The Bonus Claim

I'll Never Use That Mediator Again

The Bonus Claim

The client had worked for the company for about five years.  He resigned in January 2021 to take a job with another company.  Once at the other company, he talked with the General Counsel of that company and told him that his prior employer had refused to pay his bonus for 2020 claiming the company had no obligation to do so because the employee had voluntarily resigned, the bonus plan was discretionary, and it provided that a person had to be employed at the time the bonus was paid in order to be eligible.  The General Counsel called my colleague who called me and asked if I would take a look at the issue.  I did and decided to represent the client.  I was told the bonus should have been about $50,000 and that bonuses had been paid, historically, in December as the company was on an October 1 fiscal year.

Pre-Litigation Settlement Efforts

After reviewing the facts, I thought this would be a pretty easy case to resolve.  The company was a large company whose General Counsel had practiced at a top law firm.  The client had received a bonus in each year of his employment.  The bonus had always been accompanied by a letter from the CEO.  The most recent bonus letter described the formula on which the bonus was based.

The client told me his bonus was not paid in December because of an ongoing internal investigation.  The CFO told the client his bonus would be delayed until the investigation was completed, although the company would not provide him any estimate of when that was expected to happen. The CFO also told the client he was not paid his bonus at the same time as virtually all other bonus-eligible employees, as the company did not want to allow bonuses for people involved in an internal investigation while such investigation was ongoing.  Subsequently, the CFO said the client would not be paid his bonus because he had to be employed with the company “when the bonus is paid out in order to receive it.”

As I pointed out, if the investigation took five years to complete, the client would have had to remain employed with the company for 5 years in order to be paid the bonus he earned for 2020. I asserted that the company’s position “defies basic common sense, fairness and most important for our purposes, California law.”

The company referred the case to outside counsel who requested more time to evaluate the case, which I naturally granted.  About a month after I first contacted the company I heard from outside counsel, who told me the company was not going to pay the bonus because not only had the client left the company, but also that he had failed to disclose what he knew about the internal issue being investigated, an issue for which he was responsible.

As it turns out and, as the company knew at the time, the client was the person who brought the issue forward in the first place and disclosed the issue that lead to the investigation and eventually, to a large settlement with a government entity. In other words, what had started out as a simple failure to pay a bonus had become a whistleblower case.

After going back and forth with outside counsel, I finally made a settlement demand of $75,000 with indications that the client would settle for the amount of the bonus plus a “kicker” to cover my fee.  The company did not offer a penny.  Then, I suggested mediation.  The company declined.  So I filed a demand for arbitration asserting claims based on the failure to pay the bonus, but also CCP 1102.5 and a defamation claim.

Settlement

I won’t bore anyone whose has taken the time to read this far with all the gory details of the arbitration process.  Shortly before Christmas (about a month ago), a year after the client’s bonus should have been paid, the company settled for about $200,000.  Thus, it’s likely the company spent close to half a million dollars on a claim it could have settled for less than $50,000.

Moral of the story.  Make a realistic evaluation of your case.  Don’t throw good money after bad.  A mediator might have helped the company lawyers take a more objective view of the case early on.  One of the problems in the case is that the lawyer who was responsible for determining whether the case settled early was involved in some of the initial advice. It is always harder to settle a case directly with one of the decision makers because that person has to eventually concede, at least to him/herself, that the initial advice might have been problematic from the start.

Resolve your case through mediation instead.

Call me at 626.469.5070

I Will Never Use That Mediator Again

I'll Never Use That Mediator Again

I Will Never Use That Mediator Again

6 Mistakes All Mediators Should Avoid

Prejudging or Evaluating too Early

Especially in an area where a mediator is a bona fide expert in the issues involved in the case, it is easy and tempting for the mediator to reach a conclusion and attempt to drive the parties to that predetermined conclusion.  Even if the case ends up there, the worst mistake is for the mediator to drive the train rather than act as the conductor.

 

Personalizing

The mediator’s job is to assist the parties in reaching a settlement.  It’s not to be well-liked.  Nor is it to demonstrate that the mediator is the smartest person in the room.  Avoid petty personal conflicts with counsel.

 

Coming Unprepared to the Mediation

Mediators complain about lawyers who are unprepared.  One of the biggest sins a mediator can make is not preparing for the mediation.  I conduct premediation calls with each side separately so I can prepare for both legal issues and personal issues that are likely to arise.

 

Giving up too Early

Achieving a negotiated resolution in a litigated case is hard work.  Persistence is required.  A mediator who is perceived as punching a time clock or watching the clock to bill for every second of time is unlikely to be rehired.  Often, after a lengthy session, the parties are primed to settle.  They just need a cooling off period.  Perhaps they cannot concede in person after heated, protracted negotiations.  The mediator who does not make the timely follow up phone call is unlikely to get repeat business.

 

Embarrassing the Lawyer in front of the Client

Oops.  I did this once by mistake.  Counsel had been sanctioned by the court in a discovery dispute.  During the mediation, she repeatedly cast aspersions on opposing counsel.  I eventually reminded her that opposing counsel was not the one sanctioned by the court.  Apparently, counsel had not told her client about the sanctions.  Didn’t settle that case.  Didn’t get hired again.  Mediators need to be aware of when to discuss issues with attorneys outside the presence of the client.  I am now keenly aware of what I should and should not say to attorneys in the presence of a client.

