Circuit City, facing lawsuit over pay, can sell Canadian assets

Circuit City hit with suit over pay Federal bankruptcy judge OKs sale of chain's assets in Canada to Bell Canada

Circuit City Stores Inc. got court approval yesterday to sell off its Canadian operations as word came that the company faces a class-action lawsuit by lawyers claiming some laid-off employees were not paid federally mandated WARN Act payments.

The lawsuit, filed by the New York-based law firm Kantrowitz Goldhamer & Graifman PC, claims the failed Henrico County company violated federal law by not giving enough notice to employees it terminated and who were subsequently not paid.

The firm represents Marlon Mondragon, who worked at a store in West Nyack, N.Y. It was one of 155 stores the chain announced it was closing in early November.

A Circuit City spokesman said the company could not comment on the suit.

At the time of the store closings, Circuit City said employees who qualified for payments under the Worker Adjustment and Retraining Notification Act, commonly called the WARN Act, would be paid for 60 days by law.

The law states that employers must provide 60 days' notice of layoff or 60 days' pay in lieu of notice.

Attorney Gary S. Graifman said Mondragon was not given the notice nor was he paid. He believes others were not paid as well.

In December, Circuit City fought off an attempt by a creditors committee that sought to stop it from making WARN payments to laid-off workers. The judge agreed with Circuit City and said the chain could keep paying laid-off employees.

Graifman conceded that the judge's ruling allows the company to pay the employees but doesn't mandate it.

In all, about 34,000 people lost their jobs when Circuit City liquidated. About 100 employees remain at the company's Henrico headquarters.

At a court hearing yesterday, U.S. Federal Bankruptcy Judge Kevin R. Huennekens approved the sale of InterTAN, Circuit City's Canadian operations, to Bell Canada, one of Canada's largest communications companies.

Bell will keep the 750-plus The Source by Circuit City stores operating.

Details of the deal were not made public. The deal is expected to close in the fiscal third quarter.

Contact Louis Llovio at (804) 649-6348 or .