Tag Archives: collective action

March 22, 2016

Class-Action Lawsuit Permitted To Rely On Sample Data To Determine Wages Owed

Husband_JBy John Husband

In the absence of actual time records, time spent by employees donning and doffing protective gear may be established by representative evidence in order to establish the employer’s liability for unpaid overtime pay in a class action lawsuit, ruled the U.S. Supreme Court today. The Court rejected the company’s argument that each employees’ wage claim varied too much to be resolved on a classwide basis. Instead, the Court upheld the class certification, sending the case back to the district court to determine how to distribute to class members the $2.9 million dollar jury award. Tyson Foods, Inc. v. Bouaphakeo, 577 U.S. ___ (2016).

Pay For Donning and Doffing Protective Gear

Under the Fair Labor Standards Act (FLSA), it is well established that employers must pay employees for time spent performing preliminary or postliminary activities that are “integral and indispensable” to their regular work. In the Tyson Foods case, over 3,300 pork processing employees sued, alleging that the company failed to pay them for time spent putting on and taking off required protective gear at the start and end of their work shifts and at meal periods. The employees argued that such time was “integral and indispensable” to their work and that when added to their weekly work hours, pushed them beyond 40 hours per week resulting in unpaid overtime.

Because Tyson Foods did not keep any time records for donning and doffing time, the employees presented representative evidence of the time spend on those activities, including employee testimony, video recordings of the donning and doffing process at the plant, and a study by an industrial relations expert, Dr. Kenneth Mericle. Dr. Mericle analyzed 744 videotaped observations to determine how long various donning and doffing activities took, concluding that employees in the kill department took an estimated 21.25 minutes per day while workers in the cut and retrim departments took an estimated 18 minutes per day. Using that data, another expert added that time to each employees’ recorded work time to determine how many hours each employee worked per week.

Tyson Foods argued that because the workers did not all wear the same protective gear, each individual plaintiff spent different amounts of time donning and doffing the gear. Therefore, Tyson Foods maintained that whether and to what extent it owed overtime pay to each individual employee was a question that could not be resolved on a class-action basis. Importantly, Tyson Foods did not attack the credibility of the employees’ expert or attempt to discredit the statistical evidence through its own expert, but instead opposed class certification on the basis that the individual variances of the time spent by each employee made the lawsuit too speculative for classwide recovery. 

Employee-Specific Pay Inquiries Do Not Destroy Class Action

The Court determined that the employees’ use of Dr. Mericle’s representative study was permissible to establish hours worked in order to fill the evidentiary gap created by the employer’s failure to keep time records of the donning and doffing activities. The Court refused to define a broad-reaching rule about when statistical evidence may be used to establish classwide liability, stating instead that it would depend on the purpose for which the evidence was being introduced and the elements of the underlying action. It ruled it appropriate to rely on  sample evidence when each class member could have relied on that sample to establish liability if he or she had brought an individual lawsuit. In the wage and hour context, if the sample data could permit a reasonable jury to find the number of hours worked in each employees’ individual action, the “sample is a permissible means of establishing the employees’ hours worked in a class action.”

The Court, in its 6-to-2 decision, refused to rule on the issue of how the jury’s $2.9 million award would need to be dispersed among the class members and how to prevent uninjured class members (i.e., those whose donning and doffing time did not result in overtime) from recovering any part of the award. In fact, Chief Justice Roberts, writing a separate concurring opinion, expressed his concern that the district court would not be able to devise an allocation method that would award damages only to those class members who suffered an actual injury. But, because the majority found that the allocation methodology issue was not before the Court, the case gets sent back to the trial court for that determination.

Litigation Tactics To Oppose Class Certification

The Court noted numerous litigation strategies by Tyson Foods that may have proved fatal to its case. First, Tyson Foods failed to move for a hearing to challenge the admissibility of the employees’ expert study by Dr. Mericle. A so-called Daubert hearing would have offered Tyson the chance to keep the representative sample out of the trial which may have eliminated the employees’ evidence of time spent donning and doffing protective gear.

Second, the Court noted that Tyson Foods did not attempt to discredit Dr. Mericle’s sample evidence through an expert of its own. By focusing its trial strategy only on attacking the class certification issue, the jury was left without any rebuttal to the employees’ experts.

