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Five recent employment-related judgments, settlements and lawsuits that will make your jaw drop

Several recent employment cases from across the country have quite a few people recovering from shock. These cases provide some important lessons, and the amounts of money involved in each one serve as good reminders to stay on top of employment issues in your own business.

1. Vedachalam v. Tata America International Corporation, et al.

Defendant Tata American International Corp, India’s largest conglomerate, will pay nearly $30 million to settle a class action lawsuit currently pending in the U.S. District Court for the Northern District of California. The nearly 13,000 plaintiffs are non-U.S. citizen employees who worked in the United States and claim, among other things, that the company illegally forced the workers to hand over millions of dollars in individual tax refunds. The settlement payment, which includes nearly $9 million in attorneys’ fees and $270,000 in costs, would amount to an average of $1,600 for each worker. Lesson learned: Don’t mess with Texas. I mean taxes.

2. United States of America, et al. v. Momence Meadows Nursing Center, Inc. et al.

A jury delivered a $29 million verdict against an Illinois nursing home, siding with whistle-blower nurses in a False Claims Act suit accusing the nursing home of defrauding Medicare by allowing patients to “wallow in filth and go without medications.” The award represents the maximum $11,000 civil penalty for each of the 1,729 bogus bills submitted by the nursing home, totaling $19 million. In addition, the jury found that the government had suffered more than $3 million in damages (which the jury then multiplied by three), and the two whistle-blowers sustained individual damages of over $400,000. The evidence at trial included details of the terrible living conditions for patients at the nursing home, the undersized staff and directions given to staff to alter records. In another related case, the nursing home filed a malpractice suit against its attorneys for allegedly breaching a capped fee agreement and excessive billing. Lessons learned: Do it right or yikes!

3. Nortel Networks, Inc.

The Delaware Bankruptcy Court preliminarily approved a settlement worth as much as $28 million for disabled employees whose benefits are being cut off as a result of the defunct company’s four-year liquidation period. The settlement would give 215 long-term disabled employees a general unsecured claim for up to $28 million to compensate them for the termination of their health care benefits. This initial approval, which is pre-lawsuit, certifies the disabled employees as a class. This settlement is in addition to the $67 million settlement between Nortel and about 3,300 retirees aimed at compensating them for the termination of their benefits. The good news for Nortel? No double-dipping for long-term disability folks who are also retirees. Phew. The other good news? The liquidation raised $9 billion to pay off creditors.

4. Beauperthry et al v. 24 Hour Fitness USA, Inc. et al.

If the proposed settlement between 24 Hour Fitness and 862 former and current employees is approved by the U.S. District Court for the Northern District of California, each plaintiff will, on average, be awarded $20,000. That, in addition to the $5.5 million sought in attorneys’ fees and $1.1 million in costs, adds up to a grand total of $17.5 million that the company will pay to settle the Fair Labor Standards Act overtime collective action suit filed back in 2006. Lesson learned: Check, check and double-check proper classification of exempt and nonexempt workers before denying overtime.

5. Martignago v. Merrill Lynch & Co., Inc. et al.

Merrill Lynch agreed to pay $12 million to settle a class and collective lawsuit pending in the U.S District Court for the Southern District of New York. The plaintiffs, a group of “client associates” (employees who assist financial advisors, paid a small salary largely supplemented by commissions earned by the financial advisor), argued that Merrill Lynch violated the Fair Labor Standards Act and state overtime laws by not properly paying them. The lead plaintiff, Nancy Martignago, will receive an additional $10,000 for the risk assumed representing the class. Lesson learned: wage and hour lawsuits are very popular and expensive.



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