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Wednesday, Feb 1, 2023

Ex-Employee’s Loss May Work in Bosses’ Favor

The business community let out a sigh of relief when Silicon Valley venture capital firm Kleiner Perkins Caufield & Byers defeated discrimination and retaliation allegations from former employee Ellen Pao after a high-profile jury trial.

Still, as similar disputes are common in California courts, it’s tough for some companies to get past the risks associated with letting the battle go to a jury trial.

The financial risk alone was again illustrated in the Pao case, as court records show the venture capital firm accumulated nearly $1 million in legal fees – even though it won. That’s one of the biggest reasons most businesses settle these disputes long before trial, said Kristen Nesbit, partner in the downtown L.A. office of Fisher & Phillips.

Nesbit said she anticipated the outcome in the Pao case would prompt more business owners to fight similar allegations from employees.

“It’s not so much a given now that if (an employee) files a lawsuit it automatically means a company is going to settle with them immediately,” she said. “It might be years before they see any monetary settlement from the case, and even if they go all the way through to trial, they might not get anything.”

Plus, Nesbit said, employers have more confidence knowing that it’s possible to win in court, compared with a decade ago when most would settle disputes immediately.

“It can be very costly to trial cases, but sometimes if you do a cost-benefit analysis, some employers decide to spend the money to vindicate themselves,” she said. “I just think employers should not be scared of the word ‘trial.’”

Indeed, Nesbit just wrapped up a three-year dispute in which she defended Kansas City, Mo., commercial truck dealer Arrow Truck Sales against racial discrimination and wrongful termination allegations from two former employees at its Montebello office.

A Los Angeles Superior Court jury last month found that Arrow had not fired the workers because of their race. The company’s victory, as well as the Pao case in San Francisco, is yet another reminder that employers can succeed in court despite the state’s employee-friendly laws.

“You don’t have to be bullied when you receive a demand letter from a former employee,” Nesbit said.

Mentoring Methodology

When Zac Turke was a summer associate at Sheppard Mullin Richter & Hampton nearly a decade ago, he was approached with a unique opportunity to join Larry Braun, a longtime partner at the firm, on a business trip to Taiwan.

But there was a small hurdle: He had no luggage and the flight was scheduled to depart the next day.

Luckily, Turke scrambled to get everything he needed, and soon was on his way to Asia. Braun was representing DM Label Group, a Taiwanese woven label manufacturer, in a sale to Pasadena label manufacturer Avery Dennison Corp. (The sale was ultimately completed in 2008.)

Braun invited the then-23-year-old on the trip to give him a taste of the legal work required in the corporate practice.

“It was myself, a client who was the owner of his company and it was the CEO of Avery Dennison and the counsel for Avery Dennison – and young Zac,” Braun said.

The experience sealed the deal for Turke, who solidified his decision to practice corporate law after the trip.

“It was a mixture of excitement, but obviously there was a little bit of trepidation there as well,” Turke said. “I think it’s safe to say I didn’t have the greatest handle on what it meant to be a lawyer at that point.”

A decade later, Turke just became a partner at Sheppard Mullin.

While he doesn’t quite have the seniority to plan trips out of the country, Turke said he has already embraced his role as a mentor. Last week, for instance, he invited an associate to join him in a negotiation meeting with a local private equity firm.

“It’s nowhere near as glamourous, and they won’t need to go out and buy any luggage,” he said, but “I really hope it helps the associates see the big picture and be able to put in context what we as a team are trying to achieve.”

News & Notes

Real estate attorney Loryn Dunn Arkow joined the Century City office of Stroock & Stroock & Lavan last month. … Bankruptcy lawyer Eve H. Karasik was hired as a partner at Century City law firm Levene Neale Bender Yoo & Brill. … Fox Rothschild has hired commercial litigator John Shaeffer as partner in the firm’s Century City office. … Beverly Hills law firm Donaldson + Callif has promoted Dean R. Cheley and Christopher L. Perez to partner. … Sheppard Mullin has hired Adam T. Ettinger as a partner in the firm’s corporate practice group in Century City. … Barry Leigh Weissman has joined Carlton Fields Jorden Burt as a shareholder in the firm’s Century City office.

Staff reporter Cale Ottens can be reached at cottens@labusinessjournal.com or (323) 549-5225, ext. 221.


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