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March 22 — A federal court permissibly certified as a class action the claims of former and current employees at a Tyson Foods Inc. pork processing plant alleging they were underpaid for time spent donning and doffing safety gear, a divided U.S. Supreme Court ruled March 22.
In a 6-2 decision, the court affirmed a $5.8 million judgment against Tyson under the Fair Labor Standards Act and an Iowa state wage statute. It upheld a U.S. Court of Appeals for the Eighth Circuit decision that a district court didn't abuse its discretion by certifying a class of 3,344 former and current employees at Tyson's Storm Lake, Iowa, plant who claimed the company unlawfully denied them overtime pay for time spent putting on and taking off protective equipment.
The decision is significant because it establishes that representative proof is an acceptable methodology to certify classes, said David C. Frederick, a Washington lawyer who represented the Tyson employees before the Supreme Court. That point had been debated and wasn't entirely certain before the court's decision, Frederick told Bloomberg BNA March 22.
Writing for the court, Justice Anthony Kennedy declined Tyson's invitation to “announce a broad rule” against the use of “representative evidence” that establishes a defendant's classwide liability through statistics gleaned from a sample of putative class members. Instead, the court said “a categorical exclusion” of such evidence “would make little sense.”
Whether a representative or statistical sample is permissible “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 on the relevant cause of action,” the court said.
“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,” Kennedy wrote.
A representative sample that establishes an average time workers spent changing into and out of protective gear is a permissible way to establish classwide liability if each class member also could have relied on that sample to establish liability in an individual action, the court said.
In dissent, Justice Clarence Thomas said the district court erred by granting class certification under Federal Rule of Civil Procedure 23(b)(3) because the plaintiffs failed to show that common issues “predominated” over individual questions. Justice Samuel Alito joined in the dissent.
It's also notable the majority rebuffed Tyson's attempted analogy to Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338, 112 FEP Cases 769 (2011) , in which the court had rejected as “trial by formula” the use of statistical sampling in a massive sex bias class action, Frederick said.
By distinguishing Wal-Mart, the court returns to a “case-by-case analysis” of class certification that will help workers with potential classwide claims under the FLSA and other employment laws, said Frederick, who is with Kellogg Huber Todd Evans & Figel PLLC.
The decision is “a strong reaffirmation of workers’ rights to join together in taking their employer to court for failing to pay wages due under state and federal laws,” said Scott Michelman of Public Citizen in Washington in a March 22 statement.
“The Supreme Court rejected the corporate defense bar’s strong push to eliminate the ability of workers and consumers to litigate common claims through class actions—which are critical to holding corporations accountable for systemic wrongdoing,” Michelman said.
It's a “robust ruling” that should aid employees seeking class treatment of discrimination claims as well, said Joseph Sellers, a plaintiffs' attorney with Cohen Milstein Sellers & Toll in Washington.
The court's discussion of representative evidence isn't confined to the FLSA, and its clarification of what “trial by formula” means is particularly helpful, Sellers told Bloomberg BNA March 22.
Since Wal-Mart was decided, practitioners and lower courts have been debating what types of attempted proof in class cases cross the line into the disfavored trial by formula, Sellers said.
Now the court has ruled that Wal-Mart didn't foreclose use of representative proof to support both classwide liability and damages, said Sellers, who represented the Wal-Mart employees before the court in 2011.
In a March 22 statement, Tyson Foods said it was disappointed in the result.
“However, we are also heartened by the divided court’s consideration and analysis of serious issues affecting the sufficiency of proof required to maintain a class action” under the FLSA and state law, said David Van Bebber, the company's general counsel in Springdale, Ark. “We are studying the opinion and, in particular, the issue of whether damages can be lawfully allocated to ensure that uninjured class members do not recover from the jury’s lump sum award.”
Carter Phillips of Sidley Austin in Washington, who represented Tyson before the Supreme Court, wasn't available for comment March 22.
The justices granted review of the Eighth Circuit decision in June 2015 and heard oral argument Nov. 10 .
