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Bankruptcy Court Refuses to Dismiss Proposed Class Action Suit by Former Dewey Employees

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On Monday, Judge Glenn at the federal bankruptcy court in Manhattan, denied the motion of the Dewey estate to dismiss a proposed class action seeking to represent about 450 former employees of the law firm.

While the lawsuit by Victoria Conn, a former employee of the law firm’s document production department alleged that she and 450 similarly situated employees had lost their jobs without due notice under the WARN Act, Dewey argued it was not an “operating business” at the time of the layoffs.

Dewey’s stance was that only businesses that fit the description of “operating businesses” under the WARN Act, were bound by the mandatory notification periods to provide due warning to employees before layoffs.

However, Judge Glenn said the point raised by Dewey was significant, and could not be decided at a summary judgment proceeding.

While Conn alleged that Dewey owed her and other employees full pay for 60 days, the Dewey estate argued that allowing such a case to proceed would put the interests of the class member’s ahead of the creditors.

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Judge Glenn held that the proposed class action can proceed as an adversary proceeding in the Dewey bankruptcy, since there were numerous instances where WARN Act claims were allowed to proceed during a bankruptcy case, and often as class actions. He also cited precedents of the federal bankruptcy court in Manhattan where such action had been allowed.

However, Glenn did not rule on the merits and said “(Dewey) argues that it was no longer operating in an ordinary business sense when it laid off its employees … such issues of fact cannot be resolved on a motion to dismiss.”

A next hearing has been scheduled for March 28 to hear arguments from both sides on the class action status of the matter.

  • Tim Morgan

    Employees’ wage and related claims, at least if valid, have historically taken priority over those of creditors. Thus it was appropriate to let the action proceed, so that former employees either get paid or be found not to be entitled.

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