The steel plant operated by Bayou Steel BD Holdings, L.L.C. has been a fixture of the landscape in LaPlace since it was opened more than 40 years ago. In October 2019, the owners of the company filed a petition under Chapter 11 of the United States Bankruptcy Code seeking protection from claims of creditors. The owner, a hedge fund named Black Diamond Capital Management Co., soon closed the LaPlace plant and laid off 376 workers at the LaPlace plant and another 100 at three other operation around the country. Plans for a recapitalization and reopening were soon announced by the owners, but the plant still stands vacant. Now the company has been hit with another blow to reopening: a recently filed class action by laid off workers claiming back pay and damages for bad faith.

Five former employees are named as plaintiffs in the case. The lawsuit alleges that Bayou Steel signed an employment contract with the United Steel Workers, the union that represents the plant’s employees shortly before the owners closed the plant’s doors. The complaint alleges that the owners signed the employment contract even though they knew that the plant would be closed. The complaint further alleges that the president of Black Diamond traveled to LaPlace to meet with the plant’s chief operating officer to discuss plans for closing the plant. Among subjects that were discussed were immediate termination of all employees without prior notice, a violation of federal labor law. Bayou Steel’s president admitted in bankruptcy court testimony in late 2019 that the company was deliberately lowering its inventory of scrap steel to facilitate the bankruptcy.

Plaintiffs hope that other laid off employees will join the case so that it can be carried forward as a class action. The laid off workers are also seeking 60 days of back pay and benefits.

More than one observer has given the employees very little chance of succeeding in their claims. Nevertheless, a capable business law attorney may be able to salvage a significant portion of the employees’ missing compensation.