Supreme Court Gives Stamp of Approval to Representative Statistical Evidence
Why it matters
In a closely watched case, the U.S. Supreme Court has ruled that the use of representative statistical evidence for purposes of class certification in a wage and hour suit was acceptable. Employees at a Tyson Foods pork processing plant claimed they did not receive overtime pay owed for the donning and doffing of protective equipment. Because records were not kept about how much time it took for each worker to change, the class relied on representative statistical evidence at trial to establish the extra time it took to put on and take off protective gear. A federal jury awarded $2.9 million in compensatory damages. Tyson appealed, arguing that the class was incorrectly certified because the plaintiffs should not have been allowed to rely on the statistical evidence when differences in gear and among employees meant it took different amounts of time for each worker. The Eighth Circuit Court of Appeals affirmed the verdict and the Supreme Court granted certiorari. In a 6-to-2 decision, Justice Anthony Kennedy upheld the certification order. Declining to adopt a categorical rule regarding such evidence, the majority said it was appropriate in the case against Tyson because the workers used the representative sample "to fill an evidentiary gap created by the employer's failure to keep adequate records." However, Chief Justice John Roberts filed a concurring opinion expressing concern about whether the jury verdict can stand given the possibility that some class members are not entitled to damages, while Justices Clarence Thomas and Samuel Alito dissented, predicting an increase in FLSA litigation for employers.
Detailed discussion
Peg Bouaphakeo and a handful of other employees at a Tyson Foods meat processing facility in Iowa filed suit against their employer. The workers alleged they were not being paid the correct wages under both state law as well as the Fair Labor Standards Act (FLSA).
The plaintiffs were "gang-time" employees at the facility, meaning Tyson measured their compensable working time when the workers were at their stations and the production line was moving. The workers sought compensation for donning and doffing their protective equipment and clothing before and after lunch. Importantly, the protective gear and equipment worn and used by the plaintiffs varied depending on their position, ranging from hard hats to work boots to aprons and gloves, with some workers needing time to clean their knives.
In addition to "gang-time," Tyson added "K-code" time to each employee's paycheck: four additional minutes for employees using knives and several more minutes for workers for pre- and post-shift walking time intended to cover the required donning and doffing of protective gear and materials. Tyson did not record the actual time that employees performed these tasks.
The K-code time was insufficient to cover compensable pre- and post-production line activities, Bouaphakeo and the other workers alleged. After a class was certified, a nine-day trial was held. The plaintiffs presented their evidence in the form of individual timesheets and the average donning, doffing, and walking times calculated from 744 employee observations conducted by an expert.
A jury returned a $2.9 million verdict in favor of the plaintiffs. Tyson appealed, arguing that the trial court erred in certifying the class because the primary method proving injury assumed each employee spent the same time donning and doffing protective gear—even though employees took different amounts of time—and the damages awarded to the class had the potential to be distributed to some workers who did not work any uncompensated overtime.
But the Eighth Circuit Court of Appeals affirmed the court's certification order, the jury's verdict, and the damages award, and Tyson filed a writ of certiorari.
In an opinion authored by Justice Anthony Kennedy, the U.S. Supreme Court also affirmed class certification. The majority first refused to issue a categorical exclusion of representative statistical evidence, which it said "would make little sense." The permissibility of such evidence "turns 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 relevant cause of action."
In many cases, a representative sample may be the only practicable means to collect and present relevant data to establish a defendant's liability, the justices added, and instead of punishing the employee by denying recovery on the ground that he is unable to prove the precise extent of uncompensated work, the evidence is acceptable if it is sufficient "to show the amount and extent of that work as a matter of just and reasonable inference."
The burden then shifts to the employer to come forward with evidence of the precise amount of work performed or with evidence to negate the reasonableness of the inference drawn from the employee's evidence, the Court said, relying on a prior decision in Anderson v. Mt. Clemens.