Whether statistical evidence may be used to establish classwide liability “will depend on the purposes for which the evidence is being introduced” and the elements of the underlying claim, Kennedy wrote.
When Tyson kept no time records on how long plant employees actually took to put on and take off different safety gear, Supreme Court precedent permitted the use of the plaintiffs' statistical sample to establish classwide liability under the FLSA and state law, the court said.
In Anderson v. Mt. Clemens Pottery Co., 328 U.S,. 680, 6 WH Cases 83 (1946) , the court said that when employers don't keep required time records and employees therefore have no way to establish the time spent doing uncompensated work, the employees may proceed under the act if they “produce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”
“If the employees had proceeded with 3,344 individual lawsuits, each employee likely would have had to introduce [plaintiffs' expert Kenneth] Mericle's study to prove the hours he or she worked,” Kennedy wrote. “Rather than absolving the employees from proving individual injury, the representative evidence was a permissible means of making that very showing.”
Because the employees had no alternative means to establish their hours worked, Tyson's primary defense was to show the plaintiff's expert's study was unrepresentative or inaccurate, the court said.
“That defense itself is common to the claims made by all class members,” the court said. Tyson's failure to establish that defense doesn't mean the representative testimony should be excluded, the court said.
Tyson's reliance on Wal-Mart is “misplaced,” the court said.
Unlike the Tyson employees, the Wal-Mart plaintiffs failed to meet Rule 23's “basic requirement” of showing a common question of law or fact, the court said.
The Wal-Mart employees sought to use sampling drawn from 120 class members' anecdotes “as a means of overcoming this absence of a common policy,” the court said. The court in Wal-Mart rejected that use of “trial by formula,” because it “enlarged” class members' substantive rights and deprived Wal-Mart of its right to litigate statutory defenses, the court said.
In contrast to the statistical sampling in Wal-Mart, Mericle's study regarding the Tyson employees could have been sufficient to sustain a jury finding regarding hours worked even if it were introduced in each employee's individual action, the court said.
“While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case each employee worked at the same facility, did similar work, and was paid under the same policy,” the court said. “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.”
That doesn't mean all inferences drawn from representative testimony in an FLSA case are “just and reasonable,” the court said.
Rather, representative testimony that's “statistically inadequate or based on unreasonable assumptions” couldn't lead to a “fair or accurate estimate” of the uncompensated hours an employee has worked, the court said.
But Tyson failed to challenge the plaintiffs' experts' methodology and there's no basis to conclude it was “legal error” to admit that evidence, Kennedy wrote.
Once that evidence was admitted, it was the jury's job to determine if the average time the expert calculated was “probative” regarding the time actually worked by each employee, the court said.
The district court could have denied class certification if it found that no reasonable jury could have believed that employees spent roughly the estimated average time donning and doffing, the Supreme Court said.
But the lower court made no such finding and the record “provides no basis” to “second-guess” that conclusion, Kennedy wrote..
Tyson argued that class plaintiffs must provide some mechanism to identify uninjured members of the class and ensure that those members don't inflate the damages award or share in the damages themselves. But the Supreme Court said the district court on remand should figure that out.
The issue of whether uninjured class members may recover is “one of great importance,” but it's not a question “yet fairly presented by this case,” Kennedy wrote. The damages award hasn't yet been disbursed, nor does the record indicate how it will be disbursed, the court said.
Tyson may challenge the proposed allocation method when the case returns to district court, Kennedy said.
But the problem also appears to be one of Tyson's own making, the court said. The employees had proposed bifurcating the trials on liability and damages precisely because it might be difficult to remove uninjured workers from the class after a damages award was returned, the court noted. But Tyson opposed that procedure and “now seeks to profit from the difficulty it caused,” the court said.
On remand, the district court may decide any error in damages allocation was “invited” by Tyson, Kennedy wrote.
Chief Justice John Roberts and Justices Elena Kagan, Sonia Sotomayor, Stephen Breyer and Ruth Bader Ginsburg joined in the majority opinion.
