Virginia Values Act: Trial Lawyers Win, Business Climate Loses

by Hans Bader

Both houses of the Virginia legislature passed the Virginia Values Act yesterday. Media coverage of the bill has focused on the fact that it will add sexual orientation and gender identity (transgender status) to state laws against discrimination in employment, housing, and public accommodations. As the media note, this is the first time a state legislature in the south has enacted such a ban.

But media coverage has virtually ignored how the bill will change other aspects of state law, in ways that are far more significant in economic terms. The bill will create major risks for business owners. It will also make the state’s business climate less inviting for companies considering whether to relocate to Virginia.

It will do this by changing the ground rules for discrimination lawsuits in general, not just for lawsuits alleging discrimination by LGBT people, who are expected to file only a small minority of the lawsuits brought due to this bill.

For example, the Virginia Values Act contains no protections against groundless or unreasonable lawsuits: It doesn’t allow employers to obtain their attorneys fees when such lawsuits are brought to shake down an employer over a meritless claim (unlike most anti-discrimination statutes, which contain such language either in their attorney-fee provisions, or in judicial interpretations of them, allowing the employer to obtain its fees when a worker brought a lawsuit proven to be groundless or unreasonable, as opposed to just unsuccessful).

The Virginia Values Act also authorizes the Virginia attorney general to sue public employers. That appears to pose a conflict of interest. Historically, it has been the attorney general’s job to represent state agencies, not to sue them. Allowing the state attorney general to sue state agencies means that a state agency may end up paying out lots of taxpayer money to a complainant whose case is very weak, because it can’t rely on its traditional representation by the state attorney general to fight the allegations of discrimination, making fighting the allegations much more difficult.

Another flaw of the Virginia Values Act is that it provides for unlimited punitive damages, “without limitation otherwise imposed by law.” This is troubling, because punitive damages are often imposed in a random, unpredictable, and arbitrary way, and limitations imposed by law are appropriate to constrain such abuses and provide greater consistency. Even putting aside this “without limitation otherwise imposed by law” language, unlimited punitive damages are something rejected in most conservative states and even many liberal states — such as Washington State, which doesn’t allow any punitive damages in discrimination lawsuits brought under state law (even though Washington State has a Democratic governor and Democratic legislature).

Punitive damages can result in lottery-size damage awards against businesses in discrimination cases, even when a worker hasn’t lost much money due to discrimination. For example, in Weeks v. Baker & McKenzie, an appeals court upheld a $3.5 million damage award against a law firm which failed to believe allegations of sexual harassment against a lawyer at the firm. The jury found that a legal secretary experienced $50,000 worth of damages for things like emotional distress, and awarded $7 million in punitive damages against the law firm, which was reduced by the courts to $3.5 million. Thus, the punitive damages under the state’s discrimination law were 70 times the amount of money needed to compensate the plaintiff. That decision was issued in California, whose law requires “clear and convincing” evidence of employer wrongdoing for punitive damages. Virginia law does not even require that safeguard when punitive damages are available under a law, so “clear and convincing” evidence won’t be required for punitive damages under the Virginia Values Act. So punitive damage awards will be imposed based on far weaker evidence.

The bill appears virtually certain to become law. There may be tiny differences between the House and Senate versions of the bill that need to be reconciled before it can be sent to the governor, who will almost certainly sign it. But the House and Senate versions (HB 1663 and SB 868) look essentially identical. The House voted for the Virginia Values Act by a margin of 59-to-35, largely along party lines, with Democrats voting for it, and most Republicans voting against it. The Senate voted for it by a margin of 30-to-9, after rejecting a series of Republican amendments to soften the bill, amendments that were rejected by votes of 21-to-19 or 23-to-17.

The Virginia Values Act is just one piece of anti-business legislation likely to pass the Virginia legislature soon, turning what once was a pro-business state into an anti-business state. Both houses of the legislature are likely to increase the state’s minimum wage from $7.25 to $15, which would cost 130,000 jobs according to research funded by the National Federation of Independent Business. Economists predict that similar legislation in Maryland will eventually cost that state 99,000 jobs. A committee in the state senate tried to soften the $15 minimum wage by allowing health benefits to count toward the $15, but that provision softening the bill was subsequently removed, and the increase is now expected to be approved by the full Senate.

