Using Statistics and Surveys to Prove Class Claims -- Duran v. U.S. Bank, N.A.

Appellate courts produce a steady stream of opinions discussing the criteria for certifying class actions.  But guidance as to how such cases should be actually proven at trial has been conspicuously lacking.   This dearth of authority has been remedied somewhat by Duran v. U.S. Bank, N.A.,, in which the California Supreme Court finally came face-to-face with "that exceedingly rare beast: a wage and hour class action that proceeded through trial to verdict."  

Performing an autopsy on this "rare beast" allowed the Court to explain where the trial court went wrong and how other courts might avoid the same mistakes in future class action trials.   

How Not to Conduct A Trial of Class Claims

The issue in Duran was whether, and to what extent, U.S. Bank had denied overtime to a class of loan officers by classifying them as exempt "outside sales" employees when they primarily performed non-exempt "inside sales" activities.    

The trial court developed its own trial plan in which it heard evidence from a sample of 21 out of 260 class members.  From this sample testimony, the Court found that all of the class members (both testifying and non-testifying) were misclassified.  It then calculated class-wide damages by assuming that the testifying and non-testifying employees worked the same number of overtime hours per week.

The Supreme Court rejected this method of proof as unfair and contrary to the Defendant's due process rights.  In particular, the verdict had to be reversed because:

  • The selected sample of 21 employees were neither statistically representative nor numerous enough to support the court's findings as to the rest of the class.  
  • The Court violated the Defendant's rights by barring its proffered testimony that other class members did, in fact, meet the duties of the "outside sales" defense.  

How to Conduct A Trial of Class Claims 

The Supreme Court was highly critical of the lower court's trial plan.  But it did not rule that the plaintiffs' claims could not be tried on a class-wide basis.  Rather, it explained that the existence of certain individual issues such as the percentage of time spent on exempt duties, or the number of overtime hours worked, are potentially manageable.  

The Supreme Court then articulated the following elements of a viable plan for resolving these individual issues in the context of a class-wide trial.  

  • Class-wide claims must be supported by proof of a common set of facts, not merely a statistical showing.  
  • Once these “issues common to the class have been tried, and assuming some individual issues remain, each plaintiff must still by some means prove up his or her claim, allowing the defendant an opportunity to contest each individual claim on any ground not resolved in the trial of common issues.”
  • However, if "sufficient common questions exist to support class certification, it may be possible to manage individual issues through the use of surveys and statistical sampling."
  •  "In general, when a trial plan incorporates representative testimony and random sampling, a preliminary assessment should be done to determine the level of variability in the class. If the variability is too great, individual issues are more likely to swamp common ones and render the class action unmanageable."
  • Moreover, "a class action trial management plan must permit the litigation of relevant affirmative defenses, even when these defenses turn on individual questions.”
  • Yet, "No case, to our knowledge, holds that a defendant has a due process right to litigate an affirmative defense as to each individual class member."

Duran does not attempt to dictate what level of statistical certitude -- i.e., the appropriate "confidence interval" or "margin of error" -- will be appropriate in a particular case.  But it does provide useful guidance in determining when and how expert testimony can be used to make reasonably reliable factual determinations for a large group of individuals.