Infotron Remembered
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A lawsuit pending in this Court involves claims by Dolores Amatuzio and other former employees of Gandalf Systems Corporation (the Plaintiffs) that Gandalf Systems Corporation, Gandalf Technologies, Inc., and Infotron Systems Corporation (the defendants) wrongfully withheld severance and other benefits owed to the Plaintiffs. Other Plaintiffs claim that Defendants improperly failed to provide them with sixty days' notice of a mass layoff or plant closing, in violation of the Worker Adjustment Retraining and Notification Act ("WARN Act"), 29 U.S.C. §2101 et seq.
The purpose of this Notice is to advise you of the status of the lawsuit, including a statement of your rights with respect to a proposed settlement of the case.
By consent of the parties, the Court ruled that this case was to be maintained on behalf of three classes (and one subclass) described as follows:
Class One consists of former GSC employees who received notice of termination from GSC on or after February 22, 1994 and who were laid off in various groups on or after April 25, 1994; these individuals were not paid severance benefits consistent with the Infotron/Gandalf severance plan (one week's pay per year of service for hourly employees, two weeks' pay per year of service for salaried employees, and three weeks' pay per year of service for officers);
Class Two consists of former GSC employees who were laid off without any notice between February 22, 1994 and March 7, 1994 and who were not paid severance benefits consistent with the Infotron/Gandalf severance plan;
Class Three consists of former GSC employees who were laid off on or about January 14, 1994 who were not provided 60 days notice of their layoff.
Class One, Subclass A consists of GSC employees who were constructively discharged and who were not paid severance benefits they earned.
Plaintiffs' claims in the lawsuit can be summarized as follows:
A) Class One and Class Two Plaintiffs allege they are entitled to severance pay that was earned pursuant to a severance policy established by Infotron and continued by Gandalf to induce workers to continue working for the company after the merger. These persons claim they were instead paid severance pursuant to an amended plan that improperly took back severance pay that had already been earned.
B) Eight named Plaintiffs in Civil Action 96-CV-621 and twenty-six named Plaintiffs in Civil Action 95-CV-4808 allege that Defendants made representations to them which were false and which Plaintiffs reasonably relied upon to their detriment. These individuals claim to have lost severance benefits that they had earned and which had vested.
C) Class One and Class Two Plaintiffs seek to void the retroactive effect of Defendants' attempt to amend the severance plan, contending that the amendment was improper.
D) Class Two and Class Three Plaintiffs allege that Defendants violated the WARN Act, 29 U.S.C. §2101 et seq. by terminating them without providing the required 60 days notice. As to the Class Two Plaintiffs, the Court granted their Motion for Summary Judgment on this claim of improper notice.
E) Class One, Subclass A Plaintiffs claim they were constructively discharged or involuntarily terminated and were not paid the severance benefits they had earned for their past service. The Court dismissed the claims of this class, holding as a matter of law that these Plaintiffs were not constructively discharged. These Plaintiffs retain appellate rights, which Plaintiffs' counsel believe have some settlement value.
The Plaintiffs also brought claims against Chubb Insurance Company of Canada, Federal Insurance Company, St. Paul Fire & Marine Insurance Company, and American Home Assurance Company ("the Insurance Company Defendants"), seeking a declaration that one or more of these insurance carriers would be required to indemnify Defendants and pay the Plaintiffs in the event of a judgment against the Defendants.
The Court has not passed on the merits of Plaintiffs' or Defendants' contentions, except as has been set forth above. This Notice should not be construed as an expression of the views of the Court. The attorneys for the Plaintiffs have made a thorough review of the facts and they have conducted discovery, both as to liability and damages. The pleadings and discovery information reveal the existence of sharply contrasted interpretations of the facts and their legal consequences.
Significantly, Defendant Gandalf Technologies, Inc. filed for protection from its creditors in Canada and Defendant Gandalf Systems Corporation is reported to have no assets. Therefore, the Defendants' financial condition virtually assures that any recovery would be based upon the existence of one or more policies of insurance that would cover this type of claim against the Defendants. Whether any insurance exists is a question that can be decided against the Plaintiffs, leaving them without any funds to recover, even if Plaintiffs ultimately establish liability on the part of the Defendants.
