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Johnson City Earth Fare employee suing company: Notification of closure felt awful

David Floyd • Updated Feb 13, 2020 at 8:45 AM

On Feb. 3, Johnson City resident Kelsi Cornett, who has worked at Earth Fare since 2011, learned she would soon be out of a job.

She didn’t find out from her employer.

She learned from a friend, who had read about the company’s decision to close in a news story and messaged Cornett on social media.

“I didn’t believe it at first, and reached out to my store managers, who had literally just found out,” said Cornett, who started as a cashier at Earth Fare before becoming a bookkeeper and then rising to a managerial position.

Cornett said she didn’t receive word about the closure from Earth Fare until she went into work to figure out what was going on. She said the process made her feel awful.

“That was the worst possible way I feel like it could have been done,” she said.

On Feb. 5, Cornett filed a class action lawsuit against the grocery store chain and its parent company, EF Investment Holdings, claiming that the business didn’t give workers the 60 days notice required by federal law before closing its stores and laying off employees.

“They kind of just expected the store managers to get the information out as quickly as possible, which is not going to be possible for a big business like that,” she said.

Cornett said Earth Fare’s Johnson City location has 57 employees. Statewide, the business says it has about 250 workers spread across five stores and employs about 3,000 people across its operations.

Cornett and Amy Hile, an employee at an Earth Fare in St. Johns, Florida, are listed as plaintiffs in the lawsuit, which says Earth Fare violated the Workers Adjustment and Retraining Notification Act by failing to give Cornett, Hile and other similarly situated employees at least 60 days’ advance written notice of termination.

Jennifer Mercer, a media representative who works for Earth Fare’s communications firm, Paladin, did not immediately respond to a request for comment.

The company said in a news release last week that it had notified employees of the closure in compliance with the WARN Act.

New York attorney Stuart Miller, who’s representing the plaintiffs in the suit, said Earth Fare employees received a last-minute notice about the closure of the company’s stores and that the company says it was unable to give an earlier warning.

“That will in all likelihood be the primary issue in this litigation,” he said.

A letter dated Feb. 3 from the company to employees, provided to the Press by Miller, said Earth Fare had been in negotiations to refinance its bank loan obligations and sell the business, which Earth Fare said would have allowed operations to continue. The company said it had recently learned the buyer was withdrawing from the sale and that the financing Earth Fare was seeking fell through at the same time the buyer withdrew.

The company said its largest supplier also discontinued shipments of products to the company days before the announcement.

“Given the fact that we have insufficient funds to continue our operations for an extended period of time and there are no other foreseeable buyers, we have no choice but to begin the process of liquidating the company’s inventory, and once that process is complete, to close all of our operations,” the company wrote in the letter.

The company said it anticipated stores would close sometime between two weeks from the date of the notice, Feb. 3, and four weeks from the date of the notice. The company said employees would be laid off during that time period, although the precise date could be subject to change.

“This decision and our inability to provide more advance notice is the direct result of the sudden and unanticipated withdrawal of the buyer from the sale process, whom we had every reason to believe would go forward with the sale,” the notice said.

The company said some employees could be kept on for a limited time to help wind down operations. 

“We deeply regret and understand the uncertainty this action will cause our valued team members,” the company said of the closure. “We also regret that we were unable to provide you with notice for a longer period of time, but providing earlier notice regarding the circumstances would have likely jeopardized our ability to obtain the financing we were seeking. Apart from that, the withdrawal of our buyer and cessation of supplies from our major vendor took us by surprise. We did not foresee these circumstances and we have to act now that they have occurred.”

In a filing submitted in U.S. Bankruptcy Court in the District of Delaware on Feb. 4, Earth Fare estimated in a series of multiple choice questions that it has between 10,000 and 25,000 creditors and between $100 million and $500 million worth of assets and liabilities.

The filing also lists creditors with 30 of the largest unsecured claims against the company. The largest unsecured claim, totaling $9.6 million, is from United Natural Foods Inc. in Lincoln, Rhode Island, which deals in wholesale bulk food and other products. 

Earth Fare’s top five creditors with unsecured claims, according to court documents, are food distributors, with Inland Seafood, Albert’s Organics, Crosset Company and Gourmet Foods International in that order holding the next-largest unsecured claims against the company.

Cornett, who is still working at the Earth Fare at 1735 N. State of Franklin Road, noted the exact date of the store’s closure is hazy, but said she plans to stick around until the end.

Nicole Chabot, the public relations coordinator for Fresh Market, which operates in a similar upscale grocery market as Earth Fare, said Fresh Market has so far hired 150 Earth Fare employees across the board and seven specifically in Johnson City. Fresh Market has a local location at 421 N. State of Franklin Road.

“As a fresh-focused specialty retailer, the Fresh Market carries a variety of natural and organic products, so there is some crossover from a retail knowledge standpoint for someone coming from Earth Fare who would like to stay in the food retail space,” she said.

Cornett said Earth Fare store managers have been helpful as employees start looking for work elsewhere, setting up job fairs in the store’s cafe with representatives from other companies. Cornett said she has some options, but anticipates it could be a difficult transition.

“I worked my way up in this company,” she said, “and I’m going to have to end up doing it again at another company.”

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