The Virginia legislature may also repeal or weaken the state’s right-to-work law, which has been used to attract many businesses to Virginia. The repeal of that law would result in the loss of “thousands” of manufacturing and supply-chain jobs in Virginia, according to the Virginia Economic Development Partnership (VEDP) in a report cited in the fiscal impact statement for pending legislation to repeal the state’s right to work law. A recent study finds that workers also benefit from right-to-work laws.

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37 responses to “Virginia Values Act: Trial Lawyers Win, Business Climate Loses

  1. So, the GA is not supposed to pass pro-gay laws because they are too much trouble?

    • C’mon, Peter, exercise your critical reading skills.

      That’s not what Hans said, He warned that the legislation would have an impact way beyond the protection of sexual minorities. It would “change the ground rules for discrimination lawsuits in general.”

      • Jim, so what to do? The usual and time tested conservative response is that reform is actually a pandora’s box

        • Crazy. What’s being raised is a lot of what’s been so for other possible areas of litigation. Your ideas?
          I am not a lawyer and I don’t want to get too down in the weeds,but what you YOU do? Set settlements limits? Ban lawsuits against the state? What do other states do in LGBT cases? Do you know?

    • Peter, rational people understand Han’s point. “I’m not a lawyer” isn’t an excuse for being intentially obtuse. Comments like yours devalue any contribution you have to this dialog

  2. So what to do? For starters, let’s determine whether you think there is nothing to what Hans said? If you think so, then there’s probably not much to talk about. Your statement about a time-tested response is overly broad and does not respond to what Hans put on the table. If you don’t want to come to the table to respond, please save us all the trouble of reading your comments.

    At one point in time, you abandoned Bacon’s Rebellion. Is it time for you to do so again? Or do you think real discussion of real problems and points in proposed laws is preferable?

  3. The Virginia Values Act is a state sponsored weapon that will be used to Cascade Memes into ever more wedge issues, splintering our society in ever more virulent factions, to maintain the power and control of the state.

    In so doing, it hands over to lawyers ever more power and tools by which they can enrich themselves while acting as shock troops on the state’s behalf against their fellow citizens, narrowing and eating away their liberty. A police state is being created at warp speed in Virginia.

    • People here above and below are engaging in a fascinating and timely discussion. One that is really about the awesome power of government today, and how our top government officials too often today wield that power in such destructive, costly and irresponsible ways, doing great harm to this nation, its people, their culture, traditions, and institutions.

      Thus our government officials undermine and destabilize our nation top to bottom. We have only begun to scratch the surface.

      Consider a few random examples:

      In 2014, O’bama and Biden in the White House Blue Room declared a rampant rape epidemic on campus (a false charge) and warned university and college Presidents that they, the President and VP “got their coeds “backs.” Recall all the harm and disruption that ensued after these irresponsible statements and lies, the Jackie scandal at UVA being only one example.

      6 months later in 2014, the Obama administration using another false narrative waded into the police officer self defense shooting of Michael Brown in Ferguson, Missouri. Recall all the harmful events that followed those events in Missouri, how they are playing out even today on the streets and police stations of New York City, and indeed all over the country.

      You would think government officials would have learned from the equally false narrative ginned up out of the Trayvon Martin case in 2012. But no, governments leaders are always looking for new ways to pit the American people one against the other for their own political advantage.

      What is going on here are the creation of even more powerful ways for state officials in Virginia to gain and keep power by tearing our society ever farther apart. This of course is standard operation procedure for today’s government crew in Virginia who got its big start and political pay-off with this:

      https://www.washingtonpost.com/video/politics/latino-victory-fund-american-nightmare—campaign-2017/2017/10/30/0b01c6a2-bd93-11e7-9294-705f80164f6e_video.html

      This shows why these sorts of ill advised and ill constructed bills and laws are so dangerous, particularly in the wrong hands.

