Class Actions Appear Poised to Survive to Fight Another Day at High Court

At least five justices of the U.S. Supreme Court suggested at Tuesday’s oral argument in Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146, that they would not impose further restrictions on class action litigation in that case.

The case involves pork-processing workers seeking overtime pay under the Fair Labor Standards Act (FLSA) for time spent donning and doffing protective gear beyond 40 hours per week, time for which Tyson Foods also failed to keep FLSA-mandated records. More than 3,300 former and current employees who held 400 different jobs on the plant floor were certified as a class in the trial court in Iowa. That decision relied on statistical modeling by the employees’ expert showing that, despite some differences in the protective gear required for the various jobs, most employees took between 17 and 22 minutes donning and doffing. The case went to trial and a jury awarded the class a verdict worth approximately $5.8 million.

Tyson unsuccessfully appealed the class certification decision to the U.S. Court of Appeals for the Eighth Circuit. At the Supreme Court, Tyson contended, first, that the statistical models could not sufficiently account for the different amounts of donning-and-doffing time spent by employees with different job duties and, second, that the certified class contained hundreds of members who had not worked more than 40 hours in a week.

For groups of employees or consumers who suffer injuries which are comparatively small but widespread, class actions are an essential tool to vindicate individual rights and ensure large corporations comply with existing law. Because the costs of bringing individual lawsuits may be prohibitive, class actions level the playing field for employees and consumers.

The Roberts Court showed its hostility toward class actions in two infamous 2011 decisions penned by Justice Scalia and reflecting a now-familiar 5-4 split along ideological lines: AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333, and Wal-Mart Stores Inc. v. Dukes (2011) 131 S. Ct. 2541. In the latter case, Justice Scalia decried class actions which rely on the use of statistics to calculate and apportion damages as “Trial by Formula” and reversed the lower courts’ certification of a class of female Wal-Mart employees who alleged sex discrimination. Two years later, in Comcast Corp. v. Behrend (2013) 133 S. Ct. 1426, Justice Scalia–writing for the same 5-4 majority–again reversed the lower courts’ class certification decision (in a case challenging the cable company’s anticompetitive practices) on grounds that the consumers’ statistical model did not sufficiently support the alleged damages suffered across the proposed class.

A recent investigation and an editorial in The New York Times (articles available here, here, here, and here) documented and discussed the push by credit card companies and other large corporations to weaken class actions through class-action bans in consumer and employment contracts. As noted in the Times, Chief Justice John Roberts advocated in favor of class-action bans in consumer contracts as a private lawyer for Discover Bank before voting to uphold them in AT&T Mobility LLC v. Concepcion and American Express v. Italian Colors (2013) 133 S. Ct. 2304. The latter was a case in which the Supreme Court held that, even if an arbitration clause with a class waiver has the effect of preventing meaningful relief, it must generally still be upheld – severely undermining the enforcement of numerous statutes designed to protect the public from corporate abuses.

Thus, consumer and employee advocates were rightfully concerned when the Court granted certiorari in Tyson Foods. However, at oral argument, Tyson Foods’ advocate faced sharp questioning from several Justices, including Justice Kennedy (who had joined the majority in the three above-described class cases). Multiple Justices took issue with the fact that Tyson Foods was essentially asking the Court to resolve in their favor an avoidable problem of its own making: at trial, Tyson Foods opposed the plaintiffs’ efforts to bifurcate the trial, which would have allowed for a determination of the hours worked by each employee after the jury awarded aggregate damages. Justice Kennedy told counsel for Tyson: “you suggest in your brief that uninjured plaintiffs are included in aggregate damages, but you were the one that objected to the bifurcated trial.” Similarly, Justice Kagan stated: “it really was your decision not to have a bifurcated proceeding, where it would have been clear–it would have been proved separately in a highly ministerial way which employees worked over 40 hours.” Several Justices further noted that the trial court would address such concerns when apportioning the jury award on remand.

As to Tyson’s objection to the statistical model which supported class certification, five Justices appeared to agree that the question raised did not implicate Federal Rule of Civil Procedure 23 (governing class actions); instead, that question could be resolved under Anderson v. Mt. Clemens Pottery Co. (1946) 328 U.S. 680, an old FLSA case. That case held that where an employer fails to keep adequate records (as the FLSA requires), employees need not prove the exact hours worked and are entitled to a just and reasonable inference as to those hours. Put simply, an employer who fails to keep adequate time records as required by law cannot then use the absence of those records as grounds to escape liability for minimum wages or overtime premiums. Here, Tyson had not kept records of the time employees spent donning and doffing protective gear, and thus the employees were entitled to use statistical models based on video footage at the plant to determine the average time spent on those activities. Thus, Mt. Clemens gives the Court an opportunity to uphold the class determination based on existing substantive law rather than looking to Rule 23’s procedures. Justice Kennedy did not hold back in showing his cards, telling Tyson’s counsel: “it seems to me Justice Kagan is precisely right. You said, well, I want to start first with class action. She said, no, no. The point is we start with Mt. Clemens. That’s the substantive law for FLSA.”

Although predicting the outcome of Supreme Court decisions based on the Justices’ questions at oral argument is often a futile exercise, consumer and employee advocates were cautiously optimistic after argument on Tuesday. Reinforcing the Mt. Clemens precedent would be critical for workers seeking to prove the hours they worked when an employer has misclassified employees as exempt from overtime, kept imprecise records, or required off-the-clock work. However, despite what may turn out to be a rare victory before the Roberts Court for those who protect workers’ and consumers’ rights, the warning signs for the imposition of further restrictions on class litigation were apparent in the questions asked by several Justices, notably Justice Kennedy.

He probed both the advocates for the plaintiffs and the government (which intervened on behalf of plaintiffs in the case) as to whether the case would be “much closer” if decided solely under Rule 23, without the Mt. Clemens inference, asking counsel for plaintiffs: “do you concede that there is a strong possibility you might not be–have this class certified under section–under Rule 23, absent Mt. Clemens?” In doing so he signaled that, even if he sides with the Tyson Foods plaintiffs, he has no plans to abandon the majority from the AT&T Mobility, Wal-Mart Stores, Comcast, and Italian Colors cases.

Chief Justice Roberts expressed skepticism as to whether Mt. Clemens could even resolve the class certification question, arguing that Mt. Clemens addressed the amount of damages owed to a worker shown to have worked more than 40 hours in week, not a situation where the records failed to establish the employer’s liability for overtime in the first instance. Both Justices Scalia and Alito expressed their grave concern–as did Tyson’s counsel–that some of the class members might have worked less than 40 hours, notwithstanding that such concerns could be addressed by the trial court on remand, as discussed above.

In other words, employees and consumers may win in Tyson Foods, but the current Roberts Court majority at oral argument offered little assurance that they will preserve the safety of the public policy interests protected by consumer and employment class actions going forward