Issues in Labor and Employment Law Litigation
an interview with Tim Long of Orrick, Herrington and Sutcliffe
BLJ Staff

Posted Sunday, May 1, 2005
5 U.C. Davis Bus. L.J. 24 (2005)

Mr. Long is the partner-in-charge of the Sacramento and Los Angeles Employment Law Groups at Orrick, Herrington & Sutcliffe LLP. He has significant experience litigating employment discrimination, wrongful termination, and wage-and-hour claims. Mr. Long has also litigated matters involving qui tam, trade secret, white-collar crime, and environmental claims. In addition, he has extensive experience in traditional labor relations matters, including collective bargaining, unfair labor practice charges, labor relations issues that arise in mergers and acquisitions, certification, de-authorization and decertification campaigns, and labor arbitrations. Mr. Long also acts as general counsel to companies that are not large enough to have a full-time general counsel. He counsels these clients on a wide variety of employment and related corporate issues. Mr. Long received his B.A degree from Stanford University, and his J.D. degree with Great Distinction, Order of the Coif from University of the Pacific, McGeorge School of Law. Mr. Long is currently a member of the Litigation and Employment Law Section and Fair Labor Standards Legislation Subcommittee of the American Bar Association, the Litigation and Employment Law Section of the California State Bar.

Q. In the past three decades, there has been an upward trend in labor and employment litigation. What do you believe are the major factors that could explain this trend?

A. There are multiple reasons accounting for this rising trend. One of the main factors is the increasing number of labor and employment laws that have come into effect in the past twenty or thirty years, both at the federal and state levels (see graph below). The passage of Title VII of the Civil Rights Act in 1964 marked an important shift that helped trigger an evolution in employment litigation away from traditional labor relations actions to lawsuits asserting violations of personal and civil rights. Under Title VII, an employer is prohibited from discriminating or retaliating against an employee with regard to hiring, firing, compensation, terms, conditions or privileges of employment on the basis of protected characteristics, such as race, color, religion, sex, or national origin. State legislatures have passed laws similar to Title VII, and some states, such as California, have extended the federal protections to include an employee's medical condition, sexual orientation and marital status. Coupled with this legislative trend, there has been a decrease in the unionization of the workforce, particularly in the private sector, which has also affected the types of employment claims. Another factor underlying this litigation trend is employees' improved awareness about their employment rights and their willingness to assert those rights.

Q. How are employers responding to the increased number of actions brought by employees?

A. Some employers are responding better than others. Responsible employers began investing in human resources departments, hiring trained professionals to help employers work through a multitude of employment issues. These employers have learned that a qualified human resources professional can resolve many issues with the employee feeling the need to file a lawsuit. The advent of new laws also prompted employers to initiate other measures designed to lower the incidence of labor-related litigation, such as Alternative Dispute Resolution (ADR) programs. In some instances, laws have mandated employers to take action. For instance, a new California law[1] requires managers to complete sexual harassment training.

Suffice to say, it is important for employers to be aware of their obligations, educate their managers, respond promptly to employee complaints and generally practice good management techniques.

It should be mentioned, also, that even when an employer acts responsibly, it may still face employment-related claims. Too often this occurs because of miscommunication or misperception. One example in this regard that I use in managers' training is a hypothetical involving a supervisor and four subordinates of various ages. Of the four, one of them has been at the company for over twenty years and another employee for only three years. The one who's been there longer does good solid work but he is not exceptional. He probably has progressed as far as his abilities will take him in the organization. By contrast, the employee who's only been there for three years does an excellent job. He is without question a rising star. I ask the audience to presume that the more senior employee is over the age of forty. At their last employment evaluation, however, their manager gave both of these employees a score of 3 on a scale of 1-5 on their evaluations. As to the older employee, the manager believes that this is a fair assessment of the employee's work. With the younger employee, the manager did not want to give him a higher score because he did not want the younger employee to become over-confident and not work as hard. With these facts in mind, then I ask the audience which employee should be promoted when a promotion opportunity arises. I suggest that the younger employee should be promoted because he does excellent work and is a rising star. In this situation, however, I also point out that the older employee is likely to suspect age discrimination, and for someone in his position, this is a reasonable and rational inference. Was it really age discrimination? Not on these facts. But given these facts, including the manager not being candid with both employees, it is certainly rational for the older employee to feel otherwise. This is an example of how lack of clear communication created a misperception, one that could lead to litigation.

Q. In December 2004, a California state court decided its first electronic discovery case dealing with cost allocation for e-discovery. Toshiba America Electronics Components, Inc. v. Superior Court, No. H027029 (Cal.Ct. App. 2004). In your opinion, what impact will this decision have on future labor and employment cases?

