Key to Victory - Jigsaw Damages

Daily Journal, February 28, 2001

Source: Eron Ben-Yehuda

To prove that the defendant delivery business allegedly underpaid its drivers, the plaintiffs' experts analyzed the few pay records defendant retained, and then extrapolated the amount of total damages.

In order to ensure full payment of a $9.75 million settlement, the plaintiffs forced the financially shaky defendant to obtain a line of credit guaranteeing payment of the settlement amount.

FACTS

According to the plaintiffs' attorney, the defendant delivery business had a policy of paying its drivers based on a percentage of money charged to customers for deliveries. Because the drivers were not paid based on the number of hours worked, they were not guaranteed to receive minimum wage, overtime pay or reimbursement for reasonable business expenses, such as compensation for the mileage they drive while on the job.

More than 3,000 drivers who worked from 1995 to 1999 joined this class action to recover money and expenses.

CONTENTIONS

Plaintiff-The defendant did not compensate its deliver drivers as required by the labor code, which guarantees employees minimum wages, proper overtime and reimbursement for all reasonable expenses.

Defendant-The defendant denied violating any laws, but even if the company did break the law, the damages sought by the plaintiffs were too high.

NO PAPER TRAIL

The biggest obstacle in the case was figuring out damages because the defendant failed to keep much of the statutorily mandated pay records, plaintiffs' attorney Steven G. Zieff says.

"Indeed, the records that were kept were often disorganized or hard to retrieve," he says.

The drivers themselves didn't help their cause because many were short-term employees who generally did not make detailed accounts of their business expenses, he says.

Zieff overcame that problem with the help of experts who developed a formula for figuring out the amount of unpaid wages and reimbursable expenses.

"Plaintiffs and their experts analyzed those limited databases that were available concerning limited numbers of class members for the limited time periods and then extrapolated to the class as a whole for the entire class period," he says.

NOT ASKING TOO MUCH

The defendant claimed it couldn't afford to pay what the plaintiffs alleged was owed to them, he says.

Zieff, with the help of co-counsel A. Mark Pope of San Diego-based Pope & Berger, verified the plaintiffs' claims by reviewing bank statements and filing with the Securities and Exchange Commission, and speaking to the parent company's chief financial officer.

As a result, the plaintiffs reduced their demands somewhat, he says. They could have received a bigger judgment if they had taken the case to trial, but Zieff says that wouldn't have paid off in the long run.

"There was a real danger that a higher verdict may have pushed the company into bankruptcy and would have likely made the judgment uncollectible," he says.

To secure payment of the $9.75 million settlement, the defendant had to obtain a line of guaranteed credit, Zieff says.