U.S. top court rules against Tyson Foods in class action case

By Lawrence Hurley

WASHINGTON (Reuters) - The U.S. Supreme Court on Tuesday handed a loss to Tyson Foods Inc (NYSE: TSN) over the company's challenge to an almost $5.8 million class action judgment in a case won by workers at an Iowa pork-processing facility who contended they were underpaid.

The court, in a 6-2 ruling written by conservative Justice Anthony Kennedy, upheld a 2014 appeals court decision in favor of the workers.

It was one of three closely watched class action cases to come before the court during its current term, with business interests urging the justices to rein in such litigation.

Of the three cases, the court has now ruled in two, with businesses losing both times. In January, the court ruled 6-3 against advertising firm Campbell-Ewald, saying a lawsuit could proceed over claims the company violated a federal consumer law by sending unsolicited text messages on behalf of the U.S. Navy.

In the Tyson case, the court was considering an objection to the use of statistics to determine liability and damages. Critics in the business community have described such use of statistics as "trial by formula" that violates defendants' due process rights, instead of assessing each claim individually for the more than 3,000 current and former employees who are suing.

The narrow ruling turned in part on a 1946 Supreme Court precedent that said plaintiffs can rely on averages in such situations to determine claims under the federal Fair Labor Standards Act.

Kennedy said while corporate defendants "may urge adoption of broad and categorical rules governing the use of representative and statistical evidence in class actions, this case provides no occasion to do so."

Kennedy said the ruling does not undercut the court's major 2011 ruling in favor of Wal Mart Stores Inc(NYSE: WMT), which made it harder to bring class action cases.

The court did not address a broader question of whether a class action lawsuit should move forward if the group of plaintiffs includes people who were not injured.

Conservative Justices Clarence Thomas and Samuel Alito dissented.

Workers at the meat-processing facility, which employs around 1,300 people, sued in 2007, claiming they were entitled to overtime pay and damages because they were not paid for time spent putting on and taking off protective equipment and walking to work stations.

The jury found in favor of the plaintiffs following a federal district court trial in Iowa in 2011. The 8th U.S. Circuit Court of Appeals upheld the judgment in 2014.

The case is Tyson Foods Inc v. Bouaphakeo, U.S. Supreme Court, No. 14-1146.

(Reporting by Lawrence Hurley; Editing by Will Dunham)

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