You’ve been sued? Don’t be surprised. You aren’t alone. You are in the most litigious state in the country, and our beloved state legislators are falling over themselves to make it easier to sue you and create ever-more curious and bizarre laws. You are a target. Plaintiff attorneys are falling over themselves looking for clients who may have even the smallest of claims – if there are attorneys’ fees available at the other end. That is, many laws provide that if they prevail on even the smallest lawsuit, the attorney fees by themselves can be awarded by the court of amounts of $25,000, $50,000, $100,000 or more. This is the environment in which we live. So, how do you protect yourself? There are 3 ways.
First, with respect to employees, you must have an arbitration agreement in place for every employee and if you have more than 20-30 employees, the arbitration agreement must have a “Class Action Waiver” built-in. If you have an arbitration agreement and you are sued, then you have the option to compel arbitration or simply contest the lawsuit in court. The advantage of arbitration is that there is no jury and if you do lose, the arbitrator will probably award the plaintiff less than a jury would (no guarantee). Arbitration agreements are especially useful in cases such as wrongful termination, sexual harassment, and discrimination cases (race, age, sex, etc). However, if it’s a small wage claim, then we wouldn’t want to go to arbitration because you have to pay the arbitrator’s fees in employment cases.
Also, you may need an Arbitration Agreement built-in to your sales contracts with your customers. Even restaurants have been sued by customers in class actions and other cases. Arbitration Agreements don’t cost you anything and it could save you a great deal of money. There are some attorneys who won’t want to work on arbitration cases because there is no threat of a jury. I’ve actually had one attorney dismiss a wrongful termination case in its entirety after I filed a motion to compel arbitration.
Second, you must become aware of the most common business lawsuits, and make sure that you are not violating them. This includes understanding wage laws, overtime, meal and rest breaks, when and how to terminate someone. The best way to do this is to have a consultation with an employment attorney to go over these issues and others. As for myself, there is no charge for the consultation. Also, there are other common lawsuits of which you should be aware. Americans With Disability lawsuits (ADA) are very common and usually involve a lack of or improper handicap parking spots and proper signage as well as restroom requirements, ramps, etc. You can get an inspection of your facility by a certified CaSP inspector, who will go to your facility, advise you of any violation, and, when corrected, provide you with certificate to protect you from these lawsuits. (I’ve heard the cost may be as little as $600 so check around. Google “CaSP Inspection” and then click on “Certified Access Specialist List – State of California.) There are dozens of attorneys who have disabled clients who drive up and down every street in every county (and even use Google Street View) to look for violations so they can bring a lawsuit.
Other common lawsuits involve trademark and patent infringement. These include, for example, a sports bar showing a cable sports event but failing to buy the license to show the event, or selling products that look similar to patented products (e.g., ladies Coach bags, designer shoes, etc). Also, if you produce or sell a product in California that has a certain amount of a designated chemical or compound built-in, you may be the target of a Proposition 65 lawsuit. This is very common if you import products from China or other countries.
Third, if you have been sued, the most important thing is to get out of the lawsuit as soon as reasonably possible. I don’t care if you did nothing wrong and the lawsuit is a total sham; the problem is that you simply have to defend the lawsuit. If you are taking it personally, then stop it. This is business. Lawsuits happen. And don’t take the very common position that “I would rather pay my attorney a million dollars before I pay that so-and-so one red cent.” This is business and you have to take a common-sense business approach that it is sometimes better to pay the plaintiff something than to pay your attorney tens of thousands. And you have to seek out an Attorney who will talk to you like that. An attorney who starts talking Trial tactics and how you are going to win at trial is doing you no favor. You need an attorney that views you as someone who needs legal help rather than looking at you as another billable event.