Why it matters

Statistical sampling may be used by the plaintiff class, a California appellate panel ruled, finding that the U.S. Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes did not effectuate a ban on such evidence. The case involved more than 10,000 security guards who alleged their employer failed to pay them for meal breaks. The class requested to use statistical samples to determine how many of the guards signed on-duty meal agreements during the class period and the employer objected, pointing to the Wal-Mart decision to argue the Justices prohibited such evidence. A trial court decertified the class but the appellate panel disagreed. Distinguishing Wal-Mart—where the class wanted to use statistical sampling to calculate all damages—the court said the security guards only wanted to use the evidence as support for facts that were already established.

Detailed discussion

A trio of security guards at The Wackenhut Corporation filed suit against their employer, alleging the company failed to provide them with off-duty meal and rest breaks, as well as neglecting to provide adequate wage statements. A trial court certified a class of roughly 10,000—13,000 guards in 2010, and the parties agreed in a stipulation to use statistical sampling in lieu of document production or inspection.

However, after the U.S. Supreme Court released its ruling in Wal-Mart Stores, Inc. v. Dukes in 2011, the employer moved for decertification. The Justices’ decision—refusing to permit a “Trial by Formula” where the plaintiffs used a sample of class members to establish liability and damages because it would prevent Wal-Mart from litigating its statutory defenses to individual claims—constituted a significant change in law justifying reconsideration of class certification, the employer argued.

A trial court granted the motion, ruling that individualized issues predominated the dispute and that there was no way to conduct a manageable trial of plaintiffs’ claims. The security guards appealed and a California appellate panel reversed.

The trial court’s reliance on Wal-Mart to support decertification for the security guards’ claims “overextended” the holdings of the Supreme Court case, the panel said, particularly in light of the Court’s subsequent decision in Tyson Foods, Inc. v. Bouaphakeo. In that case, the Justices approved of the use of statistical sampling, writing that 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, the Court wrote in Tyson.

Applying this standard, the appellate panel found the security guards could use the statistical sampling as they had proposed. “[S]tatistical evidence was proposed only for the limited purpose of determining how many employees had signed on-duty meal agreements lacking revocation language during the class period,” the court explained.

The plaintiffs had already established through deposition testimony that Wackenhut required all employees to sign on-duty meal agreements, that prior to 2004 most of the agreements lacked the required revocation language, that between 2004 and 2008 only new employees signed agreements with the necessary revocation language, and that it was only after 2008 that all employees signed agreements with the revocation language.

“[U]nder these circumstances the percentage of the subset of employees who signed meal agreements lacking the required revocation language during a given time period is probative as to the percentage of the class that signed meal agreements lacking the required revocation language,” the court said. “Thus, unlike Wal-Mart, where the statistical sampling was the only evidence establishing liability, here, the results of the statistical sampling (calculating an average percentage of meal agreements lacking revocation language for each year between 2001-2008) served as a manageability tool—an alternative to burdensome production.”

Further, the trial court muddled the holding of Wal-Mart with the question of predominance in a class certification motion. When it originally certified the class, the trial court found that the security guards had presented sufficient evidence that Wackenhut had policies and practices that violated wage and hour laws, the court said. “Because plaintiffs met their burden of establishing a common policy, whether an individual was permitted to take a valid meal or rest break on any given day is a question of damages,” the panel wrote.

The nature of Title VII liability also distinguished Wal-Mart from the case at hand, the court said. Individualized inquiries were necessary in that case because of the burden-shifting framework of employment discrimination actions under the statute while the wage order under which the security guards filed suit does not feature an individualized burden-shifting mechanism. “If plaintiffs have made a showing that Wackenhut had a policy or practice that violated California wage and hour laws, any defense asserted by Wackenhut can also be presented on a classwide basis,” the court said.

What about an affirmative defense based on “the nature of the work”? The employer contended that this exception to the requirement for meal breaks could not be adjudicated on a classwide basis because it required an analysis of each individual client, worksite, job post, and shift. But the appellate panel found that Wackenhut made it a class issue by treating the meal break on a classwide basis. Specifically, the employer had a policy of letting its clients decide whether or not security guards would be permitted to be relieved of all duty for meal breaks.

“[S]ince the employer did not analyze whether the nature of the work exception applies before requiring employees to take on-duty meal periods, it cannot rely on the nature of the work defense to bar class certification,” the court wrote. “Individual issues … do not predominate because Wackenhut has treated the nature of the work exception on a classwide basis.”

To read the opinion in Lubin v. The Wackenhut Corporation, click here.