Class Actions After Tyson Foods Disputing or Leveraging Statistical - - PowerPoint PPT Presentation

Statistical Evidence in Employment Class Actions After Tyson Foods

Disputing or Leveraging Statistical Evidence in Complex Wage and Hour Litigation

Today’s faculty features:

1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

The audio portion of the conference may be accessed via the telephone or by using your computer's

• speakers. Please refer to the instructions emailed to registrants for additional information. If you

have any questions, please contact Customer Service at 1-800-926-7926 ext. 10.

WEDNESDAY, JUNE 8, 2016

Presenting a live 90-minute webinar with interactive Q&A Bradley J. Hamburger , Esq., Gibson Dunn & Crutcher, Los Angeles Christine E. Webber, Partner, Cohen Milstein Sellers & Toll, Washington, D.C.

Tips for Optimal Quality

Sound Quality If you are listening via your computer speakers, please note that the quality

• f your sound will vary depending on the speed and quality of your internet

connection. If the sound quality is not satisfactory, you may listen via the phone: dial 1-866-370-2805 and enter your PIN when prompted. Otherwise, please send us a chat or e-mail sound@straffordpub.com immediately so we can address the problem. If you dialed in and have any difficulties during the call, press *0 for assistance. Viewing Quality To maximize your screen, press the F11 key on your keyboard. To exit full screen, press the F11 key again.

FOR LIVE EVENT ONLY

Continuing Education Credits

In order for us to process your continuing education credit, you must confirm your participation in this webinar by completing and submitting the Attendance Affirmation/Evaluation after the webinar. A link to the Attendance Affirmation/Evaluation will be in the thank you email that you will receive immediately following the program. For additional information about continuing education, call us at 1-800-926-7926

• ext. 35.

FOR LIVE EVENT ONLY

STATISTICS IN WAGE AND HOUR CLASS ACTIONS

Christine E. Webber

cwebber@cohenmilstein.com

Statistics in Wage & Hour Class & Collective Actions

 Statistics used for sampling discovery  Statistics used to show common question exists for class

cert

 Statistics used to show answer to common question for

liability

 Statistics used to show damages

5

Representative & Statistical Evidence

 FLSA "collective actions" as well as cases prosecuted

by the DOL traditionally relied upon "representative evidence"

 While some representative evidence might be

statistical, that was not required for evidence to be accepted and applied to class as whole

 It is only recently that some courts have been

applying standards for statistical analysis to the use

• f representative testimony, but even so, it is by no

means universal

6

Common Statistical Issues

 Random sampling  Descriptive statistics  Time Studies  Damages  Tyson v. Bouaphakeo

7

Random Sampling in Discovery

 With opt-in class cases, courts will typically limit discovery to a fraction of

the total class

 Parties have jointly agreed to random selection. See, e.g., Scott v. Chipotle

Mexican Grill, Inc., --- F.R.D. ---, 2014 WL 2600034 (S.D.N.Y. June 6, 2014) (Permitting discovery of 10% of opt-ins, 50% chosen by defendant, 25% chosen by plaintiff, and 25% chosen randomly).

 “Although there is no “bright line formulation” or “percentage threshold” for determining

the adequacy of representational evidence, “it is well-established that the [plaintiff] may present the testimony of a representative sample of employees as part of his proof of the prima facie case under the FLSA.”

 Courts have also ordered random selection over defendant’s objections.

See, e.g., Helmert v. Butterball, LLC, 2010 U.S. Dist. LEXIS 143134 (E.D. Ark.

• Nov. 5, 2010); Scott v. Bimbo Bakeries, USA, Inc., No. 10-3145 (E.D. Pa.
• Dec. 11, 2012) (written discovery of 10% of opt ins and 20 depositions

from a representative sample of 650 opt-ins).

8

Random Sampling in Discovery

 Courts are often persuaded by statistical principles in choosing random

selection as method of deciding who would respond to discovery.

 Nelson v. American Standard, Inc., 2009 WL 4730166 at *3 (E.D. Tex. 2009) (limiting

discovery to 84 selected at random from 1,328 individuals who opted into action)

 “[T]he fundamental precept of statistics and sampling is that meaningful differences

among class members can be determined from a sampling of individuals,” and thus if decertification is appropriate, it will be revealed with discovery of a random sample of individuals.”

