Former Borders employees secure settlement in lawsuit: $797 a person
Borders maintained its headquarters at an office building on Phoenix Drive in Ann Arbor.
Melanie Maxwell | AnnArbor.com
The agreement amounts to $797 per person after legal fees are paid, according to a document describing details of the settlement that was filed with the U.S. Bankruptcy Court's Southern District of New York.
Former employees of Borders' Ann Arbor headquarters, led by an employee named Jared Pinsker, filed suit this summer accusing the company of failing to give corporate employees proper notice of their layoffs under the federal Worker Adjustment and Retraining Notification (WARN) Act.
Borders contended that it did provide proper notice — and even if it did not, attorneys said Borders was exempted from the WARN Act under a stipulation that allows fast layoffs in the event of "unforeseeable business circumstances."
According to the filing, the parties agreed to settle their dispute to avoid a protracted and costly legal battle.
"The trial of this matter likely would be lengthy and complex, adding to cost and potential delay," the filing says. Meanwhile, "due to the complex nature of the issues involved, the parties recognize that the outcome of the WARN action is uncertain."
After legal fees and other payments, the 198 employees represented in the class action suit will receive about $797 apiece.
A U.S. bankruptcy judge in Manhattan must approve the settlement.
Borders, which finished closing its stores and liquidating its inventory in September, filed for Chapter 11 bankruptcy protection in February. The company converted its case into a Chapter 11 bankruptcy liquidation in July.
At one point within the last 10 years, Borders had nearly 2,000 workers at its corporate headquarters on Phoenix Drive. That figure dwindled to a few hundred by the time the company filed for bankruptcy.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Tim
Thu, Dec 1, 2011 : 6:57 p.m.
Has anybody else had issues getting access to their Flexible Savings Account funds?
dontcountusout
Tue, Nov 29, 2011 : 4:40 p.m.
The key word here is "class-action". Cha-ching!
Mike
Tue, Nov 29, 2011 : 3:56 p.m.
It's a good day to be a lawyer. Pennies for the peons, big bucks for the lawyers. Regardless the whole suit is a sham. Borders goes out of business and is required to pay a penalty because they violated a law related to large lay-offs? We could only dream this stuff up in this country; the land of the lawyers and crooked politicians.
Lac Court Orilles
Tue, Nov 29, 2011 : 12:38 p.m.
How much more did the corporate bosses get for bankrupting the business?
Ron Granger
Tue, Nov 29, 2011 : 3:15 p.m.
Borders was a poorly run company for well over a decade. This failure did not happen in the past couple years - it was a lonngggg time coming. The final CEOs came in under a *terrible* situation. I recall 4 CEOs over about 2 years. It is difficult to blame the guys who came in trying to fix it. That's a bit like walking in on a janitor who is mopping up spilt milk and yelling at him about the mess. He didn't make it, he's just the clean-up crew. When a business is in ruin, you can only attract talent by offering large incentives. With each new CEO, the chances of success went down. I can't imagine why anyone would take that job.
A2comments
Tue, Nov 29, 2011 : 11:59 a.m.
The law requires formal notification. The company cannot set aside funds in a bankruptcy, the court controls all payments. The employees clearly agreed to pay the lawyers 33% of any award, likely nothing if they lost.
Sparty
Tue, Nov 29, 2011 : 5:23 a.m.
It's ridiculous that the employees could claim with a straight face that they had no warning that Borders may have been going out of business. There were layoffs and articles for a year, the CEO was already gone - what more notice did they need? Usually I would stand with the employees, but in this case ... Please enjoy the $800.
Ron Granger
Tue, Nov 29, 2011 : 3:10 p.m.
It is interesting that you equate a requirement to comply with employment law as "ridiculous". And Borders had four CEOs over a period of about two years. It was the flavor of the quarter. Those employees were loyal, and stuck with the company until the very end. They did not know if or when that end would come. Borders had been averting bankruptcy for years. And even in bankruptcy, they could have continued. $800 doesn't go far these days when supporting a family, or individual.
JimB
Tue, Nov 29, 2011 : 4:23 a.m.
"unforseeable business circumstances" Really? We all watched Borders decline and read about it right here for years. They can't use that one as an excuse not to pay. They could have created a fund for the employees they let go way ahead of time. Maybe use the money the received from the sale of their on-line client list to Barnes & Noble.
Spenman
Tue, Nov 29, 2011 : 2:51 a.m.
why does our judicial system require a 33% payment to lawyers for basic justice?
Jeff Frank
Tue, Nov 29, 2011 : 5:10 p.m.
@Jordan It's not true that our legal system never requires you to hire an attorney. Try being the owner of a small business being sued by another business and attempting to represent yourself... not allowed. Seen it happen to a former employer that couldn't afford an attorney and lost the case by default.
Jordan Miller
Tue, Nov 29, 2011 : 11:36 a.m.
This was an out of court settlement. That means the party got a lump sum, and used a portion of it to pay their legal fees, which in this case amounted to about a third of the settlement. The judicial system never requires you to hire an attorney, although in some cases one party may be ordered to pay the other party's legal fees.
snapshot
Tue, Nov 29, 2011 : 1:47 a.m.
The bankruptcy judge should negate the settlement and just pay the employees the 1,200 bucks.
justcurious
Tue, Nov 29, 2011 : 12:02 a.m.
Employees get $797, lawyers get $415?
belboz
Mon, Nov 28, 2011 : 11:27 p.m.
Maybe they can go to the movies... by themselves.