Matter of Interco Inc.
| Decision Date | 22 July 1997 |
| Docket Number | Bankruptcy No. 91-40442-172. |
| Citation | 211 BR 667 |
| Parties | In the Matter of INTERCO INCORPORATED, et al., Debtors. In re INTERCO INCORPORATED. Harold Wittes, Claimant. |
| Court | U.S. Bankruptcy Court — Eastern District of Missouri |
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Bryan, Cave, McPheeters & McRoberts, Gregory D. Willard, Lloyd A. Palans, John C. Boyle, Carl J. Spector, Vicki L. Little, St. Louis, MO, for Debtors-In-Possession.
Michael Flanagan, Polsinelli, White, Vardeman & Shalton, Kansas City, MO, Joel A. Poole, Polsinelli, White, Vardeman & Shalton, Chesterfield, MO, Andrew L. Eisenberg, Nancy Yale Stout, Palmer & Dodge, Boston, MA, for Claimant.
This Order addresses the Debtors' objection to the proof of claim filed by Harold Wittes ("Claimant").
This is a core proceeding pursuant to Section 157(b)(2)(B) of Title 28 of the United States Code. The Court has jurisdiction over the parties and this matter pursuant to 28 U.S.C. §§ 151, 157 and 1334, and Rule 9.01 (formerly Rule 29) of the Local Rules of the United States District Court for the Eastern District of Missouri.
On January 24, 1991, Interco Incorporated ("Interco") and thirty affiliated entities ("Debtors") filed for relief under Chapter 11 of the United States Bankruptcy Code. The Debtors' Chapter 11 cases are jointly administered for procedural purposes, pursuant a January 25, 1991 Order of this Court.
The Debtors have continued in possession of their property and have operated and managed their businesses as debtors-in-possession and as Reorganized Debtors. The Debtors' Amended Joint Plan of Reorganization was confirmed by this Court on June 26, 1992.
The thirty-one underlying Bankruptcy cases were closed by the Court on March 19, 1996. In its closing Order, the Court specifically retained jurisdiction to enter a final determination and order with respect to pending matters such as that being concluded here. 28 U.S.C. § 1334; 11 U.S.C. § 1142; Rules 3020(d) and 3021, F.R.B.P.
On June 27, 1991, the Claimant filed Proof of Claim No. 4035 in the Interco case. The claim is based on a nonbankruptcy lawsuit that had been filed against Interco and College-Town, a division of Interco, in 1988. The nonbankruptcy lawsuit was filed in the United States District Court for the District of Massachusetts (Civil Action No. 88-0994-Y) and has been stayed as a result of these bankruptcy proceedings. The Claimant filed a motion to modify the automatic stay of 11 U.S.C. § 362 so as to permit him to proceed with the litigation commenced in Massachusetts. This Court denied the motion on December 6, 1991.
In the underlying lawsuit, the Claimant filed a two-count First Amended Complaint alleging that the Defendants had violated the Age Discrimination in Employment Act, 29 U.S.C. § 621, et seq. ("ADEA"). Claimant also alleged that the Defendants had violated the age discrimination provisions of the Massachusetts General Laws c. 151B. Mass. Gen. L. ch. 151B, § 4 (1990).
On November 4, 1991, Interco filed an objection to Mr. Wittes' claim. On December 9, 1991, Mr. Wittes filed a "Motion for Mandatory Withdrawal of All Proceedings Related to Proof of Claim Filed by Harold Wittes Pursuant to 28 U.S.C. § 157(d)" in the United States District Court for the Eastern District of Missouri. Simultaneously, Mr. Wittes filed with this Court a "Motion for Stay or, in the Alternative, for Continuance of Hearing," in which he requested this Court to stay the hearing of Debtors' objection to his claim pending a decision by the District Court on the withdrawal of the reference motion. This Court denied the motion to stay on January 21, 1992; the District Court denied the motion for withdrawal of the reference on March 3, 1992.
On March 24, 1992, the Claimant filed a motion in which he requested this Court to "transfer this proceeding to the United States Bankruptcy Court for the District of Massachusetts, or in the alternative, to appoint a special master located in the District of Massachusetts to make proposed findings of fact." On April 13, 1992, this Court denied Claimant's motion.