In the suit against Tyson Foods, the workers used the representative sample "to fill an evidentiary gap created by the employer's failure to keep adequate records," Justice Kennedy—joined by Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan—wrote. "Rather than absolving the employees from proving individual injury, the representative evidence here was a permissible means of making that very showing."
Further, reliance on the statistical evidence "did not deprive [the employer] of its ability to litigate individual defenses," the majority said. "Since there were no alternative means for the employees to establish their hours worked, [Tyson's] primary defense was to show that [the statistical evidence] was unrepresentative or inaccurate." The employer also declined to request a hearing to challenge the statistical validity of the expert report under Daubert v. Merrell Dow Pharmaceuticals, Inc., the Court noted, and did not present evidence from its own expert to counter the plaintiffs' expert.
The Court distinguished Wal-Mart Stores, Inc. v. Dukes by noting that the experiences of the plaintiffs in that class action bore little relationship to one another, while "in this case each employee worked in the same facility, did similar work, and was paid under the same policy. As Mt. Clemens confirms, under these circumstances the experiences of a subset of employees can be probative as to the experiences of all of them."
Not all representative statistical evidence will pass muster, the justices explained, and evidence that is statistically inadequate or based on implausible assumptions will not be permitted in a courtroom. Once a district court finds evidence to be admissible, its persuasiveness is, "in general, a matter for the jury."
"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," the Court wrote. "In FLSA actions, inferring the hours an employee has worked from a study such as [the expert's] has been permitted by the Court so long as the study is otherwise admissible. The fairness and utility of statistical methods in contexts other than those presented here will depend on facts and circumstances particular to those cases."
The justices also addressed the employer's concern that division of the damages award among the class would be problematic, as some members may not have been injured and have no legal right to any damages. Based on the calculations of the plaintiffs' expert, the class requested almost $6.7 million in damages, but the jury awarded less than half of that, Tyson pointed out, without any explanation as to which workers should be paid and how much.
The record does not indicate how the damages award will be disbursed, the Court said, leaving the issue for the district court to address in the first instance. But the majority expressed its belief that ways of distributing the award to only those individuals who worked more than 40 hours were available—working backwards from the damages award and assuming each employee donned and doffed for an identical amount of time, for example.
In a separate concurrence joined by Justice Samuel Alito, the Chief Justice articulated "concern that the District Court may not be able to fashion a method for awarding damages only to those class members who suffered an actual injury," because "we do not know how much donning and doffing time the jury found to have occurred in each department, we have no way of knowing which plaintiffs failed to cross that 40-hour threshold."
"Given this difficulty, it remains to be seen whether the jury verdict can stand," the Chief Justice wrote.
Justice Clarence Thomas (also joined by Justice Alito) authored a dissenting opinion that found the district court failed to "give proper consideration to the significance of variable donning and doffing times" and that the majority "redefine[ed] the predominance standard of Rule 23(b)(3)."
"The majority thus puts employers to an untenable choice," Justice Thomas wrote. "They must either track any time that might be the subject of an innovative lawsuit, or they must defend class actions against representative evidence that unfairly homogenizes an individual issue. Either way, the majority's misinterpretation of Mt. Clemens will profoundly affect future FLSA-based class actions—which have already increased dramatically in recent years."
To read the opinion in Tyson Foods, Inc. v. Bouaphakeo, click here.