  4. Crazy. You are avoiding the real point. Virginia is the first Southern state to have a law protecting gay rights. It doesn’t matter what nits hans or anyone else wants to pick. Frankly i do not me. Bader and i am sure he’s never heard of me. When north carolina’s social right wingers got involved in school bathroom gender issues, a bunch of important corporations with a global focus started to rethink being in NC. So mych for the damage to business argument

  5. Not sure that the NC law had provisions for private causes of action, punitive damages and attorney fees, but it’s a useful distraction from Bader’s point.

    • Distraction? Huh? He claims the law as it is now will hurt business. It’s like saying that you should have laws protecting women and minorities because it might hurt business. I have heard this so many times before. That’s really the issue not arguing points state by state. I do not have the time for that.

      • You don’t even read at all before the knee jerks. His concern through several articles has been about the civil litigation provisions, which are not included in many other states. The “boys peeing in the girls room” example would only be relevant with a civil cause of action for punitive damages. Which of course will be next…..

        • Yup, that’s true and it’s also true that he’s presenting it in a way that feels like he is an activist who has his own biases.

          Who else besides him is sounding the alarm?

          Are a coalition of businesses and corporations opposing also?

          Some of this uber legislation is a consequence of all of it being bottled up in prior years and now the dam has burst – and perhaps overboard – but I’d like to see more than just Mr. Bader weigh in on this.

        • Steve. How do you know what i read? Kinda insulting. Do you judge that because i disagree with you?

        • Isn’t it also true that some corporations and businesses have lobbied FOR the legislation?

          I’m not surprised if some of the legislation might need to be further refined and if the corporations that support it also provide that feedback then do it but I don’t think we only take the folks who are vehmently opposed as the only feedback. I see Bader in that camp myself.

  6. Has Bader laid out a middle ground compromise position?

    Why have we got to this point where the prior GOP GA essentially chose to do nothing to address the issue?

    Pete is right about Corporations. They’re clearly indicating that they want something done about the issue yet the GOP that claims it is “business friendly” has great reluctance to do much other than oppose the Dems proposals.

    How do we move forward?

  7. There has been plenty of testimony and lobbying against these civil litigation provisions, which are the steel fist inside the velvet glove of these “feel good” bills. On the House Floor an amendment was offered on a public accommodations version (I think it was that one) to include some language that is in New York’s law (right wing New York!) allowing some leeway for valid religious convictions. It was voted down, of course. This fever will just have to burn for a while.

  8. Steve,
    Also, here’s a little reality check: lots of companies want gay rights laws. (see below) Bader’s arguments that Va’s new proposed law will hurt business may be merely his opinion. If he sees problems that the proposed law would undue the state’ civil law system, then he has still time to complain and adjust the law. Also note that Bader has been years with the libertarian, free market, anti-regulation Competitive Enterprise Institute which promote, among other things, that global warming is a hoax.

    https://money.cnn.com/2016/03/31/news/anti-gay-north-carolina-corporations/index.html

    • Ad hominem. You just can’t help yourself. I love you lecturing me on what corporations want. You like to lord it over us with your experience, but this issues goes right to decades of my experience. Large businesses have internal law departments, etc., but even they cringe at the phrases “punitive damages” and “attorney fees.” Small businesses see those and know they are just #@^%ed. It isn’t about the prohibitions on discrimination, it is about the incentives to civil litigation. But (see Spencer below) all are afraid to speak up and be labeled anti-gay or pro-discrimination.

      And it wouldn’t be the first time the large national companies happily signed onto something that threw their smaller, local competitors under the bus. Knowingly. Most have other large “rent seeking” goals during the session.

      • “And it wouldn’t be the first time the large national companies happily signed onto something that threw their smaller, local competitors under the bus.”

        Amen, best example I can think of are USDA meat labeling regulations, the big boys don’t give a damn if one of their 500 product lines gets tagged or recalled. They deal in volumes measured in tonnage. Skirting the rules and saving 1-2 cents per pound makes them a phenomenal amount of money. At the same time, they understand that a similar tagging or recall of a niche or small establishment usually sounds the death knell.

  9. The biggest players in Virginia’s business community lobbied for these protections.
    Recruitment is important for global companies and selling a state that thinks it’s too hard to protect the rights of all its citizens is difficult.

