California Supreme Court Clarifies Standard for Certifying Employee Misclassification Actions
Sacramento, CA (Law Firm Newswire) August 15, 2014 - In May, Duran v. U.S. Bank National Association came before California's Supreme Court. The resulting ruling will provide guidance to other courts attempting to decide whether individual employee wage actions may remain certified or if they must be certified as class actions.
Duran v. U.S. Bank National Association began as a complaint alleging that loan officers working for the bank were misclassified under California Labor Code § 1171 and deserved overtime pay for work they had done. The trial court certified this case as a class action suit according to evidence suggesting that a loan officer was a standardized position. The bank classed all officers as exempt without considering their work habits or duties. Furthermore, the bank failed to monitor or train workers to make sure exemption requirements were met. The bank officers claimed to be suing on behalf of some 260 other employees.
When the class action was certified, the bank responded, showing that a large number of its officers did in fact meet the exemption standard.
“However, the trial court chose to use testimony from randomly selected class members, plus the two named plaintiffs," Sacramento business attorney Deborah Barron outlined. "The verdict applied to the plaintiffs and related to all loan officers, but it was based on testimony only from the selected class members and two named plaintiffs.” The first trial decision ruled that U.S. Bank owed the employees $15 million in damages.
The case was then appealed and reversed with stinging criticism from the appellate court. The appellate court decided that the sample group that the trial court used denied the bank due process. When the case finally reached the California Supreme Court, the sampling method the trial court used was comprehensively rejected.
The Duran decision is bound to have a far-reaching impact, prompting trial courts to analyze cases at the time of class certification, paying close attention to practical means by which individual defenses may be resolved. The Supreme Court guidelines will also offer a trial plan that allows employers to litigate individual liability defenses. Simply put, the court's decision sharpened the focus of proper class certification.
The Supreme Court also indicated, without directly stating so, that earlier vague standards regarding certification of class actions are no longer good law. “With this latest decision,” said Barron, “the playing field has been levelled for employers litigating certification of workers in employee class actions.”
Duran is a step in the right direction to clarify the law, affirm defendant’s rights, ground due process, allow presentation of individual defenses and instruct other courts to assess those rights when the class action is certified. “It gives the whole process less of meandering around a football field and more of focusing on what courts want and need to ensure smooth litigation,” Barron illustrated.
The Duran decision also created several noteworthy signposts for future cases of this nature. The California Supreme Court opined that settlement should never be considered a forgone conclusion for any class action and that now courts must, at the certification stage, consider a plan for how individual issues may be managed at trial.
It was further noted that a class action must be considered a procedural device only, it and may not be used to abrogate a party’s rights. As such, trial plans must be based on solid evidence, surveys and samplings, not on random interviews designed to increase their validity.
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