On Monday, February 4, the Seventh Circuit decided Espenscheid v. DirectSat, Inc.  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.

One potential early approach to a class action is to “decapitate” it — to knock out the claims of the class representative(s), often by finding some deficiency in their individual claim that supports a motion to dismiss or for summary judgment.  Another approach, though, is to settle with the named plaintiffs.  That buys no peace with other class members, of course, and so isn’t necessarily the end of the story, but in some cases plaintiffs’ counsel may find recruitment of class reps to be challenging and a decapitation strategy may have more lasting effect.

Although the questions were flying in both directions yesterday, as usual for the Supreme Court, the tone of the Justices’ interaction suggested that Wal-Mart has the edge over the plaintiffs.  As others have reported, Justices Kennedy and Scalia were quite skeptical of the plaintiffs’ theory that store-by-store discretion could be characterized as a common policy subject to a class challenge.  But the argument went well beyond that. 

The Supreme Court, not surprisingly, granted Wal-Mart’s petition for certiorari today, agreeing to review the 500,000-member class certification decision from the Ninth Circuit, which had held 6-5 that the class could be certified, even though, as Judge Kozinski wrote, the class members

held a multitude of jobs, at different levels of Wal-Mart’s hierarchy, for variable lengths of time, in 3,400 stores, sprinkled across 50 states, with a kaleidoscope of supervisors — male and female — subject to a variety of regional policies that all differed depending on each class member’s job, location and period of employment.