    This chatter is all blather. The bill got strong Republican support (the vote was 30-9 in the Senate). The issue isn’t new. The solutions aren’t new. The effects aren’t unknown. If allowed for a vote, this legislation would have passed last year when the R’s were in the majority.

    • Spencer, time to be “woke” to politics.

      Any support by Republicans is mostly likley due to 1) supporting the legal industrial complex 2) supporting big business lobbying that lines thier pockets and pays thier club memberships 3) fear of cancel culture in marginal districts

      The only folks that win in court are the lawyers. This law is designed to give lawyers another way to do a shakedown. The people that this is claimed to protect, will get little benefit from it.

      Regardless of party, the ga and congress is filled with lawyers who pass laws to benefit the legal profession. They pass laws that benefit the political profession. Thus, many of us see little difference between Republican and Democrats are in power.

      The publicly promoted issue, is just chrome.

      • While I agree with above comment, I see the greatest threat of this law is that it empowers and makes highly profitable political shakedowns of people and businesses deemed opponents.

        Thus the law is designed to coerce behavior from those deemed political opponents, as well as extort money from them. These are the tactics employed by the likes of Jesse Jackson and Al Sharpton that became institutionalized during the Obama administration, and so now have morphed into deputized variants like Antifa that became Janissaries of the political left of Democratic party.

        Hence the law takes leftist politics to whole new level under the disguise of lawful state action.

  10. Lengthening the ever-growing list of “protected” groups is just political virtue signalling at this point and probably has no impact on employers. There are already so many reasons an employer can be sued for perceived “discrimination” or “wrongful” whatever, adding another doesn’t change much.

    What does change the landscape significantly is failing to include penalties for spurious, groundless, merit-less cases. Most who have employed over the past 5 – 10 years have experienced the discrimination shakedown. I had once to deal with one who worked for a company for a few months, filed a greenmail claim, got a settlement and moved on to the next company.
    When these laws have no safeguards against abuse by unscrupulous lawyers and settlement-seekers, they are very destructive.

  11. By way of further explanation, for some who receive an assessment less glowing than they believe was deserved, less of a raise than they wanted, a work assignment they don’t like, an office they don’t like, or anything else they don’t like–discrimination is a wonderful tool and weapon to contest it.

    Oddly, the poorest performers in an organization are almost universally certain that the problem is not them. And except for the poor white male who has no protections unless he is over 60, has AIDs, or can claim a disability of some sort almost all of them fall into some protected category.

    If the attorneys fees are guaranteed no matter the merits of the case, it should be obvious to anyone familiar with today’s litigious environment what is going to happen.

    • Your comments are very well stated, Janus

      One elaboration on these chilling laws are that the government, and its supporters, that want to take away folks’ guns are the same government and supporters who want to pass illegitimate laws to silence, disarm and disenfranchise by force all other citizens who disagree with that corrupt government and its supporters.

      Hence, these bills are intentionally designed create a police state that under the color law has the power to breed fear and coercion against all recusants within its realm, and that achieves this illicit end by vesting certain named privileged groups the unfettered and government funded means to wage cultural war and genocide on all those recusants within its realm.

      These laws make Jim Crow look like Sunday School. These are the tactics of fascists. These laws and the odious values and system of beliefs and actions building them must be implacably resisted.

      • Reed,
        You may be correct at the Soros level of funding and activism.

        At the Assembly level, I think the main problem with today’s activism is that they are operating out of a flawed 19th C paradigm that employers are evil and any safeguards will be abused to crush the poor worker.

        What they fail to recognize is that they won and the social zeitgeist of the last 100 year has reversed the paradigm.

        Those who purport to advocate for the disenfranchised are now the ones who are driving policies that further disenfranchisement and create worse outcomes.

        No where is this more obvious than the issue of race. As the country moves more and more toward the least racist society in the world, the once noble race activists have become race hustlers –more and more strident and divisive to keep alive the problem on which they have built their existence and livelihood– or grievance seekers working to find a new victim group for their redemption – AKA immigrants legal or illegal, non-voting felons, or whomever.

        • How about SLAPP protection?

