When the following conditions are all true in a Microsoft Exchange Server 2010 environment, the group members in the address list are not sorted by display name.
Outlook is running in the cached mode.
Offline address book (OAB) and hierarchical address book (HAB) are used.
SeniorityIndex data is not deployed in HAB.
The version of Outlook is not Japanese, or is Japanese with the DisableGALPhonetic registry turned on.
This issue occurs because Exchange Server 2010 does not sort the group members by display name when it is generating OAB.
To resolve this issue, install Update Rollup 8 for Exchange Server 2010 Service Pack 3.
Microsoft has confirmed that this is a problem in the Microsoft products that are listed in the "Applies to" section.