Thursday, May 24, 2012

California State Bar President to Chair "Task Force" to Decide "Clinical Education" Requirement for Law Grads

The current President of the State Bar of California is chairing a committee to explore a requirement that newly graduated attorneys satisfy a practical training curriculum as a condition of licensing.  That is, that Bar Applicants undergo a clinical experience to acquire the practical skills of lawyering before being allowed to provide legal counsel to the public.  

The Committee will explore the scope and structure of such a proposal.  Will a clinical program be rolled out gradually?  What will be the minimum clinical experience?  Will there be exemptions?  What will be the economic impact on the public?  How will the program be implemented?  Where will the clinical training be given, and who will provide it?  All unanswered questions currently.

I applaud our State Bar President for bringing this issue into focus.  There are many lawyers in this State graduating from unaccredited schools who pass the Bar with no real opportunity to obtain training as summer law clerks or as new associates in large law firms with internal training and mentoring.  The result can be confusing, and sometimes disastrous.  Further, the complexity and range of the law is daunting to the experienced.  It is overwhelming to the uninitiated. The public must be protected, and the reputation of the Profession as competent served as well.  

Other professions, as medicine and accounting, require such clinical accountability.  It is over time to move the legal profession in this same direction.

Kudos to State Bar President Jon Streeter.  I just hope his one year term of office is long enough to accomplish meaningful dialogue of lawyers AND the public on this important issue.  

For a full reading of the President's letter in the California State Bar Journal, go to:  Jon Streeter .

Tuesday, May 15, 2012

Public Reporting of Arbitration Proceedings

Arbitration proceedings are not confidential. There is no statute or State Bar rule that requires arbitrations to be confidential. Confidentiality is required only by contract.

An employee may have reasons to want the arbitration to be public. Public disclosure may influence the employer to settle. Public disclosure may influence the employer to change its discriminatory or retaliatory practices. Public disclosure may enhance the reputation of the employee attorney. Public disclosure may provide a stronger sense of justice being done for the employee. Public disclosure may persuade other employers not to engage in similar practices.  

If the original arbitration agreement does not provide for confidentiality of the arbitration proceedings, the employer may attempt to obtain a stipulation from counsel for confidentiality. For the reasons listed above, the employee's attorney may want to resist entering into such a stipulation. 

If the employee’s attorney requests court reporter transcripts of the proceeding, those transcripts can be made public unless there is a stipulation are agreement to limit that right. It reasons that if the parties have not agreed to the privacy of arbitration, members of the public can be invited to attend the arbitration. Simply that the matter is heard in a private location does not prevent the person in control of the premises from admitting persons to attend. An arbitrator may exercise his discretion in excluding witnesses, but he may also exercise his discretion in allowing observers to the proceedings. 

 When counsel reviews “verdict and award” results and sees that there are arbitration awards listed, that information is the result of one or both of the parties declining to enter into an agreement of confidentiality. For various tactical reasons, employee’s counsel should consider refusing such agreements if the original arbitration agreement does not already provide for confidentiality.

Wednesday, May 09, 2012

Taking a Second Bite at the Apple: Foreign Suppliers Abuse Workers

While California employment lawyers fight over minutes granted or denied to employees for rest and meal breaks, foreign suppliers to some of these same U.S. companies go unchecked by U.S. law while violating minimum standards of human decency. Unsafe or unsanitary working conditions, unlimited working hours per day, and “barely survival” pay, are commonplace for third world manufacturing employees. To the extent the American consumer unquestioningly buys cheaper products based labor approaching conditions of slavery, the consumer economically supports the practice. 

FoxConn is the Chinese factory where our iPads and iPhones are assembled. The Apple logo on the back of our Apple product is hand-carved, and that the employee doing that work may never see the final shipped item. Recently, ABC News exposed the treatment of workers at the FoxConn factory. Many workers were underage, “warehoused” in overcrowded dorms, and forced to work most of their waking hours, day after day. For a summary of those conditions, go to 

The overworked FoxConn employees were killing themselves in such numbers that suicide nets were placed below the windows of the FoxConn dormitories. 

