In 6-2 decision, the US Supreme Court rejected a challenge to a jury verdict in Tyson Foods v. Bouaphakeo but declined to impose a broad rule for use of representative evidence.

On March 22, the US Supreme Court affirmed the US Court of Appeals for the Eighth Circuit’s decision in Tyson Foods v. Bouaphakeo,[1] a trial verdict on behalf of a class of workers who sought overtime. The Supreme Court found that plaintiffs could meet their burden to certify a class under Rule 23 in part by using an expert’s statistical analysis that opined on the average amount of time it took class members to don and doff protective gear.[2] According to the Court, the expert evidence prevented individualized issues about the amount of time that class members worked from predominating over the common issues in the case. The Court declined, however, to adopt any “broad rule” regarding the “use in class actions of what the parties call representative evidence.” The Court also declined to rule on the standard for proceeding as a collective action under the Fair Labor Standards Act (FLSA).

Background

Plaintiffs worked in the kill, cut, and retrim departments at a single Tyson Foods meat processing plant, where they slaughtered, trimmed, and prepared hogs for shipment. The plaintiffs filed suit, seeking overtime for the time it took to don and doff required protective gear. They sought to proceed as a collective action under the FLSA and a Rule 23 class action for the claim under Iowa law.

The district court certified a class and collective action of all employees at the facility in question who were paid under Tyson Foods’ “gang time” compensation system—a system that did not pay workers for donning and doffing the protective gear or, at certain times, paid them a set amount for such time without recording the actual time it took to don and doff the gear. The court found that there were common questions susceptible to classwide resolution, including “whether the donning and doffing of [protective gear] is considered work under the FLSA, whether such work is integral and [in]dispensable, and whether any compensation work is de minim[i]s.”[3]

To sustain a claim for overtime, class members were required to show in part that they worked more than 40 hours in a workweek. Plaintiffs offered an industrial relations expert’s study of the average time it took employees to don and doff protective gear for the various tasks in the plant. Plaintiffs hired a separate expert to combine these averages with each worker’s other work time for the week to determine whether each employee worked more than 40 hours for the week. Using this methodology, the plaintiffs’ expert found 212 employees (out of a class of 3,344) who never met the 40-hour threshold and could not recover.

At trial, the jury determined that time spent donning and doffing was compensable work under the FLSA and calculated an aggregate amount of damages to be divided among class members. Significantly, the jury awarded only $2.9 million of the total $6.7 million that the plaintiffs’ experts identified as unpaid compensation based on the average observed donning and doffing time.

The Eighth Circuit agreed with the district court that the class was properly certified and that relying on the expert survey was a permitted inference of hours worked by the class under Anderson v. Mt. Clemons Pottery Co., 328 US 680, 687 (1946).

Tyson Foods raised two issues in its petition for certiorari: (1) whether the requirement of each employee to prove that the amount of time he or she spent donning and doffing protective gear, when added to his or her regular hours, amounted to more than 40 hours in a workweek created individualized issues that predominate over the common ones, and (2) whether a class could be certified if it contains members who were not injured and have no legal right to any damages.

The Supreme Court’s Opinion

The Supreme Court affirmed the Eighth Circuit’s decision, holding that, given the facts and circumstances of this case, the trial court permissibly certified a class action that relied in part on the representative evidence. Justice Kennedy wrote the opinion of the Court for a six-Justice majority.

Before reaching the questions presented, the Court noted that it assumed, without deciding, that “the standard for certifying a collective action under the FLSA is no more stringent than the standard for certifying a class under the Federal Rules of Civil Procedure,” and, therefore, “if certification of respondents’ class action under the Federal Rules was proper, certification of the collective action was proper as well.”[4] The Supreme Court thus did not rule on the standard for when a case may proceed as a collective action under the FLSA.

