Supreme Court Upholds Class-Action Verdict For Tyson Foods Workers

Date: March 23, 2016

Justices Affirm Use Of Data To Estimate Damages In Class-Action Suits

In a closely-watched labor case that has broad implications for businesses across the US, on Tuesday the Supreme Court voted 6-2 to affirm a $5.8 million class-action verdict for a group of Tyson Foods meat packers in Iowa who said they should have been paid for time spent donning and removing safety gear. The Los Angeles Times called the decision a “setback to corporate America,” suggesting the court departed from its generally “skeptical” view of class-action claims in recent years. Business groups had been hopeful that the Supreme Court would use the appeal filed by Tyson “to further rein in” multiparty cases, the Times said. The Wall Street Journal, which also pointed out the support of business groups for Tyson Foods’ position in the case, Tyson Foods v. Bouaphakeo, explained that the court found that using statistical estimates to establish liability in class-action claims against businesses is acceptable. Because Tyson didn’t log its employees’ hours, the plaintiffs were free to use data in calculating the unpaid overtime and legal damages they sought, the court’s majority said. The New York Times quoted Justice Anthony Kennedy as writing in the majority opinion that the “permissibility” of a “representative or statistical sample” depends “on the degree to which the evidence is reliable in proving or disproving the elements of the relevant cause of action.” Dissenting were Justices Clarence Thomas and Samuel Alito, who argued that the Tyson case should have been decided in similar fashion to a 2011 action against Wal-Mart Stores in which the high court rejected data-based evidence from about 120 women alleging discrimination on behalf of 1.5 million employees. According to USA Today, Tuesday’s ruling gave the Tyson workers a “narrow victory” that “may prove to be fleeting.” The story explained that although Chief Justice John Roberts, along with the court’s four liberal members, concurred with Kennedy’s opinion, “he wrote separately with a warning” that unless the federal district court that tried the case can ascertain which Tyson employees worked over 40 hours a week and are thus entitled to some of the $5.8 million judgment, “that award cannot stand.”

What This Means For Small Businesses

This latest Supreme Court ruling sets a dangerous precedent that allows class-action suits against employers to be more easily created by estimating employee hours worked. The NFIB previously filed a brief in support of Tyson Foods in this case, with NFIB Small Business Legal Center Executive Director Karen Harned arguing, “Courts cannot rely on statistical models because they are, by definition, assumptions. There’s no justice in a system in which the injuries are theoretical but the penalties are real.”

Additional Reading

The AP also covered the story.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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