Supreme Court To Address Use of Statistics For Class Action Certification

|||Supreme Court To Address Use of Statistics For Class Action Certification

Supreme Court To Address Use of Statistics For Class Action Certification

June 2015

The April 2013 Supreme Court decision in Comcast Corp. v. Behrend, No. 11-864, was a profound change benefitting companies facing class action lawsuits.  The Court held that a plaintiff seeking certification must establish through “evidentiary proof” that damages can be measured on a class-wide basis.  Individual damage issues can defeat class certification where those issues cannot be resolved on a class-wide basis.  This tightens the requirements of some courts which have held that individual issues related to the amount of damages should not preclude class certification.

Since that time, trial courts, attorneys, and damage witness have struggled to determine the extent to which individual concerns over damages prevent class certification.  If held to the strictest standard, few classes could ever become certified.  For example:

  1. Based on price variances that must occur in a free economy, can a consumer class ever contain persons who have not paid exactly the same price for the product at issue?
  1. Based on differences in individual human genetics and personal human chemistries which cause slightly different reactions to a medical or food product, can such a class ever be certified?
  1. Based on personal motivations for desiring any particular product, can even a few persons with a different thought process on any subject or purchase prevent a class from being certified?

To attempt to address the Comcast damage requirements, most plaintiffs now endeavor to use statistics to show typical reactions, prices, etc.  But, in most cases, the mere fact that statistics measuring central tendency are used demonstrates that proposed class members are not all identical.

With this important background in mind, the U.S. Supreme Court has agreed to re-visit the use of statistics to demonstrate the commonality required for class certification.   In agreeing to review Tyson Foods, Inc. v. Bouaphakeo, a wage and hour class action case, the Court will address the use of statistical techniques that presume all class members are similar and whether a class can include individuals who were not injured.

Federal Rules of Civil Procedure 23 requires that “questions of law or fact common to class members predominate over any questions affecting only individual members.” The Tyson case involves employee plaintiffs who allege they were not properly compensated for time spent donning and doffing personal protective equipment and walking to and from their work stations.

“To calculate the employees’ compensable working time, Tyson measures “gang time” — when the employees are at their working stations and the production line is moving. The employees claim Tyson failed to provide FLSA overtime compensation for donning (putting on) personal protective equipment (PPE) and clothing before production and again after lunch, and for doffing (taking off) PPE and clothing before lunch and again after production. The PPE and clothing worn by individual employees vary depending on their role in the process. Tyson classifies items of PPE and clothing as either “unique” or “non-unique” to the meat-processing industry…. The employees also seek compensation for transporting the items from lockers to the production floor. 

In addition to “gang time,” Tyson adds “K-code” time to each employee’s paycheck. Before 2007, Tyson paid four minutes of K-code time per day to each [employee in a department where knives were used] in order to compensate for the donning and doffing of unique items. From [February] 2007 to [June] 2010, Tyson added [several minutes] per day for pre-and post-shift walking time required of the employee…. Tyson does not record the actual time that employees perform any of these tasks.”

The employees alleged that Tyson’s K-code time was insufficient to cover compensable pre- and post-production line activities, violating the Fair Labor Standards Act of 1938 (“FLSA”) and the Iowa Wage Payment Collection Law (“IWPCL”).  The district court certified the class based on the common question of whether these activities were compensable work, despite acknowledged differences in the time an individual employee spent, and with some employees spending no uncompensated time.  The trial court allowed plaintiff’s expert to demonstrate liability and damages based on statistical models which provided an average employee experience.  The expert’s analysis involved individual timesheets, along with average donning, doffing, and walking times calculated from 744 employee observations. The jury found for the plaintiff class and awarded a $5.8 million judgment.

On appeal, the Eighth Circuit affirmed the verdict, but with internal dissention on the grounds that (i) individualized differences among class members would indicate claims could not be proven “in one stroke” and (ii) the hundreds of uninjured employees made certification inappropriate.  The Supreme Court’s decision to review and possibly ultimately side with this dissenting view has the potential to have a huge impact on the future of all class action claims.

Statistical sampling and related inferential statistics can create an estimate of damage with precise error rates and confidence levels.  Removing this tool will seriously erode the ability of many groups of similarly situated individuals to achieve class certification and calculate damages.

Fulcrum Inquiry performs statistical analyses in litigation.

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