March 24, 2017
Media contact: NCL Communications, Cindy Hoang, firstname.lastname@example.org, (202) 207-2832
Washington, DC—The National Consumers League (NCL) is welcoming the U.S. Supreme Court’s decision in Czyzewski v. Jevic Holding Corporation, in which the Court ruled that a bankruptcy settlement that effectively wiped out employee claims against a trucking company while paying off more junior creditors impermissibly sidestepped the U.S. Bankruptcy Code’s creditor priority.
“This is great news for workers,” said Sally Greenberg, executive director of NCL, which submitted an amicus brief with the National Employment Law Project (NELP) in the case.
Jevic Transportation filed for Chapter 11 bankruptcy after being purchased in a leveraged buyout.
The amicus brief signed by NCL and NELP argued that:
“This case both illustrates and aggravates the pervasive problem of workplace injustices due to unequal bargaining power. Unlike many wage-earners, the nearly 1,800 truck driver employees of Jevic represented by petitioners have been able to sustain this lengthy and expensive litigation because they are well organized and have been well represented, including by pro bono counsel. However, they have still received no relief on their claim for accrued but unpaid wages and benefits more than seven years after they were laid off without notice in violation of state law. The structured dismissal order sanctioned by the Third Circuit has opened a bankruptcy loophole enabling their employer to escape without paying them. This represents an additional opportunity for wage theft – employers failing to pay employees what they have earned, without effective accountability – at a time when, as U.S. Department of Labor and independent studies collected by NELP reflect, wage theft has reached epidemic proportions nationwide. Unless this Court acts to close it, the bankruptcy loophole opened by the decision below is likely to result in many thousands of additional employees being denied what they have earned. Moreover, as with other forms of wage theft, the vast majority of those employees will not have the bargaining power to secure their rights or the resources to bring the problems to the courts’ attention.”
The workers’ priority claims entitle them to receive over $8 million, but collection is conditioned on the estate having those funds and it might not, so this is not a sure thing. Nevertheless, the principle behind the decision is what is critical.
“NCL believes that the Supreme Court has vindicated the claims of these workers,” said Greenberg. “And a 6-2 decision reversing the Third Circuit, with only Justices Alito and Thomas dissenting, sends a clear message that the Court recognizes the rights of employees under the U.S. Bankruptcy Codes.“
About the National Consumers League
The National Consumers League, founded in 1899, is America’s pioneer consumer organization. Our mission is to protect and promote social and economic justice for consumers and workers in the United States and abroad. For more information, visit www.nclnet.org.