MVA Litigation

Plaintiffs can count the first class action decision to be issued by the U.S. Supreme Court since the death of Justice Scalia as a win; although, they did not receive broad authorization to proceed carte blanche, as some had hoped. On March 22, 2016, a 6-2 split Court issued its opinion in the Tyson Foods, Inc. v. Bouaphakeo et al Fair Labor Standards Act (FLSA) class action which called into question the extent to which statistical averaging may be used to establish liability on a classwide basis and whether a class may be certified if it contains uninjured class members. The Court issued a relatively narrow ruling authorizing the use of the statistical evidence proffered to establish that employees were entitled to overtime pay under the FLSA. Plaintiffs, however, did not walk away with a green light to use statistical averaging in all types of class actions. According to the Court, a case-specific analysis is required to determine the propriety of using representative evidence. Several questions raised by the Justices during oral argument suggested that the Court might consider issuing a more tailored ruling limited to FLSA collective actions (see our previous post), but the Court’s decision squarely found the use of statistical averaging proper in the context of a federal class action brought under Federal Rule of Civil Procedure 23, as well as FLSA collective actions. We highlight the key takeaways from the Court’s opinion, beginning with a brief overview of the facts that the Court relied on to justify plaintiffs’ use of statistics to establish liability.

Non-Existent Timekeeping Records - Donning and Doffing

The dispute at the heart of Tyson Foods is rooted in the fact that the company did not keep records of the time that each employee spent donning and doffing the protective gear required for their work in several departments of one of Tyson’s meat processing plants. Tyson did not pay all employees for those activities, and a class of 3,344 member employees alleging that they were owed overtime for those “integral and indispensable” activities was certified by the District Court. In addition, 444 employees joined the parallel collective action that was filed under the FLSA.

Representative Statistical Evidence to Fill the Liability Gap

To prevail, plaintiffs had to prove that they were entitled to overtime pay for hours worked in excess of 40 hours per week. Because Tyson did not have records of donning and doffing times, plaintiffs used an expert study to compile statistical “representative evidence” to establish the average amount of time employees in the different departments spent on these activities. The expert analyzed nearly 750 videos, averaging the time employees took in the videos to produce an estimate of 18 minutes per day for two of the departments and 21.25 minutes for the other department. These averages were added to the timesheets of employees to establish whether or not they worked more than 40 hours – approximately 200 employees were determined not to be entitled to overtime. Based on these averages and the number of employees determined to be entitled to overtime, plaintiffs’ other expert determined that Tyson owed the class $6.7 million in unpaid wages.

Individual Questions Outweighed by the Common or Simply Assumed Away by Statistics?

Tyson argued that certification of a class was improper because the variety of gear that employees wore and time required to don and doff that gear would vary depending on their duties for a particular day and therefore would vary by individual. Thus, whether or not Tyson was liable, i.e. owed an employee overtime pay, also would vary by individual. The District Court found that certification of the class was proper because the common questions presented in the case, including whether donning or doffing of the protective equipment was compensable time under the FLSA, could be resolved on a classwide basis. Tyson urged that the expert’s study “manufactures predominance by assuming away the very differences that make the case inappropriate for classwide resolution,” and using a representative sampling “absolves each employee of the responsibility to prove personal injury.” Interestingly, the jury found donning and doffing at the start and end of the day to be compensable, but only awarded $2.9 million in damages to the class. The jury clearly discounted the plaintiff expert’s estimates of time spent on the activities, but no details were provided as to how the jury came to its determination. Tyson sought to set aside the verdict, but the District Court denied the motion and the Eighth Circuit confirmed the award.

No Broad Categorical Ruling

The Supreme Court refused to categorically exclude the use of representative evidence or statistical samples from all types of class action cases, reasoning that “[i]n a case where representative evidence is relevant in proving a plaintiff’s individual claim, that evidence cannot be deemed improper merely because the claim is brought on behalf of a class.” The Court similarly refused to categorically approve the use of such evidence in all class action cases. Instead, the Court held that “[w]hether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.” Based on Anderson v. Mt. Clemens Pottery Co., 328 U. S. 680 (1946), the Court determined that for “FLSA actions, inferring the hours an employee has worked from a study such as [the plaintiff expert’s] has been permitted by the Court so long as the study is otherwise admissible.” The question remains open in contexts other than FLSA wage and hour disputes: “[t]he fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases.”

According to the Court, a means of analyzing the propriety of using such evidence in a class action is determining whether each class member could have relied upon the sample evidence to establish liability in an individual action. The Dissent points out, however, that in an individual action a company defendant could introduce contradictory evidence to disprove that the averages derived by a study apply to a particular plaintiff. In fact, employee witnesses in Tyson Foods testified that the actual time they spent donning and doffing protective equipment diverged from the average times in the expert’s study. Contrary to the Majority, Justices Thomas and Alito urge that without the opportunity to present an individualized defense to individualized liability issues, company defendants are at a disadvantage.

What to Make of Uninjured Class Members?

Tyson Foods leaves open questions regarding the propriety of certifying a class that contains uninjured class members. Although this question was presented by Tyson and certified for review, Tyson reformulated the question in its merits briefing and the Supreme Court found that the question was no longer fairly presented by the case. The question may remain open for quite some time, as the District Court in Tyson Foods has yet to determine the methodology by which the class award will be distributed to class members. This presents a particularly interesting question, noted by Chief Justice Roberts in the Concurrence, since the jury obviously discounted the expert’s estimation of the times spent donning and doffing but provided no indication as to what times they used to calculate the damages award. The Supreme Court also subsequently denied certiorari review of Wells Fargo Bank v. Gutierrez (No. 14-1230) on April 4, 2016, which squarely presented the uninjured class member question.

Where Does Tyson Foods Leave Employers?

FLSA class actions have been on the rise, having recently hit record highs. The Tyson Foods Majority noted several times that Tyson “failed” to keep records on donning and doffing times. As for the impact of this decision on employers potentially facing FLSA class actions in the future, Justices Thomas and Alito say it well:

The majority thus puts employers to an untenable choice. They must either track any time that might be the subject of an innovative lawsuit, or they must defend class actions against representative evidence that unfairly homogenizes an individual issue. 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.

Companies are well advised to consult with counsel to review their current timekeeping policies and trends in FLSA litigation to identify potential areas of exposure.

With respect to other types of class actions in which plaintiffs may attempt to offer statistical or representative evidence, Tyson Foods leaves the door open to successfully challenging that evidence. Tyson Foods leaves the Supreme Court’s Wal-Mart Stores, Inc. v. Dukes, 564 U. S. 338 (2011) decision intact and distinguishes Tyson Foods. In Dukes, plaintiffs attempted to use a sampling to establish liability for discrimination for a class of over 1.5 million employees. The Tyson Foods Majority explains that in Dukes:

Since the Court held that the employees were not similarly situated, none of them could have prevailed in an individual suit by relying on depositions detailing the ways in which other employees were discriminated against by their particular store managers. By extension, if the employees had brought 11∕2 million individual suits, there would be little or no role for representative evidence. Permitting the use of that sample in a class action, therefore, would have violated the Rules Enabling Act by giving plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action. 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.

The continued viability of Dukes and the case-specific analysis required by Tyson Foods provide company defendants with continued opportunities to limit plaintiffs' use of statistical evidence in class actions.