There are both legal and economic solutions to these abuses. It may be that the most immediate and effective solution is economic—that is, that U.S. consumers unite to state their outrage that Apple (or other U.S. based company using their foreign sources) allows such inhumane conditions. Often, U.S. companies will be concerned that their sales may drop by a boycott of their products, or a tarnishing of their brand, if their passivity is exposed. That is, these companies may not have a legal obligation to improve working conditions of foreign workers hired by an “independent” supplier, but there is not doubt the U.S. corporation has the economic leverage to improve conditions. The ethical argument is that the U.S. company should use this economic leverage not only to obtain the best price, but the best price consistent with the basic human dignity of the supplier’s workers. 

The short form of the legal issue is this: What degree of control and co-ownership does the U.S. Company have over the foreign supplier? A related question is: Does a U.S. Company have an independent duty of truthful advertising to the American consumer that it supports fair and decent working conditions of the foreign workers hired by its suppliers? 

In Doe v. Wal-Mart, a code of ethics merely stated that Wal-Mart reserved the right to control or direct the activities of its suppliers, but did not promise to do so. This lack of promise was enough for the Ninth Circuit to hold there was not false advertising that would give U.S. consumers a direct “false advertising” claim against Wal-Mart. The Court also held that Wal-Mart’s “control” over the supplier was too slight to make it a “joint employer.” 

One case is positive potentially for California consumers seeking to redress inhumane working conditions of foreign workers: in Nike v. Kasky (2002) 27 Cal.4th 939, 949, Nike issued widely published rebuttals to charges that it engaged in widespread abuse of its suppliers’ foreign workers. A California resident, Kasky, sued under Bus. & Prof. Code Sec. 17200. He alleged that Nike that Nike was engaged in false and misleading advertising. Since Kasky was decided, California enacted Proposition 64 required a litigant to demonstrate actual economic harm to have standing to sue. Kasky could not bring his case today as a result UNLESS he showed that he (and others like him) would not have completed a purchase of the particular product but for the false and misleading publicity statements. See generally, Klein v. Chevron USA Inc. 2012.Ca.0000564.

Thus, if a California consumer were to bring a “false and misleading advertising” case successfully, one element of pleading and proof would be that the consumer himself was induced to make the purchase based on the “advertising” and that “but for” the advertising, would have refrained from the purchase. This would of course also be a matter of individual proof for each consumer, and would be one factor contrary to class certification. Even without class status, a group of like employees could proceed independently, and seek consolidation of their cases, assuming their primary motive was to achieve a principled outcome rather than a mega-judgment. 

Plaintiffs' counsel could seek recovery of fees based on the “private attorney general” theory. C.C.P. Sec. 1021.5. However, the real financial incentive will be the threshold certification issue: Do individual issues of intention and purchase decision override the other common issues of fact and law? 

Will consumers stop buying the latest versions of the iPad or refuse to shop at Wal-Mart? Apple has intervened in the FoxConn scandal not because of a drop in sales, although that could happen depending on how Apple publicly responded. No, Apple has intervened because it cares about the “luster” of its brand and its corporate reputation. Over the long haul, such intangibles can have tangible results, especially if an upstart competitor enters the market. The risk of loss, when weighed against the short term increased costs, indicated that Apple would act to influence its suppliers. 

In conclusion, while legal avenues are still open to attack a U.S. corporation that is complicit in creating inhuman working conditions for foreign workers, economic leverage and public exposure are probably the best immediate tactics. 

Note: This article is derived in part from an article by Anne K. Richardson, Hadsell Stormer LLP, published in the Daily Journal May 9, 2012.

Crush the "I'm Not Creative" Barrier - Jeff Dyer, Hal Gregersen, and Clayton M. Christensen - Harvard Business Review

Crush the "I'm Not Creative" Barrier - Jeff Dyer, Hal Gregersen, and Clayton M. Christensen - Harvard Business Review 

This article provides a quick "creativity mind set" self-assessment.  Good news:  you can develop mental habits that increase your daily creativity.  

