Earlier this month we learned that Commonground/MGS, which was formed when Chicago-based commonground and Miami’s MGSCOMM joined forces in fall of 2014, ceased operations due to financial issues, informing employees that as of December 5 the holding company was no more and their employment was terminated. Now Miami managing partner Jorge Espinoza is filing a class action suit against Panton Equity Partners’ PCH Communications, which did business as Commonground/MGS, Ad Age reports. Panton Equity Partners was the private-equity firm that backed the formation of the holding company last year.
Espinoza filed the complaint in a Southern Florida district court on behalf of 100 employees and alleges that Commonground/MGS violated the WARN Act, which requires employers to give employees 60 days notice for such mass layoffs. “This action arises from Commonground’s decision to terminate substantially its entire workforce without a single day’s notice,” reads the opening of the complaint, which goes on to allege the employers violation of the Worker Adjustment and Retraining Notification Act, through a failure to adequately warn employees of their impending termination. The lawsuit seeks to award said employees “their respective wages, salary, commissions, and bonuses, the cost of health and pension benefits, pay for personal days, accrued vacation pay, severance pay, and other fringe benefits for a period of 60 days.”
“Our hope is to get the employees what they are due under federal law, which is 60 days of pay and benefits,” Espinosa’s attorney Brian Chaiken told AdAge. “The fact that they were given no notice, and they were let go the same day they got notice and weren’t given much of an explanation makes some, especially those who had been around since before the merger, feel they were treated badly.”
Former representatives for the now defunct Commonground/MGS declined to comment to the publication.
The memo sent to employees informing them of the holding company’s closing and their determination mentioned the WARN Act and hinted that the circumstances surrounding the closing of the company allowed for an exemption, stating, “While the Worker Adjustment and Retraining Act of 1988 may require advance notice of your permanent layoff, the unforeseeable circumstances of the lender’s actions and our faltering business circumstances that necessitated our good faith efforts to actively secure capital to prevent closing the Agency, did not afford us an opportunity to provide such advance notice.”
Chaiken acknowledged that the WARN Act does provide for some exceptions, but clarified that these were normally due to disasters such as fires.