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June 6 — Can statistics be extrapolated to large groups to calculate damages in class litigation in the wake of the Supreme Court ruling in Tyson Foods?
“This is a question that will continue to be debated—and decided on a case-by-case basis—long after” the U.S. Supreme Court ruling in Tyson Foods v. Bouaphakeo, 2016 BL 87179 (U.S. March 22, 2016) (17 CLASS 307, 3/25/16), attorney Andrew J. McGuinness, who represents both plaintiffs and defendants, told Bloomberg BNA.
Several attorneys recently predicted that the number of reliability challenges to statistical evidence is expected to increase following the Supreme Court's ruling (17 CLASS 562, 5/27/16). But gauging how these challenges might fare is a more complex task.
Jason M. Halper, a defendants' attorney with Orrick, Herrington & Sutcliffe in New York, told Bloomberg BNA that after Tyson Foods statistics-based representative evidence can be admissible both to establish the prerequisites to class certification and the merits of plaintiffs’ claims.
But that's true, he said, only if the evidence satisfies the standards for admissibility under the test set forth by the Supreme Court in Daubert v. Merrell Dow Pharms., 509 U.S. 579 (1993) .
There is no “one size fits all” answer to this question, plaintiffs' attorney Jason L. Lichtman, with Lieff Cabraser Heimann & Bernstein in New York told Bloomberg BNA.
“At the risk of seeming flip, there is a reason that the Scientific Reference Manual is not exactly a light read,” he said.
“Many factors go into whether particular evidence in a particular case is appropriate. It’s an extraordinarily fact-specific analysis,” Lichtman said.
The Supreme Court in Tyson Foods, “eschewed making any broad pronouncement about the use of statistical expert testimony in class action proceedings, generally,” Professor Linda S. Mullenix of the University of Texas School of Law in Austin told Bloomberg BNA.
The court also “neither endorsed or repudiated `trial by formula,' a label derived from Justice Scalia’s characterization of statistical sampling” in Wal-Mart v. Dukes, 564 U.S. 338 (2011) , Mullenix said.
Instead, Tyson Foods applied a “more nuanced approach,” she said.
The top court in Tyson Foods, an employment case that examined alleged underpayments for time spent donning and doffing safety gear, concluded that the use of statistical averages in that case was “supportable,” unlike in Wal-Mart v. Dukes, (12 CLASS 519, 6/24/11), she said.
To arrive at that conclusion, the court “carefully distinguished” the problem of the statistical sampling that the plaintiffs offered in Wal-Mart, a sex bias class action, from the expert testimony offered by the plaintiffs’ expert in Tyson Foods, she said.
Elaborating on the distinction, Halper said the plaintiffs in Wal-Mart proposed to use a sample set of class members as to whom liability for sex discrimination and back pay would be determined in depositions supervised by a special master.
The “aggregate damages award was to be derived by taking the ‘percentage of claims determined to be valid’ from this sample and applying it to the rest of the class, and then multiplying the ‘number of (presumptively) valid claims’ by the average backpay award in the sample set,” he said.
Wal-Mart rejected this approach as what it called `Trial by Formula,' ” Halper said.
But according to the top court in Tyson Foods,Wal-Mart doesn't stand for the “broad proposition” that a “representative sample is an impermissible means of establishing classwide liability,” Halper said.
“Rather, unlike in Wal-Mart, where the experiences of the plaintiffs-employees `bore little relationship to one another,' the Tyson Foods plaintiffs-employees had similar experiences, including working at the same plant performing similar job functions and being paid under the same policy. In those circumstances, the court found representative evidence to be admissible,” he said.
Distinctions aside, Lichtman said he “bristles” upon hearing the term “trial by formula” for very different reasons: The terminology is anti-plaintiff.
“To me this assumes what it sets out to prove, that the plaintiff somehow is not introducing persuasive, admissible evidence. Statistical evidence does not have some inherent property that makes it more or less valuable than other evidence,” he said.
