Damage control at Jennifer Convertibles
When a corporation becomes a defendant in a lawsuit, it’s customary for the company to issue a statement denying the allegations and promising to defend itself.
Retailer Jennifer Convertibles said as much this week in a press release announcing its financial results for fiscal 2009, noting that it is a defendant in a class action suit alleging numerous violations of California labor law.
“We are vigorously defending this matter,” the press release read.
A reading of the retailer’s 10-K, however, puts the matter in an entirely different light. It shows that Jennifer is, indeed, defending itself — by trying to limit the amount of damages it has to pay.
“We have determined that it is probable that we have some liability,” reads a section describing the litigation. “(W)e estimate the liability ranges between $1,300,000 and $2,500,000, with no amount within that range a better estimate than any other amount.”
It goes on to describe the settlement talks between the company and lawyers representing the plaintiff, who formerly was an hourly employee in several Jennifer stores in the San Francisco area. She accused the company, among other things, of routinely forcing her to work alone in a store for more than 11 hours a day without any rest breaks or lunch breaks.
She also said the company refused to pay her for time spent driving to other Jennifer stores on company business, and wouldn’t reimburse her for personal auto expenses incurred on such trips.
The regulatory filing says the plaintiff initially offered to settle for $400,000 in cash and 20% of the company’s outstanding shares of stock, as long as the shares were worth at least $2 million.
Jennifer made a counter offer of $300,000 cash and $1 million worth of stock.
The plaintiff’s lawyers agreed to the stock component of the counter offer, but asked for $1.5 million in cash, according to the filing.
There’s no indication when the parties finally will settle, but Jennifer already has set aside $1.3 million to cover potential liabilities — an action that further impaired its already weak financial position.
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Yuan Can Nguyen commented:
There is a simple answer to this problem. Follow the law. Don't try to cheat your employees. At minimum wage, you have cheated your employees out of $4160 a year each assuming full time status. Sit down with a good lawyer and learn what you can and cannot do. The California Superior Court system would have been a better venue as meal and rest break mandates are part of the State Labor Code. Keith, it wasn't one employee, it was a class action on behalf of all similarly situated employees. "Mattress Company" I don't doubt that your situation will wind up in state court where it should have been filed. Just hope that it won't be brought under the State Private Attorney General Act. There the employee can recover not only the monies owed for whatever violation of Labor Law occurred, but any civil penalties allowed too. If you corporations and owners would spend as much time following the law as you do trying to find ways around it you would have much happier employees. Jennifer Convertables, just pay up what you rightfully owe, correct your mistakes and move on with business. Keith, it was a class action on behalf of all similarly situated employees.
Larry Thomas commented:
Mattress Company...an executive at Jennifer Convertibles told me he would like to speak with you, but does not have your contact information. Please e-mail the information to me at l.thomas@reedbusiness.com Thanks!
Keith commented:
Sounds crazy to me. One employee - 20% of the company for boo - who - who , look what you did to me?
mattress company commented:
We are a large retailer in California. I have spent three years battling this type of lawsuit and prevailed just last week as the employees attorneys withdrew their case in federal court.
Call us before you settle. The Federal Judge refused to certify the class. Our former employees made many of the same claims.
Larry Thomas commented:
I'm not questioning their negotiating strategy, Big M. I just thought it was very unusual for the company to essentially admit it would lose the suit if it went to trial. But that information wasn't mentioned in the press release -- only in the 10-K.
Big M commented:
Larry, have you ever worked for a company that had to defend or go through one of these lawsuits? It costs much less to try and settle than spend tons of money in attorney fees and it drags on for years. The legal expenses can go much, much higher than this. The attorney's is usually who wins here. What do you expect them to do since you are the expert here.
