Jessica Karmasek Mar. 23, 2016, 10:30am


WASHINGTON (Legal Newsline) - The U.S. Supreme Court on Tuesday ruled against Tyson Foods, one of the leading producers of meat and poultry, siding with a class of current and formerly hourly workers at the company’s Iowa plant.

The Supreme Court ruled 6-2 in Tyson Foods Inc. v. Bouaphakeo. Justice Anthony Kennedy wrote the majority opinion, with Chief Justice John Roberts and justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor and Elena Kagan joining. Justice Clarence Thomas filed a dissent, in which Justice Samuel Alito joined.

The majority concluded that if representative proof -- also referred to as statistical modeling or statistical sampling -- is permitted in an individual claim, it also can be used in class action claims.

“Calling this unfair, petitioner and various of its amici maintain that the Court should announce a broad rule against the use in class actions of what the parties call representative evidence. A categorical exclusion of that sort, however, would make little sense,” Kennedy wrote.

“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.”

The nation’s highest court granted Tyson’s petition for writ of certiorari in June.

The pork processing company challenged the $2.9 million in money damages awarded to a class of line employees who work or worked on the slaughter and processing floors of its Storm Lake facility.

The employees sued, alleging they are entitled to overtime compensation and liquidated damages because Tyson failed to compensate them fully for time spent “donning” and “doffing” their protective equipment and walking to and from their work stations.

“The district court certified the class based on the existence of common questions about whether these activities were compensable ‘work,’ even though there were differences in the amount of time individual employees actually spent on these activities and hundreds of employees worked no overtime at all,” according to Tyson’s petition.

“The court then allowed plaintiffs to ignore these individual differences and ‘prove’ liability and damages to the class with ‘common’ statistical evidence that erroneously presumed that all class members are identical to a fictional ‘average’ employee.

“The end result of this ‘undifferentiated presentation of evidence’ was 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.’”

In August 2014, the U.S. Court of Appeals for the Eighth Circuit upheld the district court’s decision and entered judgment against Tyson, and in November 2014 denied the company’s request for a rehearing.

Tyson filed its petition with the Supreme Court in March 2015.

The company argued that the Eighth Circuit’s ruling sanctioned the use of “seriously flawed” procedures that many district courts have used to permit certification and adjudication of class actions.

“The Eighth Circuit’s affirmance of that unjust result warrants review because it exacerbates two circuit splits and conflicts with this Court’s decisions in Wal-Mart Stores Inc. v. Dukes and Comcast v. Behrend,” Tyson’s lawyers wrote in the petition.

Wal-Mart and Comcast should have put a stop to class certification premised on the notion that classwide liability and damages can be established through a ‘trial by formula,’ and damages models that ignore the basis of the defendant’s putative liability to each class member.”

In Tyson, there were no business records to show the extent of the harm because the company didn’t keep them.

But the Supreme Court said the workers shouldn’t suffer because of their employer’s poor record-keeping, and that it would be reaching “too far” if it were to establish general rules governing the use of statistical evidence in all class action cases.

“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,’” Kennedy wrote in the 17-page ruling.

Kennedy pointed out that in many cases, a representative sample is the “only practicable means to collect and present relevant data,” establishing a defendant’s liability.

The court noted in its majority opinion that its ruling does not conflict with its 2011 ruling in Wal-Mart that denied “trial by formula.”

“The underlying question in Wal-Mart, as here, was whether the sample at issue could have been used to establish liability in an individual action. Since the Court held that 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,” Kennedy explained. “By extension, if the employees had brought 1 1/2 million individual suits, there would be little or no role for representative evidence.

“Permitting the use of that sample in a class action, therefore, would have violated the Rules Enabling Act by giving plaintiffs and defendants different rights in a class proceeding than they could have asserted in an individual action.”

Kennedy said while the experiences of the employees in Wal-Mart bore little relationship to one another, in Tyson 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,” he wrote, adding that “this is not to say that all inferences drawn from representative evidence in an FLSA (Fair Labor Standards Act) case are ‘just and reasonable.’

“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.”

Tyson, in its petition, had argued that the $2.9 million jury verdict cannot stand because, while no one disputes that the class as certified contains hundreds of uninjured employees, the plaintiffs have not come up with any way to ensure that those employees do not recover damages from the jury’s lump-sum award.

The Supreme Court left the issue for initial resolution by the lower courts.

But Roberts, who authored a concurring opinion, expressed 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.

“The only way to know is to figure out how much donning and doffing time the jury found Tyson owed the workers in each department. But the jury returned a lump-sum verdict of $2.9 million on a class-wide basis, without specifying any particular amount of donning and doffing time used to calculate that number,” the chief justice pointed out. “If we knew that the jury had accepted the plaintiffs’ proposed average donning and doffing times in calculating the verdict, we could easily overcome this problem. But we know the jury did no such thing.

“And with no way to reverse engineer the verdict to determine how much donning and doffing time the jury found Tyson owed workers in each department, we do not know which plaintiffs the jury found to be injured (or not).”

In his dissent, Thomas said the majority’s approach “puts employers to 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,” he wrote, adding that the majority ruling will “profoundly affect” future FLSA-based class actions.

David Van Bebber, general counsel for Tyson Foods, said in a statement to Legal Newsline that while the company respects the Supreme Court’s decision, it is “disappointed with the result.”

“However, we are also heartened by the divided Court’s consideration and analysis of serious issues affecting the sufficiency of proof required to maintain a class action under the Fair Labor Standards Act,” Van Bebber noted.

“We are studying the opinion and, in particular, the issue of whether damages can be lawfully allocated to ensure that uninjured class members do not recover from the jury’s lump sum award.”

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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