MF Global Subject to WARN Suit Investigation Over Terminated Employees

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Outten & Golden LLP has announced its investigation of the termination of employees idled in connection with the collapse of MF Global Holdings Ltd and its brokerage, MF Global Inc.

Without proper notice, employees may not have time to plan ahead and seek new jobs and health insurance before the pink slips go out.

After bracing for termination, thousands of employees of MF Global may have significant claims in the bankruptcy, but the payouts may be hard to reach, according to Jack Raisner, partner at the national employee rights law firm of Outten & Golden LLP.

Simultaneously, Outten & Golden LLP has announced its $15 million settlement on behalf of the employees let go in the shutdown of what was the nation’s largest non-depository mortgage lender, Taylor, Bean & Whitaker – which according to Raisner – imploded under circumstances resembling those of MF Global. Under the WARN (Worker Adjustment and Retraining Notification) Act, when large companies close or order deep layoffs, employees must receive advance written notice. Without proper notice, employees may not have time to plan ahead and seek new jobs and health insurance before the pink slips go out. Both Taylor Bean and MF Global lost their ability to transact business with the government amid allegations of misconduct. A recent FBI investigation into possible impropriety at bankruptcy solar-panel maker Solyndra, LLC followed just days after Outten & Golden filed suit on behalf of its terminated employees under the WARN Act.

Although pink slips may be imminent at MF Global, Raisner says that no WARN notices have been filed with state agencies, indicating a possible failure to comply with the WARN Act’s requirements should mass layoffs occur at the Manhattan and Chicago offices.

In addition to WARN Act claims, Raisner, says his firm is investigating severance claims that may be valuable despite the bankruptcy proceedings. “Often times,” says Mr. Raisner, “when employers file bankruptcy, employees do not bother pressing these claims in the belief there will be no funds left for them. There is heightened concern for MF Global’s employees due to a statement regarding the lack of assets made by the bankruptcy judge when he called it a possible ‘bridge to nowhere’ case."

Raisner, who with attorney René S. Roupinian, co-chairs Outten & Golden's WARN Act Practice Group, points out that MF Global’s appears to be following the roadmap used in Lehman Brothers bankruptcy case, where Outten & Golden also filed WARN and severance-based claims. Raisner says the claims may be stronger in MF Global, although impediments to collecting undoubtedly exist. Meanwhile, Roupinian observes that “MF Globals’ employees will also have to deal with medical insurance issues such as finding replacement coverage – and figuring out how to pay for it.” One of the reasons why advance notice of termination is so important is it permits employees to arrange for health insurance, prescription purchases and ongoing medical treatment. Under the WARN Act, Roupinian adds, employees may recoup those costs.

Outten & Golden LLP represents almost 2,000 former employees of Taylor, Bean & Whitaker. After two years of litigation, the court granted preliminary approval to the settlement on Friday, November 4, 2011. (Callahan v. Taylor, Bean & Whitaker Mortgage Corp., in the U.S. Bankruptcy Court for the Middle District of Florida, 5:09-cv-00346-HLA-GRJ). The firm filed the suit Kohlstadt v. Solyndra LLC, in the U.S. Bankruptcy Court for the District of Delaware, 11-53155 (MFW) where the lead plaintiff sits on the Official Committee of Unsecured Creditors. Outten & Golden LLP is also currently litigating WARN lawsuits in Ohio, Connecticut, California, Texas, New Mexico, Pennsylvania, and several other states, all on a contingency basis. Under the WARN Act, employees terminated without written notice may receive up to 60 days of wages and benefits.

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Jack Raisner

Rene Roupinian