Argument preview: New woe for class-action lawsuits?
on Nov 7, 2015 at 12:33 am
Lawyers who have groups of clients pursuing common grievances — often against big corporations — have known for years that their cases are an endangered species in the Supreme Court. In decision after decision, a majority of the Court has shown deepening skepticism about lawsuits technically known as “class actions.”
To several of the Justices, such group challenges are seen as blunt instruments for forcing companies to settle to avoid the cost of a trial, even if they might win on the merits, and as an easy way to handsomely reward class-action attorneys. To the lawyers, they are doing a noble thing, holding companies accountable when there may be no better mechanism to do so for instances in which individual claims are small but the overall value to the class is potentially in the millions of dollars.
On Tuesday, this clash of perceptions returns to the Court, with review of the latest class-action dispute, Tyson Foods v. Bouaphakeo. The core of the disagreement is whether everyone joined in the suing class must prove, individually, that he was harmed by the claimed misconduct that is the common target.
This case also brings back to the Court a familiar complaint by workers in factories: that they do not get paid for the time that it takes for them to put on and take off specialized clothing or gear needed to do their jobs — the “donning and doffing” compensation question, the subject of several rulings in recent years.
The new case grows out of that kind of dispute at a pork processing plant in Storm Lake, Iowa, operated by Tyson Foods, Inc., a major packing company in pork and poultry products. Tyson is attempting to overturn a verdict of nearly $6 million in damages in a lawsuit brought by six of its workers on behalf of a class of current and former hourly workers at the Iowa plant.
The plant had a payroll of about 1,300 workers on production lines either in the killing zone or in the meat processing areas. The plant had two shifts, with workers doing more than 400 distinct tasks. Each position required workers to do specific chores and to wear different kinds of sanitary items and personal protection equipment.
The workers who sued were paid on a time system keyed to the period between the point when the first hog passed their station until the last hog had passed. The company also paid a fixed amount for workers who used knives — so-called “K-Code time.” Four minutes of such time-related pay per day was to cover the donning and doffing for part of the overall span of time covered by the class claim, and eight minutes per day in the remaining part of the class period.
In their lawsuits, the workers claimed that the process of donning, doffing, washing up, and walking to and from their work stations lengthened their workweek beyond the forty hours specified by federal law for regular pay, so they were entitled to overtime pay.
They sought, over Tyson’s objection, to sue on behalf of a class, and a federal judge approved a class of 3,334 members under Federal Rule of Civil Procedure 23 (governing class actions) and conditionally added 444 members as part of a so-called “collective action” under another part of the federal Fair Labor Standards Act. Those 444 were also part of the Rule 23 class.
The case went to trial, and the jury awarded the class $2,892,378.70, to be divided among the members of the class. Including liquidated damages, the verdict reached about $5.8 million. Tyson appealed to the U.S. Court of Appeals for the Eighth Circuit, where it lost on a two-to-one vote.
Taking the case on to the Supreme Court, Tyson raised two questions: first, a challenge to class or collective actions for cases in which factual differences exist among class members but statistical models are presented as supposedly fitting all class members; and, second, a challenge to such group lawsuits when the class “contains hundreds of members who were not injured and have no legal right to any damages.”
The employer complained that it faced 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.”
Tyson is relying heavily upon the Court’s 2011 decision in Wal-Mart Stores v Dukes, which blocked the creation of a nationwide class of present and former workers for the giant retail chain claiming discrimination in wages paid to female workers. In that ruling, the Court declared that a class may not be created based upon what it criticized as “trial by formula” — the use of statistical modeling rather than individualized evidence to support damages in a class-wide claim.
Under Rule 23, the decision reads, an employer is entitled to offer its legal defense to each individual’s claim, and generalized statistics cannot be substituted for person-by-person evidence.
Around the same time last June that the Court considered whether to hear Tyson’s appeal, it also pondered a pair of new petitions filed by Wal-Mart Stores, which were growing out of class-action claims in state court under Pennsylvania law. Those petitions, too, challenged the “trial by formula” approach, but they did so under the Constitution’s Due Process Clause in the Fourteenth Amendment, applied to the states, rather than under federal law.