A. This case highlights the challenges employers face in this high tech era. That said, it should ensure that parties in litigation do not have to incur substantial discovery costs merely based on accusations from the other side. However, in certain situations, California law[2] allows cost-shifting to the demanding party. The Toshiba court affirmed this cost-shifting approach. In this way, Toshiba does not represent a dramatic change, but it does provide practitioners with clearer guidelines. When considering Toshiba, however, one should also take into account the Zubulake V[3] decision. Employers must be familiar with the requirements discussed in both decisions, particularly as more and more employment-related data is maintained electronically. For example, Zubulake Vsuggests that any time an administrative charge is filed against a company, that company should place a "litigation hold" on all data that could be relevant to the charge, including electronic data, such as emails. This may sound relatively simple, but it isn't. Imagine the challenges a large employer faces with many employees and operations throughout the country. That employer may receive a number of employment-related administrative charges every year. Trying to figure out what to retain or not, as well as the cost of doing so, can present very difficult challenges for employers. In general, a party to discovery has to bear certain costs associated with producing documents and the like. Both Toshiba and Zubulake V are relevant for employment law practitioners because more and more potentially relevant evidence resides in emails or other electronic storage. The challenges associated with managing such e-discovery become ever greater in employment class actions, which are being filed with greater frequency these days.

Q. It seems as if more employers are imposing binding arbitration agreements as a condition of employment. What effect do arbitration agreements have on employment-related class action suits? If arbitration agreements are silent on the issue of class arbitration, can individual employees still bring class action suits?

A. To begin with, there is nothing that prohibits the enforcement of an arbitration agreement in the context of class actions. Before an arbitration agreement can be enforced, however, the agreement must be enforceable. This often means proving that the agreement is not unconscionable or otherwise contrary to public policy. In California, the Armendariz decision[4] sets forth the factors a court must consider when evaluating an arbitration agreement. Assuming the arbitration agreement is enforceable, one has to evaluate whether in a class action you would want arbitration. For example, would the parties want the matter heard by an arbitrator? Would the analysis be different if the employer has a strong legal argument against class certification? Sometimes you face a situation where some putative class members have executed arbitration agreements, while others have not. Some believe that this would be an inappropriate situation for class certification. Assuming that this is not to be the case, the employer may very well face a large number of individual arbitrations. One has to ask whether from a practical perspective this is a desired outcome. As you can see, arbitration agreements can present nettlesome challenges in the context of employment class actions.

Q. How should arbitration agreements be drafted to eliminate such ambiguities?

A. It's frankly difficult to say. An employer could exclude class actions from arbitration, although it's not clear that such an agreement would be enforceable.

Q. What are the policy reasons for favoring arbitration even in class-wide contexts?

A. The traditionally mentioned reasons are efficiency and resolution. In reality, however, this may not be the case.

Q. Are there significant differences between how California state courts and federal courts view arbitration agreements? If so, what are the differences?

A. State courts will tend to enforce these agreements as long as the factors outlined in Armendariz are satisfied. It appears that federal courts in the Ninth Circuit may be more hesitant to enforce them. This is not necessarily so in other federal circuits. The Ninth Circuit seems very concerned about whether such agreements are unconscionable, either on a procedural or substantive basis. Other courts do not seem as concerned about such issues and instead seem to look for ways to enforce, rather than strike down, arbitration.

Q. How should law students interested in practicing labor and employment law prepare for this specialty?

A. Labor and employment law is a complex legal area. This is because, among other reasons, labor and employment disputes often implicate other legal disciplines. Then there are the multitude of labor and employment laws the number of which continues to grow and this is to say nothing about the evolution of those laws. It is important for students to take a broad spectrum of classes to be able to master the various facets of labor and employment law. First-year courses are essential for establishing foundational knowledge. In terms of specialized courses, good options include classes on civil rights law, traditional labor relations, trial advocacy, tax law, securities law, administrative law and compensation and benefits. Also, Intellectual Property classes are helpful for understanding issues that arise in trade secret disputes. And finally, students should not forget that labor and employment matters involve people. Personalities, perceptions, human desires and human frailties often drive labor and employment disputes. Courses that help a student better understand human motivation, as well as obtaining such insight through life experience, will help make the law student into a valued and successful labor and employment law practitioner.

[1] California AB 1825 is a state law mandating sexual harassment prevention training for supervisors. California employers must comply with AB 1825 by January 2006.

[2] According to the California Code of Civil Procedure Section 2031(g)(1), "Any documents demanded shall either be produced as they are kept in the usual course of business, or be organized and labeled to correspond with the categories in the demand. If necessary, the responding party at the reasonable expense of the demanding party shall, through detection devices, translate any data compilations included in the demand into reasonably usable form."

[3] Zubulake v. UBS Warburg LLC., No. 02 Civ. 1243 (SAS), 2004 WL 1620866 (S.D.N.Y., July 20, 2004)

[4] Armendariz v. Foundation Health Psychcare Servs., 24 Cal. 4th 83 (2000)