The Kneafsey Firm obtained a $258,000 Judgment against gold dealer Seacoast Coin, Inc. based on the company's refusal to defend and indemnify its employee in violation of the California Labor Code. Seacoast and its owners, Michael Getlin and Peter Epstein were sued for fraud, breach of fiduciary duty, and financial elder abuse. Seacoast's employee maintained that he had done nothing wrong but was sued by the customer as well. Seacoast defended itself but refused to defend its employees in violation of California Labor Code section 2802. In this circumstances, the California Legislature and the California Supreme Court have made clear that Seacoast had a duty to protect and defend its employee. The Supreme Court explained:
California has a strong public policy that favors the indemnification (and defense) of employees by their employers for claims and liabilities resulting from the employees’ acts within the course and scope of their employment. Labor Code section 2802 codifies this policy and gives an employee a right to indemnification from his or her employer. (See Grissom v. Vons Companies, Inc. (1991) 1 Cal.App.4th 52, 59-60 [1 Cal. Rptr. 2d 808] [the purpose of Lab. Code, § 2802 is “to protect employees from suffering expenses in direct consequence of doing their jobs”]; Janken v. GM Hughes Electronics (1996) 46 Cal.App.4th 55, 74, fn. 24 [53 Cal. Rptr. 2d 741] [Lab. Code, § 2802 “shows a legislative intent that duty-related losses ultimately fall on the business enterprise, not on the individual employee”].)
Edwards v. Arthur Anderson LLP, 44 Cal. 4th 937 (2008).
Despite the clear directive from the California Legislature and the California Supreme Court on this basic issue of employment law, Seacoast not only refused to pay for its employees defense but it attempted to coerce the employee to pay to settle the case in clear violation of California law. The Kneafsey Firm refused to allow the employee to be taken advantage of by its employer and filed a counter suit against Seacoast and its owners who were represented by Ricardo Cestero and Ira Steinberg of the law firm of Greenberg Glusker Fields Claman & Machtinger LLP. The Kneafsey Firm prevailed and obtained a judgment against Seacoast for $258,000. See Kraner v. Seacoast Coin, Inc. Los Angeles Superior Court Case No. SC 122137.