Duran v. U.S. Bank National Assn., 59 Cal. 4th 1

Background

U.S. Bank (USB) business banking officers (BBOs) sued as a certified class (260 members) alleging misclassification as exempt outside salespeople and unpaid overtime under California law.
The trial court selected a 21-member representative witness group (RWG) — 19 randomly drawn plus 2 named plaintiffs chosen by class counsel — to try liability (phase one) and then extrapolated results to the entire class for damages (phase two).
The court excluded evidence and testimony about work habits of class members outside the RWG, refused USB’s attempts to introduce dozens of declarations/depositions, and barred discovery or impeachment of a post‑trial survey.
Phase one: the court found, largely from RWG testimony, that USB had not proven the outside‑sales exemption and that the whole class was misclassified.
Phase two: plaintiffs’ expert extrapolated RWG average overtime (11.86 hrs/week) to the class with a margin of error ≈43%; the court awarded roughly $15 million (with interest).
The Court of Appeal reversed and decertified the class; the California Supreme Court affirmed the reversal, ordering a new trial and permitting a renewed certification motion.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the trial plan could establish classwide liability by extrapolation from a small sample	Sampling of RWG produced representative proof that all class members were misclassified; defendant’s individualized proofs could wait until damages phase	Extrapolation from a small, biased sample denied USB due process and prevented adjudication of affirmative defenses for individual members	Court held the plan unfair: defendant must have opportunity to litigate affirmative defenses and sampling cannot foreclose relevant individualized evidence
Whether the RWG selection and sample implementation were statistically valid	RWG was randomly drawn and adequate to infer classwide liability/damages	Sample was too small, nonrandom (opt‑outs, inclusion of named plaintiffs), and subject to selection/nonresponse bias, producing unreliable estimates	Court held the sampling implementation was fatally flawed (size, selection bias, high margin of error)
Whether exclusion of non‑RWG evidence violated due process	Excluding outside declarations and depositions was consistent with trial plan and preserved efficiency	Exclusion prevented USB from presenting evidence of many properly‑classified BBOs and from impeaching the sampling model	Court found exclusion an abuse of discretion because it foreclosed USB’s substantive defenses
Whether the damages extrapolation (high margin of error) satisfied fairness standards	Mt. Clemens and Bell permit approximate damages via sampling where employer failed to keep records; margin of error can be offset by corroborating indicia	A ~43% margin of error (and sampling bias) is intolerably large and may overstate liability; Mt. Clemens does not license classwide liability proof by unreliable sampling	Court held the damages extrapolation unreliable and that Mt. Clemens does not justify classwide liability based on a flawed statistical model

Key Cases Cited

Ramirez v. Yosemite Water Co., 20 Cal.4th 785 (Cal. 1999) (outside‑sales exemption focuses on whether employee customarily/regularly works >50% away from employer; inquiry emphasizes how employee actually spends time and employer’s realistic expectations)
Sav-On Drug Stores, Inc. v. Superior Court, 34 Cal.4th 319 (Cal. 2004) (certification may be appropriate when job duties are standardized; courts must manage individual issues and may use representative methods)
Bell v. Farmers Ins. Exchange, 115 Cal.App.4th 715 (Cal. Ct. App. 2004) (sampling accepted to prove damages only after classwide liability had been established and after extensive expert cooperation)
Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (Cal. 2012) (manageability of affirmative defenses affects certification; distinguishes defenses that extinguish liability vs. those that affect damages)
Mt. Clemens Pottery Co. v. Anderson, 328 U.S. 680 (U.S. 1946) (when employer’s records are inadequate, employee may prove hours by reasonable inference and employer must rebut precise amount)
Teamsters v. United States, 431 U.S. 324 (U.S. 1977) (pattern‑and‑practice aggregate proof and burden‑shifting in disparate treatment cases; court explains limits of analogy to wage‑and‑hour misclassification)
Wal-Mart Stores, Inc. v. Dukes, 564 U.S. 338 (U.S. 2011) (class certification cannot be premised on denying defendant the opportunity to litigate individualized statutory defenses)