Aaron Espenscheid v. DirectSat USA, LLC, 688 F.3d 872

Appellants are named plaintiffs in a Fair Labor Standards Act (FLSA) collective action and supplemental state-law claims; district court certified then decertified classes, leaving plaintiffs to pursue individual suits which settled; settlement reserved appeal rights; defendants seek dismissal for lack of jurisdiction due to mootness.
Mootness: settlement moots the appeal, but a settlor’s retained stake to appeal can preserve jurisdiction; lower court’s decision is not vacated when mootness follows settlement.
Standing issue: whether settling named plaintiffs may appeal the denial of class certification given potential benefits from an incentive award; Narouz v. Charter Communications supports standing based on potential incentive award.
Incentive awards: incentive payments (enhancement fees) may confer a financial stake; such awards are tied to certification prospects and class-wide recovery, not limited to post-certification damages.
Collective vs class distinction: collective actions (opt-in) and class actions (opt-out) are treated similarly for certification/decertification and incentives; no clear rule prohibiting incentive awards in collective actions, and certification decisions affect both paths.
Result: the appeal is not barred for lack of standing; the motion to dismiss for lack of jurisdiction is denied.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Standing to appeal denials of class certification	Narouz supports standing via incentive award.	Stevens requires a direct injury; mere financial stake insufficient.	Standing exists due to potential incentive award and representation stake.
Effect of settlement on appellate jurisdiction	Settlement preserves right to appeal; mootness does not bar jurisdiction.	Settlement moots the dispute and divests appellee of grounds to appeal.	Mootness did not deprive appellate jurisdiction; dismissal denied.
Incentive awards in class vs. collective actions	Incentive reward gives tangible stake to appeal in class actions (and possibly collectives).	No explicit provision for incentives in collectives; policy parallels with class actions.	Incentive awards can confer standing; no prohibition on incentives in collectives.
Treatment of collective vs class actions on appeal	Collective actions behave like class actions for certification/appeal purposes.	Differences exist (Rule 23); but appeal considerations align.	No meaningful difference for standing/incentive purposes; appeal allowed.
Authority on incentives and standing cited by court	Prior authorities support stakeholder standing via incentives.	Court should follow Stevens and related precedents strictly.	Key authorities favor keeping the appeal viable given incentive-based stake.

Narouz v. Charter Communications, LLC, 591 F.3d 1261 (9th Cir. 2010) (standing to appeal based on incentive award)
Vermont Agency of Natural Resources v. United States ex rel. Stevens, 529 U.S. 765 (Supreme Court 2000) (standing requires injury-in-fact; inclusion of partial assignee rationale for incentives)
In re Continental Illinois Securities Litigation, 962 F.2d 566 (7th Cir. 1992) (incentive awards contemplated as part of fee/expense structure for class actions)
Nixon v. Fitzgerald, 457 U.S. 731 (1982) (standing where probabilistic but substantial benefit may occur)
Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982) (standing based on prospective relief/relief impact)
Smentek v. Dart, 683 F.3d 373 (7th Cir. 2012) (presence of class members can drive continued litigation after settlement)
Ingram v. The Coca-Cola Co., 200 F.R.D. 685 (N.D. Ga. 2001) (illustrative authority on incentives and class dynamics)
Roberts v. Texaco, Inc., 979 F. Supp. 185 (S.D.N.Y. 1997) (scope of incentives and plaintiff roles in class actions)
Primax Recoveries, Inc. v. Sevilla, 324 F.3d 544 (7th Cir. 2003) (economic rationale for class action incentives)
United States ex rel. Roby v. Boeing Co., 302 F.3d 637 (6th Cir. 2002) (standing with contingent benefits in qui tam-like settings)