Ex-Gibraltar Workers Settle Lawsuit Over Layoffs : Courts: 250 ex-employees will receive $700,000 out of the $3.1-million payout in their action against Security Pacific.

Former employees of Gibraltar Savings have settled their 3-year-old class action lawsuit against Security Pacific National Bank, which acquired most of the assets of the insolvent Simi Valley thrift in June, 1990, and subsequently laid off the 250 Gibraltar workers without notice.

The gross amount of the settlement is $3.1 million. But of that amount, the former Gibraltar workers will receive about $700,000, because severance payments and certain other wages already received by the laid-off workers will be subtracted from the gross amount. The plaintiffs’ attorneys will receive an additional $500,000, plus other expenses.

The agreement was approved by U. S. District Judge James M. Ideman on Sept. 21 in Los Angeles. The settlement was reached with Bank of America, which acquired Security Pacific National Bank and its parent, Security Pacific Corp., in early 1992.

The settlement brings an end to an unusual and complicated legal battle that involved vastly disparate interpretations of the federal Worker Adjustment Retraining and Notification Act. In their suit, which was filed in federal court in Los Angeles in August, 1990, the former Gibraltar employees alleged that the WARN Act entitled them to 60 days of notice or pay before losing their jobs.

The WARN Act requires employers of 100 or more workers to notify employees in writing 60 days before mass layoffs, or compensate them for 60 days of work.

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 the 250 Gibraltar employees who were laid off within 90 days after the Security Pacific takeover.

Security Pacific had argued that it was not liable for damages under the WARN Act. It said responsibility should fall to the Resolution Trust Corp., the federal agency that seized the troubled savings and loan, Gibraltar, in March, 1989, and which later sold most of the thrift’s assets to Security Pacific.

“We struck what we think is a fair and equitable settlement,” said Bank of America spokesman Peter Magnani. But he added that Bank of America would continue to negotiate with the RTC to try to recover the full amount of the settlement.

The complaint originally named the RTC as a co-defendant, but Ideman dismissed the agency from the suit. He ruled that the WARN Act did not apply to the RTC when it is liquidating failed financial institutions, and also ruled that the agency was not the employer at the time of the Gibraltar layoffs.

In September, 1992, Ideman ruled that Security Pacific should have given the former employees notice as required by the WARN Act. He asked the two sides to try to reach an agreement on compensation for the former Gibraltar workers.

Howard Z. Rosen, the attorney representing the former Gibraltar employees, called the agreement a “fair settlement.” He said the case involved “a lot of unusual and very interesting issues” because the WARN Act has been subject to very little litigation, and therefore there are few court decisions to act as guidelines.

The suit was also complicated, Rosen said, because some of the severance pay received by laid-off Gibraltar employees actually came from the RTC, while other former employees accepted short-term contracts to work for Security Pacific after being laid off.

Gibraltar was once the nation’s 10th largest thrift. But investments in high-risk securities, resorts and even “horse condos” led to $750 million in losses in its last three years of operations and its eventual seizure by the RTC. Terms of the sale to Security Pacific were not disclosed, but industry sources at the time estimated the price at about $140 million.

Magnani said checks were due to be sent out soon to the laid-off Gibraltar workers.

Court documents listed only the individual amounts to be paid to the four former Gibraltar employees who filed the suit. Marlene Elliott, former Gibraltar payroll manager, will receive $12,740. Susan Hearon, who was a programmer analyst, gets $8,445.

Charmaine Iler, a former payroll supervisor at the thrift, will be paid $10,708. Former payroll clerk Christine Khodagholizadehi will get $6,385.

The rest of the former employees will receive varying amounts depending on their salaries at Gibraltar and whether they received any severance pay or other compensation after being laid off.

Ivan Keithley, who was a systems analyst at Gibraltar when Security Pacific took over, said he and other former co-workers lost their jobs at a time of economic recession and the height of the savings and loan crisis. Although within a few months Keithley found a similar post at Health Net, a health maintenance organization in Woodland Hills, he said “a significant number of people they threw out waited a long time before they found another job. I think this made it all the more bitter.”

Now, he said, “it’s wonderful to have it concluded.”