Supreme Court Permits Use of Statistical Evidence to Prove Classwide Liability, but Declines to Adopt Categorical Rule

In Tyson Foods, Inc. v. Bouaphakeo, et al., the United States Supreme Court affirmed a judgment in favor of a class of Tyson employees, holding that averaged statistical analysis or so-called “representative evidence” presented by the class’s experts properly established classwide liability in the case.  The Court rejected, however, the requests of all parties and amici curiae to adopt a broad and categorical rule governing the use of representative and statistical evidence in class actions, stating that “[w]hether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.”

The suit was brought by current and former employees at Tyson’s pork processing plant in Iowa who worked in the plant’s kill, cut, and retrim departments where hogs are slaughtered and prepared for shipment.  Such work required employees to wear protective gear, the exact composition of which depended on the tasks performed by a worker on a certain day.  Tyson had paid its employees pursuant to varying policies over the years, some of which compensated certain employees for time spent donning and doffing protective gear and some which did not.  Tyson never recorded the time each employee actually spent donning and doffing.  The employees brought suit, alleging violations of the Fair Labor Standards Act (FLSA) and the Iowa Wage Payment Collection Law for failure to pay for time spent donning and doffing, thereby denying employees of overtime compensation required by the FLSA.  Employees sought class certification under F. R. Civ. P. 23 and certification of their federal claims as a collective action under 29 U.S.C. § 216.  Over Tyson’s objections, the class was certified and the case proceeded to trial before a jury.

Faced with proving whether each employee worked more than 40 hours a week, inclusive of time spent donning and doffing, without the existence of any records, the class relied on a study performed by its expert.  The expert observed and analyzed a sample of the class to determine how long various donning and doffing activities took and then averaged the time to produce an estimate.  Using this data, a second expert calculated the amount of uncompensated work for each employee.  As a result, the experts concluded that 212 employees did not meet the 40-hour threshold and could not recover, leaving remaining class members who had “potentially been undercompensated to some degree.”  Making a curious tactical decision, Tyson did not challenge the statistical validity of the experts’ studies under Daubert, nor did it present a rebuttal expert to attempt to discredit the evidence.  Instead, Tyson argued that the varying time it took employees to don and doff the various gear made the lawsuit too speculative for classwide recovery, and that the expert’s study overstated the average donning and doffing time.  Ultimately, the jury awarded the class $2.9 million in unpaid wages, less than half of the calculated amount recommended by the class’s experts.

On appeal to the Supreme Court, Tyson argued that the expert’s study “manufactures predominance by assuming away the very differences that make the case inappropriate for classwide resolution.”  Relying on a representative sample, Tyson contended, “absolves each employee of the responsibility to prove personal injury, and thus deprives [Tyson] of any ability to litigate is defenses to individual claims.”

The Court, noting that in many cases a representative sample is the only way to present relevant data establishing liability, opined that each class member could have presented the same representative evidence at an individual trial in an effort to “fill an evidentiary gap” created by Tyson’s failure to keep adequate records.  The Court relied on Anderson v. Mt. Clemens Pottery Co, 328 U. S. 680 (1946), which held that “when employers violate their statutory duty to keep proper records, and employees thereby have no way to establish the time spent doing uncompensated work, the ‘remedial nature of [the FLSA] and the great public policy which it embodies…militate against making’ the burden of proving uncompensated work ‘an impossible hurdle for the employee.’”  The Court rejected Tyson’s argument that the evidence absolved the class of proving individual injury, finding that the representative evidence was a “permissible means of making that very showing.”

Many anticipating this decision thought that Tyson would succeed in light of Wal-Mart Stores, Inc. v. Dukes, in which the Court held that “Trial By Formula” was contrary to the Rules Enabling Act because it enlarged class members’ rights and deprived defendants of their right to litigate statutory defenses to individual claims.  Instead, the Court stated that “Wal-Mart does not stand for the broad proposition that a representative sample is an impermissible means of establishing classwide liability.”  Unlike Wal-Mart, where employees were not similarly situated and could not have prevailed in individual suits by relying on testimony detailing ways in which other employees suffered discrimination, the study relied on by the Tyson employees “could have been sufficient to sustain a jury finding as to hours worked if it were introduced in each employee’s individual action.”  The Wal-Mart employees’ experiences shared little in common while the Tyson employees did similar work in the same facility and were paid under the same policy.  Applying Mt. Clemens, the Court found that under such circumstances “the experiences of a subset of employees can be probative as to the experiences of them all.”

The Court expressly declined to establish a general rule governing the use of statistical evidence as doing so would “reach too far.”  Permissibility of such evidence “turns not on the form a proceeding takes – be it a class action or individual action – but on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.”

By tightly tethering its holding to the facts of the case, the specific causes of action, and FLSA precedent under Mt. Clemens, the Court avoided an outright rubber stamping of plaintiffs’ future ability to prove liability through statistical evidence, although this is undoubtedly a welcome decision for the class action plaintiffs’ bar, who will surely attempt to expand the Court’s holding in the lower courts.  Going forward, defendants will have to distinguish their cases from Tyson by arguing, where possible, that they possess records such that there is no “evidentiary gap” requiring plaintiffs’ reliance on representative evidence, or that the specific claims advanced do not permit burden shifting allowing plaintiffs to rely on evidence from which reasonable inferences can be drawn, as was permitted in Tyson under Mt. Clemens.

In addition to tailoring attacks on representative evidence accordingly in light of this opinion, defendants should think long and hard before forgoing Daubert challenges and not presenting expert rebuttal evidence.  The Court pointed to this “failure” on Tyson’s part several times, but noted that there was no basis in the record from which it could conclude admission of the expert evidence was legal error.