California Labor &
Employment Law Blog
Jan 21, 2011

Ninth Circuit Issues Two More Employee-Friendly Decisions

Topics: Court Decisions, Discrimination, Harassment & Retaliation, Employee Hiring, Discipline & Termination

Widely reputed as an employee-friendly forum, the Ninth Circuit furthered that reputation this week by issuing two new employee-friendly decisions. In Collins v. Gee West Seattle, the court held that employees who voluntarily resign after learning the employer might cease operations, have suffered an "employment loss" within the meaning of the WARN Act, thereby entitling them to 60 days' notice (pay) under the Act. Although the employer notified all employees of a potential cessation of operations, the employer only provided a couple weeks' notice under the faltering business exception to the WARN Act's 60 day notice requirement. The employer notified employees that it was actively seeking a buyer for the business in order to continue operations. After receiving the notice, the vast majority of employees quit, rather than waiting to see whether a sale materialized. Affected employees later sued for violation of the WARN Act, arguing the employer was required to give them 60 days' notice (and/or pay). The employer argued that because the suing employees had voluntarily resigned, they were not covered and therewas no "employment loss" as to them within the meaning of WARN. Although a district court agreed with the employer, the Ninth Circuit reversed the decision, giving virtually no credence whatsoever to the employer's argument. The court reasoned that the WARN Act's 60 day notice requirement is triggered at the time the employer reasonably foresees a significant employment loss triggering coverage under the Act (i.e. plant closureormass layoff). In this case, the employerhad that foresightbutprovidedless thanthe 60 days notice required. Thecourt held that the fact that employees voluntarily resigned on belief they were about to be laid off, does not vitiate the employer's notice obligations under the Act.

In Harris v. Maricopa County Superior Court, the Ninth Circuit sharply curtailed an employer's ability to recover attorneys' fees for a frivolous discrimination lawsuit, holding that only fees exclusively attributable to defending a frivolous claim may be recovered. As many employers know, it is already rare for an employer to be able to recover its attorneys' fees after prevailing in a discrimination lawsuit. In order to recover fees, the employer must prove that the discrimination claims were frivolous, which is a high standard to meet. A claim is not deemed "frivolous" simply because the employee ultimately loses. In the Harris case, the Ninth Circuit further tightened the screws on employers by holding that even where the employer meets the standard for fees by proving one or more claims was frivolous, the employer can only recover fees expended exclusively on defending a frivolous claim. Thus, if the employee brings a discrimination claim and a harassment claim, and only the harassment claim is deemed frivolous, the employer can only recover fees proven to be exclusively devoted to defense of the harassment claim. If fees relate to both claims (e.g. deposition time) this will not be considered exclusive and, therefore, the fees will not be recoverable. In other words, if this Ninth Circuit caselaw holds up, employers litigating discrimination claims in this circuit will be hard pressed to ever have meaningful recovery of attorneys' fees in discrimination cases--even frivolous ones.

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