 But not all samples have to be “statistically significant” so long as they are

“representative.”

 Craig v. Rite Aid Corp., 4:08-CV-2317, 2011 WL 9686065 (M.D. Pa. Feb. 7, 2011)

(ordering 50 randomly selected opt-ins (out of 1000) respond to discovery and refusing to use Defendant’s experts proposed stratified sample)

 “We are also unpersuaded by Defendants' argument regarding their proposal for

deriving a statistically significant sampling, developed by Defendants' own expert, in

• rder to fairly conduct representative discovery of the Opt-ins.”

9

Descriptive Statistics



Can describe prevalence of a violation that can be objectively measured, i.e. “33%

• f shifts over six hours show no meal/rest period” – that was accepted as sufficient

to certify meal/rest break claim in Brewer v. GNC, 2014 WL 5877695 (N.D. Cal. 2014)



Can be used to measure opportunities for violations – i.e. showing a substantial number of shifts exceeded 10 hours (and thus requiring second meal period) combined with testimony from employees that they missed meal periods – Cervantez

• v. Ceestica, 253 F.R.D. 562 (C.D. Cal. 2008)



Can be used by Defendant to show lack of policy – i.e. showing 70% of employees report OT at least some workweeks to establish there was no overwhelming pressure not to report OT. Espenscheid v. DirectSat, 2011 WL 10069108 (W.D.

• Wis. 2011)



Can be examined as to the similarity or difference of different locations/departments/etc, for example the average time spent on pre-shift activity in different departments – Reed v. County of Orange, 266 F.R.D. 446 (C.D. Cal 2010)

10

Descriptive Statistics

 Descriptive statistics may be based on the entire universe of data, or

• n a sample

 If based on a sample, courts frequently require that be a random

sample, though with varying degrees of rigor on how “random” is determined

 See, e.g. Camesi v. Univ. of Pittsburgh Med. Ctr., No. CIV.A. 09-85J,

2011 WL 6372873, at *11 (W.D. Pa. Dec. 20, 2011) (striking report of defendant’s expert because the sample was not random, citing R. Paetzold and S. Willborn, The Statistics of Discrimination § 2:6 (2011) (“statistical inference is used ... to generalize from a sample to a population,” and “[i]nferential statistical procedures [require] that the sample” be “randomly drawn from ... the larger population”))

11

Time Studies

 Perez v. Mountaire Farms, Inc., 610 F. Supp. 2d 499, 523-24 (D. Md. 2009)

aff'd in part, vacated in part, 650 F.3d 350 (4th Cir. 2011):

 Dr. Radwin had a truly random sampling of participants going about their

normal work day. Dr. Radwin had four videographers stationed near plant entrances simultaneously videotape employees picked by a random number

• generator. Videotapes were made during the various times of day and night

when each shift performed donning and doffing activities and at the different locations throughout the plant where donning and doffing activities took place. The study included employees working in all shifts. . . . Although there was a difference between the proportion of employees on the actual payroll and employees sampled in the Debone and First Processing departments, these differences were not statistically significant.

 Once again there is concern about the randomness of the sample 12

Damages

 Historically, damages in FLSA cases could be

awarded to non-testifying class members based on representative testimony. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 687 (1946)

 If employer failed to keep records, employees

could recover upon showing “the amount and extent

• f that work as a matter of just and reasonable

inference.” Id.

13

Damages

 Same principle applied in using statistical evidence,

such as time studies. Perez v. Mountaire Farms, 610 F. Supp 2d 499 (D. Md. 2009), aff’d in part 650 F.3d 350 (4th Cir. 2011)

14

Jimenez v. Allstate

 Supreme Court denied cert in Jimenez v. Allstate Ins.

Co., 765 F.3d 1161 (9th Cir. 2014).

 The Ninth Circuit approved the district court’s decision to

certify a wage and hour class, bifurcating between liability and damages, relying on statistical evidence for the liability phase.

 The Ninth Circuit noted that the separate damages

phase would permit the defendant to litigate individual issues, since the district court had rejected the use of sampling and representative evidence for the damages

• phase. (But see Tyson)

15

Tyson v. Bouaphakeo, 136 S. Ct. 1036

 Donning and doffing claims brought on behalf of

collective action under FLSA as well as Rule 23 class under state law.

