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Posts Tagged ‘wage and hour’

The California Supreme Court issued its long-awaited decision in Duran v. U.S. Bank National Association yesterday, addressing the use of statistical sampling as a way of evaluating aggregate liability and damages in a class action. Although Duran is a wage and hour case, its analysis is pertinent to the use of statistical evidence in a variety of other class action contexts.

In the opening line of his majority opinion, Justice Corrigan referred to Duran “an exceedingly rare beast” because it was a wage and hour class action that had proceeded all the way through trial to verdict.  In the trial court, the plaintiff had presented testimony from statistician Richard Drogin, who had also notably served as an expert for the plaintiffs in Walmart Stores Inc. v. Dukes.  Drogin proposed a random sampling analysis that purported to estimate the percentage of the defendant’s employees that had been misclassified for purposes of entitlement to overtime pay.  The trial court did not rely on Drogin’s analysis but instead came up with its own sampling approach, which involved pulling the names of 20 class members, hearing testimony from these witnesses along with the named plaintiffs, and then extrapolating the court’s factual findings across the entire class in order to determine the defendant’s liability.

The supreme court affirmed a decision by the Court of Appeal holding that this sampling approach violated due process and was a manifest abuse of discretion.  Generally, there were two independent reasons for the supreme court’s conclusion: 1) the use of random sampling deprived the defendant of the opportunity to present individualized evidence supporting its defenses to the claims; and 2) the sampling method adopted by the court was inherently flawed and unreliable.

Without categorically rejecting the use of statistics as a tool in managing class action litigation, the supreme court identified numerous conceptual limitations on its use.  First, “[s]tatistical methods cannot entirely substitute for common proof . . . .  There must be some glue that binds class members together apart from statistical evidence.”  So, while statistics may serve as circumstantial evidence to support a common issue–such as the existence of centralized policy or practice, they may not be used as a substitute for establishing commonality or for avoiding individualized determination of individual issues–such as by generalizing effects of a given policy or practice on large groups of claimants where the effects vary in actuality.

Second, a trial court cannot utilize statistical evidence in a way that prevents the individual adjudication of individual defenses.  Although courts are encouraged to develop innovative procedures in managing individual issues, a court cannot ignore individual issues altogether or prevent them from being decided on an individual basis.

Third, if statistical evidence is to be used as part of a litigation plan for managing complex class action, the methods to be employed should be presented, evaluated, and scrutinized at the class certification stage.  The court should not simply assume that statistical methods will permit class treatment and certify the class based on this hypothetical possibility.

Fourth, the court must ensure that the statistical method to be employed has to be reliable, based on statistically valid data, and not prone to a high margin of error.  In other words, junk science or ad hoc, rough justice are not enough.

The Duran opinion is worthy of careful study for anyone considering the use of statistics in class certification proceedings, both in the wage and hour context and in class actions more generally.  It also provides a colorful illustration of the due process and manageability problems posed by the “trial by formula” approach to class actions that the United States Supreme Court criticized in Dukes.

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In preparing for our webinar on the use of statistics in class actions tomorrow, I discovered that the California Supreme Court has granted review in Duran v. U.S. Bank, a case that could have major implications for the future of statistical sampling as common proof in class actions.  See my April 6, 2012 post titled Trial by Formula, Statistical Sampling, and the Right to Due Process for a summary of the Court of Appeal’s decision, which has lost its precedential effect by virtue of the decision to grant review.  The supreme court’s docket for the case  is available here.   Kimberly Kralowec has posted many of the court documents on her blog, The UCL Practitioner.

The folks at the Litigation Impact Journal have noted that the decision to grant review in Duran was foreshadowed by Justice Werdegar’s concurrence in his own majority opinion in the California Supreme Court’s highly publicized decision last month in Brinker Restaurant Corp. v. Superior Court.  In that concurrence, Justice Werdeger argued that “[r]epresentative testimony, surveys, and statistical analysis all are available as tools to render manageable determinations of the extent of liability [in wage and hour cases].”  In Duran, the court will have an opportunity to explore that issue in more detail.

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Class Action Blogosphere Weekly Review’s “Lay Down the Gauntlet” Challenge of the Week

I know this is going to make me sound like Ayn Rand, but why would we possibly want to encourage a public policy that imposes liability on employers for failing to force all of their hourly employees not to work during meal and rest breaks?

I sense that there are a few bloggers out there who will have an answer (or who will take great issue with the premise of the question).

For continuing coverage of proceedings in the California wage and hour class action decision, Brinker Restaurant Corp. v. Superior Court, and other recent decisions involving wage and hour claims for unpaid time worked during meal and rest breaks, see this post and others from The Complex Litigator…

http://www.thecomplexlitigator.com/2008/10/brinker-redux-in-brinkley-v-public-storage-inc.html

… and this post from Wage Law:

http://wagelaw.typepad.com/wage_law/2008/10/old-and-busted-brinker-new-hotness-brinkley.html

With that out of the way, here are some more blog entries from the week that was that might be of interest to class action practitioners:

Class Action Decisions

William Shatner stars in this typically colorful case review from CAFA Law Blog of a California federal court’s order remanding to state court a class action that had been removed under the Class Action Fairness Act (CAFA), finding that the defendant had filed to establish by a preponderance of the evidence that the $5 million amount in controversy threshold was met:

http://www.cafalawblog.com/-case-summaries-dont-be-a-namby-pamby-negotiate-your-own-amount-in-controversy-for-cafa-removal.html

