Another Trial-by-Formula Case Waits in the Wings

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By Perry Cooper

Nov. 23 — The U.S. Supreme Court caught many court watchers off guard when oral arguments in Tyson Foods v. Bouaphakeo focused more on a long-standing Fair Labor Standards Act rule than on Rule 23 class action practice.

It appears that the special Mt. Clemens rule for the use of statistical evidence in FLSA collective actions will play a much larger role in resolving this case than people expected, Archis A. Parasharami, partner at defense firm Mayer Brown in Washington, told Bloomberg BNA in a Nov. 18 interview.

But plaintiffs' advocate Arthur H. Bryant says the FLSA issue shouldn't have been a surprise to anyone who read the plaintiffs' briefs in Tyson.

Tyson Foods didn't keep adequate records of workers' time spent changing into and out of protective gear, and the Mt. Clemens case says in those circumstances, plaintiffs can make reasonable inferences of the time they worked, he told Bloomberg BNA in a Nov. 17 interview. Bryant is the chairman of the public interest firm Public Justice in Oakland, Calif.

But if Tyson does ultimately turn on the FLSA, defendants have another shot at getting trial by formula before the top court because an antitrust petition pending before the court offers a straight Rule 23 case supported by statistics, Parasharami said.

Parasharami also sees a bright side for defense counsel if the justices limit their Tyson ruling to the FLSA, “I think it creates some hope for defendants that in a true Rule 23 class action many of the arguments that have been raised are available to them in future cases,” he said.

Oral Argument Curve Ball

Tyson involves allegations by pork plant workers that they were inadequately compensated for time spent donning and doffing protective equipment.

Tyson Foods Inc. challenged expert evidence offered by the plaintiffs of the average time it took workers to suit up, Tyson Foods Inc. v. Bouaphakeo, U.S., No. 14-1146, argued 11/10/15.

That kind of averaging constitutes impermissible “trial by formula” under Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), and can't be relied on to certify a class under Fed. R. Civ. P. 23, Tyson Foods argued.

But at oral arguments Nov. 10, the questioning seemed to focus more on the FLSA-nature of the claims.

The justices looked to Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), where the Supreme Court held in an FLSA case that if employers don't keep the required time records, employees can present a “reasonable inference” of their time worked.

Second Chance

The poor recordkeeping was the key to the plaintiffs' argument, Bryant said.

“It was hard to understand, as even Justice Kennedy said, what the arguments of the defendants were about how you get around that,” he said. He referred to Justice Anthony M. Kennedy, who often casts the tie-breaking vote in close cases before the court.

Kennedy has recently sided with the conservative justices in cases limiting the use of the class action device, but didn't seem very sympathetic to the defendant's points at argument in Tyson.

“And on top of that, I think they really were caught on the hooks of the fact that if this was an individual case, and the records had similarly been missing or destroyed, the law was crystal clear that the plaintiff was entitled to make these inferences from limited data,” Bryant said.

“If that’s true in an individual case, how can you possibly say it’s not true in a class action when making it a class action is not supposed to affect substantive rights,” he said. Tyson Foods “had no good answer for that.”

But business defense lawyers have another opportunity to get the trial-by-formula question before the court.

The Dow Chemical Co. currently has a certiorari petition pending before the Supreme Court in a Tenth Circuit case that raises the question in a straight Rule 23 situation. The justices didn't act on the petition when they considered it at conference in June, presumably holding it for an outcome in Tyson, which raised both FLSA and Rule 23 claims.

“That’s more the kind of case that might bring the same kinds of questions that seemed to be at issue in Tyson, but seemed to fall away, back to the fore” during oral argument, Parasharami said.

What the court does with that case all depends on how it rules in Tyson, he said. The justices often grant, vacate and remand cases when the issues resolved by one of their cases “are even in the ballpark.”

But the Tyson decision may not be similar enough to the trial-by-formula issues in Dow for a GVR, Parasharami said. He said, in hindsight, the Dow case may have been a better vehicle to get the issue before the court in a regular Rule 23 case.

Another Mayer Brown attorney, Timothy S. Bishop, filed an amicus brief in Tyson on behalf of Dow.