Each Defendant and each Insurance Company Defendant denies any liability to the Plaintiffs. In addition, each Insurance Company Defendant denies any liability to indemnify the Defendants for Plaintiffs' claims. The proposed settlement with the Defendants and Insurance Company Defendants is a compromise of disputed claims and does not mean that the Defendants are liable for the severance benefits or WARN Act damages claimed by the Plaintiffs, nor does it mean that the Insurance Company Defendants are responsible for providing insurance coverage for the Defendants' acts as alleged in this lawsuit. The Defendants and the Insurance Company Defendants desire to effectuate the settlement in order to avoid the further substantial expense and burden of continued protracted litigation and to put to rest all further controversy.
Subject to court approval, the Plaintiffs and Defendants have agreed on a settlement under which the Insurance Company Defendants will collectively pay the total amount of Three Hundred Seventy-Five Thousand Dollars ($375,000.00) ("the Settlement Distribution Fund"). These payments will be in final settlement of all claims by Class members against the Defendants and/or the Insurance Company Defendants for severance benefits, 401(k) benefits, WARN Act damages, or other benefits alleged to be due and owing as a result of, or arising from, the layoffs, terminations of employment, or alleged constructive discharge of employees without cause from GSC during the time period from January 14, 1994 to August 31, 1994.
The Settlement Distribution Fund, totaling $375,000.00, will, after reduction for such fees and expenses of Class Counsel as may be allowed by the Court, be distributed to Class Members in a method to be determined by the Court. The Court has not fixed the amount of fees and expenses to be allowed or determined the precise method of allocating and distributing the net settlement fund to Class Members. However, Class Counsel has indicated that the total fees and expenses to be requested (including amounts in connection with distribution of the settlement fund) will not exceed $151,666.67, resulting in a net settlement fund of at least $223,333.33 to be distributed to the Class Members.
Class Counsel has further proposed a method for allocating the net settlement funds based on the total amounts claimed to be owed to each Class Member, with a weighting of the claims due to the anticipated strengths of the liability claims of the different Classes. Class Two Members' claims were weighted higher than the claims of Class One and Three because the WARN Act claims of these claimants were successful on summary judgment. Class One and Class Three Members' claims were weighted equally. Class One Subclass A claims were weighted lower because the Court granted the Defendants' Motion for Summary Judgment as to this Subclass. The weighting process allocated 100 basis points to Class Two claims, 80 points to Class One claims and Class Three claims, and 25 points to Class One, Subclass A claims. The pro rata allocation from this weighting system was applied to the total monetary claim of each Class, then reduced proportionately to the percentage of each claimant's claim to the overall anticipated recovery of the Class.
The allocation of the funds among the individual Classes and members of the Classes was not part of the settlement negotiations with the Defendants and the Insurance Company Defendants. However, the settlement process cannot be completed unless there is a basis for allocation of the net settlement fund in a fair and reasonable manner. Class Counsel believe that the proposed allocation of settlement proceeds is fair, reasonable, and equitable to all Class members. Class Counsel believe that allocation on a straight pro rata basis would not be appropriate because the strength of the claims at the time of the settlement was not equal among each of the Classes.
Class Counsel estimates that if the proposed settlement is approved by the Court, the net recovery by Class Members should be in the approximate range of 15.69% of the total claim submitted for each Class One Member; 19.6% of the total claim submitted for each Class Two Member; 15.69% of the total claim submitted for each Class Three Member; and 4.9% of the total claim submitted for each Class One, Subclass A Member.
The proposed settlement is recommended by Class Counsel and by the Class Representatives.
The proposed settlement contemplates the dismissal of all claims by all Class Members on the merits, with prejudice, and without costs, as against each and every Defendant and Insurance Company Defendant and the discharge of each and every Defendant and Insurance Company Defendant, their heirs, executors, administrators, successors, assigns, officers, directors, shareholders, managing agents, employees and agents, from any and all liability for each and every claim that was or could have been asserted in the Complaint and its amendments, resulting or arising from, or relating to, the layoffs, terminations of employment, or alleged constructive discharge of employees without cause at the Gandalf Systems Corporation or Gandalf Technologies, Inc. plants in the United States during the period from January 14, 1994 to August 31, 1994.
