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The American Spectator
September, 1997

We Can't Work It Out

Matthew Scully

The latest landmark in employment law, coinciding with the arrival of Walter Olson's The Excuse Factory, was the "Seinfeld case": A jury in Milwaukee awarded $26.6 million to one Jerold Mackenzie, fired from his job for recounting a "Seinfeld" episode to a female co-worker. A gag in the show had a sexual twist the woman found offensive. Fearing harassment charges, Miller Brewing Company in 1993 jettisoned the malefactor, who responded with a wrongful discharge suit. Time quotes the plaintiff's lawyer, of the San Francisco-based firm Littler, Mendelson specializing in employment litigation, saying the verdict might be evidence of "the pendulum swinging" against workplace harassment suits.

How such petty workplace quarrels ever became federal cases is Olson's subject in this devastating brief against America's employment lawyers. The office scold makes a big to-do over a meaningless incident, and four years later we find ourselves listening to Roger Cosack and Greta Van Susteren discussing Mackenzie v. Miller Brewing on CNN. A brewery, whose sole function in the world is to make beer, dismisses an otherwise fine employee and is then immersed in years of litigation, with more to come in appeals. Millions of dollars that should have gone to payroll, new distilling equipment, new hires, goes instead to a team of defense attorneys. Another jury, unable to follow simple instructions, decides to "send a message" with heavy punitive damages. Littler, Mendelson heads back to 'Frisco with a third or more of the $26.6 million.

Employment, Olson reminds us, used to be understood in fairly simple terms: I agree to lend my labor to you, you agree to pay me a specified amount of money. Either party is free, barring terms otherwise specified in written contract, to end the arrangement. I do not own the job. You do not own my labor.

Both the ill-treated employee and dissatisfied employer had the same recourse , Olson writes. Either one "could end the relation on short notice or none, much as we are free to stop dealing with a local tradesman if we grow dissatisfied with his service." Only where some specific contractual breach was at issue would the courts intervene, and then only to enforce the contract. Even unions did not shake the basic principle of "at will" employment. The workers, exercising their independence, simply agree to band together and deal with employers as one. And for a time at least, unions were run by men with some actual connection to the workplace and a stake in its well being.

By contrast, the employment lawyer of today is there to extract the highest possible damages for one client, never mind the interests of the company or its less contentious employees. Arbitration or other traditional in-house means of addressing worker complaints are, if anything, an obstacle to be averted on the way to court. Attempts to work things out short of litigation (talking it over with the aggrieved employee, reassigning the offender, changing office policy) are often grounds for still more legal action.

Where once litigation was seen as a final recourse, writes Olson, "By the late 1960's our legal establishment had begun to see things in an entirely new light. Lawyers and courts suddenly seemed like a potential vanguard of social progress. Litigation wasn't a miserable and costly last resort at all, but really a positive thing for society; nothing seemed more natural than to apply its many benefits to the workplace."

Here's an incomplete list of workplace grievances Olson examines in the book, all of recent mintage in the law schools, and each of which has yielded high -dollar jury awards: Racial, gender, age, and disability discrimination; wrongful discharge; hostile working environment; sexual harassment; failure to give accommodation; employee privacy; retaliation; emotional distress; disparate treatment; disparate impact; adverse impact; defamation; gender animosity; religious discrimination; condonation (failure to give adequate warning for bad performance); constructive discharge (failure to assist an employee under stress).

"Unlike most previous laws," writes Olson, "the new ones tend to avoid giving employers definite rules to obey but instead lay out sweeping if vague aspirations that are given the force of law." Some arise from sheer judicial whim, others from such federal legislation as the Civil Rights Restoration Act of 1991 and Americans with Disabilities Act. (The Bush administration, according to Olson, having reviled the ACLU in 1988, actually enlisted the group's help in drafting these bills. Please tell me this isn't true.)

The total national caseload is hard to fix but workplace quarrels appear to take up roughly half the business of our civil courts: Employment bias suits in federal courts "rose by 2,166 percent between 1970 and 1989, a period in which filings in other cases were rising by 125 percent. Complaints to the Equal Employment Opportunity Commission, which tend to prefigure trends in lawsuit filings by a couple of years, jumped from 64,000 to 95,000 between 1991 and 1994..."

