Four former employees of Gibraltar Savings in Simi Valley have filed a lawsuit against Gibraltar, Security Pacific National Bank and the Resolution Trust Corp., alleging that Gibraltar workers should have received 60 days' written notice before they lost their jobs when Security Pacific agreed to acquire Gibraltar.
The suit, which was filed Friday in federal court in Los Angeles and seeks class-action status, says that at least 50 former Gibraltar employees were not given the 60 days' written notice required by the Worker Adjustment Retraining and Notification Act. The federal law requires employers of 100 or more workers to either notify employees in writing 60 days before mass layoffs or provide them with 60 days of pay and benefits after termination.
The workers lost their jobs after Los Angeles-based Security Pacific agreed on June 27 to acquire Gibraltar from the RTC, the federal agency that seized Gibraltar in March, 1989.
Howard Z. Rosen, the plaintiffs' attorney, said both Security Pacific and the RTC were named in the suit because it isn't clear if Security Pacific was technically the owner of Gibraltar at the time of the layoffs, even though the acquisition had already been announced.
Security Pacific spokeswoman Deborah Lewis said Security Pacific isn't liable for damages because "the RTC is responsible for any liability in regard to the WARN Act." Security Pacific also maintains it did not lay off the Gibraltar workers because they were never employed by Security Pacific. Rather, the bank said, it did not offer temporary employment contracts to 180 of the 800 Gibraltar employees based in Simi Valley after the acquisition was announced.
The RTC maintains that the law does not apply when the federal government takes over insolvent thrifts. "It's the RTC's opinion that the WARN Act does not apply in these cases," RTC spokesman Kevin Shields said.
The suit seeks 60 days of regular pay and benefits for each former employee, a civil penalty of $500 per day, legal costs and other unspecified damages.
The four plaintiffs named in the suit are Susan Hearon, a former Gibraltar programmer analyst; Marlene Elliott, former payroll manager; Charmaine Iler, a former payroll supervisor; and Christina Khodagholizadeh, a former payroll clerk.
Gibraltar, once the nation's 10th-largest thrift, is one of the biggest institutions sold by the government since passage last year of legislation to clean up the troubled savings and loan industry. The thrift lost $750 million in the last three years because of investments in high-risk securities, resorts and even "horse condos."
Terms of the sale of Gibraltar to Security Pacific have not been disclosed, but industry sources estimated the price to be about $140 million. Though the government has declined to comment, private sources have also estimated that Gibraltar's failure and rescue could cost taxpayers as much as $400 million.