Labor Department Shuts Memphis, Tenn., Paper Mill

The U.S. Department of Labor has shut down operations at the American Paper Corp. mill in Memphis after the company failed to pay employees several weeks of wages.

It is the second time since April that the government has shut down the plant, formerly called American Tissue Inc., for not paying its employees.

However, this time the government gained a temporary retraining order from U.S. District Court Judge Julia Gibbons, to halt all shipments.

The company has failed to pay about $150,000 in wages and overtime to 95 workers," the government stated.

"Employees are entitled to the wages legally due for their work," said Alfred H. Perry, regional administrator for wage and hour in Atlanta.

Posted on the front gate at the tissue paper mill is a "Hot Goods" sign that states the company is in violation of the Fair Labor Standards Act. It also states that goods can't be taken from the site until all employees have been paid.

The government also gained an injunction against secured creditor Congress Financial Corp. of New York City, which has a lien on the goods in the plant, from shipping products from the site.

The injunction also protects funds that could be gained from goods already shipped since May 13 from the 1.8million-square-foot factory at 400 Mahannah in North Memphis. The court order forces all funds received from American Paper, and affiliated companies in Memphis, since May 13 to be deposited with the clerk of the court.

"We have been temporarily shut down and that's all I know," said Patricia Wilson, acting plant manager.

She referred media calls to the company's headquarters in Hauppauge, N.Y., where telephone calls from a reporter were not returned.

Employees were not paid for the weeks of May 13-19, May 20-26, and May 27-June 2, according to court documents.

The last time the company was shut down by the labor department it had not paid 207 workers. The company subsequently paid workers about $240,000 in back wages and was able to restart operations.

In September 2001, American Tissue, also of Hauppauge, N.Y. filed for Chapter 11 bankruptcy protection. A group of executives from the company subsequently formed American Paper to continue operations in Memphis, and at other sites, which were not included in the bankruptcy filing.

"The power was restored in April and it has not been disconnected (this week)," said Nicole Ritchie, a spokesman for LG&W.  The Commercial Appeal (Memphis, Tenn.)