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When the defendant in an employment discrimination class action pleaded poverty, plaintiff attorneys agreed to settle the case for less than they wanted to. But one of the attorneys tacked on a provision to retroactively boost the settlement if the company’s fortunes turned by the end of 2000. They did. The defendant, Borg-Warner Protective Services Corp., was acquired last year by a Swedish company, and the settlement clause kicked in. It requires the company to pay out an additional $500,000, with the bulk of the money going to the American Civil Liberties Union of Northern California to cover its attorney fees. Four nonprofit legal clinics that focus on workers’ rights will split the remaining $150,000 that was not claimed by members of the class action. They include: the Hastings College of the Law Civil Justice Clinic, Golden Gate University School of Law Women’s Employment Rights Clinic, the Legal Aid Society of San Francisco/Employment Law Center and the Asian Law Caucus. “To be honest, I never thought we would see this money, but I put [the provision] in anyway,” said Brad Seligman, who handled the case pro bono with attorneys from the ACLU and Howard, Rice, Nemerovski, Canady, Falk & Rabkin in San Francisco. The class action was brought on behalf of those seeking to be hired as security guards at Borg-Warner. At issue was a pre-employment test that asked such questions as: “Do you think corporations are good?” and “Should marijuana be legalized?” Plaintiff attorneys claimed that the test violated a state labor code prohibiting employer discrimination on the basis of an individual’s political beliefs. “I’ve done a fair amount of pre-employment testing [cases],” Seligman said. “This is one of the most idiotic tests I’ve seen.” Seligman now heads The Impact Fund, a nonprofit foundation that provides support to class actions involving civil, environmental and poverty rights. Seligman said settlement negotiations were difficult given Borg-Warner’s financial difficulties. But in 1998 the company agreed to pay $1.6 million in damages, attorney fees and costs plus an additional half million if its finances improved or it was acquired by another company in the next two years. “I think it’s pretty unusual” to include such a clause, said Joan Graff, head of the Employment Law Center. “It’s wonderful that Brad thought to do that.” Graff said residual class action money also is not often donated to nonprofit groups. “We’re grateful to Brad for keeping this provision uppermost in his mind when he settled the case,” Graff said. “I hope it sets an example for other attorneys.”

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