 Employer did not keep records of donning/doffing

time

 Plaintiffs had expert conduct time study –

videotaping a random selection of employees – to determine the amount of time at issue

16

Tyson v. Bouaphakeo, 136 S. Ct. 1036

 Supreme Court ruled 6-2 that plaintiffs could use

representative statistical evidence by an expert to prove individual hours worked “to fill an evidentiary gap created by the employer’s failure to keep adequate records.” Id. at 1039

 Statistical evidence may be used for both liability

and damages. Id. at 1046 (Jiminez was more restrictive than SCT required)

17

Tyson v. Bouaphakeo, 136 S. Ct. 1036

 In finding that the use of a sample was an

appropriate method of proving classwide liability, the Supreme Court noted that “one way” to establish the sample was permissible was “by showing that each class member could have relied

• n that sample to establish liability if he or she had

brought an individual action.” Id. at 1046-47.

18

Tyson v. Bouaphakeo, 136 S. Ct. 1036

 “Representative evidence that is statistically

inadequate or based on implausible assumptions could not lead to a fair or accurate estimate of the uncompensated hours an employee has worked. Petitioner, however, did not raise a challenge to respondents’ experts’ methodology under Daubert.”

 Id. at 1048-49

19

Tyson v. Bouaphakeo, 136 S. Ct. 1036

 “Whether a representative sample may be used to

establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action. In FLSA actions, inferring the hours an employee has worked from a study such as Mericle's has been permitted by the Court so long as the study is otherwise

• admissible. Mt. Clemens, supra, at 687, 66 S. Ct.

1187; see also Fed. Rules Evid. 402 and 702.” Id. at 1049

20

Statistical Ev Evidence in Employment Class Actions After Tyson Foods

Br Bradley J. . Ha Hamburger

bha bhamburger@gib ibson

• ndunn.com

Jun June 8, 2016

22

Defense Strategie ies for Attackin ing Statis istical l Evid idence

• Challenge the Use of “Trial By Formula”

– Attack sampling, averaging, and extrapolation as a violation

• f the Rules Enabling Act and due process.

– Impact of Tyson Foods, Inc. v. Bouaphakeo (2016)

• Focus on whether sampling would be permitted in an

individual action under the governing substantive law.

• Chall

allenges to

• Expert Testimony an

and Meth thodologie ies – Engage in “rigorous analysis” of expert testimony.

• Comcast Corp. v. Behrend (2013)
• Lo

Lookin ing Ahead – Courts begin to apply Tyson Foods.

23

Dukes on “Trial by Formula”

• Rule 23(b)(2) class consisting of all of Wal-Mart’s

female employees—1.5 million class members across the nation.

• Plaintiffs sought backpay under Title VII as monetary

relief “incidental” to the injunction. – Whether monetary relief was “incidental” hinged

• n avoiding individualized proceedings.
• Proposal to replace individual Teamsters hearings

with sampling and extrapolation.

24

Dukes on “Trial by Formula”

The pla lan: “A sample set of the class members would be selected, as to whom liability for sex discrimination and the backpay owing as a result would be determined in depositions supervised by a master.” “The percentage of claims determined to be valid would then be applied to the entire remaining class, and the number of (presumptively) valid claims thus derived would be multiplied by the average backpay award in the sample set to arrive at the entire class recovery— without further individualized proceedings.”

Wal-Mart St Stor

• res, Inc

Inc. . v. . Duk Dukes, , 131 131 S.

• S. Ct.
• Ct. 2541,

2541, 2561 2561 (2011 (2011)

25

Dukes on “Trial by Formula”

• Th

The Su Supreme Co Court rt unanim imously ly rejec jects ts th the proposal l to repla lace ind indiv ivid iduali lized proceedin ings with ith sa sampli ling, averagin ing, g, and extr xtrapola latio ion.

– “We disapprove that novel project.” – The Rules Enabling Act “forbids interpreting Rule 23” to allow certification of a class “on the premise that Wal-Mart will not be entitled to litigate its statutory defenses to individual claims.”

Wal-Mart St Stor

• res, Inc.
• Inc. v.

. Duk Dukes, , 131 131 S.

