The U.S. Supreme Court’s decision in Tyson Foods v. Bouaphakeo, No, 14-1146, slip op. (March 22, 2016), leaves open two important issues: (1) whether representative statistical evidence is permissible in the class context to establish liability; and (2) whether the uninjured can be part of a damages class under Article III of the Constitution. Meanwhile, the Court seemed to add confusion to the predominance inquiry under Rule 23.
The Tyson case (which, for the sake of full disclosure, my firm and I participated in briefing at the Supreme Court level, representing an amicus), is a “donning and doffing” employment action, in which Tyson employees brought claims under the Fair Labor Standards Act (“FLSA”) and Iowa state law for payment for the time they spent putting on and removing protective gear. They sought certification of their FLSA claims as a “collective action” and certification of their state law claims as a class under Federal Rule of Civil Procedure 23. The district court certified the classes and the Eighth Circuit affirmed.
Both below and in the Supreme Court, Tyson contended that certification was inappropriate because differences among class members in the time spent donning and doffing their protective gear, among other reasons, created individualized issues, defeating the Rule 23 requirement that common issues “predominate” over individualized ones. Because Tyson did not keep time records, the employees relied on an expert to come up with average times spent per department. The averages were then added to employee timesheets to determine which employees worked more than the 40 hours required to state a claim under FLSA and the value of class-wide recovery. The case went to trial and the jury awarded the class as a whole $2.9 million in unpaid wages. The award has not yet been disbursed.
In a 6-2 decision, Justice Kennedy wrote for the majority, in which Justices Roberts, Ginsburg, Breyer, Sotomayor and Kagan joined. Chief Justice Roberts wrote a concurring opinion, in which Justice Alito joined in part. Justice Thomas dissented, in which Justice Alito joined.
As to the use of statistical evidence to establish class-wide liability and damages, Justice Kennedy made the point that in some circumstances — but not in all — such evidence is permissible. Here, in particular, because Tyson had not kept the necessary time records, expert testimony was necessary. Justice Kennedy was careful to ensure that the Tyson case not give carte blanche to the use of such evidence in all cases: “The Court’s decision in Anderson v. Mt. Clemens explains why [the] sample was permissible in the circumstances of this case…The Court in Mt. Clemens 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,” it is not the employees who should be punished. As Justice Kennedy concluded: “The Court reiterates that, while petitioner, respondents, or their respective amici may urge adoption of broad and categorical rules governing the use of representative statistical evidence in class actions, this case provides no occasion to do so.”
Justice Kennedy also distinguished the Tyson decision from the Court’s admonition in Wal-Mart that “trial by formula” violates the Rules Enabling Act, which instructs that the use of the class action procedure cannot abridge or expand a substantive right. That is, if the use of the statistical evidence would not be permitted in an individual action, it cannot be permitted in a class action. But Justice Kennedy stated that the evidence here would be permissible in the individual setting, unlike Wal-Mart, where plaintiffs attempted to use statistical evidence to overcome individualized issues. Justice Kennedy stated that “the study here could have been sufficient to sustain a jury finding as to hours worked if it were introduced in each employee’s individual action.” Justice Kennedy added that Daubert challenges as to the adequacy of a methodology remain important, but Tyson had raised no such challenges.
As to the issue of whether uninjured class members may recover, the Court held that that issue was not yet ripe for determination because the damages award had not been disbursed, and nor was there any indication in the record as to how it would be disbursed. Justice Kennedy portrayed the Article III issue as of Tyson’s own making: “it bears emphasis that this problem appears to be one of petitioner’s own making. Respondents proposed bifurcating between the liability and damages phases of this proceeding for the precise reason that it may be difficult to remove uninjured individuals from the class after an award is rendered. It was petitioner who argued against that option and now seeks to profit from the difficulty it caused.”
In his concurring opinion, Justice Roberts described the Article III problem, emphasizing that “Article III does not give federal courts the power to order relief to any uninjured plaintiff, class action or not.” Thus, he concluded, “if there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”
In dissent, Justice Thomas focused on the predominance requirement of Rule 23. He stated that “[t]he critical issue for class certification …was whether the individualized nature of employees’ donning and doffing times defeated predominance.” Here, he argued, those individualized issues outweighed any common ones, and the class should not have been certified. He reasoned that the majority’s view of predominance was contrary to Comcast, in which the Court ruled that the lack of a class-wide damages model defeated the predominance criterion.
That said, what is most striking about the Tyson decision is how limited it is. Even on the predominance requirement, the majority goes to great lengths to distinguish Wal-Mart factually. And as to Comcast, the majority alludes to a court’s ability to bifurcate liability and damages, perhaps allowing for the certification of a class plagued with individualized damages issues. Indeed, the issue of bifurcation is likely one of the next certification battlegrounds.