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Companies and the lawyers that protect them may want to take note of what happened at Glendale-based Nestl� USA last week. The food and beverage giant lost big in an age discrimination case brought by one of its former employees. Richard Herr was a Nestl� manager in his mid 40s. While he was qualified for several job openings and had a track record of positive performance evaluations, Herr was repeatedly passed over by Nestl� in favor of employees in their early 30s, many of who did not meet the jobs’ minimum posted requirements. As Herr quit the company after being denied promotion eight times, his boss told him, “I knew you would.” The Second District Court of Appeal upheld a $5 million jury award for compensatory and emotional distress damages for Herr, plus $1.7 million in attorneys fees. “The evidence showed it was company policy to eliminate so-called ‘deadwood’ and ‘to promote young, energetic people in management positions,’” wrote Justice Joan Dempsey Klein. Five million dollars is a big award, one no company would be happy to pay. But that’s the risk companies take in refusing to settle and allowing cases to go to trial. However, if Herr v. Nestle holds up, the ruling could open the door to more exposure for Nestl� — and possibly other companies as well. That’s because the opinion held that injunctive relief under California’s unfair competition law — Business & Professions Code � 17200 — is an appropriate remedy when businesses discriminate against older workers. “An employer which practices age discrimination has an unfair competitive advantage over employers who comply with the [Fair Employment and Housing Act] because older workers frequently are more highly compensated than their younger colleagues,” Klein wrote. Among other things, the injunction against Nestl� requires the company to repudiate a 1993 memo by parent company Nestl� SA’s then-chief executive officer that laid out a policy to “continue hiring, identifying and developing young people to have in the long term enough resources for future management.” More importantly, it also requires the company to inform its 20,000 U.S. employees of the ruling. The court may as well have allowed the plaintiff to put an ad in the company newsletter. Nestl�’s 20,000 workers are going to find a notice on their chair or in their e-mail that a court found that their company discriminates against older workers and that, after being subjected to such discrimination, one of their former co-workers won a $5 million judgment. It’s not hard to imagine every Nestl� employee who’s ever felt bent out of shape to take the notice as an engraved invitation to file suit. And you know the notice will be Exhibit A in those suits. How would you like to be the Nestl� counsel defending against one of those? For a big company like Nestle, the occasional suit is the cost of doing business. But it will be interesting to see if Herr v. Nestle raises the stakes by unleashing a flood of similar suits. And now that the door to bringing 17200 claims in discrimination suits has been opened, Nestl� isn’t the only company that should worry. What happened at Nestl� should make companies think twice about allowing discrimination suits to go to trial and risk similar injunctions. According to its Web site, Fortune Magazine in March named Nestl� USA “America’s most admired food company for the sixth consecutive year.” After setting the precedent in Herr v. Nestle, the company may find earning that title for a seventh year elusive.

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