• S. Ct.
• Ct. 254

2541, 1, 256 2561 1 (2011 (2011)

26

“Trial by Formula” Revisited – Tyson Foods

• Small Rule 23(b)(3) class and FLSA collective action

limited to a single pork processing plant.

• Claims based on allegation that Tyson Foods failed to

pay sufficient overtime for time spent donning and doffing protective gear.

• Plaintiffs relied on an expert’s average based on 744
• bservations of donning and doffing.

– Another expert combined this average with payroll records to generate an aggregate damages award.

27

“Trial by Formula” Revisited – Tyson Foods

• The Supreme Court declines to “announce a broad

rule” regarding the use of statistical sampling:

– “A categorical exclusion . . . would make little sense.” – “Whether and when statistical evidence can be used to establish classwide liability will depend on the purpose for which the evidence is being introduced and on the elements of the underlying cause of action.”

Tyso son Food

• ods,

s, Inc.

• Inc. v.
• v. Bou

Bouaph aphakeo, , 136 136 S.

• S. Ct.
• Ct. 103

1036, 6, 104 1046 6 (2016 (2016)

28

“Trial by Formula” Revisited – Tyson Foods

“The Court reiterates that, while petitioner, respondents,

• r their respective amici may urge adoption of

broad and categorical rules governing the use of representative and statistical evidence in class actions, this case provides no occasion to do so.” “Whether a representative sample may be used to establish classwide liability will depend on the purpose for which the sample is being introduced and on the underlying cause of action.” Tyso

yson Foods

• ods, Inc

Inc. . v.

• v. Bouaph

Bouaphakeo, , 136 136 S.

• S. Ct.
• Ct. 1036,

1036, 1049 1049 (2016 (2016)

29

The Tyson Foods Framework

• Th

The Rules les Enabli ling Act t requir ires an asse ssessment of f what would ld be perm rmis issib ible le in in an ind indiv ivid idual l actio tion. – “In a case where representative evidence is relevant in proving a plaintiff’s individual claim, that evidence cannot be deemed improper merely because the claim is brought on behalf of a class.” – “To so hold would ignore the Rules Enabling Act’s pellucid instruction that use of the class device cannot ‘abridge ... any substantive right.’” Tys

yson Foods

• ods,

, Inc Inc. . v. . Bouap Bouaphakeo, 136 136 S.

• S. Ct.
• Ct. 1036,

1036, 1046 1046 (2016 (2016)

30

The Tyson Foods Framework

“If the sample could have sustained a reasonable jury finding as to hours worked in each employee’s in indiv ividual l actio ion, that sample is a permissible means of establishing the employees’ hours worked in a cla lass actio ion.”

Tyso

yson Foods

• ods, Inc

Inc. . v.

• v. Bouaph

Bouaphakeo, , 136 136 S.

• S. Ct.
• Ct. 1036,

1036, 1047 1047 (2016 (2016)

31

Im Importance of Anderson v.

• v. Mt.

. Cle lemens

• Why was

s sa sampli ling all llowed in in Tyso yson Foods? Be Because

• f

f th the su substantiv ive ru rule le adopted for r FLS LSA claim laims in in Mt. t. Cle lemens. – “This Court’s decision in Anderson v. Mt. Clemens explains why Mericle’s sample was permissible in the circumstances of this case.” – Mt. Clemens rule applies where “employers violate their statutory duty to keep proper records, and employees thereby have no way to establish the time spent doing uncompensated work.” Tyso

yson Foods

• ods, Inc

Inc. . v. . Bouaph Bouaphakeo, , 136 136 S.

• S. Ct.
• Ct. 1036,

1036, 1047 1047 (2016 (2016)

32

Tyson Foods on Dukes

• “Since the Court held that the employees were not similarly

situated, none of them could have prevailed in an ind indiv ivid idual l su suit it by relying on depositions detailing the ways in which other employees were discriminated against by their particular store managers.”

• “By extension, if the employees had brought 1½ million ind

indiv ivid idual l su suit its, there would be little or no role for representative evidence.”

• “Permitting the use of that sample in a class action, therefore,

would have violated the Rules Enabling Act by giving plaintiffs and defendants different rights in a class proceeding than they could have asserted in an ind indiv ividual ac acti tion.”

