The Minnesota Department of Labor and Industry is suing three related trucking companies for $524,000 for allegedly committing wage theft against 95 employees by fraud. [Download PDF of the filing]. Teamsters Local 120, which represents the workers, released a statement noting that the suit comes “just over two months after Lakeville Motor Express closed . . . with no notice three days before Thanksgiving.”

The suit, filed Dec. 28 and made public this week, names Lakeville Motor Express, LME and Finish Line Express, charging that “Lakeville siphoned funds and dissipated assets to LME and Finish Line…with actual fraudulent intent” to avoid paying employees’ wages.

Greg Davitt had already put in a full, five-day week at Roseville terminal when his crew was asked to come in on Friday, Nov. 18.  They cleaned up the dock and got all the freight loaded during 10 hours of overtime work, finishing the next morning. Sometime after the last worker left, a manager locked the gate and posted a sign that read, “Lakeville Motor Express, effective Nov. 19, 2016, has permanently ceased all operations.”

Word of the shutdown spread as workers showed up for shifts, discovered the notice and called fellow employees and the union.

Davitt, a nine-and-a-half-year Lakeville employee, said he learned of the shutdown from his union steward on Sunday. “No warning. Goodbye. Too bad.”  

“No one from Lakeville ever called or wrote me to say that my job was over - after 30 years with the company,” said driver John Stachowski.

Their health insurance also expired that Friday at midnight but no one informed them. A medical emergency could have been dangerous and costly, noted driver Jim Crisham. Workers and their families went a weekend without medical coverage and didn’t know it.

Three days later, the union got a letter from Lakeville owner Kevin Deming stating that the workers would not be paid for their last two weeks of work because the company was out of funds. That meant a loss of $2,000 to $3,000 for each employee.

By Dec. 29, without any benefits and unpaid for 93 hours he was counting on, Davitt related, “I’m struggling, I’m getting minimum available funding from the state for unemployment. I’ve been late on all my necessary bills. I’ve been getting phone calls. And it’s just a source of a lot of tension. It’s been hard on my kids the most.”

The abrupt loss of medical insurance continued to create stress for workers.
 
“I’m diabetic, so my meds have skyrocketed,” said Davitt, who still felt lucky that he was able to get on his wife’s insurance plan. Other Lakeville workers’ families have been left with no coverage at all. They include people with chronic medical conditions and some undergoing expensive cancer treatment.

“And the timing of the shutdown is really suspicious,” said Davitt. “They closed it down three days before the holiday break so they wouldn’t have to pay the Thanksgiving benefit. I lost four days of vacation, and on Dec. 17 I was supposed to get three fresh weeks.”

Evidence documented in the suit indicates the closure was planned well in advance. The gates closed soon after Lakeville had reduced the workforce to just under 100, a tactic that allowed them to avoid a 60-day closure notice to employees and the state. Such closure notifications are required by the federal Worker Adjustment and Retraining Notification (WARN) Act for companies over a 100-employee threshold.

In addition, Teamsters Local 120 Secretary Treasurer Bill Wedebrand noted that over the last year, office staff and other workers had been transferred from the Lakeville terminal to corporate headquarters. Drivers who quit or retired were not replaced. Yet the company assured workers as late as a week before closing its doors that it was doing fine.

Wedebrand began to suspect that something was not right at the company three years ago during a meeting with the vice president of what had always been named Lakeville Motor Express. The VP told Wedebrand that he was not with Lakeville, but with LME, and claimed not to know what the initials stood for.

But the 95-year old company, Lakeville Motor Express, had registered and used the logo, “LME” for years. It was emblazoned on the very trucks the Lakeville workers drove.

“At that point, things began getting fishy,” observed Wedebrand. 

Current management claims LME is a completely separate company, “Logistics Made Easy,” headquartered near the Lakeville Motor Express terminal. But the state and the union cite many indications – the same management, trucks, equipment, dispatcher and billing notices – that point to it being the same company operating under a new name with a new terminal in Maple Grove called Finish Line Express.

