Big Orange County Impact Seen From Firings Ruling

A state Supreme Court decision shielding employers from the most threatening type of damages claimed by fired workers should have a big impact in Orange County, with its concentration of white-collar managerial employees, lawyers said Thursday.

But several county employers said they expect the decision to have little immediate effect on how they do business.

The ruling, in a Los Angeles wrongful-discharge case, is expected to have an impact on hundreds, perhaps thousands, of pending lawsuits in Orange County.

In a lengthy opinion, the high court left largely intact workers’ rights that have evolved through court decisions in recent years but cut back sharply on the type of damages and amount of money that can be recovered by employees in lawsuits against former employers.

“This is a very, very favorable and very, very significant victory for employers,” said Lee Crawford of the Orange County law office of Paul Hastings Janofsky & Walker, which represents defendant firms in more than 250 pending wrongful-discharge cases in the county.

The decision means that damages intended to punish employers who treat workers unfairly or to compensate aggrieved workers for emotional trauma suffered as a result of being fired may no longer be awarded.

Without the threat of big verdicts, lawyers for workers said, the chances of fully compensating workers who have been mistreated are sharply reduced.

Crawford, whose firm represents such large local employers as the Irvine Co., said 99% of his pending wrongful-discharge cases involve the type of damage claim prohibited by the high court Thursday.

Irvine lawyer William M. Crosby, who represents discharged employees in such cases, said the effect of the decision will be “less justice in the workplace.”

“Companies will be more able to write off the costs of these lawsuits,” he said, “in much the same way they write off the costs of workers’ compensation. Without the threat of a big award, they’re going to be less likely to change practices.”

Crosby said companies now “will have less incentive to be fair with their employees.”

Nonetheless, Crosby and others pointed out that the Supreme Court did recognize certain workers’ rights in its decision Thursday.

William C. Quackenbush, a lawyer who represents employees and has 35 wrongful-discharge suits pending, said: “The court has confirmed that there are three totally distinct bases on which an employee may sue”:

- It held that an employer may not fire an employee without good cause.

- The justices confirmed that an employee may not be fired if the employer is thereby violating a public policy. For example, an employee could not be fired on the basis of racial or sexual discrimination or for refusing to do something illegal at the employer’s request.

- The court upheld the notion that an employee can sue an employer for violating standards of good faith and fair dealing.

“Before today,” Quackenbush said, “we didn’t know whether these three would be held viable. From that standpoint, it may make some attorneys more willing to take a case. The extent of damages is limited, but the legitimacy of the claims is more clear.”

While the ruling may cause some turmoil in the courts, several major county-based companies said Thursday that they expect little immediate effect on employers.

With an unemployment rate of about 3% countywide, “we don’t want to fire people, we want to hire them,” said Wayne William Armstrong, president of the Costa Mesa-based Del Taco/Naugles division of AWR II.

Del Taco, with about 9,000 employees, has had perhaps six employment-related lawsuits in the last 10 years, Armstrong said, “and those involved minimal kinds of problems.”

But while many companies are not likely to feel an immediate impact from the ruling, it is expected to make it easier in the long run for employers to plan for large-scale layoffs.

“Employers will have greater predictability in foreseeing the consequences of decisions to reduce the work force,” Irvine Co. general counsel Peter D. Zeughauser said. “That makes it significantly easier to plan them.”

Fewer Illegal-Firing Suits

Local employers agreed that, with punitive damages now available only in very limited situations in wrongful-discharge lawsuits, companies are almost certain to see fewer lawsuits alleging illegal firings.

For that reason, one company executive who asked not to be named called the ruling an “emancipation proclamation” for employers.

“It’s great!” he said.

Del Taco’s Armstrong, who is a lawyer, hailed the decision because, he said, it gives employees the chance to “redress their grievances” while at the same time saying “that the employee can’t punish the employer for wrongful termination.”

Before this decision, Armstrong said, “we seemed to have been going from a situation where a job is a privilege to where a job is a right.”

The case decided Thursday affects the rights of workers not represented by unions or employed by public agencies.

Crawford of Paul Hastings Janofsky & Walker said the decision means both sides will know with greater certainty what the law requires. As a result, he predicted that more lawsuits will be settled before trial.

“In the old days, the theory was that as long as (an employee) could get his case to a jury, he might win the California lottery--the $1-million verdict,” said lawyer Howard C. Hay, head of the employment law department at the Orange County office of the Paul Hastings.

“This has taken the lottery element out of it. . . . There will be fewer lawsuits, because cases that should not have previously been brought will not be brought.”

Times staff writers Martha Groves and Linda Williams contributed to this article.