On March 22d, the U.S. Supreme Court issued its much awaited decision in Tyson Foods, Inc. v. Bouaphakeo,1 ruling 6-2 that it was permissible for a trial court to certify a class based on the “representative evidence” of a statistical sample used by plaintiffs for purposes of establishing liability and/or damages issues. In doing so, the Court rejected Tyson Foods’ effort to establish a categorical rule that representative evidence cannot be used for such purposes. The Court stressed, however, that “[w]hether] and when statistical evidence can be used to establish classwide liability will depend on the purpose for which the evidence is being introduced and on the elements of the underlying cause of action.”2 The Supreme Court remanded to the trial court the issue of whether uninjured class members could be screened out from the aggregate damages that were awarded by the jury.3
Background — The Underlying Facts
Tyson Foods was both a wage and hour collective action under the Fair Labor Standards Act (“FLSA”), as well as a damages class action brought under Iowa state law. Filed in federal court, the suit was governed by Rule 23, the federal class action rule. The suit was brought by several Tyson employees on behalf of a putative class of more than 3000 employees who worked at a Tyson meat processing plant in Iowa. It was claimed that the employees were not fully compensated for time spent donning and doffing protective gear before and after working at the plant, allegedly resulting in unpaid overtime in violation of the FLSA and Iowa state law. Under the FLSA, each employee had to show that he or she worked more than 40 hours a week (inclusive of donning and doffing) in order to recover.
Tyson did not keep records of the actual time spent donning and doffing by class members, so plaintiffs retained an industrial relations expert, Dr. Kenneth Mericle (“Mericle”) who, through 744 videotaped observations, reviewed the time spent donning and doffing by a 53 employee sample. The statistical averages found by Mericle were then turned over to the second of plaintiffs’ experts, Dr. Liesl Fox (“Fox”), who determined through employee time sheets that 212 class members (about 6%) had worked less than 40 hours, and therefore would not have been entitled to overtime pay. Fox’s calculations supported an aggregate award of $6.7 million in unpaid wages.
Tyson did not seek to exclude either expert under the Daubert standard.4 Instead, it argued to the jury that variations in the time it took to don and doff made classwide recovery too speculative to justify certification of the class, and that Mericle’s averages were overstated. Tyson also rejected as a waste of resources the plaintiffs’ request to bifurcate damages issues from the liability phase of the case. The jury returned a verdict for the plaintiffs and awarded $2.9 million in classwide damages, which was much less than the Fox calculation of unpaid wages. The Eight Circuit affirmed the result.
The Supreme Court Decision
Justice Kennedy, writing for a six-Justice majority, identified two arguments raised by Tyson in challenging the propriety of certifying a class:
- Plaintiffs inappropriately assumed that each class member spent the same amount of time donning and doffing protective gear when it actually took different amounts of time to do so because there were differences in the composition of the gear. Tyson requested that to remedy this alleged error, the Court should issue a “broad rule against the use in class actions of what the parties call representative evidence.”5
- The damages awarded to the class might in part be distributed to employees who did not work any uncompensated overtime, so were not injured.6
The averaging issue.
