In this interview with KLIF-AM's Grant Stinchfield, Dallas trial attorney Charles "Trey" Branham III says that General Motors’ recent string of recalls shouldn’t surprise consumers. When asked if he thinks criminal charges would be brought against GM, he said, “You sort of have to look at where the government has gone in previous investigations. The best example would be all the mortgage fraud that went on, and you didn’t see a whole lot of criminal charges there. I do think you’ll see serious civil consequences,” says Branham, founder of Branham Law LLP. When asked how he thinks GM will defend itself, he said, “What they’ll do is blame this on low-level employees that supposedly didn’t tell anybody. This is a common story in GM’s history. This isn’t the first time they’ve done something like this over a part that cost a dollar … despite all the shock they’re professing, it’s something that’s gone on throughout GM’s history.”
McDonald's Wage Class Actions Will Be Hard Sell In Court
By Natalie Rodriguez
Law360, New York (March 14, 2014, 7:55 PM ET) -- The filing of seven lawsuits accusing McDonald's Corp. of stiffing employees on earned wages and other labor-law violations is sending a new warning signal to companies that guide or monitor franchisees' finances, but attorneys say the individual suits could find a hard time gaining traction as class actions because of the way they're structured.
Among the numerous claims lodged in California, Michigan and New York are allegations that McDonald's should be held culpable in not only the suits targeting corporate-owned stores, but also those targeting franchisees, because it had a heavy hand in monitoring and guiding the restaurants' financial and timekeeping policies.
While the concurrent filings send a strong warning to both McDonald's and other franchisers that might have similar policies, attorneys say the suits could face significant hurdles in garnering a sizable class or even securing certification.
“It's not easy, and I think plaintiffs have a long road ahead of them,” said Tamara I. Devitt, a labor and employment partner at Haynes and Boones LLP.
Three of the suits were filed in federal district courts and allege minimum wage violations of the Fair Labor Standards Act, while the rest were filed in California state court and claim various labor and wage law violations. Of the federal suits, attorneys say the two Michigan cases could have trouble putting together sizable classes because they aren't seeking certification under Title 23 — where proposed class members would have to opt out — meaning members have to opt in.
“[T]he impact on the company from the actual lawsuits will be determined by the number of McDonald’s employees who actually join the suit,” Trey Branham of Branham Law LLP said. “Typical opt-in rates for collective actions are around 15 to 20 percent, although I expect with the media attention that this case is grabbing, that percentage will be higher.”
Many of the cases — including the New York suit, which focuses on a unique state law that calls for reimbursing uniform cleaning and maintenance costs — may have a better shot at class action certification under their state law claims, experts say. But in California, where four of the suits are filed, a recent ruling could pose a challenge, according to attorneys.
Two years ago, Brinker Restaurant Corp. v. Superior Court put a foot down on wage-and-hour class actions that called for overly broad numbers of class members, saying factual issues tied to certification had to be reviewed and resolved before the granting of class action status, which has stymied the flow of such suits in the state, experts say.
“Brinker, in April 2012, appeared to make it tougher to get certification in these kinds of cases. ... It's too soon to tell with this litigation, given the theories that there are some tough hurdles to try to get these cases certified,” Devitt said.
The California and Michigan suits, however, both levy a significant claim that McDonald's should be considered a joint employer because it provides computer software to track financial information about franchisees, which in turn also guides when managers allow employees to come into work or clock in.
While the suits allege this amounts to a companywide policy that wrongly keeps employees from working the shifts promised to them, some attorneys say this will be hard to prove to the level of scoring class-action certification.
“I can see some difficulties here because decisions regarding when employees were to start work or were not to start work seem to be quite individualized. ... It appears to have been based on the actions of the manager of the store,”said H. Andrew Matzkin, an employment and labor attorney with Mintz Levin Cohn Ferris Glovsky and Popeo PC. He added that cases revolving around on-call times were fertile ground for litigation since it is a subjective area of the law.
"Were you waiting to be engaged or were you engaged to wait?" he said.
By far, the Michigan suits seem to levy the most substantial claims against the mothership company, experts say. The bulk of the two complaints focus on the various point-of-sale and labor-cost reporting software that McDonald's allegedly provides to franchisees, which the plaintiffs contend guides managers to wrongfully bar employees from clocking in until the restaurant is making a certain amount of business.“If decisions were based on this software system to have employees clock out. ... I think that's a good argument that McDonald's company should be considered a joint employer,” said Sophia Lau, a litigator and partner with Early Sullivan Wright Gizer & McRae LLP.
And if the plaintiffs succeed, the repercussions could grow beyond the individual state suits.
