Mar 23

Supreme Court Says Plaintiffs in Class and Collective Actions Can Sometimes Use Averages and Representative Samples to Prove Elements of Their Case

The Supreme Court decided yesterday, in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, 2016 WL 1092414 (U.S. Mar. 22, 2016), that the named plaintiffs in a wage-and-hours case could use an expert’s calculation of the average time a representative sample of workers took to put on and remove (“don and doff”) various types of protective gear as common proof of uncompensated overtime for the entire class of their co-workers in the same plant.  By a 6-2 margin, the Court rejected Tyson’s argument that this was an impermissible “trial by formula.”  Rather, Justice Kennedy’s majority opinion said, the use of sampling and averages was permissible here because a single employee could have used that type of evidence in an individual, non-class case to calculate his or her own uncompensated overtime pay.

The case involves claims of undercompensated overtime under the federal Fair Labor Standards Act (“FLSA”) and Iowa state wage law by current and former Tyson employees at a single pork-processing plant in Storm Lake, Iowa.  The six named plaintiffs allege that Tyson failed to compensate them fully for time spent donning and doffing personal protective gear.  Tyson’s policy added a fixed amount of additional compensated time each day to account for these activities, but plaintiffs say it was inadequate.  The district court certified a collective action for the FLSA claims and a Rule 23(b)(3) class for the Iowa state wage law claims and allowed both sets of claims to be tried together.  After a nine-day trial, the jury returned a verdict for the class of $2,892,378.70—which, with liquidated damages, became a final judgment totaling $5,785,757.40.  The Eighth Circuit affirmed over the dissent of one circuit judge. Bouaphakeo v. Tyson Foods, Inc., 765 F.3d 791 (8th Cir. 2014).

The Supreme Court initially took the case to address two issues but ultimately decided only one—leaving the second for the trial court to decide in the first instance.  Both issues stem from the plaintiffs’ use of two experts to prove that Tyson failed to properly pay overtime to workers whose uncompensated donning and doffing time put them over 40 hours in a week.  One expert conducted a time study that purported to calculate the average time employees spent on donning/doffing-related activities by observing and timing a sample of the employees.  The other expert used employee time records to calculate the uncompensated overtime for each employee based on the assumed average amount of donning/doffing-related time.  Tyson’s first issue was its argument that plaintiffs’ use of samples and averages was improper because the evidence showed that employees wore different types of protective gear depending on their jobs and took different amounts of time putting that equipment on and taking it off.

On the use of samples and averages in class and collective actions, the Supreme Court rejected Tyson’s request that the Court “announce a broad rule against the use in class actions of what the parties call representative evidence.”  2016 WL 1092414, at *8. The Court explained:

A categorical exclusion of that sort, however, would make little sense.  A representative or statistical sample, like all evidence, is a means to establish or defend against liability.  Its permissibility turns not on the form a proceeding takes—be it a class or individual action—but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.  See Fed. Rules Evid. 401, 403, and 702.

It follows that the Court would reach too far were it to establish general rules governing the use of statistical evidence, or so-called representative evidence, in all class action cases.  Evidence of this type is used in various substantive realms of the law.  Whether and when statistical evidence can be used to establish classwide liability will depend on the purpose for which the evidence is being introduced and on “the elements of the underlying cause of action[.]”

Id. (citations omitted).

The Court noted that in a wage-and-hours case—where an employee’s burden of showing how many hours he or she worked is often made more difficult by the employer’s failure to maintain proper (and statutorily required) time records—it had held long ago, in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946), that “an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”  2016 WL 1092414, at *9 (quoting Mt. Clemens).  By contrast, the Court said that its disapproval of the plaintiffs’ attempt to use sampling and statistical evidence in Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (2011), was based on what the plaintiffs in Wal-Mart were trying to prove with that evidence:  namely, that Wal-Mart’s policy of allowing local supervisors to have discretion over employment matters was a policy of sex discrimination affecting all employees because the experience of some employees (plaintiffs said) could be extrapolated to all employees.  2016 WL 1092414, at *10-11.

In contrast, the study here could have been sufficient to sustain a jury finding as to hours worked if it were introduced in each employee’s individual action.  While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case each employee worked in the same facility, did similar work, and was paid under the same policy.  As Mt. Clemens confirms, under these circumstances the experiences of a subset of employees can be probative as to the experiences of all of them.

Id. at *11.

Tyson’s second issue was that the jury’s verdict would result in payments being made to hundreds of workers who were not injured.  The jury’s award was $2.9 million, but that amount was less than half of what plaintiffs’ expert calculations suggested.  Tyson argued (and the Court agreed) that the jury must have rejected some portion of the experts’ analysis—creating the likelihood that a significant number of workers whose uncompensated donning and doffing time put them over 40 hours under the experts’ analysis would not be over 40 hours (and therefore not be entitled to overtime) under the jury’s award.  Tyson said the Court could not uphold an award that permitted distribution of damages to some class members who suffered no harm.  The majority agreed that “the question of whether uninjured class members may recover is one of great importance[,]” 2016 WL 1092414, at *12, but decided the issue was not yet ripe for determination.  The Court decided that on remand, the plaintiffs could propose, and the district court could assess, a methodology that plaintiffs believe would identify uninjured class members and distribute the jury’s aggregate award only to those class members who were injured by the wage-and-hour violations the jury found.  Id.

Chief Justice Roberts, in a concurring opinion joined by Justice Alito, questioned whether the district court could come up with a satisfactory methodology.  “I am not convinced that the District Court will be able to devise a means of distributing the aggregate award only to injured class members.”  Id. at *14.  “[I]t remains to be seen whether the jury verdict can stand.… If there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”  Id. at *15.

In dissent, Justice Thomas, also joined by Justice Alito, argued that predominantly common proof would not be available to separate those workers who put in more than 40 hours, and thus were entitled to some damages, from those who did not, and thus were entitled to nothing.  He criticized the majority for “redefining the predominance standard” in finding plaintiffs’ experts’ averaging sufficient.  Id. at *19.

According to the majority, if some central issues present common questions, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.…  We recently—and correctly—held the opposite.  In Comcast, we deemed the lack of a common methodology for proving damages fatal to predominance ….

Id. at *19 (quotations omitted).

The Tyson Foods decision demonstrates that there is no categorical answer to the question of whether statistical sampling, averages, or other types of representative evidence are permissible or sufficient in a class action.  The answer will depend on what type of claims are being litigated, what the proponent of the representative evidence is trying to prove with the evidence, and whether a single plaintiff could use that type of evidence to prove his or her own individual claim.  And while the Court declined to rule on whether uninjured class members may recover, a question of “great importance,” id. at *12, the majority appeared to assume what the concurrence and dissent made explicit—that the verdict can stand only if the district court devises a way to separate the injured from the uninjured.

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