by Suit claims they and other employees did not receive 60 days’ notice of the company’s closing as typically required by law
NEW YORK — Citing violations of the WARN Act and New York labor laws, two former Mitchell Gold employees in New York have filed a class action lawsuit against the company on behalf of themselves and others let go without cause or warning from the company on Aug. 25.
The plaintiffs, Gail Dillon and Tenisha Rodgers, filed the lawsuit Sept. 8 in the United States Bankruptcy Court for the District of Delaware.
The suit claims that they did not receive 60 days’ notice in advance of a closing that is typically required under the federal Worker Adjustment Retraining and Notification Act. It also states that the plaintiffs and more than 50 other Mitchell Gold employees were not provided 90 days’ notice as required under the New York WARN Act.
This is the second such class action suit alleging that the Mitchell Gold Co. violated the WARN Act when it ceased operations.
As part of an ongoing Chapter 11 bankruptcy case filed on Sept. 6, two other plaintiffs, former employees Lindsey Price and Stanley White, filed a related suit on Sept. 7 that states they and others did not receive the appropriate notice as required by the WARN Act when the company shut its North Carolina production facilities around Aug. 25, effectively putting some 533 workers — in Taylorsville, Statesville and Hiddenite, North Carolina — out of work.
That suit claims that they and other workers are owed wages and Employee Retirement Income Security Act health and retirement benefits for 60 days from the time of the abrupt closing.
In addition to the closings in North Carolina, the ceasing of operations has impacted the company’s 27 retail locations in the U.S., Canada and Puerto Rico, which also include a store in New York City and Manhasset, New York. Calls made to a number of those locations have not been returned and in other cases the voice mailboxes were full.
On behalf of themselves and the other workers impacted by the closing, the New York plaintiffs seek a judgment that is equal to the sum of their unpaid wages, salaries, commissions, bonuses, accrued holiday and vacation pay, pension and 401 (k) contributions and other ERISA benefits for up to 60 days.
The lawsuit also cites a letter the company sent to workers on Sept. 6, stating, “We do want you to know that our ownership … is also working to fund a form of bankruptcy that will preserve the best opportunity for you to recover all of your unpaid and earned wages, in the event the bankruptcy process does not provide for you to receive your wages.”
It went on to state that the company’s owner, The Stephens Group, “plans to ask the bankruptcy court for permission to supplement whatever recovery you do receive such that you receive the equivalent of your base wages, PTO, any unreimbursed expenses you may have submitted but not been paid for, as well as 50% of any commission dollars you would have been entitled to in the event payroll had been met in the ordinary course. As you are aware, the commission policy is that the commission on any product which is canceled is offset against future commissions. We hope that you will view 50% of outstanding commissions as a favorable gesture, given that most orders pertaining to August commissions were effectively canceled due to our inability to continue operations.”
The New York employees’ lawsuit said that the email did not inform the plaintiffs and other workers that they had additional rights under the federal WARN Act and the New York WARN Act. It added that the defendant misled plaintiffs and other individuals by telling them that they were not entitled to their full commissions.
While the suit said the exact number of persons impacted by the sudden layoffs is unknown, it indicated that this number can be obtained through litigation. It also noted that a class action suit representing all of the workers affected is the most effective form of litigation given that many workers lack the financial means to file their own individual lawsuits and that the damages suffered by those workers is relatively small compared to the expense and burden of filing an individual lawsuit.
On Aug. 26, the company did file a WARN Act notice with the North Carolina Department of Commerce that stated the company unexpectedly learned that it was unable to secure critical financing to continue its business operations. Whether this qualifies as one of several exemptions allowed under the WARN Act will likely be determined as the company works through its bankruptcy proceeding.
Company principal Mitchell Gold has not returned calls that Home News Now has made seeking comment on the company’s sudden demise.
