Tyson Foods, Inc. v. Bouaphakeo, et al. (14-1146)

Issues 

May a class be certified under Federal Rule of Civil Procedure 23(b)(3) and collective action taken under the Fair Labor Standards Act when individual employee class members differ as to the amount of compensable time worked? Additionally, is the use of statistical analysis to prove liability and damages proper in that situation?

Oral argument: 
November 10, 2015

In this case, the Supreme Court will determine whether class certification or collective action may proceed under Federal Rule of Civil Procedure 23(b)(3) or the Fair Labor Standards Act (FLSA), when liability determinations and damage calculations will turn on statistical analysis that assumes all class members, regardless of actual differences between them, are identical to a statistical average. See Petition for Writ of Certiorari, Tyson Foods, Inc. v. Peg Bouaphakeo, et al., No. 14–1146, at i.  The Court will also consider whether Rule 23(b)(3) or the FLSA permits class or collective action when the putative class contains uninjured members without legal rights to damages. See id. Tyson argues that the use of statistical averages masks differences between class members that not only create individual questions of law and fact, but also result in uninjured class members being awarded damages. See Brief for Petitioner, Tyson Foods, Inc. at 18-19. Additionally, Tyson argues that the use of statistical averages also prevents it from raising defenses that it would otherwise be entitled to employ. See id. at 33. But Bouaphakeo claims that Tyson’s failure to keep statutorily required records of the amount of time that employees worked necessitated the use of statistical analysis, and such use was necessary and proper to prove liability and damages through a just and reasonable inference. See Brief for Respondents, Peg Bouaphakeo, et al. at 33-35. Bouaphakeo further contends that uninjured class members were not awarded damages, and that Tyson was not prevented from raising defenses. Id. at 57-60. The Court’s decision may affect litigation costs for businesses, economic growth, and the use of statistical analysis in class action proceedings. See Brief for Amici Curiae Chamber of Commerce of the United States of America et al. (“Chamber”), in Support of Petitioner at 20–21, 23; Brief of Amicus Curiae American Independent Business Alliance, in Support of Respondent at 3–6; Brief of Amici Curiae Civil Procedure Professors, in Support of Respondents at 9–11.

Questions as Framed for the Court by the Parties 

1. Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample.

2. Whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.

Facts 

Petitioner Tyson Foods, Inc. (“Tyson”) operates and manages meat-processing facilities across the country, including a facility in Storm Lake, Iowa. See Bouaphakeo, et al. v. Tyson Foods, Inc., 765 F.3d 791, 794 (8th Cir. 2015). Tyson employs approximately 1,300 people at the Storm Lake facility, and requires each employee to wear various sanitary apparel and personal protective equipment (“PPE”). See Petition for Writ of Certiorari, Tyson Foods, Inc. v. Peg Bouaphakeo, et al., No. 14–1146, at 4. Under its “gang-time” system—a method of measuring employee use of time on and off production lines—Tyson did not typically compensate employees for donning (putting on) and doffing (taking off) PPE, or the time spent walking to the company locker room before and after shifts and during meal breaks. See Bouaphakeo, 765 F.3d at 795–96.

Respondents Bouaphakeo, et al. are current and former hourly “gang-time” employees at Tyson’s Lake Storm facility. See Bouaphakeo, 765 F.3d at 794. In 2007, Bouaphakeo filed a collective action under the federal Fair Labor Standards Act (“FLSA”) and a class action under the complementary state law—the Iowa Wage Payment Collection Law (“IWPCL”)—in the District Court for the Northern District of Iowa, demanding unpaid overtime for the donning and doffing of PPE and for walking to the locker room immediately before and after shifts, and during meal breaks. See id. at 796. Tyson objected to the certification of both the class action under Federal Rule of Civil Procedure 23(b)(3) and the FLSA, claiming that the court could only determine liability and damages in such a complex case on an individual basis. See id. Finding Tyson’s “gang-time” system to be a commonality linking all members, the district court certified a class on the state-law claim under Rule 23 and allowed a conditional certification of the FLSA collective action. See id. at 799.  Specifically, the court found that deficiencies in Tyson’s “gang-time” system were a common issue relevant to all class members that would predominate over any individualized questions under the Rule 23 standard for certification; and, that the class was “similarly situated” under the corresponding FLSA standard. See id. at 798.

