Source: https://www.gibsondunn.com/california-supreme-court-unanimously-rejects-statistical-sampling-that-deprived-class-action-defendant-of-its-ability-to-present-individualized-defenses/
Timestamp: 2019-04-24 10:41:15+00:00

Document:
On May 29, 2014, the California Supreme Court in Duran v. U.S. Bank National Association, No. S200923, unanimously "affirmed in its entirety" the Court of Appeal’s decision reversing a classwide judgment for plaintiffs in a wage-and-hour misclassification class action that was tried based on an assessment of a statistical sample of class members.
Moreover, by bringing California class action law closer in line with federal law on these critical issues, the Court implicitly rejected recent decisions that had interpreted Brinker Restaurant Corp. v. Superior Court, 53 Cal. 4th 1004 (2012), as representing a "renewed direction that class-wide relief remains the preferred method of resolving wage and hour claims, even those in which the facts appear to present difficult issues of individual proof." Martinez v. Joe’s Crab Shack Holdings, Inc., 165 Cal. Rptr. 3d 85, 100 (Ct. App. 2013), review granted, 317 P.3d 1183 (Cal. 2014); see also Williams v. Superior Court, 221 Cal. App. 4th 1353, 1370 (2013) (citing Brinker and reversing order denying class certification even though many putative class members did not work off the clock and "were thus not injured"). After Duran, it is clear that "difficult issues of individual proof" can and will frequently preclude class treatment of wage-and-hour claims.
In Duran, the trial court certified a class of 260 "business banking officers" who claimed they had been misclassified as "exempt" outside salespersons and thus were owed overtime pay. (Slip op. at 1–2.) The trial court limited the bench trial to an assessment of an unrepresentative sample of 21 class members (including the two named plaintiffs), and determined that all class members had been misclassified as exempt on the basis of the sample group’s testimony. It then extrapolated the average amount of overtime reported by the sample group to enter a $15 million judgment for the entire class. The court repeatedly rejected the defendant’s attempts to introduce evidence regarding the experiences of class members outside the sample group, and it also removed four individuals from the sample group after they opted out of the class.
Duran is a highly significant development in class action and wage-and-hour jurisprudence, and marks an important win for California employers and other class action defendants. The Court’s decision confirms that due process and California law forbid procedural shortcuts, including statistical sampling, that deprive defendants of an opportunity to present their individualized defenses. It also underscores the responsibility of trial courts to ensure that class actions can be feasibly and manageably tried, without altering the substantive law.
2. Conflation of "Calculation of Damages" and "Right to Recover Damages." Many recent Court of Appeal decisions have suggested–based on an erroneous reading of Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal. 4th 319 (2004), and Brinker–that individual issues relating to "damages" are irrelevant to the class certification inquiry. The unanimous opinion in Duran recognized that "'[a]s a general rule if the defendant’s liability can be determined by facts common to all members of the class, a class will be certified even if the members must individually prove their damages.’" (Slip op. at 22.) Significantly, however, the Court "cautioned that class treatment is not appropriate ‘if every member of the alleged class would be required to litigate numerous and substantial questions determining his individual right to recover following the "class judgment" on common issues.’" (Id. at 23.) Thus, while "[d]efenses that raise individual questions about the calculation of damages generally do not defeat certification," the Court observed, "a defense in which liability itself is predicated on factual questions specific to individual claimants poses a much greater challenge to manageability." (Id. at 25.) Of course, the U.S. Supreme Court has held that "[q]uestions of individual damage calculations" may "overwhelm questions common to the class" and prevent a finding of predominance. Comcast Corp. v. Behrend, 133 S. Ct. 1426, 1433 (2013).
The Court concluded that it "need not resolve here whether statistical sampling can ever be used in a misclassification action to prove an employer’s liability to absent class members," but that the trial plan in Duran was not sufficiently representative nor did it allow defendant to present its evidence against classwide liability. (Id. at 50.) The Court’s opinion also contains an extensive discussion of statistical methodology. (Id. at 40–45.) Coupled with the U.S. Supreme Court’s ruling in Comcast, this decision underscores the importance of robust expert submissions at the class certification stage in appropriate cases.
Gibson, Dunn & Crutcher LLP represented amici curiae the National Association of Security Companies, the California Association of Licensed Security Agencies, ABM Security Services Inc., AlliedBarton Security Services, G4S Secure Solutions (USA) Inc., and Securitas Security Services USA, Inc. in Duran v. U.S. Bank National Association and represented Wal-Mart Stores, Inc. in Wal-Mart Stores, Inc. v. Dukes and Comcast Corp. in Comcast Corp. v. Behrend.

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