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May 15

Merck hit with suit over mass layoffs at a Defunct Med. Co.

May 15, 2014 – Brian Kabateck was quoted in a Law360 article published on May 15, 2014 about a suit he brought on behalf of a former employee of Aviir Inc. alleging that its parent company Merck & Co. Inc., two company board members and two venture capital firms broke the law by hiding mass layoffs. In the proposed class action former sales director Suzanne Adelsohn accuses New Leaf Ventures Partners LLC, Bay Capital LLC, Merck and the two board members of violating the state’s Worker Adjustment and Retraining Notification Act by waiting until just a day before the layoffs to notify employees.

According to the complaint, “promised benefits were abruptly cut off, even though payment for those benefits had already been deducted from employees’ pay. Earned commissions, bonuses and reimbursements for business expenses were not paid.” Information about Aviir’s financial health was also kept from senior managers. The company filed for bankruptcy in January. The suit alleges that a subsidiary of a company run by Aviir’s former CEO now sells the same products that Aviir used to market and the CEO has tried to recruit former Aviir employees to work at the company.

Kabateck told the publication that the case presented a “disturbing fact pattern.”

“These employees had no clue, even the people who were … in upper management,” he said. “Which in my mind doesn’t pass the smell test, because it sounds to me … that this was a part of a plan, a way to divest themselves of debts and obligations. And out of the ashes, arises basically the same entity with a different name.”