Hope Bakery owners say they couldn’t give workers 60 days notice; first lawsuit dropped to merge with second

HOPE, Ark. – The owners of the shuttered Hope Bakery are asking a federal judge to throw out a class-action lawsuit over the plant’s sudden closing, arguing that financial trouble excused them from giving workers the 60 days notice federal law normally requires.

Meanwhile, the first worker to sue over the closing dropped his case Wednesday so it could be combined with the second, according to one of his attorneys.

Christopher Estrada, whose July 22 lawsuit was the first of two filed in federal court in Texarkana, Ark., filed a notice Wednesday voluntarily dismissing his claims against Hope Baking Company Inc. and East Baking Co. Inc. The dismissal is without prejudice, meaning Estrada can refile. The one-page notice does not give a reason.

“It is my understanding that this lawsuit had to be dismissed without prejudice so it could be merged with a lawsuit alleging the same facts that is filed with the Court,” J. Matthew Coe of Rogers & Coe Attorneys at Law in West Memphis, Ark., said in an email to TXKtoday. Coe said he filed the suit as local counsel for Lankenau & Miller LLP of New York and The Gardner Firm of Mobile, Ala., which represent Estrada, and referred further questions to those firms.

As of Thursday, no filing in the remaining case showed Estrada being added.

That leaves a second suit, filed July 28 by former employee Travis Box, as the only pending case over the closing. Box’s suit makes the same claim: that the companies violated the federal Worker Adjustment and Retraining Notification Act by giving roughly 250 employees one week’s notice before the plant at 2700 E. Third St. shut down July 25. The act requires employers with 100 or more workers to give 60 days written notice before a plant closing or mass layoff.

Box’s complaint says the number of affected workers “may have approached or exceeded 300.”

Companies cite ‘dire’ finances

In separate answers filed Sept. 4, Hope Baking and East Baking deny violating the law. Both admit they are employers covered by the WARN Act, that they employed more than 100 people, and that more than 50 employees and at least a third of the workforce lost their jobs when the plant closed.

Hope Baking said it closed the plant “due to dire financial circumstances and after unsuccessful efforts to secure financial resources up until the week of the announced closure.”

Both companies deny that the WARN Act “requires notice unequivocally in all circumstances.” They say that if notice was owed, they are excused from the full 60 days under two exceptions in the law. One covers a struggling company that was actively seeking money or business that would have kept it open and believed that announcing a shutdown would have ruined those efforts. The other covers business circumstances that were not reasonably foreseeable when notice would have been due.

The companies also argue that, if the court finds a violation, they acted in good faith and had reasonable grounds to believe they were not breaking the law. Under the WARN Act, a judge may reduce damages in that case.

The companies also asked the court to dismiss Box’s suit under the “first-filed rule,” because Estrada had already filed “an identical claim and proposed class” six days earlier. They noted that Box did not identify Estrada’s case as a related matter on his civil cover sheet. Estrada dismissed his case 19 days after the answers were filed.

Both companies are represented by H. Wayne Young Jr. of the Little Rock firm Friday, Eldredge & Clark. They ask that Box’s complaint be dismissed with prejudice and that they be awarded attorney’s fees.

Who made the call to close

A central question in the case is whether East Baking, a Massachusetts company based in Holyoke, Mass., can be held liable along with Hope Baking. Box alleges the two operated as a “single employer” with common ownership, shared officers and centralized control over payroll, benefits and personnel matters.

In its answer, East Baking denies that and says Hope Baking made the decision to close the plant. East Baking says it bought the assets of Southern Bakeries in March 2024 and reorganized the plant as “a newly formed, separate entity,” Hope Baking Company Inc. Both lawsuits had said the acquisition took place in 2023.

East Baking does admit that Hope Baking was branded as a member of the “East Baking Company Family of Bakeries” and “would utilize East Baking’s resources for certain matters.” Both companies acknowledge that Danny Z. Serra was a “key leadership executive” for each of them, though they deny the rest of Box’s allegations about shared management.

Box’s complaint says that in January 2024 the company publicly announced a $37 million expansion that was expected to create about 266 jobs, which it says shows the owners planned to keep the plant running for the long term. Hope Baking admits it announced plans to expand the plant in January 2024.

Health insurance canceled before closing

Both companies admit that Hope Baking sent employees letters on July 10, 15 and 18 saying the carrier had canceled the workers’ group health insurance. Box alleges workers were told continuation coverage would not be available. According to his complaint, the July 18 insurance notice was printed on East Baking letterhead.

Box’s complaint also says the written closure notice employees got through the company portal on July 18 did not mention the WARN Act, did not name a company contact or phone number, and listed East Baking’s Holyoke headquarters as the company address. He alleges the companies also failed to notify the state’s dislocated worker unit and local elected officials, as the law requires.

Box, of Hope, worked at the plant for about two years as a full-time Vemag operator and was training for a supervisory position when it closed, according to the complaint. The companies admit those facts and that Box received no severance and signed no release.

Box is seeking back pay and lost benefits for himself and the other laid-off workers, a finding that the violation was willful, and attorney’s fees. He has demanded a jury trial. He is represented by James A. Streett of the Streett Law Firm in Russellville, Ark., and J. Gerard Stranch IV and Mariah S. England of Stranch Jennings & Garvey in Nashville, Tenn.

Court records previously reviewed by TXKtoday show Hope Baking was sued by at least three creditors over unpaid debts beginning in 2023, including staffing firm Collier Investments LLC, Riceland Foods Inc. and Sysco Arkansas LLC. Each case ended in a default judgment. The most recent was entered June 22, less than a month before workers were told the plant would close.

Both cases were assigned to U.S. District Judge John Thomas Shepherd in the Western District of Arkansas. As of Thursday, the court docket showed no hearings scheduled in Box’s case.