8 June 2015
The U.S. Supreme Court June 8 agreed to review the class certification of over 3,000 Iowa meat-processing workers on their wage and hour claims that resulted in a nearly $5.8 million jury award.
The justices will review a 2-1 split decision of the U.S. Court of Appeals for the Eighth Circuit, which held that a district court didn't abuse its discretion by certifying the workers' collective and class actions under the Fair Labor Standards Act and the Iowa Wage Payment and Collection Law. The employees claimed that the time their employer Tyson Foods Inc. automatically added to paychecks for donning, doffing and required walking wasn't sufficient to cover pre- and post-production line activities.
In its petition for review, Tyson argued that the appeals court erred by affirming collective and class certification where liability and damages were “determined with statistical techniques that presume all class members are identical to the average observed in a sample.”
Differences between the employees' routines made class certification based on the existence of common questions improper, Tyson argued. Certification was also improper because the class contained hundreds of members who were not injured, the company asserted, and an award of damages to uninjured workers isn't authorized “simply because their claims are aggregated with others who were harmed.”
Sign That Court Disapproves ‘Trial by Formula'?
Archis A. Parasharami, partner at Mayer Brown in Washington and co-chair of the firm's consumer litigation and class action practice, told Bloomberg BNA in a June 8 e-mail, “The Supreme Court's decision to grant review today in the Tyson Foods case is a welcome development that hopefully will underscore what the Supreme Court already made clear in Wal-Mart Stores Inc. v. Dukes: that ‘Trial by Formula' is a ‘novel project' that the Court ‘disapprove [s],' because it violates a defendant's right to ‘litigate its statutory defenses to individual claims.'”
“Another way to put it is that Rule 23 authorizes aggregation of individual claims, but it doesn't permit shortcircuiting individual defenses through the use of averaging,” he said.
The court made no certiorari decision on two petitions in a similar case, Wal-Mart Stores Inc. v. Braun, U.S., Nos. 14-1123, 14-1124, which involves certification of Wal-Mart employees alleging wage and hour violations.
Class defense attorney John H. Beisner, of Skadden Arps Slate Meagher & Flom LLP in Washington, told Bloomberg BNA in a June 8 e-mail that the petitions in that case “present similar questions presented, so it's possible the Court will hold these petitions pending an outcome in Tyson.”
Another pending case, Allstate Ins. Co. v. Jimenez, U.S., No. 14-910, “raises the question whether liability to the class may be established through statistical sampling, while Tyson raises that question as to both liability and damages,” Beisner said. “Thus, a hold on the Allstate petition is possible as well.”
Counsel for the plaintiffs here, Scott Michelman, of Public Citizen Litigation Group in Washington, declined in a June 8 e-mail to speculate about what the court might do in these other cases. Furthermore, the plaintiffs used individual time records to apply the representative analysis to individual class members, the workers noted.
Donning and Doffing Pay Insufficient
According to the case record, the plaintiffs worked as hourly production employees at Tyson's pork-processing facility in Storm Lake, Iowa. The workers were paid a “gang time” rate for time they spent at their workstations when the production line was moving.
Although Tyson didn't record the actual time employees spent donning and doffing protective equipment and walking to and from the production floor, it added about four minutes per shift to employees' paychecks for these activities, which it called “K-code” time.
In 2007, the workers filed a lawsuit claiming that Tyson's K-code time was insufficient to cover pre- and postproduction line activities. The district court certified an FLSA collective action, as well as a state law class action under Federal Rule of Civil Procedure 23.
According to the appeals court, the workers relied on individual time sheets, along with average donning, doffing, and walking times calculated from 744 employee observations to prove liability and damages. The time study showed it took an average of 18-21 minutes for employees to perform K-code functions, depending on their department. Following a nine-day trial, the jury returned a verdict awarding almost $5.8 million in compensatory and liquidated damages to the class.
Employer Argues ‘Trial By Formula' Impermissible
In its petition for review, Tyson argued that the Supreme Court's decision in Wal-Mart Stores Inc. v. Dukes, 79 U.S.L.W. 4527, 2011 BL 161238 (U.S. June 20, 2011) , “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.' ”
In Dukes, the Supreme Court held that the U.S. Court of Appeals for the Ninth Circuit erred in finding that female plaintiffs, who alleged Wal-Mart violated Title VII of the 1964 Civil Rights Act by discriminating against women in pay and promotions nationwide, met the Rule 23 requirement of showing that the plaintiffs presented a common issue of law or fact.
The Dukes court found that the plaintiffs failed to show the company's alleged corporate policy of giving local supervisors discretion regarding pay and promotion decisions produced common factual or legal issues best addressed in a class action rather than in individual suits.
In the present case, Tyson argued that employees wore different protective equipment depending on their job and personal preference. The lower court permitted the workers 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,” Tyson argued in its petition.
Tyson contended that other federal appeals courts, including the Fourth and Seventh Circuits, would have denied class certification because the workers could only prove entitlement to overtime and damages based on impermissible averaging.
In their brief in opposition, the workers argued Tyson incorrectly asserted that the use of representative proof has created a circuit split.
The Supreme Court in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), created a special rule for wage and hour cases, the workers argued.
In Mt. Clemens, the court held that when an employer failed to keep time records of the hours employees worked, the “employees could prove the amount of time worked ‘a matter of just and reasonable inference,' ” the workers argued. And the Mt. Clemens court permitted the use of representative testimony, the workers said.
Furthermore, “[t]he cases on which Tyson relies either do not involve wage/hour claims or involve quite different factual circumstances than those here,” the workers said.
Not All Class Members Worked Overtime, Employer Says
Tyson also argued that the class shouldn't have been certified because it included employees who were not injured. According to Tyson's petition, the “plaintiffs' damages expert admitted that the class contained at least 212 employees who were not injured because they did not work any unpaid overtime.” But the appeals court “expressed concern that Tyson had exaggerated the authority for its position,” the workers argued.
Furthermore, they said, the Eighth Circuit declined to decide the question because Tyson's requested jury instruction invited the error.
According to the appeals court, Tyson requested a jury instruction that, “Any employee who has already received full compensation for all activities you may find to be compensable is not entitled to recover any damages.” Thus, the company “directed the jury to treat plaintiffs with no damages as class members,” the court said.
Hunton & Williams LLP and Sidley Austin LLP in Washington represented Tyson. Wiggins Childs Quinn & Pantazis LLC in Birmingham, Ala., and Public Citizen Litigation Group in Washington represented the employees.
Reproduced with permission from The United States Law Week,83 U.S.L.W. 1860 (June 9, 2015). Copyright 2015 by The Bureau of National Affairs, Inc. (800-372-1033) <http://www.bna.com>