At trial, Bouaphakeo offered evidence to establish the amount of time spent donning, doffing, and walking. See Bouaphakeo, 765 F.3d 791 at 799. Tyson objected that a time study, presented as evidence, was too imprecise and would lead to an impermissible “trial by formula.” See id. at 799–00. Tyson argued that the study’s reliance on statistical averages to determine the company’s liability and damages would distort any actual overtime hours owed to individual employees. See id. at 797. Despite Tyson’s objections to Bouaphakeo’s evidence, the jury returned a verdict for Bouaphakeo for $5.8 million. See id. at 796.

Tyson appealed, arguing that the class should never have been certified because factual dissimilarities among its members and the imprecise method used to calculate individual injury. See Petition for Writ at 15–17. The Court of Appeals for the Eighth Circuit affirmed the district court’s ruling, holding that Tyson’s compensation system applied to all members and bound them together for the purposes of class litigation. See id. at 12. The court reasoned that because Tyson violated its time-keeping obligations under FLSA, Bouaphakeo could rely on statistical data to prove liability to the class as a whole. See id. at 12. The court explained that Bouaphakeo could apply this representative statistical analysis to calculate damages for each individual class member. See id. at 13. Subsequently, the court denied Tyson’s petition for rehearing en banc; the Supreme Court granted Tyson’s petition for certiorari on June 8, 2015. See id. at 14.

Analysis 

To bring a class action lawsuit under the Federal Rules of Civil Procedure, several requirements must be satisfied. See F.R.C.P. 23(a). Specifically, to certify—or approve —a class, courts must find that “the questions of law or fact common to class members predominate over any questions affecting only individual members . . . .” See F.R.C.P. R. 23(b)(3). Likewise, a collective action by employees for unpaid wages against their employer may be certified under the Fair Labor Standards Act if all Respondent employees in the case are similarly situated. See 29 U.S.C. §216(b).

Tyson argues that allowing class certification in this case was improper for three reasons. First, Tyson argues that the district court erred in certifying the class because employees must be similarly situated and common issues of law and fact must predominate the trial, and that there were meaningful differences between types of employees that were masked by Bouaphakeo’s use of statistical analysis. See Brief for Petitioner, Tyson Foods, Inc. at 22-29. Second, Tyson claims that, because the lower courts failed to recognize individual differences between types of employees, allowing Bouaphakeo to prove liability and damages on a class-wide basis was in error. See id. at 33. Finally, Tyson claims that because Bouaphakeo’s statistical study shows that a number of class members likely suffered no injuries, and because damages were awarded to all class members in one lump sum, hundreds of uninjured class members have been awarded damages in violation of Article III of the United States Constitution. See id. at 45.

Bouaphakeo disagrees with Tyson’s analysis, arguing instead that common issues of fact and law predominated at trial. See Brief for Respondents, Pam Bouaphakeo, et al. at 27. Moreover, Bouaphakeo alleges that because Tyson failed to keep records that are statutorily required under the FLSA, the respondents were permitted to prove liability and damages through class-wide approximation. See id. at 33. And Bouaphakeo contends that neither Article III nor Rule 23 prevent certification of a class when some members ultimately do not prove injury. See Id. at 51.

CAN PLAINTIFFS USE STATISTICAL ANALYSIS TO PROVE LIABILITY AND DAMAGES IN LIGHT OF DIFFERENCES BETWEEN INDIVIDUAL CLASS MEMBERS?

Tyson contends that whether common questions of law or fact predominate a case depends on the legal elements of the claim at issue, and furthermore that a prerequisite for class certification is the determination of dissimilarities in a class. See Brief for Petitioner at 24. Tyson asserts that the requirements for collective action certification under the FLSA are similar to those under Rule 23(b)(3), and therefore no meaningful differences exist with respect to the errors of certification. See id. at 25. Tyson claims that to prove liability and damages under the FLSA, Bouaphakeo must show that donning and doffing activities are work that must be included in determining how long employees worked, and that these activities caused employees to work more than 40 hours per week. See id. at 26. Tyson asserts that Bouaphakeo cannot show that these activities constitute a specific amount of unpaid work, because variations in the type and amount of protective gear individual employees wear causes variation in the amount of time that employees take to don and doff. See id. at 34-35. Tyson contends that the use of statistical averages to prove liability and damages violated the Rules Enabling Act and abridged Tyson’s substantive Due Process rights by lessening the respondents’ burden of proof and by preventing Tyson from rebutting the respondents’ contentions through individual testimony and cross examination. See id. at 36-38. Tyson relies on the Court’s ruling in Wal-Mart Stores, Inc. v. Dukes, arguing that proving class liability by extrapolation from an average sample is a flawed approach and impermissibly abridges that defendant’s rights under the Due Process Clause and the Rules Enabling Act by foreclosing defenses that would otherwise be available. See id. at 38-39.

