Why Wage-and-Hour Class Actions Need a Valid Trial Plan in California
After 19 years of litigation, a California appeals court reversed a $43.5 million wage-and-hour class action judgment on two independent grounds — both of which highlight the procedural disciplines that successful misclassification class actions require.
A long-running wage-and-hour class action involving roughly 400 California escrow officers ended with a $43.5 million judgment for the class — only to have the Court of Appeal reverse it on two independent grounds. The trial plan violated California Supreme Court precedent on how class-wide proof must work, and the damages phase was improperly delegated to a private referee without the parties' consent. The class was ordered decertified. The named plaintiffs may pursue their individual claims on retrial. The trial court may entertain a new class certification motion — but only if any new class proceeds under the procedural framework the Court of Appeal has just reinforced.
Nineteen Years, Two Classes, and a $43.5 Million Judgment That Did Not Survive Appeal
In Duran v. U.S. Bank National Association, the California Supreme Court memorably described a wage-and-hour class action that proceeded through trial to verdict as an "exceedingly rare beast." The Fifth District Court of Appeal opened its 2026 opinion in Cortina v. North American Title Company by observing that the present case was "even rarer and more beastly" than Duran. The original complaint was filed in April 2007. It took nineteen years to reach merits review on appeal.
The case involved two classes of employees of North American Title Company. The "Nonexempt" class alleged that the employer's policies pressured employees to underreport overtime and skip meal and rest breaks. The "Exempt" class — approximately 400 escrow officers in various roles, working in over 80 offices across 23 California counties over roughly a 10-year class period — alleged they had been misclassified as exempt from California overtime, meal break, and rest break laws.
The trial was bifurcated. The first phase, called the "liability phase," was a bench trial in which the trial court decided whether the employer's exemption defenses were valid on a class-wide basis. The court found against the employer on the exemption defenses, decertified the Nonexempt class, and ordered the case to a second phase to determine damages for the Exempt class.
For the second phase, the trial court appointed a private referee — over the employer's objection and without the parties' consent. The reference proceedings lasted approximately three years and included live testimony from more than 230 class members. The referee made findings and recommendations on damages, which the trial court largely adopted. In August 2022, the trial court entered a judgment of approximately $43.5 million, of which more than half consisted of prejudgment interest accrued over the 15 years between the filing of the complaint and the entry of judgment.
Both sides appealed. The Court of Appeal reversed the judgment on two independent grounds.
First Independent Ground: The Reference Proceedings Were Unauthorized
Under the California Constitution and Code of Civil Procedure, a trial court's authority to delegate matters to a private referee without the parties' consent is strictly limited. The Code of Civil Procedure recognizes two kinds of references: consensual references under section 638, and non-consensual references under section 639 — which are limited to a narrow list of specific functions (accounting, taking depositions, examining documents, and a few other ancillary tasks).
The reference the trial court ordered here did not fit any authorized category. The Court of Appeal described it as "not merely a rare occurrence" but "appearing unprecedented in our state jurisprudence." A three-year reference proceeding involving live testimony from hundreds of class members, in which the referee functioned as the trier of fact for the damages phase of a major class action, exceeded what the Constitution and Code of Civil Procedure permit. The court held that "this error alone compels reversal of the judgment."
Second Independent Ground: The Trial Plan Violated Duran
The first phase of trial also contained prejudicial errors. The plaintiffs' theory was that all approximately 400 members of the Exempt class — despite holding a variety of different job titles, working in different offices across California over a ten-year period — all performed the same allegedly nonexempt work the same way, all the time. To prove this on a class-wide basis, plaintiffs relied on testimony from a sample of class members and argued the sample was representative of the entire group.
The California Supreme Court's Duran decision specifically rejects this kind of reasoning. Duran holds that when statistical sampling is used to prove class-wide liability or damages, the methodology must produce reliable results: a valid extrapolation model requires expert input to determine appropriate sample size and margin of error, and the sample group must be randomly selected. None of those requirements were met in Cortina. For example, in the Branch Manager subgroup of about 156 class members, plaintiffs called approximately 24 witnesses — roughly 15 percent — and asked the court to extrapolate from that non-random, non-statistically-validated sample to the whole group.
Duran also makes clear that when class-wide common proof is unavailable, the alternative of hearing individual testimony from hundreds of class members "turns the class action device on its head." That is essentially what happened in Cortina: the trial court arbitrarily limited the first phase to roughly 100 witnesses per side to address the claims of 700 people, then authorized full individual testimony from the Exempt class in the second phase — but prohibited the employer from questioning those witnesses about the exemption defenses, which had already been deemed to have failed on a class-wide basis in the first phase.
The court held that under Duran, decertification was required as soon as the trial plan proved unworkable, which the Court of Appeal concluded was apparent during the first phase. The class is now decertified. The case has been remanded for retrial of the individual claims of the named plaintiffs. The trial court "is of course free to entertain a new certification motion on remand" — but if it does, it must follow the framework set out in Duran and reinforced by Cortina.
What Cortina Decides — and What It Does Not
It is important to be precise about what Cortina holds. The Court of Appeal did not hold that the employer was correct on the underlying exemption defenses. It did not decide whether the escrow officers in the Exempt class were properly classified, or whether the work they performed met the executive or administrative exemption tests. Those questions remain open for the individual named plaintiffs on retrial and for any future class proceedings.
