CHARLESTON, S.C. (CN) - Firetruck maker American LaFrance fired 500 employees with 8 hours notice - far short of the 60 days required by law, the newly unemployed workers claim in a federal class action.
Lead plaintiff Olivia Schreiner claims the private equity firm that abruptly shuttered the famous firetruck manufacturer violated the WARN Act and owes the class paid wages and benefits.
Schreiner sued Patriarch Partners LLC, the private equity firm that has owned co-defendant American LaFrance since 2005.
She claims that workers got a letter on Jan. 17, telling them they would be unemployed as of 5 p.m. that day, and that the company would pay them only for "actual time worked" until the date of their termination.
Schreiner claims that violated the federal Worker Adjustment and Retraining Notification Act.
The defendants closed their plants in Moncks Corner, S.C., in Ephrata, Penn., and in Los Angeles.
Schreiner worked at Moncks Corner.
On the day of the closures, the defendants issued a statement said: "Unfortunately, the company's unexpected current financial condition requires the discontinuation of operations in these locations at this time and these facilities are not expected to reopen."
Patriarch owns 100 percent of American LaFrance, the complaint states: "In fact, shortly after ordering the mass layoffs and closings of the facilities, defendant Patriarch filed a document with the Berkeley County Register of Deeds claiming ownership of 'all assets' located in ALF's Moncks Corner facilities."
Founded in 1973, American LaFrance once was one of the nation's largest manufacturers of firetruck and emergency vehicles. As recently as 2002, when the company was owned by Freightliner, which in turn was owned by DaimlerChrysler AG, it was rated one of the top five emergency vehicle manufacturers in the country.
But American LaFrance fell on hard times in the mid-2000s and filed for bankruptcy reorganization, a move that jolted fire departments across the country.
At the time of the filing, the company said it owed more than $100 million to more than 1,000 creditors.
In that filing, American LaFrance said it had lost $56 million in 2007 and $48 million in 2006.
The company attributed most of its troubles to having to move to a new factory and headquarters as part of a complex economic development deal, in which Freightliner agreed to relocate American LaFrance so that DaimlerChrysler could use its former manufacturing plant to assemble Sprinter vans imported from Germany.
After the move, American LaFrance saw reduced demand for emergency vehicles, while accounting and inventory problems delayed delivery of the vehicles that had been ordered and led to a temporary furlough of more than 100 workers.
Against that backdrop, the arrival of Patriarch Partners LLC was seen as a godsend.
Lynn Tilton, Patriarch Partners' principal, told reporters at the time that she became interested in the emergency vehicle sector after watching from her office window as firefighters entered the World Trade Centers during the Sept. 11 terrorist attacks. She said she decided to buy American LaFrance after being contacted by Donnelly, Penman & Partners, a Michigan-based investment banking firm.
"Patriarch Partners plays a duel role in the companies it acquires," Tilton said at the time. "Financially, that means the provision of capital, but we also have a strong management group whose goal is to expand the company's horizons through greater efficiencies and innovation."
By 2011, however, she said the purchase was a mistake, telling The Wall Street Journal: "That was a purchase I made more with my heart than my head."
Schreiner seeks class certification and unpaid wages, commissions, bonuses, accrued holiday, vacation and sick pay, as well as pension and 401(k) contributions they would have made during the 60 day notice period.
She is represented by Catherine McElveen of Richardson, Patrick, Westbrook & Brickman in Mount Pleasant, S.C.
Representatives of the defendants could not be reached for comment Monday evening.
However, Richardson Patrick attorney James Ward told the Berkeley (S.C.) Independent: "These employees have been left out in the cold. Not only did they lose wages and benefits, they lost the time they needed to search for new employment."