back to top
Second Circuit Finds Individual Liability Under FMLA for HR Director
Why it matters
An individual human resources (HR) director can be liable under the Family and Medical Leave Act (FMLA) as an "employer" under the statute's economic realities test, the Second Circuit Court of Appeals has ruled, reversing summary judgment in favor of the individual and the company. A worker at the Culinary Institute of America took FMLA leave to care for her son after he was diagnosed with type 1 diabetes. Her other son then fractured his leg and she requested more leave as well as a modified schedule for her return to work. The HR director sent a letter saying that her paperwork did not justify her absences and declined to elaborate when the employee requested clarification. The parties were unable to schedule a meeting and the HR director refused to allow the employee to return to work without the proper documentation. When the employee was terminated for job abandonment, she filed suit against the HR director and the Culinary Institute alleging violations of the FMLA. A federal district court granted the defendants' motion to dismiss, but the federal appellate panel reversed. Not only did the HR director control the employee's rights under the statute and appear to have played an important role in the decision to fire her, establishing the potential for individual liability, but the panel found the claims against the employer could move forward as well. The lesson for employers: pay close attention to the statute. The Second Circuit documented months of communications between the parties to emphasize the importance of the employer's mandate to "responsively answer questions from employees concerning their rights and responsibilities under the FMLA." A failure to follow this requirement could lead to liability.
Detailed discussion
Cathleen Graziadio began working as a Payroll Administrator at the Culinary Institute of America (CIA) in 2007. In June 2012, her 17-year-old son was hospitalized as a result of previously undiagnosed type 1 diabetes, and Graziadio informed her supervisor she needed to take a leave to care for him.
When she returned to work a few weeks later, she submitted a medical certification supporting her need for FMLA leave to care for her son. The same day, her 12-year-old son fractured his leg in an accident and underwent surgery. Graziadio again requested leave. In July, she asked to return to work on a three-day schedule through August to care for her sons. She also asked—as she had in prior e-mails—whether the employer needed any further documentation.
But Shaynan Garrioch, CIA's Director of Human Resources, did not respond to multiple calls or e-mails from the employee, who kept asking when she could return to work. Garrioch sent Graziadio a letter stating that her FMLA paperwork did not justify her absences from the workplace and that she needed to "provide updated paperwork to this office which addresses this deficiency" within seven days.
Graziadio responded with a series of e-mails trying to determine what "paperwork" was necessary, explaining that her prior calls and e-mails had not been returned. The HR director sent an informational brochure from the Department of Labor, refused to approve a schedule for Graziadio to return to work, and rejected a note from her son's doctor.
Garrioch then refused to communicate via e-mail and told Graziadio to come in for a meeting. The employee responded that she was "available whenever," to which the HR director asked for specific times. This exchange was repeated over several days. Graziadio retained an attorney and the CIA shut down all communications with the employee. She was terminated one week later for abandoning her position.
Graziadio sued Garrioch and the CIA for interference with FMLA leave and FMLA retaliation. A federal district court judge granted summary judgment for the defendants on both counts and the plaintiff appealed.
The Second Circuit Court of Appeals first addressed Garrioch's individual liability, adopting for the first time the economic reality test used to analyze individual liability in the Fair Labor Standards Act (FLSA) to the FMLA, citing decisions from the Third, Fifth, and Eleventh Circuits, as well as federal courts in Connecticut and New York.
"Under this test, courts ask 'whether the alleged employer possessed the power to control the worker[] in question, with an eye to the "economic reality" presented by the facts of each case,'" the panel explained, considering a nonexclusive and overlapping set of factors, including whether the alleged employer had the power to hire and fire the employee and supervised and controlled work schedules or conditions of employment.
The district court found that Garrioch's relationship to Graziadio did not satisfy any of the factors. But the Second Circuit reached the opposite conclusion, determining that questions of material fact remained as to Garrioch's authority. For example, although traditional hire-and-fire authority rested with a vice president at CIA, Garrioch "appears to have played an important role in the decision to fire Graziadio" and that the HR department handled any employee's return to work after FMLA leave.
"[O]n the overarching question of whether Garrioch 'controlled plaintiff's rights under the FMLA,' there seems to be ample evidence to support the conclusion that she did: deposition testimony and email exchanges demonstrate a) that Garrioch reviewed Graziadio's FMLA paperwork, b) that she determined its adequacy, c) that she controlled Graziadio's ability to return to work and under what conditions, and d) that she sent Graziadio nearly every communication regarding her leave and employment (including the letter ultimately communicating her termination)," the court said. "Indeed, Garrioch specifically instructed [Graziadio's supervisor and a company vice president] that they were not to communicate with Graziadio and that Garrioch alone would handle Graziadio's leave dispute and return to work."