The trial of this matter included the testimony of witnesses for both parties. Numerous exhibits were submitted and have been reviewed by the Court. As part of certain post-trial proceedings, the Parties stipulated to the admissibility of the deposition of Carl Packer, an Executive Vice President of an Interco operating division.
Based on the evidence presented and the record as a whole, including the post trial stipulations, memoranda and letter briefs, this Court makes the following findings of fact and conclusions of law.
Interco is a Delaware corporation. Until it ceased operations, College-Town was an operating division of Interco that manufactured and distributed women's clothing. Deposition of Carl Packer, March 1, 1989, p. 17. In 1966, the Claimant was hired by College-Town as Distribution Manager of its warehouse facility in Braintree, Massachusetts.
The Claimant testified that prior to joining College-Town, he worked at Majestic Specialties, a women's clothing firm in Cleveland, Ohio. He began his employment there in 1947, working as a stockboy. He testified that he worked his way up, learning different functions including: puffing away stock, picking, packing and writing invoices. By the time he left Majestic Specialties, he was the Distribution Manager. He testified further that as Distribution Manager he was responsible for a "three-floor operation" which was a "hands-on operation." He asserted that he was involved in putting together a computer package so the company could ship more goods in a shorter period of time.
In 1966, the Claimant was hired by College-Town. At that time, the College-Town management included: George Sibley — the founder of College-Town and Chairman of the Board; Gerald Sibley — the President of College-Town; Arthur Sibley — the Vice-President of College-Town; and Bill Packer, who was the uncle of Arthur and Gerald Sibley.
The Claimant began work as the Distribution Manager at the College-town facility in Braintree, Massachusetts. The Braintree facility was the only facility operated by College-Town at that time. The Braintree facility had approximately 100,000 square feet of space: 60% was distribution space and 40% was space for cutting, or for piece-goods and office space. The Claimant explained that cuffing involved laying a pattern on top of fabric and cutting it. The cut pieces were then sent to vendors who would assemble the garments and send them back to Braintree as finished product.
The Claimant provided the Court with a detailed description of the operations which were involved in warehousing clothing and defined some terms which are used in the clothing industry. He explained that most clothing firms receive garments on hangars. The hanging garments must be unloaded from specially devised trucks quickly and the garments must come off the truck in a specific way. The "flat garments" must also be unloaded and put directly into stock. The "receiver" must count everything that comes off the truck. Then the receiver breaks down all the clothes by style, size and color, and records that information on receiving records. The company selects a certain percentage of the garments to be inspected after they are received as a quality check.
After the inspection, the goods are moved to a stock area. The garments are usually hand-pushed on a "slick rail", a special tubing that supports moving trolleys. Once the stock reaches the designated location, the garments are "coordinated". Tops and bottoms with the same coloration and the same styling are put together. The coordinated items are put in a specific area.
"Allocation" is the process by which available finished goods are assigned to fill open customer orders. The allocator's job is to coordinate shipments. Inventory may be allocated on a "first come, first served" basis. However, the allocator must also deal with a preferred list of customers who are usually served first. After the allocator determines which styles are available and coordinates colors, the order goes to the "picker."
The "order picker" is the person who fills an order which is also known as order "picking". The picker goes to the specific area of the aisle, selects clothing by style, size and color and puts it onto a trolley. The order is then pushed into the checking area where the garments are checked against the order for style, size and color and the checker records the number of garments which were selected. Next, the order is pushed into the packing area where the order "packer" checks the total number of garments which were selected and checked against the number the checker wrote on the document. After the order is packed, it goes to the "shipper" who makes out the bills of lading, attaches the shipping label and prepares the order for loading. Finally, the "handlers" load the orders onto the proper trucks.
The Claimant testified that when he first came to Braintree, "everything was old-fashioned." Orders were selected from handwritten documents and it took a long time to complete the order process. The machinery was antiquated and the process depended on hole-punch cards. He stated that he implemented a computerized system and took courses from IBM in order to assist with the change.
The Claimant was responsible for an expansion of the Braintree facility in about 1970. The distribution center was enlarged by about 55,000 square feet, and the cutting center was expanded to included piece goods, inspection and storage areas.
He testified that as Distribution Manager, he filled in for workers who were missing from any of the departments. Thus, while he was in a managerial position, he continued to perform the "hands-on" functions such as checking, packing and picking.
The Claimant's duties included staffing the distribution...
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