Little Discussion of Class Issues

Tyson and two other class cases that were argued before the court this fall give Bryant hope that the court has tired of making the sweeping, pro-business decisions it has favored in the past few years.

The Supreme Court heard arguments Oct. 14 in Campbell-Ewald Co. v. Gomez, U.S., No. 14-857, argued 10/14/15, over U.S. Navy recruitment text messages that allegedly violated the Telephone Consumer Protection Act, 47 U.S.C. § 227. That case asks the justices to decide whether a defendant can defeat individual and class claims by “picking off” the named plaintiff with a judgment offer.

And Nov. 2 the court heard arguments in Spokeo Inc. v. Robins, U.S., No. 13-1339, argued 11/2/15. There, Thomas Robins filed a class action against Spokeo Inc. alleging the website violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, by posting inaccurate, but not necessarily negative, information about him. The court is considering whether that statutory violation, without additional “concrete” harm, gives Thomas the right to sue.

Due to the court's past hostility to the class action device, Bryant was concerned when these cases were granted. But he says he's less worried after oral arguments.

“I think part of the reason for that is that the corporations got greedy,” he said. None of these cases “are just about limiting Rule 23.”

“In fact, each is an attempt by corporations and their lawyers to develop rules that would have broad-ranging effects on a lot of things other than class actions, and try to use the majority’s perceived antipathy to class actions to develop such rules,” he said.

But many of the justices signaled at oral argument, by focusing, for example, on individual rather than class claims in Campbell-Ewald and Spokeo, or, as in Tyson, on FLSA claims, that they aren't ready to go so far, Bryant said. The justices realized these cases aren't just about limiting class actions, and there's no good way to limit them in these cases without affecting many other areas of the law they may not want to affect.

Parasharami had a different interpretation. He said the justices that have shown sympathy for class action plaintiffs avoided bringing up the class implications of these cases because they “are actually quite hard to defend as a policy matter.”

Technical Question of Mootness?

In Campbell-Ewald, Justice Elena Kagan referred to the case being about a “pretty technical question of mootness,” Parasharami said.

Kagan, “who pretty clearly supports the plaintiffs' view in this case,” was trying to say that this case wasn’t about class actions so much as it was about drawing more the jurisdictional question, he said.

He said the statutory damages cases in particular don't tend to engender a lot of sympathy for plaintiffs, who stand to win thousands of dollars for injuries as slight as getting a single text message. Therefore, the members of the court who favor the plaintiffs' positions might have been trying to keep attention away from the class device in those cases.

Bryant said the justices in Campbell-Ewald “ended up going through this intellectual search—which in the class action area becomes entirely academic—of how, if you really want to offer the plaintiff everything and eliminate the case, and he really for absurd reasons doesn’t want to take it, how does the court end the case.”

“Well, it’s an interesting law school hypothetical, but it’s not relevant to what’s going on in class actions or the real world,” he said. “Once you can’t get past that factual predicate, or legal analysis predicate, you don’t get to the class action.”

But Parasharami noted that the liberal justices may have been trying to deflect attention from the class implications. Chief Justice John G. Roberts Jr., however, brought the issue back to front and center in that case.

The reason the plaintiff refused “to take ‘yes' for an answer” and accept the defendant's offer, Roberts said, was that the plaintiff—or more likely, the plaintiff's attorneys—was really interested in class certification.

Is Spokeo's Argument Too Broad?

Going into the term, many practitioners said Spokeo had the greatest potential to devastate the class action device because the company's argument on standing—that a bare statutory violation isn't enough to give a plaintiff the right to sue—was so far-reaching, Bryant said.

After argument, the plaintiffs' bar breathed a sigh of relief because they realized that Spokeo's argument was “way too broad and unlikely to be adopted,” he said.

Parasharami represents Spokeo, and therefore declined to discuss the case.

But Bryant said one thing he's learned from watching the Supreme Court is never to predict what the justices are going to do.

“I won’t really be unworried until the decisions come down, if they come down the right way,” he said. “I am worried less than I was, but it’s not like I’m going to stop worrying yet.”

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