The California Supreme Court Adds Another Hurdle For Employees Seeking Class Certification

On May 29, 2014, the California Supreme Court issued its highly anticipated decision inDuran v. U.S. Bank Nat'l Assoc., (2014) 59 Cal.4th 1, making clear that before a court can certify a class action, it should require the plaintiff to have a trial plan addressing manageability of the class claims.

The class in Duran was a group of business banking officers that alleged that they were misclassified as exempt from overtime. According to the class of employees, they did not fall within the "outside sales" exemption, which requires that the employee spend more than half of his or her time on sales activities outside the office.

The trial court indicated that any manageability concerns could be alleviated by using a representative sample of testimony from 20 of the 260 class members along with the two named plaintiffs. U.S. Bank was not permitted to introduce evidence regarding the work habits of any other class member outside of this sample. As a result, based upon the representative testimony heard during trial, the trial court found that the entire class of business banking officers were misclassified as exempt.

On appeal, the Court of Appeal reversed the trial court's decision. Thereafter, the California Supreme Court unanimously affirmed the decision of the Court of Appeal, making it unequivocally clear that "in wage and hour cases where a party seeks class certification based on allegations that the employer consistently imposed a uniform policy or a de facto practice on class members, the party must still demonstrate that the illegal effects of this conduct can be proven efficiently and manageably within a class setting."Duran, at 29. The Court went on to state that "trial courts must pay careful attention to manageability when deciding whether to certify a class action."

In its decision, the California Supreme Court heavily criticized the trial court's "seriously flawed" trial plan, stating that the court must preserve a defendant's due process rights by allowing them to have the opportunity to present their affirmative defenses, even if it these defenses hinge upon individualized issues. Further, the Court recognized that although it is not feasible to introduce testimony as to every class member, if individual issues do prove to be unmanageable, the class should not be certified.

What does this mean for employers?

The decision makes it more difficult for employees seeking class certification and prevents trial courts from simply rubber stamping class certification motions. Now, not only must the plaintiff show that common issues predominate, but they must also consider issues related to manageability. If individualized issues predominate, making the case unmanageable, it should not be certified.

Although the Court called this case an "exceedingly rare beast," it certainty brings the issue of manageability into the discussion of class certification, adding one more hurdle for plaintiffs. Nevertheless, Duran provides a clear standard for trial courts to following when deciding whether class certification should be granted.

This decision is certainly good news for employers, and is contrary to a recent trend of decisions in favor of plaintiffs seeking class certification.

If you have any questions concerning these developments, please do not hesitate to contact us.

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