Schuman v. Connaught Group, Ltd. (In re Connaught Group, Ltd.)

491 B.R. 88
CourtUnited States Bankruptcy Court, S.D. New York
DecidedApril 17, 2013
DocketBankruptcy No. 12-10512 (SMB); Adversary No. 12-01051 (SMB)
StatusPublished
Cited by9 cases

This text of 491 B.R. 88 (Schuman v. Connaught Group, Ltd. (In re Connaught Group, Ltd.)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schuman v. Connaught Group, Ltd. (In re Connaught Group, Ltd.), 491 B.R. 88 (N.Y. 2013).

Opinion

MEMORANDUM DECISION GRANTING MOTION FOR CLASS CERTIFICATION

STUART M. BERNSTEIN, Bankruptcy Judge.

The plaintiff filed this adversary proceeding on behalf of herself and all other similarly situated persons asserting claims under the Federal and New York State Workers Adjustment and Retraining Notification Acts (collectively, the “WARN Act”). (See Complaint, dated Feb. 14, 2012 (ECF Doc. 1).)1 She has moved to certify the class. The Connaught Group Creditors’ Liquidating Trust (the “Trust”), the successor to the Debtors under their confirmed plan, opposes the motion. The Court grants the motion for the reasons that follow.

BACKGROUND

The debtor The Connaught Group, Ltd. (“Connaught”) was engaged in the business of designing and selling fashion apparel for women. (Complaint at ¶ 4.) Its headquarters were located at 423 West 55th Street in Manhattan, and it also operated facilities at 16 East 52nd Street in Manhattan and in Long Island City, New York. (Id. at ¶¶ 3^4.) The plaintiff worked at the East 52nd Street address. (Declaration of Martina Schuman in Support of Plaintiffs Motion for Class Certification and Related Relief, dated Dec. 6, 2012 [92]*92(“Schuman Declaration ”), at ¶ 4.)2

On January 30, 2012, Connaught terminated her employment along with the employment of 67 people at the East 52nd Street facility and approximately 27 employees at the Long Island City facility. (Id. at ¶¶ 5-7.) According to the plaintiff, she did not receive at least 60 days’ written notice of termination and, to the best of her belief, neither did any of the other former employees who were terminated on or about that date. (Id. at ¶ 6.) The plaintiff calculates that an award of 60 days’ pay would come to $6,720.00, not including benefits. (Id. at ¶ 12.)

A. The Bankruptcy

The Debtors filed their chapter 11 petitions in this Court on February 9, 2012, and the plaintiff commenced this class adversary proceeding five days later. The putative class includes Connaught’s former employees “who worked at or reported to one of Defendant’s Facilities and was terminated without cause on or about January 30, 2012, and within 30 days of that date, or was terminated without cause as the reasonably foreseeable consequence of the mass layoffs and/or plant closings ordered by Defendant on or about January 30, 2012.” (Complaint at ¶ 9.)

Following the commencement of the adversary proceeding, representatives of the plaintiff and the Debtors agreed to stay the adversary proceeding for 90 days to allow counsel to discuss the financial condition of the Debtors’ estates. Schuman v. Connaught Group, Ltd. (In re The Connaught Group, Ltd.), Adv. Proc. No. 12-01051, 2013 WL 413589, at *1 (Bankr.S.D.N.Y. Feb. 1, 2013). After the conclusion of the stay, the parties presented a stipulation that the Court “so ordered,” setting a deadline of October 12, 2012, for the plaintiff to file a motion to certify the class. Id. Separately, the parties agreed to extend the bar date for filing WARN Act claims until September 30, 2012,3 and the plaintiff filed a class proof of claim on September 28, 2012.

The Debtors confirmed a liquidating plan on October 10, 2012, two days before the deadline for the certification motion. (See Order Confirming the First Amended Joint Plan of Liquidation, dated Oct. 10, 2012 (“Confirmation Order”) (Main Case/ ECF Doc. 529).) The plaintiff failed to make the certification motion by the deadline, and the failure prompted the Trust to move to dismiss the adversary proceeding for disobeying the scheduling order. The Court refused to dismiss the Complaint, noting that the noncompliance with the scheduling order was solely the fault of the plaintiffs attorney and’the attorney should bear the brunt of any sanction. “The dismissal of the adversary proceeding or even the denial of the motion to certify the class would fall primarily on the plaintiff and the class and, for that reason, would be too drastic.” Connaught Group, 2013 WL 413589, at *3 (emphasis added). Instead, the Court directed the plaintiffs attorneys to pay the Trust’s reasonable expenses, including attorneys’ fees, incurred in making the motion. Id.

B. The Class Certification Motion

The plaintiff made the certification motion on December 6, 2012, approximately [93]*93seven weeks after the deadline. The Trust opposes her motion. It argues that the plaintiff is not an adequate class representative because she holds, at best, a priority claim, while other members of the class who were fired after the petition date may hold administrative claims. In addition, the Trust makes several bankruptcy-specific arguments against allowing the discharged employees to proceed with their claims as part of a class proof of claim. These include the fact that class certification will result in the extension of the bar date for those who did not file individual claims, certification will increase costs and delay the administration of the case and, more generally, that class actions are inconsistent with and detrimental to the claims resolution process and administration of the bankruptcy case. (Defendant’s Memorandum of Law in Opposition to Plaintiffs Motion for Class Certification, dated Feb. 25, 2013 (“Defendant’s Memo ”), at ¶¶ 1-5, 7 (ECF Doc. 32).)

DISCUSSION

Rule 23 of the Federal Rules of Civil Procedure, made applicable to this adversary proceeding by Rule 7023 of the Federal Rules of Bankruptcy Procedure, governs class actions. Rule 23(a) establishes four prerequisites that must be satisfied in order for a suit to proceed as a class action: “(1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class.” Fed.R.CivP. 23(A).

In addition, the plaintiff must satisfy one of the subparagraphs in Rule 23(b). Here, she relies on Rule 23(b)(3), which states that a class action may be maintained if:

the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: (A) the class members’ interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action.

Fed.R.Civ.P.

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Cite This Page — Counsel Stack

Bluebook (online)
491 B.R. 88, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schuman-v-connaught-group-ltd-in-re-connaught-group-ltd-nysb-2013.