The Court chose, instead, to take on this case, which arises under federal labor law and Federal Rule of Civil Procedure 23.
However, the second question raised in Tyson’s petition — about a class that includes workers who were not injured — has overtones of Article III of the Constitution, which the Supreme Court has used to limit who may sue in federal court. (The Wal-Mart cases apparently are being held for the ruling in the Tyson case.)
Tyson’s workers tried to head off Supreme Court review. They preferred to call the methods used in the trial court to define the class members “representative proof,” and they claimed that Tyson’s lawyers had proposed jury instructions that, in essence, embraced an approach based upon “inferences” from the evidence. The instructions actually given by the judge, the workers said in their filing opposing review, “incorporated all of Tyson’s proposed changes” to the language of the instructions.
Moreover, the workers’ response disputed Tyson’s claim that the federal appeals courts are split on the use of “representative proof” in class actions.
Tyson’s brief on the merits dwells at considerable length on the differences among the workers in the company’s Storm Lake plant and argues that no worker can qualify for overtime pay without proof that they, as individuals, did work more than forty hours in a week and did not get added pay for it. That showing, it said, “cannot be made with common evidence because individual class members [working for Tyson] wear different combinations of personal protective equipment that takes varying amounts of time to don.”
The lower courts, the brief added, did not insist on that kind of evidence, and they then compounded the error by allowing the workers to claim injury “with statistical sampling that masked” their individual differences.
The company brief turns the second question, on the claimed lack of injury, into a broad attack on the verdict by asserting a constitutional violation in allowing them to sue without proof of individual injury, a basic requirement for the right to sue under Article III.
The workers’ merits brief relies upon the argument that there were common questions of law at stake in the case and upon the legal principle that, in a class-action case, those predominate over individualized claims. In this case, it said, the issues were whether the workplace activities at issue were “work,” whether they were exempt from overtime pay requirements, whether time taken out for a lunch break was realistic, and whether the amount of pay at issue was “de minimis.”
The trial, the brief said, focused on those issues, with Tyson conceding that it had adopted a company-wide policy against compensating for the disputed in-plant activities. Tyson’s defense was itself class-wide, the brief added, showing that the case was one about law, not about statistics. The brief also faulted Tyson for allegedly failing to keep proper records on the number of hours that class members had spent on activities for which pay would be due. And it argued that the Supreme Court, in fact, has not ruled out reliance on “common evidence” as a valid form of admissible proof.
The federal government has entered the case on the workers’ side. On the absence-of-injury claim for some class members, the government echoes an argument made by the workers that Tyson forfeited an objection on this point by failing at the trial to exclude such workers from the action and actually opposed a trial plan that would have excluded them from sharing in any award of damages. But, in any event, the government’s brief asserted, the judge’s instructions to the jury ensured that workers not entitled to recover would not increase the amount of the verdict.
On the evidentiary dispute, concerning the use of statistical evidence, the government — like Tyson — relied upon the Court’s 1946 ruling in Anderson v. Mt. Clemens Pottery Co., which held that workers are not required to prove the precise extent of the work when the employer itself had not actually made records about such time, with the result that a court may draw inferences from “representative proof” offered at the trial.
Siding with Tyson Foods as amici are Wal-Mart Stores, other businesses, a wide array of business associations, several conservative or libertarian legal advocacy organizations, corporate defense lawyers, and a group of professors.
The workers are supported — in addition to the federal government — by labor unions and their federations, liberal or progressive legal advocacy groups, several workers’ justice advocacy organizations, and professors of law, economics, and social science.
The Court will hear one hour of oral argument on the case, scheduled for 10 a.m. Tuesday. Arguing for Tyson Foods will be Carter G. Phillips of the Washington, D.C., firm Sidley Austin LLP, with thirty minutes of time. Representing the Storm Lake workers’ class will be David C. Frederick of the Washington, D.C., firm Kellogg, Huber, Hansen, Todd, Evans & Figel, with twenty minutes of time. The federal government, as an amicus supporting the workers, will be represented by Elizabeth Prelogar, an assistant to the U.S. Solicitor General. She will have ten minutes of time.