‘Taking Candy From a Baby’

Lawyers sometimes push the envelope.

“The economy is making it worse,” said Robert Dawson, a lawyer with the Los Angeles firm of Fulbright & Jaworksi LLP who represents Tuesday Morning. “It’s obviously tempting for some people to take a position that may be marginal if a lawyer tells them if they take it, they could get some money.”

Some employers are willing to settle to get the lawsuit off the table. Not Tuesday Morning.

“The company has held firm. It’s faced lawsuits for years over claims about whether or not, in fact, managers at Tuesday Morning are real managers under the law,” Dawson said. “The company maintains that is true ... and refuses to bow down to claims it knows are incorrect. If they were wrong, they would say they are wrong and change their behavior. They are not wrong.”

Even getting a case dismissed can take years and thousands of dollars, loading leverage on the side of workers and plaintiffs’ attorneys.

“It’s such a cash cow,” said Jeremy Naftel, managing partner in the Sacramento office of Carlton DiSante & Freudenberger LLP and counsel for Foremost Marble. “It’s like taking candy from a baby.”

The fallout for small businesses is particularly painful.

The Foremost lawsuit is a classic case of “No good deed goes unpunished,” Naftel said.

“The difference between the amount actually paid and the higher rate was trivial, but all the fees made it an exorbitant amount,” he said of the settlement.

“We thought it was a great idea—pay on performance plus hourly overtime,” said Howard, who co-owns the company with Anthony Jones. “But you can’t give incentives that way.”

In its heyday, Foremost had 24 employees. Now, the company is trying to hold onto 13.

“The settlement was outrageous. We are really reeling from it,” Howard said.