SCOTUS Upholds Use of Statistics in Class Overtime Fight

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By Perry Cooper

March 22 — Workers at a Tyson Foods pork processing plant were properly allowed to pursue their overtime claims as a class, the U.S. Supreme Court overwhelmingly ruled in a significant win for plaintiffs.

Courtwatchers speculated before oral argument that this case could shut down so-called trial-by-formula calculations of damages, thereby ending many class actions that rely on representative evidence.

The court held, in a 6-2 opinion by Justice Anthony M. Kennedy, that this case, which raised both class claims under state law, and collective action claims under the Fair Labor Standards Act, didn't present an occasion to adopt such a broad rule for all class actions.

“A categorical exclusion of that sort … would make little sense,” the court said.

The court said it would “reach too far” if it were to bar statistics in all class actions. “Evidence of this type is used in various substantive realms of the law,” it said.

Instead, the court ruled, plaintiffs may use statistical evidence to prove classwide injury as long as an individual could use that same evidence to prove his or her own claim.

But, the court stressed, “The fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases.”

Attorneys on both sides of the class action bar agreed this is the ruling's big takeaway.

“The decision makes clear that statistical proof is just like other forms of evidence,” plaintiffs' attorney Jocelyn D. Larkin told Bloomberg BNA in a March 22 e-mail.

“Whether it can be used in a particular case to establish class wide liability (or anything else) will depend on the elements of the claim and the purpose for which it will be used,” she said.

Larkin is the executive director of pro-consumer group the Impact Fund in Berkeley, Calif., which filed an amicus brief in support of the class.

Defense attorney Paul G. Karlsgodt also emphasized the “it depends” characterization of whether and when statistical evidence will be allowed.

“It’s not an all-or-nothing proposition—it’s not either statistics are allowed or they’re not allowed,” Karlsgodt of Baker & Hostetler LLP in Denver told Bloomberg BNA March 22.

“Here, they said an individual could have used statistics to prove their own claim, and therefore we’re not going to prevent the plaintiffs from using it for classwide proof,” he said.

The court punted on the other question on which certiorari was granted: whether uninjured class members may recover.

But that wasn't a surprise after Tyson Foods backed away from the issue in its opening brief filed before oral argument .

The court indicated though that it would take on the “no injury” question if the right case presents itself.

No Categorical Exclusion

The case arose from allegations by pork plant workers that Tyson Foods Inc. inadequately compensated them for time spent donning and doffing protective equipment.

Tyson challenged the plaintiffs' use of statistics to average the time it took workers to suit up .

But Tyson and its amici went further than just this case from a single plant in Iowa, urging the court to adopt a broad rule against the use of statistical evidence in class actions.

Broader Than FLSA

The statistical sample here was permissible under the court's earlier decision in Mt. Clemens, Kennedy said.

In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), another Fair Labor Standards Act case, the Supreme Court held that if employers don't keep the required time records, employees can present a “reasonable inference” of their time worked.

The plaintiffs' statistical evidence here was a permissible means of proving individual injury because Tyson failed to keep adequate records, the court said.

The justices focused much of oral argument on Mt. Clemens, leading many to predict that the decision would be limited to the FLSA context.

But not so, plaintiffs' attorney Larkin said. “The decision is broader and useful for plaintiffs in a variety of class actions.”

Defense attorney Karlsgodt agreed that the standards laid out in the majority opinion will be helpful to defendants in the long run to address when statistics may be used to support the idea of common injury in class actions.

But he said the guidelines were dicta because the court didn't really need to address the issue to reach their decision.

Wal-Mart Clarified

The opinion also “provides some important guidance” on the court's opinion in Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011) , Adam Steinman, who teaches civil procedure at the University of Alabama Law School in Tuscaloosa, told Bloomberg BNA in a March 22 e-mail.

Wal-Mart involved a proposed class of over a million female Wal-Mart workers who alleged pay and promotion discrimination. The Supreme Court held that the workers' statistical evidence of discrimination failed to establish a nationwide pay or promotion pattern across all Wal-Mart's stores, and didn't tie all of the workers' claims together to satisfy commonality.

Commonality, a prerequisite to class certification under Rule 23, requires questions of law or fact common to the class.

But the court here clarified that “ does not stand for the broad proposition that a representative sample is an impermissible means of establishing class-wide liability.”

Steinman said it's significant that the court rejected a categorical rule against the use of such evidence.

No Answer on No-Injury

The court declined to consider the so-called no-injury issue of whether a class can be certified if it includes uninjured class members, which Tyson argued was the case here because some of the workers weren't actually eligible for overtime. The court called the challenge “premature.”

It suggested that Tyson can challenge the proposed method of allocation when the case returns to the district court for distribution of the award.

The majority and dissent both suggest that the question will be addressed in the future, but they frame the question differently, Larkin said.

“The majority posits that the question is ‘whether uninjured class members may recover,' while the dissent says the issue is ‘whether a class action can be maintained if a class contained uninjured members,'” she said.

“This is significant because ‘culling out' uninjured class members at or after trial is far different than making an inappropriate merits determination at the class certification stage.”

But Karlsgodt said the danger is to read this as a rejection of the no-injury arguments raised by Tyson and its amici. Rather, “it's just a refusal to get into the issues they wanted addressed,” he said.

Chief Justice John G. Roberts Jr., and Justices Ruth Bader Ginsburg, Stephen G. Breyer, Sonia Sotomayor, and Elena Kagan joined in the opinion.

Roberts wrote a separate concurrence to “express [his] concern that the District Court may not be able to fashion a method for awarding damages only to those class members who suffered an actual injury.”

Justice Clarence Thomas, joined by Justice Samuel A. Alito Jr., dissented.

Thomas argued that the district court improperly allowed the class plaintiffs to prove an individualized issue with classwide evidence, which “relieves them of their burden to prove each element of their claim for each class member and impedes the defendant’s efforts to mount an effective defense.”

David C. Frederick, of Kellogg, Huber, Hansen, Todd, Evans & Figel PLLC in Washington, argued for the plaintiffs.

Carter G. Phillips of Sidley Austin LLP in Washington argued for Tyson Foods.

Elizabeth Prelogar, assistant to the solicitor general, argued for the government on behalf of the class.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com