The long-running class action lawsuit over alleged misclassification of Farmers Insurance Exchange adjusters has taken another twist: A California court of appeal has ruled that the employees can sue the San Francisco law firm that represented them against Farmers for malpractice.
Recently, the adjusters won a critical appellate decision affirming a jury’s award of more than $90 million in back overtime. The gist of the new action is that the firm should have obtained a bigger damage award than that. We’ll explain what this is all about.
400+ pages of state-specific, easy-read reference materials at your fingertips—fully updated! Check out the Guide to Employment Law for California Employers and get up to speed on everything you need to know.
Unfair Competition Claim
The California Supreme Court ruled a few years ago that employees seeking back overtime can sue not only under state wage and hour laws but also under California’s Unfair Business Practices Act. The malpractice lawsuit charges that law firm Rudy, Exelrod & Zieff negligently failed to assert the unfair competition claim against Farmers—which could have netted the employees even more than the $90 million in unpaid overtime.
Malpractice Action Can Proceed
The court of appeal has now ruled that it is up to a jury to decide whether the law firm breached a duty of care to the employees by not including the unfair competition claim. The court, however, pointed out that the ultimate result may be that the lawyers did nothing wrong.
Practical Impact for Employers
Because of this ruling, employees’ lawyers may become more aggressive than ever in asserting all possible claims to protect themselves from malpractice actions like this one. Employers who are sued for wage and hour or other workplace issues may see an uptick in unfair competition claims, as well as claims under the new “bounty hunter” law, which provides new and increased remedies for Labor Code violations.