As Orlando-based Red Lobster begins reorganization under Chapter 11, displaced workers at the chain’s New Jersey restaurants are filing suits.
The litigation will provide an early application of New Jersey’s recently beefed-up version of the state’s Worker Adjustment and Retraining Notification Act.
Two former employees at the chain’s now-closed Ledgewood location filed a suit in Morris County Superior Court on behalf of a class of New Jersey Red Lobster employees who claim violations of the state’s WARN Act.
Another suit was filed in the Middle District of Florida on behalf of a nationwide class of Red Lobster employees asserting violations of the federal WARN Act, and a New Jersey subclass claiming violations of the New Jersey WARN Act. The named plaintiff in that suit is another former employee of the Ledgewood Red Lobster.
Red Lobster filed its Chapter 11 petition in the Central District of Florida on May 19. The company, which had 646 locations in the U.S. as of May 15, closed 99 restaurants, according to media reports.
New Jersey Changes
Under the federal version of WARN, an employer must give workers written notice 60 days before a mass layoff or plant closing. Where the employer fails to do so, workers can seek damages for up to 60 days’ worth of back pay and benefits.
New Jersey’s version of WARN, which was updated in 2023, now requires 90 days of notice of a plant closing or mass layoff.
The statutory definition of a mass layoff used to be 500 employees, or 50 employees if they represent one-third or more of the workforce at a place of business, counting only full-time employees. But the revision to the statute changed the definition of a mass layoff to 50 employees, and employees at all of a company’s facilities in the state are aggregated for WARN purposes.
Red Lobster did not respond to a reporter’s question about the suits.
The New Jersey suit was filed by Franklin J. Rooks Jr. of Morgan Rooks in Marlton along with James E. Goodley and Ryan P. McCarthy of Goodley McCarthy in Philadelphia. Gregg I. Shavitz of Shavitz Law Group in Boca Raton, Florida, and Nicholas A. Migliaccio and Jason S. Rathod of Migliaccio & Rathod in Washington, D.C., filed the Florida suit.
In the New Jersey suit, the named plaintiffs are Brandon Wright and Trista Van Jura. Neither was given written notice of the restaurant closing, the suit said. Wright, a manager and a 10-year veteran of the company, worked full time and grossed $989 a week, the suit said. He was notified by phone on May 13 that the restaurant was closing, and on May 17 he received his last paycheck, which included two weeks of severance pay, the suit claimed.
Van Jura, a part-time server, worked there for three months, the suit said. She heard from colleagues that the restaurant was closed.
In the Florida suit, named plaintiff Donna Lowe had asked her manager about rumors that the restaurant was closing, but was assured that it was profitable, according to the complaint. She learned that her location was closing through the restaurant’s scheduling app, the suit claimed.
New Jersey’s revised WARN Act was challenged in a suit by an industry organization, but U.S. District Judge Zahid Quraishi dismissed the suit in April 2023.
The WARN Act claims would be adjudicated by the bankruptcy court, said David H. Stein, who is co-chair of the bankruptcy and creditor’s rights group at Wilentz, Goldman & Spitzer in Woodbridge. The WARN claims might fall into a portion of the bankruptcy code that covers unpaid wages, which would make it a priority claim, Stein said. Alternately, the WARN claims might be covered by some form of insurance, he said.
“I’m assuming Red Lobster has secured debt,” he said. “(The WARN claims) would probably be behind secured creditors in priority.”