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Court sides with laid-off car dealership employees

Thu., Feb. 3, 2011

A Seattle car dealer with a familiar Spokane name did not give employees enough warning of impending layoffs in 2007, according to the 9th U.S. Circuit Court of Appeals.

In a Jan. 21 ruling by two of three judges, the court said Gee West Seattle LLC was required to notify its 150 employees at least 60 days ahead of the pending closure of its dealership, which was for sale.

Gee purchased the former Huling Brothers dealerships in West Seattle in January 2007, two weeks before three employees were charged with stealing the life savings of a mentally ill client. The business did not recover from the scandal.

A Gee lawsuit claiming the pending arrests should have been disclosed prior to the sale was settled out of court.

Gee Automotive Chief Executive Officer Ryan Gee said the Spokane and Seattle businesses were owned separately, with his participation the only connection.

Gee West issued a memo Sept. 2, 2007, alerting employees to the closure, set for Oct. 7 unless a buyer could be found. The dealership closed Oct. 5 because all but 30 of the 150 workers had already left.

Because the Worker Adjustment and Retraining and Notification Act, or WARN, does not require a notice if fewer than 50 employees lose their jobs at the time of closing, Gee West argued a WARN notice was not required. The 120 employees no longer with the dealership had left voluntarily, the company said.

The U.S. District Court in Seattle agreed in a decision handed down in November 2009. The employees appealed.

The Circuit Court rejected the conclusion the employee defections were voluntary. Nor could Gee West claim that only 30 employees were affected by the dealership’s ultimate closure because WARN applies to anyone who “may reasonably be expected to experience an employment loss as a consequence of a plant closing.”

The law, the court said, was intended to give workers 60 days of income while they looked for other employment.

The third judge, Chief District Judge Richard Cebull, agreed with the majority’s ruling that the case be sent back to District Court for reconsideration, but said he rejected their definition of “voluntary.”

The majority’s ruling conflicts with U.S. Department of Labor commentary on the act, he said.

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