Economy

With Scalia’s Death, Corporate America May Have A Harder Time Watering Down Collective Legal Rights

CREDIT: AP Photo/Pablo Martinez Monsivais

President Barack Obama and first lady Michelle Obama stop to look at a portrait of Supreme Court Justice Antonin Scalia after paying their respects at Scalia's casket in the Great Hall of the Supreme Court in Washington, Friday, Feb. 19, 2016.

The meat industry’s business model has radically reshaped Storm Lake, Iowa, in the past few decades.

The 10,000-person town is home to numerous meatpacking plants owned by Tyson Foods, the world’s second-largest industrial meatpacking firm. In recent years, Tyson’s pork processing operation in Storm Lake became the latest epicenter in a long-running campaign to convince the Supreme Court to undermine the rights of the kinds of people who make the town prosperous.

Like the rest of the industrialized agriculture business, Tyson relies on low-wage workers to keep up with its fast-paced production lines.

One worker per month on average manages to cut off a piece of herself, 2015 data on Tyson’s safety record indicates. The company’s 113,000 workers take knives, saws, and skinners to a staggering volume of carcasses. The firm processes out 35 million chickens, 400,000 pigs, and 128,000 cows every week, a speed that means poultry workers are expected to handle as many as 14,000 chickens per day.

Facilities like Tyson’s have made Storm Lake a major draw for immigrant workers willing to be paid as little as $10.16 per hour to perform arduous, repetitive tasks with a higher risk of injury than many other blue-collar occupations. Surrounding Buena Vista County was less than 1 percent Hispanic as the Reagan era waned. Now more than one in five county residents are Hispanic or Latino, a shift the New York Times noted in 2007 in a report on divisive immigration politics ahead of the 2008 election.

They have also made Storm Lake a hotbed for wage theft allegations. To keep per-unit costs as low as possible across roughly 68 million pounds of meat per week, Tyson takes a tight-fisted approach to payroll questions.

Workers have sued the company repeatedly over the years for payroll issues stemming from its commitment to compressing labor costs. But the company appears content to pay for years and years of litigation to fight back worker claims rather than adopting a more generous approach.

A 1988 lawsuit from federal labor officials was tied up in court until 1996. Four years after it was resolved, the Department of Labor took Tyson to court for the same set of issues. That suit took 9 years to reach completion.

This spring, the company is awaiting a Supreme Court decision in yet another long-running labor case. A group of 10 workers in Storm Lake including a woman named Peg Bouaphakeo sued Tyson in 2007, saying the company violates both state and federal wage laws by paying workers for just four minutes per day for the time they spend “donning and doffing” safety equipment.

Bouaphakeo and her coworkers won class-action status for their complaint, and a jury awarded the group $6 million in compensation based upon a statistical average of the actual time workers spent wrangling protective equipment before and after standing on the production line.

Rather than absorb that hit – which Mother Jones noted last year is the equivalent of two hours of operating profits for the meat titan – Tyson deployed its lawyers. And a familiar cast of corporate allies lined up to fight alongside them.

If the business side wins in Bouaphakeo, it won’t just undermine compensation for Storm Lake’s cheated workers. It will further tip the balance of justice away from large groups of wronged individuals and toward the interests of the powerful, continuing a pattern of the court under Chief Justice John Roberts.

But in the months between oral arguments last fall and an actual decision that could dull the power of class-action suits to cut into abusive corporate profiteering, Justice Antonin Scalia died suddenly in bed in Texas.

The shocking death of one of the most reliable conservative votes on the high bench leaves consumer advocates hopeful that the streak of Roberts court decisions chipping away at critical tools for America’s legal underdogs will end in Storm Lake.

What Should It Cost To Cheat The Little Guy?

In this case, Tyson’s defense centers on the technical argument that the plaintiffs’ average time spent dealing with safety gear overstates the damages that its standardized four-minute payroll assumption caused. It’s asking the court to reject such statistical evidence as grounds for determining damages in class-action suits, and to invalidate the class entirely on the grounds that some members of it weren’t underpaid at all according to the plaintiffs’ study.

Strip away the Latin phrases and inscrutable citations, though, and Tyson v. Bouaphakeo is a simple thing. When lots of relatively powerless people seek the law’s protection from a powerful entity, how can the law prevent that inequality from infiltrating courtrooms?

The class-action system is among the most efficient and effective tools that an underdog has when defying someone who can afford decades of legal fees.

