Upper Crust Ordeal Intensifies
BOSTON - Upper Crust Pizza filed for bankruptcy protection last month – following years of legal battles with staff, creditors, and regulators. The local chain owes employees about $850,000 in back pay and wages. One hundred and forty workers will continue to stay home after being laid off when the company closed 10 of its 16 locations indefinitely on November 13th.
When Boston civil litigation attorney Mark DeGiacomo was installed as trustee by the bankruptcy court, the plan that was that he would look at the situation and determine whether a sale of the company would be necessary, and if so, work on getting the company sold. Based on court filings, the Upper Crust owners had represented to the court that there was enough cash on hand to keep the company going. DeGiacomo looked at the books and found that this was not so. There was very little cash on hand; and only enough products for four days of operation. He determined that the stores had to be closed immediately.
Upper Crust owes $3.4 million to creditors, including $230,000 to their former lawyer, Thomas Reilly. One hundred and twenty thousand dollars would allow the stores to open, allowing 170 workers, including several part-time employees, to get their jobs back temporarily. According to Shannon Liss-Riordan, the attorney representing a class action lawsuit against Upper Crust, there is talk of the company becoming an employee owned business. This would cost millions of dollars. The exact amount could not be disclosed.
When asked about the bankruptcy proceedings initiated by Upper Crust, Liss-Riordan mentioned that she sits on the creditors committee. “There was approximately $150,000 at the time of the bankruptcy filing in October. A wire transfer was made into the company just before the bankruptcy filing of $250,000, and it appears the owners took about $100,000 for themselves.”
DeGiacomo revised the amount of cash on hand from to $14,000, after the Chief Executive Officers Joshua Huggard and Brendan Higgins, as well as Chief Financial Officer Dan Hurley, paid themselves a month’s pay on November 1st. The company’s trustee also said that Upper Crust had not made employee health insurance payments since August.
Upper Crust’s problems began in 2009, when a The US Department of Labor investigation resulted in the company being ordered to pay workers about $350,000 in back wages. Several employees, in a class-action lawsuit, said they were forced by company executives to give back the federally mandated payments or lose their jobs. Liss-Riordan began representing them in the class action lawsuit in July of 2010, as they sue Upper Crust for violations of Mass General Law Chapter 149-148 and Mass General Law Chapter 151-1.”
She said, “We began representing 121 workers for the $342,000 owed to them at the time of the payback scheme. Our estimate of the damages from the original case includes money that was extorted from the workers, trebling of damages, and back wage damages and some emotional distress damages for the workers who lost their jobs due to the extortion. Many of the workers were working 70 hour weeks, making below minimum wage because of the extortion, with no overtime.”All of the workers involved have had their employment terminated. She estimated damages to be over two million dollars.
Many of the workers travelled 7,000 miles to work for Upper Crust from their native village of Marilac, Brazil. As Upper Crust grew, it began to exploit its population of immigrant workers with 70-100 hour weeks, lack of overtime, and threats as workers began complaining to the Department of Labor.
According to court records, Upper Crust owes workers about $850,000 in back wages and damages. A second federal investigation of pay practices found that Upper Crust violated minimum-wage and overtime laws and failed to pay 67 employees roughly $425,000 from 2009-2011. Two of these former employees agreed to be interviewed by Open Media Boston. Israel Filho, 34, worked for Upper Crust as a kitchen helper from 2005-2009. He alleges that he was fired because he refused to give back his overtime check. When asked about the closing of Upper Crust, he said, “We are watching the situation. We don't want to let the Upper Crust use bankruptcy to escape from justice.”
Another worker, wishing to only be identified as Alex, worked for Upper Crust for five years as a pizza maker. He commented, “I hope to be compensated for all the damages the Upper Crust caused me when they decided to lower my payment to a $455 salary and required me to work 70 hours a week, in the hope of recovering what the Department of Labor required them to pay us in 2009. I received this $455 salary for a long period of time. I hope to be compensated for all the financial and emotional suffering I went through during this period of hardship and humiliation. Alex has since moved back to Brazil, and is working with lawyers from afar.
On the recent closing, he said, “I feel bad for everyone who lost their job, and sincerely hope they all find work somewhere else where they will be treated with dignity. To pay high salaries to three executives and then close the pizzeria for lack of money is an act of bad faith, not a strategy to reorganize the business. More than 140 people lost their jobs, among them heads of households who need to work to support their families. This is how the Upper Crust tries to solve its problems, acting in bad faith, stealing from workers, and ignoring the law and human rights. I sincerely hope the courts in the United States are paying close attention to this and that they will judge our case fairly in August.”
One of the three executives Alex referred to, owner Jordan Tobins, is not a defendant in the bankruptcy case, but is still being sued for his alleged part of the federal lawsuit. The company is not united. Brendan Higgins and Joshua Huggard placed Tobin on leave and sued him for allegedly misusing company funds.
Liss-Riordan explained, “The Massachusetts wage laws impose personal liability (individual capacity) on owners and officers of companies – for this very purpose – so that a business owner cannot just shut down the company, declare corporate bankruptcy, and walk away. The individual owners and officers are on the hook for liability for wage violations. The other owners (Higgins and Huggard) are also named individually and will be individually liable for the wage violations. They have not filed for personal bankruptcy, so the Upper Crust bankruptcy filing does not protect them.”
Russ Davis, director of Massachusetts Jobs with Justice, mentioned that the organization had a meeting with Upper Crust management earlier this year. “They tried to explain that none of this really happened. They’ve been pathological liars and it’s caught up to them.” Jobs with Justice first became involved two years ago when they heard of injustice and worker oppression from the Brazilian immigrant community. Davis said, “What we hope will come of this is a business that provides good jobs. There’s been talk of making this a worker owned business. This has worked in Spain, and in Argentina with worker rights consortiums overlooking businesses.” Davis estimates the cost of buying Upper Crust to be in the millions.
