The Seventh Circuit has now issued a decision relating to the application of Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), to state law overtime disputes. While the decision is curious for many reasons, it may prove problematic for Seventh Circuit employers as it relates both to the issue of class definitions and as to how the Dukes “commonality” determination will apply to wage and hour claims.

In Ross v. RBS Citizens, N.A.pdfCase No. 10-3848 (7th Cir., Jan. 27, 2012), the plaintiffs brought two sets of claims against Charter One Bank. First, the plaintiffs contended that the bank denied overtime by discouraging hourly workers to record their overtime, “erased” their time when they did record it, and improperly used the concept of “comp” time. Second, they claimed that the bank misclassified assistant branch managers as exempt, arguing, as one might expect, that their jobs consisted primarily of non-exempt tasks. Although they asserted claims under both federal and Illinois law, they only sought certification as to the state law wage and hour claims.

The trial court certified two classes. The first was of hourly employees affected by “unlawful compensation policies.” The second was of the salaried assistant branch managers, who also were subject to “unlawful compensation policies.” The problem with these definitions is that they really don’t define the class at all: if the question is whether the class members were subject to “unlawful” policies, then logically if the employer acted lawfully there is no class.

Charter One sought review under Rule 23(f) and the Seventh Circuit originally accepted the case limited to the class definition issue. After oral argument, the Supreme Court decided the Dukes case and the court requested additional briefing on that opinion’s application.

The end result is disappointing and of limited utility for any party. First, one of the Seventh Circuit judges assigned the case died before it was decided, and one of the other judges was a district court judge sitting by designation. Thus, only two judges, and only one Seventh Circuit judge, decided the case. In any event, the court’s analysis of both issues was underwhelming to say the least.

The court first upheld the class definition under Rule 23(c)(1)(B), a Rule designed to protect parties against vague class definitions. The court, following the lead of the Third Circuit, found that a class definition satisfies the rule if it provided a “readily discernible, clear, and precise” definition of the class and a similar “readily discernible, clear, and complete” listing of claims and issues. So far, so good, but where the opinion breaks down is where it addresses the trial court’s definition couched in terms of “unlawful compensation policies.” The court makes no meaningful effort to defend such a definition but, instead, found that with the remainder of the trial court’s opinion made it clear that the classes consisted of (a) all hourly employees; and (b) all assistant managers. That is not a satisfactory answer and largely defeats the purpose of Rule 23(c)(1)(B) because it ignores the trial court’s use of the word “unlawful.” For a host of reasons, including the scope of discovery, the issues at trial and (in subsequent lawsuits) issues of res judicata and collateral estoppel, having an imprecise and questionable class definition only makes litigation of the class issues all the more difficult, unpredictable, and expensive.

The truncated court’s analysis of the Dukes issues, too, was disappointing. It recited some of the Dukes language relating to commonality under Rule 23(a)(2), but largely rejected its application because the proposed class consisted of barely 1,000 employees, rather than the over one million in Dukes. Turning Dukes on its head, the court found that the “glue” binding the case together was the common question of whether the company “policies” resulted in the employees being denied overtime. This was, of course, virtually the opposite of what the Dukes court held, which was that the “common question” was not simply whether the employer discriminated or violated the statute in question. The court refused to review any other issues relating to certification, including the obvious questions of predominance and superiority under Rule 23(b)(3).

The court’s decision will result in further proceedings that will likely be hobbled by the imprecise class definition and cardboard analysis of the commonality and remaining issues. Still, the opinion is likely to be cited by plaintiffs seeking certification of poorly defined classes based on allegations of unwritten policies.

The Bottom Line: The Seventh Circuit has issued a decision making it easier to pursue unfocused class allegations based on fairly general claims of wage and hour violations.