Given the totality of the circumstances, a rational jury could find Garrioch exercised sufficient control over Graziadio's employment to be subject to liability under the FMLA, the panel held, reversing dismissal of the claims against the defendant.
The panel similarly reversed summary judgment on the plaintiff's claims of FMLA interference and retaliation against the CIA. In the process, the Second Circuit formally adopted a standard for the requirements of a prima facie case of interference with FMLA rights: "a plaintiff must establish: 1) that she is an eligible employee under the FMLA; 2) that the defendant is an employer as defined by the FMLA; 3) that she was entitled to take leave under the FMLA; 4) that she gave notice to the defendant of her intention to take leave; and 5) that she was denied benefits to which she was entitled under the FMLA."
Graziadio satisfied all of these elements, the court said, rejecting the district court's position that the CIA did not actually deny leave to care for her son and that she failed to fulfill her obligation to provide an adequate medical certification. Graziadio submitted a medical certification to which Garrioch did not respond or even acknowledge receipt, the panel noted, and repeatedly attempted to cure any deficiencies but was blocked by Garrioch at every turn.
"Under the FMLA, an employee seeking leave need not submit a medical certification unless and until one is specifically requested by her employer," the panel wrote. "Neither the fact that CIA maintained a handbook stating that it required medical certification nor the fact that CIA had recently given Graziadio a Notice of Rights and Responsibilities, which explained the medical certification requirement, sufficed to put Graziadio on notice that medical certification was required for this leave claim."
The CIA did not make a formal request for certification until mid-July, the court added, and even then, Garrioch made a vague request for "paperwork," which "studiously avoided responding to any of Graziadio's pleas for clarification," a reply that may itself run afoul of the FMLA's explicit requirement that employers "responsively answer questions from employees concerning their rights and responsibilities under the FMLA."
Coupled with the "excruciating exchange" of e-mails trying to set up a meeting, the court said a jury could find that Graziadio made sufficient good faith efforts to comply with her employer's requests and that the defendant's conduct—"their imprecision in requesting certification, their failure to answer Graziadio's questions responsively, and their failure to communicate with Graziadio after deeming her doctor's note deficient—relieved Graziadio of any unsatisfied obligation to provide a medical certification to support her leave."
Finally, the panel found it "difficult, to put it mildly," to accept the employer's contention that Graziadio abandoned her job as a non-pretextual reason for her termination. "There is no question but that defendants refused to reinstate Graziadio because she took leave that they declined to approve under the FMLA," the court said. "It requires little imagination to infer that they fired her for the same reason."
The temporal proximity of the plaintiff's termination to her FMLA leave and circumstantial evidence—Graziadio's computer network access was suspended well before her actual termination and testimony from an HR employee that he was instructed to compose a job description for a replacement for Graziadio in early July—warranted reversal on the FMLA retaliation claim as well, the panel said.
To read the opinion in Graziadio v. Culinary Institute of America, click here.
back to top
Lawmaker Challenges EEOC's Collection of Pay Data
Why it matters
In January, the Equal Employment Opportunity Commission (EEOC) announced that it would begin collecting information from employers about pay data as part of a push for equal pay. The proposed rule generated its share of critics including Sen. Lamar Alexander (R-Tenn.), who introduced a bill that would amend the agency's proposed data collection. Instead of adding to the EEOC's workload, the Commission should focus on the backlog of discrimination charges pending at the end of the year, the Senator suggested in the EEOC Reform Act, requiring the agency to reduce its pending charges to not more than 3,660 of the 76,408 pending at the end of 2015 before beginning any collection of pay data. The legislation would also require the EEOC to thoroughly research the cost of collecting and securing the pay data, with a test of its systems on data from federal employees before turning to the private sector.
