U.S. Supreme Court Decision In Tyson Allows Narrow Use Of Statistical Sampling Evidence In Class Actions

The Supreme Court affirmed a $2.9 million jury verdict in favor of a class of employees and against Tyson Foods. Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, slip op., 2016 WL 1092414 (Mar. 22, 2016). Although the key issues in Tyson overlapped with key issues in two recent, landmark opinions from the high Court – Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013), and Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541 (2011) – the majority instead framed the analysis around another wage-and-hour class action, Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).

Background: “Donning,” “Doffing” and Slaughterhouse Workers’ Wages

The case centered on Tyson’s payment (or non-payment) of its employees at an Iowa plant’s kill, cut and re-trim departments for time those employees spent donning and doffing – that is, putting on and removing – their protective gear. The employees sued Tyson in Iowa federal court, alleging violations of the Fair Labor Standards Act (FLSA) and Iowa state law. The crux of the lawsuit was that a covered employee should be paid at overtime rates (time-and-a-half) for the time spent donning and doffing protective gear.

Tyson objected to class treatment on the basis that the employees’ claims were not sufficiently similar. Among other things, Tyson contended the variances in protective gear and the time spent donning and doffing by individual employees in different departments precluded certification. The district court disagreed and certified a class action under Rule 23 of the Federal Rules of Civil Procedure and a collective action under the FLSA, consisting of Tyson’s employees at its Storm Lake, Iowa facility who were employed during the time frames applicable under the statutes, and who did not receive compensation for time spent donning and doffing.

Proof: Meeting the FLSA’s 40-Hour Threshold

Under the FLSA, the employees had to establish the threshold requirement that they worked more than 40 hours a week, inclusive of any time spent donning and doffing. In other words, only if a class member actually reached the requisite 40-hour work week could that employee prove an FLSA violation.

At trial, the class offered a study by an industrial relations expert who produced donning and doffing estimates of either 18 or 21.25 minutes per day, depending on the department. The class’s second expert estimated the amount of uncompensated work by combining the non-overtime compensation with the first expert’s estimated average. Notably, and as highlighted by the majority, Tyson did not lodge a Daubert challenge as to either expert.

The calculations performed by the second expert resulted in a total of $6.7 million in unpaid wages, yet the jury returned a verdict of $2.9 million in unpaid wages. This amount has not yet been disbursed to the class members. The Eighth Circuit affirmed the jury award.

Issue 1: Despite Wal-Mart and Comcast, Statistical Evidence May – In Certain Circumstances – Be a Substitute For Individualized Proof

The first issue the majority confronted was whether differences among individual class members may be ignored where class-wide liability will be determined with statistical techniques that presume all class members donned and doffed for the same average time observed in the industrial expert’s sample. Tyson argued that the holding of Wal-Mart v. Dukes precluded such evidence.

The Court rejected Tyson’s reliance on Wal-Mart as misplaced, noting that the holding in Wal-Mart did not stand for the broad proposition that a representative sample is an impermissible means of establishing class-wide liability. Instead, the Court held that the permissibility of using statistical evidence in any particular case – class or individual action – will depend on the purpose for which it is offered and the underlying cause of action.

The majority distinguished Wal-Mart on the basis that class treatment there was not appropriate because the plaintiffs failed to prove a common policy of discrimination. The Court’s distinction between Tyson and Wal-Mart hinged on whether the “representative evidence” – the statistical evidence offered by the respective plaintiffs – could prove the claims of any individual plaintiff. In Wal-Mart, the use of statistical sampling would have been impermissible as to any individual claim and, thus, could not have applied to the class as a whole. In contrast, any member of the Tyson class could have used the statistical sampling to establish Tyson’s liability on an individual basis under Mt. Clemens.

Chief Justice Roberts authored a concurrence, writing that he understood the holding to mean that the expert’s study “constituted sufficient proof from which the jury could find ‘the amount and extent of [each individual respondent’s] work as a matter of just and reasonable inference’ – the same standard of proof that would apply in any case.”