“Class-actions offset asymmetries and imbalances,” David Seligman, an attorney at the workers’ rights non-profit Towards Justice, said in an interview. “Class-action means that if there’s one worker who realizes she has these rights and is courageous enough to come forward, she can represent all her coworkers. Low-wage workers are often really scared to come forward, and their employers know it. A lot of them bank on never being sued.”

Such intimidation and despair can be great for business. The small individual sums Tyson workers weren’t paid became profit for their employer. And Tyson doesn’t dispute that workers should be paid for donning and doffing time, or that its system shorted many of them. It just argues the penalty should be limited to the exact amount workers were underpaid.

Allowing companies to be that persnickety about what it should cost them to break the law misses a key point about what class-action suits are supposed to achieve. “We’re not talking only about allowing people to obtain redress, to become whole, but also about disgorging profits from entities that obtain them illegally,” Seligman said.

“That’s part of what the law has to do. Because otherwise people have an incentive to keep breaking the law.”

Workers have an interest in being fairly compensated for all the time it takes them to do their jobs. Their employer has an interest in paying them only for the time they spend actively earning the firm profits. Our legal system says companies can’t foist the cost of doing things the right way off onto their workers – but unless that national value can be enforced at the bar, it’s useless.

Over the past several years, Justice Scalia helped radically limit the actual utility of class-action suits. His death was a dramatic enough shift in the court’s view of corporate rights that Dow Chemical just volunteered to give away $835 million rather than take their chances in a price-fixing case before a post-Scalia Supreme Court.

The Scalia-era court leaves a broad legacy of decisions that curtail little-guy rights in a variety of ways. It derailed the largest class-action in history in 2011, siding with Walmart in a case of alleged gender discrimination on the grounds that the plaintiffs’ strong proof of a discriminatory outcome from corporate policy didn’t mean the company had actively discriminated against women in its employ. The same term, in a case called Concepcion, the justices approved the increasingly common corporate practice of burying forced-arbitration clauses in contracts that renounce a worker or customer’s right to seek class-action relief from the courts for any dispute that may arise in the future.

Scalia authored the majority opinion in both cases. Each was decided 5-4, with the court’s four liberals dissenting from Scalia’s central findings.

The Legal War On Class-Action Rights

A favorable ruling for Tyson would make it much harder to use class-action suits to punish workplace practices that convert money that should go to workers into profits for their employer, National Consumer Law Center attorney Charles Delbaum said in an interview.

“If the Supreme Court were to overturn this decision, it means that only individual workers will be able to prove a claim for overtime. They’ll have to have their own records of exactly how much time they spent without getting paid,” said Delbaum.

A 4-4 tie would preserve the previous judgment from the Eighth Circuit while depriving it of any binding precedential power in other courts. It might still carry significant weight, Delbaum said, because the Eighth Circuit has traditionally been hostile to class-action claims but found in the workers’ favor here.

Delbaum and Seligman saw some reason for optimism even before the conservative bloc lost Scalia’s voice, simply because of how far Tyson and its compadres were asking the court to go.

“By law, it’s the employer’s responsibility to record how many hours the employee worked,” Seligman said. Where employers fail to provide an adequate record, employees are free to bring courts a credible estimate of the ill-gotten profits earned by the company through payroll errors.

“That’s how it’s worked for a century,” Seligman said. “The alternative that Tyson is asking for is for employees to come forward with very specific evidence of how many hours they worked. That turns wage and hour law on its head, and the more pragmatic members of the court were really concerned about that.” The sheer ambition of Tyson’s request made their opponents hopeful, and Scalia’s death has upped the odds of a positive outcome dramatically.

Business interests flock to cases like these, coordinating their fire in hopes of shrinking the utility of class-action techniques. Bouaphakeo, for example, saw amicus filings on behalf of Tyson Foods from a long list of organizations including the Chamber of Commerce, the National Association of Manufacturers, Walmart, Dow Chemical, and multiple trade groups representing defense attorneys.

“The Chamber of Commerce is at the forefront of that effort. It’s all part and parcel of the overwhelming change in the landscape that arose from Concepcion upholding arbitration clauses that deprive people of the right to participate in a class action,” said Delbaum. “That’s a strong example of the bias of the majority of this Supreme Court, when Justice Scalia was alive at least, against consumer class-actions.”

The court’s recent trajectory adds up to nothing less than an assault on one of the best tools individual Americans have for confronting the powerful entities that define their lives, the consumer attorneys said.

“I think there’s absolutely a war on class actions,” Seligman said. “It’s not to encourage efficient dispute resolution, but to squelch disputes entirely, which in many ways is antithetical to the principles of law and economics that many conservatives care about.”