Scooter Store lawsuit: What are the odds?
NEW BRAUNFELS, Texas – If you’re a laid off employee suing The Scooter Store, you may want the company to turn things around, industry attorneys say.
Ex-employee Anna Urbina filed a lawsuit March 15, claiming that The Scooter Store didn’t give those who were laid off the 60-day notice required by the Worker Adjustment and Retraining Notification Act (WARN). But even if the lawsuit succeeds, whether or not she gets the 60 days of back pay and benefits she’s seeking will depend on the company’s financial health going forward.
“Even if the plaintiffs prevail in their lawsuit, the question becomes: Will TSS have the money to pay the plaintiffs?” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato in Amarillo, Texas.
Other laid off employees have joined Urbina, making it a class action lawsuit.
For example, what happens if The Scooter Store files for bankruptcy or what if the company gets shut off as a result of a fraud investigation?
“The bankruptcy laws, if The Scooter Store were to file, may supersede this obligation,” said Neil Caesar, president of the Health Law Center in Greenville, S.C. “Or it might mean that everything gets thrown into a pot and figured out over the course of the proceedings. Or, if it’s tied to a fraud thing, does it mean the government would need to sign off on this? I don’t know.”
The Scooter Store notified employees March 8 they were placed on unpaid leave until further notice. That “furlough” became a permanent layoff March 31 for all but 300 employees, leaving nearly 1,500 jobless with less than one month’s notice.
“The whole purpose of this law is that, if you’re of a certain size, your size conveys certain responsibility to let your people have the opportunity to take care of themselves,” Caesar said.
The Scooter Store declined to comment on pending litigation.
Other TSS news: Lenders pitch in, city readies to sue
NEW BRAUNFELS, Texas – The Scooter Store will remain open past its initial deadline of March 31, the company announced last week.
“I am encouraged that the company’s lenders are working with us and providing sufficient liquidity to help us navigate a path forward beyond the initial extension of March 31,” stated Larry Young, chief restructuring officer.
There was concern over The Scooter Store’s future after CEO Martin Landon sent a letter in March to the Texas Workforce Commission saying the company had financing only through the end of the month.
“The company has obtained sufficient financing to allow it to avoid the immediate closure of the New Braunfels facility until March 31, 2013, and is optimistic that further efforts will allow the New Braunfels facility to remain operational beyond that date,” Landon wrote.
The Scooter Store is working with a staff of 300 employees while it tries to create a “viable business model,” Young said.
“Our distribution centers are open and serving customers,” he stated. “Serving customer needs remains our top priority.”
City to sue The Scooter Store
NEW BRAUNFELS, Texas – The New Braunfels Industrial Development Corp. plants to file a lawsuit to recover “any and all sums owed” from The Scooter Store after the company failed to maintain a certain number of jobs, according to a local radio station. The board says The Scooter Store owes the city $1.3 million as part of a “claw-back” stipulation from a 2009 incentive agreement. The Scooter Store had until March 21 to pay back the city. In 2009, several Texas cities were trying to woo The Scooter Store, a large private employer, away from New Braunfels. But when the city stepped in and offered $3.4 million dollars in incentives, the company opted to stay put. After a recent audit of The Scooter Store’s employment data, however, city officials found that about half of the roughly 400 jobs the company created through the economic incentives were not maintained.