Yesterday, the California Supreme Court issued its long-awaited opinion, Duran v. U.S. Bank National Association, ___ Cal.4th ___ (May 29, 2014). The ruling is a victory for the Duran plaintiffs, who now have their putative class action back, along with an opportunity to re-try their case on remand, and clear guidance on how to successfully litigate their case going forward.
For class action plaintiffs generally, the ruling is also a victory. Try as they might, defense-side interests failed to achieve their goal of eliminating the class action as a procedural device in misclassification cases involving an exemption defense.
To the contrary, in Duran, the Supreme Court confirmed principles critical to preserving the class action procedure as a tool for courts to use when they need to efficiently adjudicate the claims of large groups of plaintiffs against a single defendant.
For example, under Duran, "[s]tatistical sampling may provide an appropriate means of proving liability and damages" in class action litigation. Slip op. at 2 (emphasis added). The Court provided ten pages of guidance on how to develop and use this type of evidence. See id. at 40-49.
As previously held in both Sav-on and Brinker, class certification may be granted even if the case presents individualized issues in addition to the common ones. The pertinent question is whether the individualized issues can be effectively managed. Slip op. at 22-25. Statistical sampling is one of many available management tools that the trial court may allow the parties to use. See id. at 27.
The opinion clarifies that a defendant's affirmative defenses should be considered at the class certification stage, and that the trial management plan must allow the defendant to present them—which, the Court held, the plan adopted by the trial court in Duran did not. Slip op. at 29-35. However, the defendant may not dictate to the trial court how the defenses are presented.
U.S. Bank argued that it had a due process right to adjudicate its exemption defense by calling every class member to the stand. As a result, the bank claimed, there could be no class action because the individualized evidence it wanted to present would swamp the common evidence. The Supreme Court rejected that reasoning in Duran.
Instead, the Court held that defendants do "not have an unfettered right to present individualized evidence in support of a defense," let alone "a due process right to litigate an affirmative defense as to each individual class member." Id. at 30, 35. The defendant's "opportunity to present proof of affirmative defenses" must adhere to "whatever method the court and parties fashion" for their trial. Id. at 50. The defendant must be allowed to present its defenses (an issue that was undisputed in Duran), but there is a give and take. If the plaintiff proposes to use statistical proof, the trial court must adopt a trial management plan that accommodates the defenses, but on the flip side, the defendant cannot defeat certification by insisting on presentng its evidence in a manner contrary to the plan.
There is a lot more to be said about the Duran opinion, and much more I am sure will be written about it in the coming weeks. Bryan Schwartz has a post on the opinion here and Scott Leviant has one here. I think Duran is likely to be spun initially as a defense victory, but time will tell a different story, as happened after Brinker. The flaws in the underlying litigation in Duran were unique to that case, and they are unlikely to reappear in other litigation. In the Court's words, the case was "an exceedingly rare beast." Slip op. at 1. Although the Duran judgment stands reversed, the broader legal principles announced in the opinion reinforce the bedrock on which the class action procedure stands in California.
On a personal side note, my blogging has been sparse this past month due to the press of other business, including two summary judgment oppositions and a class cert. reply. I am also in the process of relocating my office to another building in San Francisco, and I will have a blog post with my new address after we've moved. Finally, my service provider TypePad has been the target of a series of DDoS attacks in recent weeks. These attacks have taken down the TypePad website and all TypePad blogs, including mine, temporarily. If you visit and the site is down, that is probably the reason. It will be back soon.
