On March 22, 2016 the U.S. Supreme Court affirmed, 6-2, a lower court decision which found Tyson Foods liable for damages in excess of $2.9 million because it failed to properly compensate employees for time spent donning and doffing protective equipment at a meatpacking facility. The case was brought as a hybrid collective and class action under Federal and State wage-hour laws.The decision is significant because it appears to reverse a trend in class action decisions by the high court and endorses the use of representative, statistical evidence to prove claims on a wholesale, rather than individualized, basis. It may well renew plaintiffs’ lawyers’ appetite for large-scale wage and hour litigation.
Employees at a Tyson’s pork processing plant in Iowa used to be paid under a "gang-time" system, which compensated them only for time spent at their work stations. Seeing other employers stung by lawsuits seeking pay for time employees spent donning and doffing protective and sanitary gear in the wake of the Supreme Court’s 2005 Alvarez v. IBP decision holding that employees had to be paid for such activities if they were integral and indispensable to their work, Tyson added 4 minutes of “K-code” paid time to each day, which it considered adequate to compensate them for donning and doffing. The number of K-code minutes was subsequently adjusted, depending on the required gear for each category of jobs, and ranged from nothing to 4 or even 8 minutes, but Tyson never kept records of the actual amount of time each employee spent donning and doffing gear each day. Eventually, they were sued by plaintiffs who claimed, on behalf of themselves and others similarly situated, that despite the additional minutes they were not being paid for all the time they spent doing compensable donning and doffing.
The court allowed the case to proceed as a collective action under the federal Fair Labor Standards Act (FLSA), which meant that affected employees had to give their written consent to be included as plaintiffs. At the same time, however, the plaintiffs pursued claims under Iowa’s wage laws as a class action under Rule 23 of the Federal Rules of Civil Procedure: this means that all affected employees were included unless they affirmatively signified that they did not want to participate. As a result, 3,344 plaintiffs were included in the case that went to trial in district court.
To prove their claims at trial, the plaintiffs relied on evidence of representative employees. This included testimony, video recordings of donning and doffing, and most importantly, a study of about 50 employees conducted by a time-and-motion study expert. This expert analyzed video-taped observations of selected employees donning and doffing various items – which varied widely, from 30 seconds to 50 minutes -- then averaged those measurements and concluded that they took 18 minutes a day for the cut and retrim departments and 21.25 minutes for the kill department. A second plaintiffs' expert then estimated the amount of uncompensated work each employee had done by adding the average donning and doffing times to the amount of gang-time each employee had been paid for, and then subtracting any K-code time: she acknowledged that by her calculations, a considerable number of the plaintiffs had not suffered any injury because even with the added time, they had not worked more than 40 hours in any week and could recover no unpaid overtime.
The experts’ calculations supported an aggregate award of approximately $6.7 million. However, the jury awarded the class a lump sum of $2.9 million, without explaining what that dollar amount represented, or how they reached their decision. Tyson appealed, but the Court of Appeals affirmed. The Supreme Court granted Tyson’s writ of certiorari.
Drawing on the Supreme Court’s 2011 WalMart v. Dukes decision, Tyson argued that it was not proper for the employees to pursue their claims as a class because they relied primarily on estimated amounts of time derived by formula, rather than actual evidence of individual claims, which is what the FLSA requires. In Dukes, the Supreme Court had thrown out a class composed of women who claimed that WalMart discriminated against them in promotions and hiring because they proposed to prove discrimination using statistical analysis. Tyson argued that the plaintiffs’ methodology was similarly flawed because it made statistical assumptions despite manifest differences in the amount and type of gear the employees had to wear and the amount of time it took them to don and doff. Tyson also argued that the class should not have been certified because it included persons who did not work any uncompensated overtime and were entitled to no recovery under the law.
In a majority decision by Justice Kennedy, the Supreme Court drew no distinction between the collective and class actions, but held that there was no error in the district court’s decision to certify the class. With respect to the verdict, the Court remanded the question of how to deal with class members who suffered no damages and were entitled to no recovery to the district court: Tyson may challenge the proposed method of allocation when the award is disbursed.
Under Rule 23, a class action may be certified only if "questions of law or fact common to class members predominate over any questions affecting only individual members." A common question is one in which "the issue is susceptible to generalized, class-wide proof." The majority concluded that despite differences in donning and doffing time for individual class members, the plaintiffs had adequately proved the amount of uncompensated time for each individual through generalized, class-wide proof, i.e., the plaintiffs' expert's representative study. The Court found the study sufficient for the jury to find the amount of compensable time due each individual employee “as a matter of just and reasonable inference.”
Chief Justice Roberts wrote a concurrence, expressing doubt as to whether the district court would be able to perform its ultimate task of distributing the award only to those entitled to recover in accordance with the FLSA. Justices Thomas and Alito dissented, pointing to the demonstrated differences both in the amount and type of gear each employee used as well as the widely varying amounts of time required to don and doff as insurmountable obstacles to “generalized proof” consistent with Dukes. They would have reversed, because the lower court did not give proper consideration to these variations, and said that the majority had altered the “predominance” inquiry, making important individual issues less likely to defeat class certification. They cautioned that the majority was creating a special, relaxed rule authorizing plaintiffs to use otherwise inadequate representative evidence in wage-hour cases, which already choke the Federal docket. By focusing on similarities that are ultimately irrelevant to whether employees performed tasks for which they are allegedly uncompensated, the majority’s conclusion will allow future plaintiffs to use representative evidence to establish class-wide liability even when many of the class members have no overtime claims at all.
Absent from both the majority and the dissent was much discussion of the structure of the FLSA, which, since shortly after the oft-cited Anderson v. Mt. Clemens Pottery decision, has stressed individual claims and narrowly-tailored recoveries (back wages plus liquidated damages when appropriate) in contrast to “conscience of the jury” lump-sum awards. The Tyson decision will surely encourage plaintiffs to pursue broad collective and class actions since it appears that damages can be proven with statistical extrapolation. This will have to be remedied at the district court level. Nothing in the Tyson decision really impairs an employer’s ability to mount a strategic defense. Statistical evidence and experts can and should be challenged. A class can be decertified if discovery shows that the members and their claims are dissimilar. Individual plaintiffs who are included in a class but are demonstrated to have no right to recovery can be picked off in motions to dismiss. This requires hand-to-hand litigation in the trenches of our court system, but considering the amounts of money at stake, the battle can be worth fighting.