Why it matters

With the potential for a major impact, the U.S. Supreme Court has agreed to hear an employment case involving a class action filed by workers against Tyson Foods, Inc. seeking payment for the time spent putting on and taking off protective gear using “extrapolation and averaging” to determine class certification and damages. In 2007, hourly workers at a pork processing facility sued for overtime and liquidated damages for their donning and doffing time. A jury found for the plaintiffs, with a damage award of $5.8 million. A panel of the Eighth Circuit Court of Appeals affirmed the verdict, ruling that the class was properly certified using individual timesheets and average times calculated from 744 observations of employee donning, doffing, and walking.

Tyson petitioned the high court for review, asking whether a class or collective action can be certified where “liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in the sample.” A second question will have the justices consider whether a class or collective action can be certified and maintained if the group includes “hundreds of members” who were not injured or lacked a legal right to damages. The decision could have a significant effect on class actions generally as well as Fair Labor Standards Act disputes. If the justices side with Tyson Foods and take a hard line on statistical sampling or extrapolation, plaintiffs will face a more challenging road to establishing liability on a classwide basis.

Detailed discussion

Peg Bouaphakeo and a handful of other employees at a Tyson Foods meat processing facility in Iowa filed suit against their employer. The workers alleged they were not being paid the correct wages under both state law as well as the Fair Labor Standards Act (FLSA).

The plaintiffs were “gang-time” employees at the facility, meaning Tyson measured their compensable working time when the workers were at their stations and the production line was moving. The workers sought compensation for donning and doffing their protective equipment and clothing before and after lunch. Importantly, the protective gear and equipment worn and used by the plaintiffs varied depending on their position, ranging from hard hats to work boots to aprons and gloves, with some workers needing time to clean their knives.

In addition to “gang time,” Tyson added “K-code” time to each employee’s paycheck: four additional minutes for employees using knives and several more minutes for workers for pre- and post-shift walking time intended to cover the required donning and doffing of protective gear and materials. Tyson did not record the actual time that employees performed these tasks.

The K-code time was insufficient to cover compensable pre- and post-production line activities, Bouaphakeo and the other workers alleged. After class and collective actions were certified, a nine-day trial was held. The plaintiffs presented their evidence in the form of individual timesheets and the average donning, doffing, and walking times calculated from 744 employee observations.

A jury returned a verdict in favor of the plaintiffs. With liquidated damages, the judgment totaled $5,785,757.40.

Tyson appealed, arguing that the trial court erred in certifying the class and collective actions due to the differences between the plaintiffs in their individual routines, equipment used, and jobs performed. The “extrapolation and averages” used as the basis for both the certification as well as the damages calculation was unlawful, the employer added.

But the Eighth Circuit Court of Appeals affirmed the court’s certification orders, the jury’s verdict, and the damages award.

“Tyson had a specific company policy—the payment of K-code time for donning, doffing, and walking—that applied to all class members,” the panel wrote. “True, applying Tyson’s K-code policy and expert testimony to ‘generate … answers’ for individual overtime claims did require inference, but this inference is allowable …. While individual plaintiffs varied in their donning and doffing routines, their complaint is not ‘dominated by individual issues’ such that ‘the varied circumstances … prevent one stroke determination.’”

The plaintiffs did not improperly rely upon a formula to prove liability, the court said. Unlike the frowned-upon “trial by formula,” the plaintiffs proved liability “for the class as a whole, using employee time records to establish individual damages,” the court said. “Using statistics or samples in litigation is not necessarily trial by formula.”

Although the panel acknowledged that the plaintiffs relied upon inference from average donning, doffing, and walking times, “they apply this analysis to each class member individually. Using this representative evidence is comparable to a jury applying testimony from named plaintiffs to find classwide liability,” the panel said.

Tyson’s contention that the plaintiffs presented insufficient evidence to prove damages classwide failed to sway the court. “Tyson has no evidence of the specific time each class member spent donning, doffing, and walking,” the court wrote. “[W]hen an employer has failed to keep proper records, courts should not hesitate to award damages based on the ‘just and reasonable inference’ from the evidence presented.”

To prove damages, the plaintiffs used individual timesheets along with the average times calculated from a sample of 744 observations of employee donning, doffing, and walking, with expert testimony that the sample was appropriate for the type of study, representative, and approximately random, the court said, providing sufficient evidence to support a reasonable inference of classwide liability.

The court also rejected Tyson’s contention that evidence was presented at trial that some class members did not work overtime and were not entitled to damages, holding that a jury instruction approved by the defendant directed the jury to treat plaintiffs with no damages as class members.

A dissenting opinion argued that neither the class nor the collective action should have been certified given the disparities among the workers.

“[T]his case with these classes cannot be resolved in ‘one stroke,’ given the differences in donning and doffing times, K-code payments, abbreviated gang time shifts, absenteeism, sickness, vacation and a myriad of other relevant factors,” the judge wrote. “Here we have undifferentiated presentations of evidence, including significant numbers of the putative classes suffering no injury and members of the entire classes suffering wide variations in damages, ultimately resulting in a single-sum class-wide verdict from which each purported class member, damaged or not, will receive a pro-rata portion of the jury’s one-figure verdict.”

Tyson filed a writ of certiorari with the U.S. Supreme Court, arguing that the plaintiffs should not have been allowed to establish liability and damages through a “trial by formula,” noting a split among the federal circuits that have addressed the issue. While the Tenth Circuit has allowed class action damages to be extrapolated based on averages like the 8th Circuit permitted in Tyson, the Second, Fourth, Fifth, Seventh, and Ninth Circuits have refused to certify a class where the individual damages would have been inferred from statistical sampling or averages.

The justices granted cert. to answer two questions: “Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample; and whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.”

A decision from the Court is expected next term.

To read the Eighth Circuit’s decision in Bouaphakeo v. Tyson Foods, Inc., click here.

To read Tyson Foods’ petition for certiorari, click here.

To read Bouaphakeo’s reply brief, click here.