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Ruling may trigger more overtime suits

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The U .S. Supreme Court's ruling that statistical evidence can be used to determine overtime wages points up the need for employers to keep records of how long it takes employees to change their work clothes.

Some say the high court's 6-2 ruling last month in Tyson Foods Inc. v. Peg Bouaphakeo et al., over whether workers should be paid for overtime spent donning and doffing their work clothes in a pork processing plant, is narrowly written, but others say its impact could extend well beyond wage-and-hour claims.

Observers also say the high court did not address the critical issue of whether a class could be certified if it included workers who were not injured — in this case, those who did not work overtime while changing their work clothes — and therefore had no legal right to any damages.

The 3,344 workers in the case were employees of the kill, cut and retrim departments of the Storm Lake, Iowa, pork processing plant operated by Springdale, Arkansas-based Tyson.

The workers filed suit in Sioux City, Iowa, federal court in 2007 alleging violation of the Fair Labor Standards Act and the Iowa Wage Payment Collection Law.

The district court certified the litigation as a class action in 2008.

During the trial, evidence included a study including 744 videotaped observations by an industrial relations expert, Kenneth Mericle, who concluded that it took about 18 minutes a day for the cut and retrim departments to change cloths and 21.25 minutes for the kill department. A jury in September 2011 awarded the workers $2.9 million in overtime benefits.

An August 2014 ruling by the 8th U.S. Circuit Court of Appeals in St. Louis upheld the lower court, as did the Supreme Court.

In its ruling for the workers, the Supreme Court majority said that because the employer failed to keep proper records, “the representative evidence here was a permissible means” of showing the hours that had been worked.

The ruling, authored by Justice Anthony Kennedy, also cautioned, however, that the “fairness and utility of statistical methods in context other than those presented here will depend on facts and circumstances particular to those cases.”

In a dissent, Associate Justice Clarence Thomas, who was joined by Associate Justice Samuel Alito, said the majority had redefined class action requirements and devised an “unsound special evidentiary rule for cases” under the FLSA.

While it is good the court has given some direction to plaintiffs and employers on the admissibility of statistical evidence, “we are going to see an uptick in litigation here” because plaintiffs can use it to sustain class proceedings, said Christopher R. Kazanowski, a partner at Honigman, Miller, Schwartz & Cohn L.L.P. in Detroit.

Fine-tuning legal language

The case could also affect class actions beyond wage-and-hour claims “because the court used pretty broad language to say they will not permit a categorical rejection of all statistical evidence,” he said.

“Until we have opinions from other federal courts fleshing out the ruling, we're going to see additional litigation by plaintiff class action attorneys trying to broaden that narrow window and exception” in the ruling, said Kenneth L. Racowski, counsel at Buchanan, Ingersoll & Rooney P.C. in Philadelphia.

“It's going to be easier for plaintiffs' lawyers to do less discovery, do less work” and provide evidence through expert witnesses, rather than having to spend a lot of time fighting over getting evidence admitted in wage-and-hour cases, said defense attorney Rebecca L. Torrey, a partner at Manatt Phelps & Phillips L.L.P. in Los Angeles.

Others, however, believe the ruling's impact will be more limited.

The decision “basically ratified the way that many of these cases are litigated now,” said Eric R. Magnus, a principal in Jackson Lewis P.C.'s Atlanta office.

“I suspect the court had trouble punishing the employees because the employer didn't keep the kind of records they were supposed to have kept,” said P. Russell Perdew, a partner at Locke Lord L.L.P. in Chicago.

The ruling does point to the need for firms to keep track of their workers' overtime, experts say. It imposes a record-keeping burden on employers that might not have been a factor before, Mr. Racowski said.

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    The primary question on which the U.S Supreme Court’s 6-2 ruling in Tyson Foods Inc. v. Peg Bouaphakeo et al. focused was the admissibility of statistical evidence.