Count The Cost Before Waging The War

 

An excellent piec by my Portland, Oregon partner, Rich Meneghello….

When Sun Tzu wrote “The Art of War” in the sixth century B.C., he probably wasn’t thinking about how his advice would apply to employment law litigation in the 21st century, but he might as well have. One of his most famous quotes from that epic military treatise is “Those who wish to fight must first count the cost.” A recent example from Washington state shows the value of following this sage advice.

The Field Of Battle

Andrew Fiore worked for PPG Industries for a relatively brief period of time, roughly nine months, in 2009.  He was employed as a Territory Manager, which called for him to service retail stores throughout Washington and Oregon, assisting in the selling of paint and paint products for PPG. His actual job involved him managing color samples at the paint counter of these retail stores, including rotating stock, building displays, and performing manual labor. His job also called for him to directly interact with the customers and contractors who were looking to buy products.

PPG considered him an “exempt” employee, which means they paid him a fixed salary and did not pay him any overtime. In their view, his primary job responsibility was “promoting sales,” which meant that he fit into one of the white-collar exemptions that allowed them to pay him a fixed salary no matter how many hours he worked per week. According to Mr. Fiore, he worked a considerable amount of time beyond 40 hours per week during his brief stint at PPG, travelling to and from the 11 stores in his territory, handling after hours email and phone calls, and other functions besides his in-store job responsibilities.

After his employment at PPG ended, Mr. Fiore brought a wage and hour lawsuit against PPG, contending that his duties principally consisted of manual labor and conducting individual sales, and thus he should have been entitled to overtime pay. After sitting down and calculating how much he thought he should have been paid, Mr. Fiore concluded that he had been shorted about $12,000.

Now $12,000 is nothing to sneeze at. It’s a considerable sum of money to the vast majority of people in this country, and someone who believed he earned that money fairly would certainly not want to give it up. From an employer’s perspective – even an international conglomerate – $12,000 is no small chunk of change either. PPG decided after it received the lawsuit that it was willing to fight Mr. Fiore’s efforts to recoup that money and instructed its lawyers to defend the case vigorously. And fight it vigorously they did. For the next three years, the lawyers for PPG and Mr. Fiore waged a battle over this issue at arbitration, then at trial court, then at the Court of Appeals, and finally at the Washington Supreme Court.

When the dust settled a few weeks ago after years of fighting, the courts concluded that Mr. Fiore was entitled to recover his $12,000 (now doubled to $24,000 as a punishment for “willfully” withholding the overtime pay). And to cap it all off, the Court also told PPG that it had to reimburse Mr. Fiore’s attorneys their fees for fighting the case on his behalf, which total over $700,000. Yes, you read that correctly – nearly three quarters of a million dollars spent fighting over $12,000.

Could It Still Be Worth It?

This is not necessarily an uncommon scenario. For a variety of reasons, employers often far outspend in defense costs what it would have taken to simply settle a case early on. In PPG’s view, this matter was a “test case” that would have national implications for many of its workers, which is one reason to go toe to toe all the way to the state Supreme Court.

In many other cases, employers decide to draw a line in the sand and fight a particular case to set an example for other disgruntled workers (or former workers) who may be thinking about filing a lawsuit but will think twice if they know the company will forcefully fight their case. In still other cases, employers just decide to fight a case on principle grounds – they know they are in the right, and they would rather spend money defending their position than “paying off” someone undeserving of any reward.

Of course, all of these reasons are quite justified, and at the end of the day PPG might say that they would do it all over again if they had to.  But for some employers, another quote from Sun Tzu’s Art of War might be applicable when thinking about fighting employment litigation: “He will win who knows when to fight and when not to fight.” For some companies, spending $700,000 to fight a $12,000 claim is worth the money. For many others, this story is a cautionary tale about when to fight and when to think about resolving a case in a different manner.


For more information contact the author at RMeneghello@laborlawyers.com or (503)252-4262.

 

About mavity2012

I am a Senior Partner operating out of the Atlanta office of Fisher & Phillips LLP, one of the Nation’s oldest and largest management employment and labor firms. My practice is national and keeps me on the road or in one of our 28 offices about 50 percent of the time. I created and co-chair the Firm's Workplace Safety and Catastrophe Management Practice Group. I have almost 29 years of experience as a labor lawyer, but rely even more heavily on the experience I gained in working in my family's various businesses, and through dealing with practical client issues. Employers tell me that they seldom meet an attorney who delivers on his promise to provide practical guidance and to be a business partner. As a result, some executives probably use different terms than “practical” to describe my fellow travelers in the profession. I don't enjoy the luxury of being impractical because I spend much of my time on shop floors and construction sites dealing with safety, union and related issues which are driven by real world processes and the need to protect and get the most out of one's most important business assets ... its employees. That's one of the reasons that I view safety compliance as a way to also manage problem employees, reduce litigation and develop the type of work environment that makes unions unnecessary. Starting out dealing with union-management challenges and a stint in the NLRB have better equipped me to see the interrelationship of legal and workplace factors. I am proud also of my experience at Fisher & Phillips, where providing “practical advice” is second only to legal excellence among the Firm’s values. Our website lists me as having provided counsel for over 225 occasions of union activity, guided unionized companies, and as having managed approximately 450 OSHA fatality cases in construction and general industry, ranging from dust explosions to building collapses, in virtually every state. I have coordinated complex inspections involving multi-employer sites, corporate-wide compliance, and issues involving criminal referral. As a full labor lawyer, I oversee audits of corporate labor, HR, and safety compliance. I have responded to virtually every type of day-to-day workplace inquiry, and have handled cases before the EEOC, OFCCP, NLRB, and numerous other state and federal agencies. At F & P, all of us seek to spot issues and then rely upon attorneys in the Firm who concentrate on those areas. No tunnel vision. I teach or speak around 50 times per year to business associations, bar and professional groups, and to individual businesses. I serve on safety committees at three states’ AGC Chapters, teach at the AGC ASMTC
This entry was posted in civil and criminal exposure, discipline and discharge, litigation, managing legal matters, settlement strategies, wage hour and tagged , , . Bookmark the permalink.

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