Litigation dogs Lakeville Motors Express and LME 15 months after Roseville trucking firm shut down

Pressures are mounting for the owners of the defunct trucking firm Lakeville Motor Express and its affiliates.

The entity that abruptly locked its doors and laid off 95 workers without pay just before Thanksgiving 2016 was sued twice last month for alleged pension and bankruptcy violations.

This month, the National Labor Relations Board (NLRB) informed the International Brotherhood of Teamsters that it had investigated and found cause for concern regarding allegations that Lakeville Motor Express and its affiliates had potentially engaged in bad faith and unfair labor practices.

"Specifically the board is pursuing the union's allegations that LME and Lakeville Motor Express are alter egos and that LME engaged in anti-discrimination by abandoning the collective bargaining agreement with Local 120 by laying off its employees and relocating the work and resources to a nonunion facility," said Tom Erickson, president of Teamsters Local 120 in Blaine, in a letter to members. "The case is in the beginning stages of litigation."

The NLRB will attempt to reach a settlement with the owners of LME. "If the case is not settled it will proceed to trial," Erickson said.

Teamsters spokesman and Treasurer Bill Wedebrand said that the union couldn't comment beyond the letter because its officials are in talks with the NLRB. LME and Lakeville Motor Express officials could not be reached for comment.

The Lakeville Motor Express dust-up is the latest to surface since the union filed formal grievances against the companies last year with the state of Minnesota and the NLRB.

The Teamsters accused Lakeville Motor Express of abruptly shutting its Roseville location and locking out 95 union workers on Nov. 19, 2016.

The union contends that the business closure was a sham and accused Lakeville Motor Express of just changing its name to LME Inc. or Finish Line Express; of relocating from Roseville to Maple Grove; and of staffing the new location with nonunion workers at lower wages.

Finish Line Express officials denied the allegations.

"This has nothing to do with us," said Finish Line co-owner Mike Sanford. He declined to comment further.

Officials at the NLRB declined to comment about its case this week, but confirmed that it sent several "charge" and "amended charge" letters to Lakeville Motor Express and LME Inc. The most recent was sent April 13.

Teamsters members said they have picketed and complained for more than a year about their treatment by Lakeville Motor Express and its affiliates. They note that none of the 95 laid-off workers were ever paid for work they performed at the end of 2016.

"As far as money owed to the Lakeville employees, it is approximately $700,000, which includes final pay and penalty fees," said former Lakeville Motor Express employee Keith McDonald. "I believe we should be paid what is owed to us."

McDonald said he worked at the Lakeville Motor Express trucking facility in Roseville for just six months before he was abruptly locked out and had to look for work. His only notice was a surprise call from a co-worker; he then showed up at the warehouse to find the entrance "was locked and chained."

A note said: "Lakeville Motor Express locked its doors permanently."

"Needless to say, it was a very depressing, bitter and dark 2016 holiday season," McDonald said.

Lakeville Motor Express filed for bankruptcy protection Jan. 20, 2017.

Following up on complaints by workers, on Jan. 26, 2017, the state of Minnesota sued Lakeville Motor Express and affiliates LME Inc. and Finish Line Express for pretending to go out of business so it could lock out union workers and withhold back pay without notice.

The unusual state lawsuit accused the three entities of fraud and wage theft and of fraudulently transferring Lakeville assets to the other two companies.

James Honerman, spokesman for the Minnesota Department of Labor and Industry, said in an e-mail last week that an administrative law judge held a scheduling conference on April 4 regarding the department's case and reached a tentative settlement agreement with LME. Any information about a possible settlement with the state, though, will be delayed 60 days as LME and Lakeville attempt to settle another case, he said.

In addition to the state's actions, two separate lawsuits were filed in federal court last month.

On March 15, Teamsters pension funds from across the central and southern United States sued, among others, LME Inc., Finish Line Express, Lakeville Transportation and Lakeville Motor Express owners Roger and Shari Wilsey.

That lawsuit said the abrupt closure of Lakeville Motor Express unraveled a series of pension plans that had been tied together under a collective bargaining agreement covering many firms and their truckers, chauffeurs, warehousemen and other employees.

"As a result of its [abrupt] closure, Lakeville Motor Express effected a complete withdrawal from the central states, southeast and southwest areas pension fund in 2016, and incurred withdrawal liability in the principal amount of $90.1 million," the Teamsters' lawsuit said. "The pension fund now seeks to collect Lakeville Motor Express' withdrawal liability from various companies that were at one time under common control with Lakeville Motor Express."

On March 28, the trustee handling Lakeville Motor Express' bankruptcy petition sued LME and Finish Line Express co-owner Roger Wilsey.

The trustee's lawsuit said Lakeville Motor Express had no right to any bankruptcy protections from the court because Lakeville, LME and Wilsey had enriched themselves by the "fraudulent transfer" of Lakeville's inventory, parts, stock payments and other monetary transfers from Lakeville Motor to either LME or Wilsey.

Those transfers were "avoidable" and done just before Lakeville filed for bankruptcy as a way to hide assets, Trustee John R. Stoebner said.

The lawsuit claims Lakeville Motor Express paid $4.3 million in payments to LME Inc. just months before filing for bankruptcy. It also said LME essentially controlled or shared Lakeville Motor's operations, bookkeepers, equipment, revenue and management functions throughout 2016.

As a result, "the trustee is entitled to recover from the transferee the monetary transfers or the value of the property transferred," Stoebner said in the complaint.

Dee DePass • 612-673-7725