Ex-Eriez CEO Claims He Was Fired Over COVID-19 Rift
By Ed Palatella
May 15, 2020 - Manufacturer says no merit to lawsuit’s claims that ex-CEO was dismissed over attempt to close due to governor’s order.
The coronavirus pandemic has triggered a high-level legal feud involving one of Erie’s most prominent businesses.
The former CEO of Eriez Manufacturing is claiming that the company wrongfully fired him over the COVID-19 outbreak — a contention that Eriez says is groundless.
In a lawsuit that seeks to highlight the deadly sweep of COVID-19 and suggests that Eriez employees had contracted the contagion, Timothy Shuttleworth is claiming that he was forced out as the CEO of Eriez on April 7 because he attempted to follow Gov. Tom Wolf’s March 19 shutdown order concerning non-life-sustaining businesses.
“Throughout history,” reads the beginning of the wrongful-discharge suit, filed Wednesday in Erie County Court, “nothing has killed more people than infectious disease.”
Shuttleworth, who had been CEO of Eriez for 16 years and an employee for 25, is claiming that he sought to abide by Wolf’s order and apply for a waiver so that Eriez could stay open, but that the company’s owner and board chairman, Richard Merwin, refused to take that approach and retaliated against Shuttleworth by having him fired. Merwin said Eriez could stay open without a waiver, the suit claims.
At one point, according to the suit, “Merwin continued to insist that Eriez remain open even as Eriez employees began contracting COVID-19” — a claim that Eriez said is false, along with the suit’s contention that Shuttleworth was fired due to the dispute over the waiver request.
“The COVID-19 situation had no bearing on Mr. Shuttleworth’s separation from the company,” Eriez said in a statement to the Erie Times-News on Thursday.
“Eriez has never placed profits ahead of employee health,” the statement also said.
“At no time was any Eriez employee in the U.S. diagnosed with COVID-19,” according to the statement, which said the company has followed or exceeded all federal and state requirements for protecting employees and others from COVID-19.
“Eriez,” according to the statement, “has prioritized employee health and safety, communicating all workforce protection efforts through a series of COVID-19 updates that have been posted in the plant and on the Eriez employee website. Eriez prides itself on its outstanding employee safety record.”
In his suit, Shuttleworth claims that Merwin maintained that Eriez did not need to seek an exemption and could stay open despite Wolf’s directive. Shuttleworth, citing emails and other communications, also claims that Merwin criticized Wolf; referred to Wolf once owning a cabinet company in York County; and questioned the governor’s strategy of closing non-life-sustaining businesses to control the spread of COVID-19.
The suit also claims Merwin derided the county officials who would have to enforce the shutdown order.
“Merwin maligned Governor Wolf as an ‘idiot’ and a ‘former furniture wholesaler,’ and compared Erie County health and safety inspectors to Nazis, calling them ‘socialist stormtroopers,’” according to the suit.
“Merwin summarily decreed that Eriez would continue operating and would put the burden on the Commonwealth to force Eriez to close,” the suit reads. “Merwin’s foremost concern was money. He complained that if Erie closed down, it would lose business to competitors in states not run by an ‘idiot.’”
When Shuttleworth challenged Merwin and contended that Wolf’s order at least required Eriez to investigate whether the company needed a waiver, “Merwin concluded that Shuttleworth wanted to close Eriez down and could not be trusted,” the suit claims. It claims that Merwin “caused” the company’s board of directors to fire Shuttleworth.
“The termination of Shuttleworth’s employment contravenes the public policies embodied in the Governor’s Order and the legislation on which it is based and caused Shuttleworth substantial losses,” according to the suit.
The suit, filed by the Bracken Lamberton law firm in Pittsburgh, names Shuttleworth as the sole plaintiff and Eriez Manufacturing Co. and Merwin as the defendants. The suit seeks back pay for Shuttleworth; reinstatement or other compensation; punitive damages; and compensatory damages for Shuttleworth’s “grief, anxiety, mental anguish and distress.”
The lawyers for Merwin and Eriez will get a chance to respond to the suit in court.
Focus on a Waiver
Eriez, with its headquarters at 2200 Asbury Road in Millcreek Township, specializes in advanced technology for separating things through the use of magnets, vibration, screening, flotation and other methods.
According to the lawsuit, the company was shuttered for one day — March 20 — in response to Wolf’s closure order, which he relaxed for certain businesses in Erie County on May 8. Eriez reopened on March 23, though Shuttleworth’s suit claims that the decision to reopen without a waiver was Merwin’s and not his.
Upon learning of Wolf’s March 19 closure order, according to the suit, Shuttleworth sought to investigate how the directive applied to Eriez, which operates in 12 countries, including China, and has about 350 employees in Erie and about 800 worldwide. The suit claims that Shuttleworth determined that Eriez had to close its headquarters and its plant on Wager Road, also in Millcreek.
The suit claims that Merwin immediately opposed that decision, arguing that the state regulations defined Eriez as a life-sustaining business that could remain open because it was in the exempt “mining machinery manufacturing” category. The suit claims that Shuttleworth and other members of senior management determined that the category did not include Eriez, but that Merwin resisted their findings and criticized Wolf.
In the end, Eriez never applied for a waiver to stay open. In a letter to the state Department of Community and Economic Development on March 20, Shuttleworth wrote that Eriez determined that it was allowed to stay open. He wrote that the company fell under exempt categories including mining manufacturing and that the company’s products supported other life-sustaining industries.
“Eriez has concluded that Eriez is permitted to continue in operation,” Shuttleworth wrote in the letter, which also detailed social distancing and other measures the company had put in place to protect its employees from COVID-19.
The letter, however, did not include a request for a waiver, which the company never needed to stay open after all. Shuttleworth claims in his suit that he wanted to ask for a waiver, but that Merwin refused. The suit claims Merwin told Shuttleworth that Merwin feared “an inexperienced underling” at the state level would reject Eriez’s request for a waiver.
Shuttleworth claims that Merwin’s position further divided the two of them and undermined what Shuttleworth characterized as his “good faith, informed and reasonable” attempts to follow Wolf’s order.
“Shuttleworth was stunned,” according to the suit. “Not only was Merwin’s position inconsistent with the Governor’s waiver process, the ‘risk’ Merwin feared, if it existed at all, was shared equally among all businesses. If other businesses refused to apply for waivers because of some speculative fear of arbitrary government action, no business would close and the coronavirus could spread across the Commonwealth like wildfire.
“Shuttleworth thought again about the spirit of Governor Wolf’s Executive Order and whether Eriez remaining open furthered the public safety objectives of the Order,” according to the suit. “It troubled him that Merwin was thinking about profits when Governor Wolf and other officials were trying to save lives.”