LawyersandSettlements (L&S): You are a difficult guy to get hold of.
Jose Garay (JG): Sorry about that—I've been rather busy lately. In the last three years our law firm has expanded by about 400 percent in the number of cases filed pertaining to wage and hour class actions, and in the meantime we have also reduced the number of cases we bring.
L&S: Are you turning cases away?
JG: Yes, we have to turn away about three cases to every one we bring in.
JG: Due to the economies of scale involved in prosecuting a class action lawsuit our law firm dedicates its resources only to the larger cases. For us, that means pursuing cases that have a settlement value of at least $5 million, and we are now starting to focus on cases that have the potential to settle over $10million.
L&S: What does this mean for attorneys entering into the class action market?
JG: There are lots of opportunities for attorneys new to the field. As an example, there are still a lot of companies not on the "radar" that employ large workforces, are relatively unknown, and who continue to violate California's labor laws. The violations range from failure to provide meal to failure to pay overtime, whether due to misclassification as exempt or failure to pay "off the clock" time. Also, there are a lot of small companies that have not been sued and where the settlement values exceed seven digits or are in the range of solid six digits. Our law firm and our peers look for larger cases but we are constantly referring out smaller cases.
JG: We often reject cases, and that could be a missed opportunity because these cases are a source of cash flow. Our problem has been finding qualified attorneys who have the resources and the desire to pursue smaller class actions.
L&S: Is there a solution to that problem?
JG: Sure. We frequently will train attorneys so that we have someone to refer smaller cases to.
L&S: What does this require?
JG: We are willing to train attorneys who bring their own cases and are willing to pursue our smaller cases. We train by consulting them on legal strategies such as the best jurisdictions to file in, what are the proper pleading methods, and what are some of the more effective litigation strategies. As well, they have to be willing to do the work, and they must also have their own resources to pursue class actions because even a small class action can be expensive and it can require a lot of time. And it could be a drain on resources. But if someone is willing to take the opportunity, we will share all our resources with them.
L&S: Which are...
JG: Knowledge and experience, a lot of pleadings and litigation materials, and also they will be able to tap into our network of our peers who collectively possess hundreds of years of experience. Additionally, we provide damage models and risk valuations methods and access to experts.
L&S: Why are you busier now?
JG: Several reasons. Like I said, we have a lot of cases and the magnitude of each individual case can strain on our own resources. We have one lawsuit now against a major tech company and I am leading that case. We are working with other firms as well, but we are a typical plaintiff firm in that we employ few attorneys. I have an associate and several assistants working on the case which means less time to dedicate to our other cases. This lawsuit requires a lot of attention because it is a new field even for experienced wage and hour attorneys.
L&S: Are there more class action lawsuits?
JG: You are probably asking this question a few years too late. If I could identify two definitive events that triggered the deluge of wage and hour class action lawsuits, it was the Ramirez v. Yosemite Water Co. case. In order for an employee to be exempt, he had to be performing exempt duties 50 percent of the time. After the Supreme Court established a brightline rule that triggered a lot of class action lawsuits. A lot of cases were filed against retailers in particular for designating assistant managers and managers to perform work that had nothing to do with managing. These so called managers or "straw bosses" would work 60-70 hours a week and were paid mediocre salaries. The problem was they were doing a lot of the work that their subordinates were supposed to do.
The exempt status allowed a lot of companies to rely on a 'cookie cutter template' which allowed them to franchise or expand statewide and/or nationally while only having to pay for a glorified supervisor. The problem is, many of the managers were engaged in non-exempt and tedious, low-level work.
For example, a major clothing store required its managers to mop the floors. The case was settled for a seven digit amount in the last year.
One other important event happened. Commencing October 1, 1999, the Industrial Welfare Commission (IWC ) issued regulations that required employers to provide meal and rest periods to their employees. If they did not, employers had to pay them one hour of compensation for each day in which a meal or rest period was missed. Employees could collect one hour of extra compensation-- one hour of wages for whenever they were not provided a meal or rest period, with a limit of two hours of extra compensation per day.
(A meal period in California is 30 minutes and it cannot be interrupted. A meal period has to be provided after 5 hours worked.
A Rest period in California is 10 minutes every four hours. An eight hour day means two rest periods.
If you work 10 hours, you are entitled to 2 rest periods and 2 meal periods.)
L&S: I'll bet a lot of workers still don't know about rest and meal periods, especially two meal periods after 10 hours worked. Was there one industry worse than another?
JG: The restaurant industry was notorious for these violations. Retail was bad as well but not as bad as the restaurant industry.
L&S: How were they becoming aware?
JG: The media at large did not cover these types of lawsuits. The lawsuits permeated throughout the workforce because hourly employees generally work temporarily for any one employer. For instance, a cook at a restaurant chain that got sued goes somewhere else to work; sees the same violations and calls an attorney. It was word of mouth. Even the biggest cases didn't get a lot of media attention-- maybe they got into the local paper but didn't make the evening news.
As employees became aware of the fact that they had to be paid an extra hour when it wasn't provided, they started to seek attorneys who handled class actions for these violations.
And we are in the business of law so we employed our own marketing strategies to make sure that employees were aware of their rights.
L&S: I guess you don't want to give any examples...
JG: Well, no...
But I will tell you this. One of the reasons that so many attorneys missed the opportunity to file valuable cases was because they were not aware of the laws and even then, they weren't asking the right questions.
For example, my partner used to practice in general employment law so he got a lot of calls from workers regarding harassment or discrimination or other labor issues with their employer. After we started working together we would ask them if they got meal breaks and all wages owed--even though they were coming to us for a general labor problem. The majority of the time, they didn't even know they had a case.
L&S: That's a clever marketing technique
JG: As well, we have encouraged workers' compensation attorneys to contact us because they deal exclusively with employees and they have a captive audience: the individual they represent for work related injury is a potential representative in a case that would be much more valuable than the workers' compensation case itself. I had one worker's compensation attorney refer me a case that was settled for over seven million dollars. He made about $2500 on the case but received a 6 digit check for the referral.
L&S: Another example?
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The case has a settlement value of between $1.5 million to $2.5 million and the attorney will get a check for 20 percent of our fees, which will be substantial. Generally we get between 25-30 percent.
LAS: Thanks Jose, for sharing this information with LawyersandSettlements.com and for any interested attorneys, contact Jose Garay by email: email@example.com or phone: 949-260-9193 [www.cartergaraylaw.com]