Employment

The vast power imbalance between low-wage warehouse workers and the retail giants' logistics contractors who employ them took a hit when ingenious lawyers for the workers figured out a way to enforce accountability through a novel class action.

The clients were 2,000 immigrant workers at four Inland Empire warehouses owned by Wal-Mart Stores Inc. In a deft maneuver, Altshuler Berzon LLP, Traber & Voorhees, Bet Tzedek Legal Services, Law Offices of Sandra Munoz and Janet Herold, then the associate general counsel of the Service Employees International Union, teamed to launch litigation asserting labor code violations by obtaining a temporary restraining order and three preliminary injunctions soon after they filed their complaint.

Lawrence A. Katz of Steptoe & Johnson LLP was lead attorney for Wal-Mart. Carrillo v. Schneider Logistics Inc., (C.D. Cal., CV11-8557, filed Oct. 17, 2011).

The plaintiffs' early ploy required subcontractors at the warehouses to abandon their practice of providing bogus wage statements, said co-lead counsel Michael Rubin of Altschuler Berzon.

"The newly accurate recordkeeping had the effect of actually raising the workers' wages from around $4 per hour to $12 or $15 while the litigation went forward," Rubin said.

Rubin's co-lead was Theresa M. Traber of Traber & Voorhees, whom Gov. Jerry Brown has since placed on the Los Angeles County Superior Court. "The retailers, the warehouses and the labor contractors had been putting economic pressure on the downward links in the employment chain, literally forcing the subcontractors to cheat workers," Rubin said.

The TRO and the injunctions also prevented the mass retaliatory firing of individual plaintiffs and helped obtain visas for undocumented class members. "Employers were firing workers for seeking to vindicate their rights," Rubin said. "We put a stop to that."

In an interview before she got her robe, Traber said the trend toward joint employer complaints "are in response to the continued fissuring of responsibility and obligation" by employers. They confront "layers of insulation" employers erect to evade accountability, she added.

The preliminary injunction litigation also established facts needed to overcome the defendants' summary judgment motion challenging the plaintiffs' theory that warehouse owner Wal-Mart and warehouse operator Schneider Logistics Inc. were "joint employers" alongside the two labor services contractors that directly employed the workers.

The TRO and the injunctions in turn afforded the plaintiffs leverage in eventual settlement talks. It was a strategy replicated in class actions around the nation for representing low-wage contract workers in the modern splintered workplace, such as the current litigation against McDonalds Corp. and its franchisees.

The strategy gained significant traction when U.S. District Judge Christina A. Snyder of Los Angeles ruled in 2014 that it is a triable issue whether Wal-Mart is legally responsible for alleged labor code violations committed by Schneider and its subcontractors.

In September, Snyder granted final approval to a $22.7 million settlement, with $13.8 million going to the class and $7.1 million for the plaintiffs' lawyers. Several class members will get more than $80,000 each and dozens will receive more than $20,000, Rubin said.

"The outcome was groundbreaking on two counts," he said. "We established that Wal-Mart and Schneider Logistics were joint employers of the plaintiffs, making them jointly and severally liable for the violations and the settlement award."

"Formerly, the labor service subcontractors at the bottom of the chain were left holding the bag for violations. But they were always undercapitalized, making it useless to sue them," he added. "Second, our new procedural strategy of going early for the TRO and injunctions established our likelihood of success on the merits, enhancing our settlement position."

Rubin said the case was about a lot more than money. "It was a very cool case, now used as a model, as we had hoped. We were trying to establish principles here."