United States: Supreme Court Affirms Class Certification And Judgment Predicated Upon "Representative Evidence"

On March 22, 2016, the Supreme Court issued a decision permitting class plaintiffs to rely on "representative" or "sample" evidence to satisfy the prerequisites to class certification and certain elements of their claims.  See Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, 2016 WL 1092414 (Mar. 22, 2016).  This is one of the relatively few recent class action decisions by the Court that could be construed as something other than a victory for class defendants.  As Justice Thomas stated in dissent, the decision arguably is inconsistent with the Court's pro-defendant decisions in Wal-Mart and Comcast.  We have previously discussed the Supreme Court's recent class action jurisprudence, including the Wal-Mart and Comcast decisions. 

Upon close reading, however, Tyson Foods may not be the significant boon to the plaintiffs' class action bar that a cursory review could suggest, nor is it necessarily inconsistent with Wal-Mart and Comcast.  While its holding supports the use of representative evidence, the ability to use such evidence applies equally to defendants attempting to defeat class certification and liability.  The Court did nothing to circumscribe the most significant aspect of these decisions, which is that Rule 23 "does not set forth a mere pleading standard," but rather a party must "be prepared to prove that there are in fact . . . common questions of law or fact" as required by Rule 23(a) and a district court must undertake a "rigorous analysis" that plaintiff has met this burden.  Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541, 2551 (2011).  Perhaps more than anything, the decision's repeated reference to the consequences of defendant's litigation decisions, including its failure to challenge one of plaintiffs' experts under Daubert or to offer a competing expert at trial, provides litigation strategy guidance for defendants in future class action cases. 

Tyson Foods arose out of a dispute between Tyson, a meat processing company, and certain employees at its Storm Lake, Iowa pork processing plant regarding whether the employees had been properly compensated for overtime work.  These employees worked in Tyson's "kill, cut and retrim" departments, where pigs are slaughtered, trimmed and prepared for distribution.  Because of the dangerous nature of the work, the employees in these departments are required to wear protective gear.  Tyson paid its employees under a so-called "gang-time" system, where employees were paid for the time spent at their stations.  Tyson also paid some, but not all, of its kill, cut and retrim employees an additional four to eight minutes per shift, to account for the time spent putting on and removing protective gear.  This metric—the four to eight minutes—was merely an estimate.  Tyson did not actually record the amount of time each employee spent putting on and removing the protective gear.

Employee-plaintiffs filed suit in the Northern District of Iowa, claiming that Tyson's practices violated the Fair Labor Standards Act ("FLSA"), which requires that a "covered employee who works more than 40 hours a week receive compensation for excess time worked 'at a rate not less than one and one-half times the regular rate at which he is employed.'"  Id. (citing 29 U.S.C. § 207(a)).  The FLSA also requires covered employers to pay employees for activities "integral and indispensable" to their regular work, even if those activities do not occur at the employee's workstation.  See Steiner v. Mitchell, 350 U.S. 247, 254 (1956).  Additionally, the FLSA requires employers to keep "records of [its employees] and of the wages, hours, and other conditions and practices of employment."  29 U.S.C. § 211(c).  According to plaintiffs, Tyson violated the FLSA because it should have but did not record, and compensate, them for the time in excess of 40 hours spent "donning and doffing" protective gear.  Plaintiffs also asserted claims under the Iowa Wage Payment Collection Law, which provides for recovery under state law when an employer fails to pay "all wages due," including FLSA-mandated overtime.  Iowa Code § 91A.3 (2013).

Plaintiffs moved for class certification of their Iowa law claim (and certification of their federal claims as a "collective action" under the FLSA), and Tyson objected to certification of both classes on the same ground.  According to Tyson, because of the variance in (i) the protective gear that each employee wore and (ii) the time it took each employee to put on and remove their gear, plaintiffs' claims were not sufficiently similar to be resolved on a classwide basis.  In Rule 23 parlance, Tyson argued that plaintiffs could not satisfy the predominance requirement of Rule 23(b)—that "questions of law or fact common to class members predominate over any questions affecting only individual members."  Fed. R. Civ. P. 23(b)(3). 

