Duran v. U.S. Bank Nat’l Ass’n, 59 Cal. 4th 1 (2014)

Plaintiffs in this case are loan officers for U.S. Bank (“USB”) who claim they were misclassified as exempt employees under the outside salesperson exemption. After certifying a class of 260 plaintiffs, the trial court devised a plan to determine the extent of USB’s liability to all class members by extrapolating from a random sample of 21 plaintiffs. Based on testimony from the small sample group, the trial court found the entire class had been misclassified and ultimately rendered a verdict of approximately $15 million (an average recovery of over $57,000 per employee). The California Supreme Court affirmed the judgment of the court of appeal reversing the trial court’s judgment and holding that the trial plan’s reliance on a representative sampling to determine liability denied USB its due process right to litigate affirmative defenses. The Court concluded that “[i]f statistical methods are ultimately incompatible with the nature of the plaintiffs’ claims or the defendant’s defenses, resort to statistical proof may not be appropriate. Procedural innovation must conform to the substantive rights of the parties.” See also Hall v. Rite Aid Corp., 226 Cal. App. 4th 278 (2014) (suitable seating class action was improperly decertified where order was based on an assessment of the merits of plaintiffs’ theory rather than whether the theory was amenable to class treatment).