A class-action lawsuit against Arrow Trucking was expected to be filed in federal court Monday. A principal charge: The Tulsa, Okla., flatbed carrier broke federal law by not giving its employees 60 days' notice about its precarious financial state.
Instead, Arrow last week stranded hundreds of its drivers around the country. Many of them found out their employer was shutting down when their company-issued fuel cards wouldn't work. On Tuesday, the company abruptly told its headquarters staff to pack up and go home.
"It was just outrageous conduct, I think, to do it on the eve of Christmas," said Chuck Ercole, an attorney with Klehr Harrison Harvey Branzburg LLP in Philadelphia. "People's paychecks on the 15th bounced."
Mr. Ercole, who said he's been contacted by some 100 Arrow employees, planned to file suit Dec. 28 in federal district court in Tulsa, Okla. The suit claims the company violated the federal Worker Adjustment and Retraining Notification Act (WARN), which mandates that employees with at least 100 employees give them 60 days' notice before a plant closing or mass layoff.
The suit will also address other violations of state and local laws that Arrow employees have alleged, including bounced paychecks, unpaid medical premium payments, and nonreimbursement of out-of-pocket expenses, Ercole said.
With the company in apparent limbo – and company executives unreachable – Arrow's next step was unclear. If it files for bankruptcy, that might make for a more orderly disposition of assets, the attorney said, although employees' claims would come behind banks that loaned money to Arrow as well as Daimler Trucks and Navistar, which leased trucks to the company.
The two companies swung into action to help the stranded drivers after reports of Arrow's shutdown last week. Daimler booked at least 75 Greyhound tickets to get drivers home and gave $200 in compensation for personal travel to another 150 drivers or more. As of Monday, Daimler had recovered 590 of the nearly 1,000 Freightliner trucks it had leased to Arrow.
A key question in the lawsuit is whether Arrow executives knew their company was in trouble or whether a lender pulled out unexpectedly. Apparently, the company's operations broke down after the weekend of Dec. 19, when its drivers could no longer use their company credit cards to buy fuel.
Transportation Alliance Bank, an Ogden, Utah, issuer of credit cards to truck owner-operators and trucking companies, would not confirm that it was the issuer of those cards. But in an ad earlier this year, it prominently featured a quote by Arrow's chief financial officer calling the bank "a strategic partner."
In court, Arrow will claim that a creditor pulled out suddenly, Ercole predicts. But "my experience has been in these cases that we're going to find evidence months earlier that things were precarious."