Pursuant to Fed. R. Civ. P. 23(b)(1), no Class Member will be able to opt out of the Class Action; however, the Settlement Agreement can be challenged at the Settlement Hearing. If, after the hearing, the Settlement Agreement is approved, the Settlement Agreement will be binding on all parties.
If the Settlement Agreement is approved without opposition, there will be no appellate rights. If the Settlement Agreement is contested by one or more Class Members, the appellate rights of the Classes will be preserved for thirty (30) days following the Court's final Order. The appeal rights can only be protected with the filing of a Notice of Appeal in the United States District Court for the District of New Jersey. If a party that objects to the Settlement does not file a Notice of Appeal within thirty (30) days of the Court's final Order, the appeal period will expire.
If the Court approves the Settlement, it will be administered by Joseph F. Bouvier, Esquire, a member of the law firm of Mattioni, LLP and Dante Mattioni, Esquire, a member of the law firm of Mattioni, LTD. This administration will be supervised by the Court. The cost of the administration will be included in the cost of litigation.
If the Court approves the Settlement as fair, adequate and proper, counsel for Plaintiffs will apply to the Court on their own behalf for reimbursement of litigation costs in the approximate amount of $40,000.00. To date, Plaintiffs' counsel has incurred $39,599.57 expenses out of pocket that have thus far not been reimbursed. Class Counsel anticipates expending an additional sum of approximately $400.00 in administering the Settlement, including mailing out notices and settlement checks. Class Counsel intends to apply for a counsel fee of one-third of the net proceeds (after deduction for litigation costs). The anticipated counsel fee being requested is $111,666.67. If Class Counsel had sought recovery of attorney's fees based upon hourly rates for work performed in this case, rather than on a contingency basis, Class Counsel would have requested counsel fees of approximately $452,395.00 for 2,572.2 hours of work performed.
Any reimbursement of costs and award of counsel fees must be approved by the Court.
The Court will hold a hearing in Courtroom 3C of the Mitchell H. Cohen United States Courthouse, One John F. Gerry Plaza, 5th and Cooper Streets, Camden, NJ 08103 at 2:00 P.M. on July 26, 1999, to determine whether, as recommended by Class Counsel and the Class Representatives, it should approve the proposed settlement.
Objections to the proposed settlement by Class Members will be considered by the Court, but only if such objections are filed in writing by mail postmarked before July 16, 1999. Such objections should be mailed or delivered to:
If the settlement is approved by the Court, procedures will be established to verify the amounts of the Class Members' claims, which have been calculated based upon payroll and other records of the Defendants. Class Counsel believes that, unless delayed by appeals or unforeseen events, this distribution may be made by August 31, 1999. You should preserve records relating to your earnings at Gandalf Systems Corporation, the amount of severance benefits paid to you, and the amount of notice provided to you before your layoff from employment with Gandalf Systems Corporation.
If the settlement is not approved, the case will continue to be prepared for trial or other judicial resolution of the claims and defenses.
The pleadings, the Settlement Agreement and General Release, and all other papers filed in the Action are available for inspection in the office of the Clerk of Court, Mitchell H. Cohen United States Courthouse, One John F. Gerry Plaza, 5th and Cooper Streets, Camden, NJ 08103 and may be examined during business hours of each day except Saturdays, Sundays and Federal Holidays. Materials obtained by Class Counsel during discovery in the Action are available for inspection in the office of Dante Mattioni, Esquire, Mattioni, LTD., 399 Market Street, Philadelphia, PA 19106 (215) 629-1600.
Any questions you may have about the matters in this Notice should not be directed to the Court, but may be directed by telephone or in writing to the following attorney:
Joseph F. Bouvier, Esquire
Class Counsel
Amatuzio v. Gandalf Litigation
Mattioni, LLP
216 Haddon Ave, Suite 100
Westmont, NJ 08108
Telephone: (609) 854-6200