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In a recent motion filed in Monroe v. FTS USA, LLC, No. 2:08-cv-02100 (D.E. 441-1), defendants Unitek USA, LLC and its subsidiary, FTS USA, LLC, (collectively “UniTek”) asserted that a $3.8 million judgment awarded to a class of cable technicians should be tossed in light of the Seventh Circuit’s ruling in Espenscheid, v. DirectSat USA, LLC, 705 F.3d 770 (7th Cir. 2013), which upheld the decertification of a class of satellite technicians.  UniTek maintained in its motion filed March 11, 2013, that the facts of the Espenscheid case so closely resembled the facts in Monroe, that decertification, or alternatively, judgment as a matter of law or a new trial was necessary. 

In Monroe, plaintiffs, three cable technicians, brought claims under the Fair Labor Standards Act (“FLSA”) alleging that UniTek failed to pay plaintiffs and all others similarly situated for overtime hours worked by inaccurately completing or altering timesheets, instructing plaintiffs to underreport hours worked and creating a system that discouraged proper reporting for fear of termination or a shorter work schedule.  D.E. 441-1 at 7 n. 4.   Similarly, the Espenscheid plaintiffs brought an action under the FLSA and parallel state laws against UniTek USA LLC and its subsidiary, DirectSat USA LLC, (collectively “DirectSat”) alleging that DirectSat compelled the satellite technicians to do work for which they were not compensated at all and to work more than 40 hours a week without being paid overtime and “concealed their violations by forbidding the technicians to record time spent on certain tasks, such as calling customers, filling out paperwork and picking up tools from one of the company’s warehouses.”  705 F. 3d at 773.   Like the technicians in Espenscheid, the FTS technicians were paid piece rate, meaning they were compensated for each type of job they performed. 

UniTek argued throughout the case that the claims brought by the FTS technicians were not “amenable to collective treatment” because they required “individualized factual determinations and defenses, thereby rendering a collective action impractical and prejudicial.” D.E. 441-1 at 1,3.   UniTek particularly opposed plaintiffs’ use of a representative sample of 18 technicians from the approximately 300 member class to prove liability and damages at trial.  UniTek maintained that to prove damages the plaintiff would need to show the hours she worked and the hours for which she was not compensated during each relevant time period, which was affected by “the state in which the Plaintiff worked, what skill set he or she possessed, the number of jobs he or she performed during the relevant time period, the type of jobs he worked and for which FTS customer, (i.e., which cable company) the jobs were performed.”  D.E. 441-1 at 4.  The District Court for the Western District of Tennessee Western Division, however, ruled that collective treatment was proper because plaintiffs’ claims relied on a “series of common methods by which Defendants allegedly deprive technicians proper overtime pay regardless of location or supervisor.”  D.E. 238 at 25.  In a single-page order, the court further held that the class representatives identified by plaintiffs sufficiently represented the class and allowed the case to proceed to trial.  D.E. 308.

The Espenscheid ruling, which came down two and a half weeks after the parties had fully briefed UniTek’s post-trial renewed motion for judgment as a matter of law, breathed new life into UniTek’s arguments prompting the current motion.   Like the district court in Monroe, the district court in Espenscheid initially certified the class using the lenient two-part standard for FLSA certification.  But as the case proceeded closer to trial and the record became more developed, the court ruled that despite its holding that plaintiffs’ claims were grounded primarily in defendants’ uniform policies and practices at the certification stage, “proof of plaintiffs’ claims depended on how individual technicians responded to the numerous policies and practices at issue in the case.”  Espenscheid v. DirectSat USA, LLC, 2011 WL 2009967, at *7 (W.D. Wis. May 23, 2011).  The court further held that due to the divergent factual experiences of the technicians as well as plaintiffs’ proposed plan to use representative proof to establish an “average” number of uncompensated hours worked by the entire class, “it would be difficult for a jury to determine what experiences are representative of the entire group of technicians at issue in this case without gross margins of error.”  Id., at 6.  Therefore, the court decertified the class and the Seventh Circuit affirmed the decision in its entirety.

Specifically, the Seventh Circuit held that four complicating factors prevented collective adjudication: 1) extrapolating from the experiences of 42 representatives to determine damages for the class of 2341 technicians would unjustly result  in a windfall for some while others would be undercompensated based on the variance in the technicians tasks, schedules, how they were told to report their time and how they reported it; 2) the piece rate system itself created inherent computation difficulties because “the hourly wage varies from job to job and worker to worker;”  3)  the plaintiffs’ representative proof could not account for workers who underreported their time to impress the company to seek promotion and 4) the technicians failed to keep records of the time they worked but did not report.  D.E. 441-1 at 28-29. 

UniTek claimed the Seventh Circuit decision squarely applied to Monroe.  It also cited to Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011), to support its position that the “handpicked ‘unrepresentative representative’ class members” chosen to testify at trial “contravened the Defendants’ right to present all available defenses and is the kind of approach specifically rejected as unconstitutional by the Supreme Court.”  441-1 at 45.   Unitek further argued that the Espenscheid decision suggests that a more rigorous analysis for representative proof is necessary.  Whether the Tennessee district court will agree is yet to be known.

UniTek Argues $3.8M FLSA Award Cannot Stand in Light of Seventh Circuit Decertification Decision