U.S. Supreme Court Holds That Class Plaintiffs May Use Sampling Evidence to Establish Predominance of Common Issues If Such Evidence Would Be Admissible to Prove Liability in Individual Suits
The Supreme Court held yesterday in Tyson Foods, Inc. v. Bouaphakeo1 that representative evidence may be used to establish class-wide liability—and that common questions may predominate over individual ones—if it could be used to establish liability in an individual action. At issue in Tyson Foods was whether a class of workers in a food processing plant could rely on expert studies calculating, based on observing a sample of employees, the average amount of time spent donning and doffing protective equipment to establish the amount of overtime pay to which members of the class were entitled. The Court concluded in a narrow decision that such evidence was admissible in this class and collective action because it would have been admissible to show an employer’s liability in an individual lawsuit, under a rule set forth in the Court’s decision in Anderson v. Mt. Clemens Pottery Co.2 The Court declined to address Tyson’s separate contention that the plaintiffs were required to prove that uninjured employees would not receive damages under the lump-sum award, thus leaving that question open.
Tyson Foods operates a pork-processing plant in Storm Lake, Iowa. Tyson generally compensates the hourly employees of that plant under a “gang-time” system, which compensates them according to the time spent at their workstations. But before reporting to their workstations, these workers, most of whom use knives or other cutting tools, must don varying levels of protective and sanitary equipment, depending on the tasks performed. In 1998, Tyson began compensating all its production workers for four additional minutes a day on top of their “gang-time,” representing the time Tyson estimated it took the workers to don and doff their protective gear. Beginning in 2007, however, Tyson started paying knife-wielding employees for an additional few minutes per day, but ceased paying other employees for any additional time.
Peg Bouaphakeo and five other employees in the plant’s “kill,” “cut,” or “retrim” departments brought suit on behalf of themselves and a class of current and former hourly-wage employees at the Storm Lake plant, alleging that Tyson violated the Fair Labor Standards Act of 1938 (“FLSA”)3 and the Iowa Wage Payment Collection Law (“IWPCL”)4 by failing to pay them overtime to compensate for the time they spent donning and doffing protective gear. Because Tyson did not keep records of the time individual employees spent donning and doffing, the class representatives sought to establish how much overtime they believed they had worked through representative evidence. In particular, they relied on an expert report that, relying on videotaped observations of a sample of the employees donning and doffing their gear, calculated an average estimate of time that the workers in each department spent per week in that preparatory process.
The district court rejected Tyson’s argument that, due to variations in the amount of protective gear the putative class members wore, their claims were not sufficiently similar to be resolved on a class-wide basis. After Tyson opposed the plaintiffs’ motion to bifurcate the liability and damages phases, the case proceeded to a single trial. Based on the averages calculated by the plaintiffs’ expert and other representative evidence discussed above, the plaintiffs argued to the jury that Tyson owed the employees $6.7 million in unpaid wages. The jury found for the plaintiffs and awarded the class approximately $2.9 million.
A divided Eighth Circuit panel affirmed. Like the district court, the majority rejected Tyson’s argument that differences in the protective equipment worn by the employees of various departments made class certification inappropriate. It also rejected Tyson’s argument that the class had to be decertified because some class members concededly did not work overtime and thus had not been injured.5
THE SUPREME COURT’S DECISION
In a 6-2 decision authored by Justice Kennedy, the Supreme Court held that the representative evidence offered by the plaintiffs was properly admitted to prove Tyson’s liability to all class members, and thus to show that common issues in the litigation predominated over individual ones.6 The Court first rejected Tyson’s argument for a broad rule banning the use of statistical sampling or other “representative evidence” in all class actions, concluding that if such evidence would be reliable proof to support an individual claim, the same “evidence cannot be deemed improper merely because the claim is brought on behalf of a class.”7 In other words, “[w]hether and when statistical evidence can be used to establish classwide liability” depends on “the purpose for which the evidence is being introduced” and “‘the elements of the underlying cause of action.’”8
As for the claims at issue in the case, the Court held that the employees could establish the extent of Tyson’s liability under the FLSA through the use of representative evidence. The Court noted that under its decision in Anderson v. Mt. Clemens Pottery Co., when an employer does not keep records of the time its employees spend doing certain activities, the employees can carry their burden by introducing evidence sufficient to show the amount of time worked “as a matter of just and reasonable inference.”9 The Court reasoned that, because Tyson had not kept records of the time the workers spent donning and doffing protective gear, each of those workers in an individual action likely would have had to rely on the same expert report to prove the number of hours he or she had worked.10 If the workers could use that evidence to establish liability in individual cases, the Court held, it was permissible to do so in a class action. Allowing such evidence would not violate Tyson’s right to present individual defenses, the Court further held, because Tyson’s only defense at trial—attacking the reliability of the expert report—was a common defense to the class, to be resolved on summary judgment.
