Monthly Archives: January 2011

Jan 09 2011
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Customer Lists, Injunction Bond, Trade Secrets

Third Circuit Affirms Award of Damages in Misappropriation of Trade Secrets Case and Denial of Recovery on Injunction Bond After Employee’s Partial Success on Appeal

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The United States Court of Appeals for the Third Circuit affirmed the district court’s award of damages against employees on a claim brought by their former employer for, inter alia, misappropriation of trade secrets.  Latuszewski v. Valic Financial Advisors, Inc., No. 08-1511, 2010 WL 3582434 (3rd Cir. Sept. 15, 2010).   Former employer, VALIC Financial Advisors, Inc., bought claims against former employees Gary Latuszewski and James Rogan alleging breach of contract, breach of fiduciary duty, misappropriation of trade secrets, and tortious interference with contract. Id. *1. Employees appealed arguing that this award was in error and also that the District Court erred in declining to award them damages under VALIC’s injunction bond after this court vacated part of the District Court’s temporary injunction against them. Id. Continue reading →

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Jan 09 2011
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Employee Mobility, Investigations

Immediate Steps to Take Upon an Employee’s Departure for a Competitor

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Richard C. Darwin posted a useful summary and reminder of the steps an employer should take once an employee has decided to pursue an opportunity with a direct competitor.  Darwin recommends the following nine common-sense precautionary measures to be taken right away to reduce the risk of lost or deleted evidence:

  1. Secure the defecting employee’s computer and make sure no one uses it.
  2. If the IT department recycles backup tapes, immediately suspend that practice.
  3. Check the former employee’s office or workspace for missing documents and files.
  4. Get copies of the tapes or electronic files if the building has security cameras. Continue reading →
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Jan 09 2011
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Alter Ego Liability, Attorneys' Fees, Labor Code 218.5

First District Denies Alter Ego Liability Even Where Officer Pays Self and Wife, While Failing to Pay Wages and Commissions

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The Court of Appeal for the First District held that an officer’s failure to pay wages and commissions to an employee, while paying himself and his wife during the same period, is not the type of conduct that requires piercing the corporate veil.  Wymore v. Minto, No. A125476, 2010 WL 3687511 (Cal. Ct. App. 1st Dist. Sept. 22, 2010).

Nor do we see any merit to appellants’ various arguments that it would work an injustice to allow respondent to hide behind EWM because it was his decision, as a director and officer of EWM, not to pay appellants wages and commissions in 2007, while paying himself and his wife during the same calendar year. The fact that respondent, as the president of EWM, may have intentionally failed to pay appellants is not the type of conduct that requires piercing the corporate veil. Continue reading →

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Jan 09 2011
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Administrative, Exemptions

After Bench Trial on UCL Claim, Northern District Finds “On-Job Supervisor” Properly Classified as Exempt Under Administrative Exemption

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District Judge Susan Illston of the Northern District of California conducted a bench trial of plaintiff’s overtime claim under the Unfair Competition Law (“UCL”) and found that defendant UPS met its burden of proving that plaintiff was properly classified as falling within the administrative exemption in his role as “On-Job Supervisor”.  Lopez v. United Parcel Service, Inc., C 08-05396 SI, 2010 WL 3630619 (N.D. Cal. Sept. 14, 2010).

Background

Plaintiff Ben Lopez sued defendant United Parcel Service, Inc. (“UPS”) contending that UPS improperly classified him as an employee exempt from overtime compensation under California law. Id. *1. Continue reading →

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Jan 09 2011
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Attorneys' Fees, Lodestar

Fourth District Affirms Reduction of Fee Award to 12% of Fees Requested Under Labor Code Section 218.5

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The Fourth District Court of Appeal affirmed a fee award of $7,475 (about 12% of requested fees) under Labor Code section 218.5, where plaintiff recovered only $3,290 in statutory waiting time penalties and the damages sought in his complaint and ultimately obtained at trial were substantially less than the jurisdictional maximum for a limited civil case.  Cochran v. El Cajon Motors, No. D055390, 2010 WL 3637540 (Cal. Ct. App. 4th Dist. Sept. 21, 2010).

Background

Defendant El Cajon Motors employed Cochran as a sales manager at its El Cajon Ford dealership until it terminated his employment in mid-January 2007. Id. *1. Continue reading →

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Jan 09 2011
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Class Discovery, Discovery, Opt-out

Central District Rejects Opt-Out Procedure and Orders Disclosure of Name and Contact Information for Members of an Unpaid Commission Wages Class Action

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The Central District granted plaintiff’s motion to compel disclosure of the name and contact information (full name, last known addresses and telephone numbers) for class members of a putative class action for unpaid commission wages.  Celia Alvarez, et al. v. The Hyatt Regency Long Beach, et al., CV 09-04791-GAF (VBKx).  According to the court, the class was defined as all non-exempt employees for the period commencing May 7, 2005.  (Thank you to Radhika Sainath for alerting me to the decision.)