Bouaphakeo disagrees with Tyson’s analysis, arguing instead that common issues of fact and law predominated at trial. See Brief for Respondents, Pam Bouaphakeo, et al. at 27. Bouaphakeo notes that common contentions raised about compensability were central throughout the litigation; and, therefore, the sole issue Tyson claims is individualized is the number of hours each class member spent on compensable activities. See Brief for Petitioner at 29-33. Bouaphakeo maintains that common questions of law and fact predominated over these individual questions, and that all members of the class were similarly situated. See id. at 25, 27. Bouaphakeo contends that she was permitted to prove liability and damages through class-wide approximation, because Tyson failed to keep records that are statutorily required under the FLSA. See id. at 33.

ANDERSON V. MT. CLEMENS

Bouaphakeo argues that under the Court’s decision in Anderson v. Mt. Clemens, employees can show “approximate” time worked “as a matter of just and reasonable inference” when employers violate their FLSA obligation to keep adequate time records. See Brief for Respondents at 34. But Tyson maintains that Mt. Clemens stands only for the proposition that plaintiffs meet their burden of proving entitlement to damages if the plaintiffs have in fact performed work for which they were improperly compensated, and if they produce sufficient evidence to show the amount and extent of that work as a matter of just and reasonable inference. See Brief for Petitioner at 42-43. According to Tyson, Mt. Clemens does not allow employees to prove that they were improperly compensated based on the amount of time that a different or hypothetical employee spent performing dissimilar activities. See id. at 42.

But Bouaphakeo maintains that reasonable approximation through statistical extrapolation shifts the burden to the employer to prove the actual amount of time that the employees worked, or to negate the reasonableness of the inference from Respondent’s evidence. See Brief for Respondents at 35. Furthermore, Bouaphakeo argues that, because Mt. Clemens is a substantive rule of law, Tyson’s Substantive Due Process and Seventh Amendment rights were not abridged, and the district court’s certification of this class and Respondents proof of liability and damages through the use of statistical analysis did not violate the Rules Enabling Act. See id. at 49-50.

IS IT PROPER TO CERTIFY A CLASS OR COLLECTIVE ACTION WHEN THE CLASS CONTAINS MEMBERS THAT MAY BE UNINJURED, AND ARE NOT ENTITLED TO DAMAGES?

Tyson asserts that, under Lujan v. Defenders of Wildlife, one of the minimum requirements for standing in federal court as defined by Article III of the United States Constitution, is “injury in fact.” See Brief for Petitioner at 45. Tyson claims that, because Respondents’ statistical study shows that some class members likely suffered no injury, and because damages were awarded to all class members in one lump sum, uninjured class members may have been awarded damages in violation of Article III. See id. at 45. Tyson explains that class actions are inappropriate when uninjured members cannot be pruned from a class, and that requiring defendants to pay damages to persons who cannot prove injuries is beyond the authority of federal courts. See id. at 47–48. Tyson suggests that the Court follow the D.C. Circuit, in holding that Rule 23(b)(3) requires plaintiffs to prove, “through common evidence, that all class members were in fact injured” by the defendant’s actions. See id. at 48-49. In the alternative, Tyson asks that the Court require that, if Bouaphakeo cannot prove all class members were injured, that Bouaphakeo instead provide a mechanism for ensuring that uninjured members will not take any share of damages awarded. See id. at 49.

Bouaphakeo asserts that federal courts have jurisdiction over class action suits if a single class member has standing. See Brief for Respondents at 51-57. And Bouaphakeo contends that neither Article III nor Rule 23 prevent certification of a class when some members ultimately do not show injury. See id. at 51. Bouaphakeo argues that Tyson’s criticism of a lump sum jury award was invited by Tyson’s request for such an award, and that Tyson should not now be able to argue that this type of award gives damages to uninjured class members. See id. at 57. Additionally, Bouaphakeo asserts that uninjured class members were not awarded damages, because the jury was instructed not to award damages to those members, and because the jury had the evidence it needed to avoid doing so. See id. at 58-59. Finally, Bouaphakeo maintains that Tyson’s Due Process clause assertions lack merit because court approval of a damages allocation plan would neither reopen judgment nor reallocate damages. See id. at 59-60.

