A trial misstep, not the merits, undid the verdict – and it took nineteen years
Misclassify your workforce and a $43.5 million bill can follow – but here, the trial itself fell apart, and a California court wiped the judgment out.
The decision, handed down May 29, 2026, closes one chapter in a case running since April 2007 – nineteen years. The Fifth District Court of Appeal made no secret of its frustration, calling this litigation even more extreme and unwieldy than the long-running wage case it measured it against.
The fight is a familiar one for any HR leader. Roughly 700 current and former employees of North American Title Company, now Lennar Title, Inc., sued over overtime. One group said the company wrongly classified them as exempt from overtime law. A second said they were pushed to work without recording their hours.
Misclassification sits at the center. In California, some managerial and administrative employees can be exempt from overtime – but only if they spend more than half their time on genuinely exempt work. As the court explained, a worker splitting time 49-51 between managerial and regular duties doesn't make the cut.
The trial court ruled against the employer, decertified one class, then appointed a referee to run a second trial phase without the parties' agreement and over the company's objections. Those proceedings stretched on for years and drew testimony from more than 230 class members, ending in a judgment calculated at $43,547,946 - with prejudgment interest making up more than half.
The appeals court threw it out. A forced referral on this scale, it said, appeared to have no precedent in California law, and a judge's power to hand a case to a referee without consent is sharply limited. That alone required reversal.
The court also picked apart the first phase. Plaintiffs had leaned on testimony from about 24 of some 156 Branch Managers – roughly 15 percent - to stand in for the whole group. The court called that scientifically invalid, with no expert input on sample size and no random selection.
The lesson for employers is blunt. Exempt status depends on what people actually do, not their titles. A sprawling class with many roles across many offices over a decade is hard to try as a single unit, and judges must decertify when the trial plan breaks down. The case now returns for retrial of the named plaintiffs' individual claims, with room for a new bid at class certification.
