Cary News

Lawsuit spotlights Connexion’s woes

A lawsuit filed against Connexion Technologies, which this month laid off 40 workers in yet another round of job cuts, links the company with “alleged fraud” but provides no details and presents no evidence.

The reference to fraud, which Connexion denies, is contained in a lawsuit filed this month by a former employee in the company’s call center in Alabama. The worker was laid off in the second of three rounds of major job cuts made by the Cary-based company since late January.

“Anybody can file a complaint and state what they want in the complaint,” said Walter Daniels, Connexion’s general counsel. “We do not believe the complaint has merit in any respect.”

Once among the Triangle’s fastest-growing companies, Connexion has laid off roughly two-thirds of its workers this year. It eliminated 80 jobs in late January and 232 in March. A week ago, it followed up with 40 additional job cuts, including 29 in Cary, reducing its companywide workforce to 177 full- and part-time workers. That includes 105 workers in Cary.

Another sign of Connexion’s distress: It is discontinuing health insurance for employees, and COBRA coverage for those who were laid off, as of May 30.

Connexion, which builds and manages telecommunication networks for residential communities, was founded in 2002 by Glen Lang, a former Cary mayor who remains CEO.

The lawsuit contends the company’s layoffs in March came about when DirecTV “learned of alleged fraud committed by” Connexion and subsequently terminated its relationship with the company. A Connexion business called Prime Cast sells DirecTV’s satellite TV, phone and Internet services that use infrastructure owned and operated by Connexion.

That is the only reference to fraud made in the lawsuit.

Connexion acknowledges a contract dispute with DirecTV that it is trying to resolve but denies the fraud allegation. DirecTV declined to comment on the allegation.

The lawsuit also contends that Connexion didn’t give its call center employees in Gulf Shores, Ala., the required 60-day notice under the federal Worker Adjustment and Retraining Notification Act. It also alleges that Connexion employees had pre-shift and post-shift duties, each of which took about 15 minutes, that they had to perform “off the clock.”

The lawsuit was filed on behalf of a single laid-off employee, Buffy Madden of Elberta, Ala., but seeks to represent other call center employees “performing off-the-clock work without being paid” during the past three years.

With regard to the fraud allegation, Connexion’s Daniels said, “DirecTV has never accused Connexion or any of its affiliates of committing fraud.”

Daniels did say a contract dispute with DirecTV was “one of many factors” contributing to the company’s recent job cuts.

“DirecTV has asserted it has the right to terminate certain contracts, and those terminations are in dispute,” he said. “We are working in good faith with DirecTV to resolve the differences.”

Although it declined to comment on the lawsuit’s allegation, DirecTV issued this statement: “DirecTV is working with Connexion to ensure that DirecTV customers continue to receive service. We’re conducting a review that includes Connexion’s operating and financial status and any practices relating to their execution that come to our attention.”

Allen Arnold, a lawyer with the Birmingham, Ala., firm Arendall & Arnold, which filed the lawsuit, declined to comment on the alleged fraud. “I wish I could,” he said.

When Connexion laid off more than half of its staff last month, a company executive said the cutbacks were triggered by the privately held company’s failure to raise the financing it needed to execute its business strategy. The first round of cuts was attributed to a shift in the company’s business in recent years that required employees with a different set of skills.