Employees Win Court Decision : Banking: In a class-action suit, Security Pacific was told it should have given ex-Gibraltar workers 60 days notice or 60 days pay and benefits.
Former employees of now-defunct Gibraltar Savings have won a major victory in their legal battle with Security Pacific National Bank, which acquired Gibraltar two years ago after the Simi Valley thrift was seized by federal regulators.
U.S. Dist. Judge James M. Ideman found late last month that Security Pacific should have given the former Gibraltar employees 60 days written notice or 60 days of pay and benefits before laying them off. The judge was ruling on a class-action lawsuit filed in federal court in Los Angeles in August, 1990, against Security Pacific and the Resolution Trust Corp.--the federal agency that placed Gibraltar in receivership in March, 1989.
The plaintiffs’ attorney, Howard Z. Rosen, said that total damages could reach $1.2 million. That figure would include 60 days salary and certain benefits for an estimated 250 to 300 former Gibraltar employees who might be included in the class. Security Pacific National Bank and its parent, Security Pacific Corp., were acquired earlier this year by BankAmerica Corp.
Peter Magnani, a BankAmerica spokesman, said that representatives from the bank would now meet with the plaintiffs’ attorney to resolve “who pays what to whom . . . That’s what the judge ordered us to do, to sit down and work it out,” said Magnani. He declined to discuss any proposals BankAmerica might make for a possible settlement.
The former Gibraltar employees argued in their lawsuit that Security Pacific and the RTC should have given them 60 days of notice or pay before they lost their jobs, as required under the federal Workers’ Adjustment and Retraining Act. The WARN Act states that employers of 100 or more workers must either notify employees in writing 60 days before mass layoffs, or provide them with 60 days of pay and benefits after termination.
The suit originally named both the bank and the federal agency as defendants, Rosen said, because it wasn’t clear which of the two was technically the owner of Gibraltar at the time of the layoffs.
In April of last year the court dismissed the action against the RTC on the grounds that the WARN Act does not apply to the agency when it is liquidating failed financial institutions, and in any case the RTC was not the employer at the time of the Gibraltar layoffs.
However, the court denied a motion for dismissal filed by Security Pacific National Bank. The bank could also be liable for attorneys’ fees, Rosen said.
The four plaintiffs named in the original suit were 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.
About 800 people were once employed at Gibraltar’s Simi Valley headquarters, out of 1,500 workers statewide. The lawsuit was filed on behalf of those Gibraltar employees who were laid off within 90 days after the Security Pacific takeover.
Gibraltar was once the nation’s 10th-largest thrift. But troubled investments in high-risk securities, resorts and even “horse condos” led to an accumulated $750 million in losses in its last three years of operations and its eventual seizure by the RTC. Terms of the June, 1990, sale to Security Pacific were not disclosed, but industry sources at the time estimated the price to be about $140 million.
