A week after the closure of mortgage lender Live Well Financial, a former employee filed a class-action lawsuit alleging lost wages and wrongful termination under the terms of the Worker Adjustment and Retraining Notification (WARN) Act, which requires 60 days of advance notice before dismissing employees. Now, Live Well is pushing back by challenging the lawsuit on the basis of two exceptions that the WARN Act allows in the case of employee dismissals without notice.
Live Well Financial says that the case brought by former employee Monica Williams is invalid, and that it does not owe 60 days of wages to the former workers bringing the suit despite not giving them advance notice, as first reported by Richmond Biz Sense.
In its response to the lawsuit, Live Well claims that it acted in “good faith and according to its commercially reasonable business judgement.” The company also argues that two provisions of the WARN Act corroborates its actions in making the lay-offs of over 100 workers.
“[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,” said Alejandro Caffarelli, employment attorney and shareholder at Caffarelli and Associates, Ltd. in Chicago, Ill. in an interview with RMD after Williams first brought the suit against Live Well. “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 the ‘faltering company’ defense.”
Live Well is also citing another acceptable defense under the WARN Act, the “unforeseeable business circumstances” exception. This defense, Caffarelli described, 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.
Live Well argues that the circumstances that led to its closure qualify for both the “faltering company” and “unforeseeable business circumstances” exceptions of the WARN Act and are seeking dismissal of the case.
This is the latest in a series of unfolding events concerning the abrupt closure of Live Well Financial, which RMD learned about on May 3. The closure was followed by more than 100 lay-offs at the company’s Richmond, Va. headquarters, which then led to the filing of Warren’s class action lawsuit.
Michigan-based Flagstar Bank also recently filed a lawsuit against Live Well, seeking repayment of more than $80 million in delinquent loans and interest, according to a court filing made with the U.S. District Court for the Eastern District of Michigan.
Multichannel lender Open Mortgage also recently announced that it had hired the core team of mortgage lending executives from Live Well, in addition to approximately 50 former Live Well sales and operations employees to expand its retail, wholesale, principal agent and closed-loan seller mortgage channels.