“This could turn into a very big litigation under a multidistrict court judge. ... From what I've read in the complaints, McDonald's has figured out a system by which its franchisees can maximize its profits by utilizing employees' times,” said Paul Millus, a member of Meyer Suozzi English & Klein PC's employment law department.
However, attorneys spearheading the litigation contend that they have not given much thought to an MDL. Joseph M. Sellers of Cohen Milstein Sellers & Toll PLLC, who is representing plaintiffs in California and New York, noted that getting the suits tied together would be difficult, but also said there might be instances in at least some of the cases where sharing discovery might make the most sense.
“Our clients wanted us to file them together in part because the cases together raise challenges to a number of practices that we regard as unlawful,” Sellers said.
The suits come at a time when the environment seems to be ripe for such litigation, as President Barack Obama is pushing for minimum-wage reforms and new regulatory efforts being made at the U.S. Department of Labor, Matzkin pointed out.
The McDonald's suits send a message to other franchisers to tread carefully when it comes to what kind of financial and timekeeping guidance they offer their franchisees, lest they want to deal with a wave of lawsuits, according to attorneys.
“I definitely think [others] will be paying close attention to these lawsuits to see what happens and to see how much control and influence they have in their franchisees,” Lau said.
--Additional reporting by Igor Kossov. Editing by Elizabeth Bowen and Philip Shea.
A Texas federal jury on Thursday returned a $180,000 verdict in a collective action against a Dallas attorney and a pair of debt settlement companies, finding they failed to pay a group of more than two dozen employees proper overtime wages.
The jury found the employees worked overtime hours they were not paid for, finding the defendants — Lloyd Ward individually and his firm, Lloyd Ward PC; ABC Debt Relief Ltd. Co. and The Debt Answer LLC; along with the CEO of those companies, Lloyd Regner — violated the Fair Labor Standards Act and that all the defendants except Regner willfully violated the FLSA. The workers made phone sales, handled customer service and performed debt negotiation services and say they worked both on and off the clock overtime hours in addition to regular time, but weren’t paid at the required time and a half rate.
The jury also found all the defendants except Regner lacked a good faith basis they were in compliance with the FSLA and didn’t act with an objectively reasonable basis for believing they were in compliance when they failed to pay overtime, and awarded compensation to the individual employees ranging from $642 up to $33,594.
“Mr. Ward and the other defendants defended this case with a scorched earth policy,” Charles W. “Trey” Branham III of Branham Law LLP, an attorney for the workers, said in a statement. “He never offered a penny to settle my client’s claims. Ultimately, the jury did not believe what Mr. Ward had to say.”
Ward declined comment Friday.
Ward and his firm maintained they were not the employers of the plaintiffs, said most plaintiffs did not work overtime often and that some of the plaintiffs didn’t work overtime hours at all, and argued because they did pay the base hourly rate for the workers, they could collect only the extra half-rate. The firm also denied that it had tried to combine with the debt relief companies overseen by Regner.
“Mr. Ward baldly challenged the credibility of our clients and, in spite of overwhelming evidence to the contrary, asked the jury to award nothing,” Branham said. “I am pleased that the jury awarded my clients almost the entire requested amount.”
Branham said the attorneys for the workers plan to seek hundreds of thousands of dollars in attorneys’ fees.
Ward was hit with a partially probated suspension by the state bar on July 29, with the sanction lasting till Sept. 28 and a probation period that will end in June 2014.
In August, Ward petitioned the Texas Supreme Court to revive a defamation suit he filed against the Better Business Bureau of Metropolitan Dallas Inc. An intermediate appellate court in May threw out Ward’s complaintabout the BBB’s “F” rating of his firm under the Texas Citizens Participation Act, a state law aimed at protecting free speech from strategic lawsuits against public participation.
The workers were represented by Charles W. “Trey” Branham III and Corinna Chandler of Branham Law LLP.
In this interview with KLIF-AM's Kurt Gilchrist, Dallas trial attorney Charles "Trey" Branham III discusses the news story of Atmos Energy inadvertently making excessive withdrawals from the auto-pay accounts of thousands of its natural gas customers. According to media reports, the major public utility made excessive withdrawals from nearly 40,000 customer accounts. "When you sign up for auto-pay that comes out of your account, that is going to be governed by a document that the customer has signed. What their rights are, or -- more candidly, at this point -- are not, is going to be governed by that contract. It wouldn't surprise me to see that there's an arbitration clause in it, which would prevent you from going to a courtroom. You might have to go to an arbitrator. There may be a class-action waiver. In situations like this ... it will be hard to justify paying a lawyer if the only damages are $400. If Atmos doesn't come back, and make things right -- like they said they would do, to their credit -- these people's rights will be defined by the contact they signed."
