Today, the U.S. Supreme Court agreed to hear an appeal challenging an almost $6 million judgment awarded in a class action case against Tyson Foods, Inc. See Bouaphakeo, et al. v. Tyson Foods, Inc., No, 12-3753 (8th Cir. 2014).
The Court will decide (1) whether, in a class or collective action, liability and damages may be determined by statistical techniques that presume all class 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 compensate them for overtime spent “donning” and “doffing” protective equipment and walking to and from their work stations. The district court certified a class based on the existence of common questions about whether those activities were “work” under the FLSA and the state law. At trial, the plaintiffs proved liability and damages by using statistical evidence of the average donning, doffing, and walking times for employees. The jury returned a verdict for the 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. Tyson further noted that some class members did not work overtime and thus were 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 do not preclude certification.
In March 2015, Tyson filed a petition for a writ of certiorari presenting the following issues:
(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.
Appellate courts are divided on these issues. Like the Eighth Circuit, the Tenth Circuit has permitted damages in class actions to be extrapolated based on averages. In contrast, the Second, Fourth, Fifth, Seventh, and Ninth Circuits have questioned the use of class certification in cases where individual damages would have to be inferred from averages or statistical sampling. Similarly, the courts disagree on whether each putative class member must have standing for a class to be certified.
Potential Implications for Businesses
The Court will hear the case during its next term, along with Spokeo, Inc. v. Robins, which presents the question of whether an individual who did not suffer a concrete injury from a statutory violation has standing to sue on behalf of himself or a class for that violation. The Supreme Court’s decisions in these cases could have broad implications for consumer, workplace, and other class actions, and the rulings will likely apply to numerous federal statutes, including the FLSA and consumer statutes such as the Fair Credit Reporting Act and the Telephone Consumer Protection Act.
Decisions requiring actual injury or rejecting the use of statistical sampling would hamper plaintiffs’ ability to certify classes and likely result in fewer class actions. Conversely, decisions affirming the court of appeals rulings would likely solidify the importance of the class action and may result in increased filings. Businesses should continue to monitor these cases closely. For pending class action litigation, businesses should consider whether to seek a stay until the Supreme Court rules in Tyson and Spokeo.