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Ex-HHGregg manager's lawsuit grows into class-action

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A lawsuit brought by a former HHGregg Inc. manager charging that the company failed to pay incentive bonuses has been granted class-action status by a Marion Superior Court judge.

Former accounting manager Dwain Underwood filed his complaint in March 2013, claiming that the Indianapolis-based appliance, electronics and furniture retailer failed to factor a $40 million payout into the calculation used to determine whether employees were entitled to incentive bonuses.

The company collected the payout after Executive Chairman Jerry Throgmartin died in 2012.

Underwood claims HHGregg should have paid him a $25,000 bonus based on the company’s fiscal 2012 earnings before interest, taxes, depreciation and amortization, or EBITDA, of $144.4 million.

Underwood claims HHGregg wrongly based bonuses on “adjusted EBITDA,” which excluded the life insurance payout. The payout sent HHGregg's profit soaring in the fiscal fourth quarter of 2012.

The complaint involves 62 current and former HHGregg employees, according to Judge Robert R. Altice Jr.’s July 9 ruling awarding Underwood’s suit class-action status.

Underwood’s attorney, Eric Pavlack, said the amount of unpaid bonuses totals about $5 million.

“We’re very pleased with the decision,” he said. “We weren’t surprised because we think it’s the right decision. We were hopeful that this is what would happen.”

A spokeswoman for HHGregg said the company doesn’t comment on pending litigation.

In rendering his decision, the judge disagreed with HHGregg’s argument that class-action status should not be granted because some members don’t want to belong to the suit.

“If such class members do not wish to participate in this case,” Altice wrote, “they will have the opportunity to opt out after receiving notice.”

Underwood voluntarily left the company in January 2013, two months before he filed suit.

He is suing the company for breach of contract and unjust enrichment.

 

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  • another Form of Bad Behavior
    I received poor to zero customer service from HHGregg after purchasing 3 appliances at once.It appears that HHGregg treats customers and staff the same-badly.
  • Agree with Rob
    I agree with Rob, If the company was using EBITA money to pay the insurance premiums, then the employee's are entitled to the benefits of the insurance payout. If the company didn't want the potential insurance payouts to be a factor in bonus payouts to employees, management should have paid the premiums with funds that the employees didn't have to shoulder.
  • All Numbers
    HHG paid the premium for this policy and deducted these payments from previous EBITA earnings that affected bonuses. HHG can't have their cake and eat it too. They want to pay the premiums with EBITA dollars but not include the payout of the policy. No different than any other investment. Many factors of the bonus program were out of employee control, vague, and arbitrary.
  • Dwain is in Maine
    Meant to say Dwain is in Maine
  • Twain in Maine
    It appears that Twain is in Maine. Probably looking to get money for his bed and breakfast business. http://theblackboarinn.weebly.com/ I agree that HHGregg employees SHOULD NOT get bonuses simply because the founder of the company DIED. Has absolutely NOTHING in regards to employees making the company profitable.
    • Greed
      This lawsuit will all depend on the language in the Company's Bonus Plan and what is included in the base of earnings on which bonuses are based. But think about this a minute. That $40 million had nothing to do with any employee's performance. It had only to do with someone's death. Why should any employee's bonus be impacted by that even if the Company improved it's "earnings" by these funds. No employee contributed to those earnings. This additional money was not based on more sales or more profitable sales. So the fact the employees are suing is just ludicrous to me and greedy. They did nothing to earn it. Now they may get their money because Gregg did not word it's bonus plan carefully enough. But it says alot about society today to say - "hey you made more money because you cashed in a life insurance policy on the death of the founder so I want my share of that"

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