Falcon files layoff notice; workers file second suit

By JUSTIN DENNIS

jdennis@vindy.com

COLUMBUS

Falcon Transport Co. has laid off 162 employees between its two Mahoning County locations and its Lorain County location, according to three layoff notices filed Tuesday with the Ohio Department of Job and Family Services, more than a week after the layoffs took effect.

The trucking company is now facing two federal lawsuits relating to its sudden closure April 27 and subsequent layoffs of nearly 600 workers. The most recent, filed Monday in the U.S. Northern District Court, names Falcon owner CounterPoint Capital Partners LLC of Los Angeles, a venture capital company that purchased the transporter in September 2017, and G.D. Leasing Inc. of Indiana, a Falcon-owned subsidiary employer, makes breach of fiduciary duty claims against Falcon’s CEO Chris Broussard, of Texas, and COO Nick Schrader, of Medina, and seeks to stop the company from liquidating and dissolving.

The Worker Adjustment and Retraining Notification Act, or WARN, notices state the positions eliminated at Falcon’s Ohio locations along Belmont Avenue in Youngstown, Victoria Road in Austintown and Baumhart Road in Lorain will be permanent. That includes 113 truck drivers.

Though companies with more than 100 employees are required by law to give notification of a mass layoff at least 60 days in advance, Falcon Transport Co.’s notice came by text April 27, the day of the closure, and left many of its truckers stranded throughout the country.

As in a similar notice filed earlier this month in Tennessee, the company blamed “unforeseen business circumstances” on its inability to warn workers about their lost jobs, including the sudden closure of Falcon’s largest customer — presumed to be the General Motors Lordstown Assembly Complex — a ransomware attack on its accounting system and Falcon executives’ failure to negotiate for funding capital.

“Sending notices earlier would have jeopardized our effort to obtain further funding,” the Ohio WARN notice reads.

Falcon is currently attempting to liquidate its assets, according to the notice. A federal suit filed Monday by law firm Elk and Elk of Cleveland seeks a preliminary injunction to stop that.

The suit alleges Broussard and Schrader “engaged in self-dealing, wasted company assets and mismanaged the affairs of Falcon” even as the company was believed to be insolvent or approaching insolvency near the end of 2018.

The suit also alleges Falcon employees’ health premium contributions were deducted from their pay but “were not used or escrowed for their intended purpose.”

One of the suit’s plaintiffs, David Hlebovy, employed at Falcon’s Youngstown facility through G.D. Leasing — used to hire drivers and skirt workers’ compensation requirements, according to the lawsuit — was not reimbursed for business expenses he “personally paid for defendants.”

Hlebovy was being treated for “vascular issues in his legs” when he was notified his health coverage was terminated April 26, the day before the layoffs, the suit claims.

The suit also alleges the company withdrew contributions to Youngstown Falcon worker Tawni Grove-Caban’s health plan from her compensation. Grove-Caban, who was being treated for diabetes at the time, was informed April 29 that she was dropped. Her daughter was also a beneficiary of the plan, the suit claims.

The suit looks to make Falcon, CounterPoint and G.D. Leasing equally liable for the claims, alleging they are “alter egos” of each other, with “substantially identical” management and ownership. It also seeks 60 days of pay and unexpired benefits for the laid-off employees.

The suit also alleges the company withdrew contributions to Youngstown Falcon worker Tawni Grove-Caban’s health plan from her compensation. Grove-Caban, who was being treated for diabetes at the time, was informed April 29 that she was dropped. Her daughter was also a beneficiary of the plan, the suit claims.

James Kelley, managing partner for Elk and Elk, said the firm has obtained evidence the company wasn’t paying into the self-funded plans.

The suit looks to make Falcon, CounterPoint and G.D. Leasing equally liable for the claims, alleging they are “alter egos” of each other, with “substantially identical” management and ownership. It also seeks 60 days of pay and unexpired benefits for the laid-off employees.

“Our hope is that Falcon, G.D. Leasing and/or CounterPoint step up and immediately pay the wages owed and going forward so these people can have a fair, reasonable transition as comprehended by the law,” Kelley said. “No one in this case is asking for anything other than either money they’ve worked for and earned or statutory damages spelled out by the law.”

It is the second WARN Act suit filed against the transporter since the April 27 closure. The first was filed by New York firm Lankenau and Miller, which specializes in WARN Act cases, said attorney Stuart Miller.

He said his firm likes to have retainers from individual employees, so they can file individual claims should the defendant companies claim bankruptcy, which is “always the possibility.”

Miller said the firm is receiving “non-stop” calls from former workers looking to join the case.

“We don’t believe that anything was sudden and dramatic here. There were events the company was aware of. They had been telling employees for a while everything was fine,” he said. “We don’t believe the employees were treated fairly here and they were actually treated particularly unfairly.”