So, for example, there was the American Airlines manager who didn't get her expected promotion: "Discrimination." Jury award: $7 million. In California a Texaco employee was denied her basic constitutional right to promotion as credit manager. Award: $20 million. A New York company was ordered to pay $1.4 million in damages to a discharged employee for whom it gave an unfavorable reference: "Emotional pain and trauma." That 1989 case, says Olson, set a "defamation" precedent that to this day has employers on their guard in reference-giving. A tepid or even mildly approving reference might invite trouble.

As for disability suits under ADA, Olson reports, these have reached the point where you can claim narcolepsy as a protected disability. Courts have actually ordered that nap space be set aside to accommodate the afflicted. "Only 8 percent of employment complaints under the law have come from wheelchair users," says Olson, "and a mere 3 percent from the deaf or blind."

Take each of the above jury awards—just a sampling from the book—divide by three, and you have the lawyers' fees. Social progress has never been so lucrative. One wonders why there should be any damage award at all in employment cases, or why damages should be paid by companies instead of by particular harassers, retaliators, or disparate impactors who just happened to commit their offense on the job. If an employee has been denied his due, then a court's job is to restore his due: the job, the promotion, back pay, and nothing more. Olson gives us the history here of how employment evolved into such a profitable industry. The idea of "hostile work environment," he observes , was of particularly "brilliant coinage," transferring guilt from individual offenders to the company itself—where the money is.

Listen to some of the lawyers' manuals Olson cites, journals, newsletters, and books such as Sue Your Boss devoted entirely to a branch of law that didn't even exist thirty years ago: "Every decision discharging a woman," advises one attorney, "is a potential source of litigation.... Whether or not firing is in fact discriminatory, members of [these] groups will have increased leverage in a severance negotiation." Says another: "An employer who fires you but gives you a positive reference...is just begging to be hit with a wrongful discrimination suit. After all, if you were such a good employee, what was the real reason you were fired?"

So much for trying to soften the blow and help a guy find better luck elsewhere. Olson confines himself to writing up the charges against employment lawyers, concluding with an eloquent case for the old idea of free association. Like his 1991 The Litigation Explosion, the book is a model of clear thinking, thorough research, and judicious understatement. A lot of common sense, too, as when he notes that getting the sack is often just the kick one needs to "confront weaknesses, seek new skills," and move forward in life.

But what of practical remedies? There are two problems here: One is a distinctly American weakness for litigation. The other is the material incentive lawyers have to exploit that flaw. The first cannot be readily cured, but the other can.

"Most nations," Olson notes, "ban the lawyers' contingency fee as unethical, holding that to let lawyers become participants in their claims gives them too sharp an incentive to overpress their cases. The United States does not." In defense of their fees, the trial lawyers contend these are entirely reasonable because they were willing to take risks: They took these cases with no other assurance but the rightness of their cause. Contingency payment allows injured parties who ordinarily could not afford a lawyer recourse to our civil courts.

But this only begs the question of just why lawyers' fees are so far beyond the ability of the average person to pay. And one reason is the contingency system, which itself inflates the rates lawyers expect and demand for their services. The whole corrupt system draws trial lawyers to the most lucrative contingency-fee cases, creating a class of full-time sowers of discord who bathe and breakfast in the misery of other people, and can no longer be compensated by the means of the average citizen.

Forgotten in the debate is that every federal court save the Supreme Court is a creation of Congress; every attorney who steps foot inside is an officer of that court subject to congressional oversight. One simple bill could abolish all contingency-fee agreements as a form of unjust enrichment and violation of the lawyers own Model Rules of Professional Conduct. ("Lawyers' fees shall be reasonable.") Total jury awards need not be limited, just the share of them available to lawyers. The right of redress would remain secure and the lawyers could still sue all they want—only from now on, justice and social progress would have to be reward enough.

©1997 The American Spectator

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