BURLINGTON — A lawsuit filed by former employees of Vermont Bread Company and Koffee Kup Bakery will continue to go forward, for now.
U.S. District Court Judge William K. Sessions III denied a motion to dismiss of the case in a decision issued Monday.
The suit was filed by Matthew Chaney and Nadine Miller, who both worked at Vermont Bread in Brattleboro, and Arthur Gustafson, who worked at Koffee Kup Bakery in Burlington.
The trio is represented by Thomas P. Aicher, of Cleary Shahi & Aicher PC in Rutland, in collaboration with Lankenau & Miller in New York City, The Gardner Firm in Mobile, Ala., and the Sugar Law Center for Economic & Social Justice in Detroit.
The suit was brought on behalf of all employees of Koffee Kup, Vermont Bread and Superior Bakery in Connecticut after the bakeries were closed and all the employees were terminated with no warning on April 26, just 25 days after the sale of the company.
On April 30, Chaney initiated the lawsuit, arguing that American Industrial Acquisitions Co. and its six co-defendants had violated the federal WARN Act because they failed to give employees at least 60 days advance written notice of termination.
Attorneys for the defendants asked Sessions to dismiss the lawsuit, contending American Industrial Acquisitions and KK Bakery Holding Acquisition Co. do not own interests in any Vermont companies, and do not and have never owned any shares in the holding company that purchased Koffee Kup Bakery and its two sister companies.
In his order, Sessions wrote the lawsuit should continue while discovery is conducted to determine exactly who was involved in the transaction and who owned the three bakeries as a result.
Discovery might also include who was involved in “post-transaction business decisions,” specifically related to the decision to close the bakeries and fire all 400 or so employees.
Once discovery is complete, wrote the judge, the defendants can file another motion to dismiss, and he will take it under advisement.
On April 1, information was released stating Koffee Kup Bakery had “successfully completed a transaction with American Industrial Acquisition Corporation.”
But as part of the defendants motion to dismiss, American Industrial Acquisitions founder Leonard Levie stated in an affidavit that the company “did not acquire any shares of the holding company that purchased plaintiff’s employers.”
His company “does not and has never owned any shares in Koffee Kup Bakery Inc., Superior Bakery Inc., Koffee Kup Distribution LLC, or Vermont Bread Company,” he wrote.
In addition, he stated, the company “does not maintain, own or operate any business facilities in Vermont.”
Levie also noted that the holding acquisition company has no employees in any state, including Vermont; did not acquire any shares of the holding company; and does not and has never owned any shares in the bread companies.
Because the defendants have no connections to Vermont, stated the motion to dismiss, the federal court in the state lacks jurisdiction.
“That neither company had a physical presence in Vermont is not a factor, as the Supreme Court has long held that actual presence in the state is not a prerequisite for minimum contacts,” Sessions wrote in his order Monday.
In the suit, he wrote, the plaintiffs have alleged that American Industrial Acquisitions played a significant role in the purchase, and that it was involved in post-purchase business decisions.
Its “precise role in the purchase of stock, and in the decision to lay off workers, is less clear,” noted Sessions. The holding company “also appears to have been an integral player in the purchase of the acquired entities, even if its existence as an entity was short-lived.”
As described in the lawsuit, wrote the judge, the defendants “engaged with Vermont” in a way that benefited them. Because they did so, he wrote, they should be able to litigate in Vermont “without an undue burden.”
In addition, wrote Sessions, “Vermont has a ‘manifest interest’ in providing means of redress for its residents ...”
To evaluate whether the case should continue in Vermont, he wrote, “the Court requires additional factual development.”
Sessions has noted that while AIAC denies owning any portion of the three companies, who actually bought them has not been named.