2nd Circ. To Weigh FLSA Class Waivers In Citigroup Case
By Scott Flaherty
Law360, New York (March 18, 2013, 7:58 PM ET) -- The Second Circuit is set to hear arguments Wednesday in Citigroup Inc.'s appeal of a ruling that blocked the company from enforcing an arbitration agreement that required employees to waive their collective action rights — a case experts say could help clarify whether employers can force wage disputes into individual arbitration.
At oral arguments Wednesday in Raniere et al. v. Citigroup Inc. et al., the financial services company is expected to challenge a ruling that it can't compel arbitration of claims that it misclassified home lending specialists as exempt from overtime under the Fair Labor Standards Act.
"The whole issue in this is, 'Can an employment arbitration agreement preclude an FLSA class action?'" said Brandon McKelvey, a partner in Seyfarth Shaw LLP's labor and employment practice.
Although several federal appeals courts have found in favor of employers looking to enforce class waivers in arbitration pacts, the issue has seen "mixed results" in federal district courts. The question now is whether the Second Circuit will align itself with the others, according to McKelvey.
"I think what this [case] does is it adds another piece to the arbitration-collective action puzzle," he said. "This is just one step along the way of figuring out this issue."
The Citigroup appeal comes after the U.S. Supreme Court's 2011 decision in AT&T Mobility LLC v. Concepcion, in which the high court upheld class arbitration waivers in a dispute between the company and consumers. With the Citigroup case, the Second Circuit is poised to address whether similar waivers are valid in the realm of employment disputes, particularly those involving FLSA claims.
Citigroup has maintained that an arbitration pact it reached with two of the named plaintiff employees — an agreement that incorporated a collective action waiver — is enforceable.
The home lending employees, on the other hand, are expected to argue that a collective action waiver runs counter to the FLSA's intent, and that the New York federal court was right when it denied Citigroup's bid to arbitrate.
For employers, arbitrating disputes with employees on an individual basis is a way to minimize the risks posed by class or collective actions, according to Ellen Kearns, a partner with employment firm Constangy Brooks & Smith LLP. Those risks have only increased in the past decade, which has seen an "explosion of FLSA litigation," she said.
"Because of the risk," Kearns said. "That's the primary reason that an employer attempts to get out from any class process."
But employees who are forced into individual arbitration may have trouble finding attorneys willing to work on their behalf, according to Trey Branham of Branham Law LLP, who has experience representing workers in wage-and-hour actions. The possible recovery from an individual wage dispute is often less than the costs of pursuing those claims, he said.
"The danger here for the employee is that you really begin to lose the ability to get lawyers to take the case," said Branham.
The dispute underlying the Citigroup appeal dates to April 2011, when the home lending specialists sued the company, as well as its Citibank NA and CitiMortgage Inc. units, claiming they had been misclassified as overtime-exempt.
In May 2011, Citigroup asked the district court to compel arbitration of claims brought by two of the named plaintiffs, Tara Raniere and Nichol Bodden, who had signed pacts promising to arbitrate FLSA disputes on an individual basis, according to court filings.
U.S. District Judge Robert Sweet denied the motion, ruling in November 2011 that FLSA collective action rights could not be waived through an arbitration agreement. Although the Second Circuit hadn't yet ruled on the issue, the judge concluded that there was a strong case that FLSA collective action waivers are "per se" unenforceable.
On appeal at the Second Circuit, Citigroup said the lower court had created "unprecedented" rules that were out of step with both the FLSA and the Federal Arbitration Act.
"It is difficult to overstate the implications of the district court's ruling," Citigroup said in a brief filed in February 2012.
In response, the employees argued that the general FAA policy favoring arbitration could not be used to wipe out rights under the FLSA.
"The legislative history and congressional record leading to the enactment of the FLSA, Supreme Court precedent, and the analogous statutes addressing employees' rights unquestionably establish the primacy of collective action rights to the overall statutory scheme of the FLSA," the employees said in an April brief.
The outcome of the case could impact the way wage disputes are resolved, as well as employers' policies, experts said.
If the employees prevail, it could "strengthen the concept and use of a class action in certain kinds of employment cases," said David Lewin, professor of management at the University of California, Los Angeles.
Lewin, who has served as an expert witness in wage-and-hour cases, added that a victory for the employees might "cause companies to reexamine their employment policies, and especially their internal dispute policies."
