By Anne Marie Sferra, a Partner, and Kara H. Herrnstein, an Associate, with Bricker & Eckler LLP in the firm’s Columbus, OH office.
The US Supreme Court has made it clear that plaintiffs must show class-wide injuries to certify a Rule 23 class action and, more recently, a collective action under the Fair Labor Standards Act (FLSA). It is not enough to employ a “trial by formula” model—extrapolating the injuries of a few class members to the rest of the class.
In Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), the Court reasoned that backpay was an “individualized monetary claim” that could not be certified under Rule 23(b)(2) based on the plaintiffs’ proposed statistical model. In Comcast Corp. v. Behrend, 133 S. Ct. 1426 (2013), the Court held that, if a plaintiff could not establish that a damages model could be fairly applied across the entire class, such class could not satisfy the Rule 23(b)(3) predominance requirement, which mandates class-action proponents demonstrate that issues in class actions are applicable to the class as a whole and predominate over issues subject only to individualized proof. Id. at 1433. The Court limited its analysis to Rule 23, so FLSA collective actions were waiting on the sidelines.
More recently, in Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (2016), the Court clarified that FLSA collective actions should be considered under Wal-Mart and Comcast and affirmed the certification of a collective action alleging that employees were not compensated for overtime hours spent donning and doffing protective equipment. In doing so, the Court accepted “representative evidence” of the class-wide injury. First, the plaintiffs showed that class members spent 18-21 minutes a day donning and doffing. The plaintiffs then reviewed time sheets to determine which employees would have been eligible for overtime pay using the average donning-and-doffing time. Based on this evidence and statistical modeling, the Court upheld certification. The Court made clear that it was not condoning a trial-by-formula model in FLSA cases but was adopting an exacting standard. In this regard, a key question will be whether “each class member could have relied on [the representative evidence] to establish liability if he or she had brought an individual action” for uncompensated hours.
Under this standard, a special rule applicable to FLSA claims saved the class. In Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687-88 (1946), the Court held that when an employer failed to keep proper time records, the employee need only produce “sufficient evidence to show the amount and extent of [uncompensated] work as a matter of just and reasonable inference.” The Tyson Foods plaintiffs met their burden because the statistical model could have been used to create a “reasonable inference” of each class member’s uncompensated hours. Many FLSA classes will not be able to surmount this hurdle. The Court explained that “[w]hether a representative sample may be used to establish class-wide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.” The Court squared the case with Wal-Mart:
[T]he study here could have been sufficient to sustain a jury finding as to hours worked if it were introduced in each employee’s individual action. While the experiences of the employees in Wal-Mart bore little relationship to one another, in this case each employee worked in the same facility, did similar work, and was paid under the same policy. … [U]nder these circumstances the experiences of a subset of employees can be probative as to the experiences of all of them.
Id. at 1048. Now in the FLSA context, this explanation reinforces the case-specific inquiry for representative evidence in Rule 23 cases. After a turbulent history with Wal-Mart and Comcast,1the US Court of Appeals for the Sixth Circuit now must apply Tyson Foods.
In Monroe v. FTS USA, LLC, 815 F.3d 1000 (6th Cir. 2016), the Sixth Circuit affirmed the certification of an FLSA collective action based on representative evidence that the defendant “implemented a company-wide time-shaving scheme that required employees to systematically underreport their hours.” Id. at 1020. The evidence included “testimony from 17 representative technicians [out of 239 class members] and six managers and supervisors.” Ibid. Plaintiffs used an “estimated-average approach to calculate damages for the nontestifying technicians.” The Sixth Circuit concluded that “preventing similarly situated employees from proceeding collectively based on representative evidence would render impotent the collective-action framework.” Id. at 1019.
Judge Sutton noted in dissent that “the only way in which representative proof of liability—evidence by some claimants to prove liability for all—makes any sense is if the theory of liability of the testifying plaintiffs mirrors (or is at least substantially similar to) the theory of liability of the non-testifying plaintiffs.” Id. at 1024. He explained why there were too many unexplored variables to establish liability.
Within a month of Monroe, the Supreme Court released Tyson Foods. The Supreme Court then granted certiorari over Monroe, vacated the judgment, and remanded “for further consideration in light of [Tyson Foods].”2 How will the Sixth Circuit apply Tyson Foods? Luckily it has a ready model. As Judge Sutton suggested in his dissent in Monroe, “[t]he Seventh Circuit recently explained how all of this should work in its unanimous opinion in Espenscheid v. DirectSat USA, LLC, 705 F.3d 770 (2013).” Monroe, 815 F.3d at 1026.
In Espenscheid, which predated Tyson Foods but applies the same case-specific mandate, the Seventh Circuit denied certification of an FLSA collective action strikingly similar to the one in Monroe. The court declined to use representative evidence, focusing on the “complication presented by a worker who underreported his time … under pressure by [the defendant]” (which would have violated FLSA) and the worker who did so “because he wanted to impress the company with his efficiency” (which would not have violated FLSA). Epenscheid, 705 F.3d at 774. Without individualized inquiries, there was no way to distinguish between class members who had experienced “benign underreporting” from those who suffered from “unlawful conduct.” Ibid.
The Seventh Circuit “also worried that, because each employee did not perform the same tasks, they were not sufficiently similar to permit a class-wide determination of liability or damages …,” “that the plaintiffs’ plan to use ‘representative’ proof with their hand-picked employees would not work because the various theories of liability made it impossible to have representative employees in a single class,” and “that the experience of a small, unrepresentative sample of testifying workers could not support an inference about the work time of the remaining plaintiffs.” Monroe, 815 F.3d at 1026 (internal quotations omitted).
Tyson Foods directed courts to consider similar concerns before relying on representative evidence, and those same concerns are present in Monroe. While some Monroe class members may have been pressured to underreport their time, others may have been encouraged to work more efficiently, and still others may have underreported for a different reason. Thus, evidence from 17 workers says nothing about liability or damages as to the rest. Further, unlike the relatively uniform amount of uncompensated time that the Tyson Foods plaintiffs experienced, there is no indication that the Monroe plaintiffs’ allegedly unpaid periods are so consistent.
On remand, the Sixth Circuit should take heed of the Supreme Court’s repeated guidance and more carefully consider these distinctions.
Notes
- See, e.g., In re Whirlpool Corp. Front-Loading Washer Prods. Liab. Litig. II, 722 F.3d 838 (6th Cir. 2013).
- FTS USA, LLC v. Monroe, 137 S. Ct. 590 (2016).