Opinion analysis: Group lawsuits get a (modest?) boost
on Mar 22, 2016 at 7:07 pm
For the past five years, the Supreme Court has been building up a quite sturdy barrier against group lawsuits — the kind in which people with a supposedly common legal grievance band together because there is strength in numbers and there could be a greater promise of a better financial reward for everyone at the end. The barrier has been strongest against so-called class actions, under Rule 23 of the rules governing federal non-criminal cases. On Tuesday, the Court fashioned an opening in the barrier, even while attempting to assure businesses (the usual targets of group lawsuits) that it was only a modest opening, after all.
There have been two broad questions that the Court’s class action cases have been stirring up, beginning with the now-famous 2011 decision in Wal-Mart Stores v. Dukes. The first issue has to do with the proof that those who joined in a group lawsuit must offer to show that they genuinely do have a common grievance and, as part of that, whether statistics, sampling, or data formulas can be fashioned to prove that the legal claims were common and a class proceeding is proper. The second has to do with whether everyone who sought to sue together actually suffered a legal “injury” and thus each could be entitled to share in a money remedy for the class.
The Wal-Mart decision appeared to have answered the first question: class actions cannot go forward, the Court ruled, if they are based on “trial by formula,” because that both relieves each individual in the class from having to prove that he individually shared the same legal claim made by the class, and that cheats the company being sued out of a chance to defend against each person’s specific claim.
The Court has yet to decide the second question. This Term, the Court took on a case to provide more clarity about “trial by formula,” and to answer that second question. That case was Tyson Foods v. Bouaphakeo.
The Tyson Foods ruling was issued on Tuesday, with a split result. On the “trial by formula” question, a six-to-two majority allowed the use of “representative evidence,” not specific as to each individual involved, to be put forth to show that the group could have had the same legal claim, without having to prove it individually.
But the Court found that it was unable to settle the second question — whether each member of the group suffered a “legal injury” and is entitled to share in the damages — because a change in the company’s argument put that issue aside, to be explored when the case goes back to lower courts to decide who, if anybody, can collect actual money damages.
The case appeared to be a good one to test further the scope of Wal-Mart‘s limitation on the right to proceed as a class and to answer the damages question. A jury had awarded $2.9 million in damages to a class of 3,344 members — hourly workers at Tyson Foods’ pork slaughtering and processing plant in Storm Lake, Iowa. The verdict was based upon sampling evidence, worked out by a factory time-and-motion expert, that was then extrapolated to the class to prove that the workers had not been paid overtime for the amount of time it took them to put on or take off their protective gear before working on the killing and disassembly line.
The case seemed to fit within the basic concern that the Court has had about class actions under Rule 23 (and under a similar group-claim process under federal wage-and-hour law) — allowing the class or collective action to proceed would not be fair to the targeted company, because it could not answer the claims of each worker to overtime pay. (Part of the reason that this is a concern for the Court is that it puts pressure on companies to settle rather than pay the expense of going through a costly class-action trial. In today’s case, the case did go to trial as a group lawsuit.)
Tyson Foods and its supporters, relying upon the Wal-Mart decision, urged the Court to flatly bar the certifying of a Rule 23 class or a wage-and-hour collective group if the claim was based upon “representative evidence.” That, the challengers contended, was simply another form of “trial by formula.” Moreover, the use of that kind of evidence, the argument went, did not require each worker to show that he had in fact worked overtime without being paid for it, so some workers who had not suffered a loss of pay would share in the verdict anyway.
Justice Anthony M. Kennedy, writing for the six-member majority, refused to bar the use of “representative evidence.” The Court has been allowing that kind of evidence in various kinds of cases since the idea emerged most clearly in a 1946 decision, Anderson v. Mount Clemens Pottery Co.
In a comment that sounded very different from the Court’s condemnation in Wal-Mart of “trial by formula,” Kennedy wrote that “a representative or statistical sample, like all evidence, is a means to establish or defend against liability.” It is allowed into a trial, of a class action or other type of case, depending “on the degree to which the evidence is reliable in proving or disproving the elements” of the legal claim at stake, the opinion added. “It follows that the Court would reach too far were it to establish general rules governing the use of statistical evidence, or so-called representative evidence, in all class-action cases.”
“In many cases,” according to the Court majority, “a representative sample is ‘the only practicable means to collect and present relevant data'” to prove that the company or entity being sued was legally at fault. The opinion went on to provide some guidance to when such evidence would be allowed into a class action case: that is, when each member of the class could rely on the sample to establish that he would have won the case, if he had filed it individually, rather than along with others.
In the pork-processing factory case, Kennedy said, such evidence “could have sustained a reasonable jury finding as to hours worked in each employee’s individual action,” thus supporting the hours that the workers were doing paid activity that led them to sue as a class or as a wage-and-hour collective group.
As it turned out, the opinion made clear, the Court was more content to allow such evidence in this case because, it said, Tyson Foods had not obeyed its legal duty to keep records on how much each worker had worked as overtime. Without such records, the employees had to marshal other evidence, and the sample was the proof to which they turned, the Court noted.
Kennedy said that the company and its supporters had wrongly relied upon the Wal-Mart precedent, declaring that “Wal-Mart does not stand for the broad proposition that a representative sample is an impermissible means of establishing class-wide liability.” What doomed the plea for class certification in that case, according to Kennedy, was that the evidence did not prove the female workers’ claim that there was a common policy, applicable to all workers doing various kinds of jobs for the giant retail chain, of discrimination based on sex in determining wages. The store workers seeking to sue together simply were not similar to each other, Kennedy noted.
Turning to the question of whether the verdict against Tyson Foods should be set aside on the theory that some who would collect damages had not been injured by the wage scales in the Iowa plant, the majority opinion said that would not be decided in this case because the company had changed its argument as the case unfolded in the Court. Thus, Kennedy said, that question would be open for Tyson Foods to raise when the case goes back to lower courts for a specific decision on who among the Tyson workers would be personally entitled to a share of the $2.9 million verdict.
Chief Justice John G. Roberts, Jr., wrote a separate opinion. While he noted that he had joined the Kennedy opinion in full, Roberts said he wrote separately to raise the question of whether there was any way that could be devised to determine how to split up the verdict, which was not worker-specific. If such a method of determining individual shares was in fact beyond reach, the Chief Justice suggested, then the verdict might have to be set aside.
Justice Samuel A. Alito, Jr., joined only the part of the Roberts separate opinion casting doubt on the damages-distribution policy. Alito joined in full in a dissenting opinion, written by Justice Clarence Thomas, disagreeing with the majority’s ruling allowing the use of “representative evidence.”
The Kennedy opinion was joined in full, and without separate comments, by Justices Stephen G. Breyer, Ruth Bader Ginsburg, Elena Kagan, and Sonia Sotomayor. Thus, with the Chief Justice added to the majority, the final outcome was a six-to-two vote. The late Justice Antonin Scalia’s seat remains vacant. While Scalia took part in the hearing of the case in November, his death last month ended any participation in the decision. He was the author of the Wal-Mart decision, and had been a fervent critic of class actions.