CEDU Closing: McCown deLeeuw Sued

Class action suit against McCown, De Leeuw & Co. (MDC), claiming a violation of the  federal Worker Adjustment and Retraining Notification Act.

The federal statute requires employers of at least 100 full-time workers to give 60 days' written notice before a mass layoff or company closure.

Idaho Commerce and Labor spokesman Bob Fick said last week that the Brown Schools' abrupt closure violated the WARN Act.

Brown Schools employees file a class-action lawsuit
Posted: Thursday, Apr 14, 2005 - 08:37:20 am PDT
By ELIZABETH CIEPIELA
Hagadone News Network

BONNERS FERRY -- Four former Brown Schools employees filed a class-action lawsuit Tuesday, claiming McCown, De Leeuw & Co. (MDC) violated the federal Worker Adjustment and Retraining Notification Act.  The federal statute requires employers of at least 100 full-time workers to give 60 days' written notice before a mass layoff or company closure.

Lawsuit papers estimate at least 700 employees across five states at Brown Schools-operated educational facilities abruptly lost their jobs. Idaho Commerce and Labor spokesman Bob Fick said last week that the Brown Schools' abrupt closure violated the WARN Act.

The four former employees -- Douglas Marshall, Mason Jones, Curtis Hewston and Doreen Denigris -- are suing for back wages and benefits for the 60-day period. They could not be reached for comment Wednesday evening. Bankruptcy trustee George Miller also could not be reached for comment.

The lawsuit was filed in federal court in Coeur d'Alene.

The Brown Schools board of directors announced on March 25 that the schools were closing immediately and that the company was filing a Chapter 7 bankruptcy, claiming an estimated debt of $10 million to $50 million.

That same night, as former staff and students were packing up to leave, the bankruptcy papers were signed and filed by 9 p.m. in Delaware.

Curtis Hewston, a former counselor at Northwest Academy in Bonners Ferry, handed out questionnaires Wednesday to former CEDU employees at the Bonners Ferry High School auditorium who may be interested in taking part in the lawsuit. Approximately 66 former Brown School employees had filed into the auditorium Wednesday afternoon to attend a displaced workers assistance talk given by Idaho Labor and Commerce.

According to Hewston, about 100 former CEDU employees met Monday afternoon with Portland-based attorneys Robert S. Banks and Lynn Walsh in a conference room at the Best Western Edgewater Resort restaurant in Sandpoint.

MDC, named in the lawsuit as "a substantial owner of the Brown Schools Enterprise," failed to warn employees under WARN Act specifications, the class-action complaint alleges.

"In authorizing and directing the filing of the bankruptcies of the Brown Schools Enterprise, defendant, through its employee and appointed straw president Talbott, controlled and effected the mass layoffs in violation of the WARN Act," litigation papers allege.

"Defendant was and is a substantial secured creditor of the Brown Schools Enterprise and used its position to gain control over the management and actions of the Brown Schools Enterprise, including the ultimate decision to effect the mass layoffs and file the bankruptcies without 60 days' notice to the plaintiffs or members of the plaintiff class."

The complaint also states that defendant MDC owned and controlled the Brown Schools Enterprise in one or more of the following ways:

• MDC co-founded George McCown was a member of the Brown Schools' board of directors at the time of Chapter 7 filing.

• Fenton "Pete" Talbott, the president and chief executive officer of The Brown Schools, was once an employee of MDC and "placed in the role of chairman by defendant before the bankruptcy filing of the Brown Schools Enterprise." He was CEO of Brown Schools on March 17, just eight days before the closure.

This is a relationship-based program, and they closed this like it was a factory," a counselor at one of the schools told the Spokesman-Review newspaper in Spokane, Wash.

Brown Schools operate 11 boarding schools and educational facilities in Idaho, Texas, Vermont, Florida and California, according to its Web site. Facilities in Austin and San Marcos were sold to Psychiatric Solutions Inc. in 2003.

CEDU Posts

• Former CEDU Schools Reborn January 5 2007
• Update on CEDU Schools October 28 2005
• CEDU Properties Sold August 18 2005
• The Business of Troubled Teens August 18 2005
•  CEDU Closing: Buildings and Contents to be Sold May 8 2005
• CEDU Closing: On Edison Schools April 30 2005
• CEDU Closing: Pete Talbott's Resume April 27 2005
• CEDU Closing: McCown DeLeeuw Sued ByEmployees April 14 2005
• CEDU Closing: George Locker's Criticism of the CEDU Enterprise April 14 2005
• CEDU Closing: 1990 Snapshot of McCown DeLeeuw April 12 2005
• CEDU Closing: A Timeline of the CEDU Enterprise April 2005
• CEDU Closing: Letter from a Former Faculty Member April 2005
• CEDU Closing: Parents of CEDU Students Helping Economically Distressed Faculty April 7 2001
• CEDU Closing: Economic Impact on CEDU Employees Devastating April 7 2005
• CEDU Closing: 310 Employees Stiffed on Wages April  6 2005
• CEDU Closing: Who is To Blame? April 6 2005
• CEDU Closing: Running Springs Area Also Suffers Financial Impact April 6 2005
• CEDU Closing: An Alumnus Pleads, "Save CEDU!" April 4 2005
• CEDU Closing:  A Parent's Response to CEDU's Closing April 3 2005
• CEDU Closing: Bankruptcy Trustee Slams Door Shut, Then Open April 3 2005
• CEDU Closing: Parents Out Prepaid Tuition, Employees Lose Retirement. McCown Deleeuw Still Solvent April 3 2005
• CEDU Closing: King George Stays Open as Head Thinks on Feet April 3 2005
• CEDU Closing Shocks Industry Reporter April 3 2005
• CEDU Closing: Parent Company, Brown, Negotiating in Bad Faith?  April 1 2005
• CEDU Closing: More Details March 29 2005
• CEDU Closing: Brown Schools, CEDU's Parent, Files for Bankruptcy March 29 2005
• CEDU Closing: Margurite Sallee, The Brown Schools, and McCown DeLeeuw March 27 2005
• CEDU Closing: All CEDU Schools Closing Immediately March 25 2005
• CEDU Closing: Rocky Mountain Academy Folds Abruptly February 12 2005

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• NonPublic Schools: Part I--Overview
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