Articles Posted in Business Litigation

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Luxury retailer Burberry has agreed to a $2.54 million settlement with employees. The workers include retail store and warehouse employees in New York. Their class action lawsuit claimed that they were forced to put in extra hours without pay. This expensive lesson serves as a reminder to all employers that they need to be aware of wage and hour laws and related practices.

Timeclock-45269690-001Burberry employees filed the lawsuit in December 2015 after they say that they were routinely forced to work off the clock. Sometimes, the duties were performed before or after shifts, with employees filling out necessary paperwork or cleaning the store. On other occasions, employees were told that they would need to work through their lunch hour. Holiday seasons were particularly bad. Sales associates involved in the lawsuit claim that they frequently worked three to six extra hours a day without being paid for their time.

Like many similar cases, legal experts familiar with this lawsuit note that they do not believe that executive management at Burberry was directing lower level management to violate wage and hour laws. Instead, they believe that the lower level managers were simply trying to cover the needs of the organization without fully understanding the consequences of their actions or that they were violating the law.

Burberry has now agreed to a settlement that should put approximately $2,500 into the pockets of the 643 workers who were involved in the lawsuit. The $2,500 per worker is after attorneys’ fees and costs. For a big-name, luxury brand like Burberry, $2.54 million isn’t necessarily a devastating amount of money to have to redirect for a lawsuit settlement. Lawyers for the company likely made a wise decision when they agreed to a settlement that kept them outside of the courtroom where the outcome may have been a great deal more expensive, especially with court costs and attorney fees. Still, it would have been better if the situation had not occurred in the first place.

It is vital for companies to work closely with employment law attorneys who are looking out for their best interests. This is the most reliable method for avoiding wage and hour lawsuits.

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 When an employer is sued by an employee, it’s natural to want to end the proceedings quickly. However, it is not legal for an employer to take any retaliatory action against a worker, especially one that is suing them. As a recent decision by the Ninth Circuit Court of Appeals demonstrates, it also may be illegal for an attorney acting on behalf of the employer to retaliate.

Retaliation-32004699-001José Arias was an undocumented alien who had been working for Angelo Dairy for a decade in 2006 when he filed a wage lawsuit. Arias alleged that he had not been paid for overtime hours and that he had not received mandatory rest and meal periods. The dairy retained lawyer Anthony Raimondo to represent them in the lawsuit. Raimondo began working on due diligence, looking into Arias’ past as well as examining other pertinent facts.

A few weeks before the trial was scheduled to begin, Arias had an appointment for a deposition. What he didn’t know was that Raimondo had gotten in touch with Immigration and Custom Enforcement, or ICE, which led the lawyer to the discovery that Arias had no legal status in the U.S. Further, Raimondo had arranged for Arias to be taken into ICE custody at the deposition. Arias learned of the plan and promptly settled the litigation.

Then, the next phase began. Arias filed suit against Raimondo for violation of the Fair Labor Standards Act. While the majority of the provisions in this law apply only to direct employers, the retaliation portions apply to employers and those who are empowered to act on their behalf. An initial court decision on the lawsuit sided with Raimondo, but Arias appealed the decision. The appeals court sided with him.

Most reputable employment lawyers are unlikely to recommend that their clients try to have an employee deported or otherwise take an adverse action against them. To do so only opens the employer up to more legal trouble, and the same is true for the lawyer who takes a direct, punitive action toward an employee. It is far better to let the courts decide.

Feel free to contact me, Richard Oppenheim with employment law questions. I may be reached at 818-461-8500 or by using the “Contact Us” box in the right column.

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Years of highly contested, and well-publicized, litigation have made employers aware of the dangers of discriminating against workers based on gender, sexual orientation, race and religion. It’s not unusual for company executives to work with an employment attorney when they are developing or revamping their practices. Unfortunately, age discrimination tends to be overlooked.

Age-Discrimination-132214651-e1500063954245This oversight is coming to the forefront with litigation filed in the U.S. District Court in New Jersey. Plaintiffs allege that their former employer, AT&T, systematically shed older workers in an effort to gain a workforce that has more advanced technological skills. The complaint relies largely on the Age Discrimination in Employment Act, a 1967 law that protects applicants and employees who are 40 or older. Essentially, the law makes it illegal for companies to make hiring, firing, promotion and compensation decisions based solely on age.