 

Appearing to be anything other than Neutral

A settlement does not necessarily equal a successful mediation.  I am aware of cases which have settled when the parties kicked the mediator out of the room.  Most parties and counsel care about the process.  Were they treated with respect?  Did the mediator empathize with their position?  Did the mediator allow each party to say everything the party wanted to say?  Did the mediator understand the legal issues?  Did the mediator give best efforts in trying to persuade the other party?  Mediators who provide a good process will be hired again.  Those who do not won’t.

What would you add to the list?

626.469.5070

Could This Have Been Avoided?

Case Study - Apartment Complex

Could This Have Been Avoided?

In my quarterly newsletter I referred to a headline which recently caught my eye:

A Los Angeles jury has ordered an apartment building owner and property management company to pay $7.6 million to two former live-in apartment managers who claimed to have been wrongfully terminated and discriminated against based upon a medical condition and disability (thyroid cancer).

September 2021

That same month, I mediated a case where the putative plaintiff was a woman who had been a resident manager of a large apartment complex for over 22 years. This was the first mediation in quite some time where I detected that providing an opportunity for her to air her “real” concerns (as opposed to those translated by counsel into potential legal claims) directly to her boss would be productive. It was. As we only had half-day, the matter has not yet settled. I devised a potential solution and asked the parties, both of whom were initially reluctant, to seeing if they could negotiate something along the lines I suggested. They agreed. The case ultimately settled based on my proposal.

Oh yeah. The real issues? Dignity and respect, not discrimination.

The Facts According to the Plaintiff

Jane began working for Defendant on or around January 3, 2000, as a Resident Manager. She has worked more than forty hours per week and earns $36,000.00 per year. Jane is sixty-eight years old.

In 2020, Jane began noticing that she was being treated disparately on the basis of her race. Specifically, Jane was given a harder time changing her schedule than Caucasian employees and was made to report to her general manager daily.

In January 2021, Jane was required to take a medical leave to tend to her arthritis, chronic obstructive pulmonary disease (COPD), and congenital heart failure. While she was out, Defendant attempted to replace Jane with a younger, healthier employee. Upon Jane’s return, Defendant retaliated against her by putting her on a six-day probationary period.
Defendant misclassified Jane as an exempt employee. Defendant also failed to provide Jane with the appropriate meal periods and rest breaks. Defendant further failed to provide Jane overtime wages and accurate and itemized wage statements.

When Jane returned to work, Defendants were visibly upset as her return made it more difficult to give her position to the younger employee. Jane was called into a meeting with representatives of Defendant. During the long meeting Jane was told how inconvenient it had been for her to take her medical leave, as it had increased others’ workload. Defendant largely disregarded that her health had been in jeopardy. Instead, immediately upon her return, her boss told Jane that she was being put on a thirty-day probationary period.

Jane had no choice but to abide by the thirty-day probationary period. She met with her boss the end of it. He gave her an arbitrary list of twenty-nine things to grade herself on, which Jane completed honestly. Rather than accepting her self-grade or giving her clear feedback, the boss decided to further discriminate against Jane and extend her probationary period for an additional thirty days.

At the completion of the sixty-day probationary period, Jane’s health deteriorated again. She was forced to take another medical leave in June 2021 for approximately three weeks. Upon her return from her second medical leave, Defendant further retaliated against her by increasing her workload, targeting her, and pressuring her to complete an unreasonable number of tasks. When the employee who was meant to help Jane with her task list quit, Defendant failed to hire someone else, leading to greater stress for Jane.

Jane often was required to work more than forty hours per week to complete her work. When she discussed overtime pay with her boss, he stated that he did not believe in paying overtime wages. Employees were required to get permission to work overtime hours. As a Resident Manager, Jane often had to work overtime for emergencies and was unable to wait to get permission from her boss. The boss maintained that he would not pay her for overtime hours worked, and Jane felt she was unable to add the overtime hours she worked to her time sheets.

 

Jane’s Legal Claims

Jane asserted claims for Discrimination, Retaliation and Harassment under the FEHA. CFRA/FMLA Violations and Retaliation and Wage/Hour Claims.

 

The Mediation

I spent most of the mediation asking questions of the parties in separate rooms to understand what was really underlying this dispute. The building owner was adamant that Jane was not able to do the work required and had numerous examples. Not surprisingly, there had been very little documentation of any problems over Jane’s 20-year career. The truth is, the owner actually liked Jane, thought she was good with the tenants, and had tolerated her less than stellar performance for 20 years. Even Jane admitted that she was not able to keep up with all the work. She attributed this failure to her health issues.

After several hours, it appeared to me that both parties could benefit if Jane was permitted to “speak her mind” to her boss outside the presence of the lawyers. I persuaded counsel that this would help the process. I then moderated the discussion between the principals to make sure it stayed on track and that the parties spoke respectfully, If candidly, to each other.

That dialogue seems to open the door to a solution I proposed that allowed both parties’ interests to be served and avoided a lawsuit. After a week or so of consideration, the parties signed an agreement based on my proposal.

Moral of the story. Use mediation to uncover underlying interests, not positions and craft a solution that addresses as many of the interests as possible.

Give me a call about your case

626.469.5070