03.28.2016

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Updates

The Supreme Court issued its decision in Tyson Foods, Inc. v. Bouaphakeo on March 22, 2016.  The Court held that a group of employees in a class action could use a statistical study to establish the employer’s liability for unpaid overtime.  The employees claimed that they should have been paid for time spent donning and doffing protective gear.

Background: The District Court and Eighth Circuit

Plaintiffs were employees in the kill, cut and retrim departments at Tyson Foods’ pork processing plant in Storm Lake, Iowa.  The employees brought class and collective claims under the Fair Labor Standards Act (FLSA) and Iowa state law for allegedly unpaid overtime related to the time they spent donning and doffing protective gear.  The district court certified an FLSA collective action and a Rule 23 class.

In order to recover on their claims, the employees needed to prove that they had worked more than 40 hours a week, including the time spent donning and doffing protective gear.  In relevant part, the employees attempted to prove their claims through a study performed by an industrial relations expert, Dr. Kenneth Mericle.

Dr. Mericle’s study purported to calculate the average time taken by employees to don and doff their protective gear.  The employees’ second expert then used Dr. Mericle’s averages to determine whether each employee worked more than 40 hours in a week and, if so, to estimate the amount of uncompensated work for each employee.  Ultimately, the employees relied on expert testimony to argue that the class should be awarded $6.7 million in unpaid wages.  The jury awarded the class approximately $2.9 million in unpaid wages, exclusive of liquidated damages.

Tyson Foods moved to set aside the jury verdict, arguing in part that the class should not have been certified.  The district court denied the motion.  On appeal, the U.S. Court of Appeals for the Eighth Circuit affirmed the jury’s judgment and award, finding that the jury could have drawn a “reasonable inference” of classwide liability from the representative proof before it.

Supreme Court Upholds Use of Representative Evidence

In a 6-2 opinion, authored by Justice Anthony Kennedy, the Supreme Court affirmed the Eighth Circuit and held that the class properly proved their claims through the use of expert testimony.  The Court rejected Tyson Food’s argument that individual inquiries were needed to determine whether the amount of time each employee spent donning and doffing, when added to his or her regular hours, amounted to more than 40 hours in a given week. 

The Court refused to adopt “a broad rule against the use in class actions of what the parties call representative evidence.”  Instead, the Court reasoned that the question of whether representative proof or statistical sampling is permissible depends on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action, not whether it is used in a class or individual action.  The Court explained that in some cases “a representative sample is the only practicable means to collect and present relevant data” to establish a defendant’s liability.  In the employment context, the Court cited to its 1946 decision in Anderson v. Mt. Clemens for the proposition that where an employer violates its statutory duty to keep proper records related to time worked, employees need not prove exactly how much time they spent on the uncompensated task, but instead, they may meet their burden by showing they performed work for which they were improperly compensated, and by producing sufficient evidence to show the amount and extent of that work “as a just and reasonable inference.”

The Court reasoned that, because Tyson Foods did not keep records of employees’ donning and doffing time, the class needed statistical studies or representative proof to establish its claims.  The Court concluded that, even if an employee had brought an individual suit, the employee likely would have needed to introduce statistical evidence, such as that provided by Dr. Mericle’s study.

In addressing the issue of how employers can combat the use of such representative evidence, the Court explained that employers may argue that the evidence is “statistically inadequate” or “based on implausible assumptions [that] could not lead to a fair or accurate estimate” of the hours worked.

Implications of Tyson Foods and Undecided Issues

The Supreme Court’s decision in Tyson Foods means that employers will need to rigorously combat the validity of aggregate, statistical evidence in both individual and class action lawsuits.  Outside the labor and employment context, Tyson Foods also provides the plaintiffs’ bar with an opportunity to counterbalance the Supreme Court’s decision in Comcast Corp. v. Behrend, in which the Court held that the U.S. Court of Appeals for the Third Circuit erred in refusing to decide whether the class’s proposed damages model could show damages on a classwide basis.  Ultimately, the issue of classwide damages will need to be challenged by defendants in class action lawsuits.

The Supreme Court left these two important issues undecided: 

  • First, the Supreme Court assumed without deciding that “the standard for certifying a collective action under the FLSA is no more stringent than the standard for certifying a class under the Federal Rules of Civil Procedure.” 
  • Second, the Supreme Court declined to address whether plaintiffs are required to articulate a method that would show that uninjured class members do not contribute to the size of the damages award and will not recover any damages.  The Tyson Foods parties agreed that hundreds of class members were uninjured and not entitled to damages.  Tyson argued that the judgment could not stand because the employees could not devise a method to prevent uninjured class members from being awarded damages.  The Supreme Court found that the issue was not ripe for review because the record did not indicate that the award had been disbursed or how the award would be dispersed.  The Supreme Court noted that Tyson Foods could later challenge any proposed method for allocation once the issue was ripe.  Chief Justice Roberts’ concurrence pointed out that a challenge to allocation of damages was not simply an administrative issue but a constitutional issue:  Article III of the Constitution does not give federal courts the power to order relief for uninjured parties.  

Because the case was remanded for the district court to disburse the jury’s award of damages and, in doing so, determine a proper method for allocating that disbursement, this may not be the last we hear on this case.

In the wake of Tyson Foods, there has already been at least one case in which the plaintiffs argued to the Eighth Circuit that the decision supports affirming certification of the class in question there.

If you have any questions regarding this class action case, labor and employment issues, or the availability of insurance coverage for such claims, please consult counsel for advice and information.

© 2016 Perkins Coie LLP


 

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