On or around May 19, 2008, Jevic Transportation shut down and terminated its approximately 1,800 employees. On May 21, 2008, we filed a WARN suit seeking recovery of WARN Act damages of 60 days’ wages and benefits from the Jevic bankruptcy estate and from Jevic’s owner Sun Capital Partners, Inc. on behalf of those employees. The suit was brought in the U.S. Bankruptcy Court for the District of Delaware and alleged claims under the federal WARN Act and New Jersey WARN Act.
In 2008, the Bankruptcy Court certified the case as a class action. In 2013, the Bankruptcy Court determined that Jevic was liable to its former New Jersey employees under the New Jersey WARN Act, but was not liable to its former non-New Jersey employees due to the federal WARN Act’s unforeseeable business circumstances defense (which is not a defense under the New Jersey WARN Act). The Court, however, determined that Sun Capital was not liable to any of Jevic’s former employees under either WARN Act. We appealed the Court’s decision that Sun was not liable. On appeal, the district court sided with Sun Capital. We appealed again to the Third Circuit Court of Appeals.
In 2016, the Court of Appeals affirmed the Bankruptcy Court’s order in favor of Sun Capital. The Plaintiffs’ only further route of appeal would be to the U.S. Supreme Court.
Separately, in 2012, the Bankruptcy Court approved a settlement between Jevic’s lender CIT, Sun Capital, and Jevic’s creditors. The settlement distributed money from the Jevic bankruptcy estate but excluded the Jevic employees although their claims are entitled to priority under the Bankruptcy Code. This settlement (referred to as a “structured dismissal”) made it impossible for the Jevic employees to collect anything from Jevic on their successful New Jersey WARN Act claim. We appealed this outcome to the Delaware District Court and Third Circuit Court of Appeals, but, again, neither appeal was successful. Nevertheless, we did appeal to the U.S. Supreme Court. In June of 2016, the Supreme Court agreed to hear the appeal.
The U.S. Supreme Court issued its decision on March 22, 2017, holding that bankruptcy courts do not have the power to approve chapter 11 structured settlements that violate the Bankruptcy Code’s priority scheme absent the consent of the affected creditors. The Jevic bankruptcy was remanded back to the Delaware Bankruptcy Court where it was converted to chapter 7, and a chapter 7 trustee was appointed on June 5, 2018.
Since his appointment, the chapter 7 trustee has been actively pursuing litigation against third parties, including Sun Capital and CIT, to bring money into the Bankruptcy Estate to pay creditors’ claims, including the WARN claims of the New Jersey drivers. As the chapter 7 trustee does not represent the WARN Class, we do not yet know the status of the trustee’s litigation efforts. Once the trustee concludes his efforts and files a report with the Bankruptcy Court, we will provide a status update to the class here.
If this mass layoff affected you, Raisner Roupinian LLP can provide you with updated information regarding your rights in this case. Generally, the WARN Act requires companies to provide their employees with 60 days written notice in advance of a mass layoff or plant closing. In the absence of such notice, employers may be liable to each affected employee for 60 days wages and benefits.
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