Remember, not legal advice...
In California, as in most other states, employment is "at will". This
means that an employee can be fired for any "good" reason, including
economics, or no reason at all.
The only "bad reasons" are ones that are explicitly illegal: Usually,
if there is evidence that the employee was fired based on any kind of
discrimination (age, race, sex, nationality, disability), the employee
was a "whistleblower" (reported on illegal activity of the company,
refused to engage in illegal activity), filed for worker's comp, etc.
Your next thing to try would be a breach of contract case. If you have
a written contract (such as with a union), examine it for a "good
cause" termination clause. These are rare, and you probably would know
by now if it contained one, but it's worth a shot. Otherwise, you
could try to prove that there was an implied contract. The California
Supreme Court has ruled that the "at will" presumption can be overcome
by showing that the employee had a reasonable belief that they would
not be fired without good cause. Establishing the implied contract
generally involves showing a decent length of service to the company,
showing that the company expected the employee to be around for a
while (the provision of benefits is a common way of doing this), and
showing the expectation that the employee would not be fired without
good cause (often by referring to an employee handbook that outlines a
policy of "progressive discipline" before firing). See
http://www.discriminationattorney.com/oral_imp_cont.html for more
However, even if you are able to establish that there was an implied
contract, you still aren't likely to be successful in a suit. The
reason for this is that having an implied contract will only really
protect you from "arbitrary and capricious" firings. An employer would
simply need to show that the firings were made in "good faith". Having
an economic reason for laying off employees would satisfy this. An
employee, however, must show that "the decision was arbitrary and
capricious, pretextual, or that the employer did not make an
appropriate investigation". Further, the only damages available for
breach of an employment contract are lost wages and benefits.
A defamation suit would be a very different way of approaching the
situation, and would require much different claims. According to
http://www.inc.com/incmagazine/articles/5694-print.html , defamation
(in a legal sense) is "saying, writing, or otherwise communicating any
untrue and derogatory statement that may harm a person's reputation.
Usually, this must be to a third person -- say, one of your current
employees or another employer. It doesn't matter who the third persons
are, as long as they understand what you're saying." This would depend
very much on your situation, but large companies are often very
attuned to what they must avoid to prevent people from bringing these
claims, and I think it's unlikely that this would apply in a
In a class action suit, you still need to prove legal wrongdoing, and
as shown above, that appears to be difficult to do. If you do have a
situation where there is clear legal wrongdoing to a large number of
people, a class action suit may be appropriate.
I'm sorry if this isn't the answer you want to hear, but it sounds
like mass layoffs are just a sign of the times, and you probably have
little legal remedy. If you'd like more information, I'm sure an
employment lawyer near you would be happy to consult with you on this
Search terms: california "wrongful termination", california "wrongful
termination" "implied contract", california "wrongful termination"