Classified discusses another CAFA amount-in-controversy decision accepting jurisdiction where the damages requested only “likely exceed” the $5 million amount:

http://www.carltonfields.com/classactionblog/blog.aspx?entry=243

North Carolina Business Litigation Report summarizes a North Carolina Business Court’s decision permitting a plaintiff to withdraw class claims and enter into a confidential settlement with the defendant:

http://www.ncbusinesslitigationreport.com/2008/10/articles/class-actions/business-court-allows-confidential-settlement-of-individual-claims-in-class-action-suit/

Class Action Defense Blog provides a synopsis of a Ninth Circuit Court of Appeals decision addressing choice of law issues and their impact on the enforceability of a class arbitration waiver:

http://classactiondefense.jmbm.com/2008/10/ucl_class_action_defense_cases_7.html

This guest post on Drug and Device Law Blog addresses the Federal Circuit Court of Appeals’ recent decision concluding that a “reverse payment settlement” in which a the holder of a patent to a branded drug agreed to make payments to a generic challenger in settlement of a patent infringement lawsuit did not violate antitrust laws:

http://druganddevicelaw.blogspot.com/2008/10/federal-circuit-upholds-reverse-payment.html

How Appealing summarizes a decision by Judge Richard A. Posner that “offers a useful discussion of the pros and cons of class actions” and draws from the personal experience of the wives of the panel’s members in reversing class certification in a deceptive advertising case:

http://howappealing.law.com/102808.html#030880

Class Action (and Related) Commentary

Overlawyered reports on an order compelling the transfer of more than 600 mentally disabled residents of a nursing facilities to group homes entered as the result of a settlement in a public interest group’s class action against the Commonwealth of Massachusetts, the objection of the parents of one of the residents arguing that their son’s health would be endangered by the transfer, and proposed legislation to require courts to notify parents and guardians in class actions and give them a right to opt out:

http://overlawyered.com/2008/10/evicted-by-his-own-class-action-lawyers/

In this Huffington Post entry, Tracy Siska comments on the indictment of former Police Commander Jon Burge and class actions filed against the Chicago Police Department alleging that illegal detentions and prisoner abuse persisted in the department persisted until as recently as 2005, years after the events underlying Burge’s indictment:

http://www.huffingtonpost.com/tracy-siska/chicago-police-burge-and_b_138242.html

Point of Law offers an abstract from a National Review article discussing the Alaska “loser-pays” rule for shifting attorneys fees:

http://www.pointoflaw.com/archives/2008/10/commonsense-jus.php

Class Action Trends

Jan Norman on Small Business discusses trends in California wage and hour class actions and offers tips for employers from employment lawyer John McKasson:

http://jan.freedomblogging.com/2008/10/28/californias-fad-workplace-class-action-lawsuits/3411/

The D&O Diary discusses “The New Phase of Credit Crisis Litigation” as well as other class-action-related trends, and provides a bit of comic relief at the end of this post:

http://www.dandodiary.com/2008/10/articles/subprime-litigation/the-new-phase-of-credit-crisis-litigation/

Class Action Scandals

The New York Times Deal Book Blog reports on the sentencing of two former Milberg Weiss partners for their role in an illegal kickback scheme (see CAB entry here):

http://dealbook.blogs.nytimes.com/2008/10/28/bershad-gets-6-months-in-class-action-scheme/

Mass Tort Litigation Blog reports on the Kentucky Supreme Court’s decision to disbar two lawyers involved in a scandal involving alleged wire fraud in connection with a Fen-Phen class action settlement:

http://lawprofessors.typepad.com/mass_tort_litigation/2008/10/lawyers-involve.html

Class Action Potpourri

FP Legal Post comments on a video game featuring vicious class action lawyers.  (See CAB entry here) …

http://network.nationalpost.com/np/blogs/legalpost/archive/2008/10/28/surefire-class-action-defence.aspx

… and Securities Docket doesn’t think the game is a good idea:

http://www.securitiesdocket.com/2008/10/27/worst-video-game-ever-class-action-killers/

The Australian newspaper’s Letters Blog includes a reader’s entry suggesting a government-sponsored class action is a better response than a bailout to the economic crisis:

http://blogs.theaustralian.news.com.au/letters/index.php/theaustralian/comments/class_action_will_show_wall_st_we_mean_business/

and finally, The UCL Practitioner offers “An Introduction to the California Blogosphere,” which includes reviews of several of the great California-and-class-action-centric blogs often featured on CABWR and others covering a variety of legal topics:

http://www.uclpractitioner.com/2008/10/blawg-review-183.html

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Yesterday, the California Court of Appeal issued an important class certification opinion in a wage and hour case, Brinker Restaurant Corp. v. Superior Court (2008 WL 2806613).  This decision was highlighted in an entry yesterday on The Complex Litigator (see yesterday’s CABWR).

The Baker Hostetler Employment and Labor Practice Team has issued an Executive Alert summarizing the decision and its possible implications for employers.  Here is an excerpt:

Employers should pay particular attention to their existing company policy on meal and rest periods and whether there is a policy discouraging off-the-clock work and time-shaving procedures. Employers also should be aware that this decision may be appealed to the California Supreme Court.

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