Detailed discussion
President Barack Obama celebrated the seventh anniversary of the Lilly Ledbetter Fair Pay Act by announcing that the Equal Employment Opportunity Commission (EEOC) will further the push for equal pay by requiring employers to report pay data.
At his direction, the agency proposed a revision to the Employer Information Report (EEO-1) that would instruct employers to report information about the wages paid to their workers. Specifically, federal contractors with 50-99 employees and private employers with at least 100 employees would add pay data to their annual EEO-1 report, which currently includes information about the number of individuals employed by job category, race, ethnicity, and sex.
Employers would share workers' total W-2 earnings for a 12-month period (to ensure the inclusion of compensation information including commissions, tips, and bonuses), for both full-time and part-time employees. The agency opened the proposal up for a 90-day public comment period set to conclude April 1.
The proposal received mixed reviews. While some praised the effort to reduce wage inequality, employers expressed concerns about confidentiality, additional compliance requirements, and the likelihood of an increase in enforcement actions based on the new data.
Sen. Lamar Alexander (R-Tenn.) took his concerns one step further, introducing legislation that would establish prerequisites and boundaries to the EEOC's proposed data collection. Senate Bill 2693, or the EEOC Reform Act, would mandate that the agency prioritize pending charges (76,408 at the end of fiscal year 2015) in lieu of taking on new responsibilities.
"The staggering increase of data proposed to be collected by the Equal Employment Opportunity Commission through the proposed revision of the EEO-1 report does not comport with that stated purpose of the Paperwork Reduction Act," according to the measure. "The Commission failed to provide a detailed explanation of how the Commission will track, verify, compile, ensure confidentiality of, and protect the new information, and how the Commission will use that information in enforcement efforts."
Pursuant to the bill, the EEOC would collect information identical to that in the proposal from each head of a department or federal agency to create an annual report—a trial run on federal employees, so to speak. The agency would then be required to collect and compile information on the number of EEOC employees and hours necessary to carry out that task "that were transferred from reducing the number of pending charges of discrimination before the Commission."
That data will provide the basis for an estimate of the number of employees and hours that it will cost the EEOC to handle "tracking, verifying, compiling, ensuring confidentiality of, and protecting the information" for private sector employers, which must be provided in an annual report to Congress.
Sen. Alexander also proposed that the EEOC create a comprehensive plan—with an accompanying report to Congress—for its data collection from private employers, including developing software, how it will use the information in its enforcement efforts, and ensuring the confidentiality of the stored data, complete with specific examples.
And the Commission "may not implement" any of the requirements set forth in the bill "until the Commission reduces its inventory of pending charges to not more than 3,660." If the revised EEO-1 is implemented before the legislation takes effect, the Commission will stop implementation until it complies with the bill.
Introduced in March, the legislation was referred to the Senate Committee on Health, Education, Labor, and Pensions, where it remains.
To read S. 2693, the EEOC Reform Act, click here.
back to top
Title VII's Ban on National Origin Discrimination Doesn't Cover Nepotism
Why it matters
Does nepotism constitute national origin discrimination? Not according to a New York federal court considering a claim that a nursing home manager hired his relatives of Albanian or Montenegrin descent in violation of Title VII. A maintenance employee of Guyanese Indian descent, Bhairo Hiralall was transferred to housekeeping, where he worked with his manager's nephew, with whom he did not get along. After he was terminated, Hiralall sued under Title VII, arguing that he was discriminated against because of his national origin. The court was not persuaded by one comment that "You people are only here to make trouble" because it was unclear who "you people" referred to. Further, the allegations of nepotism were not actionable under Title VII. "[S]howing a preference for one's family members, to the detriment of several other races or nationalities, does not amount to disparate treatment against a protected class," the court wrote, even if the nepotism is pernicious.
