A Wakeup Call For Corporate America And A Few Other Interested Parties

Thursday, May 1, 2008 - 01:00

Editor: Would each of you gentlemen tell us about your professional background?

Ganz: I joined Proskauer following a two-year judicial clerkship at the Southern District of New York, and I have been engaged in labor and employment work here ever since that time. Over the years my practice has become heavily focused on professional sports, in particular basketball and baseball, but I also style myself as an employment litigator. I handle all manner of employment disputes, including discrimination cases, wrongful discharge cases, defamation cases, single-plaintiff matters, multiple-plaintiff matters and class actions.

I note with some interest that when I joined the firm one relatively small client was the National Basketball Association. One of my Proskauer colleagues who worked with me on NBA matters was David Stern, who has gone on to be NBA Commissioner. The NBA representation led, in time, to the firm's representation of Major League Baseball, the NHL, the NFL, Major League Soccer and the Men's Tennis Tour. We have, in consequence, a very vibrant sports law practice.

Salvatore: I joined Proskauer's Labor and Employment Law Department after graduating from Cornell Law School and have been here ever since. My practice is a blend between collective bargaining and labor management relations in addition to employment law counseling and employment litigation.

Since Proskauer is one of the pioneers in labor relations law going back many years, the firm has developed a sizeable representation of employers, and indeed entire industries, in a variety of collective bargaining and labor-management issues. In coming to Proskauer I was very fortunate to be able to work on some of these long-standing representations, and at the present time I am among the fourth Proskauer generation to represent the New York real estate industry and the third to represent the New York Stock Exchange.

Editor: Are you seeing different trends in employment- and labor-related litigation and legislation?

Ganz: With the crisis in the financial services industry, particularly in New York, we are seeing an increasing volume of lawsuits relating to employee benefits, where a large institution encounters significant financial issues. Elsewhere, wage and hour litigation continues to be a significant aspect of our practice. This development gathered steam in California and Florida - we used to think of these issues as confined to the warm weather states - but it is now nationwide.

As a consequence of financial difficulties, many companies are thinking of cutting their costs, reductions in force, and so on, and invariably there are labor and employment law issues, even where there is no litigation involved. In addition, in times like these there are a number of issues that revolve around a person leaving his employer to go with the competition, including confidential information, customer lists and other proprietary materials.

Editor: You mentioned wage and hour litigation. What should employers be aware of in this area?

Ganz: Employers should understand that they may be subject to wage and hour litigation from a category of employees whom they would never have anticipated would be plaintiffs. New Department of Labor regulations have encouraged employees generally treated as executives or professionals in the past to retain counsel to advance their claims under these regulations, and this has had a particular impact on the financial services and professional firms. This will continue to be a major issue for employers in this area, in my opinion. We have recommended that our clients undertake a self-audit to see if their employees are properly classified before the Department of Labor or some group of plaintiffs' lawyers commence an attack.

Editor: Are there other types of employment litigation that are becoming more prevalent?

Salvatore: In addition to the trends that Howard mentioned, I think, with the aging of the baby boomers, we are going to see significant age discrimination litigation going forward. Several United States Supreme Court decisions have contributed to this trend, and a variety of pension laws have been aggressively expanded by virtue of both case law and the theories of plaintiffs' lawyers. We expect to be very active in this area in years to come.

Editor: What trends are you seeing in professional sports labor and employment matters?

Ganz: Over the last decade there has been a significant amount of antitrust litigation in professional sports. That has largely come to an end. What this reflects, I believe, is an increasing maturity between the players' unions and the leagues, and the essential trend is toward settling these disputes through collective bargaining rather than litigation.

Editor: The firm has very active corporate practices, particularly in the areas of private equity and financial services. What employment-related issues should the firm's clients be concerned with?Salvatore: We have seen explosive growth in this area in recent years, and we anticipate this will continue, notwithstanding the current credit crisis. The firm's private equity and financial clients look to our practice to help them with their various employment and labor law issues, and we are also sought out by other law firms with strong corporate practices seeking our collective bargaining, employee benefits, and immigration law expertise in connection with their clients' corporate or private equity transactions. We have long been active in this area, but the advent of very active private equity markets has accelerated the volume of work we are seeing here.

