weren’t paid by the hour. But you have to show that what you were paid, when divided by the hours you worked, falls below minimum wage, or that it doesn’t include all the overtime you’re due, or whatever.

And here’s where things fell apart for the plaintiffs. They claimed DirectSat tried to obscure the amount they worked by telling them not to report their time (though some did), among other things. Because of the pay structure, there were no records of how long any of the employees worked on any of the jobs for which they were paid.

So how do you figure out what 2,341 people are owed, when you don’t know how long any of them worked? And how do you divvy up the recovery?

The plaintiffs wanted to present a representative sample of 42 employees as a statistical rubric. Based on these 42 employees, the Plaintiffs wanted the court to extrapolate an amount for the whole group of 2,341 employees. You know, statiscital-like. Funny thing about representative samples, though – they have to actually be representative of the whole. Which, per Judge Posner, these were not:

There is no suggestion that sampling methods used in statistical analysis were employed to create a random sample of class members to be the witnesses, or more precisely random samples, each one composed of victims of a particular type of alleged violation.

Stupid science!

The real reason I think this case was so badly destroyed was not because damages are hard to prove; it’s because – in Posner’s view, anyway – the attorney’s didn’t do their job dealing with those difficulties. Right before the quote above, Posner said this:

The plaintiffs proposed to get around the problem of variance by presenting testimony at trial from 42 “representative” members of the class. Class counsel has not explained in his briefs, and was unable to explain to us at the oral argument though pressed repeatedly, how these “representatives” were chosen–whether for example they were volunteers, or perhaps selected by class counsel after extensive interviews and hand picked to magnify the damages sought by the class…

So… that’s not exactly a gold star.

No, this case is not an evisceration of wage and hour class actions. I wish. What it is is a cautionary tale to the attorneys who bring those cases: Make sure you are buttoned the hell up. How will you determine actual damages? How will you differentiate between variations in what members of the class are owed? You have to know these answers before you file that complaint. Because I will definitely be demanding those answers when I respond to your claims.

In this case, the plaintiff’s attorney should’ve looked at the way in which these folks got paid and realized the damages issue was going to be a huge hurdle to jump. Not impossible – as Posner noted – but really, really tough. To show up with 42 people and no explanation for how you found them is not going to cut it.

One last note: Posner does mention that, under these facts, there is no good way to divvy up the recovery fairly. In other words – two guys could have the same jobs for the week, but they could take one guy 20 hours, and the other guy 60 hours. That second guy – the slow one – he’d be entitled to overtime, which means he should get more out of the recovery. But the “representative sample” wouldn’t make those distinctions at all. That’s true, and I’m sure scary for Plaintiff’s attorneys, because it basically craps all over the idea of any statistics ever being sufficient in these types of cases.

But that’s the point – it’s these types of cases. Maybe if every employee had such a different experience, it’s not a great candidate for class action litigation in the first place. There are plenty of workplaces where employees punch time cards, or have policies in place that create uniformity. That just wasn’t the case here.

Well, that’s my two cents2. Hopefully I can get a response from Walker. And also you people. Comments are right down there.

Footnotes:
  1. Read: I am an idiot. []
  2. A really long two cents, obv. []

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