Although Mullenix said Tyson Foods “neither endorsed or repudiated” trial by formula, Halper said Wal-Mart “makes clear that a `trial by formula' is a bridge too far.”
But what is trial by formula, and why is it so hard to pin down?
According to McGuinness, who operates a class action boutique practice in Ann Arbor, Mich., a “trial by formula” means that an absent class member’s claim, whose validity depends upon facts unique to that class member (as distinct from any named plaintiff) can't have his or her claim determined by “representative” evidence at a class trial.
Representative evidence, often in the form of statistical proof, is commonly used in class actions to show that prospective class members are situated similarly to the named class representatives.
“Stated differently, a defendant cannot be held liable in a `trial by formula' to dissimilarly-situated absent class members,” he said.
McGuinness said that because the Supreme Court determined that sex discrimination depended upon each store manager’s behavior in Wal-Mart, the claims of class members who worked at stores at which no named plaintiff worked (or where her hiring was refused) could not be tried in a class trial.
“As Tyson Foods demonstrates, this is a very different question than whether representative evidence (including statistical averages) can be used to establish classwide liability or damages,” he said, adding that the court distinguished Wal-Mart on the ground that because representative evidence was admissible in an individual case in Tyson Foods, it was admissible in a class trial.
The court in Tyson Foods further noted that all plaintiffs worked at a single facility and were “similarly situated vis-a-vis defendant’s conduct. The average donning and doffing data was sufficiently tied to the class to permit its use to determine class liability and damages without offending the `trial by formula' proscription,” he said.
Given that statistical evidence is alive and well in class certification disputes after Tyson Foods, how can litigators best mount challenges to adverse proof?
All agreed that challenges to statistical evidence should focus on the expert’s methodologies, including construction of the sample, conclusions drawn from the methodologies, and the reliability of the expert’s findings.
Halper said defendants most likely will challenge this evidence via either a Daubert motion challenging the reliability of expert evidence, or depending on the timing, at summary judgment.
Mullenix noted that most defendants are already attentive to raising a Daubert challenge to a plaintiff’s offer of expert statistical evidence earlier in the class certification proceedings, so as not to waive such an objection later in the proceedings.
If a trial court declines to consider a Daubert challenge at the class certification stage, then defendants most likely will re-raise the challenge should a class action actually proceed to trial, as the Tyson Foods case did, she said.
“Because challenges to use of statistical proof will be mounted through a Daubert challenge, these objections most likely will take the form of initially challenging the expert’s expertise,” she said.
And after Tyson Foods, “the challenge also will now include an argument that the sample at issue could not be used to establish liability in an individual action,” Mullenix said.
Drilling deeper, McGuinness said that challenges at the class certification stage would be launched, principally by: (i) attacking any scientific or methodological flaws in the evidence (i.e., traditional Daubert grounds); and (ii) by attacking any disconnect between what the evidence purports to show; and either (a) the issues presented under Rule 23 (e.g., predominance), or (b) the sample of class members studied (and their respective situations) and the wider class.
And at trial, principally by (i) attacking the credibility of the expert (e.g., use of unreliable methodology; failure to do other tests/studies, etc.); (ii) by demonstrating to the factfinder that the opposing expert’s study incorporates numerous false positives (or negatives); and (iii) by proffering one’s own, more persuasive expert testimony to the factfinder, McGuinness said.
Asked if challenges to statistical evidence in class action proceedings will be more successful after Tyson Foods, Mullenix said it will depend on the court’s careful evaluation of the defendant’s arguments in support of a Daubert challenge, balanced against the plaintiff’s counter-arguments.
“Nonetheless, the court will need to consider such proffers in light of the basic test set forth In Tyson Foods for the appropriate use of such expert testimony,” she said.
Halper and McGuinness agreed, noting the outcome of these challenges might depend on each expert's qualifications and the quality of the expert's analysis, as well as case-specific issues.