As to Tyson’s contention that a court should be prohibited from considering averaging when certifying a class, the Supreme Court responded:
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. . . . Whether and when statistical evidence can be used to establish classwide liability will depend on the purpose for which the evidence is being introduced and on the elements of the underlying cause of action.7
Illustrating his point, Justice Kennedy stressed that if an individual class member could have relied on a representative sample as a way to prove that individual’s case, such 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.”’8 Specifically, the Court posited, if reliance on the Mericle sample was a way to sustain a jury finding as to hours worked in an individual employee’s suit, the sample would be a permissible means of establishing all employees’ hours worked in a class action.9
In the course of its decision, the Court defined the legal standard for meeting the predominance requirement of Rule 23(b)(3) in order to certify a damage class action: common issues should be more prevalent than individual issues:
When one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.10
Going further, the Court blunted Tyson’s reliance on the Court’s 2011 Wal-Mart decision11 as supporting Tyson’s proposition that a representative sample is an impermissible means of establishing classwide liability. First, the Supreme Court pointed out that the Wal-Mart decision did not even reach the predominance prong of Rule 23(b)(3). It involved only the more basic requirement of Rule 23(a) that class members must share a common question of fact or law. There, the Court ruled that the plaintiffs had failed to show that the employees in the class had been subject to a common policy, because adoption of the policy was left up to individual Wal-Mart stores. Unlike the Tyson workers, if one of the 1.5 million Wal-Mart class members had sued individually, the experiences of class members who worked in other stores would not have been sufficient to prove that the individual plaintiff had been discriminated against. To so rule would have extended greater rights to the class than to individual class members, in violation of the Rules Enabling Act.12 According to the Majority in Tyson Foods:
While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case, each employee worked in the same facility, did similar work, and was paid under the same policy . . . under these circumstances the experiences of a subset of employees can be probative as to the experiences of all of them.13
The Court emphasized, however, that in deciding that class certification is permissible, a district court may not invade the province of the jury. The persuasiveness of the evidence is a question for the jury to decide.14
The issue of identifying uninjured class members.
As already noted, plaintiffs’ experts did not dispute that 212 members of the class (about 6%) had worked less than 40 hours and therefore could not recover. Tyson abandoned the argument in its Petition for Certiorari that a class could never be certified under such a circumstance. Instead, it argued before the Supreme Court that plaintiffs were required to demonstrate before judgment that there was some mechanism to identify the uninjured class members, and to ensure that such class members do not recover any damages, which plaintiffs had not done.15 According to Tyson, plaintiffs had not met these requirements because the jury had reduced the damages by more than half of plaintiffs’ experts’ estimate. Accordingly, it was not possible to know which workers were entitled to share in the award. Plaintiffs, on the other hand, argued that it would be possible to reverse-engineer the jury’s reasoning on remand and estimate mathematically how to exclude the 212 uninjured members of the class.16
The Supreme Court responded to the arguments by ruling that the issue was premature and should be considered by the district court at the time damages are to be disbursed. It emphasized that the problem was one of Tyson’s own making. Plaintiffs had proposed bifurcation of the liability and damages phases on the ground that tried together apportionment might present problems. Because Tyson rejected the proposal, the Court would not allow it to profit from the difficulty it had caused.17
Chief Justice Roberts concurred in the decision, and Justice Alito concurred with the determination regarding uninjured class members. Otherwise, he joined in Justice Thomas’s dissent.
The Potential Impact of the Decision
The Supreme Court’s Tyson Foods decision endorses the use of reliable statistics and other inferential aggregate proof as a permissible way to establish that questions of liability and/or damages are common to a class. Actually, such evidence previously had been routinely approved by the lower courts in antitrust cases. For example, in price fixing cases, representative evidence has been used to show that defendants had raised prices relative to prices that had been charged in a competitive market, thereby establishing impact. Indeed, the Manual of Complex Litigation (Fourth) recognizes that representative evidence may be “the only practical means to collect and present relevant data,” a statement quoted favorably by the Supreme Court in Tyson Foods. 18
In fact, the Supreme Court has simplified the issue: when representative evidence is admissible for an individual class member, it should also be admissible for the class, thereby meeting both the Rule 23(a) commonality and rule 23(b)(3) predominance requirement in damages class actions.19
The decision is also instructive with respect to a trial court’s obligation to rigorously analyze economic opinion. In furtherance of its warning in its 2013 Comcast decision, it cautioned in Tyson Foods that an expert opinion based on “implausible assumptions” —either for the plaintiff or defendant-- cannot lead to a “fair or accurate” fit either with the facts or quantification of injury.20
As quoted earlier, the Tyson Foods Court firmly rejected defense arguments that a class action cannot be certified when damages have to be tried separately. Certification is appropriate so long as one or more of the central issues in the suit are common to the class and can be said to predominate. Moreover, so long as class members are excluded when classwide damages are allocated after judgment, it follows that it is not necessary that plaintiffs must prove at the class certification stage that all class members were in fact injured. The presence of uninjured class members is not a bar to class certification when it is possible to allocate any award only to injured class members.