United Furniture transportation lawsuit voluntarily dismissed; 91 former employees gain unemployment benefits

A federal transportation lawsuit involving United Furniture Industries Inc. has been dismissed voluntarily by the plaintiff, but with the ability to re-file.

DFW LinQ Transport Inc., based in Belford, Texas, sued on Dec. 2 in federal court for the Northern District of Mississippi. DFW requested compensatory and punitive damages of at least $500,000 each.

In a separate legal action, DFW voluntarily dismissed with prejudice (meaning it cannot be re-filed) its lawsuit against Wells Fargo & Co. - a major lender to United - Focus Management Group USA Inc. and Security Associates of Mississippi LLC.

Meanwhile, there has been little movement involving four employee-filed WARN Act lawsuits since they were filed between Nov. 23 and Nov. 28.

United made promotional- to mid-priced upholstered furniture in the U.S. under its brand and the Lane Home Furnishings brand. The manufacturer also imported wooden bedroom and dining furniture.

United shut down abruptly on Nov. 22, affecting about 2,700 employees companywide, including about 530 in Winston-Salem, High Point and Davidson County.

United's board of directors informed the workforce in a 12:42 a.m. email blast that it was terminating their employment and health benefits, effective immediately.

David Rhoades, an N.C. Commerce Department spokesman, said Thursday that as of Dec. 21, there have been 148 former United employees to file for unemployment insurance benefits. He said at least 91 were approved and have received their first benefit check.

There have been several job fairs focused on former United employees in the Triad since the shutdown, including two in Winston-Salem.

The affected United employees entered into a state UI system that provides the lowest number of benefits weeks - at 12 - in the nation. Florida also provides just 12 weeks of UI benefits.

North Carolina provides a maximum weekly benefit of $350, which is the ninth lowest in the country.

Those limited state unemployment benefits were put into place by a Republican super-majority during the 2013 session.

Of the eight states that provide a lower weekly benefit, the five lowest (Mississippi $235, Arizona $240, Louisiana $247, Tennessee $275 and Alabama $275) provide up to 26 weeks.

Transportation lawsuit

According to the complaint, DFW had contracted with United in 2019 to transport copper from Texas to facilities in Mississippi via United's trucking operations.

A DFW shipment containing 44,059 pounds of copper - with an estimated fair market value of $147,000 - was placed on Nov. 19 in a United tractor-trailer in Denton, Texas, to be transported to Starkville, Miss.

The trailer had arrived in Tupelo, Miss., when United's board ordered on Nov. 22 that all truck drivers were to return all equipment to their respective bases.

DFW said it sent a driver to Tupelo to finish transporting the copper, but was denied access by United because all employees had been let go by United.

DFW said United had not provided access even though DFW said it would pay United for the full shipment even if its driver finished the route.

DFW expressed concerns that the copper was not in a secure setting, and said it considers "the taking of the copper to be an act of theft and conversion by the defendants."

No WARN lawsuits update

The company's Nov. 22 overnight email to employees said in part that United's board of directors made the decision to cease production immediately "due to unforeseen business circumstances."

There has been no noteworthy update involving the four WARN Act employee lawsuits vs. United.

There also has not been a federal bankruptcy protection filing by United.

A Chapter 11 filing could allow the manufacturer to restructure financially, while a Chapter 7 filing allows for the liquidation of its assets.

In a typical WARN filing, a company agrees to pay 60 days' worth of wages and benefits as part of closing their business or a business operation. The notice also sets in motion local and state employment assistance initiatives.

As of Thursday, no WARN notices have been filed by United in California, Mississippi and North Carolina.

However, the act lacks enforcement teeth. Several studies have shown that it has lots of loopholes and virtually no enforcement authority from federal, state and local officials.

Employees must file a lawsuit in federal court to assert WARN rights, which has produced occasional success, such as in 2016 when former employees of the closed Yadkinville hospital were able to secure a settlement with the hospital's for-profit operator.

The latest WARN lawsuit was filed in California on Nov. 28, claiming that most of the manufacturer's workers have not been paid their final paycheck.

The other three lawsuits were filed in federal court in Mississippi.

North Carolina employees would be covered by two of the Mississippi lawsuits and the California lawsuit.

Besides the WARN Act, the California plaintiffs claim United violated the N.C. Wage and Hour Act and two California labor codes.

The N.C. law requires employers to pay final wages to discharged employees through the regular payroll method on or before the normal payday.

The California lawsuit claims that N.C. employees haven't been paid their final paycheck, accrued vacation pay or company-paid pension and 401(k) contributions.

Under the N.C. law, United can be liable for civil penalties of $250 per day per employee, up to a maximum of $2,000 per violation.

336-727-7376@rcraverWSJ