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California Wage and Hour Lawsuit Delayed--70 Jack in the Box Restaurants Go Bankrupt

October 12, 2009

Our Orange County, California Labor & Employment Lawyers have been following a recent California wage-and-hour case, in which a lawsuit filed by former Jack in the Box employee Patricia Morgan and thousands of her night-shift colleagues has been put on hold. The delay stems from the company's recent file for Chapter 11 bankruptcy protection.

After being fired from her California job in August 2008, Morgan filed a lawsuit against the fast food chain--seeking unpaid hourly and overtime wages, and compensation for being forced to work through unpaid breaks and meal periods.

Morgan's suit names Kobra Associates, run by Jack in the Box franchisee Abe Alizadeh, as well as his three other companies--Sierra Valley Restaurants Inc., Food Service Management Inc., and Central Valley Food Services Inc. Alizadeh filed Chapter 11 bankruptcy petitions for all four companies last month, closing the doors to all of the 70 Jack in the Box restaurants that he ran in Northern California, stranding over 2,100 employees. The restaurants were then immediately reopened under bankruptcy protection from creditors, filed in the U.S. Bankruptcy Court for the Eastern District of California.

According to Morgan and her colleagues, the violation of wage laws should be accounted for, as their rights were repeatedly compromised while employed with the company. She claims in the suit that they were required to work through meal breaks during the night shift, that they were unable to leave the location, and that they were consistently overloaded with work. This was allegedly part of the Jack and the Box culture, and as employees, they were scared to report the working conditions for fear of retaliation.

Morgan's lawyers certify the case as a class-action suit on behalf of nearly 5,300 employees who have worked the night shift at Jack in the Box franchise restaurants run by Alizadeh since December of 2004. They estimate a resolution that could amount to millions of dollars of unpaid wages. The firm recently won a similar class-action lawsuit against another California-owned Jack in the Box franchise that involved nearly 30,000 night-shift workers. They were awarded $8 million in resolution.

The Sacramento Bee reports that even if Morgan and her co-workers succeed in the wage-and-hour lawsuit suit against Jack in the Box, the prospect for recovery could be seriously diminished. Alizadeh reportedly owes over $1.5 million in back state taxes, with liens against the company from the state. Morgan and her co-workers would be among the last to be paid from any remaining assets in liquidation.

If you or someone you know in Orange County or throughout Southern California has an employment or labor issue dealing with wage and hour issues in the workplace, our Anaheim-based team of experienced attorneys and professionals can help. Call us for a free consultation at 1-800-872-5925.

Jack in the Box Bankruptcies Put California Worker Lawsuit in Limbo, Sacramento Bee, September 23, 2009

Franchisee Tax Trouble Closes 70 Jack Outlets, Modesto Bee, September 19, 2009

Owner of 70 Jack in the Box Restaurants Seeks Bankruptcy Protection, The Mercury News, September 19, 2009

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