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Transportation Secretary Foxx Sued by Former Employer

Transportation Secretary Foxx Sued by Former Employer

DesignLine, a bankrupt North Carolinian company that made hybrid and electric buses before their demiss, is suing U.S. Secretary of Transportation Anthony Foxx in an effort to have more than $420,000 dollars paid back for a job that state Foxx never completed.

The company, a private-equity-backed bus manufacturer, was started in 1985 in Ashburtton, New Zealand with the intent of making tour coaches. The 1990s saw the company diversify into standard transit buses and then hybrid city buses. American interests bought the company in 2006 and relocated the headquarters to Charlotte, North Carolina. In 2007, the debuted their first hybrid models, and soon made the hybrid EcoSaver bus and the Eco-Smart bus, which was all electric.

Soon DesignLine began experiencing delays in production and struggled with contract disputes as well as lawsuits. In August of 2013, they filed for chapter 11 bankruptcy protection and sold off all their assets. At the time, they were facing $53 million dollars in unpaid debts. Their buses were used in Charlotte, North Carolina, Arlington, Virginia and Denver, Colorado. The company was then bought and renamed Environmental Performance Vehicles(EPV) and continues to make coach, electric and hybrid buses.

Trustee Elaine Rudisill is managing the attempt to recover money and assets where she can for the company and has opened dozens lawsuits on behalf of DesignLine’s creditors. One of those suits was brought against Foxx in Charlotte’s U.S. Bankruptcy Court. All of these suits are a part of an overall attempt to claw back payments from businesses and company insiders, as trustees are allowed to do in bankruptcy dealings. If the bankrupt company was insolvent and collapsing during the time period it took on these new liabilities, these transfers of payments from DesignLine can be deemed “fraudulent” and the trustee can fight to get them returned. This is usually the best option for creditors trying to cut their present and future losses and gain back some of what they have already lost.

The suit alleges that Foxx never performed a job that he was hired by DesignLine to do. The company stated they paid millions of dollars in general legal counsel fees and other services to two outside law firms, services that included “obtaining financing, board meetings, collection issues, contract negotiations, and general legal counsel.” They also hired Foxx as their deputy general counsel from December 2009 to 2013, during which time he was also the mayor of Charlotte, North Carolina. The suit alleges there are no records that the two firms and Foxx ever worked together in any capacity, nor did they discuss any matters relating to the company. Foxx resigned from his work at DesignLine one day before he took his new post as transportation secretary, after being nominated by President Obama in 2013.

Court papers from Rudisill’s lawyers state DesignLine’s “books and records do not reflect any communications between [Mr. Foxx] and the outside firms, nor do they reflect any activities or actions of defendant in his role as deputy general counsel.” The suit goes on to claim the Foxx “spent little to no time” at DesignLine’s Charlotte-based offices during the time period his services were paid for.

Mark MacDougall, the lawyer from the Akin Gump firm representing Foxx said, “This is a routine claim — one of many dozens brought by this trustee. We’re confident this will be resolved in Secretary Foxx’s favor.”

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