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American Home Could Face Class Action
Class Action | 2007/12/18 04:37

Former American Home Mortgage Investment Corp. loan officers want a bankruptcy judge to let them alert thousands of other ex-employees that they may be entitled to collect from the failed company for allegedly overworking and underpaying them.

Court papers filed late Friday ask the U.S. Bankruptcy Court in Wilmington, Del., to lift the shield that protects companies in Chapter 11 from lawsuits so American Home workers can be informed of their right to participate in a potential class-action lawsuit.

Those who left their jobs before American Home went under in August "may remain unaware that their employer engaged in illegal pay practices," say lawyers who filed the class action in California before American Home sought Chapter 11 protection.

Due to the bankruptcy filing, lawyers for American Home's suing loan officers need court approval to send out notices about the lawsuit, which was filed with the U.S. District Court for the Northern District of California. They also need bankruptcy court approval to seek certification of class-action status for the case.

Officials of the liquidating Melville, N.Y.-based company weren't available to comment Monday.

Time could be running out for those entitled to join in the lawsuit, as a Jan. 11, 2008, claims-filing deadline looms in American Home's Chapter 11 case, according to the employee lawyers.

Plans are to file a proof of claim in the bankruptcy case on behalf of employees involved in the class action, which began in June. But if employees don't know about the class action and don't sign up, they won't be included in the bankruptcy claim.

The California class action alleges violations of federal labor law and state wage and hour laws for California, New York, Illinois, Wisconsin, Colorado, New Jersey and Washington.

Long hours without overtime were an occupational hazard for loan officers in the heyday of home lending, if the lawsuits filed against mortgage companies are any indication.

New Century Financial Corp. of Irvine, Calif., and Atlanta's HomeBanc Mortgage Co., both of which filed bankruptcy this year, also have been accused in court of violating overtime pay laws.

"What they do is hire a bunch of people and tell them you must work 60, 70, 80 hours a week and they think because these people are paid on commission basis that they are exempt from the Fair Labor Standards Act," said Marshall A. Adams, whose Ft. Lauderdale, Fla.-based firm Adams, Cassidy and Piccolo is handling the HomeBanc litigation.



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Class action or a representative action is a form of lawsuit in which a large group of people collectively bring a claim to court and/or in which a class of defendants is being sued. This form of collective lawsuit originated in the United States and is still predominantly a U.S. phenomenon, at least the U.S. variant of it. In the United States federal courts, class actions are governed by Federal Rules of Civil Procedure Rule. Since 1938, many states have adopted rules similar to the FRCP. However, some states like California have civil procedure systems which deviate significantly from the federal rules; the California Codes provide for four separate types of class actions. As a result, there are two separate treatises devoted solely to the complex topic of California class actions. Some states, such as Virginia, do not provide for any class actions, while others, such as New York, limit the types of claims that may be brought as class actions. They can construct your law firm a brand new website, lawyer website templates and help you redesign your existing law firm site to secure your place in the internet.
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