This week, the Supreme Court issued its decision in Tyson Foods, Inc. v. Bouaphakeo, 577 U. S. ___(2016). The key issue addressed is whether class certification was proper in a FLSA case where the methodology used to establish damages was determined by expert sampling and assumptions about how long it would take certain categories of employees to “don and doff” certain protective gear needed to perform their jobs. The defendant argued that relying on a representative sample unfairly absolved each employee of the responsibility to prove his own injury and deprived defendant from litigating defenses that might be applicable to individual claims. The Supreme Court affirmed the Eighth Circuit’s affirmance of the class certification order. Writing for the majority, Justice Kennedy rejected the call for a categorical exclusion of representative evidence and found that the permissibility of the sampling depends on the reliability of the evidence and the expert testimony about it. There was no Daubert challenge to the evidence below, and the majority found that the sampling evidence was a reasonable proxy for establishing liability and would have been even in an individual case. Moreover, the majority found that defendant’s failure to keep adequate records of how much time it actually took employees to don and doff their uniforms deprived the class of other reasonable ways to establish their hours worked.
Justice Roberts filed a concurring opinion and Justice Thomas dissented. Justice Alito joined in both the concurring and dissenting opinions. In his concurring opinion, Justice Roberts agreed with the majority’s remand of the case to the trial court to allocate the jury’s lump sum award of $2.9M among class members. But he expressed skepticism that the court would be capable of identifying those employees who were injured and limiting recovery to those class members. It was undisputed that hundreds of class members had suffered no injury. The jury’s verdict did not specify how this figure was calculated or recite any finding as to the average donning and doffing time the jury had used to calculate that number. The plaintiffs’ expert had testified to various averages, but the jury’s lump sum amount was not consistent with those averages. Thus, Justice Roberts explained, the lower court would lack sufficient information to properly allocate the award among class members without potentially awarding uninjured parties. Because a plaintiff must have suffered some injury in order to have standing, any apportionment of the jury award that failed to exclude uninjured employees would violate Article III. Justice Roberts acknowledged that this issue was not ripe because the trial court had not yet attempted to allocate the jury award, but cautioned that “if there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”
Writing in dissent, Justice Thomas stated that the trial court should not have certified a class at all because common issues did not predominate over individual issues. He explained that the plaintiffs could establish Tyson’s liability to all class members only if all employees had worked over 40 hours per week, including any donning and doffing time and Tyson had failed to compensate each employee for all overtime due. But, that was not the case. Some employees had not worked overtime even accounting for time spent donning and doffing. Accordingly, the district court had not properly considered the significance of variable donning and doffing times and whether this issue was susceptible to common proof. Because certification is proper only where claims may be decided on the basis of common evidence, Justice Thomas concluded that the court erred in certifying the class. In fact, Justice Thomas continued, the evidence adduced at trial was not “common” to all class members. The data underlying Plaintiffs’ expert testimony of average donning and doffing times showed that these times varied materially from employee to employee. The trial court erred in allowing the jury to rely on such representative evidence to establish each class member’s claim. Tyson was forced to defend against a class action even though claims could not be proven with common proof. Justice Thomas concluded that these errors created an unacceptable risk that Tyson would be held liable to a large class without adequate proof that each individual class member was owed overtime.
The potential scope of this decision and application to cases outside of the wage and hour context remains unclear. The Court declined to “establish general rules governing the use of statistical evidence, or so-called representative evidence, in all class-action cases.” Instead, it stated that “[w]hether and when statistical evidence can be used to establish class-wide liability will depend on the purpose for which the evidence is being introduced and on ‘the elements of the underlying cause of action[.]’” Slip op. at 10 (citations omitted). Here, the majority concluded, the use of the expert’s averages was permissible under Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), which “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,” the burden shifts to the employer to come forward with evidence of actual time worked. Because Tyson had no such evidence for the plant at issue, the use of representative data was permissible. But, elsewhere the opinion suggests that the use of such evidence was permissible because “there were no alternative means for the employees to establish their hours worked. ” In many cases, a representative sample is “‘the only practicable means to collect and present relevant data’ establishing a defendant’s liability.”
If this decision is interpreted broadly, defendants may have a more difficult time defending against class certification in cases where members of the putative class suffered no injury. Financial institutions are often the subject of putative class actions that allege overly broad class definitions including class members who have suffered no injury. The question for financial institutions facing class action exposure is whether courts will apply Tyson to allow class action plaintiffs to overcome this problem through the use of statistical averages if they can show that a representative sample is the only practicable means to collect and present relevant data. Justice Roberts anticipated this very concern, noting that he did not view the decision as FLSA-specific: “Rather, I take the Court to conclude that [the representative evidence] constituted sufficient proof from which the jury could find ‘the amount and extent of [each individual respondent’s] work as a matter of just and reasonable inference’ – the same standard of proof that would apply in any case.”
The full text of the decision may be found here.