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A federal judge left Morgan, Lewis & Bockius on the hook Tuesday for severance pay sought by former employees of Brobeck Phleger & Harrison. U.S. District Judge Claudia Wilken ruled that it’s up to a jury to decide if Philadelphia-based Morgan Lewis purchased part or all of Brobeck’s business. After Brobeck closed its doors last February, Morgan Lewis hired one-third of Brobeck’s former partners and dozens of associates and staff members. Brobeck employees, led by Robert McCaffrey, filed suit against Brobeck and Morgan Lewis claiming they were entitled to 60 days’ severance pay. They claimed the firms violated the federal and state Worker Adjustment and Retraining Notification (WARN) Act and California labor code by failing to provide employees 60 days’ notice of the firm’s closure — or severance pay in lieu of notice. The employees claim Morgan Lewis is liable because the firm purchased part of Brobeck’s business and because it was a successor or alter ego of Brobeck. Judge Wilken denied in part Morgan Lewis’ request for summary judgment. Wilken found that Morgan Lewis could not be held liable as an alter ego under the federal WARN Act, but said the firm could be held liable as Brobeck’s successor under the state WARN Act. Wilken also dismissed Morgan Lewis’ argument that it had not acquired Brobeck’s business but merely extended offers of employment and purchased a small quantity of Brobeck’s tangible assets. “Morgan Lewis also leased Brobeck’s former premises, purchased access to Brobeck’s informational infrastructure, obtained access to Brobeck’s client files and emphasized lawyer continuity in press releases geared toward convincing Brobeck’s clients to become Morgan Lewis’ clients,” Wilken wrote. “Thus, although Morgan Lewis neither assumed Brobeck’s liabilities nor acquired its accounts receivable,” Wilken wrote, “Morgan Lewis did put together a series of transactions that allowed many of the same lawyers to practice law using much of the same infrastructure with the explicit hope that this would allow it to acquire Brobeck’s clients.” As for plaintiffs argument that Morgan Lewis is Brobeck’s alter ego, Wilken said plaintiffs have not demonstrated that Morgan Lewis was Brobeck’s equitable owner or that Brobeck was a mere conduit or shell for the affairs of Morgan Lewis. “Thus, Morgan Lewis cannot be held liable for the failure to give the requisite notice on the basis of alter ego liability,” Wilken said. Under the state WARN Act, Wilken said, Morgan Lewis also could not be found liable as an employer of the plaintiffs. But she said it is possible that the firm could be held liable as Brobeck’s successor. The case is McCaffrey v. Brobeck, Phleger & Harrison, 03-2082. The claims against Brobeck are stayed since the firm is in bankruptcy proceedings.

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