Once Mericle's expert testimony was introduced at trial, it became clear there was no common proof regarding the time that workers spent on protective gear, the dissent said. The district court at that point should have decertified the class, Thomas wrote.
By affirming the Eighth Circuit, the majority errs in “three significant ways,” the dissent said.
The court “alters the predominance inquiry” under Rule 23 so that “important individual issues are less likely” to defeat class certification, Thomas wrote. It also “creates a special, relaxed rule” that enables employees to “use otherwise inadequate representative evidence” by misreading Mt. Clemens, the dissent said.
Finally, the majority cites Tyson's litigation strategy and purported differences from the court's prior Rule 23 decisions to justify class certification, the dissent said.
“None of these justifications withstands scrutiny,” Thomas wrote.
The majority misstates the “predominance” inquiry by saying a class action may proceed under Rule 23(b)(3) if some “central issues” present common questions, even if “other important matters,” including damages or affirmative defenses, are “peculiar to some individual class members.”
But the court recently “and correctly” held just the opposite, the dissent said. In Comcast Corp. v. Behrend, 133 S.Ct. 1426 (2013) , “we deemed the lack of a common methodology for proving damages fatal to predominance” because individual damage calculations “will inevitably overwhelm” common questions, Thomas wrote.
Representative evidence can be used to prove an individual issue on a classwide basis if each class member, in an individual action, could rely on that evidence to prove his claim, the dissent said, agreeing with the majority on that point.
But “that premise should doom” the plaintiffs' class action because Mericle's study confirmed the vast differences in workers' experiences, the dissent said. Even employees who testified at trial didn't conform with Mericle's purported time averages for donning and doffing, the dissent said.
The majority misreads Mt. Clemens to allow the plaintiffs nevertheless to use the representative testimony as proof of common issues because Tyson failed to keep time records, the dissent said.
In doing so, the majority “goes beyond” what the Supreme Court decided in Mt. Clemens, the dissent added.
That precedent doesn't hold that FLSA plaintiffs can use representative testimony to prove “an otherwise uncertain element of liability,” the dissent said. Instead, the court in Mt. Clemens said if an employer failed to keep required records, employees could use evidence “that shows the amount and extent of that work as a matter of just and reasonable inference.”
But it's limited to cases in which the employer's FLSA violation was “certain,” the dissent said. Mt. Clemens doesn't justify using representative evidence here, when Tyson's liability to many class members was uncertain, Thomas wrote.
The majority also misreads Mt. Clemens as confirming that when employees “worked in the same facility, did similar work and were paid under the same policy,” then representative evidence can prove all their claims, the dissent said.
But Mt. Clemens said nothing about whether or why the employees there shared sufficient similarities for their claims to be susceptible to common proof, the dissent said.
Mt. Clemens “thus offers no guidance” about what degree of similarity among employees is sufficient for “representative evidence to establish” the common experiences of all employees, Thomas wrote.
That decision doesn't support the conclusion that representative evidence “can prove thousands of employees' FLSA claims if they share a facility, job functions, and pay policies,” the dissent said.
The majority would allow representative evidence to establish classwide liability even if much of the class might not have overtime claims at all, Thomas wrote.
The court forces employers to face “an untenable choice,” the dissent said. They must either track any employee time “that might be the subject of an innovative lawsuit” or defend against representative evidence that “unfairly homogenizes” an individual issue, the dissent said.
“Either way, the majority's misinterpretation of Mt. Clemens will profoundly affect future FLSA-based class actions—which have already increased dramatically in recent years,” Thomas wrote.
To contact the reporter on this story: Kevin McGowan in Washington at firstname.lastname@example.org
To contact the editor responsible for this story: Susan J. McGolrick at email@example.com
Text of the opinion is available at http://www.bloomberglaw.com/public/document/Tyson_Foods_Inc_v_Bouaphakeo_No_141146_US_Mar_22_2016_Court_Opini.
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