United States: Supreme Court Revisits "Trial By Formula" Approach In FLSA Collective Action

In 2011, the U. S. Supreme Court issued a landmark decision regarding certification of employment discrimination class actions. The opinion, Wal-Mart v. Dukes, rejected the "trial by formula" approach of allowing a random sample of the class members' claims to be tried, with the results of those trials to be applied to the entire class. Among other problems, the Court found that this shortcut approach deprived defendants of the ability to litigate statutory defenses to individualized claims. Dukes, however, did not reach the narrower issue of whether "representative," "sample" or "anecdotal" evidence" is ever appropriate in a class-action employment case.

Since Dukes, there has been plenty of disagreement on the true meaning of the Court's prohibition of a "trial by formula."  Employers argue that the Dukes opinion means representative evidence is prohibited in class actions.  So, class actions are not appropriate unless class-wide liability and damages can be established with common evidence. Employees, in contrast, argue that Dukes was limited to the facts of that case and the Employers' argument is contrary to the efficiency purposes underlying class-action lawsuits.

Last month, the Supreme Court issued its opinion in the Fair Labor Standards Act (FLSA) collective action case of Tyson Foods v. Bouaphakeo.  The Tyson decision was highly anticipated because it was expected to provide guidance on the prohibition of a "trial by formula", and it was the first class-action decision in the employment context following the death of Justice Antonin Scalia, the author of the Dukes decision.  Employers hoped that the Court would extend Dukes and issue a per se rule that "representative" or "sample" evidence may not be used in the class action context. But, the Court declined to do so.  Whether this case is limited to the FLSA or has broader ramifications is yet to be seen and surely will be litigated.

At issue in Tyson was whether a class of employees had not received statutorily mandated overtime pay for time spent putting on and taking off ("donning and doffing") protective equipment.  The time spent donning and doffing (and unpaid wages for the same) varied depending on the tasks performed by the individual workers.  So, common evidence could not be used to establish class-wide damages.  Further, Tyson did not track this time, making it impossible to determine the exact time each individual was allegedly shortchanged wages.  This, of course, is an all-too-common scenario under the FLSA.

Since the claims related only to overtime, each employee had to show he or she worked more than 40 hours a week, inclusive of donning and doffing time. Tyson argued that the variance in donning and doffing time demonstrated that the employees' claims were not sufficiently similar to be resolved on a class-wide basis.  The lower court allowed the employees to use "representative" evidence to make their case to the jury.  So, for example, the employees used a statistical expert who conducted representative time studies to determine the average number of minutes that the employees spent on donning and doffing equipment.  The end result of this analysis was that employees in one department averaged 18 minutes per day donning and doffing while in another department they averaged 21 minutes per day. This study, in conjunction with time records, was used by a second expert to determine which employees were entitled to overtime based on adding in the donning and doffing time.

Despite the employer's arguments, the Supreme Court rejected a categorical exclusive of representative or sample evidence in class actions.   Rather, the Court explained that the propriety of using representative or statistical evidence depends on the degree to which the evidence is reliable in proving or disproving the elements of the case. Thus, if the sample could have been used to establish hours worked in each individual's action, that sample is likewise a permissible means of establishing the employee's hours worked in the class action.  Because Tyson did not maintain records, representative evidence was the only way for the employees to demonstrate the hours worked donning and doffing.  In distinguishing Dukes, the Court explained that unlike the Tyson case had the Dukes case been individually litigated there would have been little or no role for representative evidence.

Some have suggested that the Court's acceptance of representative evidence in Tyson is limited to the instances where the employer breaches its obligation to keep records of employees' compensable work under the FLSA. It remains to be seen, however, whether this limited reading is they way lower courts interpret the case.  Further, as the dissent noted, even this limited application still leaves employers with a difficult choice: either track any time that might be the subject of an innovative lawsuit, or defend class actions against representative evidence that unfairly homogenizes an individual issue.  So, even a limited reading of this case leaves employers in a difficult position under the FLSA going forward.  This important issue bares watching, and we will of course report on future decisions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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