Litigate or Settle?

FedEx recently made headlines for their involvement in a lawsuit against their workers for misclassifying them as independent contractors as opposed to employees. After acquiring litigation fees that skyrocketed well into multiple millions of dollars due to battling these allegations in court for the past several years, the company settled the case for 240 million dollars.[1] From the outside looking in, it can appear that the choice that FedEx made to litigate the misclassification claims was not the best use of their time and resources since the case was settled in the end.  Even if an employer truly believes that they are correct in a situation, there are many factors to consider when deciding whether litigation is in the best interest of the company.

Many articles have given a vast number of perspectives and opinions on whether litigation is worth the cost as opposed to settlement. However, these articles and studies are incapable of being 100% accurate. These studies are not able to factor into their calculations the particulars of a case: specific facts and the legal issues that they present, the judge, or the skill level and experience of the lawyer trying the case.

When addressing disputes that arise out of the employment relationship, Courts prefer that such matters go to arbitration.[2] Many companies have arbitration provisions that are within their company handbook. These provisions are meant to encourage employees to bring forth their grievances and have them resolved in a private and time conscious manner. In addition to the benefits it provides for employees, arbitration saves the employer time and presents a cost effective alternative when using company resources.

When an employer encounters an allegation that is more serious in nature or is developing into a large class action lawsuit, the best practice is to listen to the legal guidance of a lawyer. Lawyers possess experience and insight that the everyday individual does not. With this level of knowledge lawyers are able to assess the facts and legal issues and determine the possible outcomes. The overall goal in addressing whether to litigate or settle is to have an understanding of the legal and business implications in order to make an informed decision that is in the best interest of the business’s success.

~Author: Victoria Smith, University of Georgia 3rd Year Law Student, 2016 Gate City Bar Summer Associate

[1] Vin Gurrieri, The Top Employment Cases of 2016: Midyear Report, Law360 (July 1, 2016, 5:59PM), http://www.law360.com/employment/articles/812891?nl_pk=179244b0-9a97-41d4-aad1-4de1058ac5c4&utm_source=newsletter&utm_medium=email&utm_campaign=employment.

[2] Circuit City Stores Inc. v. Adams, 532 U.S. 105, 119 (2001).