Jottings By An Employer's Lawyer

Wednesday, April 06, 2005

Things Are Bigger On Wall Street, Including the MDV's

Something must be in the water lately as more juries seem to be returning million dollar verdicts, but today's decision reported in the NYT, UBS Ordered to Pay $29 Million in Sex Bias Lawsuit, has to be the largest for a single plaintiff discrimination case in some time, if not ever. Although Wall Streeter's make a lot of money, which means a lot of back pay, it's pretty clear that its treatment of employees can engender some pretty heated feelings, in this case enough to award $20.1 million in punitive damages.

The plaintiff, Laura Zubulake, a former Asian bond salesman claimed she was passed over for a manager's job in favor of a male. When she filed a complaint with the EEOC, she was fired within three months. The jury ruled for her on both her gender discrimination and retaliation claims.

According to the Newsday story on the trial, Zubulake's lawyers argued that she should be awarded between $9.7 to 10.2 million. Why was the jury willing to award almost 3 times as that?

The Times article has some interesting possibilities. Perhaps the jury didn't like the "he was bad to everyone" defense:

UBS argued, unsuccessfully, that Mr. Chapin's conduct was not discriminatory because he treated everyone badly, and that male employees had also complained about him.

Or maybe from an earlier Newsday story, it was her testimony that she was excluded from some client gatherings, including more than one baseball game and two golf outings. Or that a male superior invited her to a Boston bottomless strip club, or that another male colleague expensed a trip with a client to Scores, a Manhattan strip club. Perhaps that didn't sit well with the 6 woman, 2 man jury.

This case had gained prominence even before it went to trial as the Court had addressed a number of electronic discovery issues. See Judge Scheindlin's May, 2003 decision, one of the first opinions to set out a procedure for dealing with the whole issue of electronic discovery including the costs. And that was not the only time the Court had to address the discovery issues, as Seyfarth & Shaw noted in a client bulletin.

And what were the discovery fights all about? Well perhaps it might have been another reason why the jury felt as it did. One of Zubulake's lawyer's was quoted in Newsday's trial story as suggesting:

The case was also notable for the number of e-mails and other evidence that were destroyed along the way. The verdict [will] send the message, "Don't try to hide the truth."

And to add insult to injury, even before the verdict, the case was already being used as an example about the costs of discovery in an electronic world. Ziplip, a company that describes itself as the 'technology leader in email archiving for compliance, had used the case as an example of the costs of email discovery in a press release about a new product:

An employee discrimination suit like Zubulake vs. UBS Warburg is a case in point. UBS Warburg only archived outgoing and incoming email for their registered traders on optical disk. The Zubulake discovery request sought internal mails which were stored on backup tapes. Recovery costs for a sample set of email on five initial backup tapes cost $19,003.43, or about $4,000 per tape. A second round of discovery requests resulted in additional costs of more than $100,000, before related litigation fees.

This has the appearance of one of those cases that, at least from the defendant's perspective, was just snake bit. And the truth is, once that becomes apparent, they rarely get better.


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