The Supreme Court Turns Its Attention Back to Class Certification in Tyson Foods


The Supreme Court Turns Its Attention Back to Class Certification in Tyson Foods

by Cody D. Rockey, Dykema Gossett PLLC


When the Supreme Court granted certiorari in Tyson Foods v. Bouaphakeo,1 antitrust practitioners wondered if this would be the next case to raise the bar for certifying a class. In 2011, the Court decertified a class of employees alleging gender discrimination in Wal-Mart Stores, Inc. v. Dukes because there was no common question that would “resolve an issue that is central to the validity of each one of the claims in one stroke” given that the at-issue employment decisions were made at the discretion of local managers.2 The Court also frowned upon “trial by formula,” rejecting the employees’ proposal to use a sampling procedure to extrapolate class-wide damages.3 In 2013, the Court overturned class certification in Comcast v. Behrend because plaintiffs proffered class-wide damages included damages attributable to theories of liability rejected by the trial court.4 Antitrust litigators are watching Tyson closely to see if the Court will expand on or limit Dukes and Comcast.

Tyson is asking the Court to resolve (1) “whether differences among individual class members may be ignored and a class action certified…where liability and damages will be determined with statistical techniques that presume all class members are identical to the average,” and (2) “whether a class action may be certified…when the class contains hundreds of members who were not injured and have no legal right to any damages.”5 After briefs were submitted by the parties and thirty amici, the Court heard oral argument on November 10th. With all the caveats about predicting a decision based on oral argument, antitrust practitioners may be disappointed to hear that the court may use a 1946 wage-and-hour case to decide Tyson narrowly. Nonetheless, antitrust practitioners are likely to find the decision of interest as it may signal the direction in which the Court’s class action jurisprudence is headed more generally.

Background
Plaintiffs in Tyson challenged whether they had been properly compensated for time spent donning and doffing protective equipment and walking to and from their work stations at a Tyson meat-processing plant in Iowa. Tyson did not record the actual time employees spent on these activities, but rather paid them a fixed amount based on a study of how much time workers typically spent on these activities. The plaintiffs brought claims under the Federal Labor Standards Act and a state analogue—the former as an opt-in collective action under the FLSA and the latter as a opt-out class action under Rule 23. The case went to trial, and the jury awarded the employees nearly $3 million.6

The jury award was in an amount less than that calculated by plaintiffs’ two experts. An industrial-relations expert used video footage of over 700 employees to calculate the average time spent donning and doffing equipment by two different types of employees. He then calculated the time each employee would spend walking to their work using the relevant distance and standardized walking speeds. A statistician then added these times to the time each worker spent on the production line to calculate the total pay each worker was due and compared it to what the worker was actually paid to calculate damages. The statistician found that all but about 200 of the over 3,000 class members were undercompensated.

On appeal to the Eighth Circuit,7 Tyson challenged the use of averages to determine both liability and damages (i.e., that a worker was underpaid and by how much). But the Eighth Circuit rejected this argument, finding the actual differences in time spent donning and doffing equipment was not significant and that a prior Supreme Court decision in Anderson v. Mt. Clemens Pottery permitted the use of proof by inference in wage-and-hour cases where the employer did not have adequate records.8 The Eighth Circuit was particular persuaded by Mt. Clemens because it allowed testimony from eight employees to establish liability for 300 similarly situated workers. Tyson also challenged the inclusion of uninjured members in the class, but the Circuit Court declined to address the issue, finding that Tyson invited this error by requesting that the jury be instructed to treat plaintiffs with no damages as class members.

Oral Argument
The Justice’s questions at oral argument suggest that the Court may lean on the FLSA-specific standard from Mt. Clemens to decide whether the use of averages to determine liability and damages was appropriate in Tyson. Justice Kagan led the charge, stating “that certain kinds of statistical evidence are completely appropriate in FLSA cases generally” as a result of Mt. Clemens.9 Thus, according to Justice Kagan, the issue is “whether this sort of evidence complies with the Mt. Clemens standard.”10 Justice Kennedy appeared ready to join her, asking both the plaintiffs and the Government (amicus) whether the “special rule” under Mt. Clemens meant that these issues were not a barrier they otherwise might be under Rule.11 Justice Sotomayor also seemed to have little hesitation with endorsing the use of averages, proclaiming that she was “completely at a loss as to what [Tyson is] complaining about.”12 Justice Ginsburg seemed to agree, particularly because Tyson performed a similar analysis when instituting its own policy.13 Although never mentioning Mt. Clemens, Justice Breyer suggested that there was no problem with using a “good average” to prove the class’s case.14

In contrast, Justice Scalia suggested he thought there might be an issue here because the averages on which plaintiffs relied—whether permissible or not—seemed to have been rejected by the jury when they awarded damages different from plaintiffs’ estimate.15 Justice Roberts professed being “troubled” by the variation in time spent by different workers donning and doffing equipment,16 and made a point of noting that applying Mt. Clemens to the fact of injury (liability) would be an extension of that case, which dealt only with calculating damages.17 But Justice Kagan did not see how limiting Mt. Clements to damages alone “would make…much sense.”18 The Government agreed: “[W]hen that exact same fact is relevant liability insofar as it’s necessary to prove that the employee is pushed over the 40-hour-per-week threshold, then we think that all of the rationales that animated Mt. Clemens would equally apply to the determination of that particular [liability] fact.”19

The second question presented—whether a class may be certified when some members were not injured—did not receive as much attention at oral argument. Justice Alito was skeptical that the lower court could reconcile the jury’s verdict with the evidence and determine a way to allocate damages amongst class members (i.e., who did the jury find was actually injured and by how much).20 But Justice Kennedy suggested the Court may not resolve the question, letting the lower court address allocating damages on remand.21 Justice Ginsburg went further by suggesting how the money is allocated should not even matter, at least not to Tyson.22 It is certainly possible that the Court side steps the issue of injured members being included in the class. But the Court could grant a petition for certiorari pending before it in Dow Chemical Co. v. Industrial Polymers, Inc. (No. 14-1091) that would allow it to address this question in the context of an antitrust class action.