According to McGuinness it “seems likely” that challenges and outcomes might differ depending on the subject matter of the case, such as employment law, product liability, antitrust, etc.
For example, the Supreme Court in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), employed a lower evidentiary threshold where an employer failed to meet its statutory obligation to maintain adequate time records, he said.
“This was an important underpinning” of the majority opinion in Tyson Foods, though the court’s opinion “does not limit its analysis to FLSA cases,” he said.
“There are similar or analogous evidentiary rules applicable in other legal contexts,” he said.
But Lichtman, a plaintiffs' attorney, said there is nothing in Tyson Foods that is “likely to make these challenges more or less successful now than they were before.”
“I wish I could take the view that Tyson Foods heralds some kind of sea change because of course the Tyson Foods plaintiffs were successful before the Supreme Court, but I really do not think we are likely to see a major change in practice,” he said.
“My instinct is that defendants will make the same arguments they make now: (1) that a particular expert fails Daubert, and (2) that a rigorous analysis indicates that class certification is inappropriate,” Lichtman said.
It's “impossible to generalize” in this area, McGuinness said because an “important element is legal context.”
Focusing on the impact of Tyson Foods in employment law cases, defendants' attorney Gerald L. Maatman with Seyfarth Shaw in Chicago told Bloomberg BNA that after Tyson Foods statistical proof of this sort is likely acceptable in cases under the Fair Labor Standards Act.
Outside of the FLSA context, defendants will mount effective challenges to bar such evidence based on the admonition in Wal-Mart that trial by formula in a Title VII employment discrimination action isn't appropriate, he said.
He also offered a nugget for the future: “I predict that Tyson Foods ultimately will be limited to the FLSA context.”
Still unclear after Tyson Foods are several issues that are important to litigators.
For example, the Supreme Court still has neither addressed nor decided “whether defendants (or plaintiffs, for that matter) are entitled to full-blown Daubert hearings on challenges to expert witness testimony at class certification proceedings,” Mullenix said.
Nor has the Supreme Court ruled on what such a Daubert challenge at class certification would require of the trial court judge in hearing such a motion, she said.
Currently, circuit and district courts are split concerning the use and standards governing Daubert hearings at class certification, Mullenix said.
“Until this problem is perfected on appeal to the Supreme Court, and the Supreme Court offers guidance on the use of Daubert hearings as part of the class certification process, this remains an open and contested issue,” she said.
Maatman placed another concern on litigators' radar screen.
“Because Equal Pay Act collective actions are based on the same procedural grounds as FLSA collective actions (29 U.S.C. Section 216(b)), I expect to see an uptick in EPA collective actions,” he said.
Tyson Foods “makes bringing such cases easier,” he said.
Another unresolved issue, McGuinness said, is whether lower courts will extend “the logic of Tyson Foods outside the FLSA/ Mt. Clemens Pottery context of the case,” he said.
And if so, “where and how far?” he said.
“There are a number of contexts in which analogous principles of burden shifting and lower evidentiary thresholds for plaintiffs where the defendant has acted improperly would lend themselves to use of representative evidence a la Tyson Foods. Antitrust and consumer protection statutes come to mind,” he said.
Although Tyson Foods raised new questions, it also answered some old ones.
McGuinness said Tyson Foods “puts to bed” the argument, based on language in Comcast v. Behrend, 133 S. Ct. 1426 (2013), that plaintiffs can only achieve class certification if damages are susceptible to classwide proof.
The court’s opinion in Tyson Foods “expressly cites contrary—and long recognized—authority,” including Wright & Miller in Federal Practice and Procedure, he said.
“Justice Thomas’s dissent (joined only by Justice Alito) complains about the abandonment of this supposed teaching of Comcast, a reading that almost every Court of Appeals had already rejected,” he said.
To contact the reporter on this story: Bruce Kaufman in Washington at firstname.lastname@example.org
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