Plaintiffs argue that AT&T relied on age-based stereotypes to purge older workers. The process involved notifying the older workers that they had been placed on “surplus” status. They had a set amount of time within which they must be accepted into an alternative position within the company. However, the plaintiffs say that the selection process for those alternative positions was biased against the older employees who had been categorized as surplus. When they were unable to find another position, the workers were laid off.

Some of these employees say that they received a severance check, and that they were told by AT&T that they would be unable to sue the company under anti-discrimination laws if they took the money. Lawyers for the plaintiffs say that’s not necessarily the case, especially if the notice given to employees did not contain certain stipulated language.

The former employees cite a company blog post that described AT&T’s “Workplace 2020” program, which admitted that age-based stereotypes are being weighed in employment decisions. According to plaintiff descriptions of the blog post, older workers are the employees of yesterday while younger workers are considered more desirable.

This litigation serves as a timely reminder for all employers to be mindful of their employment practices with respect to older workers.

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Telecom giant CenturyLink is now a defendant in a potentially massive class action lawsuit in which total damages could amount to between $600 million and $12 billion if the claim is successful. Legal analysts say that CenturyLink customers should be prepared to review their bills to see if they were charged for accounts that they did not actually request.

Whistleblower-6928551-001In a situation that is eerily similar to the Wells Fargo Bank scandal that broke in 2016, CenturyLink is being accused of setting up dummy accounts, and then charging customers for them. The alleged misconduct came to light after former CenturyLink employee Heidi Heiser, who is branding herself as a whistleblower, sued her former employer over what she termed a high-pressure sales atmosphere. Heiser worked for CenturyLink for approximately one year, and charges that she was fired after using a company Q&A session to tell CEO Glen Post about suspicions that the company was charging its customers for services they did not ask for.

A lawsuit has now been filed in California on behalf of CenturyLink customers who believe they have been defrauded by the company. Among the allegations are unjust enrichment, unfair competition and fraud. Officials from the Better Business Bureau in Denver, which broadcast a warning about CenturyLink early this year, are encouraging customers to closely review their bills.

A CenturyLink spokesman states, “The allegations made by our former employee are completely inconsistent with our company policies, culture and unifying principles, which include honesty and integrity.” This lawsuit comes at a particularly critical moment for CenturyLink as they are negotiating a merger with Level 3 Communications.

The class action lawsuit names plaintiffs Craig McLeod and Steven McCauley. Both are customers of CenturyLink who say that they have been over-charged. McLeod contends that he was quoted a charge of an extra two dollars per month for a faster Internet connection. However, he was charged considerably more than that, and he also received a bill for a repair that never occurred.

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A former Amazon employee is suing his erstwhile employer over not being paid overtime. In the lawsuit, he asserts that Amazon misclassified him as a salaried manager that was not entitled to overtime. However, the worker says that the duties he performed were those of a manual laborer who should have been eligible for overtime. This case is a useful reminder for all employers to review their classification and compensation packages to ensure that they don’t encounter a similar issue.

clock-overtime-110616811-001Michael Ortiz was hired as a shift supervisor at Amazon warehouses in California. His official title was “Level-4 Manager,” a position that was supposed to cover mainly supervisory duties. Amazon’s policy defines this type of job as a salaried position that is not eligible for overtime. Entry-level “associates” whose main responsibility is moving packages, are hourly workers who can be paid overtime, and that is the work that Ortiz contends he was doing.

In the complaint filed in Contra Costa County Superior Court, Ortiz says that he spent his days loading and sorting boxes or clearing up jams on conveyor belts. Similarly, he asserts that he frequently worked days that were longer than eight hours and in excess of 40 hours per week. Only a minimum of his time was spent in supervisory or managerial duties, Ortiz contends.

According to the complaint, there may be thousands of other people who are current or former Amazon employees who may have experienced a similar situation. At the heart of the story is a central question: Did Amazon knowingly misclassify workers in an attempt to avoid paying overtime? If so, then they may find themselves on the hook for multiple thousands, if not millions, of dollars in back wages.

This lawsuit is still in its early stages, and Amazon has said that they will not comment on pending legal matters. It’s fairly safe to assume that both sides of this issue are going to dig in their heels, so a long fight is all but assured. Reviewing company classification and compensation plans with an employment lawyer is advisable for avoiding a similar situation.

