On February 6, 2012, the California Court of Appeals for the First Appellate District (based in San Francisco) decertified a nationwide class of business banking officers and overturned a $15 million judgment that was entered following a bench trial. Duran v U.S Bank National Association, Case No. A125557 (CA Dist. 1 Ct. App., Feb. 6, 2012). Duran involved an employment class action brought under California's unfair competition law (Business & Professions. Code § 17200) on behalf of 260 business banking officers who claimed that they were misclassified and denied overtime pay against U.S Bank National Association (“USB”).
In Duran, the trial court entered its own trial plan that allowed plaintiffs to prove liability and damages on behalf of the entire class based upon the testimony of 20 randomly selected plaintiffs while rejecting the employer’s evidence consisting of 78 declarations of absent class members who swore under oath they were not misclassified. After a bifurcated trial, the court entered judgment and awarded $15 million to the class.
On appeal, the Duran court concluded that the trial judge's decision to use a 20-person sample was “fatally flawed” and violated USB’s due process rights. First, there was no statistical foundation for the trial court’s initial assumption that 20 out of the 260 is a sufficient size for a representative sample by which to extrapolate either liability of damages. The appellate court noted: “The court appears to have arrived at this procedure on its own, without reliance on legal precedent of the advice of expert witnesses.”
Second, the appellate court found the trial court’s sampling approach improperly precluded the employer from introducing the 78 (relevant) sworn declarations from absent class members refuting plaintiffs' misclassification claims. The Duran court noted: "…the court erred when, in the interest of expediency, it constructed a set of ground rules that unfairly prevented USB from defending itself. These ground rules were the product of the trial court. We do not suggest that the implementation of any particular additional procedural tool would have satisfied due process. We simply hold that the court, having agreed to try this matter as a class action, denied USB the opportunity to defend itself by flatly foreclosing the admission of potentially relevant evidence.”
Finally, the appellate court ordered the class decertified also based on the trial court’s flawed trial plan.