Defendants contended that the information was not relevant for class certification and invaded the privacy rights of the putative class.  Plaintiffs offered to enter into a protective order and offer that the information be given to a third party who would send the class members an opt-out letter.  Defendant rejected these proposal. Continue reading →

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Jan 09 2011
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Class Actions

Northern District Strikes Aiding and Abetting Allegations From Overtime Class Action Complaint

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The Northern District of California granted a motion to strike aiding and abetting allegations from an overtime class action complaint.  Toy v. Triwire Engineering Solutions, Inc.,  No. C 10-1929 SI, 2010 WL 3448535 (N.D. Cal. Sept. 1, 2010) (slip op.).

Background

Plaintiff Jason Toy filed a putative class action in state court against defendants TriWire Engineering Solutions, Inc., Comcast Corporation, and Comcast Cable Communications Management LLC, alleging that TriWire and Comcast employed Toy as a cable technician to install, disconnect, and upgrade cable television and computer services for consumers throughout California.  Id. *1.  Plaintiff contended he was not exempt from overtime requirements, and was not paid overtime in accordance with the law. Id. Continue reading →

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Jan 09 2011
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Demurrer/Motion to Dismiss

Northern District Rejects Motion to Dismiss Misappropriation of Trade Secrets Claim

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In Farhang v. Indian Institute Of Technology, Kharagpur, No. C-08-02658 RMW, WL 3504897 (N.D. Cal. Sept. 7, 2010), Defendant Indian Institute of Technology, Kharagpur (“IIT”) moved to dismiss a complaint for misappropriation of trade secrets on the grounds that it failed to allege sufficient facts showing that: (1) the alleged trade secrets were subject to reasonable efforts to maintain their secrecy; (2) IIT misappropriated trade secrets; and (3) plaintiffs suffered harm as a result.  Id. *1.  The court denied the motion. Continue reading →

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Jan 09 2011
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Wages

Southern District Holds That Compensation Received But Later Forfeited Under Cliff Vesting Schedule in Mandatory Investment Plan, Are Not Unpaid Wages

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In Callan v. Merrill Lynch & Co., Inc., No. 09 CV 0566 BEN (BGS), 2010 WL 3452371 (S.D. Cal. Aug. 30, 2010) (slip op.), the Southern District held that compensation plans that contained cliff vesting schedules in which awards are forfeited if employment terminates before the awards are vested did not constitute unpaid wages under the Labor Code.

Facts

Former employees of the Defendants Merrill Lynch & Co., Inc. and Merrill, Lynch, Pierce, Fenner & Smith, Inc. participated in three of Merrill Lynch’s employee compensation packages.  Id. *1. Plaintiffs alleged they were required to accept part of their wages in the form of “awards” under the plans. Id. Plaintiffs alleged the plans contain forfeiture provisions that constitute unlawful conversion and violate California’s Labor Code and Unfair Competition Law. Id. Continue reading →

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Jan 09 2011
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Attorneys' Fees, Default Judgment, Judgment, Verdicts

Northern District Awards $618,812.82 in Compensatory Damages and Punitive Damages in Case Involving Labor Code and Human Trafficking Allegations

The Northern District granted a default judgment in a human trafficking and Labor Code case.  Canal v. Dann, No. 09-03366 CW, 2010 WL 3491136 (N.D. Cal. Sept. 2, 2010) (slip op.).

Plaintiff Zoraida Peña Cenal alleged that from July, 2006 to April, 2008, Peña Canal worked for Defendant Dann for fifteen hours a day, seven days a week, caring for Defendant’s three young children and cooking and cleaning for the household. Id. For all of this work, plaintiff alleged that Defendant paid Peña Canal only once: on Christmas day in 2006, Defendant gave Peña Canal $100. Id. *1

After Peña Canal escaped from Defendant, the U.S. Attorney charged Dann with five counts: forced labor, unlawful use of documents in furtherance of servitude, harboring an illegal alien for private financial gain, visa fraud and conspiracy to commit visa fraud.  Id. *2.  A jury convicted Dann on all counts, and the criminal court sentenced her to sixty months in prison and three years of supervised release, and ordered her to pay $123,740.34 in restitution. Id. The restitution amount was based upon the government’s calculation, which was derived from data submitted from the federal government’s Foreign Labor Certification Program, as evidence of the value of Peña Canal’s labor during the period at issue. Id. Continue reading →

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