Falcon Execs Explain Why Company Failed To Follow The Law, More Lawsuits Soon?
Youngstown, Ohio – For the first time since the Youngstown, Ohio-based trucking company abruptly closed its doors and ceased operations on April 27, officials are now providing more details about what they say led to the sudden closure and it’s failure to provide required 60-day layoff notices to its workers.
In three letters filed Tuesday, May 7, with Ohio Department of Job & Family Services each dated April 27, Falcon Transport Co. officials acknowledged the company’s failure to provide the required 60-day notices to workers under the Worker Adjustment Retraining Notification (WARN) Act.
The WARN Act requires company’s that employ at least 100 workers who put in at least 4,000 hours of aggregate labor per week to provide 60-days written notice of mass layoffs.
Management of Falcon Transport Co. said it did not provide the notices to its more than 800 employees, including almost 600 truck drivers, because it would have jeopardized the company’s efforts to raise more funding.
The letters explain management made a deliberate choice not to provide the notices, writing,
“Sending notices earlier would have jeopardized our effort to obtain further funding.”
Additionally, officials outlined various “unforeseen business circumstances relating to material impairment of operations” which caused the company to end operations.
Some of the circumstances cited include:
1.) the inability to collect on outstanding receivables, 2.) new work awarded by customers not materializing, 3.) the effects of a ransomware attack on the company’s accounts receivable system, 4.) lending sources and vendors suddenly deciding not to advance funds and to demand payment, and 5.) the failure of Falcon’s attempts to raise additional capital.
Company management said it was unable to secure additional capital and tried unsuccessfully to negotiate accommodations with lenders.
Further, the letters cite the company’s inability to “sell excess equipment… negotiate release of escrow funds from prior owners… and negotiate a settlement payment from its largest customer.”
The three WARN notification letters were submitted to announce the closures of facilities on Belmont Avenue in Liberty Township, Victoria Road in Austintown and Baumbart Road in Lorain.
The company’s Ohio operations employed a total of 162 people including: 52 drivers in Austintown, 61 employees in Lorain and 49 workers at the trucking company’s headquarters in Liberty, according to the notices.
The letters state:
“The elimination of these positions will be permanent, and there are no bumping rights.”
The company also operates facilities in Nashville and LaVergne, TN; Kansas City, KS; Weirton, WV; and Romulus and Lake Orion, MI.
However, the letters make it clear the company’s only objective now is to liquidate its remaining assets, writing,
“Falcon currently has ceased operating as a going concern and is solely engaged in attempting to liquidate its assets.”
More Lawsuits On The Way?
The filing of the WARN notice letters come a week after former Falcon Transport Co. employee, Mary Chavez, filed a civil action complaint against her former company in U.S. District Court on Monday, April 29.
The suit alleges Falcon violated the WARN Act and is asking for 60 days of unpaid wages, salary, commissions, bonuses, accrued holiday pay, accrued vacation pay, pension and 401(k) contributions along with other benefits.
According to a report by Vindy.com, more than 40 former Falcon employees have also met with Cleveland attorneys and could be preparing to file class action litigation seeking to be awarded similar compensation as Chavez.
However, Chavez and her legal counsel are asking the court to declare her complaint a “class action” in order to allow other former Falcon colleagues to join.
Stay logged on to TransportationNation.com for the latest on the fallout from the abrupt closure of Falcon Transport Co.