The Court distinguished Wal-Mart Stores, Inc. v. Dukes, 11 in which the plaintiffs “did not provide significant proof of a common policy of discrimination to which each employee was subject.” “The only corporate policy” was “allowing discretion by local supervisors over employment matters,” “and even then, the plaintiffs could not identify a common mode of exercising discretion that pervade[d] the entire company.”12 In that circumstance, the Court said, the plaintiffs could not show discrimination by having a special master preside over depositions of a sample set of class members. Because “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.13 “[I]f the employees had brought 1 1/2 million individual suits, there would be little or no role for representative evidence.”14 In contrast, the Court noted, the expert report at issue in Tyson Foods “could have been sufficient to sustain a jury finding as to hours worked if it were introduced in each employee’s individual action.”15
The Court declined to address Tyson’s separate argument that the plaintiffs were required to demonstrate that there is a mechanism to identify uninjured class members (i.e., the employees who did not work any overtime) and ensure that those uninjured class members do not recover damages. The Court held that the question “whether uninjured class members may recover,” while “one of great importance,” was not yet fairly presented because the damages awards had not yet been disbursed, nor did the record reflect how they would be disbursed.16 Raising the possibility that Tyson may have “invited” any error by opposing a bifurcated trial on liability and damages, the Court left the decision of how to calculate those damages to the district court, at which point Tyson could challenge the allocation method.
Chief Justice Roberts concurred in the majority opinion, but wrote separately (in a section joined by Justice Alito) 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.”17 The Chief Justice noted the difficulty in “reverse engineer[ing]” the jury’s verdict to determine the average amount of “donning and doffing time the jury found Tyson owed workers in each department,” and stated that it would violate Article III to award relief by lump sum absent assurance that no uninjured class members would receive damages.18
Justice Thomas, joined by Justice Alito, dissented, contending that the majority’s conclusion “created an unacceptable risk that Tyson would be held liable to a large class without adequate proof that each individual class member was owed overtime.”19
Yesterday’s decision indicates that a putative class may use representative or statistical evidence to prove a defendant’s liability on a class-wide basis—and thus to support an argument that common issues predominate over individual ones—to the same extent that its class members could use such evidence to establish liability in an individual case. As a result, plaintiffs who rely on statistical or representative evidence at the class-certification stage will need to demonstrate that such evidence could permissibly demonstrate liability in an individual case, and that the evidence is otherwise reliable and admissible in its own right. Conversely, defendants should raise challenges to representative evidence, including any Daubert challenges to the expert methodology, at the class-certification stage.
Significantly, the Court declined to decide whether plaintiffs seeking to use such representative evidence must demonstrate a way to ensure that uninjured class members do not recover damages. The Chief Justice clearly stated his view (which was joined by Justice Alito) that any award that would inevitably compensate uninjured plaintiffs would violate Article III. The Court may be receptive to deciding this issue in another case. In the meantime, class-action defendants can continue to contest the validity of any damages model or award under which it would be difficult to ensure that uninjured class members do not receive compensation, including by raising arguments that a class cannot be or remain certified because individual calculations used in distributing awarded damages will predominate over common questions.