Why post this article on  a legal blog?  Creative problem solving applies to every discipline. 

Friday, May 04, 2012

NLRB On A Collision Course

Do non-union employees have a right under the National Labor Relations Act [NLRA] to join in a class-action to secure their rights as employees?

 The interesting dilemma arises from the National Labor Relations Act’s protection of employees to engage in collective or “concerted” action to secure their employment rights. The dilemma arises because a class action is also a form of concerted action. A couple of recent National Labor Relations Board [NLRB] decisions highlight the political tension between the conservative majority of the Supreme Court and the Obama appointed members of the National Labor Relations Board. [NLRB.] This battle in my mind casts a shadow over the “equal” branches of government, putting in doubt the executive’s respect for the judiciary. 

 Our own California Supreme Court ran headlong into the conservative brick wall of the U.S. Supreme Court in Sonic-Calabasas A, Inc. v. Moreno (2011) 51 Cal.4th 659, which was remanded by the U. S. Supreme Court on appeal (late 2011), with directions that the California Supreme Court should reconsider its 4 to 3 decision to invalidate the employment arbitration agreement.  The U.S. Supreme Court has held that consumers can be compelled to waive their class-action rights and to arbitrate their individual claims.  AT&T Mobility LLC v Concepcion  [“Concepcion”]  

 This federalism fight turns on the legal principle that a contract cannot be enforced if doing so would be in violation of federal law. Stated simply, you cannot enter an agreement to violate the law, and expect courts to enforce your contract. In a battle between federal and State law covering the same issue, the federal law pre-empts a conflicting State law.    

Of relevance to this battle is an NLRB decision currently on appeal to the Fifth Circuit Court of Appeals, known as the "Horton" case.  In Horton the NLRB concluded that an employer violated the NLRA when it obtained employee agreements to waive their class action rights to sue the employer. "Horton" I believe is likely to be reversed on appeal. 

A recent administrative complaint filed by the General Counsel for the NLRB charges that an employer promulgated contract waiving employees rights to file a class action collides with the federal rights of non-union employees to engage in concerted action. 

 This NLRB charge against "24 Hour Fitness" goes even farther than the Board's decision in Horton. The “Horton” employer did not allow the employees to opt out of the binding arbitration agreement. In contrast, the “24 Hour Fitness” employer permitted its employee's to request, complete, and deliver an "opt out" form within 30 days of signing the arbitration agreement.  Nonetheless, General Counsel for the NLRB charges that this “opt out” option does not bring the arbitration agreement within the requirements of the NLRA. 

 At first view, this "24 Hour Fitness" NLRB Complaint seems like political "flag waving" with little chance of success.  But maybe the General Counsel for the Board is on to something:   

This fight over "concerted action" is not a simple pre-emption case of the Federal Arbitration Act ["FAA"] invalidating a conflicting state statute.  This is a question of legislative intent where Congress has enacted two sets of statutes addressing the same question:  "concerted action" as defined by the NLRA and "class action" as defined by the Rules of Civil Procedure.  Both concerted action and class action are undertaken by one subclass of the general population:  employees acting within their employment.  

If the U.S. Supreme court addresses the legal issue in this framework, then I predict they will find that Congress intended the NLRA to provide the prevailing law.  Why?  Because the FAA covers class actions generally, while the NLRA covers "concerted action" by employees specifically.  The inference is that Congress intended to exempt employees engaged in class actions from the general policy favoring arbitration found in the FAA.  Of course, a logical step is also required:  that "concerted action" is inclusive of "class action."  The Supreme Court, if it wills, can make that step consistent with law.  

Finally, the NLRA is not limited to unionized employees.  It covers all employees engaged in "concerted action" to address their concerns over the terms and conditions of employment.  Thus, the seemingly Quixotic recent maneuver by the NLRB may have a few more teeth than the usual toothless tiger we see, if the case is taken up on appeal. In the meantime, I urge the Plaintiff's bar to add this argument to their assault on class-action waivers:  the waivers violate the NLRA, and the NLRA controls over the "general" provisions of the FAA to permit class actions.