IN THE
UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF DELAWARE
CIVIL
ACTION NO. 00-674 (RRM)
CATHLEEN
SWEENEY, JANICE
JARRETT,
KEYSHER FRANKLIN
TRISHA
RICKAY ESTELL, and BARBARA
SHIPES,
on their own behalf and as representative plaintiffs on behalf of all similarly
situated persons,
Plaintiffs,
v.
CRESCENT
REAL ESTATE
EQUITIES
COMPANY, CRESCENT
REAL
ESTATE EQUITIES LIMITED
PARTNERSHIP,
CRESCENT REAL ESTATE
EQUITIES,
LTD., and CRESCENT
OPERATING,
INC.,
Defendants.
IN THE
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF
DELAWARE
In
re:
CHARTER BEHAVIORAL HEALTH
Case No. 00-989
throughSYSTEMS, LLC, et al.,
through
00-1089 (RRM) –
numbers
Nos. 00-1555, 00-2231
through
through 00-2237
Jointly Administered
Chapter 11
Debtors.
IN THE
UNITED STATES BANKRUPTCY COURT
FOR THE
DISTRICT OF DELAWARE
ADVERSARY
NO. A-00-562
JOANN
ALLEN, KATHY ARROWOOD, AMY CARVER,
KIM CASSIDY, DIANE GILLESPIE, CECILIA GILLIAM, ROSE GREER, KATHLEEN HANEY,
JENNIFER HOFFMAN, JEAN BOYD JACKSON, GAYLE JOHNSON, DAVID MENDENHALL, ELIZABETH
D. MURRELL, SHERRI PARRY, JENNIFER RAGER, LEEANN REA, LOUISE L. SEAVERS, KAREN
CHEREE SMART, NYKKI STARR, CATHLEEN SWEENEY, MARCIA VITALE, DEREK WATSON, JILL
WHITESELL, PHYLLIS WILLINGHAM on behalf of all other similarly situated persons,
Plaintiffs,
v.
CHARTER
BEHAVIORAL HEALTH SYSTEMS, LLC
et
al.,
Defendants.
NOTICE OF
CLASS CERTIFICATION AND PRELIMINARY APPROVAL OF A SETTLEMENT CLASS OF FORMER
EMPLOYEES OF CHARTER BEHAVIORAL HEALTH SYSTEMS, LLC.
TO:
Any and all former employees of Charter who are (i)
determined to have conditionally allowed WARN Act Claims in the WARN Claims
Bankruptcy Order or (ii) who were terminated on or after December 28, 1999 by
Charter Behavioral Health Systems, LLC, or any of its subsidiaries.
THIS NOTICE MAY AFFECT YOUR
RIGHTS PLEASE READ IT CAREFULLY IN ITS ENTIRETY
This Notice is being sent as
ordered by the United States District Court and the United States Bankruptcy
Court in the above-styled actions to advise you of the
following:
1.
a proposed Settlement of the
above-captioned class actions wherein the defendants have agreed to pay
compensation and additional benefits to former employees of Debtors;
2.
a court hearing on December 17, 2001, to determine the
fairness, adequacy, and reasonableness of the proposed Settlement;
3.
your rights to support,
object to, exclude yourself from or participate in the proposed Settlement; and
4.
the following important dates
and deadlines:
IMPORTANT DATES AND
DEADLINES
"Opt-Out" Postmark
Deadline |
November 23,
2001 |
Comment/Objection
Postmark Deadline |
November 23,
2001 |
Fairness Hearing
Date |
December 17,
2001 |
1. WHY SHOULD I READ THIS
NOTICE?
On October 22, 2001 a hearing
commenced in the bankruptcy court to valuate claims of class members under the
WARN Act. Debtor sent previous notice of that hearing and the deadline for
objecting to conditionally allowed or disallowed claims pursuant to the
authority of the Bankruptcy Court.
