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Legal Trends: Retailers Beware!
Now Saperstein Goldstein has attracted a competitor: Robles & Gonzalez of Miami, which has filed its own sex discrimination class actions against Publix as well as grocery chain Albertson's.
Expect more law firms to follow suit against more retailers.
An update to the civil rights laws in 1991 made class actions based on sex discrimination (as well as national-origin discrimination) far more attractive to plaintiff attorneys. It did so by offering a full array of damages to victims for the first time. Previously, damages for victims of gender and national-origin discrimination were limited largely to back pay.
"There's no question it makes it easier to protect people's rights," says Ervin Gonzalez of Robles & Gonzalez. "It's a coming area."
The Miami firm's claim against Publix seeks damages on behalf of women who work in the chain's administrative offices, bakeries and other non-retail facilities. By contrast, Saperstein Goldstein's suit against Publix seeks damages for women in stores, as does the Robles & Gonzalez claim against Albertson's.
Attorneys are said to be considering class-action sex-discrimination cases against other Southeastern retail chains. Robles & Gonzalez also is pursuing a class action against Pizza Hut on behalf of Hispanic employees.
"There's no question that the changes on the state and federal level in the discrimination laws have led to the increases in cases we're seeing," says Ronald Rosengarten of Miami's Greenberg Traurig. "I don't think we'd see the volume we see now without those changes."
Already, the changes in the law have caused potential awards to soar over $100 million in some big class actions. Saperstein Goldstein won $107 million from Lucky Stores and $250 million from State Farm in recent years. Those cases arose on the West Coast. Saperstein Goldstein also gained a $29.5 million settlement in a previous claim against Albertson's stores in California. Attorney fees in class actions can range from 10% or less up to 40% of the award, depending on the complexity of the case, length of the litigation and other factors.
Saperstein Goldstein "has demonstrated that a lot of money can be won by the plaintiff lawyers if they're well-financed and good and smart," explains Donald Livingston, a Washington lawyer and former general counsel of the federal Equal Employment Opportunity Commission (EEOC). "So they've established a blueprint. And it would be naive to think other lawyers wouldn't try to follow it."
Another employment expert, attorney Irving Miller of Miami, says the Publix case could produce a settlement of up to $500 million. "And if they lose pursuant to a trial on the merits," says Miller, "it could be double or triple that." Publix and Albertson's have denied discriminating.
In part, businesses have themselves to blame for the changing climate. Many big companies encouraged lax enforcement of employment laws in the 1970s and 1980s by pressuring federal officials. Particularly under then-Chairman Clarence Thomas (now the Supreme Court Justice) during the Reagan administration, the EEOC became notoriously slow to respond to complaints because of understaffing and sensitivity to political pressures. Many observers say this led indirectly to the 1991 law changes.
"There were a number of huge lawsuits in the late '60s and early '70s," recalls Miller, a former regional counsel for EEOC. "But those suits have really kind of fallen off in the last 10 years or so.
"What this Publix litigation means is that there's finally a private firm out there that's developed the skill and ability to go after these large corporations on a big scale, and rip them up financially," Miller says. "I'm kind of excited about the prospect of a private entity developing this kind of power and expertise when it should be the government."
In fact, through its successes in the last five years, Saperstein Goldstein has built up a much larger litigation war chest than the EEOC, observers say. The firm is "by an enormous margin the most successful plaintiff employment discrimination firm," says Livingston. That's important because employment discrimination class actions require tremendous investments in discovery.
Miller and some other employment lawyers believe many companies suddenly are at risk of similar suits by private plaintiff attorneys. Says Miller: "I've told people, 'If you look around at your ranks and it's not diverse, you might be getting a knock on the door. And it's the big bad wolf coming to eat you up.'"
Grocery stores remain uniquely vulnerable because they operate on tight margins that often leave little room for elaborate personnel decision-making techniques. That becomes a liability when a company must reconstruct the reasons for particular hiring and promotion decisions. Common to many discrimination cases is the claim that women have been channeled into dead-end jobs and ignored by the chain's promotion system. Companies like Publix say many women don't seek management positions because they want to spend more time with their families. But without a detailed record, that can be hard to prove.
Other risk factors are common to the retail industry as a whole. For example, a policy of promoting from within - a typical practice in retail - means that a company could face problems if its management ranks don't look like its lower ranks in terms of race and gender.
In addition, because retail businesses are open to the public, they lend themselves to informal surveys by plaintiff attorneys.
"Publix helped us out," says Thomas A. Warren, a Tallahassee attorney who is co-counsel with Saperstein Goldstein. "They put all the pictures of their managers on the wall."
Cars Kill People
Florida's antiquated "dangerous instrumentality" doctrine in auto liability shows no signs of running out of gas. A recent decision by the state Supreme Court reinforced the doctrine as applied to a long-term auto lessor, American Honda Finance Corporation.
Dating back to 1920, Florida has made an automobile owner liable for any damage the car causes through negligent operation, regardless of whether the owner was driving. The theory behind the rule: that autos - like dynamite - are so inherently dangerous that an owner's fault doesn't matter. Florida is the only state to continue to apply the rule to autos.
The Legislature in 1986 waived the rule for long-term auto lessors so long as lessees maintain adequate insurance. But in a decision a few weeks ago, four justices of the state Supreme Court interpreted the 1986 statute narrowly, ruling that Honda couldn't escape its own liability by purchasing insurance for its lessees. Three justices dissented, arguing that strict adherence to the statute produced an unfair result. Lawyers for automakers say the ruling could cause lessors to cut back on the widespread practice of buying such backup insurance.
