With years in the making, the long-awaited decision of the California Supreme Court in Duran v. U.S. Bank has finally arrived and represents a significant victory for California employers. Duran is the first case to consider the now prevalent use of statistical evidence by class action plaintiffs to condense class certification briefing and/or trials, avoid issues of proof with individual class members, and establish class-wide liability using often one-sided and route arithmetic. In a unanimous decision, the Supreme Court imposed new restrictions on such tactics and reaffirmed the rights of employers facing class action lawsuits. Here are a few highlights from the Court’s decision:
- No More Cutting Corners at Trial – Duran is an excellent illustration of the modern misuse and abuse of statistical evidence in class litigation. The trial court adopted a trial plan, under which a purportedly random sample of twenty class members—plus two of the named plaintiffs—would represent the entire class of 260 current and former employees. In the damages phase, the trial court implemented the determination of plaintiffs’ expert that class members worked on average 11.87 hours of overtime per week, subject to a 43% or almost double margin of error. The Supreme Court rejected the statistical model used by the trial court as flawed and “intolerable” because the sample was too small to produce reliable information about the entire class, biased in plaintiffs’ favor, and had too large a margin of error. In future cases involving statistical evidence, it can be expected that trial courts will follow the lessons of Duran and use caution before adopting a trial plan based on surveys, sampling, and/or statistics.
- Employers Have a Constitutional Right to Defend Their Cases – Under the lower court’s trial plan, liability for the entire class was determined solely by use of evidence concerning the 20-member sample. U.S. Bank was not permitted to present evidence that plaintiffs outside this group were properly classified as exempt employees—a key defense in a misclassification case such as Duran. The Supreme Court held that class certification is inappropriate under constitutional due process principles when a trial management plan cannot “fairly and efficiently” allow employers to present and litigate its relevant affirmative defenses. Quite simply, the trial court’s plan prevented the employer from showing that some class members were exempt and entitled to no recovery, amounting to a gross violation of U.S. Bank’s constitutional rights. Duran is an important reminder that trial management practices cannot serve as a basis to deny a party’s substantive, and in this case constitutional, rights. For more information on this particular issue, click here.
- Trial Courts Now Required to Give Early Attention to the Use of Statistical Evidence and Case Management Before Certifying a Class – While the Supreme Court did not wholly preclude the use of sampling and surveys in class litigation, Duran imposes new restrictions to this practice. If statistical evidence is to be used as part of a trial plan for managing complex class action, methods to be employed by class counsel must be presented, evaluated, and scrutinized early in the life of the case, and in any event no later than the hearing on class certification. Trial courts are no longer permitted to assume that the use of statistical methods will serve as a panacea to class certification and manageability issues raised early in the case. Under Duran, courts must develop plans for statistical proof and methods before certifying a class, and should further be prepared to order decertification if a proposed trial plan is ultimately unworkable. In addition, courts in California are encouraged and—based on Duran—likely required to determine, before class certification how a case will be tried. If the court cannot conduct a fair trial on the class claims, while allowing employers the ability to assert affirmative defenses as to the class, certification should be denied.
In all, Duran represents a definitive affirmation of employers’ rights in class litigation by the state’s highest court. New limitations on the use of statistical evidence and emphasis on constitutional due process concerns in class cases provide California employers with vital ammunition when defending wage and hour and other employment class actions. With jury verdicts in these matters routinely exceeding seven figures, the Duran case is welcome news to employers indeed.