If the Bankruptcy Court
determined in the WARN Claims Bankruptcy Order that you have a
conditionally allowed WARN Act claim or if you were terminated on or after
December 28, 1999, your rights may be affected by the proposed settlement of two
class actions filed against Charter and others. The purpose of this Notice is to inform
you that the Bankruptcy Court and District Court in which the above-captioned
actions and other WARN claims have been filed have preliminarily approved a
proposed settlement of (i) a
lawsuit filed in the United States District Court styled as Cathleen Sweeney, et al. v. Crescent Real
Estate Equities Company, et al., Case No. 00-674 (RRM) asserting WARN
claims; (ii) a lawsuit filed in Bankruptcy Court as an adversary proceeding
styled, Joann Allen, et al. v. Charter
Behavioral Health Systems, LLC, et al., Adversary No. A-00-562 (Bankr. D.
Del.); and (iii) proofs of claim including a class proof of claim of Joann
Allen and a motion of Eloise Baldwin for leave to file class proof of
claim (collectively, “Class Representatives”) filed in the Bankruptcy Court
against the above- named Debtors (the “Debtor”) each asserting claims under the
WARN Act (collectively, the “WARN Proofs of Claim”) on behalf of all other
similarly situated persons.
2. BACKGROUND OF THE
LITIGATION
The Stipulation of Settlement
has further been submitted in the bankruptcy proceedings in conjunction with
Debtors’ Motion for Order approving the Stipulation of Settlement with WARN Act
Claimants, Crescent Real Estate Equities Company, Crescent Real Estate Equities,
Ltd., Crescent Real Estate Equities Limited Partnership, Crescent Operating, Inc.
and the Official Committee of Unsecured Creditors of the Debtors (“Debtors’
Motion for Order Approving Settlement”).
If the Stipulation of Settlement is granted final approval by the
Bankruptcy Court and the District Court, a multitude of issues and disputes will
be resolved not only as to the Allen
and Sweeney suits, and the WARN Proofs of Claim, but also as to a host
of claims against Charter and Charter’s claims against others.
3. WHAT IS THE WARN
ACT?
The WARN Act is a federal law
that was enacted to protect American workers from unannounced plant closures and
mass layoffs. That act provides in
part as follows:
“An employer shall not order a plant
closing or mass layoff until the end of a 60-day period after the employer
serves written notice of such an order--
(1)
to each representative of the affected employees as of the time of the notice
or, if there is no such representative at that time, to each affected employee;
and
(2)
to the State dislocated worker unit or office (referred to in section 1661(b)(2)
of this title), or the State or entity designated by the State to carry out
rapid response activities under section 2864(a)(2)(A) of this title, and the
chief elected official of the unit of local government within which such closing
or layoffs to occur.”
Plaintiffs, Class
Representatives, Defendants, Debtors, and the Official Committee of Unsecured
Creditors of the Debtors have entered into a proposed Settlement as set forth in
a Stipulation of Settlement filed in the United States Bankruptcy Court and the
United States District Court in Delaware.
The Settlement Agreement applies to a nationwide plaintiff class under
Federal Rule of Civil Procedure 23(a)(1)-(4) and 23(b)(3), (as well as
Bankruptcy Rule 7023) as a voluntary or "opt-out" class. The settlement class is
defined as any and all former employees of Charter (i) who are determined to
have conditionally allowed WARN Act
Claims in the WARN Claims Bankruptcy Order or (ii) who were terminated by any of
the Debtors on or after December 28, 1999. Persons who timely request
exclusion from the Class (or "opt-out”) are excluded from the
Class.
Under the procedures provided
in the Settlement, all WARN claims
have been subject to review for priority and amount by the Bankruptcy
Court. The order of the Bankruptcy Court conditionally allowing and fixing the
amount and priority of the WARN claims (the “WARN Claims Bankruptcy Order”)
determined the gross amount and priority of each class member’s claim. Thus, a procedure was established by
the Bankruptcy Court allowing you and all other class members to have
their WARN claims fairly and appropriately determined as to amount and
priority. By the time you
receive this notice, those proceedings will likely have been completed. Previous notice of those proceedings was
distributed to all known claimants by the Debtor.
