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California Appeals Court Reverses Class Action

Discrimination and wage class actions that rely on statistics are getting harder and harder to maintain.  In the wake of the well-publicized Wal Mart Stores, Inc. v. Dukes case, decided by the Supreme Court last year, the California Court of Appeals recently overturned a $15 million judgment entered on behalf of a class of business banking officers at U.S. Bank.  Duran v. U.S. Bank Nat’l Assoc. (Calif. Court of Appeals, First District, Division One, Nos. A125557, A126827; February 6, 2012).  The appeals court found numerous problems with the trial court’s management of the class action and the plaintiffs’ use of statistical sampling to prove liability and damages.

The Duran class consisted of 260 banking officers, who alleged violations of California’s wage and hour laws.  In its defense, USB argued that the class members were exempt employees and sought to dispute liability – a fact specific inquiry – for each class member.  Problems arose when the trial court allowed the plaintiffs to prove liability by merely sampling some 21 bank officers and then extrapolating those findings onto the entire class.  Furthermore, USB was prevented from offering any exculpatory evidence concerning any member other than the 21 member sample population.  The appeals court agreed with USB, ruling that “trial by formula” deprived USB of its due process rights to contest its liability to each member.  Clearly, support for using statistics in large class actions is waning.

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