Labor and Employment Law Blog

Defense Attorneys Continue to Drive Employers out of California

There are a couple of things that inevitably come in to my office nearly every week.  The first is a letter form an attorney representing an employer stating that my lawsuit is "frivolous" and that plaintiff's attorneys are driving employers out of California. The second is a question from an employer who is pretending to be an employee so they can get some free legal information. 

I am always a bit curious as to why some defense attorneys waste their time telling me that a lawsuit is "frivolous."  I will point out that these letters generally come from smaller law firms where the attorney does not know the first think about wage and hour law. However, even if they don't know the law, from a common sense point of view, the attorney should know that I take the vast majority of my cases on a contingency basis, as do most other plaintiff's attorneys.  Any lawsuit is going to take a good amount of time and money.  So, why would a defense attorney think that I would take a lawsuit that I have no hope of winning? I will also point out that a skilled attorney can eliminate a frivolous lawsuit with little effort, especially one in the wage and hour area.  If the lawsuit is indeed frivolous, simply respond with the information that the employer is required by law to provide, and I will figure it out soon enough.

There also isn't any basis to the claim that California's employment laws are discouraging employers from doing business here.  California has had significant employment growth for some time.  One defense attorney responded to this by saying that it was not that jobs were leaving California, they simply are not coming in as fast as they would without plaintiff's attorneys such as myself.  He responded that California's growth rate would be "double" what it was, if it were not for these wage and hour laws.

I can only say that if his statement is true, he should be thanking plaintiff's attorneys such as me.  California has one of the best economies in America.  If its growth rate indeed doubled, it would currently employ over 41 million workers as opposed to the 16.7 that it currently employs.  California would have a population of about 83 million people and produce about 1/4 of America's economic output.  We would have approximately 104 representatives in the House of Representatives out of a total of 435. (Using the time period in the above linked report). Needless to say, traffic here would be pretty bad.

I will also point out that even if you feel that the "double" estimate provided by one defense attorney was simply an exaggeration, any smaller number would reach the exact same results -- it would just take more time.  That is, any systematic advantage that one State has over other States, in terms of economic growth, will eventually make that State dominate over all others.  So, there really isn't too much merit to the argument that plaintiff's attorneys are driving any businesses out of California.

However, I do have some evidence that defense attorneys make it difficult for employer to do business here. About each week, I receive an email from an "employee."   It reads something like this, "I work for a large company, and it seems like the company wants to do the right thing.  They are telling me that ....., but I think that ......."  (Insert some current issue of employment law). "Can you tell me which of these is correct?" Now, you can say I am just being paranoid in thinking that employers are posing as employees just to get some free information.  However, in a good number of cases, the person forgets to turn their signature block off.  I received one just his last week that was an "employee" looking for information about the scheduling of the 10 minute break periods.  The signature block was from the V.P. of Human Resources for a major corporation.  It may be that the V.P. of Human Resources of a major corporation is really concerned that she is not personally receiving a proper 10 minute break, but I suspect that she was really looking for some information on how to pay her employees. 

Of course, it is good that an employer is genuinely interested in paying their employees properly, but it would be even better if the defense bar could properly and economically educate their clients about these laws.  I am certain that the company mentioned above could afford competent defense counsel -- in fact they were probably working with several different ones.  However, they still found it easier to surreptitiously pose as an employee and ask a plaintiff's attorney for advice than to pick up the phone and talk to one of their defense attorneys that they deal with all the time.

Now it may be that employers really just hate plaintiff's attorneys and would rather ask the devil himself for advice rather than a plaintiff's attorney.  But given that I get so many questions from employers, this really makes me wonder what their opinion of defense attorneys is.          

Prestigious Law Firm Winston & Strawn cites Law Offices of Michael Tracy for Willingness to Take Smaller Overtime Cases

The case of Carrera v. Bally Total Fitness Corporation is a class action case for labor law violations.  The basic allegations are the Ballys is violating various provisions of the labor laws, but mainly overtime and meal breaks.  The issue is that there is an arbitration agreement in place that attempts to disallow class actions.  In the recent case of Gentry v. Superior Court 42 Cal.4th 443 (2007), the California Supreme Court ruled that class actions can only be prohibited based on an evaluation of the following factors: (1) the modest size of the potential individual recovery, (2) the potential for retaliation against members of the class, (3) the fact that absent members of the class may be ill informed about their rights, and (4) other real world obstacles to the vindication of class members' right to overtime pay through individual arbitration.

The attorney for the employees argued that because wage and hour claims are typically small, it would be difficult for these employees to find individual representation.  I am not certain why he made this argument because it was picked up on by the defendants and exploited. 

The brief for the Defendant was written by Paul Coady, an attorney with Winston & Strawn, LLP.  For those that listen to my pod cast, you are used to me making fun of various defense attorney arguments.  However, this brief was actually well done.  It focused the Judge's attention on an issue that should not have been relevant  had the Plaintiff's attorney not made it the hallmark of his case.  In addition, the attorneys actually did some original research to back up their claims.  A lot of these defense firms just cut and paste the same arguments over and over again.  In most cases, I could write their brief for them in a fraction of the time it takes them to write it.  So, it is good to see some members of the Defense bar stepping up and giving us Plaintiff's attorneys a challenge. 

In any case, Mr. Coady and his associates combed through all the wage and hour filings in Los Angles County, Central Distinct (the main Los Angles Courthouse, or Stanley Mosk).  They found 127 of these smaller overtime cases, and specifically noted one of my cases and cited it as an example of a firm willing to take small cases (they also mentioned 4 other firms).  Now, 127 cases is not a lot for Los Angeles.  I did a simple query on my database and found out that I had filed 23 cases in Los Angeles Central Distinct in 2007.  I had actually filed a couple more, but those got removed to Federal Court, so they were not counted in the query.  In any case, this makes up about 1/5th of the total filings for Los Angeles.  My goal is to get up to 1/2 of the total filings in Los Angeles County, and so far 2008 is off to a good start.

What all of this shows is that firms such as mine can and do represent employees who have smaller claims.  However, just because you have small claim does not mean that you will get a small recovery.  Frequently, there are various penalties that can be assessed that can dramatically increase this amount.  My firm currently is using the Private Attorney General Act to help with these types of cases.   In addition, arbitration agreements can dramatically increase your potential recovery in a small case, but listeners to my podcast already know that. 

This does not mean that class actions are not necessary.  In the case mentioned above, it was really just a mistake to mention anything about attorneys not being willing to take small wage and hour cases.  The better argument would be to focus on the economic reality that if a large company is not subject to class actions, they will have an economic incentive to violate the law.  The reasoning is simple: if you have 100 employees, can you can save $1,000 per year by not paying them overtime, this is saving the company $100,000 per year.  Now, every year, a couple of them will sue for overtime, and they will need to be paid.  This might cost the company, with attorneys fees any everything $20,000 per year.  What company would not pay $20,000 per year so that they can save $100,000 per year? 

The simple fact is that many employees do not assert their rights to be properly paid.  This is not necessarily because of retaliation, but probably because many people do not want to be involved with a lawsuit.  I probably talk to 5 people a week that have valid claims against a company that will never pursue them, even when they no longer work for the company, and even if the matter can be resolved privately in arbitration.  Thus, the class action is still needed to properly vindicate the rights of these employees and ensure that all employers are playing on a level playing field.

Though I completely disagree with the reasoning in Winston & Strawn's brief, their legal writing was very well done.  This will definitely help them in the soon to be released Employment Defense Firm Rankings.