Vanderbilt Lawyer - Volume 35, Number 2

Clothes Make the GC

Marc Joseph, '83, Haggar Corp.'s First-Ever General Counsel Creates a Winning Legal Department

by Miriam Rozen Marc Joseph

Marc Joseph won't have to scrounge around to find evidence for his bosses about the value he has added to his company this year. The general counsel, senior vice president and board secretary of Dallas-based Haggar Corp., need point no further than the Texas Supreme Court. The justices decided two cases in the past six months in favor of Haggar. The Texas Supreme Court decisions spared Haggar more than $2.6 million in judgment payouts.

Court victories of that financial caliber have garnered admiration for Joseph from executives at Haggar but also from other corporate lawyers.

"He is fair, but he doesn't run from a fight," says Don Godwin, a partner in Godwin Gruber in Dallas. Nearly a decade ago, Godwin recommended Joseph for the job of general counsel of Haggar, which is best known for manufacturing men's pants, but which also owns and operates retail outlets nationwide and produces clothing lines for men, women and juniors. Haggar, a 77-year-old company, reported sales of $487.9 million in fiscal year 2004.

"He knows when it's best to settle a case, even when it's more money than he wants to pay. But he also knows cases that need to be fought because of principle. He'll stay in with the fight," Godwin says of Joseph.

Joseph's fortitude paid off in May 2005, when the Texas Supreme Court rendered a favorable reversal for the company's subsidiary in Haggar Clothing Co. a/k/a Haggar Apparel Co. v. Hernandez. A former seamstress at the company's now-closed Weslaco plant alleged that Haggar had retaliated by firing her after she filed a worker's compensation claim, and a jury found in her favor, according to the Supreme Court's opinion. The 13th Court of Appeals in Corpus Christi affirmed, holding that the evidence was legally and factually sufficient to support the jury's findings of retaliation, actual malice, and actual and punitive damages.

But Haggar prevailed at the Texas Supreme Court. In a per curiam opinion, the justices ruled that there was "no evidence" to support the jury's findings. As a result, Haggar filed a Form 8K with the U.S. Securities and Exchange Commission stating it would increase net income projections for 2005 based on the court's favorable reversal. On May 19 2005, the company reported to the sec that it expected to save $2.6 million in pre-tax dollars.

A few months earlier, on December 31, 2004, the Supreme Court decided Haggar Apparel Co. v. Leal in Haggar's favor. The per curiam court reversed a 13th Court of Appeals ruling and determined that the plaintiff, a former seamstress and label presser for Haggar, was not terminated because of her disabilities and age as she had claimed.

Perhaps the considerable amount of time Joseph spent underwater before he became a lawyer developed his staying power. A graduate of the U.S. Naval Academy, Joseph spent four years as an officer on a nuclear submarine. In 1980, after he was honorably discharged as a lieutenant commander in the U.S. Naval Reserve, Joseph, who had trained as a nuclear engineer with the Navy, says he decided to stay above ground and pursue the law. He enrolled at Vanderbilt School and realized, "I absolutely loved it."

"Nobody in my family had ever been an attorney. I didn't know what they were. But my dad had told me I should be a doctor or a lawyer. And my interest in chemistry had waned," Joseph says.

After Vanderbilt, Joseph parlayed his background with the government into a law practice handling government contracts as an associate with what was then Rain Harrell Emery Young & Doke in Dallas in 1983.

But as he got a taste of litigation, Joseph says, he wanted to move to a firm where he could obtain even more experience in the courtroom. In 1985, Joseph says, he joined Dallas' Carrington Coleman, Sloman & Blumenthal as an associate. "I learned a great deal," says Joseph. "I knew from the word around town that this was a law firm that practiced trial law in a very ethical, straightforward manner."

In 1990, Joseph took two big steps: He shaved off his beard, and he went in-house. The sequence of those events was no coincidence. That's because Joseph joined Electronic Data Systems Corp., a company founded by H. Ross Perot, who preferred his employees without facial hair. For the EDS job, Joseph first interviewed with Bert Cornelison, who now serves as general counsel and senior vice president of Halliburton Co. but who, at that time, headed up and was expanding the in-house litigation department at EDS. At that first meeting, Cornelison remembers asking Joseph, "How attached are you to that beard? Marc equivocated for a very long time." By the time Joseph showed up for the follow-up interview with then-EDS general counsel Richard Shlakman, Cornelison says, Joseph was clean-shaven and he got the job.

At EDS, Joseph was hired as a senior litigation counsel based on his Carrington Coleman experience of serving as first chair at trials. Cornelison says the in-house EDS department at that point, in contrast to many others nationwide, was trying to bring more of its work in-house and needed senior litigators such as Joseph to do that.

In 1995, Godwin recommended Joseph for the Haggar opportunity. Among the chief attractions, Joseph says, was the opportunity to run his own show. He knew he would be the general counsel. Before Joseph started, Haggar—a family-run company—had never employed a general counsel. Initially, Joseph handled all of his own SEC filings, managed all of the litigation and performed any other legal troubleshooting necessary.

