Class Action and Lawsuits and Employment Law and Retail and Law and Real Estate & Retail

Worker suit blasts Dick's for 'chronic understaffing'

October 16, 2010

Indianapolis is the latest battleground in a nationwide legal assault on how Dick’s Sporting Goods Inc. treats and compensates its hourly workers.

A case filed in Marion Superior Court in September and moved to federal court this month alleges the giant sporting goods firm and its top brass broke Indiana law by requiring employees to work when they were on break and at other times they weren’t on the clock.

“One of defendants’ largest expenses is the payroll of its hourly paid employees. In order to reduce this expense and maximize profitability, defendants have maintained a company-wide policy of not paying hourly employees for all time worked, and encouraged off-the-clock work to be performed,” according to the suit, which seeks class-action status on behalf of current and former employees.

The suit charges that “chronic understaffing” often makes it impossible for employees to take scheduled meal breaks without leaving their departments unstaffed. Taking the breaks anyway draws reprimands from managers, according to the complaint.

“This off-the-clock work includes time worked after the store location was closed for business, and the employees were ‘locked in’ and being forced to work uncompensated until management allowed them to leave,” the suit alleges.

Dick’s, a 425-store chain based near Pittsburgh that has dominated the sporting-goods business in Indiana since buying Plainfield-based Galyan’s in 2004, declined to comment.

The named plaintiffs are Michael Chatterton, a Hendricks County resident who worked at the Dick’s in Plainfield, and Nicole Jones, a Marion County resident who worked at the Dick’s on West 86th Street. Neither could be reached for comment, and their law firm, Rochester, N.Y.-based Thomas & Solomon LLP, declined to comment.

Thomas & Solomon has filed more than a dozen similar cases around the country in recent months. The case names CEO Ed Stack and other top executives as defendants, saying they put middle managers in the untenable position of not being able to meet budgets unless they got uncompensated work from employees.

Vera Bradley founders cash in

Patricia Miller, Indiana’s former secretary of commerce, plans to cash in 2.8 million Vera Bradley Inc. shares in the company’s initial public offering, likely generating a windfall of at least $39 million.

The Fort Wayne-based handbag maker, which this summer disclosed plans for an IPO, has provided new details on the offering in recent filings with the Securities and Exchange Commission.

The latest filing says the company expects to sell 11 million shares—7 million currently held by insiders and another 4 million new shares. The estimated offering price is $14 to $16 apiece.

The biggest sellers are Patricia Miller and Barbara Bradley Baekgaard, two friends who founded the company in 1982. Baekgaard plans to sell 2.2 million shares, likely generating at least $30.8 million.

Both founders would remain giant shareholders. Together with her husband, P. Michael Miller, Patricia Miller would own more than 10 million shares representing a quarter of the company. Baekgaard would own 11 million shares representing nearly 30 percent of the company.

The pair no longer lead the business but remain on the board. In addition, Miller, 72, serves as its national spokeswoman, and Baekgaard, 71, serves as chief creative officer.

Kruse takes on Goldman Sachs

Dean Kruse saw his famed auto auction business in Auburn crumble this year, leading to its July sale to RM Auctions of Ontario. Making matters worse, a recently filed lawsuit says, the investment firm Goldman Sachs has mismanaged millions of dollars he was counting on for retirement.

The suit, filed last month by Indianapolis attorney John Price in federal court in Fort Wayne, says Kruse and his wife, Kristin McGrade Kruse, invested $2.6 million in a Goldman Sachs technology fund in 2000.

They did so, according to the suit, after they “were assured that the future investment prospects for the fund were excellent and that [they] could anticipate a decent return.” The couple planned to withdraw the money in March 2010, when Dean Kruse would be nearly 69 and planned to retire. Goldman Sachs projected that by then the value of the fund would swell to more than $10 million, according to the complaint.

Instead, the lawsuit says, the value of the Kruse account shriveled to $758,000, a 71-percent decline. Court papers allege Goldman Sachs invested in an unwise and fiscally imprudent manner.

“You would think that if you knew someone was retiring in 10 years, you would be somewhat conservative,” Price said. He is asking that the case be certified as a class action on behalf of all investors in the fund.

A Goldman Sachs spokeswoman said: “We believe the allegations are both factually and legally untenable and we will defend ourselves vigorously.”•

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