by Legal counsel representing former employees believe they still have a good chance of receiving back pay
ABERDEEN, Miss. — Now that the United Furniture Industries bankruptcy case has been converted to Chapter 11 status, it is likely that separate employee claims for back pay will now be part of the case.
Following the sudden Nov. 21 shutdown of United Furniture Industries and sister company Lane Home Furnishings, several employees filed class action lawsuits claiming they were denied 60 days’ pay as afforded by the WARN Act. In addition to suits filed in Mississippi, former employees also filed similar suits in California.
In a Feb. 1 filing with the U.S. Bankruptcy Court for the Northern District of Mississippi in Aberdeen, attorneys Craig M. Geno and John W. (Don) Barrett stated, “Here the WARN Act actions are all pending before this court, involve common parties and clearly present common, if not identical, questions of fact and law. All four actions seek compensation for former employees for the same alleged factual misconduct by UFI. … Moreover, most, if not all, of the witnesses will be the same for all of the WARN actions. Furthermore, consolidation carries no risk of prejudice or confusion for the parties of the court and will conserve judicial resources by streamlining the process and preventing multiple discovery tracts, pretrial motions and trials.”
It added, if consolidated, the court will preside over one class case and trial that will dramatically reduce the cost of litigating the WARN actions affecting some 2,700 workers terminated immediately and without prior notice on Nov. 21.
Barrett was not available for further comment for this story. However, other attorneys interviewed by Home News Now who are also representing clients seeking 60 days’ back pay, believe the cases will be considered as part of the Chapter 11 bankruptcy.
“What we expect is that the court will retain jurisdiction over all of the WARN Act claims,” attorney Philip Hearn told Home News Now.
He added that that he believes the former employees have a very good chance of getting at least some of their back pay, although the return on the dollar for creditors could be “all over the court.”
“I am cautiously optimistic based on what we know at this point,” he said, on behalf of his 950 clients in the case. “I am cautiously optimistic that we will be able to get at least some return for it.”
Attorney Jack Simpson also believes the WARN Act cases will proceed in a class action context.
“The benefit of it being Chapter 11 now is that the court also appointed a trustee who is going to serve as a third party to oversee the company during this process and I think that’s good,” he said, noting that he believes the class action suit will likely occur inside the bankruptcy case versus outside the case.
He also believes the 500 clients he represents in the case have a good shot at getting monies owed through the WARN Act, although “we won’t know the full extent of their assets until United makes that disclosure and provides that schedule. But I think there are sufficient assets for the WARN Act claims.”
What’s unclear, however, is how quickly the matter of claims will be resolved not only for the former employees, but also the many creditors that are identified as part of the process.
“There are not a ton of developments yet,” Simpson said in late January. “I assume there is going to be a period of time where the trustee is just kind of getting his arms around the matter because there are a lot of moving parts to this and a lot of interested parties. But I do think that will speed up in the next few weeks.”