Editor: What labor and employment issues do you see arising out of the current economic climate?

Ganz: ERISA-based litigation concerning benefit plans, particularly 401(k) plans, is increasing significantly. In a time of financial uncertainty there are always reductions in force, retrenchments and so on, all of which contribute to the volume of litigation. As I mentioned earlier, in such times we also see considerable activity with respect to restrictive covenants and non-compete clauses as employees move from one employer to another.

Editor: Would you tell us about the potential impact of the Employee Free Choice Act?

Salvatore: This is something of a misnomer: the proposed law that Congress almost passed this past term essentially does away with the secret ballot as a way for a union to be voted into a company. This is a potential seismic change in American labor law and labor relations, and if it - or something like it - passes next time around and is signed into law by a new administration, the shot of adrenalin for the union movement could be extraordinary. As it stands now, in the private sector, the union movement has declined over the past 20 years to about seven percent of the workforce, down from a high of 30 percent.

Under the proposed legislation, a showing of 51 percent of the employees signing authorized cards will be enough for the union to be their bargaining representative and there are heightened, substantial penalties if there are violations in the way in which the employer deals with the employees' organizing efforts. For the first time, in addition, the proposed legislation imposes what it called interest arbitration on management and the union if they cannot agree to an initial contract. A government arbitrator essentially will impose the contract terms. This is common in the public sector - where employees do not have the right to strike - but it is very unusual in the private sector. If corporate America has forgotten about the labor movement, this is certainly a wakeup call.

Editor: Mr. Salvatore, I understand you will be arguing the case of 14 Penn Plaza LLC v. Steven Pyett, et al before the United States Supreme Court in the near future.

Salvatore: The Pyett case arises out of the New York City real estate industry. The collective bargaining agreement that governs building service employees in the industry - which Proskauer negotiated some ten years ago - requires the employee to go through the grievance and arbitration process set forth in the agreement for any discrimination claim. They cannot sue the employer in court as a result of that clause.

The Second Circuit, relying on Alexander v. Gardner Denver , a Supreme Court case that is more than 30 years old, found that the kind of clause involved here, the forum selection clause, is not a proper clause for a collective bargaining agreement. That is, the court determined that the union did not have the right to waive its member's ability to go into court on an employment discrimination claim. For many years the Fourth Circuit has taken the opposite approach, which has led to the United States Supreme Court's taking our case.

We are confident that the Court will see it our way. As with a number of situations involving arbitration in both the labor and employment law context and in some other areas of the law - including some decisions this past term - we think that if the parties believe arbitration to be the best forum to resolve a statutory claim, the Court will defer to that forum. The issue of the union rather than the individual waiving the right is one that brings traditional labor law into the analysis, and it is worth noting that unions waive many rights on behalf of their members in the context of representing those workers exclusively. We believe that the waiver of the judicial forum, with the right safeguards in place - as is the case in Pyett - is appropriate.

Editor: With new offices in London, Sao Paulo and Chicago, plus an existing presence in Paris, how does the firm's international platform support the labor and employment practice?

Salvatore: We have always been very fortunate in possessing the premier labor and employment practice in New York and, indeed, in the Northeast. Over the past decade or so we have expanded our labor and employment law capabilities wherever the firm has a presence, and our London office will serve to complement the international practice underway in the EU at our Paris office. We have a strong practice on the West Coast, and now in New Orleans and Florida, and we anticipate that Chicago will provide us with an extremely strong base in the future.

Editor: Is there anything else that either of you would like to say?

Ganz: As Paul has indicated in discussing the case in which he will appear before the United States Supreme Court this fall, Proskauer is at the cutting edge of developments in the employment, labor law, and employee benefits areas. We continue to handle the cases that make law and are discussed in law reviews and professional journals. This makes for a very exciting practice.

Please email the interviewees at hganz@proskauer.com or psalvatore@proskauer.com with questions about this interview.