5. TERMS OF THE PROPOSED
SETTLEMENT
The essential terms of the
proposed Settlement are set forth below. Note, however, that this is not the Stipulation of Settlement,
which sets forth in greater detail the rights and obligations of the
parties. If you desire a copy of
the complete Stipulation of Settlement, the document will be available on the
Internet during the notice period at www.classactionlitigation.com/notices/charternotice.html
on a continuous basis. Review of
the document may be made from any computer with Internet access. The Stipulation
of Settlement is also available on file in the Clerks’ offices of the United
States District Court for the District of Delaware and the United States
Bankruptcy Court for the District of Delaware.
(a) Eligible Claimants:
You will be eligible to receive benefits under
the settlement if the Bankruptcy Court determined in the WARN Claims Bankruptcy
Order that you have a WARN Act claim.
If the WARN Claims Bankruptcy Order determined that you have no WARN
claim, you will not be eligible to receive benefits from the
settlement.
(b)
Benefits of the Settlement:
The
Settlement provides benefits to class members with allowed WARN Act claims in
the form of cash payments. Due to
the fact that Charter Behavioral Health Systems, LLC, is operating as a
Chapter 11
debtor in bankruptcy, the amounts received
by class members will be less than the total valuation of their claims. The amounts individual class members
will receive are dependant upon the amount that becomes available in the
Charter estate to pay WARN claims, the priority of the WARN Act claimant’s claim, the total amount of
the allowed WARN Act claims and their priority, and whether the WARN Act claim
is a pre-petition or post-petition claim.
Deductions will be made from the total amounts collected as a result of
this settlement for attorney fees, costs of litigation and other expenses.
Deductions will also be made from individual class member’s payments for taxes that are required
by law to be paid. Several
compensation funds have been created for the benefit of
class members from which all payments to class members, costs, expenses and fees
will be deducted. The
settlement provides benefits to class members with potential WARN Act claims in
the form of cash payments.
Administrative WARN
Claims: If the WARN Claims Bankruptcy Order
determined that you have an administrative WARN Act claim, it is estimated that
you are likely to receive about 80 percent of that claim before the deduction of
taxes that are required by law to be paid, attorneys’ fees, costs of litigation
and other expenses. From the funds
expected to be available in the Charter estate to pay administrative expenses, a
maximum of $2 million will be made available to pay WARN Administrative claims
before the deduction of taxes, attorneys fees and litigation costs.
Priority Unsecured
WARN Claims: If the WARN Claims Bankrkutpcy Order
determined that you have a priority unsecured WARN claim, you will receive a
substantial part of that claim before the deductions for taxes that are required
by law to be paid, attorneys fees, costs of litigation and other expenses. The first $3 million available to the
Debtors to pay unsecured claims will be distributed pro rata to the priority
unsecured WARN claims. To the
extent additional funds are available to pay unsecured claims, pro rata distributions up to sixty percent
of the remaining priority unsecured WARN claims will be made. It is not likely that any additional
distributions will be made in respect to the priority unsecured WARN
claims. The distributions individual class members
will receive in respect to their priority unsecured WARN claims depends, among other things, upon the
amounts actually recovered by the Debtors, the administrative expenses of the
Debtor’s estate, and the total amount of the Class Members’ priority unsecured
WARN claim. .
General Unsecured
WARN Claims: If the WARN Claims Bankruptcy Order
determined that you have a general unsecured WARN claim, you will receive some payment in respect to that claim. Over $3.7 million of the Settlement will
be set aside to pay the allowed WARN claims pro-rata starting with the general
unsecured portion of each such
claim.
