In Duran v. U.S. Bank National Association, the California Court of Appeal, First Appellate District, overturned a $15 million judgment against U.S. Bank (“USB”) entered in a case tried before Alameda County Superior Court Judge Robert Freedman. In its lengthy and very detailed opinion, the court shredded all the major trial management and evidentiary rulings made by the trial court, holding that its use of flawed statistical evidence and refusal to admit relevant testimony in support of USB’s defense of exempt status denied USB its right to due process. In the first California appellate decision to apply the U.S. Supreme Court’s 2011 Wal-Mart Stores v. Dukes decision, the court determined that the trial management plan was a fatally flawed exercise in “Trial by Formula.” As a final repudiation of the trial court’s rulings, the Duran court also ruled that the class should be decertified.

What Happened in the Trial Court

Two named plaintiffs brought a class action seeking overtime pay on behalf of a class of 260 business banking officers, claiming they were misclassified as exempt outside sales personnel. The trial court certified the class and notice was sent allowing class members to opt out of the lawsuit.

Acting without the agreement of the parties or expert advice, the trial court decided that the case would be tried by choosing a “random” sample of 20 class members to testify at trial. Five alternates were chosen to substitute in if any in the group of 20 could not or would not participate. After this process, attorneys for the class dismissed some claims and added others. Over USB’s objections, the court ordered a second notice to the class and a second opportunity to opt out of the lawsuit. Four of the 20 “random witnesses” (20% of the group) and only 5 of the remaining 250 absent class members (2% of that group) exercised their second chance to opt out of the lawsuit...

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