Company News

In Weeks Before Falcon Closed, Paychecks Late

YOUNGSTOWN, Ohio — A busy signal, 24/7, is what a reporter hears when she calls the Los Angeles offices of CounterPoint Capital Partners LLC, which acquired Falcon Transport Co. in September 2017, reportedly for $27 million, and suddenly shut it down Saturday.

The private equity firm’s website is scrubbed with only a logo remaining. Falcon’s corporate offices on Belmont Avenue in Liberty Township are empty, the phones there apparently disconnected. And at the truck terminal on Victoria Road in Austintown, the picture says it all – rows of parked trucks including one from a leasing company that has part of its rear door ripped off.

Ripped off: That’s the essence of a class action lawsuit filed Monday in U.S. District Court in Youngstown.

The litigation names Mary Chavez, an office clerk and dispatcher who lives in Girard, as the plaintiff and Falcon Transport Co. of Youngstown as the defendant. It’s based on the fact that Falcon used its employee message system April 27 to terminate, effective immediately, some 200 employees here – and another 400 at seven sites across the country — in violation of the federal WARN Act that requires companies with more than 100 employees to give 60 days advance written notice of closings.

“The defendant failed to pay the plaintiff and each of the class members their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 working days following their respective terminations,” the pleadings state, “and failed to make the pension and 401(k) contributions, provide other employee benefits under ERISA, and pay their medical expenses for 60 calendar days from and after the dates of their respective terminations.”

The summons was sent to Falcon’s vacated corporate office where workers cleaned out their desks Monday.

While sudden, the terminations were not totally unexpected.

According to the trade journal Freight Waves, “In the weeks leading up to Falcon’s abrupt closure, drivers reported fuel cards weren’t working at various times, repair work wasn’t being done on their trucks and their paychecks weren’t being deposited on time. Drivers also said their E-Z Passes, or electronic tolling devices, weren’t working at different times.”

In an article posted Monday, the trade journal reports that CounterPoint paid $27 million for Falcon “with an additional $33 million in debt-financing.” When the transaction was announced, terms were not disclosed.

Freight Waves also quotes former Falcon employees as saying the company had stopped approving truck repairs as part of its contract with Ryder System Inc. And while the closing of the General Motors Lordstown Complex in March was seen as a huge blow to Falcon, workers reportedly were told not to worry, and began carrying loads for companies such as Home Depot.

The class action lawsuit, assigned to Judge Benita Y. Pearson, was filed by attorney Kenneth R. Cookson from the Columbus law firm of Kegler Brown Hill & Ritter. As of this posting, Cookson had not returned calls requesting elaboration.

Named “of counsel” are the New York law firm of Lankenau & Miller LLP and The Gardner Firm of Mobile, Ala., which is identified as associated with the Maurice and Jane Sugar Law Center for Economic and Social Justice based in Detroit.

The website for the Sugar Law Center, founded in 1991, states it is the “first nonprofit law center to represent and advocate for workers rights under the WARN Act.” And it points out that the organization’s former director of community partnerships and development is Rashida Tlaid, the freshman representative from Michigan’s 13th congressional district.

The Lankenau firm posts a list of more than 70 “recent WARN Act recoveries” from corporations that collectively amount to nearly $100 million. Another 40 cases are pending.

As for CounterPoint Capital Partners, very little information is available online about the company. A brief profile prepared by Bloomberg states the private equity fund “seeks to invest in privately held and family owned companies” and specializes “in turnaround, mature and lower middle market investments.”

The fund’s acquisition of Falcon ended the ownership of the company by the Constantini family.

The Falcon Transport website still posts “immediate job openings” on its home page. Describing the company as “the industry leader,” the narrative notes how the company was “handed down thru [sic] four generations of family ownership while keeping watch on our core values as our top priority.”

Late Tuesday U.S. Rep. Tim Ryan demanded that the secretary of labor, Alexander Acosta, keep watch that workers “know their rights and have access to new job and training opportunities.”

The congressman notified Acosta that Falcon may have violated the Warn Act which, he acknowledged, does not fall under the purview of the U.S. Labor Department to enforce.

In releasing the letter to reporters, the congressman, a candidate for the Democratic Party’s presidential nomination, added a statement that called Falcon’s mass layoffs communicated to workers via “a text message…disrespectful and an insult to their hard work. I’m urging Secretary Acosta to stand by American workers and ensure they are treated with dignity and respect. President Trump always talks about supporting workers; here’s a chance for this administration to show it.”

Published by The Business Journal, Youngstown, Ohio.