On the other hand, if Citigroup prevails, employers may be more likely to use arbitration agreements that incorporate class waivers.
"Employers who have been sitting on the fence regarding whether to adopt an arbitration program for its employees will now give such a program serious consideration if they can avoid class arbitrations with a class action waiver," said Kearns, the Constangy Brooks attorney.
An attorney for the employees, Douglas H. Wigdor of Thompson Wigdor LLP, said he was looking forward to arguing in front of the Second Circuit on Wednesday, "and answering any questions from the panel as to why Judge Sweet’s thoughtful decision denying CitiMortgage's motion to compel arbitration should be affirmed."
An attorney for Citi did not immediately respond to a request for comment.
The employees are represented by Douglas H. Wigdor of Thompson Wigdor LLP.
In this interview on NBC 5 (KXAS-TV), Dallas plaintiff’s attorney Charles “Trey” Branham III says the City of Dallas would benefit from detailed rules to govern when police officers can type on their mobile computers while driving. NBC 5’s Scott Friedman reports that cities like Arlington and Fort Worth have specific guidelines to limit the use of electronic devices by officers who are driving, while the City of Dallas doesn’t. When asked what his advice to the City of Dallas would be, Mr. Branham tells Friedman, “Get real specific (in developing these rules). What’s the harm? You can make exceptions and you can make specific exceptions, if you feel like you need them, but there’s no harm at all in being very specific about what you want your officers doing, and what you don’t want them doing.”
In this interview with KLIF-AM radio show host Kurt Gilchrist, Dallas trial attorney Charles “Trey” Branham III discusses the requirements for employers to pay overtime under federal law and the various rights and remedies for individuals who are not receiving overtime. As an example, Trey and the host discuss, as an example, a current case in which Chicago Police Officers have instituted a class action for failing to pay overtime for off the clock work, including the use of cellular phones and pagers. "Employees who are working off the clock are entitled to pay under Federal Law," say Branham, founder of Branham Law, LLP. "We handle these cases all the time and I am very confident that that officer will win his lawsuit as the law is clear."
Originally aired on KLIF-AM (570 AM), Thursday, 10 January 2013
In this interview with KLIF-AM’s Kurt Gilchrist, Dallas securities attorney Trey Branham says the media explosion over AIG considering a lawsuit against the U.S. government that saved it was largely overblown. According to media accounts, former AIG CEO and shareholder Maurice "Hank" Greenberg has sued the government for $25 billion in a derivative case,
claiming the terms of the federal bailout of AIG were too costly, and he's asked AIG's board of directors to join his suit. Says Branham: “The (AIG) board of directors didn’t have any choice but to listen to Mr. Greenberg, because they have an obligation to shareholders to consider claims like this, regardless of whether they decide that the claims are valid or not.” If the board didn’t consider the claims, it could have faced charges of breach of fiduciary duty, Branham says.
AIG 's Retreat From Starr Suit Seen As Only Real Option
By Bibeka Shrestha
Law360, New York (January 09, 2013, 7:59 PM ET) -- American International Group Inc. made a smart move Wednesday by shunning Starr International Co.'s $25 billion lawsuit against the government, according to experts, who say the heavy reputational costs associated with partnering up with Starr far outweighed any benefits.
Under much public scrutiny, AIG's board of directors decided not to stand behind former chief Maurice "Hank" Greenberg and Starr in their legal challenge to aspects of the U.S. government's bailout of the insurer during the financial crisis.
Starr — which was AIG's largest shareholder when the government grabbed an 80 percent stake in AIG — is arguing that the U.S. Treasury Department and the Federal ReserveBank of New York violated the Fifth Amendment by not providing just compensation while seizing private property.
Trey Branham, a securities lawyer at Branham Law LLP, said AIG had no choice but to consider joining the suit, even as the insurance giant runs a massive public relations campaign thanking taxpayers for its financial rescue in 2008. Actually pursuing the suit against the government, though, would come as a major surprise, Branham said.
"From a practical perspective, they couldn't," Branham said. "From a legal perspective, the board [believed] they didn't do anything wrong. They cut the best deal they could. They didn't hurt the company. In fact, they saved it."
Taking up Starr's lawsuit over the bailout might have had dire consequences for AIG and its current board, according to John James, a professor and executive director of the Center for Global Governance, Reporting and Regulation at Pace University.
"The reputational risk here is in the billions," James said. "If I were a shareholder, I'd sue them for failing to protect my fiduciary interest by taking an action which endangered the company's reputation."
Starr brought the lawsuit in the U.S. Court of Federal Claims in November 2011, making derivative claims on AIG's behalf, as well as direct claims against the government on behalf of itself and other similarly situated shareholders.
