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Borders Deals With Lawsuits, Hires CFO

15 Sep, 2011 By: Chris Tribbey

As it prepares to close the last of its stores, Borders Group is dealing with a pair of lawsuits, one from former employees, the other from the marketing company that handled Borders’ customer rewards site.

The first case deals with former Borders employee Jared Pinsker, who was among those laid off from Borders' Ann Arbor, Mich., headquarters in July. Seeking class-action status for his suit, Pinsker is suing for unpaid wages and benefits under a federal law that requires at least 60-days notice before a business dismisses a third of its workforce.

“The defendant failed to pay the plaintiff and each of the class members their respective wages, salary, commissions, bonuses, accrued holiday pay and accrued vacation for 60 working days following their respective terminations, and failed to make the pension and 401k contributions, provide other employee benefits, and pay their medical expenses for 60 calendar days from and after their respective terminations,” the suit reads.

In the second lawsuit, Next Jump Inc., the company that operated Borders consumer rewards program, is countersuing Borders. Borders first took Next Jump to court in early September, accusing Next Jump of sending unauthorized emails to Borders customers, asking them to join a different consumer rewards site, OO.com.

“Despite the fact that Next Jump was expressly advised of the termination the Next Jump agreement, Next Jump kept that portion of Borders’ customer list in its possession and continues to email Borders’ customers stating that ‘Borders’ Rewards Perks is now OO.com,’ Next Jump’s website,” Borders’ suit reads.

Borders alleges hundreds of thousands of Borders customers signed up to OO.com due to the emails. The defunct retailer is asking a judge for unspecified damages in that case.

However, Next Jump is fighting back, accusing Borders of first working with Next Jump to “take measures to preserve Borders’ Rewards Program members’ earned loyalty points” and then levying “baseless accusations of mishandling and violating the privacy of those very customers.”

“Instead of working with Next Jump to pursue this change of course in a reasonable manner, Borders ignored all of Next Jump’s urgent requests for cooperation,” the countersuit reads. “Indeed, Borders sued its partner for alleged wrongdoing, even seeking a temporary restraining order against the very activities Borders had authorized only a month before.”

Next Jump is seeking damages and reimbursement costs associated with transferring Borders customers to OO.com.

In other news, Borders has hired a new CFO and treasurer to oversee the company’s liquidation. Ojas Shah, 36, had served as director of AlixPartners, an advisory firm that specializes in restructuring and bankruptcy reorganization.

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