Implications for Antitrust Class Actions
The very real possibility that the Court blesses the use of averages based on the FLSA-specific Mt. Clemens precedent and declines to address the presence of injured members in the class would seem to limit the applicability of the decision to antitrust class actions. But as Tyson’s counsel pointed out at oral argument,23 Mt. Clemens is actually based on an earlier Supreme Court case addressing antitrust damages.24 The Court in Story Parchment held that injured plaintiffs could prove damages “as a matter of just and reasonable inference, although the result be only approximate.”25 This decision was limited to damages.26 But if the Court allows the use of averages to establish liability in Tyson, it may signal a willingness to do so in the antitrust context, as well. More specifically, if the Court approves the use of averages to determine if an employee worked more than 40 hours, they may be willing to allow averages to show that an antitrust plaintiff paid more for a product than they otherwise would have (a part of liability known as injury in fact). This could be significant given that class certification in antitrust actions often turns on whether plaintiffs can offer common proof of injury in fact.27 And it could make the analysis of whether “average” used is reasonable, particularly in light of the similarities or differences amongst class members, even more important.28
Only the Court’s decision in Tyson will tell us where the Court’s class certification jurisprudence is actually headed. And given the potential for the decision to have implications outside the employment law context, practitioners will continue to wait, as they have since the Court granted certiorari, with bated breath.

Cody D. Rockey is an associate with Dykema Gossett PLLC in Michigan. He represents corporate and individual clients in antitrust and competition matters, including civil litigation and government investigations. He also advises clients on antitrust issues related to business combinations and compliance matters.

Endnotes
1Tyson Foods, Inc. v. Bouaphakeo, 135 S.Ct. 2806 (2015).
2Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2551 (2011).
3Dukes, 131 S.Ct. at 2561.
4Comcast Corp. v. Behrend, 133 S.Ct. 1426, 1433-35 (2013). The Court further suggested that certification requires some “commonalty of damages” amongst the class members. Id. at 1435 n.6.
5Petition for Writ of Certiorari at (i).
6With liquidated damages, the final judgement was nearly $6 million.
7Bouaphakeo v. Tyson Foods, Inc., 765 F. 3d 791 (8th Cir. 2014).
8Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946).
9Tr. at 9-10; see also id. (“[T]he Rule 23 inquire…is always dependent on what the substantive law is.”).
10Tr. at 10; see also id. at 27 (“It’s an FLSA issue under Mt. Clemens as to whether this kind of statistical evidence could have been presented.”).
11Tr. at 42, 53. The Government also answered Justice Kennedy’s request for the proper standard to apply to Tyson, suggesting the jury could rely on representative evidence “if all of the employees performed substantially similar activities.” Id. at 48-49.
12Tr. at 7.
13Tr. at 8.
14Tr. at 43.
15Tr. at 47.
16Tr. at 36.
17Tr. at 53.
18Tr. at 11.
19Tr. at 54.
20Tr. at 17.
21Tr. at 4; see also id. at 25-26 (Kagan, J.) (suggesting Tyson created the issue by not agreeing to bifurcate the trial); id. at 15 (Breyer, J.) (“Can’t we wait until the evidence is presented before we tell the people who [weren’t injured] that they don’t recovery.”).
22Tr. at 56.
23Tr. at 11.
24Mt. Clemens, 328 U.S. at 670 (“But here we are assuming that the employee has proved that he has performed work and has not been paid in accordance with the statute….In such a case ‘it would be a perversion of fundamental principles of justice to deny all relief to the injured person, and thereby relieve the wrongdoer from making any amend for his acts.’”) (quoting Story Parchment Co. v. Paterson Co., 282 U.S. 555, 563 (1931)).
25Story Parchment, 282 U.S. at 563 (“The wrongdoer is not entitled to complain that they cannot be measured with the exactness and precision that would be possible if the case, which he alone is responsible for making, were otherwise.”).
26Story Parchment, 282 U.S. at 562 (“There is a clear distinction between the measure of proof necessary to establish the fact that petitioner had sustained some damage, and the measure of proof necessary to enable the jury to fix the amount.”).
27See, e.g., In re New Motor Vehicles Canadian Exp. Antitrust Litig., 522 F.3d 6, 20 (1st Cir. 2008) (“In antitrust class actions, common issues do not predominate if the fact of antitrust violation and the fact of antitrust impact cannot be established through common proof.”); In re Hydrogen Peroxide Antitrust Litig., 552 F.3d 305, 311-12 (3d Cir. 2008) (“[T]he task for plaintiffs at class certification is to demonstrate that the element of antitrust impact is capable of proof at trial through evidence that is common to the class rather than individual to its members.”).
28See, e.g., Comcast, 133 S.Ct. at 1433-35; In re Rail Freight Fuel Surcharge Antitrust Litigation, 725 F.3d 244, 253-255 (D.C. Cir. 2013) (vacating a class certification decision where plaintiffs’ model produced “false positives”).

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