LME has facilities in locations across Minnesota and in five other Midwestern states. The Maple Grove site was incorporated in May 2016 and opened in August. In the months following, LME company executives transferred Lakeville equipment and customers to Finish Line Express – another indication of plans to close Lakeville.

“We noticed our freight disappearing, probably a good year ago,” recalled 13-year Lakeville worker Mike Rettman.  “Next thing you know, they’re taking our forklifts away, saying they’re going to put them in the auction, but they’re over here [at Finish Line Express].”

The workers believe that the new LME and FLE were created as part of a covert plan to get rid of the union at the Lakeville hub, the only organized facility in the LME system. 

When reporters from four publications attempted to question former Lakeville Vice President of Operations and current Finish Line co-owner Mike Sanford at an LME meeting, he walked away, saying only that LME had nothing to do with Lakeville. 

Former Lakeville dock manager and current Finish Line co-owner Travis Hoeschen said that he knew nothing about recent Lakeville operations or why 95 workers had not been paid. In response to most questions, he told reporters they would have to talk to the Lakeville owner, Kevin Deming.

Despite the efforts of Local 120 and others to contact Deming, he has been unavailable since the shutdown. All three executives are named in the state’s lawsuit.

The state’s suit seeks $370,260.16 in back wages and liquidated damages plus $154,405.09 in statutory penalties. Future litigation by other parties could recover compensation for the workers’ unused vacation and sick time.

Local 120 Business Agent Virgil Christofferesen calculated that each of the workers was owed between $5,000 to $10,000 in total compensation, including the leave time, a total of about $400,000 to $900,000 for the entire workforce.

There’s no compensation for the period between the closure and whenever a court rules on the case. The workers won’t get their jobs back and there’s no redress for weeks or months before they find another job, aside from unemployment compensation. They start at the bottom of seniority elsewhere, even if they can find an equivalent paying union job.

John Stachowski reflected, “I’ve just gotten to the point where I could see retirement coming…And now I don’t know where I sit.” He and Jim Crisham both earned million-mile safe driving awards, and despite qualms about declining freight volume, kept showing up for work. But like other Lakeville workers, even if they are fortunate enough to find equivalent paying union jobs, they will start at the bottom of seniority elsewhere.

“And at my age, I’ll be 57 pretty quick now, you start over again,” confided Crisham. “You start at the bottom. You don’t have too many choices. At a new company, you’re going to be working nights, you’re going to be working long hours away from your family.”

Unlike many workers affected by wage theft who are not in unions, the Lakeville workers have gotten support from the Teamsters and the labor movement. Local 120 provided food and financial assistance and helped them find jobs through other union employers, state agencies and labor programs.

The union advocated for the Lakeville employees and brought attention to the wage theft by contacting the media and coordinating rallies and daily picket lines at FLE. The actions drew support from other unions and from Lt. Governor Tina Smith, who promised an investigation.  Local 120 arranged meetings with the Department of Labor and Industry to expedite workers’ claims and build the case for legal action.

Businesses have also reacted to Lakeville’s actions. Three companies, Avtec, Conductive Containers and Victory Packaging signed public letters, posted on the Local 120 Facebook page,  https://www.facebook.com/search/top/?q=teamsters%20local%20120 declaring that, “We do not support Lakeville refusing to pay 95 employees for work already completed.  As a result, we will cease utilizing sister companies LME and FLE.” 

The majority of customers on Lakeville routes told former drivers they would stop doing business with FLE and LME. However, several large corporations, including 3M, John Deere and Sylvania, continue using the trucking firms.

Walking a December picket line, Mike Rettman declared, “We’re willing to stand out here in sub-zero weather. We want our money and we want to be treated fairly and with a little bit of respect and that’s all we ask.”

View a PDF of the full text of the Department of Labor and Industry legal filing.