The district court rejected Tyson's position, concluding that there were common questions susceptible to classwide resolution, including "whether the donning and doffing of [protective gear] is considered work under the FLSA [and] whether such work is integral and [in]dispensable."  The class, consisting of 3,344 individuals, was certified and the case proceeded to trial, where the parties relied on "representative evidence."  Because Tyson did not keep records of time spent donning and doffing, plaintiffs introduced a study by their industrial relations expert, Dr. Kenneth Mericle, who "conducted 744 videotaped observations and analyzed how long various donning and doffing activities took.  Based on this investigation, Mericle calculated the average time it took Tyson employees to "don and doff": 18 minutes for employees in the cut and retrim departments, and more than 21 minutes for employees in the kill department.   Using these averages, another of plaintiffs' experts, Dr. Liesl Fox, estimated the amount of unpaid overtime worked by each employee by adding Mericle's estimated average donning and doffing time to the gang-time each employee worked and subtracting any time allocated to an employee for donning and doffing.  Based on this methodology, Fox concluded that 212 employees did not meet the 40-hour threshold to qualify for overtime, but that the remaining class members had been undercompensated in the amount of approximately $6.7 million.  The jury, however, awarded plaintiffs only $2.9 million in damages.

Tyson moved to set aside the jury verdict on the ground that class certification was improper.  The company focused on the "representative evidence" supplied by plaintiffs, arguing that it incorrectly assumed that each employee spent the same amount of time putting on and removing their protective gear.  According to Tyson, the true, individualized nature of the employees' donning and doffing times defeated predominance, whereas employees-plaintiffs countered that individual inquiries are unnecessary because it can be assumed that each employee donned and doffed for the same average time.  Tyson also argued that certification was barred by the Supreme Court's decision in Wal-Mart, which reversed a lower court's grant of class certification given the need for "individualized determinations of each employee's eligibility for backpay."  Id. at 2560.>sup>1  

The district court denied Tyson's motion, and the Eighth Circuit and Supreme Court affirmed.  In a 6 to 2 decision written by Justice Kennedy,2 the Court refused to "categorically exclude" the use of representative evidence in class action cases, finding that evidence to establish classwide liability "will depend on the purpose for which the evidence is being introduced and on 'the elements of the underlying causes of action.'"  According to the Court:

"A categorical exclusion of that sort, however, would make little sense.  A representative or statistical sample, like all evidence, is a means to establish or defend against liability.  Its permissibility 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 of the relevant cause of action. . . .  In 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.  To so hold would ignore the Rules Enabling Act's pellucid instruction that use of the class device cannot 'abridge . . . any substantive right.'"

The Court also observed that in many cases "a representative sample is 'the only practicable means to collect and present relevant data.'"  2016 WL 1092414 at *8.  Noting that Tyson kept no time records regarding its employees' use of the protective gear, the Court found that plaintiffs had no other way "to prove the precise extent of uncompensated work."  Id. at *9.  Rather, employees-plaintiffs "sought to introduce a representative sample to fill an evidentiary gap created by the employer's failure to keep adequate records."  Moreover, the Court found that Mericle's study did not "deprive [Tyson] of its ability to litigate individual defenses.  Since there were no alternative means for the employees to establish their hours worked, [Tyson's] primary defense was to show that Mericle's study was unrepresentative or inaccurate" – an issue more appropriate for summary judgment than class certification.

The Court also rejected Tyson's argument that Wal-Mart precluded certification.  In Wal-Mart, plaintiffs had not established that there was a common policy of discrimination affecting each employee in the class.  Rather, plaintiffs 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.'"  Wal-Mart rejected what it called "Trial by Formula" as, among other things, violative of the Rules Enabling Act because it enlarged class members substantive rights.  Thus, the Wal-Mart plaintiffs' were not "similarly situated" and could not satisfy Rule 23(a)'s commonality requirement—that class members have common questions of law or fact.  According to the majority, the situation in Tyson was different: "While the experiences of the employees in Wal–Mart bore little relationship to one another, in [Tyson Foods] each employee worked in the same facility, did similar work, and was paid under the same policy . . . [Thus,] the experiences of a subset of employees can be probative as to the experiences of all of them."  Id. at *11.3  Nor does Wal-Mart stand for the "broad proposition" that a "representative sample is an impermissible means of establishing classwide liability."  

The Court did not decide Tyson's second argument that plaintiffs had not identified a mechanism to ensure that uninjured class members do not recover damages, finding the inquiry "premature" and noting that Tyson could "raise a challenge to the proposed method of allocation when the case returns to the District Court for the disbursal of the award."  Id. at *12.  The Court added, however, that this problem "appears to be one of [Tyson's] own making" because plaintiffs had proposed bifurcating the proceedings for "the precise reason that it may be difficult to remove uninjured individuals from the class after an award is rendered.  It was [Tyson] who argued against that option and now seeks to profit from the difficulty it caused.  Whether, in light of the foregoing, any error should be deemed invited is a question for the District Court to address in the first instance."4 On that point, Chief Justice Roberts' concurrence noted that "Tyson's insistence on a lump-sum jury award cannot overcome the limitations placed on the federal courts by the Constitution," including that "Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not."

