Last week's Supreme Court decision in Tyson Foods v. Bouaphakeo represents not just a reprieve but an affirmative win both for workers and for class action plaintiffs more generally.
First, as to workers: In applying Anderson v. Mt. Clemens Pottery, the Court reinvigorated and confirmed an important extension of the principle that workers can use representative proof in wage-hour cases where the employer has failed to keep statutorily required records. The principle, which dates back to the Mt. Clemens case in 1946, is critical to many wage-hour cases because in the absence of employer-maintained records, the amount of time workers have worked is difficult or impossible to reconstruct. The Court in 1946 rightly reasoned that the employer should not benefit from its own violation of law — its failure to record time worked — and so held that the workers can prove the amount of time worked by "just and reasonable inference," including using evidence regarding the specific amounts of time some workers worked and extrapolating to all similarly situated workers. One of Tyson's objections to the application of that rule here was that the amount of time worked in the Mt. Clemens case itself was an issue that went only to the workers' damages, not employer's liability. Here, it went to both, so Tyson asserted it should not apply. Courts of appeals have applied Mt. Clemens to both liability and damages because the rule is about a fact (how much time was worked?) not the legal implication of that fact, whether liability or damages. In affirming the use of Mt. Clemens here, the Court endorsed this approach and rejected an artificial limitation on Mt. Clemens.
Next, as to class action plaintiffs generally: In distinguishing Walmart v. Dukes, the Supreme Court set important limits on the effect of that decision. Walmart's disapproval of "trial by formula" has been used by class action defendants as a cudgel against aggregate proof since the day that case was decided. Now the Supreme Court has made clear that the phrase must be read in context: Walmart rules out "trial by formula" only where the governing substantive law does not allow the formula in question.
In Walmart, representative proof could not be used because that case concerned discriminatory decisionmaking regarding individual employees, and without a policy linking those decisions together, evidence regarding one supervisor's discriminatory motive would prove nothing about the motive of a different supervisor. But where the substantive law — in the wage-hour context, the Mt. Clemens rule — does permit an inference from representative proof, then the fact that plaintiffs are proceeding as a class does not bar the use of that proof.
Relatedly, in explaining why the validity of aggregate proof in the class action depends on the underlying substantive law, the Court made clear that the Rules Enabling Act — which provides that procedural "rules shall not abridge, enlarge or modify any substantive right" — protects plaintiffs' rights as well as defendants. Building on language from Walmart, class action defendants have been arguing for years that Rule 23 unlawfully deprives them of various substantive rights regarding the presentation of their defenses. In Tyson, the Supreme Court instructed that courts must be careful not to be abridge the rights of class action plaintiffs — such as by depriving them of the benefit of an evidentiary presumption (like Mt. Clemens) that they could use if they pursued their cases individually.
Finally, the Supreme Court's articulation of the predominance test for class action certification undercuts support for a problematic rule that defendants have been pushing for about three years: that the absence of a classwide measure of damages defeats certification of a class action by undermining the predominance of common issues. As we've discussed previously, all the circuits to have weighed in on the question have rejected that argument, which is based on a misreading of the Court's decision in Comcast v. Behrend. Although it didn't discuss Comcast by name, the Court endorsed the circuits' view of the proper inquiry: "The predominance inquiry asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues. When one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.” (citations and internal quotation marks omitted). Hopefully this formulation will end the debate over Comcast's meaning.
There are lingering issues that the Tyson Foods decision did not reach, largely because of the procedural posture of the case. But on the issues the Court decided last week, class action plaintiffs made important gains.