1. EPLI in the New Millennium: Current Trends and Emerging Issues John L. Barber, Esq. Lewis Brisbois Bisgaard & Smith LLP California/New York

2. AVERAGE JURY VERDICTS IN EMPLOYMENT CASES – CALIFORNIA Year Average Jury Verdict Median Jury Verdict 1993 $ 1,014,046 $ 315,000 1994 $ 1,924,007 $ 300,000 1995 $ 535,834 $ 350,000 1996 $ 1,409,793 $ 545,172 1997 $ 992,774 $ 386,000 1998 $ 2,506,132 $ 250,000 1999 $ 394,483 $ 295,852 2000 $ 870,390 $ 440,000 2001 w/ Bell v. Farmers $ 3,504,150 $ 583,600 2001 w/o Bell v. Farmers $ 1,286,076 $ 494,000

3. Type of Claim Percentage of Employee Verdicts Number of Reported Claims Average VerdictMedian Verdict Breach of Contract 64%11 $ 1,134,685 $494,000 Wrongful Termination 75%8 $ 908,800 $ 454,500 Retaliation/Whistleblower45%20 $ 978,244 $ 415,000 Race/National Origin Discrimination 25%8 $ 477,105 $477,105 Disability Discrimination 0%2 $ 0.00 Age Discrimination 0%1 $ 0.00 Pregnancy Discrimination 0%2 $ 0.00 Religious Discrimination 0%1 $ 0.00 Gender Discrimination 16%6 $ 951,710 Sexual Orientation Discrimination 100%1 $ 313,400 Emotional Distress 100%4 $ 791,750 $ 705,000 Fraud/ Misrepresentation 100%2 $ 2,850,000 Sexual Harassment 38%13 $ 310,318 $ 259,568 Overtime & Unpaid Wages 60%5 $ 30,165,504 $ 474,000 TOTALS49%83 $ 3,504,150 $ 583,600 (w/o Bell) 48%82 $ 1,286,076 $ 494,000 Breakdown by Nature of Claim

4. Observations: 1. Verdicts DO NOT reflect awards of attorneys' fees 2. Breakdown between demonstrating a DISCRIMINATORY ANIMUS versus SIMPLE ILL-INTENT or EMPLOYER NEG- LIGENCE (see discrimination verdicts and compare emotional- distress, fraud, and wage and hour cases) 3. Bell v. Farmers verdict as harbinger of things to come 4. Incomplete statistics

5. Expansion of Protection   State versus Federal laws  Sexual Orientation -- Protected Characteristic under the FEHA, growing protection under Title VII  Transsexuals/Hermaphrodites (Perception of Gender/Sex versus reality) (Perception of Gender/Sex versus reality)  Disability in California versus ADA Examples:

6. One of the Most Common Personal Injury Lawsuits Today   September 16, 2002  57 Lawsuits filed in the Central District of the Los Angeles Superior Court  17 were employment-related = 30%

7. Trends 1. Pre-Issuance of Policy Due Diligence  Examples  Questionnaire  Site Visit to Correct Deficiencies  Added Exclusions 2. Shifting of HR Function to Third Parties  Examples  Who is the insured?  Greatly increased number of employees moving through employer's facility  Contractual disputes between "insureds" interfere with resolution of cases 3. Telecommuting  Examples  Wage and hour compliance  What laws apply  OSHA  Expanded base of potential plaintiffs and defendants 4. Genetic Testing -- Protected Characteristic in California 5. Growth of Poll of Attorneys

8. Mediation  Early (often pre-litigation)  Greater expense and preparation, i.e., attorneys' fees and mediator expense  Multi-day  What's covered, i.e., is it a claim?

9. Increased Settlement Values -- The Hammer of Attorneys' Fees 1998 Litton verdict -- $8,000 in compensatory damages; $300,000 in attorneys' fees 1998 Litton verdict -- $8,000 in compensatory damages; $300,000 in attorneys' fees $0 to $25,000 settlements are increasingly rare $0 to $25,000 settlements are increasingly rare Plaintiff's bar perceives $25,000 to $75,000 as early, "cheap" settlement Plaintiff's bar perceives $25,000 to $75,000 as early, "cheap" settlement

10. Legislative Activity   SB688  SB1538  HR 217