California Court of Appeal Throws Out $43 Million Wage-and-Hour Judgment After Nearly Two Decades of Litigation
Cortina v. North American Title Company represents one of the most significant California wage-and-hour class action decisions issued in 2026. In a sweeping opinion, the California Court of Appeal reversed a judgment exceeding $43 million and ordered decertification of employee classes after concluding the case had become unmanageable and was tried using procedures that deprived the employer of its right to litigate key defenses.
The decision highlights an important issue in California employment litigation: when a class action grows so large and fact-intensive that classwide procedures can no longer fairly resolve individual liability questions.
The Dispute Began with Claims of Employee Misclassification
The lawsuit was filed in 2008 by employees of North American Title Company, a title insurance and escrow services company. The plaintiffs alleged they had been improperly classified as exempt employees and therefore were denied overtime compensation and meal and rest breaks required under California law.
The claims focused primarily on employees working as escrow officers, assistant escrow officers, and branch managers. The plaintiffs argued these workers were entitled to overtime and other protections under California wage-and-hour laws because their actual duties did not satisfy the requirements of California’s executive, administrative, or professional exemptions.
North American Title disputed those allegations. The company contended many employees properly qualified for one or more exemptions and that the work performed by employees varied substantially depending on location, responsibilities, experience, and individual job assignments.
A Massive Class Action Expanded Over the Years
As the litigation progressed, the trial court certified multiple classes covering approximately 700 employees who had worked for the company over a period spanning nearly two decades.
What followed was an extraordinarily lengthy litigation process involving extensive discovery, motions, appeals, and disputes regarding how liability could be proven on a classwide basis.
Rather than conducting a traditional trial, the trial court ultimately appointed a referee to oversee what became a lengthy reference proceeding. The referee heard evidence, made findings, and recommended a judgment that eventually exceeded $43 million when damages, interest, penalties, and attorney fees were included.
The trial court adopted the referee’s recommendations and entered judgment in favor of the employee classes.
North American Title appealed.
The Court Focused on the Employer’s Right to Litigate Individual Exemption Defenses
The Court of Appeal devoted substantial attention to the California Supreme Court’s landmark decision in Duran v. U.S. Bank National Assn. (2014) 59 Cal.4th 1.
In Duran, the California Supreme Court emphasized that employers retain a due-process right to present affirmative defenses, including exemption defenses, even in class actions. A class action cannot be structured in a way that prevents an employer from demonstrating that particular employees were properly classified as exempt.
According to the Fifth District, that is precisely what happened here.
The appellate court concluded the trial plan relied too heavily on generalized proof and failed to account for significant differences among employees. The court found the employer was not given a meaningful opportunity to litigate exemption issues employee-by-employee where necessary.
The opinion repeatedly stressed that exemption determinations often depend on an employee’s actual job duties, the amount of time spent performing various tasks, supervisory responsibilities, discretion exercised on the job, and other individualized facts.
Because those issues varied among class members, the court concluded the trial procedures did not adequately protect the employer’s right to present its defenses.
The Reference Proceeding Created Additional Problems
The Court of Appeal also concluded the trial court improperly referred the case to a referee for what became a broad adjudication of contested factual issues.
California courts may appoint referees in certain circumstances. However, the appellate court determined the reference used in this case exceeded permissible limits because it effectively replaced the trial court with a referee in resolving disputed merits issues without the parties’ consent.
That procedural error alone created significant concerns regarding the validity of the judgment.
The Court Said the Classes Became Unmanageable
Perhaps the most significant aspect of the decision is the court’s discussion of class manageability.
The appellate court observed that years of litigation had revealed extensive differences among employees. Determining whether a particular worker was exempt often required individualized inquiries into duties, authority, responsibilities, and actual work practices.
As those individualized issues multiplied, the rationale for maintaining the action as a class proceeding weakened.
The court concluded the trial court should have reevaluated certification and ultimately decertified the classes once it became apparent that common issues no longer predominated and that a fair trial could not be conducted using classwide procedures.
The opinion serves as a reminder that class certification is not a one-time decision. Trial courts have a continuing obligation to reassess whether a class remains manageable as the case develops.
What the Court Ordered
The Court of Appeal reversed the judgment and directed the trial court to decertify the classes.
The court further ordered that the named plaintiffs’ individual claims may proceed, but the class claims cannot continue in their current form.
As a result, the more than $43 million judgment was vacated.
Why the Decision Matters
For employers, Cortina reinforces the principle that class actions cannot be used to eliminate individualized defenses. Even in large wage-and-hour cases, courts must ensure employers retain a meaningful opportunity to prove employees were properly classified under applicable exemptions.
For employees and class-action practitioners, the decision demonstrates the practical limits of class treatment when liability turns on highly individualized job duties and workplace experiences.
The ruling also signals continued reliance on Duran as a governing framework for evaluating whether wage-and-hour claims can fairly be tried on a classwide basis.
After nearly eighteen years of litigation, the Court of Appeal’s decision dramatically altered the course of the case and serves as an important reminder that procedural fairness remains a central concern in California class-action litigation.
Case Summary
Cortina v. North American Title Company was decided by the California Court of Appeal, Fifth Appellate District, on May 29, 2026, Case No. F085389. The Court of Appeal reversed a judgment exceeding $43 million entered in favor of certified employee classes alleging overtime and meal-and-rest-break violations. The court held that the trial court improperly used a nonconsensual reference proceeding, failed to provide the employer a meaningful opportunity to litigate individualized exemption defenses as required by Duran v. U.S. Bank National Assn., and should have decertified the classes after individualized issues rendered the case unmanageable. The Court of Appeal directed the trial court to decertify the classes and remanded the matter for further proceedings on the named plaintiffs’ individual claims.