MCB Employment Update: Supreme Court Permits Statistical Analyses in Class Action Ruling Against Tyson Foods

by | May 5, 2016 | Labor & Employment | 0 comments

The U.S. Supreme Court recently affirmed the Eighth Circuit’s ruling in Tyson Foods, Inc. v. Bouaphakeo, upholding a $5.8 million verdict against Tyson Foods, Inc. (“Tyson”). In a 6-2 decision written by Justice Anthony Kennedy, the Court issued a narrow ruling permitting the use of statistical analyses and averages to determine class-wide liability and damages against Tyson for failure to pay workers overtime accrued, in part, through time spent donning and doffing protective work gear.

The federal Portal-to-Portal Act does not require employers to compensate workers for “preliminary or postliminary activities.”  However, the Fair Labor Standards Act (“FLSA”) requires employers to compensate workers for “integral and indispensable” work-related activities.  Justice Kennedy emphasized that donning and doffing protective gear such as hard hats, work boots, hairnets, aprons, gloves, and earplugs were “integral and indispensable” activities for workers who slaughtered and prepared hogs for shipment.  Justice Kennedy also criticized Tyson’s flawed “gang-time” pay system, which failed to account for the workers’ time spent performing necessary “preliminary or postliminary activities” integral to their hazardous work.

To determine liability and damages, the workers relied on a study performed by Dr. Kenneth Mericle to ascertain which workers exceeded a 40 hour work week and the total value of the class-wide recovery.  The study consisted of 744 observations of workers donning and doffing protective gear and walking to and from their work stations.  Based on the observations of  3,000-plus workers, Dr. Mericle averaged the various times required for donning, doffing, and walking, and added the average estimated time to each individual worker’s timesheet to calculate overtime, damages, and class-wide recovery.

The Court found that the statistical analysis was permissible as evidence to fill an “evidentiary gap” created by Tyson’s failure to maintain accurate and adequate time records.  Justice Kennedy wrote that the “representative sample may be the only feasible way to establish liability” and further added that use of such evidence by a class is permissible because “each class member could have relied on that sample to establish liability had each [worker] brought an individual action.”  However, Justice Kennedy cautioned that the Court would not adopt a broad or bright-line rule regarding the use of statistical or representative samples to establish class-wide liability, instead noting that “[t]he fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases.”

Although the study showed that some workers spent ten times longer than others to don and doff their gear, Tyson failed to challenge the validity of the statistical evidence under Daubert v. Merrell Dow Pharmaceuticals, Inc., instead relying on the Court’s 2011 ruling in Wal-Mart Stores, Inc. v. Dukes (“Wal-Mart”).  In Wal-Mart, the Court rejected sample representative evidence of 120 women offering deposition testimony about Wal-Mart’s alleged discriminatory  practices on behalf of 1.5 million female employees.  Justice Kennedy distinguished the Wal-Mart ruling from this case stating that, “While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case each employee worked in the same facility, did similar work, and was paid under the same policy.”  Justice Kennedy further cited to the Court’s 1946 decision in Anderson v. Mt. Clemens Pottery, where the Court permitted the plaintiffs’ use of a representative sample to prove their wage-and-hour claim, holding, “[W]here the employer’s records are inaccurate or inadequate and the employee cannot offer convincing substitutes,” workers may rely on “sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference.”

Although the Court permitted the use of statistical analyses and averages in affirming the judgment, Chief Justice John Roberts expressed concern “that the District Court may not be able to fashion a method for awarding damages[,]” noting in a concurring opinion, “[I]f there is no way to ensure that the jury’s damages award goes only to injured class members, that award cannot stand.”  Since the Court declined to opine further on this issue, the question remains open for consideration on remand.  The Court noted that Tyson is free to “raise a challenge to the proposed method of allocation when the case returns to the District Court for disbursal of the award.”

The Court declined to establish a bright-line rule as to whether statistical analyses and averages may be used to establish common issues, claims, and defenses in class actions.  This decision will ignite litigation in future cases as plaintiffs attempt to rely on statistical methods and representative samples to establish classwide liability.  It is critical for employers to challenge the validity and admissibility of statistical analyses and averages before the case reaches a jury.  This decision also reinforces the importance for employers to maintain accurate time-keeping records – without adequate records, it is now clear that courts look to other means to calculate alleged damages.

This article contains highlights of the Supreme Court’s ruling in Tyson Foods, Inc. v. Bouaphakeo and is not intended to be legal advice.