Tyso

yson Foods

• ods, Inc

Inc. . v. . Bouaph Bouaphakeo, , 136 136 S.

• S. Ct.
• Ct. 1036,

1036, 1048 1048 (2016 (2016)

33

• Dukes and Tyso

yson focuse sed on th the federal l Rules les Enabli ling Act t and did id not t address due process.

• Bu

But t sa sampli ling, averagin ing, and extr xtrapola latio ion can also lso violate a class action defendant’s right to due process.

– “Due process requires that there be an opportunity to present every available defense.”

Li Lind ndsey v. . Norm

• rmet, 405

405 U.S. .S. 56, 56, 66 66 (197 (1972)

– “[F]undamental requisite of due process of law is the

• pportunity to be heard.’”

Mulla

ullane v. . Cen

• Cent. Han

HanoverBank & Tr. . Co. Co., , 339 339 U.S. .S. 306, 306, 314 314 (1950 (1950)

Due Process and State Court Cla lass Actio ions

34

• Duran v.

. U.S. Bank Nat’l Ass’n (C (Cal.

• l. 2014)

– California Supreme Court overturns verdict in misclassification case that was based on sampling and extrapolation. – Recognizes defendants’ due process right to raise defenses beyond a sample group.

• The “decision to extrapolate classwide liability from a

small sample, and its refusal to permit any inquiries or evidence” regarding class members “outside the sample group, deprived [the defendant] of the ability to litigate its exemption defense.” 59 Cal.4th 1, 35 (2014).

Due Process and State Court Cla lass Actio ions

35

• Duran v.

. U.S. Bank Nat’l Ass’n (C (Cal.

• l. 2014)

– “Under Code of Civil Procedure section 382, just as under the federal rules, ‘a class cannot be certified on the premise that [the defendant] will not be entitled to litigate its statutory defenses to individual claims.’”

59 Cal.4th at 35 (quoting Dukes, 131 S. Ct. at 2561)

– “These principles derive from both class action rules and principles of due process.”

59 Cal.4th at 35 (citing Lindsey, 405 U.S. at 66)

Due Process and State Court Cla lass Actio ions

36

• Does Daubert apply

ly at t th the clas lass cert rtific ificatio ion stage?

– “The district court concluded that Daubert did not apply to expert testimony at the certification stage of class-action proceedings. We doubt that is so . . . .”

Dukes, 131 S. Ct. at 2553-54

– In Comcast Corp. v. Behrend, the Court granted review

• n this issue, but did not reach it.

133 S. Ct. 1426, 1431 n.4 (2013)

– Tyson Foods shows the importance of preserving Daubert challenges to sampling experts.

Ch Chall llenges to Exp xpert Testim imony and Meth thodolo logie ies

37

• Even if

if Daubert does s not t apply ly, defendants can still till chall llenge exp xpert testi timony at t clas lass cert rtific ificatio ion.

– Comcast makes clear that damages models cannot be “arbitrary” and must “measure only those damages attributable to [the] theory” plaintiffs have advanced.

133 S. Ct. at 1433.

– The Ninth Circuit has held that as part of the “rigorous analysis” required by Dukes, courts must “judg[e] the persuasiveness of the evidence presented,” including expert testimony.

Elli Ellis v. . Costco Whole lesale le Corp rp., 657 F.3 .3d 970 (20 (2011)

Ch Chall llenges to Exp xpert Testim imony and Meth thodolo logie ies

38

• Ca

Cali lifornia ia Su Supreme Co Court rt in in Duran provid vided sig signif ific icant guid idance regardin ing sa sampli ling meth thodolo logie ies. – “Even when statistical methods such as sampling are appropriate, due concern for the parties’ rights requires that they be employed with caution. Here, the process failed.”

• The sample size was too small.
• The sample was not random.
• Large margin of error.

59 Cal.4th at 37-48.

Ch Chall llenges to Exp xpert Testim imony and Meth thodolo logie ies

39

• Few decisions applying Tyson Foods so far.
• Important opportunity for both plaintiffs and

defendants to shape the law.

• Defendants should challenge the notion that Tyson

Foods is a blanket endorsement of the use of statistical sampling in class actions. – Emphasize how an individual action would be tried. – Contest whether Mt. Clemens applies.

How will ill courts apply ly Tyson Foods?