Following Live Well Financial’s sudden closure last week, an employee is attempting to sue the company for lost wages.
A former employee of the company’s Richmond, Va. headquarters has filed a class action lawsuit in the U.S. District Court of Delaware seeking 60 days of wages and benefits, alleging termination without cause and notice as required by law, according to court documents obtained by RMD.
Monica Williams, the named plaintiff and a former loan account manager at Live Well’s headquarters, brought the suit on behalf of herself and other former Live Well employees in similar circumstances who were terminated, “without cause, as part of, or as the result of, mass layoffs or plant closings ordered by [Live Well] on or about May 3, 2019,” the filing reads.
Since the affected employees were not provided notice of their termination within 30 days of that date and not given 60 days advance written notice of their terminations by Live Well, the company did not observe the legal requirements specified in the Worker Adjustment and Retraining Notification (WARN) Act, the lawsuit alleges.
As the first such employee to bring the claim against Live Well, Williams is seeking the allegedly lost wages and benefits both individually and on behalf of “all other similarly situated former employees,” according to the case filing. The number of former employees in the class the suit is seeking remedies for is, “so numerous that joinder of all members is impracticable,” but the filing estimates the total number of those affected at “about 125 individuals.”
“We filed the class action suit against Live Well Financial. The suit has not yet been certified,” said Rene S. Roupinian, partner at law firm Outten & Golden based in New York, in an email to RMD. “Once it is, we expect it will cover all employees who worked at or reported to the Richmond and San Diego facilities, including those who worked remotely.”
While the fundamentals of the case are sound under the WARN Act, there are still potential defenses Live Well can seek out under the law to determine if it can be held liable for damages, according to Alejandro Caffarelli, employment attorney and shareholder at Caffarelli and Associates, Ltd. in Chicago, Ill.
“The typical defenses to WARN claims are the faltering company defense, or the unforeseen business circumstances defense,” Caffarelli told RMD in an interview. “[It can be] common to see scenarios where [a company is] trying to get financing, or they’re trying to do what they can to stay in business, and if they could show they were doing that and [demonstrate] that giving employees notice would’ve caused a mass exodus which would’ve put the business under, then they may be able to take advantage of that faltering company defense.”
The ‘unforeseen business circumstance’ defense, Caffarelli describes, can be cited if the company “had no reason to believe they would’ve been closing,” which would release them from the requirement to provide 60 days’ advance notice to employees.
“In this case, as with any type of a lawsuit, we have to wait and see what the company says about the circumstances surrounding the closure in order to determine [what’s next],” Caffarelli said. “Then, the facts need to be fleshed out in discovery to determine whether or not what the company is saying is true before a judge or jury can make the decision as to whether or not WARN was violated and, if so, whether one of the defenses apply.”
Even if a judge certifies the class under the terms of the suit, that does not guarantee that the class will be entitled to collect the relief they seek, Caffarelli added.
“You can have a class certified, but then lose the case,” he said. “Even if something can proceed as a class action, that doesn’t mean that the company violated the law until a judge or jury rules on the issue of liability.”
Additionally if the company named in the suit is in bankruptcy, then the entire case would have to be moved into bankruptcy court, Caffarelli added.
Live Well halted the funding of new loans and some loans in process on May 3, the date of termination according to the court filing, with some sources reporting to RMD that the company at-large had ceased operations on that date.
Days later, the company confirmed on its website that it had ceased its loan origination operations, and a local newspaper reported that the company had filed paperwork with state employment officials in Virginia detailing it had laid off 103 employees that worked out of its Chesterfield, Va. headquarters.
As of press time, representatives for Live Well Financial had not responded to a request for comment on the developing class action lawsuit.