Co-authored by Richard Alfred, Patrick Bannon and Esther Slater McDonald
Tyson Foods, Inc. v. Bouaphakeo
The U.S. Supreme Court agreed yesterday to hear an appeal challenging a nearly $6.0 million judgment in a collective and class action case against Tyson Foods, Inc. In Tyson Foods, Inc. v. Bouaphakeo, a wage and hour collective and class action regarding the compensability of time spent donning and doffing, the Court will decide (1) whether liability and damages may be determined by statistical techniques that presume all class or collective members are similar; and (2) whether a class or collective action may include individuals who were not injured.
Plaintiff employees brought a collective and class action against Tyson under the Fair Labor Standards Act (“FLSA”) and a parallel state law. The plaintiffs alleged that they were entitled to damages because Tyson failed to pay them overtime for time spent “donning” and “doffing” personal protective equipment and walking to and from their work stations. The district court certified an FLSA collective and Rule 23 class based on its conclusions regarding the existence of common questions about whether those activities were “compensable ‘work’” under the FLSA and the state law. At trial, the plaintiffs used statistical evidence of the average donning, doffing, and walking times for employees to prove liability and damages. The jury returned a verdict for the collective and class, and the final judgment totaled $5.8 million.
On appeal, Tyson contended that certification was improper because employees’ individual routines varied and, thus, the litigation could not generate common answers apt to drive the resolution of the litigation as required under Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011). Tyson pointed out that liability and damages were only inferred as to individual class members based on statistical evidence contrary to the Supreme Court’s “Trial by Formula” prohibition in Dukes and the use of damages models that ignore the basis of defendant’s alleged liability to each class member as required by Comcast v. Behrend, 133 S. Ct. 1426 (2013).
Tyson further argued that collective and class certification was inappropriate because some class members did not work any overtime and were thus not entitled to any damages. The Eighth Circuit Court of Appeals rejected these arguments, holding that liability and damages could be proven by inference and that issues relating to individual damages, or no damages at all, do not preclude certification.
Citing circuit splits on both issues presented, Tyson filed a petition for a writ of certiorari in March 2015 which was granted today. Those issues, as stated in the cert petition, are:
(1) 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
(2) 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.
Potential Implications for Wage & Hour Collective and Class Actions
Even though employers have been facing an avalanche of wage and hour collective and class claims for more than a decade, the Supreme Court has had little to say in the wage and hour context about the procedures for litigating collective actions, class actions, or “hybrids” of the two. The potential for a game-changing ruling is a very important development for employers.
Courts have been divided about whether the mere allegation of a specific type of FLSA violation, allegedly affecting a group of employees, is sufficient to show that the employees are “similarly situated” within the meaning of Section 216(b), the main remedies provision of the FLSA. The issue that the Supreme Court has now agreed to hear–whether a collective can properly be certified where the alleged FLSA violation affected different employees differently and some not at all–is an important one, especially in “off-the-clock” FLSA cases.
The Tyson Foods case is especially fascinating because it involves a “hybrid” case, involving a Rule 23 opt-out class with several thousand members and an FLSA “collective” of 444 opt-in plaintiffs. The Supreme Court can be expected to address how its Wal-Mart and Comcast decisions–both arising under Rule 23–apply to FLSA collective actions as well as state law wage and hour class actions. The Court’s prohibition in Wal-Mart of “trial by formula” has the potential to restrict the certification of collective actions, both initially and ultimately, to adjudicate cases with large numbers of plaintiffs with highly individualized claims.
We will closely follow the briefing in the months ahead, as the Supreme Court considers what could be one of the most important wage and hour decisions in many years and will blog about developments in this case as they occur.