On May 12, 2015, we reported at here on a non-ERISA case accepted for review by the Supreme Court in the 2015-16 Supreme Court Term that has ERISA Litigation implications. Now, as that Term is set to begin on October 5, 2015, we report on a second non-ERISA case with ERISA Litigation implications that soon will be decided by the Court.

On June 8, 2015, the Supreme Court agreed to hear Tyson Foods Inc. v. Bouaphakeo, No. 14-1146, which presents these questions for review:

  1. Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act (FLSA), where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample.2. Whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.

Oral argument will be heard in Bouaphakeo on November 10, 2015. A number of amicus curiae briefs have been filed in the case addressing the likely impact of the Bouaphakeo decision well beyond its unique facts and the FLSA legal context.

The first question presented for decision might not have direct application to putative ERISA class actions as ERISA class counsel do not have a history of proving damages based on statistical samples. But the second question presented for decision could have far-reaching application to putative ERISA class actions. Many courts do not now require that a class definition exclude the possibility that a class member suffers no injury. For example, the Court of Appeals for the Seventh Circuit will certify classes for liability purposes under Fed. R. Civ. P. 23(c)(4) without regard to any consideration of damages. See e.g., McReynolds v. Merrill Lynch, 672 F. 3d 482 (7th Cir. 2012) (Title VII disparate impact context). And, while ERISA class action filings are in decline, Courts still allow ERISA certifications that address damages in a hypothetical fashion. See e.g., Spano v. Boeing Co., 633 F.3d 574 (7th Cir. 2011), where the Court allowed certification even though the reference point for the damage analysis could prove to have no bearing on actual damages.

A Tyson win therefore could mean that a putative ERISA class challenging a defective Summary Plan Description that applied to a class of plan participants will not be certified unless class counsel can trace the defect, in roadmap fashion, to a common injury for each class member. It could mean that a putative ERISA class challenging allegedly excessive fees for a plan investment in a defined contribution plan will not be certified unless class counsel can show how each class member will receive a common increase in benefits should the claim succeed. It could mean that a putative ERISA class challenging an investment decision for a defined benefit plan will not be certified unless class counsel can show that each class member likewise will receive a common increase in benefits should the claim succeed. A Tyson win would build upon the Supreme Court's focus in Comcast Corp. v. Behrend, 133 S.Ct. 2013 (2013), on frontloading the damage analysis in putative class actions, and would likely result in fewer ERISA class certifications or certifications of classes with fewer members. Fewer or smaller certifications mean a better settlement bargaining position for ERISA class action defendants. Defendants could further enhance their settlement positions by pursuing a quick resolution of the class certification question, in line with the Fed. R. Civ. P. 23 (c)(1)(B) mandate that the district court resolve the class question "[A]t an early practicable time after" the action is commenced.

We will keep you advised of further Supreme Court developments on the class action front in non-ERISA contexts, to the extent that they are likely to affect ERISA class action law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.