Discussion 

The Supreme Court will determine whether courts may certify class actions under Rule 23 or collective actions under the FLSA when statistical analysis accounts for differences among individual class members by reference to a hypothetical average class member. See Petition for Writ of Certiorari, Tyson Foods, Inc. v. Peg Bouaphakeo, et al., No. 14–1146, at i.  Furthermore, the Court will decide whether courts may maintain class actions under Rule 23 or collective actions under the FLSA when classes contain members who were not injured and thus have no legal rights to damages. See id.  Tyson contends that class or collective action should not proceed based on a statistical analysis that cannot account for the particular differences that exist among individual class members to determine liability and damages for the entire class. See Brief for Petitioner, Tyson Foods, Inc. at 29, 33–34. But Bouaphakeo maintains that certification is permissible because common issues did predominate the litigation in the inquiry into the compensability of the class’ work. See Brief for Respondent, Pam Bouaphakeo, et al. at 27–28. The Court’s decision may affect litigation costs for the business community and economic growth, and the use of statistical analysis in class action proceedings.

IMPACT ON THE BUSINESS COMMUNITY AND ECONOMIC GROWTH

The U.S. Chamber of Commerce  (“Chamber”), supporting Tyson, argues that increased class action litigation will have a detrimental effect on businesses by increasing the costs of litigation and the pressure to settle disputes. See Brief for Amici Curiae Chamber of Commerce of the United States of America et al. (“Chamber”), in Support of Petitioner at 20–21. The Chamber maintains that this increase in costs and settlements only serves to stunt economic growth. See id. at 21–22. Similarly, the Dow Chemical Company (“Dow”) argues that because trial after class certification has become increasingly rare, businesses are more likely to settle disputes such as the one at issue and pass the costs onto consumers, thereby negatively impacting the economy as a whole. See Brief of Amicus Curiae Dow Chemical Company, in Support of Petitioner at 17–18.

But the American Independent Business Alliance (“AMIBA”), supporting Bouaphakeo, counters that the increase in class action litigation promotes economic growth, because companies are less inclined to engage in anticompetitive practices or collusive behavior. See Brief of Amicus Curiae American Independent Business Alliance ("AMIBA"), in Support of Respondent at 3–6. AMIBA maintains that companies would not engage in anticompetitive practices if the risk of class litigation remained a viable deterrence. See id. AMIBA argues that, when effective, class action litigation can benefit the business community by prohibiting illicit business activity, deterring future wrongdoers, and promoting innovation and competition in the marketplace. See id.

USE OF STATISTICAL DATA IN CLASS LITIGATION

The Chamber also argues that courts should not use statistical analysis to resolve issues of class liability where significant differences exist among class members because of the arbitrary results that could potentially follow such a use. See Brief of Chamber at 23. According to the Chamber, representative statistical analysis cannot accurately account for variations in each class member’s individual harm and should not be used to extrapolate averages onto individual injuries in the class litigation context. See id. at 13–16.

However, a group of civil procedure law professors argue that courts have long utilized statistical data in various areas of the law to understand factual contentions and deduce the materiality of legal arguments. See Brief of Amici Curiae Civil Procedure Professors, in Support of Respondents at 9–11. And AMIBA maintains that the procedural safeguards in place to prevent the impermissible use of statistical data in complex litigation only furthers the argument that such data is beneficial in the class litigation context. See Brief of AMIBA at 11–13.

Conclusion 

This case will determine whether courts may certify a class action under the Federal Rules of Civil Procedure or a collective action under the FLSA when liability and damages were determined based on statically analysis that may not have accounted for differences in class members. See Petition for Writ of Certiorari, Tyson Foods, Inc. v. Peg Bouaphakeo, et al., No. 14–1146, at i. Tyson argues that certification in this context is improper because the differences amongst class members masks the individual idiosyncrasies that may distort the ultimate award to the class as a whole. See Brief for Petitioner, Tyson Foods, Inc. at 18. Bouaphakeo counters that the class was properly certified, and that the differences amongst the class members was accounted for through the use of statistical analysis with reference to average time worked. See Brief for Respondents, Peg Bouaphakeo, et al. at 33–35. The Court’s decision will potentially impact the business community and the use of statistical analysis in class litigation. See Brief of Amicus Curiae American Independent Business Alliance, in Support of Respondent at 3–6.

Edited by 

Acknowledgments 

Additional Resources