Workers at Boston-area parenting chain that went belly up get screwed again

The Supreme Judicial Court ruled today that executives at the Isis chain of baby and parenting stores are not personally responsible for the $2 million a federal judge ordered the chain to pay workers when the chain suddenly shut in 2014.

The ruling means the workers get nothing because along with shutting down, Isis went bankrupt and dissolved, which left it with no assets to pay off the court-imposed payment.

Isis's closing on Jan. 14, 2014 violated both state and federal laws requiring employers at companies with at least 100 workers to give at least 60 days' notice of shutdowns.

The workers sued ISIS in federal court, ISIS never showed up in court and a judge ordered the company to pay the workers a total of $2 million. But the company, insolvent, never paid a cent.

Workers then sued in Middlesex Superior Court, under the Massachusetts equivalent of the federal law, to get the individual directors to pay make up the $2-million judgment out of their own pockets.

But in its ruling today, the state's highest court agreed with a Superior Court judge who had dismissed the worker suit because the state law focuses on back wages "secured by virtue of work or service actually performed," and the federal award was not for work actually done:

The payment is not for work that has actually been performed but for work that would have been performed had the sixty days' notice been provided. In fact, the WARN Act provides that the amount of compensation "shall be reduced by . . . any wages paid by the employer to the employee for the period of violation" (emphasis added). 29 U.S.C. ยง 2104(a)(2)(A). The extraordinary relief the Wage Act provides -- individual liability, treble damages, and possible criminal liability -- is directed at particularly egregious behavior, i.e., not paying wages for work actually performed, and not at other employment violations. See Segal, 478 Mass. at 560 (purpose of Wage Act is to prevent employers' unscrupulous, long-term detention of wages). Furthermore, not only must the employees' work actually have been performed, but the wages also must be presently -- not just prospectively or potentially -- due to be paid by the employer.

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Comments

IOW

By on

In Other Words,

They'd rather owe it to them than cheat them out of it.

You mean the executives didn't get screwed by their workers

Just their trophy wives!

It sounds to me like the executives got what they deserved. They went to school, studied hard, moved up the corporate ladder, abided by the law in this democratic state in this democratic usa and obeyed corporate law which is set up by the democratically elected officials of this state which shields executives from vulture lawyers. The workers were probably talked into this by some plaintiff lawyers looking for $666,000, what a fitting number!; and the executives probably had to pay out of pocket to protect themselves: Like almost always, the lawyers make money...no one else.

Don't be jealous, don't be a hater, the case was dismissed at the lower and the upper level.

Why be jealous of some people just because they have superior genes that make them look so good in their jeans. We get paid too.

Study hard, work hard, get ahead, get the spoils.

#metoo

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11

Not "screwed" at all

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The plaintiffs here were looking to triple-dip their money - to get not only the damages allowed by federal law, but also to multiply that by 3 under the MA Wage Act. It's a creative argument but it really stretches the meaning of the Wage Act, which is to guarantee that people get paid for work they've done. The plaintiffs were seeking pay for work they didn't do, which is outside the scope of the Wage Act.

Or, said differently, just because a plaintiff doesn't get what she asked for doesn't mean she's getting "screwed."

They got screwed, pure and simple

By on

The company was in financial trouble and knew it. The law states that the company has to provide their staff with 60 days notice before shutting down. The company broke the law. They shut down immediately without notice. Then they declared bankruptcy and the company was dissolved.

So, even though the company broke the law and even though the company owes money to the workers, the company no longer exists so the workers can not collect.

I'm sure plenty of their paying customers got screwed as well.

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15

But here's something to think about

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Did the company, when they filed for bankruptcy, have the resources to pay the amount owed to the employees. I mean, if you have nothing, you cannot give the employees anything. Now, if it comes out that the owners drained the coffers into their personal accounts before closing up shop, there might be a case. Otherwise, this is academic.

Not true

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"I mean, if you have nothing, you cannot give the employees anything."

Not true. You can give them 60 day notice as required by the law.

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12

And if the company doesn't have the money for 60 day's pay?

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As the decision notes, the workers were entitled to money from the company. It's just that the company had $0 to give them.

I suppose they could have told the employees to take everything they had in stock.

It might not be fair, and the owners do look horrible in this, but absent any proof that there was $2 million lying around, and they funneled the money into their personal bank accounts, it's tough to go say the owners need to pay up.

If you can't pay your bill

Don't use the services.

If I shoplift and have no money, does that mean I'm off the hook? Yes? No?

Otherwise, you are Donald Trump fucking over everyone for work they did.

I'll give you a better analogy

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If your sons rack up big credit card bills (yes, I know they are smart kids, but theoretically), should you be forced by the courts to pay the bills off? The company is an entity separate from the owners. If GE (whose stock I own) goes bankrupt, you better believe I don't want their creditors coming for my savings.

That's a very poor analogy

Typical goal post move for you, though.

Not the same thing as managers failing to comply with federal and state laws that they had every reason to know were there and what there responsibilities were.

God, your "play both sides"

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God, your "play both sides" is so disingenuous.

Per bizjournals, the defendants were "Isis Parenting, the corporation; former chief financial officer Peter Delahunt; and Mark Schwartz, CEO of Palladin Consumer Retail Partners."

Per Palladin's own website, "PCRP targets middle market retail and consumer products companies with revenues ranging from $50 to $500 million. We seek to invest $10-$50 million of equity capital in each transaction, but will call on our investment partners for larger opportunities."

If you think this firm doesn't have a cool 2mil laying around in general expense funds, you're a fool. This isn't a case of "bloohoo poor mom and pop owners are just as broke as their beloved employees". This is vulture capitalism making sure they were paid and fuck the proles.

You have one small problem

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Palladin wasn't listed as an owner, only that the owners worked for Palladin, per the article linked.

Okay, here's my gripe. The WARN Act was designed for companies essentially moving or outshoring operations. Think textile factories suddenly shut down in New Bedford or North Carolina with their production moved to Bangladesh. ISIS Parenting ceased doing business abruptly. Does it suck the way they treated their employees? Well, check back to 2014 and you probably see me saying as much on this website. But this looks to be the case of bad management leaving the company without any cash. This happens, and it is shitty, but the WARN Act was not designed to handle this.

Again, if a forensic accountant can show a trail in which ISIS Parenting had money that was siphoned off to the owners right before they closed, there is a case. If not, there is no case.

Wait

Somebody actually had a business named Isis in 2014? Jesus, even Archer got the clue that year to drop the name.

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Whole thing makes me sad

ISIS Parenting was the best local resource for expecting and new parents. The selection was great, the classes were super helpful, and the staff was beyond awesome.

I know many of the staff have gone on to create other local resources (and we've used a few of them over the years!), but it was so great having them all in one place.