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Attorney Laura L. Ho on a Large-scale California Class Action

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Oakland, CALaura L. Ho is a partner in Goldstein, Demchak, Baller, Borgen and Dardarian (GDBBD), a California firm practicing in a broad range of public interest class actions. A 1991 graduate of the University of Washington, Ho received a JD from the Yale University School of Law in 1994. Recently, as co-lead counsel in a California state class action against Starbucks, she gained an award of over $105 million in damages for unpaid tips for over 120,000 past and present baristas.

LAS: What are your areas of litigation—and what brought you to them?

Laura L. Ho (LLH): Most of what we do here is employment class action or collective action. I spend most of my time in the wage and hour area, both opt-out class actions under Rule 23 of the Federal Rules of Civil Procedure, and opt-in collective actions under the federal Fair Labor Standards Act.

I started doing wage and hour law right when I got out of law school. I was interested in wage and hour issues especially as they affected immigrant rights. The reason I think it's important is that all my clients are working people who depend on their wages for their livelihood, and the cases are about getting them the wages they've earned. Because we'll represent a group of people who allege that they've all been subjected to the same wrong, we can make a big impact on how the company they're alleging it against acts, and also on how an industry looks at how they're paying people, which is great.

LAS: How do clients find your firm? How might they know whether they have a case and how to proceed?

LLH: Sometimes they come directly to us and don't know exactly what to do but feel they've been mistreated somehow. We also work a lot with smaller firms who might get into a case that's larger than they can handle on their own and who need our resources and expertise. Class action cases can be very resource intensive and require a lot of work, so we work with a lot of smaller shops. A lot of times, employees don't know that a statute isn't being violated, but they'll come to us just to find out if it is and what they can do.

Then sometimes people will notice a settlement or a verdict such as Starbucks, and they'll call us up. They'll be thinking, "If it's illegal in that workplace, maybe it's illegal in ours." And of course these days they can find us on the web or e-mail us with questions.

LAS: How was the Starbucks class action built and argued?

LLH: It was first filed in October 2004. In this case, two smaller firms, Bohm, Matson, Kegel & Aguilera and the Law Offices of Terry Chapko, came to us after they had gotten the class certified and before the class notice was sent out. They needed help getting the notice out, deciding what to say in it and so on, and then figuring out how to put the case together.

It was a big class, over 120,000 people, and we had to print up all those notices and mail them out, and it was a pretty mobile workforce with a lot of address changes, so just assembling the database and tracking the class members was a big undertaking.

Along with Rudy, Exelrod and Zieff, we were co-lead class counsel; the others were class counsel. Class actions don't often get tried, so our two firms worked together to try the case.

LAS: Why do you think Starbucks chose to go to trial rather than just make a reasonable settlement?

LLH: That's a good question! We're not privy to how they work over there at Starbucks, of course, but it obviously involved a very large amount of restitution, so they may not have felt comfortable paying that even with a reasonable discount for settling. I'm surprised, really, that they took it to trial, because the law is so clear, and we felt that we had an extraordinarily strong case. Starbucks may have felt that they had an equally strong case, but their view did not prevail in court.

LAS: You believed the applicable law was clear in this case?

LLH: We thought so. It's paragraphs 350 and 351 of the California labor code that say that "No employer or agent shall collect, take, or receive any gratuity" that is left for an employee. It says, "'Agent' means every person other than the employer having the authority to hire or discharge any employee or supervise, direct, or control the acts of employees."

Starbucks had a tip pooling policy throughout California. They collected all the tips in a special container that's the same in every Starbucks store, put the money in the store safe, and at the end of the week divided it all up between the baristas, the entry-level servers, and the next level up, the shift supervisors.

The court found that the shift supervisors did indeed "supervise, direct, or control the acts" of the baristas, and therefore they shouldn't be included in the same tip pool as the baristas they directed.

LAS: Starbucks says they will be appealing, and they've also said that they will not abide by the order of the California Superior Court to end this practice. What do you think is going on there?

LLH: It's really kind of shocking. The statements they've made have been really defiant, which has sort of been their attitude from the start. They're talking about flouting the law—there's been a ruling and they say they won't abide by it.

They got away with this practice for a long time and it took a trial and a class action to bring judgement. The legal case was extraordinarily strong, as I mentioned, so it looks now they're trying to take it into the court of public opinion, but I think that public opinion is going to tell them to follow the law.

LAS: Were there any special challenges in this case?

LLH: Because this was a very large class, the most difficult part was coming up with a damage calculation, to reconstruct the amount of money Starbucks took from the tip pool and gave to the shift supervisors; that was the amount we were seeking.

We found out in discovery that Starbucks used the same weekly calculation formula in every store throughout the state. We asked for discovery on each of these calculations for every store; Starbucks hadn't kept these records, but the court ordered them to start retaining the records so we'd have a basis for figuring out damages.

We hired some experts, statisticians and accountants, who came up with an estimate of the amount based on the records that Starbucks retained. We took a sample of stores, Starbucks produced the records, and our statisticians and accountant came up with a figure based on that sample. We had to learn a lot about statistics—fortunately, we had a guy who was a Ph.D in statistics and had a done a lot of class action work.

LAS: Before joining GDBBD, you worked for the American Civil Liberties Union (ACLU). What were you involved with there?

LLH: I worked with them for about a year on the National Immigrants Rights Project. The issue there was about how much court review there could be of deportation decisions made within the administrative system of the Immigration and Naturalization Service (INS). It was all about how much review a third branch of government, the court, could have of an executive branch decision. It was about checks and balances, and was sort of an outgrowth of my interest in immigrant issues. To me, it all makes sense in the narrative of my career, in representing the little guy when they're going up against a big organization like the INS or a big corporation like Starbucks.

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