Try, Try Again: The California Supreme Court Sends 'Fundamentally Flawed' Duran Case Back To The Trial Court

Employment class action defendants in California who were hoping for an unequivocal statement that statistical sampling has no place in class actions are likely to be disappointed by today's ruling in Duran v. U.S. Bank, N.A. The California Supreme Court cautiously left all avenues to certification open, stating that a "[s]tatistical sampling may provide an appropriate means of proving liability and damages in some wage and hour class actions." (Emphasis added.) But despair not! The bulk of the opinion agreed with the court of appeal in finding the trial court's methods "profoundly flawed," recognized the "thorny" issues of proof that arise in misclassification cases, and reaffirmed a court's obligation to consider the manageability of individual issues in certifying a class action. The Court's instructions to lower courts and litigants to determine - as an integral part of class certification - whether the case can be manageably tried are likely to aid employers in certification battles to come.

Duran was a misclassification case brought by a group of loan officers employed by U.S. Bank. In the trial court, the plaintiffs successfully moved for class certification on the theory that they were misclassified outside sales employees. Despite declarations from U.S. Bank witnesses showing that dozens of employees spent more than fifty percent of their time on sales-related activities outside of the workplace, the case proceeded to trial.

The Supreme Court focused on the trial plan, which the Court found to be "seriously flawed" for several reasons. For instance, the trial court devised its own sampling methodology, without help of experts. It then compounded that error by allowing testimony of non-random, hand-selected plaintiffs in addition to 20 "randomly" selected class members, barring the defendant from introducing the testimony of class members outside the selected group and then extrapolating classwide liability from the flawed sample group.

The Court found that this process deprived the defendant of the ability to litigate its exemption defense and held that "[t]he injustice of this result is manifest." From these myriad flaws, however, the Court distilled a few key class certification guidelines for trial courts to follow.

First, the Court recognized that exemption defenses often turned on issues of "how individual employees perform their jobs," and that in such cases, proceeding as a class action can become "particularly thorny." In...