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Patent trolls may find it harder to do business thanks to a decision by the U.S. Supreme Court. That is good news for any business or entrepreneur who has ever been the subject of a frivolous patent infringement lawsuit. However, the decision also may make it more difficult to pursue legitimate infringement complaints.

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Companies that function as patent trolls make a practice of buying up patents merely for the purpose of suing large companies for infringement. They don’t make a product, nor do they provide a service. They earn a “profit” by collecting settlements from businesses that want to avoid the time and expense of a lengthy lawsuit.

Formerly, patent trolls could file complaints in any court district that they felt would be most advantageous to them. The Eastern District of Texas, in particular, is considered friendly toward such lawsuits. Most of the cases were decided quickly in favor of the patent owner, resulting in large settlements. In fact, the favorable climate for filing infringement lawsuits in the area became something of a cottage industry. One hotel in Marshall, Texas even purchased an account with the U.S. District Court’s online database to improve their appeal to visiting lawyers.

Under this model, the company being sued didn’t have to be located or associated with Texas in any way, forcing representatives to travel to defend themselves. This new decision by the Supreme Court changes that as it requires that patent infringement lawsuits be filed in the state in which the defendant is incorporated.

The decision was rendered on a case involving TC Heartland, an Indiana company that was being sued for patent infringement by Kraft Heinz in Delaware. Counsel for TC Heartland argued that they shouldn’t have to be sued in Delaware, and the Supreme Court ultimately agreed. While this decision is likely to slow down patent trolls, it also may make things more difficult for entrepreneurs who want to assert their patent rights against an organization in another state.

Anyone who is being sued for patent infringement or believes that their rights are being infringed, needs to retain intellectual property counsel.

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The one-time owner of a successful car dealership group in California has been awarded more than $256 million by a jury. Mike Kahn, who ran the Superior Automotive Group with dealerships in LA and San Francisco, fought Nissan Motor Acceptance Corp. for eight years before achieving this judgment. NMAC is the financing arm of the Nissan company, and its representatives say that they plan to appeal this verdict.

1504001-Gavel-Money-2During the financial crash of 2008-2010, many new-car dealerships were struggling. Superior’s were among these, but this wasn’t always the case. Nissan had recognized Superior as one of the top three dealership groups in the world prior to 2008. The company had sold more than $1 billion of inventory in the period between 2001 and 2008. That all changed with the economic downturn. Suddenly, consumers weren’t buying cars.

Typically, car dealerships finance the purchase of new cars through an organization like NMAC. The loan on the car is frequently paid back when the car is sold to a consumer. However, with cars not moving, dealerships everywhere were defaulting on these loans. Mike Kahn’s dealerships were among these. He reached out to NMAC, asking for them to not default him on his outstanding loans. The company agreed, and then proceeded with a default anyway.

Kahn sold one of his dealerships to cover some of what he owed to NMAC, but it wasn’t enough. More than 800 employees were put out of work when all seven dealerships had to close, and NMAC sued Kahn for an additional $40 million while also seizing all of his personal and business assets. A relationship that once thrived was now deeply contentious.

Kahn countersued and eventually prevailed after nearly a decade of litigation. A jury awarded him compensatory and punitive damages in what appears to be an indictment of large corporations deliberately putting local companies on the chopping block. NMAC plans to appeal the decision, so this saga is not over yet. Nonetheless, this is an apt demonstration of how an excellent partnership can quickly go wrong, making the requirement for careful planning and good contracts a necessity.

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A former teacher in Illinois has prevailed over his erstwhile employer in court. Bruce Vukadinovich sued the Hanover Community School Corp. for age discrimination, retaliation and violation of due process. Although the court rejected the discrimination and retaliation claims, Vukadinovich was awarded more than $200,000 for the due process claim.

you-are-firedThe story began years ago in a different school district. Back then, Vukadinovich was working for Hammond Schools when he filed a lawsuit against his employer for age discrimination. That lawsuit was settled, and the plaintiff went on to Hanover Central High School. He worked there for eight years until his contract was terminated in a workforce reduction. Vukadinovich sought answers from the district about why he was fired, but couldn’t get a straight answer. That’s when he filed the lawsuit against the Hanover Community School Corp.