Detailed discussion
A Guyanese male of Indian descent, Bhairo Hiralall was employed at Throgs Neck Extended Care Facility, a 205-bed nursing home and rehabilitation facility in the Bronx, for more than 17 years. He began as a housekeeper in 1996 and was promoted to the maintenance department as a painter in 2001. The facility also employed his wife, sister-in-law, and two brothers-in-law.
Hiralall's employment was uneventful until late 2008 when his manager, the Director of Environmental Services, transferred him from maintenance back to housekeeping, albeit without a reduction in pay or benefits. The manager, a man of Montenegrin descent, also hired his nephew around the same time. In 2009, the nephew replaced him as Director of Environmental Services.
The nephew and Hiralall did not get along. Hiralall was asked to resume some of his painting duties while still in the housekeeping department and he filed multiple complaints. He refused to accept a position as a "floater" between the departments. In 2011, the nephew accused him of changing a posted work schedule and watching television during his shift. Hiralall denied the charges and the nephew responded, "You people [are] only here to make trouble."
Hiralall filed a formal grievance with the union about his general mistreatment. Neither in the formal grievance nor in the many informal complaints he filed did he complain of discrimination based on his nationality. In 2013, his contentious relationship with the nephew came to a head and he was terminated for insubordination. Until he was fired, Hiralall was the highest-paid nonsupervisory employee in the housekeeping department.
He filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) and a lawsuit alleging discrimination in violation of Title VII based on his national origin in New York federal court. The facility moved for summary judgment and U.S. District Court Judge George B. Daniels granted the motion.
Many of the incidents relied upon by the plaintiff that allegedly contributed to a hostile work environment were time-barred, the court found, and none of the circumstances that survived constituted an adverse employment action.
In addition, Hiralall "has not shown any admissible evidence that [his manager] or [the nephew] had a pattern of activities specifically motivated by animus towards Guyanese of Indian descent," the court said. "Plaintiff's sole 'smoking gun' incident, in which [the nephew] accused him of tampering with the posted work schedule and yelled 'You people [are] only here to make trouble,' is far from the 'steady barrage of opprobrious racial comments' or extremely serious isolated incidents that are actionable under Title VII."
The hiring of relatives of Albanian or Montenegrin descent does not demonstrate discrimination against Guyanese of Indian descent or other nationalities, the court added. "Nepotism, in this case, is not evidence of actionable discrimination because showing a preference for one's family members, to the detriment of several other races or nationalities, does not amount to disparate treatment against a protected class," Judge Daniels wrote.
For similar reasons, the plaintiff's retaliation claims were dismissed by the court, as "much of the conduct Plaintiff contends are retaliatory adverse employment actions are objectively too trivial to dissuade a reasonable employee from making or supporting a charge of discrimination," the court said.
The employer's stated reason for termination—insubordination—was based on undisputed evidence of the plaintiff's behavior at a meeting where he refused to follow a workplace directive from the nephew despite multiple chances, leaving Hiralall unable to establish pretext, the court concluded, granting summary judgment in favor of the employer.
To read the opinion in Hiralall v. Sentoascare, LLC, click here.
back to top
Paid Family Leave and $15 Minimum Wage Are Coming to New York
On April 1, 2016 the New York State Legislature passed legislation that would raise the state minimum wage for all hourly wage workers in accordance with a prescribed schedule. Governor Andrew Cuomo signed the legislation into law on April 4, 2016, making New York one of two states that day—the other being California—to gradually raise the hourly minimum wage to $15 an hour. Governor Cuomo's approval of the bill culminated a coordinated, several-month effort by his Administration, organized labor, and political parties to promote the increase of the minimum wage to $15 an hour. The first increase will take effect on December 31, 2016.
As part of the same package, Governor Cuomo signed into law groundbreaking paid family leave legislation that will cover most New York employees. The law amends the current employee disability benefits law by adding new benefits and job protections for employees who need time off from work to care for family members. This is a significant development in New York, which previously did not have its own state family leave law to supplement the federal Family Medical Leave Act.
back to top