Posts belonging to Category Judgments

Representative “Averages” Permitted Where Employer Fails To Keep Records of Time Worked Following Tyson

On March 22, 2016, the Supreme Court affirmed a district court’s class certification decision following the $2.9 million judgment against Tyson Foods. Tyson Foods, Inc. v. Bouaphakeo, No. 14-1146 (U.S. Sup. Ct. March 22, 2016) (slip op. available here) (previously covered on the ILJ here). Tyson had been sued under the Fair Labor Standards Act of 1938 (FLSA) for failing to pay workers at a pork processing plant for time spent donning and doffing protective gear required for their jobs. Following certification as a collective action under 29 U.S.C. §216 and as a class action under Rule 23 of the Federal Rules of Civil Procedure, the jury awarded $2.9 million to the class. Tyson appealed to the 8th Circuit Court of Appeals and lost; Tyson filed a cert petition in the Supreme Court, which was granted.

In the Supreme Court, Tyson argued that the class action judgment should be reversed because the case should not have been certified. It also argued that judgment should be reversed because the plaintiffs identified no distribution mechanism that would not improperly compensate those class members who were not entitled to payment because they did not work more than 40 hours per week. The Supreme Court rejected Tyson’s bid to overturn the certification order and remanded to the district court for a determination of how the proceeds would be disbursed.

The plaintiffs’ problem, which they ultimately overcame, related to off-the-clock nature of the claims: Tyson’s time records did not demonstrate the amount of time necessary to don and doff the protective gear. Slip op. at 5. To prove damages, the Tyson plaintiffs retained Dr. Kenneth Mericle, an industrial relations expert, to conduct an observational study, which included 744 videotaped observations demonstrating that the average donning and doffing time was 18 minutes a day for employees in the cut and retrim department and 21.23 minutes per day for the kill department. A second expert, Dr. Liesl Fox, analyzed time records to identify whether or not the average donning and doffing time would result in more than 40 hours/week and by how much. Dr. Fox’s opinion was that there was $6.7 million in aggregate, uncompensated overtime. Slip op. at 7.

Tyson argued against the plaintiffs’ methods of using average donning and doffing times, since individual employees could have spent less (or more) time, and suggested a categorical rejection of using statistical evidence to approximate damages in such cases. Slip op. at 9. However, the Supreme Court rejected Tyson’s categorical argument, finding that such evidence has been used historically and often provides “the only practicable means to collect and present relevant data.” Id. at 10 (internal citations omitted). Critically, the Supreme Court relied on Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946), which held that, where an employer does not maintain records of uncompensated time worked, the employee’s “just and reasonable inference” of the time worked would be accepted, with the burden then shifting to the employer to show either the actual time worked or negate the reasonableness of the inference. Slip op. at 11-12. In Tyson, as in Anderson, there were not sufficient records for the employees to rely on to establish the amount of time spent donning and doffing. Thus, “[i]n 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 [under Fed. Rules Evid. 402 and 702].” Id. at 15.

Tyson also argued that there was no way to apportion damages, especially where the jury ultimately rejected the plaintiffs’ damages estimates, ultimately awarding a number less than half of what Dr. Fox found. Slip op. at 16. Thus, the defendant argued, there was no way to determine which class members the jury was considering when it awarded damages. The Supreme Court ultimately remanded this issue to the district court for a determination of how to separate out of the jury’s aggregate damages the individual award payments to uninjured class members, allowing Tyson to raise the same argument before the district court.

Thus, the Court affirmed, holding that plaintiffs may use statistical evidence to demonstrate class certification under Rule 23 and to prove classwide liability.

Authored by: 
Matthew Theriault, Partner

Jury Returns Record $240 Million Disability Verdict in EEOC Suit

Responding to allegations that Henry’s Turkey (an Iowa-based subsidiary of Hill County Farms) subjected a class of intellectually disabled workers to verbal abuse and deprivation of rights, the United States Equal Employment Opportunity Commission (EEOC) brought suit for discrimination against the turkey processor in 2011 (read the complaint here). The EEOC lawsuit was brought under the Americans with Disabilities Act (ADA), which prohibits discrimination against disabled employees in wages and workplace conditions, and bars disability-based harassment.

This case has now yielded a $240 million jury verdict, the largest in EEOC’s history according to the agency. The jury found that Henry’s Turkey had subjected the 32 plaintiffs to severe abuse and discrimination, and awarded the former employees, who earned a meager $65 per month working at Henry’s, $5.5 million each in compensatory damages and $2 million each in punitive damages.

