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Collective Thoughts

Supreme Court to Weigh Claims of ‘Class-action Abuse’

By PETER VICKERY

Peter Vickery

Peter Vickery

The U.S. Supreme Court has agreed to take a case concerning the scope of two kinds of mass employee lawsuits against employers — class actions and a similar procedure created by the federal Fair Labor Standards Act (FLSA) called collective actions. If the justices tighten the standards for certifying class actions and collective actions, it would come as a relief to companies with large numbers of workers — and a major setback for the law firms that target them.

So the plaintiffs’ bar and employers alike are watching and waiting for the outcome in Tyson Foods Inc. v. Bouaphaeko, one among a host of overtime cases that two class-action law firms, Smith & McElwain and Kenney McCafferty, have brought against the food company.

Mass lawsuits are costly to defend, which means employers often settle them prior to trial rather than take the risk of going to a jury. When the other side is receiving help from state and federal agencies, the incentive to settle is even greater. But before one of these lawsuits can move forward, a judge has to certify it as a class/collective action.

Certifying an action has a dramatic impact on the lawsuit’s value and, consequently, on a company’s competitiveness and productivity. So the standard for determining whether to grant or deny certification is something that matters a great deal to companies that might find themselves in the crosshairs of mass employee lawsuits.

At issue in the Tyson cases is the amount of compensation that the company should pay its employees for the time they spend donning and doffing protective gear and walking between the locker room and the production line. Tyson pays its clerical workers ‘punch to punch,’ i.e. from the time they punch the clock in to the time they punch out. But it pays production-line workers according to ‘gang time,’ i.e. the time they are actually at their work stations while the line is moving. It does not keep track of how much time each employee spends donning, doffing, and walking, but generally pays an additional four to seven minutes per shift to cover these activities. In the last few years, it has been paying more.

Tyson started paying donning-and-doffing time after a Supreme Court case involving its corporate predecessor, IBP, made clear that this was legally necessary.

Tyson compensates its workers for donning and-doffing at the regular rate of pay. But according to the plaintiffs, under FLSA and state wage-and-hour laws, the company should be paying them overtime (time and a half). In some cases, the plaintiffs enjoy the support of the U.S. Department of Labor, which files amicus briefs to bolster the employees’ argument in favor of overtime. Given the large numbers of current and former employees, the difference is enormous. So far, the donning-and-doffing lawsuits have cost the company millions of dollars in jury awards and settlements.

Sometimes Tyson wins, and sometimes it loses. For example, in two separate cases, Acosta and Gomez, juries awarded combined damages of $24 million. In contrast, in another pair of cases, Guyton and Lopez, which concerned the very same issues — whether donning, doffing, and walking required overtime — juries found in favor of Tyson, and sent away the plaintiffs and their lawyers empty-handed.

With such unpredictable jury results, it is no surprise that Tyson sometimes opts to settle, as it did in a Tennessee case for $7.75 million and another in Georgia for $32 million. But in Bouaphakeo, the jury’s reliance on a controversial formula has prompted Tyson to go all the way to the Supreme Court.

The plaintiffs in Bouaphakeo are hourly workers at Tyson’s Storm Lake, Iowa pork-processing facility, which employs approximately 1,600 people. The class-action lawyers wanted to include all hourly workers at the facility in the class, but the court limited membership to workers in the kill, cut, and re-trim departments. Employees in these three departments have to wear various kinds of protective gear depending on the nature of their work, e.g. hard hats, steel-toed boots, hair/beard nets, ear protectors, gloves, aprons, belly guards, and scabbards. Those who use knives have to dip them in sanitizer at the start and end of each shift. How long an individual takes to don and doff (and dip) depends on the gear.

In the Gomez case, the plaintiff’s expert witness, Kenneth Mericle, a labor economist and professor emeritus at the University of Wisconsin, Madison, School for Workers, testified that, by his calculations, based on analysis of video footage, the workers spent 25 to 29 minutes donning and doffing. Even though Tyson presented no expert testimony of its own to counter Mericle, after listening to his answers on cross-examination, the jury found that the donning-doffing time was closer to six minutes.

This is a significant divergence in view of the number of workers involved and the amount of money at stake. Nevertheless, in Bouaphakeo, the plaintiff’s expert witness used Mericle’s time-studies as the basis for calculating damages. Again, the jury found that the donning-doffing time was just a fraction of what Mericle’s statistics claimed, awarding damages of less than half the amount the plaintiffs claimed they were entitled to receive.

When the Court of Appeals denied Tyson’s request for rehearing, Justice Beam dissented, noting that “giving the best gloss available to the plaintiffs under the evidence they themselves adduced, well more than one-half of the certified class of 3,344 persons have no damages whatever, and the balance have markedly lower individual damages that are now virtually impossible to accurately calculate.” And this constitutes the nub of Tyson’s argument to the Supreme Court: for class/collective actions, there needs to be a way to determine individual damages so as to avoid the practice of ‘trial by formula,’ which the Supreme Court disapproved of in the 2011 case of Wal-Mart Stores Inc. v. Duke.

Tyson argues that the use of Mericle’s statistics amounted to trial by formula. Because of the range of differences between class members, plus the fact that some class members sustained no damages at all, the district court should not have granted class/collective action certification in the first place, said Tyson. The question, as the company presents it, is whether a trial court should be allowed to certify a class/collective action (1) if the court determines liability and damages with statistical techniques that presume all class members are identical to the average observed in a sample, ignoring the differences among individual class members, and (2) when the class contains hundreds of members who were not injured and have no legal right to any damages.

Tyson and allies such as the U.S. Chamber of Commerce would like the Supreme Court to answer ‘no,’ so as to make it harder for cases to qualify as class/collective actions. They characterize the slew of actions against Tyson as class-action abuse, and probably interpret the fact that the court has taken the case as an encouraging sign. Arguments are scheduled for the fall term.


Peter Vickery is an employment-law attorney in Amherst; (413) 549-9933.

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