Whether individual class members will recieve any
distributions in addition to their pro-rata share (after taxes, attorneys’ fees
and costs) of $3.7, million will depend, among other things, upon the amounts
actually recovered by the Debtors, the administrative expenses of the Debtors’
Estate and the total amounts of the Class Members’ priority and general
unsecured WARN claims.
No WARN
Claim: If the WARN Claims Bankruptcy Order
determines that you have no WARN claim, you will receive no benefits from the
settlement. If you opt-out of the
settlement, you will receive no benefits from the settlement.
If you are eligible
to receive benefits from the Settlement, distributions will be made to you
shortly after the settlement becomes final from $3.7 million that the Defendants in the
Sweeney action are required
to pay and from the then available funds, if any, in the Debtors’ estate and from
time-to-time thereafter as other funds become available for distribution by
Debtors. In all likelihood, final
distributions will not be made sooner than late 2002 or early
2003.
(c) Procedures for Determining Eligible
Claimants and the Amount and Priority of Their Claims: A report known as the “Penta”
report in the Stipulation of Settlement was compiled by Penta Advisory Services
(“Penta”), a consulting company hired by the Debtors to determine which former
employees may have WARN Act claims and the amounts and priority of such
claims. The procedures followed by
Penta were carefully reviewed by Class Counsel. If a claimant was identified by Penta as
having a potentially valid WARN Act claim, the claim was submitted to the Bankruptcy Court for conditional
allowance in the amount and priority determined by Penta. A notice was sent to you by the
Debtors informing you of the amount(s) and priority of your WARN claims as
determined by Penta. A number of
former employees of Charter were identified by Penta as not having a valid WARN
Act claim. The claims of those
former employees with no valid claim are set forth as “zero” $00.00 in the Penta
Report. The procedures for claim
valuation and for having objections thereto heard were set forth in that notice.
Those procedures – not your right to object
or comment on the Settlement or the Fairness Hearing – gave you the
right and opportunity to object to the amount(s) and priority of your WARN
claim. Objections as to the
amount and
priority of the WARN claims will not be heard by either the District Court or
Bankruptcy Court at the Fairness Hearing.
The hearing date for resolving disputes regarding the valuation and
priority of your WARN claims was October 22, 2001 by order of the Bankruptcy
Court.
(d) The Sweeney
Defendants’ Right to Terminate the Settlement: Defendants in the Sweeney action have the unilateral right
to terminate the Settlement if the total dollar amount of the Class Members’
claims requesting exclusion reaches a level that threatens to frustrate their
essential purposes for entering into this Settlement. A signed agreement setting the aggregate
dollar amount of opt-out claims
that would allow the Sweeney Defendants to exercise the option to void the
Settlement, is filed under seal with the Court.
6. WHAT DO I NEED TO DO TO
PARTICIPATE IN THE SETTLEMENT?
You are not required to do
anything at this time if you believe you are a member of the class and desire to
participate in the Settlement. If
you have a valid claim, those amounts to which you are due will be paid by
Charter in one or more installments as funds become available to the Debtor.
76. HOW CAN I EXCLUDE MYSELF FROM THE
SETTLEMENT?
If you want to opt-out of the
proposed Settlement, you must personally sign and have notarized a letter
requesting exclusion and mail it, by First Class U.S. Mail, to WARN Claims Filing Agent, P.O. Box 4390,
Portland, OR 97208 postmarked no later than November 23, 2001. The letter
must include your name, social security number, and facility at which you were
employed by Debtor for identification purposes and must be signed and notarized.
Unsigned, unnotarized, incomplete, or late letters requesting exclusion will not
be accepted. No one else can sign your exclusion letter for you. A copy of the Exclusion Request must
also be sent, by the same postmark date, of November 23, 2001, to: (1) WARN
Claims, P.O. Box 1501, Mobile,
AL 36633-1501; and (2) Douglas
Ernst, 600 Peachtree Street, N.E., Suite 5200, Atlanta, GA 30308-2216; and (3) Thomas J. Catliota,
2300 N Street, N.W., Washington, DC 20037-1128 (counsel for certain Defendants
in the Sweeney action).
