MF Global trustee seeks to toss employee lawsuit

Mon Mar 5, 2012 7:02pm EST

* Former MF employees claimed to be fired without proper notice

* Trustee Giddens says notice law does not apply to trustees

* MF Global went bankrupt on Oct. 31

By Nick Brown

March 5 (Reuters) - The trustee liquidating fallen brokerage MF Global asked a judge to throw out a lawsuit from former company employees claiming to have been fired unfairly, saying a federal labor law does not apply to trustees.

James Giddens on Monday filed court papers in U.S. Bankruptcy Court in Manhattan seeking the dismissal of a lawsuit filed in November by employees let go after the October collapse of the MF Global parent, MF Global Holdings Ltd.

The lawsuit claims Giddens failed to give 60 days' notice before firing the brokerage's roughly 1,066 workers, a violation of the Worker Adjustment and Retraining Notification, or WARN, Act.

But Giddens said the WARN Act applies to employers, and does not encompass liquidating trustees.

The complaint also alleged that Giddens' failure to pay accrued vacation time violated New York and Illinois state labor laws, but that claim should be handled through the bankruptcy claims process, not in a lawsuit, Giddens said in court papers.

Plaintiff Todd Thielmann, a former floor broker in the company's Chicago office, filed the lawsuit on Nov. 14. He is hoping to represent a class of all fired workers.

MF Global went bankrupt on Oct. 31 amid fears about its exposure to risky European debt. Its former CEO, ex-New Jersey Gov. Jon Corzine, stepped down on Nov. 4, after regulators found a massive shortfall in the firm's customer accounts.

Giddens has since estimated that shortfall at $1.6 billion.

The bankruptcy is In re MF Global Holdings Ltd, U.S. Bankruptcy Court, Southern District of New York, No. 11-15059.

The brokerage liquidation is In re MF Global Inc, in the same court, No. 11-2790.

The worker lawsuit is Thielmann et al v. MF Global Finance USA Inc et al, also in the same court, No. 11-2880.

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