• What is the current status of the case?

  Update December 11, 2023:

  IMPORTANT NOTICE

  You may have received information in the mail about Sprout’s Chapter 11 bankruptcy proceedings in Central Islip, New York (Case No. 23-72433). If you are owed wages by Sprout, you must file a Proof of Claim Form with the Court by December 21, 2023.

  If you have any questions about the Proof of Claim process or did not receive a form, you can contact the Court’s help desk at (631) 712-6200, option 6.

  UPDATE October 19, 2023:

  As you know, the Eastern District of New York Bankruptcy Court stayed (stalled or put on hold) our case pending in the Eastern District of New York Federal Court where we sought preliminary approval of the parties’ class action settlement. The Bankruptcy Court initially approved the appointment of a Chapter 7 Trustee but today converted it to a Chapter 11 proceeding.

  The Trustee moved (asked) the Bankruptcy Court to revoke our settlement agreement with Sprout, Strauss and the other named Defendants which will be considered on November 15, 2023. Based on advice from our consulting bankruptcy attorney, this request to revoke the settlement agreement will be granted and there will no longer be a settlement.

  Based on these circumstances, we recommend that you ask to receive email notice of all pleadings and notices from the Bankruptcy Court and, importantly, file a Proof of Claim form with the Eastern District of New York Bankruptcy Court before December 21, 2023, which is called the Bar Date.  You can find a Proof of Claim form to download and fill out on the web.

  We will continue to protect your interests and aggressively litigate the case in Federal Court against Strauss, Recovco, Salzman and Wright.

  Feel free to email Bruce Menken at bmenken@nyemployeelaw.com if you have any questions.

• Message to Opt-Ins and Putative Class Members, October 9, 2023: As you are aware, some of the banks Sprout owed money to have forced the company into bankruptcy.  This was done after Sprout put about $1.9 million in settlement funds into escrow with our class action lawsuit’s settlement administrator.  In a nutshell, those banks would like to get some or all of that money.  For now, the money is in escrow until the bankruptcy judge decides what to do. 

  The situation is still fluid.  Sprout is fighting the bankruptcy, and is trying to arrange things so the settlement goes through.  Our firm has retained bankruptcy counsel and are considering our options.  If we do not think the settlement will happen, we have the option to cancel it, and continue the lawsuit against Strauss individually to obtain a judgment against him.  There are upcoming hearings in the bankruptcy case that will let us know the chances of salvaging the settlement. 

  If you have any questions, feel free to reach out to any of us individually.  Please know that we are still working hard to get everyone as much of the money they are owed as possible. 

  UPDATE July 27, 2023: Plaintiffs have filed a request for the Court to continue evaluating the Preliminary Approval Motion. Defendants Recovco and Strauss have joined the request.

  July 18, 2023: On July 7, 2023, an involuntary petition against Sprout Mortgage, LLC was filed under chapter 7 of title 11 of the United States Code, 11 U.S.C. §§ 101–1532 in the United States Bankruptcy Court for the Eastern District of New York. Defendants in this Class Action Lawsuit alerted the Court to this in a filing on July 11, 2023, and requested that the Class Action Lawsuit be taken off the Court’s active calendar pending the resolution of the Debtor’s Bankruptcy Court case. Judge Azrack has not yet issued a ruling on this request. Meanwhile, Plaintiffs’ counsel continue to explore all options for moving this settlement forward and we will provide periodic updates on the status of the case.

  June 18, 2023: Many people have reached out to us to inquire of the status of the case. Nothing has changed since the June 5, 2023, update below. We await the Court’s ruling on the Motion of Preliminary Approval. In the event the Court grants preliminary approval of the motion, a notice advising class members of the lawsuit and their rights will be distributed to all putative class members. A new website run by the company the parties designate to administer the proposed settlement (the “Settlement Administrator”) will then go live.

• June 5, 2023: Plaintiffs have filed the Motion for Preliminary Approval, which contains the details of the proposed settlement. We await the Court’s ruling. The documents are linked here:

  Memorandum of Law

  Declaration of Bruce Menken; Ex. 1 - Settlement Agreement; Ex. 2 - Proposed Notice; Ex. 3 - Proposed Order; Ex. 4 - Soderstrom Declaration; Ex. 5 - Forootan Declaration; Ex. 6 - Nosrati Declaration; Ex. 7 - Lapuyade Declaration

  Notice of Motion

• Our law firm, Menken Simpson & Rozger LLP, filed a Second Amended Complaint on October 25, 2022, adding a legal claim based on Sprout’s failure to notify terminated employees of COBRA benefits. Defendants’ Answer to the Complaint can be viewed here.  The case caption is Agudelo et al. v. Recovco Mortgage Management LLC et al., 22-cv-4004. The case is pending in Federal Court in the Eastern District of New York.  The District Court Judge assigned to the case is the Honorable Joan Azrack. The Magistrate Judge assigned to the case is the Honorable Lee G. Dunst.

  We are also continuing to file individual opt-in forms for employees who wish to join the lawsuit’s federal claim for lost wages under the Fair Labor Standards Act. So far, we have filed over 100 opt-in forms and counting with the Court. If you would like to opt-in to this claim and have not submitted a form yet, please email brabinowitz@nyemployeelaw.com to request a form.

  On October 6, 2022, we filed a class action arbitration on behalf of dozens of people who were laid off in the months leading up to the July 6, 2022, shutdown and were not paid severance they are contractually entitled to. If you are in this situation, please email brabinowitz@nyemployeelaw.com if you have not done so already so we can ensure you receive relevant information and are identified with the correct proceeding.

• What legal claims do Plaintiffs have?

  Plaintiffs in the case filed in the Eastern District of New York have asserted legal claims based on (1) Defendants’ failure to pay them wages, commissions, and other monetary payments they earned; (2) Defendants’ failure to give them adequate notice of the shutdown under the New York State and federal Worker Adjustment and Retraining Notification Acts; and (3) Defendants’ retroactive cancelation of employees’ health insurance benefits.

  Claimants in the arbitration filed on October 6, 2022, have asserted breach of contract claims for Respondents’ failure to pay severance to employees who were laid off and signed separation agreements entitling them to severance.

•  Am I included in this lawsuit?

  If you were let go as part of the shutdown on July 6, 2022, you are included in the class proposed in the Complaint filed in the Eastern District of New York.  If you were let go as part of an earlier layoff this year and were not paid severance that was promised to you, you are included in the class proposed in the arbitration filed on October 6, 2022. Note that the proposed settlement of the case will combine this action with three other California class actions and will include California employees who were not paid properly from February 22, 2018 through the shutdown.

 Please feel free to reach out to our firm if you have questions.  The case is being litigated by Brenna Rabinowitz, Scott Simpson and Bruce Menken.