Tyson Foods rejects the premise that class plaintiffs and defendants are prohibited from relying on representative evidence.  Perhaps as importantly, the case-specific inquiry laid out in the decision highlights a number of strategic litigation considerations:

  • Move to exclude "inadequate" representative evidence via a Daubert motion and/or on summary judgment.  As the Court observed, "[r]epresentative evidence that is statistically inadequate or based on implausible assumptions could not lead to a fair or accurate estimate of the uncompensated hours an employee has worked."  Tyson, however, failed to challenge Mericle's methodology under Daubert and/or on summary judgment, and so there was no basis to exclude the evidence on appeal.  Instead, once a court finds evidence admissible, "its persuasiveness" generally is "the near-exclusive province of the jury.  The District Court could have denied class certification on this ground only if it concluded that no reasonable juror could have believed the employees spent roughly equal time donning and doffing," and the district court here made no such determination.
  • Demonstrate that representative evidence is irrelevant or prejudicial.  Citing Federal Rules of Evidence 401 and 403, the Court found that the permissibility of representative evidence turns "on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action."  But at trial Tyson did not introduce its own expert testimony to attempt to offer competing evidence or as a means to undermine plaintiffs' experts.  Plaintiffs' expert evidence therefore went largely unrebutted.  While there are conceivable reasons to adopt such an approach, serious consideration needs to be given to offering rebuttal testimony in these types of circumstances and a clear rationale accepted by counsel and the client if a decision is made not to do so. 
  • Move to bifurcate proceedings.  The plaintiffs had moved in the district court to bifurcate the proceedings, such that first a trial would be conducted on the questions whether time spent donning and doffing was compensable work under the FLSA and how long these activities took to perform on average.  Second, Fox's methodology would be used to determine which employees suffered an FLSA violation and how much each was entitled to recover.  Tyson, however, insisted on a single proceeding in which a jury determined liability and aggregate damages.  It remains to be seen which side will benefit from the use of a single proceeding, particularly in light of the majority's comments that Tyson "invited" error.  Nonetheless, bifurcation of trial into liability and damages phases is an issue that necessarily raises numerous strategic considerations, including at times offering defendant the possibility of excluding at the liability phase unfavorable evidence that is only relevant to damages.
  • Use special verdicts:  The jury returned a special verdict finding the time spent in donning and doffing protective gear at the beginning and end of the day was compensable work but that time during meal breaks was not.  No special verdict was returned on the question of damages or on whether the jury credited one or both of Mericle's average times.  The absence of a special verdict on this latter issue gave rise to Chief Justice Roberts' concern about the district court's ability to distribute the award, an outcome that obviously could benefit Tyson.  Consideration needs to be given to whether and under what circumstances special verdicts are likely to aid one side or the other in the event a jury verdict leaves certain questions unanswered.

 Footnotes

1. Wal-Mart concerned alleged discriminatory employment practices in violation of Title VII.  The company opposed class certification on the ground that plaintiffs could not show commonality under Rule 23(a)—"that 'there are questions of law or fact common to the class.'"  Id. at 2550-51. In particular, Wal-Mart argued that plaintiffs could not demonstrate that there was a single, countrywide discriminatory policy.  The Supreme Court, in an opinion written by Justice Scalia, agreed with Wal-Mart, finding that plaintiffs "provide[d] no convincing proof of a companywide discriminatory pay and promotion policy," and thus had "not established the existence of any common question" under Rule 23(a).  Id. at 2556-57.

2. Chief Justice Roberts wrote a concurring opinion, while Justice Thomas wrote a dissenting opinion, which Justice Alito joined.

3. In dissent, Justice Thomas observed that Wal-Mart requires that a district court conduct a "rigorous analysis" to determine that Rule 23's prerequisites have been met before certifying a class.  According to Justice Thomas, the district court did not rigorously analyze plaintiffs' use of representative evidence to ensure that it was "sufficiently probative of the individual issue to make it susceptible to classwide proof."  Id. at *16.  Rather, Justice Thomas stated, "Mericle's evidence showed that employees' donning and doffing times varied materially," thus confirming the "inappropriateness of class treatment."

4.  Chief Justice Roberts' concurring opinion focused on this second issue, and he expressed 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."  At least part of the problem, according to the Chief Justice, is that "it is undisputed that hundreds of class members suffered no injury in this case;" the jury "returned a lump sum verdict of $2.9 million on a classwide basis without specifying any particular amount of donning and doffing time used to calculate that number;" and "we know the jury" did not accept plaintiffs' proposed average times because, if it had, it would have arrived at a different damages figure.  As a result, "we know that the jury must have found at least one of Dr. Mericle's two averages to be too high," but "we do not know how much donning and doffing time the jury found to have occurred in each department."

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