The wrinkle is that a school district official who worked for Hammond Schools when Vukadinovich sued that district had recently transferred over to the Hanover Community School Corp. Vukadinovich believed that his firing was an act of retaliation over his earlier successful suit against Hammond Schools.

Several years of litigation followed, with Vukadinovich representing himself against his former employer. A jury and a judge ultimately agreed with the plaintiff that he was denied due process. In his decision, Judge Philip Simon wrote: “To put it bluntly, after several years of presiding over this litigation, including a five day jury trial, I cannot tell you why Vukadinovich was terminated.” The judge went on to say that the jury sympathized with Vukadinovich’s desire to receive a “straight-forward explanation” for his firing.

The judge also took issue with the school district’s claim that they didn’t tell Vukadinovich why he was terminated because he didn’t ask. Arguing that the situation was “not a game of ‘Guess the Reason You’re Being Fired,'” Simon pointed out that the reason should have been disclosed up front so that Vukadinovich could have defended himself.

This case demonstrates the importance of keeping documentation citing all of the reasons for an adverse employment action. Doing so may prevent a lawsuit from being filed.

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The embattled Fox News network now has another lawsuit to add to its list of legal woes. Employee Diana Falzone has filed a lawsuit in the New York State Supreme Court. In her complaint, she charges her employer with discrimination on the basis of gender and disability.

Gender-Discrimination-105366239-001Falzone was employed as a host of programming on FoxNews.com. In January 2017, she published an article that chronicled her battle with endometriosis. This difficult condition affects millions of women across the U.S. Falzone wrote and published the article at the encouragement of the medical team that treats her, feeling that sharing the story of her struggle might provide support to other women with the condition.

Falzone alleges in her complaint that her employer knew about and approved the article prior to its publication. However, three days after publishing her article, Falzone was called in to talk to her supervisor. He told her that senior Fox executives had ordered him to tell her that she would never again host her own shows and that she was no longer permitted to appear on FoxNews.com. Additionally, senior executives forbade her from conducting interviews, appearing on the Fox television network and doing voiceover work for the station.

Falzone alleges that she demanded to know several times why her activities were being restricted, but never received a cogent answer. A formal discrimination complaint filed through the 21st Century Fox hotline did not yield results. That was when Falzone hired a lawyer and filed a lawsuit.

Falzone contends that Fox executives believed that the public disclosure of her illness “detracted from her sex appeal and made her less desirable,” thus leading them to ban her from maintaining her public role with the network.

Fox News has made headlines several times over the last year, mostly with regard to various discrimination and harassment lawsuits as well as the ouster of network chief Roger Ailes. Though their example may seem a bit extreme, it still serves as a crucial reminder to organizations in all industries to ensure that they are complying with all laws related to workplace discrimination and harassment.

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In general, most employers are happy to grant reasonable accommodations under the Americans with Disabilities Act. This does not mean that there aren’t limits to which an employer is willing to go. What’s more, employers are by no means obligated to grant every request for ADA accommodation that they receive.

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As an example, consider the case of a librarian employed at Florida Atlantic University. The librarian had suffered from epileptic seizures since childhood, and she had long known that stress aggravated her condition. In an EEOC claim and a lawsuit that she eventually filed against her employer, she asserted that the university had failed to acquiesce in her requests for reasonable workplace accommodations. It seemed that the librarian thoroughly disliked her supervisor’s management style, and that the stress she suffered on the job caused her to have more frequent seizures.

Although her employer accommodated some of her requests, such as ensuring that there were no sharp corners in her cubicle, they declined to grant other requests. They denied requests related to the “rough or harsh” treatment that she alleged came from her supervisor. She demanded that he be ordered to cease the “series of hostile confrontations,” which she said that he repeatedly used with her and that the university find a way to “sensitize” him to the needs of women with epilepsy.

The university did not feel compelled to grant the requests that they believed were vague and difficult to define, and the courts agreed with them. In testimony, the plaintiff could not cite specific instances of confrontational behavior. Moreover, the court argued that it was not the responsibility of the employer to provide a work environment that was free of stress, and that it was not possible for the plaintiff to “immunize herself from stress and criticism.”

This outcome demonstrates that employers are well within their rights to refuse requests for accommodations under ADA when they are not specific and reasonable. Nonetheless, it is crucial that all such requests be thoroughly investigated, preferably under the guidance of legal counsel, to ensure that a legitimate request is not ignored.