Former employees of ag insights platform Gro Intelligence have filed a putative class action lawsuit* against the New York-based firm for alleged violations of the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers with 100+ full-time employees to provide written notice of mass layoffs at least 60 days in advance.
According to the lawsuit, “Starting on February 1, 2024 and continuing through March 1 2024, Defendant abruptly terminated over 90 of its employees, about two thirds of its staff.”
At the time, staff told AgFunderNews that the company had said it would cover back pay and PTO, plus health insurance through March for those laid off. They were not offered a severance package or given any advance warning that they would be terminated.
Gro had been trying to raise additional capital through a convertible bond [a bond that can be converted into shares at a later date] as a bridge until it generated more consistent and stable revenues, claimed one source, who said the firm had secured an undisclosed amount of 11th-hour funding that came “with a lot of conditions.”
Former CTO James Cariello, who was installed as CEO at Gro Intelligence in February to replace founder Sara Menker, did not respond to a request for comment on the lawsuit.
WARN notice required
According to the US Department of Labor website, Gro filed a WARN notice on March 11, 10 days after it laid off 75 staff on March 1.
Under federal law, such notices are required 60 days in advance when a business with 100+ full-time workers (not counting those with less than six months on the job) lays off at least 50 people at a single site within a 90-day period. New York state law in turn requires firms employing 50+ full time staff to provide 90 days’ advance written notice for layoffs affecting 25 or more employees.
An employer who fails to provide notice as required to local government is also subject to civil penalties.
A complaint filed on April 1 in the southern district of New York by plaintiffs Jake Bielefeldt (a former senior software engineer at Gro) and Simon Firestone (a former economist at Gro) on behalf of 90+ terminated employees, alleges that:
- Gro did not provide 60 days’ advance written notice of the mass layoffs as required under federal law, and 90 days’ notice under state law.
- Gro did not provide contemporaneous paystubs to employees on several occasions in 2023 and in Jan/Feb 2024, as required under the New York Wage Theft Protection Act. Instead, employees were provided with “fragmentary information that the defendant [Gro] expressly stated was not intended to be used as an ‘official’ pay statement” and did not have “accurate, timely, reliable statements of their wages, PTO, and benefits.”
- Gro failed to pay plaintiffs their “wages, salary, commissions, bonuses, health and life insurance premiums, accrued holiday pay and accrued vacation for 60 days following their respective terminations.”
By certifying a class of plaintiffs rather than handling a flurry of individual lawsuits, the courts would avoid “unduly duplicative litigation that might result in inconsistent judgments,” claimed Bielefeldt and Firestone, who seek to recover up to 60 days’ wages and benefits.
According to the Dept of Labor, there are three exceptions to the 60-day notice requirement under the WARN Act:
1 – Faltering company: “When, before a plant closing, a company is actively seeking capital or business and reasonably in good faith believes that advance notice would preclude its ability to obtain such capital or business, and this new capital or business would allow the employer to avoid or postpone a shutdown for a reasonable period.” According to the Dept of Labor, this exemption “applies to plant closings but not to mass layoffs and should be narrowly construed.”
2 – Unforeseeable business circumstances: When the mass layoff is caused by business circumstances that were not reasonably foreseeable at the time the 60-day notice would have been required (e.g., “a business circumstance that is caused by some sudden, dramatic, and unexpected action or conditions outside the employer’s control, like the unexpected cancellation of a major order”). According to the Dept of Labor, “The employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market.”
3 – Natural disaster: When the mass layoff is the result of a flood, earthquake, drought, storm, tsunami, etc.
Employers are not required to give notice if they can show that mass layoffs spaced out over a 90-day period occurred “as a result of separate and distinct actions and causes and are not an attempt to evade WARN.”
The number of lawsuits alleging WARN violations has been rising as more companies conduct mass layoffs, according to a Bloomberg Law analysis.
‘Like most startups, it tries to be everything to everyone and needs to find its niche’
Founded by former ag commodities trader Sara Menker in 2012, Gro Intelligence is an AI-powered insights company providing decision-making tools and analytics to a range of clients from food & ag companies to governments, insurers, investment banks, consulting firms and universities. It netted an $85 million series B round in January 2021 from backers including Intel Capital and Africa Internet Ventures, and was named as one of TIME’s 100 most influential companies that year.
The company, which also has offices in Nairobi, generates the bulk of its revenues from Unilever, one former employee told AgFunderNews. However, it had picked up some business with other packaged food companies and a number of quantitative and fundamental commodities investors.
“It had positioned itself as a food security platform to a small Asian country and a country in the Middle East exporting oil, without success. It had also attempted to engage the US government under a variety of guises but was only picking up bits and pieces of business here and there.”
While Gro had lost a crop input company as a client, its current woes were not the result of a sudden loss of clients, said the source. “The renewal rates for the commodities investors were excellent.”
Asked what had gone wrong, the source blamed a combination of the challenging funding environment and a “fundamental mismatch between the product and the market.
“They were chasing deals for projects that resembled bespoke consultancy work as opposed to something that would generate replicable revenue streams. They also had a number of mis-hires and until very recently, they didn’t have a CFO, so I don’t know that they were able to produce reasonable financials on a quarterly basis for investors.
“Sara should have brought in an operating CEO probably two years ago.”
*The case is Jake Bielefeldt and Simon Firestone et al vs Gro Intelligence Inc, filed in the southern district of New York on April 1. Case # 1:24-cv-02472
Further reading:
BREAKING: Gro Intelligence lays off 60% of staff, secures some 11th hour funding