If the Settlement becomes
final and if you have elected to be excluded from the Class: (i) you will not
share in any recovery that may be paid to Class Members as the result of the
Settlement; (ii) you will not be bound by any further orders or judgments
entered for or against the Class; (iii) you will be
bound by with the exception of the WARN Claims Bankruptcy
Order; and (iiiv) you
may present any other claims you have against Defendants or Debtors by pursuing or filing your own lawsuit or
claim at your own expense.
(a) Class
Representatives: The e class
representatives are the plaintiffs identified in the Sweeney and Allen captions that appear on the first
page of this Notice, and Eloise Baldwin . These
individuals are all former employees of one of the Debtors. They have assisted
Class Counsel in coordinating the prosecution of this action and in providing
information needed to pursue the claims of all class members and support the
proposed settlement.
(b) Class Counsel:
In its Order
granting preliminary approval of the Settlement, the Court appointed John C.
Lankenau, Stuart J. Miller, Timothy E. Eble, J. Cecil Gardner, Mary E. Olsen,
John F. Beasley, Jr., Roger K. Doolittle and Steven K. Kortanek as class
counsel.
98. REASONS FOR THE
SETTLEMENT
Class Representatives and
Class Counsel have reached this Settlement with Defendants, Debtors and the
other parties to the Settlement after lengthy negotiations conducted over the
course of six months. In ultimately deciding to recommend this Settlement, Class
Counsel considered the relative risks and benefits to the Class of settlement or
continuing litigation. The Settlement provides sure, prompt and substantial
relief to Class Members. Defendants and Debtors, for purposes of this settlement
only, have waived defenses they believe are substantial. Class Members incur no
risk or cost in obtaining the relief, such costs being borne by the funds
created by the settlement.
Substantial legal and factual issues were presented by the WARN claims
against the Debtors and the claims in the Sweeney Action. Class Counsel balanced
all of these risks in determining that this Settlement is in the best interests
of the Class.
Defendants, Debtors and the
other parties to the Settlement have agreed to enter into this Settlement to put
to rest all controversy and to avoid further expense and burdensome, protracted
and costly litigation which would be involved in defending this case and any
future actions, without in any way acknowledging fault or liability.
109. WHO PAYS THE ADMINISTRATIVE COSTS,
ATTORNEY'S FEES AND LITIGATION COSTS?
All administrative costs,
Class counsel attorney’s fees and litigation costs are being paid by the funds
created by the Settlement. Prior to the fairness hearing, Class Counsel will
apply for all expenses, costs, and expenses incurred and will additionally file
an application with the Court for the recovery of
attorneys fees based on a percentage of the fund theory for an amount equal to
33 1/3% of the total settlement achieved for the class.
110. SETTLEMENT APPROVAL
PROCEDURE
A Fairness Hearing will be held on December 17, 2001 at
2:00 p.m., in the Courtroom of The Honorable Roderick R. McKelvie, US
Courthouse, 844 King Street, Room 4209, Wilmington, DE 19801. At
the Fairness Hearing, the Bankruptcy Court and the District Court will consider
whether the proposed Settlement should be granted final approval as fair,
adequate, and reasonable and in the best interests of the Class as a whole. The
Court will also consider the request of Class Counsel for an award of attorneys'
fees and litigation costs. You may attend this hearing if you wish, but are
not required to do so in order to participate in the Settlement. You or
your own individual counsel may also seek to intervene individually to comment
upon or object to the Settlement.
