It Makes The World Go ‘Round

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EmpBlog-4.1.2014-Money-iStock-PAID-RESIZEDMoney, that is. It is a motivation shared by employers and employees alike. It is the reason why employers are in business and why employees work for employers. And it is often the primary reason for a lawsuit.

None of this will surprise savvy employers. But what often comes as a surprise to employers is that the plaintiff is not usually the person driving employment litigation. Whether it is a class action or a single plaintiff dispute, as the saying goes, if you “follow the money” more often than not it is the plaintiffs’ counsel that is in command of the lawsuit, from start to finish.

That is not to say that there isn’t some underlying alleged wrongful act that resulted in a lawsuit or that the plaintiff doesn’t have ultimate power to determine how a case is litigated; there is and he/she does. On the contrary, it simply means that many employers do not fully appreciate the dynamic of a substantial number of employment law cases. Simply put, many lawsuits are incentivized and maintained not by the damages sought by the plaintiff(s) but by the fact that most employment lawsuits carry the sting of an award of attorneys’ fees to the prevailing plaintiff(s).

The recent case of Muniz v. United Parcel Service, Inc. illustrates this point. Kim Muniz was a UPS manager who was demoted and sued her employer for employment-related claims under California’s Fair Employment and Housing Act. She was awarded $27,280 in damages following a jury trial in federal court. The trial court then awarded her $697,971.80 in attorneys’ fees, an amount which was significantly less than the $1,945,726.50 she had initially requested.

On appeal, the United States Court of Appeals for the Ninth Circuit upheld the decision, holding that the trial court did not abuse its discretion in determining the amount of the attorneys’ fees award despite the limited damages obtained by Muniz. Accordingly, the attorneys’ fees award of more than 25 times the damages award was allowed to stand.

The lesson for employers is simply this: understand that in employment law litigation you are not just fighting a claim brought by one or more employees seeking damages, and the claim cannot be evaluated by reference to the amount sought by the plaintiff(s) alone. Rather, the plaintiffs’ request for attorneys’ fees must also be considered. Because in the world of employment litigation, it is often the plaintiffs’ attorneys’ fees that make the world go ‘round.

Topics:  Attorney's Fees, Employer Liability Issues

Published In: Civil Remedies Updates, Labor & Employment Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Ervin Cohen & Jessup LLP | Attorney Advertising

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