Nonconsensual Reference and Duran Errors Sink a $43 Million Wage Judgment

Court

Cal. Ct. App., 5th Dist.

Decided

May 29, 2026

Case No.

F085389

In Cortina v. North American Title Company, the Fifth District Court of Appeal reversed a roughly $43 million judgment in a long-running wage and hour class action tried under the unfair competition law. The court held that the nonconsensual reference used for the second phase of trial was entirely unauthorized, and that the first phase departed from the sampling and exemption-defense rules set out in Duran v. U.S. Bank National Assn. The court ordered the “Exempt” class decertified and remanded for retrial of the named plaintiffs’ individual claims. Part III of the opinion was not certified for publication.

Background

The case began in 2007, when an escrow employee filed a putative class action against North American Title Company (now Lennar Title, Inc.) alleging unpaid overtime and missed breaks under the Labor Code. The claims were later pursued solely as restitution under the unfair competition law. Two classes were certified: a “Nonexempt” class and an “Exempt” class of roughly 400 people spanning nine job titles over a nearly ten-year period.

The employer defended on the executive and administrative exemptions, both of which turn on how employees actually spend their time. Because escrow work varied by role, office, and transaction, the central problem was how to prove on a classwide basis that no class member crossed the 51-percent threshold for exempt work.

The Fresno County Superior Court tried the case in two phases. After the first phase, it decertified the Nonexempt class but rejected the employer’s exemption defenses as to the Exempt class. It then appointed a referee⁠—⁠without the parties’ consent and over the employer’s objection⁠—⁠to conduct a second phase involving live testimony from more than 230 class members.

Judgment ultimately entered against the employer for about $43 million, with prejudgment interest accounting for more than half of that sum. Both sides appealed.

What the Court Held on the Nonconsensual Reference

The court held that the second phase⁠—⁠a nonconsensual reference of the scope and magnitude ordered here⁠—⁠was unprecedented and unauthorized. A trial court’s power to send matters to a referee without the parties’ consent is strictly limited by the California Constitution and the Code of Civil Procedure, and the reference below exceeded those limits.

Reviewing the underlying legal questions de novo, the court concluded that this error alone required reversal of the judgment.

What the Court Held on the First Phase and Decertification

The court also found prejudicial errors in the first phase. The plaintiffs sought to prove classwide misclassification by extrapolating from a nonrandom slice of witnesses⁠—⁠for one cohort, about 24 of 156 people⁠—⁠without the expert input, random selection, sample size, and margin-of-error analysis that Duran requires of any statistical plan.

The court further held that trying the case under the unfair competition law did not relieve the plaintiffs of the usual predominance and manageability requirements. The “without individualized proof” language from false-advertising cases does not apply to wage misclassification, where liability turns on each employee’s individual circumstances.

Because the trial plan proved unworkable and the exemption defenses were rejected on a classwide basis without an adequate common-proof foundation, the court reversed, ordered the Exempt class decertified, and remanded for retrial of the named plaintiffs’ individual claims. The judgment was affirmed as to the parties and claims not challenged on appeal.