California Supreme Court Clarifies Employer’s Right to Present Individual Defenses in Wage & Hour Class Actions

In a much anticipated decision, and positive development for employers, the California Supreme Court provided guidance to trial courts for determining whether or not to certify wage/hour class action cases. In Duran v. U.S. Bank National Association, Case No. S200923 (May 29, 2014),  the Court held trial courts must conduct a more detailed analysis at the time of class certification relating to the resolution of individual defenses to  class claims, including permitting employers to litigate individual defenses.

In Duran, loan officers who worked for US Bank claimed that they were misclassified as exempt outside salespersons.  The loan officers at US Bank  argued that their position was labeled as exempt without any examination of the work duties or habits actually performed by the loan officers, and that the employer failed to conduct any follow-up or training to ensure that the loan officers actually met the exemption requirement.

From the time of class certification and forward, the employer presented declarations and other testimony that many of the loan officers did meet the exemption standards.  However, the trial court rejected the employer’s evidence and relied instead on testimony of the two named plaintiffs and 20 randomly selected class members.  After trial of the matter, a verdict was reached against the employer with respect to all approximately 260 loan officers based upon the testimony of the plaintiffs and 20 randomly selected class members.    The class was awarded $15 million dollars for unpaid overtime.

On appeal to the appellate court, the First Appellate District reversed the verdict and ruled that the trial court’s reliance on the plaintiff’s representative sampling denied the employer’s due process right to litigate affirmative defenses.

While the California Supreme Court’s decision did not reverse the trial court’s certification order outright, it remanded the case back to the trial court with specific instructions and guidelines for the trial court.  The Court also indicated that the trial court may entertain a renewed class certification motion.

The Court explicitly required that courts, at the class certification stage, consider a plan for how individualized issues will be managed at trial:  “Trial courts must pay careful attention to manageability when deciding whether to certify a class action.”

The Court discussed the use of sampling and statistical evidence, rejecting as flawed the approach adopted by the trial court because the sample was insufficiently large, biased, and had too large a margin of error.    The Court also reaffirmed the principle, similar to the one contained in a federal rule that “the class action procedural device may not be used to abridge a party’s substantive rights.” This principle will presumably disapprove of a trial plan in which parties who could not recover in a single action court nonetheless recover as part of a class action.

Although the Court indicated an employer did not have an unlimited right to present individual evidence on each and every plaintiff in a class, the Court recognized and reinforced the right to present individual evidence to impeach and challenge the common evidence asserted by plaintiffs in a class action case.   The Court held the employer must be allowed to present affirmative defenses according to the trial management plan, and those defenses should be considered, but the employer’s presentation of proof of such defenses must be within the method the court and parties fashioned to try the issues.  The Court further held that when sampling is used, it must be utilized carefully, e.g. the sample size needs to be large enough and the sample must be randomly selected, representative, and may not include named plaintiffs.  In addition, the margin of error in the sampling method must not be too high.

The Court’s decision in Duran provides an important affirmation of an employer’s due process rights in class litigations, and some helpful guidance on the limitations of statistical sampling in such matters.  This should make the law more practical and less unpredictable.


ABOUT THE AUTHOR: Ms. Silva is a graduate of University of the Pacific.  She is senior counsel in the firm’s Employment Practices Group.  She is a former prosecutor and has considerable trial experience.  Contact her at

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