By Ben James — The U.S. Supreme Court’s recent decision to review a donning-and-doffing case against Tyson Foods Inc. gives the justices a chance to both make class actions tougher to pursue by curtailing the use of statistical sampling to support certification, and announce if and how the high court’s landmark Dukes ruling applies to Fair Labor Standards Act collective actions, lawyers say.
On June 8, the nation’s highest court granted a petition for review from Tyson, which ended up on the hook for a $5.8 million judgment in favor of current and former pork-processing plant workers the company argued shouldn’t have obtained class certification on their Iowa wage law claim or collective action certification under the FLSA.
“This case has the potential to be a blockbuster,” said Richard Alfred, chair of Seyfarth Shaw LLP’s wage-and-hour litigation practice. “The issues presented will allow the Supreme Court to address the application of Dukes and Comcast to state wage-and-hour class actions and to collective actions under the Fair Labor Standards Act.”
The Supreme Court’s June 2011 Wal-Mart v. Dukes decision, which panned the Ninth Circuit’s “trial by formula” approach and struck down a class of about 1.5 million women in a Title VII case against the retail giant, is widely viewed as having raised the bar for class action plaintiffs.
Tyson’s March 19 petition for Supreme Court review said that the Eighth Circuit — which rejected Tyson’s appeal from the trial court in a 2-1 panel opinion — had signed off on “seriously flawed procedures” for class and collective actions.
The plaintiffs, who said they weren’t fully compensated for time spent donning and doffing personal protective gear, obtained class certification despite differences in the amount of time they spent on the tasks at the heart of their allegations and the fact that many class members weren’t harmed and wouldn’t have had viable individual claims for damages, Tyson argued.
The trial court let the plaintiffs ignore those differences and prove liability and damages through statistical evidence that “erroneously presumed all class members are identical to a fiction ‘average’ employee,” according to Tyson.
The Eighth Circuit’s decision to leave the outcome at the lower court intact not only deepened circuit splits but was at odds with the high court’s Dukes and Comcast decisions, which together should have ended class certification based on on establishing damages and liability with a “trial by formula,” as well as damages models that ignore a defendant’s supposed liability to each class member, the company’s petition said.
“The case squarely presents the tension between current class action certification practices that rely on statistical sampling and the strong condemnation of ‘trial by formula’ in Dukes,” University of Virginia School of Law Professor Rip Verkerke said.
Lower courts haven’t been uniform in how they’ve applied Dukes: Many recognized the Supreme Court was looking to put a check on too many class actions being certified, but others have tried to back away from that conclusion, O’Melveny & Myers LLP partner Adam KohSweeney said. The Tyson case is a good example of a suit in which the Rule 23 class couldn’t be certified if Dukes were strictly applied, he added.
The eventual ruling in the Tyson case won’t be as important as Dukes but it will still have a significant effect because it will flesh out exactly what Dukes stands for, according to KohSweeney.
“People have been struggling with that for a number of years now, and I expect this to be a real clarification and explication of what Dukes meant,” he said.
A ruling that sides with Tyson could dampen plaintiffs’ enthusiasm for class actions, not just in the employment context but beyond, BakerHostetler partner Dennis Duffy said. He added it was hard to see a “middle ground” where the high court could rule for Tyson and reject the Eighth Circuit’s approach while still allowing for statistical sampling to be a viable means of proving commonality, though not all attorneys agreed.
“If you eliminate statistical sampling and require actual injury, it would erect a higher threshold for plaintiffs to meet to certify classes. The implications are not just in collective actions or employment class actions, but it would arguably also apply to consumer class actions,” Duffy said. “This would be just one more step, if the court went Tyson’s way, in underscoring the very stringent standards for a class action mechanism.”
But a high court ruling siding with the plaintiffs and upholding the Eighth Circuit would have the opposite effect and make certification easier to achieve, Duffy pointed out.
But the Tyson case has the plaintiff’s bar nervous, according to Josh Van Kampen, founder of employee-side firm Van Kampen Law PC.
“If a majority adopts petitioner’s arguments it would drastically alter the landscape not only for FLSA class plaintiffs, but across employment law class actions generally. So, the potential for disaster is there,” Van Kampen said.
But Van Kampen also said the Tyson case didn’t present an “extreme fact pattern” like the Dukes case did. The class in the Tyson case was big — more than 3,000 strong — but was still just a fraction of the massive, nationwide class proposed in Dukes’ gender bias case against Wal-Mart.
And the Tyson case challenged a clearly identified pay practice, Tyson’s gang time compensation system, Van Kampen said, adding that adopting Tyson’s arguments wouldn’t be “a natural or logical extension of Dukes.”
The impact of Dukes on FLSA cases so far has been modest, Van Kampen said, even in “hybrid” cases similar to the Tyson suit that assert parallel collective action and state law class claims. Collective actions are brought under Section 216(b) of the FLSA, not Rule 23. In collective actions, workers must affirmatively opt in to the lawsuit, while Rule 23 class members are included unless they opt out.
Also, courts use a two-stage certification process for collective actions, with a relatively low bar for obtaining conditional certification and more stringent review if and when the employer-defendant later moves to decertify.
One reason that conditional certification in an FLSA collective action or class certification in a state wage-and-hour class action is so important is that it gives plaintiffs leverage to pressure a defendant-employer to settle apart from the merits of their claims, Alfred pointed out.
Van Kampen said Dukes could serve as a “precedential beachhead” for the Supreme Court to issue an expansive FLSA ruling in the Tyson case.
“If the court adopts the position taken by Tyson hook, line and sinker, I think they’ve raised substantial hurdles to FLSA collective actions,” Ballard Spahr partner LLP Steven Suflas said. “This is going to be a very interesting one to watch.”