Supreme Court Takes Aim at FLSA Class, Collective Actions
June 15, 2015
Last week, the Supreme Court granted a writ of certiorari to Tyson Foods in an appeal of a class and collective action filed under the FLSA and a similar Iowa state law. Hourly workers at Tyson’s Storm Lake, Iowa pork processing plant filed a lawsuit claiming unpaid overtime for time spent donning and doffing personal protective equipment and walking to and from their assigned work stations.
The district court certified an FLSA collective action a class action pursuant to Federal Rule of Civil Procedure 23, concluding that the class of workers had presented common questions about whether those activities were “compensable work” under the FLSA, state law, and applicable case law. However, at trial, the plaintiffs did not present common questions of fact, but instead presented statistical evidence that estimated the “average” time a worker would spend donning, doffing, and walking. A jury brought back a verdict for $2,892,378.70. Liquidated damages raised the judgment to $5,785,757.40.
Tyson appealed the verdict to the Eighth Circuit, arguing that a statistical analysis was invalid, since each employee’s routine varied. Some employees in the class admittedly had no damages whatsoever. Citing Wal-Mart v. Dukes, Tyson argued that without commonality, the plaintiffs’ claims amounted to an impermissible “trial by formula,” and that the statistical modeling ignored each individual plaintiff’s damages in violation of the Supreme Court’s requirements outlined in its 2013 Comcast v. Behrend decision. Tyson also argued that awarding damages to a class that included members with no damages was inappropriate in any event.
Over a dissent, the Eighth Circuit, in an opinion written by Judge Benton, rejected these arguments, holding that Behrend would only apply when individual damages calculations actually “overwhelm questions common to the class.” The majority held that the plaintiffs could prove damages by inference and then apply those to individual class members, even if some of those individuals had no damages at all. Doing so, reasoned the court, went to the ultimate resolution of the questions on their merits, not whether the questions themselves were common among class members.
In his dissent, Judge Beam argued that the majority had accepted, but ignored, the principle that “class certification is improper when a ‘windfall’ is conferred on some class members” based on an erroneous reliance on jury instructions given at trial. At its core, Judge Beam rejected the notion that a class action could present undifferentiated evidence, “including significant numbers of the putative classes suffering no injury and members of the entire classes suffering wide variations in damages, ultimately resulting in a single-sum class-wide verdict from which each purported class member, damaged or not, will receive a pro-rata portion of the jury’s one-figure verdict.”
Citing circuit splits on these issues, Tyson filed a petition for a writ of certiorari in March. The certiorari petition raises these two questions:
- 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
- Whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the FLSA, when the class contains hundreds of members who were not injured and have no legal right to any damages.
Without the benefit of full briefing on the issues, and without hearing oral argument, this seems to be a case that should fall in favor of the employer. Both Dukes and Behrend can be read to preclude the use of class or collective actions and statistical averages in a case like Tyson. Most importantly, in my estimation, to hold otherwise would allow hundreds of class members who worked no overtime at all and thus entitled to no recovery, to receive an “average” amount of damages anyway. This fact, coupled with undisputed evidence that individual workers’ overtime amounts varied substantially, suggests a reversal is in order. The makeup of the Supreme Court has not changed since Dukes or Behrend, and this case does not seem to present particularly novel or different issues.
To me, the significant issue to follow here is the scope of the Court’s eventual decision. Because of the unusual inclusion of class members with no damages and the “average” calculation formula, the Court could limit its decision to the very unique facts of this case. If so, the management-side wage and hour attorneys’ excitement will be for naught. For businesses who routinely face the dilemma of settling early or “winning” by spending much more to defeat unnecessary class certification motions, though, I am hopeful that the Court will use the opportunity to limit class and collective actions cases like these, or at least the use of statistical averaging like this. It seems as good an opportunity as any we have had in the FLSA world in recent years.