The abuse was shocking in its cruelty. During the trial, the EEOC offered evidence that the employer (including owners and supervisors) directed verbal abuse at the workers, regularly referring to them as “retarded,” “dumb ass” and “stupid.” The company also failed to provide workers with the medical care that was needed in the course of the high-risk work and paid them well under the minimum wage. In the face of such serious allegations, Hill County Farms nonetheless opted to take the case to trial, refusing to settle through the ADA’s mandatory conciliation process.

The significance of this historic jury award is eloquently summed up by an EEOC press release: “The verdict sends an important message that the conduct that occurred here is intolerable in this nation, and hopefully will help to restore dignity and acknowledge the humanity of the workers who were mistreated for so many years.”

Kransky v. Johnson & Johnson: $8.3 Million Verdict for Defective Medical Device

A Los Angeles jury has found Johnson & Johnson, the well-known household product company and world’s largest maker of medical products, liable to a plaintiff who received an artificial hip made by the company’s DePuy orthopedics division. The jury awarded $8.3 damages to the recipient of the recalled artificial hip. The verdict is the first in the more than 10,750 civil cases alleging that the artificial hip known as the Articular Surface Replacement (ASR) was defectively designed.

While the bulk of the ASR cases are consolidated in an Ohio federal district court, the Kransky case is not among them. Kransky has attracted considerable attention in the mass press as well as legal trade journals, with the The New York Times reporting that the case was accelerated to trial owing to the plaintiff’s terminal cancer and other ailments, which was also featured in Jonhnson & Johnson’s unsuccessful defense before the 12-person Los Angeles jury. 

Though the ASR’s all-metal design was believed to be an innovative advancement when introduced in 2003, the artificial hip was recalled by Johnson & Johnson in 2010 when it became clear that the metal-on-metal wear of the ASR’s two major components resulted in metallic shavings that caused tissue and bone inflammation. At the Los Angeles trial, the key piece of evidence was an internal Johnson & Johnson memo that accentuated that the “recall” of an implanted medical device is distinctly invasive, with the memo estimating that as many as 40 percent of ASR recipients would require surgical replacement.

Despite the Kransky verdict signaling that the remaining ASR litigation will be resolved in favor of the plaintiffs, attorneys on both sides have stated that the verdict is not indicative of the fate of the remaining 10,000+ claims still pending. Even so, it is difficult to envision Johnson & Johnson eluding liability as to a recalled product, implanted in vulnerable patients, and allegedly depositing metallic shavings in and around those patients’ lower abdomens.

Matamoros v. Starbucks: First Circuit Upholds
$14-Million Judgment in Tip Pooling Class Action

Emboldened by having successfully reversed a massive verdict in a similar case, Starbucks appealed a Massachusetts trial court’s $14-million judgment resulting from allegations that shift supervisors impermissibly shared tips that properly belonged to Starbucks’ baristas. See Matamoros v. Starbucks Corp., Nos. 12-1189, 12-1277 (1st Cir. Nov. 9, 2012).

In an opinion sprinkled with sardonic asides about Starbucks’ purportedly employee-friendly work atmosphere, the court noted that, while Starbucks “euphemistically describes the employees who staff its shops as ‘partners’”, there is a sharp division between the baristas who actively receive and process customer orders and the shift supervisors who predominantly manage the baristas. Id. at 2-3.

In 2009, Starbucks succeeded in reversing a nearly $100 million judgment concerning essentially the same issue. See Chau v. Starbucks, 174 Cal. App. 4th 688 (2009). California’s Fourth Appellate district held that “the trial court erred in ruling that Starbucks’s tip-allocation policy violated California law. The applicable statutes do not prohibit Starbucks from permitting shift supervisors to share in the proceeds placed in collective tip boxes.” Id. at 691. The same team of Akin Gump attorneys that represented Starbucks in the California action joined forces with local counsel from Boston-based Goodwin Procter, which included James Rehnquist, son of the former Chief Justice. This time, however, they failed to win a victory for the coffee behemoth.

The First Circuit focused principally on that portion of the Massachusetts Tips Act providing that only those with “no managerial responsibility” are eligible to share in tips. After addressing and disposing of each of Starbucks’ arguments supporting the notion that its shift supervisors lack managerial responsibility — arguments that were by turns characterized as “hair-splitting” and “disingenuous” — the First Circuit’s de novo review concluded that “the evidence canvassed above describing the work actually performed by the shift supervisors makes it pellucid that shift supervisors possess managerial responsibility. Any other conclusion would blink reality.” Matamoros at 14.