Litigating California Wage & Hour and Labor Code Class Actions

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sample. 393 The court determined that the Bank had misclassified 19 of the 20 class members in the sample, and then extrapolated from that result to a conclusion that all 260 class members had been misclassified. 394 The court then conducted a damages phase in which it adopted the view of plaintiffs’ expert that, with a 95% confidence level, the average class member worked 11.87 hours of overtime per week, with a margin of error of 43%—in other words, the actual average overtime could fall anywhere in the range of 6.7 hours to almost 17 hours per week. 395 The trial court entered judgment against the Bank in the amount of approximately $15 million. 396 The Ruling The Court of Appeal reversed the judgment because it found that the trial plan did not reflect a statistically significant sample of the class or a reliable methodology. 397 Although the Court of Appeal stopped just short of issuing a bright line rule, it came close to holding that statistical extrapolation cannot determine collective liability in a wage and hour class action. 398 The decision also recites trial court errors that deprived the Bank of fundamental due process. 399 The Court of Appeal further faulted the trial plan for denying the Bank a chance to put on any evidence outside of the trial sample, including the testimony of class members to show that they were properly classified. 400 This evidence, if admitted and credited, would have established that at least one-third of the class was properly classified. 401 The Court of Appeal was troubled that the judgment awarded an average of over $50,000 to each of the 239 absent class members, while the Bank was precluded from putting on evidence that might have precluded at least one-third of them from any recovery: “fundamentally, the issue here is not just that USB was prevented from defending each individual claim but also that USB was unfairly restricted in presenting its defense to class-wide liability.” 402 393 Id. at 263-264. 394 Id. at 238-239. 395 Id. at 247. 396 Id. 397 Duran, 203 Cal. App. 4th at 247-248. 398 Id. at 257-258. 399 Id. at 259-276. 400 Id. at 259. 401 Id. at 260. 402 Id. at 262. Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 88
In reaching this conclusion, the Court of Appeal cited the U.S. Supreme Court’s disapproval of “trial by formula” in Wal-Mart Stores v. Dukes: “the same type of ‘trial by formula’ that the U.S. Supreme Court disapproved of in Wal-Mart is essentially what occurred in this case.” 403 In the damages phase of trial, the trial court compounded its statistical errors in constructing the trial sample utilized in the liability phase. 404 The trial court failed to follow acceptable statistical principles in Phase I, and then utilized those improper liability findings as the basis for restitution calculations in Phase II. 405 The improper sampling methodology in Phase II resulted in a 43.3% margin of error in determining the Bank’s more than $14 million aggregate liability on restitution, which the Court of Appeal identified as a separate due process violation. 406 Although the Plaintiffs cited Bell v. Farmers Insurance Exchange as precedent for using statistical sampling to prove liability and damages, the Court of Appeal distinguished Bell on the grounds that in Bell the sampling methodology was agreed to by the parties, and that the sampling was used only to determine collective damages, not liability. 407 What Duran Means For Employers The Duran decision is unquestionably welcome news for employers defending class actions in California. No California appellate court has ever held that statistical sampling may be used to prove liability, and now Duran confirms that such a proposition is highly dubious, while stopping just short of categorically repudiating it. Any trial court attempting to craft a class action trial plan will wait to avoid the statistically improper methodologies employed by this trial court, both as to liability and as to damages. Another key lesson from Duran is that employers should object at every opportunity to trial schemes that lack statistical support and that may offend due process. The decision also contains excellent language and analysis supporting decertifying a wage and hour class action in appropriate circumstances. Employers can only hope that the California Supreme Court will not disturb this well-reasoned ruling. G. Relitigation of Class Certification Denials Litigation through class certification can be tremendously expensive for employers. The primary justification for the expenditure of litigating class certification is that if the employer 403 Duran, 203 Cal. App. 4th at 259. 404 Id. at 268-269. 405 Id. 406 Id. 407 Id. Seyfarth Shaw LLP | www.seyfarth.com Litigating California Wage & Hour Class Actions (12th Edition) 89
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Litigating California Wage & Hour a
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Table of Contents I. Introduction a
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A. Disclosure of Class Member Names
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associated statutory penalties. 1 T
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who does not meet the threshold com
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exempt work is of a kind which in e
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3) The employee performs his or her
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decisions have concluded that under
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Bell court to look beyond the Wage
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place of business, would that quali
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IWC had the authority to promulgate
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stores” by providing them a porti
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declare such a system illegal witho
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employers should be able to defend
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waive the right to reimbursement, s
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Due to the ambiguity in the meaning
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For each workday the employer fails
Page 35 and 36:
Arguably, no additional $100-per-pa
Page 37 and 38:
permitted” the employee to work t
Page 39 and 40: federal decisions also held that an
Page 41 and 42: for all overtime hours worked. The
Page 43 and 44: much broader, such as the court’s
Page 45 and 46: In the appeal of Chau, the appellat
Page 47 and 48: years before the lawsuit, or for an
Page 49 and 50: imposition of penalties, 194 routin
Page 51 and 52: In one such class action, Elliot v.
Page 53 and 54: First, there has been a substantial
Page 55 and 56: Recent court decisions have begun t
Page 57 and 58: of her hours was paid at a rate of
Page 59 and 60: the limitations period for a penalt
Page 61 and 62: passage, then the employee could st
Page 63 and 64: all, but rather simply to proceed w
Page 65 and 66: Shortly thereafter, another Divisio
Page 67 and 68: and the ability to bring a collecti
Page 69 and 70: XIII. Class Action Fairness Act of
Page 71 and 72: the plaintiff is “master of her c
Page 73 and 74: alleged conduct or any related cond
Page 75 and 76: Initially, the decisions were split
Page 77 and 78: XIV. Class Certification A. General
Page 79 and 80: expectations and the realistic requ
Page 81 and 82: In the immediate wake of Sav-On, th
Page 83 and 84: Similarly, employers may argue that
Page 85 and 86: A 5 to 4 ruling reversed the Ninth
Page 87 and 88: facility to the next, or variations
Page 89: employer’s defense arsenal, and t
Page 93 and 94: party who seeks the same relief, pr
Page 95 and 96: is to be so maintained.” This det
Page 97 and 98: speech. 429 Therefore, the court he
Page 99 and 100: Puerto, or Crab Addison cases would
Page 101 and 102: epresentative. That question was an
Page 103 and 104: CashCall to disclose the identities
Page 105 and 106: nothing but still are bound by the
Page 107 and 108: Initially, there appeared to be a v
Page 109 and 110: the case. As any one of these class
Page 111 and 112: have any great impact on class sett
Page 113 and 114: plaintiff’s attorney and putative
Page 115 and 116: the California Supreme Court issued
Page 117 and 118: While California courts have essent
Page 119 and 120: The plaintiffs attempted to justify
Page 121: Breadth. Depth. Results. www.seyfar
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