Finally, Tyson Foods rejected splitting the jury trial into two phases, a liability phase and a damages phase. Instead, it insisted on a single proceeding in which damages would be calculated in the aggregate and by the jury. The jury came back with a $2.9 million award, which was half of what the employees’ sought, but still a significant award against Tyson Foods.

Blow To Businesses Defending Class Actions

Although the Court refrained from approving the use of representative data in all class-action cases, the Court’s decision makes it more difficult for employers to object to sample data when defending a class or collective action. Noting that representative data is not an appropriate means to overcome the absence of a common employer policy that applies to all class members, per its 2011 Wal-Mart Stores, Inc. v. Dukes decision, the Court allowed representative data to fill the evidentiary gap regarding hours worked where each employee worked in the same facility, did similar work, and was paid under the same policy.

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February 11, 2013

Wage and Hour Collective Actions Face Higher Class Certification Standard

By Jeffrey T. Johnson

Employers can thank the Seventh Circuit Court of Appeals for raising the standard that employees must meet when seeking final certification of a Fair Labor Standards Act (FLSA) collective action or state wage and hour law class action.   In an opinion written by Judge Richard Posner, the Court recently refused to certify a proposed class of 2,341 employees, finding that a trial would not be manageable due, in large part, to the differences in damages among the class members.  Espenscheid v. DirectSat USA, LLC, No. 12-1943 (7th Cir. Feb. 4, 2013).  The ruling will likely make it more difficult for plaintiffs to get a wage and hour class certified at the critical final certification stage.

Court Finds No Reason for Different Certification Standards

FLSA collective actions are similar in many respects to class actions brought under Rule 23 of the Federal Rules of Civil Procedure—both permit an individual (or small group) to file suit on behalf of all similarly situated individuals.  One key difference, however, is that Rule 23 sets forth relatively rigorous standards for certifying a class while FLSA collective actions are reviewed under a more lenient “similarly situated” analysis, typically pursuant to a two-step approach.  The Seventh Circuit’s recent decision turns that distinction on its head.

Noting that Rule 23’s procedural provisions are intended to promote efficiency, Judge Posner stated “there isn’t a good reason to have different standards for the certification of the two different types of action.”  Moreover, he wrote that “[s]implification is desirable in law,” especially given the fact that plaintiffs often join a collective action and a class action in one lawsuit.  This collapse of differing class certification standards gives employers beneficial language to argue against collective action certification on the basis of Rule 23 commonality, numerosity and typicality requirements.

Decertification Proper Where Trial would be Unmanageable

The Court went on to reject certification of the proposed DirectSat “class,” finding that the plaintiffs had not presented a feasible trial plan.  The proposed “class” consisted of 2,341 technicians who installed and repaired home satellite dishes.  They worked directly in customers’ homes and were paid on a per job basis, not a fixed hourly wage.  They alleged that DirectSat forbid them from recording time spent on certain tasks, such as filling out paperwork and picking up tools, and that they often worked more than 40 hours a week without being paid overtime. 

Plaintiffs’ arguments to achieve class certification failed.  Judge Posner held that lack of uniformity on the amount of damages suffered by each technician doomed certification.  Plaintiffs’ proposal to use 42 “representative” members of the class to determine damages on behalf of the entire class was rejected.  A further complication was the piece-rate pay basis where those technicians who completed jobs quickly made a higher “hourly” rate than those who worked slower.  In the end, plaintiffs’ counsel admitted that it would “be difficult for Plaintiffs to provide an objective framework for identifying each class member within the current class definitions without making individualized findings of liability.”  The failure to provide a feasible litigation plan to address these complexities doomed the plaintiffs’ effort to obtain final class certification.

Good Development for Employers

This is a significant decision for employers facing wage and hour collective actions.  The standards for final class certification are not very well-developed in most jurisdictions, and Judge Posner’s well-reasoned opinion will carry substantial weight well beyond the Seventh Circuit.  Further, if the more stringent Rule 23 standard is to be applied upon final certification, it is only logical that courts will also begin applying it at the earlier conditional certification stage, thereby making class certification more difficult for plaintiffs.  Judge Posner and the Seventh Circuit have provided employers with an important tool to defend against these types of class and collective claims.