        • Janus is right yet again. To more fully understand today’s race hustler culture and its racist government at work in Virginia today please read Faulkner and read him deeply as to deep south Mississippi in the 19th century. You might start with Go Down Moses, its first three stories – Was, The Fire and the Hearth, and Pantaloon and Black – although I must say the Faulkner’s characters, and his deep south society, and its cultures then, were not so vicious, nor so deeply corrupt, as our bigots and rulers in 21st Virginia are today.

          In short we’ve swung full circle in Virginia, thought backwards in Virginia too. Mississippi likely is doing far better today and has for quite a while.

  12. Bader has raised some valid objections, it seems. And these objection seem separate from the LGBQT issue. This is one of many areas in which I lack the knowledge and qualifications to comment or engage. I had hoped that some commenters would have focused on those points, rather than being distracted by the shinier issue.

  13. Dick,
    My comments are not directed at the LGBQT issue, if that is what you consider shinier. In the organizations I have directed, their numbers reflect the general population and their performance is usually superior to the general population. More protections for them won’t change anything other than provide a basis for political fund-raising.

    This bill will make what is already a tough process — dealing with poorly performing employees — even more difficult.

    As it stands now, the prudent employer has to review any negative performance review with counsel or trained HR and invest in extensive documentation, before acting — particularly if that review has any implications for direct or indirect compensation. In a recent case in which I am involved that adds $3000 – $5000 to an iron-clad shift-change decision.

    The problem employee(s) is/are the swollen thumb(s) in the organization, often tolerated far beyond a reasonable degree while management tiptoes its way through the solution to avoid the smug, self-righteous EEOC bureaucrat with unlimited funds and time intent on notching wins on her belt.

    Actually, this problem is far worse in the State and Federal government where the unions have made it almost impossible to discipline even extreme bad performance.

    Easing the process for discrimination lawsuits will cause real problems for small to medium-size businesses. It increases the expenses for the larger businesses with in-house counsels and law firms on retainer but they will absorb that in their pricing or their wage structures.

    It will serve no positive purpose and further disadvantage Virginia employment opportunities.

    Do not for a minute think that these issues do not influence decision-making about starting or owning a business. There are states where I have had an opportunity to expand in which I would not consider owning a small business. I am not alone in that.

    • Your comments have been substantive and I was not referring to them. My frustration has been with those that disagree with Bader. They refuse to engage him on the issues he raises, but rather champion the LGBQT cause. It is possible to support the extension of protections to LGBQT folks, but still be concerned about the other ramifications of the bill. On the other hand, perhaps Bader’s (and your) concerns are overblown or without merit. If that is the case, they should point out the reasons why, rather than continuing to focus solely on LGBTQ. I don’t have the knowledge or background to know and, absent any rebuttal on their part, your and Bader’s arguments make sense to me.

      Having spent my entire career in government service, I did not realize that the private sector had trouble getting rid of unproductive or troublesome employees. I always thought that was one of the big advantages that private business had over government.

      • “Having spent my entire career in government service, I did not realize that the private sector had trouble getting rid of unproductive or troublesome employees. I always thought that was one of the big advantages that private business had over government.”

        There’s always a chance you’ll end up with a lawsuit. Maybe its without merit, but even then its cheaper to settle than pay the legal fees to prove your innocence. The settlement will often privately absolve you just the same. Its just a legalized shakedown. Patent law is good example.

        People love to point fingers and think the other group has it easier. At the end of the day, all the finger pointing just ends up costing everyone more.

  14. Dick,
    Private business does have an advantage over government in regards to dealing with poor performance.

    I am not advocating for weakening employee protections. There are bad employers and managers who would ride roughshod over their subordinates if they could with impunity. Wall Street enshrines downsizing, and GAAP rewards “restructuring” which I think has grown worse since the late 80’s pivot to the public company’s only raisin d’etre to be shareholder return. Venture capitalists love “financial” acquisitions more than strategic.

    My point is that the current level of protection for individual employees is now more than sufficient; and an effort to increase employee protections without safeguards against frivolous or unmerited suits is destructive and misguided.

    PS, I enjoy your postings. Thanks for your contributions to Bacon’s Rebellion.

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