Monday, July 6, 2009

Former Cookeville Company in WSJ article

A Cookeville-based company, known as Service Transport, Inc., is mentioned in today's Wall Street Journal in a story about how much advance warning a company must give employees before laying them off. It says that in a suit filed in U.S. District Court for the middle district of Tennessee, a former employee of Service Transport of Cookeville, Tenn., alleged that the trucking company's owner wrongly released workers without notice in May 2005.

The owner, private-equity firm American Capital Strategies, argued in part that Service Transport was faltering and presented with unforeseeable circumstances, and that American Capital worked in good faith to comply with WARN as it sought a buyer.

In response to a request for summary judgment, the district court judge wrote that the trucking operation hadn't shown a profit for two years and had been in default on its financial obligations long before the closing and layoff, suggesting that American Capital could have foreseen its troubles. The judge noted that the owner's efforts to sell the trucking company shouldn't have prevented it from giving proper warning when the sale fell through.

"Congress did not intend a sale to relieve an employer from its obligation to notify its employees," the judge wrote. WARN's exceptions, he wrote, are to be "construed narrowly."

The parties settled before going to trial. Some 531 former trucking workers received $875,000, or about $1,650 apiece, before attorney's fees, which are typically about one-third in such matters. . You can read the full account here.