United States: California Supreme Court Stabilizes The Law In California Misclassification Class Action Cases

In a long-awaited decision, the California Supreme Court in Duran v. U.S. Bank National Association, S200923 (May 29, 2014), clarified California's standard for certifying class actions in employee misclassification cases. In doing so, the Court issued badly needed guidance to trial courts deciding whether employee wage class actions may be certified (or remain certified) as class actions. While the Court's standard is not identical to that set forth in the U.S. Supreme Court's recent decisions, Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct 2541 (2011) and Comcast v. Behrend, 133 S. Ct. 1426 (2013), Duran is a major step in bringing California's law on class certification in line with the standards prevailing at the federal courts and in other states. 

Duran's effect will be far-reaching. The Court's rigorous and sensible analysis requires trial courts to conduct a far more thorough analysis at the time of class certification concerning the practical means by which individual defenses to class claims can be resolved, including a realistic trial plan that permits employers to litigate individual liability defenses. Although the decision did not expressly overrule any prior authority, its reasoning suggests that many cases in recent years applying vague and soft standards for certification of employee wage class actions may no longer be good law. The result will likely be a fairer playing field for employers in litigation over certification of employee class actions.


Duran arose from a complaint alleging that loan officers working for USB were misclassified as exempt outside salespersons under California Labor Code § 1171. Relying heavily on the California Supreme Court's 2004 decision in Sav-On Drug Stores v. Superior Court, the trial court certified the case as a class action based on evidence that the loan officer position was "standardized," that the company had classified all loan officers as exempt without examining each employee's duties or work habits, and that the company allegedly failed to train or monitor employees to ensure that the exemption requirements were satisfied.

Duran is particularly significant because, as the Court put it, it was "an exceedingly rare beast:  a wage and hour class action that proceeded through trial to verdict." Because of this, the trial court in Duran was actually required to implement a trial plan. 

Hence, the problem. From the time of certification onward, the company had shown with declarations and other testimony that many loan officers met the exemption standard. The trial court, however, not only rejected this evidence, it excluded it entirely, relying instead upon testimony from 20 randomly selected class members in addition to the two named plaintiffs (called the representative witness group, or "RWG"). Trial was held in two phases, leading to a verdict against the company as to all loan officers based upon testimony from members of the RWG only.

On appeal, the court in California's First Appellate District reversed, severely criticizing the trial plan's reliance on representative sampling, holding that this denied the company its due process right to litigate affirmative defenses.

The Court's Decision

The California Supreme Court's decision did not reverse the certification order outright, but rather remanded the case to the trial court. However, its extensive affirmation of an employer's right to litigate individual affirmative defenses, and emphatic rejection of the trial court's flawed trial plan, left little doubt that the plaintiffs will have a difficult time crafting a plan that will pass muster under the Court's new standard.  Key features of the Court's decision include the following:

  • The Court forthrightly confronted the assumption implicit in much class action litigation that most cases will settle. Instead, the Court required an actual workable trial plan: "Settlement should never be treated as a forgone conclusion."
  • For the first time, the California Supreme Court explicitly required that courts, at the class certification stage, consider a plan for how individualized issues will be managed at trial:  "Trial courts must pay careful attention to manageability when deciding whether to certify a class action."
  • The Court discussed the use of sampling and statistical evidence, rejecting as flawed the approach adopted by the trial court because the sample was insufficiently large, biased, and had too large a margin of error. In the future, we can expect much more time and effort being expended on both sides with experts arguing the validity of trial plans based on surveys, sampling, and statistics.
  • The decision reaffirmed the principle, similar to the one written in the federal Rules Enabling Act, that "the class action procedural device may not be used to abridge a party's substantive rights." This principle would appear to disapprove a trial plan in which parties who could not recover in a single action could nevertheless recover as part of a class.
  • Although it rejected the notion that an employer had the unlimited right to present individual evidence on every plaintiff in a class, the court nevertheless reinforced the right to present individualized evidence to impeach and challenge "common evidence" in a class action case.
  • The Court fleshed out its previous decision on the outside sales exemption in Ramirez v. Yosemite Water Co., 20 Cal. 4th 785 (1999). Specifically, it discussed when and how that standard might be applied in a class action. Thus, although reliance upon the average hours spent by an employee on an exempt task might not be dispositive in every case, failure to show that employees performed their jobs in uniform fashion presented individualized issues that must be addressed by the court in a motion for class certification. This reaffirmed the trend, first seen in the Court of Appeals' 2006 decision in Dunbar v. Albertson's, Inc., 141 Cal. App. 4th 1422 (2006), in which courts increasingly have denied certification of misclassification class actions because the time spent on various tasks varied within the putative class.
  • Without explicitly saying so, the Court appeared to clarify its 2004 decision in Sav-On, noting that in Sav-On, there was evidence that class members performed essentially the same tasks, most of which were non-exempt.
  • In an intriguing subplot, the Court finessed the question of the extent to which differences in damages can prevent certification. It noted and affirmed the principle that different calculations of damages should not prevent certification. However, it noted that some questions phrased as damages questions might actually inherently require decisions on liability. "In other words, decisions about the fact of liability are reframed as questions about the extent of liability." This boundary will doubtless require further clarification in the future.

Many questions remain. The Court specifically declined to decide whether the standard for adjudication of class certification is different under California's Unfair Competition Law (Cal. B&P Code § 17200), or whether the absence of a uniform policy supports certification if such a policy is required by law. 

In all, however, the Court's Duran decision introduces a welcome clarification to the California law of aggregate litigation. Its definitive affirmation of a defendant's right, grounded in due process, to present individual defenses, and the directive to evaluate those rights at the time a class action is certified, should make the law more practical and less unpredictable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions