Cross-complaining against a wrongful termination plaintiff can be risky tactical move. If the cross-complaint lacks a valid basis (and sometimes even if it’s validly based), there’s the risk that it could:
- Be perceived by court and jury as a strong-arm tactic;
- Create sympathy for the fired employee;
- In a discrimination case, subject the employer to a claim for unlawful retaliation;
- Be deemed a SLAPP (Strategic Lawsuit Against Public Participation) lawsuit under CCP §425.16, subject to dismissal with possible cost and fee award to the fired employee; or
- Subject the employer to a possible malicious prosecution action.
But this doesn’t mean an employer should never cross-complain. An employer should definitely consider asserting a cross-complaint when (1) the plaintiff has clearly violated an employment obligation resulting in injury to the company and (2) the damages attributable to that injury are clearly quantifiable.
It’s important that the employer not be perceived as asserting a vague claim to the recovery of unidentified damages. There are many potential claims an employer can consider, ranging from negligence to Labor Code violations to misrepresentation.
If you’re representing an employer that decides to go with a cross-complaint, you have ethical considerations that come into play: make sure that your client isn’t engaging in what the court might view as overreaching in asserting a cross-complaint against the fired employee. The court may view an extraordinary prayer for damages or a cross-complaint based on a weak factual basis as improper conduct, designed to discourage litigation. Not acting ethically can cost you personally—in Hudson v Moore Business Forms, Inc. (9th Cir 1990) 898 F2d 684, the trial court assessed sanctions against defense counsel for filing a cross-complaint.
Despite the risks, don’t be so cautious that you fail to assert the employer’s good faith claim against the fired employee. Here’s a good rule of thumb: if the claim is supported by facts and a showing of actual, quantifiable injury to the employer, then seriously consider filing a cross-complaint. Not only does a cross-complaint diminish the recovery of damages, it strengthens the employer’s case on the egregious nature of the fired employee’s activities.
For everything you need to know about defending a wrongful termination action, turn to CEB’s Wrongful Employment Termination Practice: Discrimination, Harassment, and Retaliation, chapter 10. And for step-by-step advice, check out CEB’s Handling a Wrongful Termination Action. On all of the procedural issues relating to cross-complaints, check out CEB’s California Civil Procedure Before Trial, chap 26.
Other CEB Blog posts you may find useful:
- 6 Steps to Evaluate a Wrongful Termination Case
- Action Plan for Handling Harassment Claims
- Got an Employment Case? Consider Mediation
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