By Michael Kun
Much has already been written about last week’s California Supreme Court decision in Duran v. U.S. Bank Nat’l Ass’n, a greatly anticipated ruling that will have a substantial impact upon wage-hour class actions in California for years to come. Much more will be written about the decision as attorneys digest it, as parties rely on it in litigation, and as the courts attempt to apply it.
In a lengthy and unanimous opinion, the California Supreme Court affirmed the Court of Appeal’s decision to reverse a $15 million trial award in favor of a class of employees who claimed they had been misclassified as exempt, and to decertify the class. How the$15 million award had been obtained in the first place has been the subject of much discussion and more than a bit of ridicule. In short, the trial court had tried the case by essentially pulling names from a hat to determine which class members would be able to testify at trial, with the defendant precluded from presenting evidence as to other employees. The California Supreme Court described this approach as a “miscarriage of justice.” It then discussed in great length whether, when and how statistical sampling could be used in these cases, among other things.
Already, both the plaintiffs’ bar and the defense bar are claiming that the Supreme Court’s decision is a victory for them.
Because the Supreme Court did not foreclose the possibility that statistical evidence could be used to establish liability in these types of cases – instead, it recognized that “[s]tatistical sampling may provide an appropriate means of proving liability and damages in some wage and hour class actions” — the plaintiffs’ bar is claiming victory. To the extent they contend that Duran allows the use of statistical evidence to prove liability, they are ignoring the most important word in that sentence – “may” – along with the various caveats laid out by the Court.
Because the Supreme Court explained that the process must allow an employer to impeach the statistical model and litigate its affirmative defenses, and that there must be “glue” holding claims together beyond statistical evidence, the defense bar is likewise claiming victory. But even they must admit that it is not the death blow to wage-hour class actions that they may have hoped for.
In truth, Duran is a unusual decision in that it provides more than a few quotes for plaintiffs’ lawyers and defense lawyers alike to rely on.
Ultimately, the most important language in Duran may be this: “A trial plan that relies on statistical sampling must be developed with expert input and must afford the defendant an opportunity to impeach the model or otherwise show its liability is reduced.”
What does this mean?
It means that some trial plans based on statistical sampling may be approved.
And it means that some trial plans based on statistical sampling may not be approved.
It means that a trial court’s analysis will turn, at least in part, on whether the employer will be able to impeach the model and show that it does not work.
And it means that, more than ever, these cases are going to require the parties to retain expert witnesses, and whether classes will be certified will turn on those expert witnesses. Remember, the Court did not just say that a trial plan that relies on statistical sampling might be appropriate. No, it said that such a trial plan “developed with expert input” might be appropriate.
The result of all of this is that, with the plaintiffs’ bar now emboldened because the door has not been shut on the use of statistical evidence on liability, employers may face even more wage-hour class actions in California than before.
And statistical experts can go buy those new houses, cars and boats they’ve been eyeing because their services will be in greater demand than ever. They are the real victors in this decision.