An Alameda County jury awarded five former employees of Lawrence Livermore National Laboratory a total of $2.7 million last week in compensation for estimated losses suffered when they were laid off in 2008, allegedly in violation of an employment contract.
The jury decision appears to be the tip of a complex legal iceberg that has the potential to cost the company that operates the Laboratory far more than the $2.7 million jury award – or that might melt away and cost it little or nothing.
The company that operates the Laboratory is called Lawrence Livermore National Security. It issued a statement saying that it “respectfully disagrees” with the jury’s verdict and the $2.7 million award.
The statement also said that the company is “especially grateful” that the jury rejected a charge that it had retaliated against one of the five plaintiffs, Elaine Andrews.
The uncertainty concerning payment of the $2.7 million monetary award results from the complexity of dozens of related cases that are under consideration beyond the five that were decided last week.
In 2008, the Laboratory laid off 440 employees and some 500 contractors following budget cutbacks that were instigated in Washington, D.C. The Laboratory’s funding comes primarily from the National Nuclear Security Administration, which is part of the US Department of Energy.
Of the employees who were laid off, 130 filed suit the following year, alleging breach of contract and age discrimination.
The judge in the case, Robert Freedman, separated the complaint into two parts and chose five of the 130 plaintiffs to go to trial on the breach of contract allegations alone.
Simple arithmetic produces a dramatic picture of the benefit to plaintiffs – and the financial risk to Lawrence Laboratory National Security – assuming future cases yield the same result as the five decided last week.
If five breach-of-contract claims generated $2.7 million in awards, then 130 following the same pattern might produce about $70 million. That’s without moving on to age discrimination accusations, which carry the potential for punitive damages under California’s Fair Employment and Housing Act.
However, as one attorney noted who is familiar with employment law, this picture may be deceptive. “You can’t just extrapolate the first five cases to 125 others. They may have nothing in common. Details of their cases may be very different,” said the attorney, who spoke on the condition of anonymity.
Apart from the uncertainty of outcomes, payouts from the breach-of-contract awards may be postponed until the age discrimination cases are decided. These cases could take years, given the potential for drawn-out trials and appeals.
It is not yet clear how Freedman will decide to handle the remaining 125 breach-of-contract lawsuits. Will he schedule 125 individual trials that might stretch out over years? Twenty-five groups of five? A single, large group?
The Laboratory could also appeal last week’s awards, delaying the process. It has not announced whether it will do so. “We are considering our options,” it said in its statement.
As for the age discrimination cases, Judge Freedman has scheduled a hearing for May 16. He has already ruled that the Laboratory’s layoff policy was not intentionally discriminatory. That ruling was satisfying to the Laboratory, which continues to defend its layoff policy as lawful. However, the ruling’s effect on eventual trial outcomes and awards remains to be seen.
It does have an immediate impact on one practical matter: how to pay for the lawsuit. The Laboratory has a budget that will support legal defense indefinitely while the plaintiffs must either raise their own funds or hope that their law firm can proceed on the promise of attorneys fees from a settlement or verdict.
While most of the Bay Area’s news coverage has emphasized the David vs. Goliath victory of the $2.7 million jury award, a more careful look makes it difficult to separate negotiating rhetoric from legal substance.
The plaintiffs are represented by the Oakland law firm Gwilliam, Ivary, Chiosso and Brewer, which at the moment is denied attorney’s fees both because the fees are not allowed in contract violation cases and because the jury ruled that there was no retaliation against plaintiff Elaine Andrews. A verdict of retaliation would have opened the possibility of attorney’s fees.
Future rulings and verdicts with regard to age discrimination may or may not change this dramatically. Age discrimination awards can reach many millions of dollars, including punitive damages and fees for attorneys.
Gwilliam, Ivary issued a press release earlier this week boasting about the $2.7 million settlement and suggesting that the firm is ready and anxious to try the remaining cases in the full expectation of winning future legal battles. Attorney Gary Gwilliam was quoted in one report as welcoming the possibility of a negotiated settlement.
The Laboratory also continues to emphasize that the 2008 cutbacks were “painful” and were forced on it by federal funding cutbacks. “Lab managers were forced to balance their desire to maintain the Lab’s talented workforce with the need to fulfill its national security mission within the fiscal constraints imposed by Congress,” it said in a statement.
The case that financial hardships are not its fault but were imposed by funding cutbacks from Washington is reinforced by the recent announcement that it is seeking voluntary staff reductions of up to 600 employees because the so-called budget “sequester” has generated so many financial uncertainties for the coming fiscal year.
Even after five years, there is considerable bitterness among former Laboratory employees at what they see as a pattern of unfairness in how lay-offs were instituted as well as the loss of UC health care coverage. A lawsuit is pending over health care coverage.
On the plaintiffs’ side of the legal case, attorney Randy Strauss, of Gwilliam, Ivary, said in an interview that those laid off have been “looking for justice” for nearly five years. He said that last week’s jury verdict was “absolutely a victory . . . for us and especially for the clients, for whom this has been a very long battle.”
Awards to the five plaintiffs were: Elaine Andrews, $242,711; Marian Barraza, $443,299; Mario Jimenez, $853,010; Greg Olsen, $704,234; and James “Rocky” Torres, $485,783.
“We have proven that the layoff was conducted in bad faith,” Strauss said. “There’s no reason to believe future trials will come out differently in the case of other plaintiffs. They (the Laboratory) violated the contracts.
“We expect be able to prove that in court.”