Lawsuit against Celadon alleges company violated WARN Act

Fallout from Celadon’s bankruptcy continues this week as a former employee filed a class action lawsuit alleging the carrier violated federal labor laws in the WARN Act  by not providing adequate notice of its impending shutdown.

The Worker Adjustment and Retraining Notification Act requires large companies to give a 60-day notice of layoffs to employees. Employers found to be in violation of the notice may be liable for back pay and benefits for a period of up to 60 days as well as being subject to civil penalties.

Stuart Miller, an attorney with Lankenau and Miller – a New York City-based law firm seeking to represent Celadon employees in the case – says the company shut down so abruptly that employees were not given any sort of notification.

“It’s a very strong WARN Act case for many reasons,” Miller said in a phone interview with Land Line. “Based on our interviews and review of the facts, we don’t believe the company will be able to rely on any of the WARN Act’s defenses.”

One class of employees who may not be eligible for relief under the WARN Act would be independent contractors, according to Miller.

“To the extent any particular driver is an independent and not an employee, it’s likely they would have no claim, because the WARN Act only covers employees,” he said.

Miller said the company has not yet responded to the claims, and he is urging any Celadon employees who want to be part of the case to e-mail his office at SJM@lankmill.com.

Bankruptcy filing

Celadon on Monday, Dec. 9, filed for Chapter 11 bankruptcy and announced that it “will shut down all of its business operations.” The company had a total of 4,000 employees, 3,300 tractors and 10,000 trailers.

In a statement issued Monday, Celadon CEO Paul Svinland said the company faced “a number of legacy and market headwinds” that made it impossible to keep the business going. The statement also referenced the company’s “significant costs associated with a multiyear investigation” into a securities fraud scheme involving former members of the management team.

Bankruptcy court grants wage motion

Earlier this week, the U.S. Bankruptcy Court for the District of Delaware issued an order granting the company the authority to pay $5.4 million dollars in unpaid wages, contracts and termination bonuses.

The bulk of that money, nearly $4 million dollars, will go toward unpaid wages for employees. More than $500,000 of it will go toward independent contractors, while the rest will go to the bonus program.

The interim order effectively releases the money to Celadon, but does not direct the company on when or how to use it, leaving it up to, quote, their sole discretion. However, former Celadon drivers are reporting that they have received at least partial paychecks starting on Thursday.