In addressing the first questions presented, the Court noted that it was undisputed that there were “important questions common to all class members, the most significant of which is whether time spent donning and doffing the required protective gear is compensable work under the FLSA.”[5] The Court focused on whether the requirement of each employee to “prove that the amount of time spent donning and doffing, when added to his or her regular hours, amounted to more than 40 hours in a given week” would predominate over the common questions under Rule 23(b)(3).[6]

The plaintiffs argued that they could prove this issue on a class basis with representative evidence—namely, the expert survey and analysis of work time—and the Court agreed. The Court reasoned that “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.”[7] The Court determined that the expert’s survey in this case, because no records showed the amount of time that employees spent donning and doffing, could be used as admissible evidence in proving any employee’s individual claim for hours worked, and therefore, the evidence was “a permissible means of establishing the employees’ hours worked in a class action.”[8]

The Court cited its previous decision in Anderson v. Mt. Clemens Pottery Co., 328 US 680 (1946) in support of its decision to rely on statistical evidence in this case. In Mt. Clemens, another collective action under the FLSA, the Court held that “when employers violate their statutory duty to keep proper records, and employees thereby have no way to establish the time spent doing uncompensated work,” “an employee has carried out his burden if he proves that he has in fact performed work for which he was improperly compensated and if he produces sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.’”[9] The Court further reasoned that if the employees had proceeded with 3,344 individual lawsuits, because of the lack of records showing how long each employee spent donning and doffing equipment, each employee likely would have had to introduce the study to prove the hours he or she worked. Therefore, the representative evidence was “a permissible means of making that very showing” as to the class as a whole.[10]

The Court concluded that its decision was consistent with its prior ruling in Wal-Mart Stores, Inc. v. Dukes, 564 US 338 (2011). In Dukes, the plaintiffs sought to use representative evidence to demonstrate the existence of commonality. The Dukes plaintiffs proposed to adjudicate the claims of a sample set of the class members and then extrapolate the results of those determinations to the class as a whole. Because the Court found that none of the class members could have prevailed on their individual claims by relying on testimony from other employees about how they were discriminated against by their particular store manager, the employees were not similarly situated and could not establish the existence of commonality. The Court in Tyson Foods found that“[i]n 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,” because “each employee worked in the same facility, did similar work, and was paid under the same policy.”[11]

The Court made clear that not “all inferences drawn from representative evidence in an FLSA case are ‘just and reasonable.’”[12] “Representative 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.”[13] But because there was no challenge to the expert’s methodology under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Court found that there was no basis to conclude it was an error to admit that study.

The Court further declined to adopt any “broad and categorical rules governing the use of representative and statistical evidence in class actions . . . .”[14] “Whether 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.”[15] However, the Court’s affirmation of its ruling in Dukes is a strong indication that representative evidence will not be sufficient in employment discrimination class actions that challenge discretionary decisionmaking.

Finally, turning to Tyson Foods’ second argument, the Court ruled that “the question whether uninjured class members may recover is one of great importance,” but is a question not fairly presented because the damages award in this case had not yet been disbursed, nor did the record reflect how it will be disbursed.[16] The Court stated that Tyson Foods may challenge the proposed method of allocation when the case returns to the district court for the award disbursal.

In his concurring opinion, the Chief Justice joined the majority opinion regarding the first issue based on his understanding that the majority did not read Mt. Clemens to create any “special, relaxed rule authorizing plaintiffs to use otherwise inadequate representative evidence in FLSA-based cases.” With respect to the second issue, theChief Justice agreed that the issue is not presently ripe for review but questioned whether it would be possible for a trial court to ensure that damages go only to injured class members on remand.

Justice Thomas, joined by Justice Alito, dissented. Justice Thomas would have denied class certification because the “plaintiffs’ claims here had one element that was clearly individualized: whether each employee worked over 40 hours without receiving full overtime pay.” Justice Thomas rejected the majority’s reasoning that the representative evidence could have been used to support each employee’s individual claim because the study could not show “how fast [individual employees] walk, don, or doff—the key variables here for FLSA liability.” Justice Thomas also chided the majority for putting to employers 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.”

Looking Forward

The Court’s decision in Tyson Foods is narrow: “In FLSA actions, inferring the hours an employee has worked from a study such as [that of the plaintiffs’ expert] has been permitted by the Court so long as the study is otherwise admissible.”

The Court left for another day any further guidance on the use of representative evidence in class and collective actions. The Court also declined to address the standard for proceeding as an FLSA collective action. Going forward, the primary effect of Tyson Foods is likely to be significant litigation in the lower courts about whether and under what circumstances representative evidence can be used to certify class and collective actions. Employers also will need to consider whether to keep records of time that may not be compensable under their policies but may be subject to challenge by employees, as the lack of such records will allow for inferences about hours worked that may not otherwise be permissible.