The U.S. Supreme Court ruled in late March that plaintiffs may use statistical estimates to establish the commonality of their injury, a prerequisite to a court granting the plaintiffs the right to proceed as a class action. The 6-2 ruling is an important victory for all plaintiffs who rely on statistical samples to prove liability and damages. Justice Anthony Kennedy wrote the opinion for the Court, joined by Justices Ginsburg, Breyer, Kagan, Sotomayor and Chief Justice Roberts.

In Tyson Foods, Inc. v. Bouaphakeo, workers at a Tyson pork processing plant in Iowa sued the company under the Fair Labor Standards Act and Iowa employment law for failing to pay overtime for work beyond 40 hours per week. The employees worked in the plant’s cut, kill and trim departments were hogs were slaughtered, trimmed and prepared for shipment. As the work was dangerous, the employees were required to wear protective gear. That process is referred to as “donning and doffing.”

Prior to 2007, Tyson included four minutes each day in each employee’s time on the clock for purposes of calculating their hourly pay, and whether any were owed overtime. Tyson called this K-time. In 2007, Tyson stopped compensating employees for K-time. Instead, Tyson started paying some plant workers for four to eight minutes of donning and doffing each day and stopped paying the remaining employees for any time associated with the protective gear. Tyson also stopped maintaining any records on how long it took plant worker to don and doff the gear.

The Fair Labor Standards Act requires that employees be paid for one-and-a-half times their hourly wage for all work beyond 40 hours per week. “Work” is defined as all activities that are “integral and indispensable” to the job. The Tyson plant workers claimed that donning and doffing the protective gear was “integral and indispensable” to their jobs.

The district court permitted the plaintiffs to proceed as a class action after finding that common questions of fact predominated over any differences among employees in the protective gear they wore and how long it took them to put on and take off the gear. At trial, the parties agreed that employees should be compensated for time donning and doffing gear to prevent knife cuts. The jury was asked to decide whether employees should be compensated for putting on and taking off other gear; for doing so during meal breaks; and the total amount of time spent “working” that was not compensated.

Because Tyson didn’t maintain records on how long it took employees to don and doff the gear, plaintiffs presented employee testimony, videos of the donning and doffing process, and the testimony of two expert witnesses. One expert watched nearly 750 videotapes of the employees putting on a taking off the gear and estimated that employees in the cut and retrim departments averaged 18 minutes a day, while workers in the kill department averaged 21.25 minutes per day. The other expert used Tyson’s records of time spent by employees killing, cutting, and retrimming to estimate the amount of time each employee went uncompensated for overtime–i.e., the amount of time worked over 40 hours each week.

The jury found in favor of the employees and awarded them $2.9 million in damages for unpaid overtime.

At the Supreme Court, Tyson argued that the employees’ reliance on the expert who estimated the time to don and doff the protective gear absolved each employee from proving that he or she worked more than 40 hours per week, and thus suffered an injury under the Fair Labor Standards Act. Tyson, along with business groups who filed friend of the court briefs, argued that the Court should establish a bright-line rule forbidding such statistical evidence to prove commonality of class-wide questions of fact, liability and damages.

But the Supreme Court rejected that plea. Writing for the majority, Justice Kennedy noted:

A representative or statistical sample, like all evidence, is a means to establish or defend against liability. It’s permissibility depends not on the form a proceeding takes–be it a class or individual action–but on the degree to which the evidence is reliable in proving or disproving the elements of the cause of action.

The Court rejected Tyson’s effort to read expansively into the 2011 decision in Wal-Mart Stores, Inc. v. Duke, in which the Court held that women employees at Wal-Mart who were subject to different pay and promotion policies could not use sampling to prove a commonality of facts in order to gain class action status. Justice Antonin Scalia, who died in February, wrote the majority decision in Wal-Mart, in which he excoriated the idea of “trial by formula.”  “In many cases,” Justice Kennedy said in Tyson, “a representative sample is the only practicable means to collect and present relevant data’” to prove that defendant was legally at fault. 

The Court did express some concerns about how the $2.9 million damages award would be apportioned among the plaintiffs, and cautioned against a process that resulted in employees being compensated even if they didn’t work overtime.

The importance of the Court’s opinion cannot be overstated, and not just for employees pursuing claims for overtime pay under the FLSA and similar state laws. The Wal-Mart decision had raised significant concerns among attorneys representing plaintiffs in all sorts of class actions. The Supreme Court’s general endorsement of statistical samples as an appropriate way to prove liability and damages will put many of those concerns to rest.

The Tyson decision may also be helpful for non-class action cases where statistical or representative evidence is used.

For example, there is a growing trend of using statistical evidence to establish a claim under the False Claims Act. The False Claims Act is a powerful anti-fraud federal law. It works by empowering individuals to stand in the shoes of the U.S. government and sue a person or entity that knowingly defrauds the United States out of money. These individuals, often called whistleblowers, file what is known as a civil qui tam action, in which they act as “relators” and pursue a fraud claim on behalf of the U.S. against the private company.

In a False Claims Act case filed in federal court in Tennessee, U.S. ex rel. Martin v. Life Care Centers of America Inc., the federal government (after intervening in the whistleblower’s case) claimed that a chain of skilled nursing facilities submitted false claims to Medicare for medically unnecessary services. Because there more than 150,000 potential false claims at issue, the government sought to establish liability through analysis of a sample of submitted claims. The defendant objected, but the court overruled those objections, and allowed the government to proceed in the case using a statistical sample of 400 patients to extrapolate about the 150,000.

A federal district court in Florida made a similar decision in another False Claims Act case charging a string of nursing care facilities with Medicare fraud. U.S. ex rel Ruckh v. Genoa Healthcare LLC. But a federal judge in South Carolina took the opposite position, and denied whistleblowers’ efforts to obtain statistical samples of Medicare payments in order to prove liability or damages in a False Claims Act case. U.S. ex rel. Michaels et al. v. Agape Senior Community, Inc.  That decision is now on appeal to the U.S. Court of Appeals for the Fourth Circuit. The parties will now undoubtedly argue to the Fourth Circuit about how it should apply the Supreme Court’s decision in Tyson to the dispute.