California Labor &
Employment Law Blog
Court Affirms Denial of Class Certification for Business Bankers—Again
Jan 19, 2018

Court Affirms Denial of Class Certification for Business Bankers—Again

Topics: Class Actions, Court Decisions

The First Appellate District had a second occasion to rule upon class certification issues in the case of Duran v. U.S. Bank (“Duran II”), and again ruled that class treatment was improper because Plaintiffs failed to demonstrate that common issues predominated or that the case would be manageable as a class action, thereby affirming the trial court’s ruling denying class certification.  In doing so, the Court of Appeal confirmed several key holdings from the California Supreme Court’s decision in this matter (Duran v. U.S. Bank, 59 Cal.4th 1 (2014), “Duran I”).  The Court of Appeal ruled that in interpreting California’s outside salesperson exemption, “‘the primary considerations are how and where the employee actually spends his or her workday,’” citing Duran I at 27.  Justice Liu’s concurrence regarding “the realistic requirements of the job” did not change these key factors in assessing the applicability of the outside sales exemption, but rather elucidated situations where an employer’s “realistic expectations” may be shown by common proof and presented some potential approaches to using representative sampling to prove class liability while taking into consideration the presence of individual issues and a defendant’s right to challenge the sampling plan.  Additionally, the Court of Appeal further ruled that while surveys and statistical sampling may be used to support class claims, “‘there must be some glue that binds class members together apart from statistical evidence,’” citing Duran I at 31.  In other words, statistical methods cannot substitute for common proof where the factual record indicates the absence of predominant common issues.

This Court of Appeal had previously reversed a judgment in Plaintiffs’ favor after a bench trial, and decertified the class.  (137 Cal.Rptr.3d 391 (2012), superseded by Duran I). In its prior decision, this Court found that the trial court had deprived U.S. Bank’s right to due process by arbitrarily imposing a deeply flawed sampling plan consisting of statistical sampling and representative testimony and wholly ignoring the plethora of individual issues presented by the factual record.  The Court of Appeal’s prior decision was affirmed in full by the California Supreme Court in Duran I; however, the Supreme Court ruled that the trial court, upon remand, may entertain a new motion for certification.  In their renewed bid to certify the class, Plaintiffs presented evidence of a survey conducted by Plaintiffs’ retained expert Jon A. Krosnick (“2015 Survey”), that purported to show the putative class members spent a majority of their work time inside U.S. Bank’s offices and worked overtime.  Using the results of the 2015 Survey, Plaintiffs again proposed using representative testimony to prove classwide liability and presented statistical evidence of proposed sample sizes ranging from 15 to 50 business banking officers ("BBOs"), with associated respective margins of error ranging from 5.53% to 11%.  U.S. Bank presented evidence through its statistical expert Andrew Hildreth to challenge the validity and reliability of the 2015 Survey.  Hildreth opined that the 2015 Survey suffered from self-selection bias, as well as serious measurement and estimation errors.  In order to assess the opinions offered by Krosnick and Hildreth, the trial court appointed an independent expert, Kent D. Van Liere. 

The Court of Appeal observed that the trial court found the 2015 Survey unreliable “for any purpose.”  Krosnick had surveyed the same population of BBOs at U.S. Bank in 2008 regarding their purported overtime hours.  In 2008, the surveyed BBOs reported working an average of 53.76 hours per person per week; whereas in 2015, the BBOs reported working an average of 63.18 hours per person per week.  Indeed, 18 individuals responded to both surveys, and all but two had changed their estimates such that the purported average hours worked per week by this sub-group increased by an average of 5.8 hours per week.  The wide disparity of nearly 10 overtime hours per week from the same population on the same question raised serious questions as to the reliability of the 2015 Survey, including the reliability of its purported results of where BBOs spent a majority of their work time.  Additionally, the trial court further found that Plaintiffs’ proposed sample sizes were grossly understated because of their use of total hours worked, as opposed to the relevant legal question of overtime hours worked.  Given these significant shortcomings of the 2015 Survey, the trial court concluded that a sample size of the entire class would be necessary and the trial would devolve into a multiplicity of individual mini-trials, both on the issue of liability and to establish an aggregate restitution award, rendering the case unmanageable as a class action.  In affirming the ruling denying certification, the Court of Appeal ruled that the trial court’s findings in crediting Hildreth’s opinions on these critical issues were amply supported by the record, and correctly applied the criteria governing class certification.  The Court of Appeal’s decision can be found here

CDF represented U.S. Bank during the entire pendency of this case, including this most recent appeal.

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Sacramento Office Managing Partner and Chair of CDF’s Traditional Labor Law Practice Group. Mark has been practicing labor and employment law in California for thirty years. His practice has a special emphasis on the representation of California employers in union-management relations and handling federal and state court litigation and administrative matters triggered by all types of employment-related disputes. He is also adept at providing creative and practical legal advice to help minimize the risks inherent in employing workers in California. He recently named “Sacramento Lawyer of the Year” in Employment Law-Management for 2021 by Best Lawyers®.
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