If you decide to opt-out of
the Class, you are not entitled to comment on the proposed Settlement or be
heard at the Fairness Hearing. If you decide to remain in the Class, and you
wish to comment in support of or in opposition to any aspect of the Settlement
or proceedings described in this Notice, you may do so, provided that you submit
your comments, in writing, as instructed herein. If you are represented by counsel and
wish to appear at the fairness hearing and be heard orally in support of or in
opposition to the settlement, or wish to intervene, your lawyer must file with
the Clerk of the United States District Court for the District of Delaware, 844
King Street, Wilmington, Delaware 19801, on or before November 23, 2001, an
appropriate pleading addressing issues you wish to bring to the attention of the
Court.
If you are not represented by
counsel and wish to appear at the fairness hearing and be heard orally in
support of, or in opposition to the settlement, or wish to intervene, you must
mail, by First Class U.S. Mail, a written notification bearing the caption of
the Sweeney action which is set forth on the first page of this notice,
and state your desire to appear personally. Such must be postmarked on or before
November 23, 2001 to: WARN Claims Filing Agent, P.O. Box 4390, Portland, OR
97208. You need not hire a lawyer
or appear in Court to file a letter with the WARN Claims Filing
Agent.
Any objection, comments or
pleadings, if in opposition to the settlement, and any motions to intervene,
must state in detail the nature of your comment, objection or legal
argument. Copies of any documents
filed in court by counsel, or forwarded by individuals to the WARN Claims Filing
Agent must also be sent, by the same postmark date, November 23, 2001, to: (1)
WARN Claims, P.O. Box 1501, Mobile,
AL 36633-1501; and (2) Douglas
Ernst, 600 Peachtree Street, N.E., Suite 5200, Atlanta, GA 30308-2216; and (3) Thomas J. Catliota,
2300 N Street, N.W., Washington, DC 20037-1128 (counsel for certain Defendants
in the Sweeney action). If
you do not comply with the procedure and the deadlines stated herein, you will
not be entitled to be heard at the Fairness Hearing, or to otherwise contest the
approval of the Settlement, or to appeal from any orders or judgments of the
Court entered thereon.
The Court's determination
finally approving the proposed Settlement will be binding on all Class Members
(except for those who have timely opted-out of the Class). If the Court grants
approval of the Settlement, the judgment will release the Defendants and all other persons from all WARN Act
claims arising out of your or other
class members’ former employment with Charter or one of its subsidiaries and
will require the dismissal of any pending suits or claims that you may have
based on the WARN Act. This release and dismissal will bar any further suit
against Defendants, Debtors and all other persons on the settled claims by you
or by or on behalf of Class Members, and any persons claiming by or through
them, including heirs, administrators, devisees, predecessors, successors, or
representatives of any kind. If the Settlement is not approved by
the Court, the above-captioned actions and Proofs of Claim will proceed as
active litigation.
121. WHERE DO I GET ADDITIONAL
INFORMATION?
The foregoing is only a
summary of the circumstances surrounding the litigation, the claims asserted,
the proposed Stipulation of Settlement, and related matters. You may seek the
advice and guidance of your own private attorney, at your own expense, if you
desire. For more detailed information, you may review the pleadings, records,
and other papers on file in this litigation, which may be inspected during
regular business hours at Clerk's Office, United States District Court for the
District of Delaware, 844 King Street, Wilmington, Delaware 19801 and the
Clerk’s Office of the United States Bankruptcy Court for the District of
Delaware, Marine Midland Plaza, 824 North Market Street, Wilmington, Delaware
19801. The text of the Stipulation of Settlement, as well as other pertinent
information, may be viewed on-line
at www.classactionlitigation.com/charter.htm.
If you decide to remain a
Member of the Class and you wish to communicate with Class Counsel identified
above, you may do so by writing to Class Counsel, WARN Claims, P.O. Box
1501, Mobile, AL 36633-1501.
|
/s/ The Honorable
Roderick R. McKelvie
/s/ The Honorable
Roderick R. McKelvie Judge, United States
Bankruptcy Court |
DO NOT CONTACT THE COURT OR
CLERK OF COURT FOR INFORMATION.