Joseph recalls at that time Internet technology was just taking off, and the company had not yet entered the Web world. An individual had purchased Haggar's domain name and wanted "something north of $10,000" for the rights. Joseph remembers being flummoxed—he didn't want to buy out the guy, and he didn't know what the Haggar domain name was worth at that point. So he stalled.

In August 1997, he hired his first in-house lawyer, Linda Shirley. He brought the former Thompson & Knight associate into the company as his assistant general counsel. When she came on board, Shirley negotiated with the cyber-squatter, making it clear that, since he had not used the name, he had lost rights. Shirley now handles most of the contract review as well as the intellectual property matters for Haggar. "[Intellectual property] wasn't my area of expertise," Joseph says. "We were spending too much money and not getting enough return. We needed more discipline."

With Shirley's hiring, Joseph says, he has seen a financial return in terms of lower costs for outside IP lawyers. "I think we dramatically decreased how much we spend outside."

Joseph supervises most of the other litigation, including the two cases that went before the Texas Supreme Court in 2004 and 2005.

Jorge Rangel, a partner in the Rangel Law Firm in Corpus Christi, represented Haggar in both cases before the Supreme Court. Rangel says it took some nerve on Joseph's part to appeal to the Texas Supreme Court. "There's always uncertainty and unpredictability," Rangel says. But, given the dollar size of the judgments the juries had agreed upon, particularly in the Hernandez case, Rangel says, an appeal always promised a big upside.

Now, Rangel notes, Haggar won't have to pay those judgments. Meanwhile, the case law for employers looks more favorable.

Joseph was at EDS when he began his relationship with Rangel. Joseph hired Rangel to represent EDS in a case in Corpus Christi in which the company won a multimillion dollar jury verdict against a bank. So when Joseph started at Haggar, he turned to Rangel frequently for help with labor and employment cases. "He had many cases pending, and he brought me in to help," Rangel says.

For Rangel, one of Joseph's best attributes is his engaged manner. "What I appreciate is that he is a hands-on general counsel. He is on top of what is going on. He is a joy to work with," says Rangel.

Not surprisingly, Francisco Rodriguez, a partner in Rodriguez & Tovar in McAllen, who represented the plaintiffs in the 2004 and 2005 cases, doesn't exude such optimism about the outcome of the appeals. "It confirms what everybody knows. It's very difficult for plaintiffs to keep judgments before the Texas Supreme Court," Rodriguez says.

Haggar's victories at the Texas Supreme Court may not have a long-term impact on the company's business. That's because Haggar now employs the vast majority of its workforce outside the United States at factories in China, Vietnam, Cambodia and Jordan. Following the economic trend of the apparel industry, the company ceased manufacturing operations in the United States in 2001, and it just closed its last facility in Mexico this spring, moving almost all of its operations to the Far East and Middle-East for cost-competitive reasons.

With so few workers in the United States, Joseph says, the company's litigation bill has fallen by several hundred thousand dollars annually. Now the company spends more time on audits of international subcontractors than it does on litigation. But for Joseph—who joined Haggar's board of directors as its secretary this year—less litigation, even if he wins the cases he appeals, is good for the company and good for him.

—This article is reprinted with permission from the July 4, 2005, issue of In-House Texas, a publication of Texas Lawyer.

Profile: Marc Joseph, '83

Education
Marc Joseph graduated with honors from the U.S. Naval Academy and then spent four years as an officer on a nuclear submarine, where he was trained as a nuclear engineer. In 1980, after he was honorably discharged as a lieutenant in the Naval Reserve, Joseph enrolled at Vanderbilt Law School, where he was on the staff of the Journal of Transnational Law. He is a member of the Order of the Coif.
Career
Joseph joined a Dallas firm, what was then Rain Harrell Emery Young & Doke, where he focused on government contracts, in 1983. His interest in litigation later led him to move to another Dallas firm, Carrington, Coleman, Sloman & Blumenthal. He joined Electronic Data Systems Corp., a company founded by H. Ross Perot, as a senior litigation counsel. In 1995, a colleague recommended Joseph for the position of general counsel at Haggar.
Family
His wife, Ann, graduated from Vanderbilt University in 1984. The Josephs have two sons, Mac and Sam, 14 and 10.
Immediate Challenges
Haggar was acquired by a privately held company in November 2005, and Joseph assumed the role senior vice president of human resources and responsibility for Haggar's facilities. "I was involved in investor relations, and now I'm in charge of human resources," he says. "That's a big change. We don't have the public reporting requirements now, and my day-to-day routine has changed dramatically."
Long-term Challenge
"As a privately held company, now we're focusing on building the business rather than focusing on disclosure issues. I'm hoping to help facilitate that process."
On Legal Training
"Legal training teaches you how to think differently and become a problem solver. Being a lawyer enables you to spot, clarify and frame issues so the organization can get the proper focus on them and then find solutions quickly. That's what management is–problem solving that pushes the organization forward."
Professional Mantras
"You'd better run your company with integrity, whether you're under Sarbanes-Oxley or not."