In a Tuesday statement confirming that its board would mull joining the lawsuit, AIG said that if it didn't join Starr's suit and Starr prevailed or raked in a substantial settlement on its direct claims, the insurer would not get a piece of that recovery.
AIG said its board had an obligation to seriously consider Starr's demand and respond in a way that fit the company's best interests. The insurer could have taken over the claims, allowed Starr to pursue the claims on the company's behalf or prevented Starr from prosecuting the claims, a decision AIG acknowledged Starr would likely challenge.
If AIG's directors went with the first option, shareholders could have accused the board of taking unnecessary reputational risks, according to James.
"The present shareholders are the main concern of the current board, not money but the shareholders' value," James said.
Branham agreed with James that some shareholders could have taken legal action against the AIG board for joining Starr's suit.
"If the board had made that decision, I think the suit against the board then becomes a much better one," Branham said. "Then you really are hurting the company."
Now that AIG has decided to oppose Starr's derivative claims, Starr will likely be arguing that the the board of directors has breached its fiduciary duties to shareholders by not taking up the claims, according to Branham.
On Tuesday, AIG said it would make its decision in the next few weeks, but wound up acting much more quickly, after lawmakers and other critics lambasted the company for entertaining the idea of suing the government over the bailout.
Steve Miller, chairman of the AIG board, said Wednesday that the board had properly executed its fiduciary and legal obligations to AIG and its shareholders by considering and ultimately refusing Starr's demand.
According to Miller, AIG has returned $205 billion to taxpayers since the bailout, including a profit of $22.7 billion.
"We have kept our promise to rebuild this great company, repay every dollar American invested in us, and deliver a profit to those who put our trust in us," Miller said. "We continue to thank America for its support."
Corinna Chandler obtained a verdict on behalf of a city of Dallas Employee on Monday October 29, 2012
A federal jury awarded a former city of Dallas electronic technician $209,000 on Tuesday, upholding his claim that city officials fired him in retaliation for a series of grievances he made.
The verdict capped a three-year fight for Bruton Stephens, whose grievances started when he accused a fellow employee of theft. He says his complaints led his bosses to strip away his supervisory position and finally discharge him during layoffs in 2009.
“I feel great,” he said, smiling broadly after Tuesday’s verdict.
It was not just a victory for Stephens, but also for the young attorney and two Southern Methodist University law students who represented him.
His lead attorney, Corinna Chandler, is an SMU law school graduate who received her Texas Bar card in 2009. It was her first federal case, and she tried it with the help of law students Marie Rovira and Gregory Brassfield. They worked under the supervision of a professor, Eliot Shavin, as part of an SMU law school program.
“We are thrilled,” Chandler said. “It’s been a lot of hard work. We couldn’t be more excited. We appreciated that the jury paid attention and ultimately did what they thought was right.”
City attorneys said they were looking into whether to appeal.
“The city is respectfully disappointed in the jury’s decision and is assessing its post-trial options,” City Attorney Tom Perkins said by email.
The city hired Stephens in 2003 as a senior electronic technician in the Department of Public Works and Transportation. He worked on school-zone traffic blinkers, often in a supervisory capacity.
In late 2008, other employees came to him about a city employee whom they accused of stealing wood and metal poles from the city. City attorneys said it was later determined the material was scrap and had been abandoned.
Stephens took the theft allegation to his superiors, but he said he came to believe that they didn’t take his complaint seriously. As he continued to complain about this and other issues, he said, he was stripped of his supervisory duties, assigned to menial jobs such as sweeping parking lots, and, eventually, let go during the layoffs.
Among those who testified in his trial was City Manager Mary Suhm, who said that the 2009 layoffs were equitably handled and that Stephens’ dismissal was not retaliatory. She and other city officials who testified said city officials based their layoff decisions on positions, not specific employees. They said Stephens was one of 800 employees let go under drastic budget cuts, and their action had nothing to do with his complaints.
Grim but polite, Suhm was not an easy witness for Chandler to question. The city manager often said she couldn’t remember specifics about a matter from several years ago.
City attorneys tried to paint Stephens as evasive when he took the stand last week.
The jury awarded him $13,000 for back pay and benefits, $1,000 for medical expenses and $195,000 for mental anguish.
“All I know is I was nervous and had butterflies,” Stephens said about waiting for the jury’s verdict, which followed several hours of deliberation. “I didn’t know what to expect.”
Brassfield, one of the law students who worked on the case, commended Chandler for her persistence in working more than two years to get the case in front of a jury.