Justice Thomas, joined by Justice Alito, dissented, accusing the majority of “redefining class-action requirements” – predominance in particular – “and devising an unsound special evidentiary rule for cases under the [FLSA].” The individual issue of whether any given employee actually worked over 40 hours was, according to Justice Thomas, “clearly individualized” and precluded a finding of predominance under Rule 23(b)(3). And, according to Thomas, once the expert’s evidence was presented at trial, the district court should have revisited class certification at that point. “The court thus never made findings or analyzed whether, under Rule 23(b)(3), [the expert’s] study could be used as common proof of an individual issue that would otherwise preclude class treatment.” The dissent noted that the majority’s seeming relaxing of Rule 23’s predominance requirement was inconsistent with the Court’s prior holding in Comcast that the lack of a common methodology for proving damages [was] fatal to predominance because “[q]uestions of individual damage calculations will inevitably overwhelm questions common to the class.”

Justice Thomas also criticized the majority’s reliance on Mt. Clemens, and the implications that the majority’s holding will have on employers: “[Employers] must either track any time that might be the subject of an innovative lawsuit, or they must defend class actions against representative evidence that unfairly homogenizes an individual issue.”

Issue 2: Analyzing Apportionment of Damages is Premature Prior to Disbursement

The second issue addressed by the majority was the apportionment of the damages award to avoid recovery by uninjured class members. The majority held that the issue was not ripe because the damages had not yet been disbursed, nor does the record indicate how damages will be disbursed.

Chief Justice Roberts wrote a concurring opinion, which Justice Alito joined. Roberts and Alito questioned whether the District Court might be able to devise a method for apportioning damages only to class members that had suffered an actual injury. The record is undisputed in showing that hundreds of class members in the case suffered no injury. Because the jury verdict of $2.9M was less than the $6.7M proposed pursuant to plaintiffs’ expert evidence, Roberts concluded that the jury did not accept plaintiffs’ proposed average donning and doffing times in calculating the verdict. “And with no way to reverse engineer the verdict to determine how much donning and doffing time the jury found Tyson owed workers in each department, we do not know which plaintiffs the jury found to be injured (or not).” Roberts, therefore, concluded that “[i]f there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”

In total, although the majority opinion – on its face – appears to be a win for the class, Roberts’ concurrence suggests that the damages award might not survive its remand to the District Court for apportionment to only injured class members. While Roberts agreed with the majority that the District Court should in the first instance try to do so, he suggests that allocating the money may ultimately prove to be an impossible task.

Beyond Tyson: Statistics, Standing and Cy Pres

Prior to oral argument in Tyson, commentators believed (and defense counsel hoped) that the Court would take this opportunity to further expand on the tightening of class certification requirements, following Comcast and Wal-Mart. At oral argument, however, it was clear the Court found the Mt. Clemens route to be far more palatable. And the majority seems to go to some lengths to narrow its opinion, noting that the case did not present an occasion for adoption of “broad and categorical rules governing the use of representative and statistical evidence in class actions.” Instead, the opinion frames the question as an evidence issue.

Nonetheless, Tyson may very well reignite class certification disputes that had seemingly been settled in Wal-Mart. The precise circumstances under which statistical proof may now be used is left unclear by Tyson. While, on the one hand, subsequent litigation may confine the ruling to wage-and-hour cases employing Mt. Clemens, until the Court or other federal courts provide additional guidance the plaintiffs’ class action bar may attempt to construe the narrow ruling in Tyson as a roll-back of Wal-Mart’s prohibition against the use of statistical evidence to establish class-wide liability.

Finally, the highlight of this opinion might ultimately prove to be Roberts’ imminently quotable, preemptive strike at future attempts to resolve the question of overbroad putative classes that include uninjured class members – “Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not.” In addition, the comment also seemingly foreshadows the inevitable, upcoming fight regarding cy pres awards – the practice of granting awards to charities because class counsel cannot determine how to distribute remaining settlement monies to their actual clients. Given that the majority punted on the question as to uninjured class members, Justice Roberts’ concurrence addressing the issue will likely have resonance moving forward, if and when the Court takes up the issue in another case.

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