What Cortina holds is procedural. It says that whatever the merits of any class member's individual misclassification claim, those claims cannot be resolved on a class-wide basis through (a) a trial plan that relies on non-random, statistically invalid sampling and (b) a damages phase delegated wholesale to a private referee over the employer's objection. The judgment was reversed because of how the case was tried, not because the underlying claims were necessarily without merit.
Two practical consequences follow from this. First, the individual named plaintiffs can still pursue their own misclassification claims on retrial. Their claims do not go away — they simply have to be tried as individual cases unless and until a properly structured class is certified. Second, the trial court is expressly authorized to entertain a new class certification motion on remand, and if it does, it must apply Duran's framework: valid statistical methodology, expert input on sampling, randomly selected sample groups, and a trial plan that allows the employer a fair opportunity to litigate its defenses on a class-manageable basis.
The lesson of Cortina is not that misclassification class actions cannot succeed in California. Many do. The lesson is that the procedural disciplines Duran set out fifteen years ago are not optional, and a substantial judgment that was developed without them will not survive appellate review — even one that took nineteen years to obtain.
What This Means for California Wage-and-Hour Class Actions Going Forward
For employees who believe they have been misclassified as part of a group, the practical implications of Cortina are about how a class action gets prosecuted, not whether one can be brought. The case reinforces several requirements that any successful California wage-and-hour class action must satisfy:
- A valid trial plan must be developed early. The trial plan is the document that explains how class-wide proof will actually work at trial — what common evidence will establish each element of the claim, how affirmative defenses will be addressed on a class-manageable basis, and how individual variation among class members will be accounted for. Cortina makes clear that a trial plan that does not actually work cannot be salvaged by sheer procedural will.
- Statistical sampling must be done correctly. If a wage-and-hour class action depends on extrapolating from a sample of class members to the whole class, the sample must be randomly selected, expert-validated for size and margin of error, and capable of producing statistically reliable estimates. Cherry-picked or convenience samples will not pass Duran.
- Affirmative defenses must be litigated, not waved away. The trial court in Cortina rejected the employer's exemption defenses on a class-wide basis without giving the employer a meaningful opportunity to test those defenses against the actual evidence. The Court of Appeal called this a misinterpretation of the applicable law. Plaintiff-side firms have to anticipate and structure trial around the defenses they will face, not assume the trial court will reject them in advance.
- Damages cannot be wholesale delegated to a private referee without consent. California's authority for referring matters to private referees over a party's objection is narrow and specific. Sending the entire damages phase of a major class action to a non-consensual reference — especially one that lasts years and involves hundreds of witnesses — is outside that authority.
- Decertification is required when the trial plan proves unworkable. Duran says it. Cortina reinforces it. A trial court that watches its own trial plan fall apart in the liability phase but presses on anyway is creating reversal risk for any judgment that emerges.
For California employees considering a misclassification or wage-and-hour class action, none of this changes the substantive law. Salaried employees who are actually nonexempt are still entitled to overtime, meal breaks, rest breaks, and the other protections of California wage-and-hour law. What Cortina changes is the level of procedural discipline that any class action lawyer needs to bring to the work from day one.
Wage-and-Hour Issue Affecting You and Your Coworkers?
Class actions and PAGA representative actions are powerful tools when an employer's misclassification or wage practice affects many employees. They also require careful procedural planning from day one. ShortLegal evaluates these cases with the litigation discipline they actually require.
Why This Case Matters for How We Build Wage-and-Hour Class Actions
Cortina is the kind of opinion that should be required reading for any California plaintiff-side firm thinking about a wage-and-hour class action. After nearly two decades of litigation and a $43.5 million judgment, the case was reversed for reasons that were largely foreseeable from the outset. Duran was decided in 2014 and articulated the trial-plan and statistical-sampling requirements clearly. The trial court's appointment of a non-consensual referee was, as the Court of Appeal observed, "unprecedented." Some of the errors at issue here were not subtle.
For ShortLegal, the practical takeaway is that successful misclassification and wage-and-hour class actions are built on procedural discipline from the very first filing. The trial plan is not a document drafted at the end of discovery — it is a strategic framework that should shape the case from the complaint forward. The methodology for proving class-wide liability must be defensible. The affirmative defenses the employer will raise must be anticipated and addressed in a way that allows for class-manageable litigation. The damages methodology must be sound on its own terms, not delegated to a private referee in the hope of expediting an unwieldy trial.
ShortLegal handles wage-and-hour class actions and PAGA representative actions with that procedural discipline in mind. We treat these cases as the trial-bound litigation they actually are. The substantive California wage-and-hour laws favor employees in many situations. The procedural framework around how to prove those claims on a class-wide basis is demanding, and a case that does not respect that framework — however righteous on the merits — risks the same outcome Cortina reached.
Am I Misclassified as Exempt From Overtime in California?
The complete ShortLegal guide to California overtime exemptions and misclassification — the executive, administrative, and professional exemption tests, the duties analysis, the salary floor, the recovery framework for unpaid overtime and missed breaks, and what to do if you think you may be owed back wages.
Read the full misclassification guideWage-and-Hour Class Action or PAGA Question?
When an employer's misclassification, off-the-clock, or break-violation practice affects a group of employees, class actions and PAGA representative actions are some of the most powerful tools California law provides — when they are litigated with the procedural discipline these cases actually require. ShortLegal handles these matters as core practice areas.