Mandriva CEO: Employee Lawsuits Put Us Out of Business

Julie188 writes: As you probably heard by now, Linux company Mandriva has finally, officially gone out of business. The CEO has opened up, telling his side of the story. He blames employee lawsuits after a layoff in 2013, the French labor laws and the courts. "Those court decisions forced the company to announce bankruptcy," he said.

Comments

So, the other side?

[Geoffrey.landis]

So, the CEO's side of the story is that it's all somebody else's fault.

OK, that's not surprising. That's one side of the story. And, the other side says?

Re:So, the other side?

[gstoddart]

Yeah, no kidding ... failing company gets ordered to pay employees before the business folds and they get nothing is not something which evokes much sympathy.

Because I can't tell you have many companies have folded, leaving the employees with nothing, but a CEO who has managed to come out of it quite well.

Sorry, but you're the CEO ... which means the buck stops at you, not you get to skip off with your severance while everybody else gets screwed over.

Mandriva SA went out of business following a few court decisions upon action of former employees, who had been dismissed as a part of the restructuring process in 2013. As the labour laws are very generous towards the employees in France, those court decisions forced the company to announce bankruptcy, as the cash available was not sufficient to cover the amounts due and the shareholders did not want to cover them.

In other words, you were about to go out of business, and instead of leaving the employees with nothing they took what was theirs before you stiffed them and went under anyway.

Sorry, but employers don't give a damn about us. I see no reason to give a damn about them ... and certainly not to the point of not getting paid so the business can fail anyway. Who the hell is going to do that for a company who laid them off?

Sounds like he'd have happily left them with nothing if he'd had the chance. I can't see any reason why the former employees would have done anything but fight for their severance.

Re:So, the other side?

[Anonymous Coward]

The buck does stop with the CEO. All of the bucks. Stop right in his bank account.

Re:So, the other side?

[gstoddart]

The ex-employees got paid, and in fact as CEO makes clear had the court allowed say 'installment payments' or 'deferred payments' rather than 'all the money right now' they may have been able to hang on, but no.

Or, they might have still failed, and the employees would have been left behind with nothing.

These 'greedy ex-employees' wanted their money & 'be damned with who gets hurt'.

Who gives a fuck? They've been laid off, they owe nothing to the company, and getting left holding bag isn't their problem.

That doesn't change the fact the company was legally obligated to pay them.

Your obvious belief that the company owes any single indivdiual employee anything

First off, it's the fucking law that they have to pay severance. So, by law, they sure as hell do owe employees something ... your idiotic belief that workers should be grateful to a have a job and suck it up if they get fired is irrational libertarian drivel.

as opposed to 'in the best interests of the company & as many employees as we can save' is telling.

Are you actually giving me the "needs of the many" crap with regards to a fucking corporation? That employees should forego their severance from a failing company for the "greater good"? Because now you're talking bullshit out of both sides of your mouth.

Why the fuck should any employee put the "best interests of the company & as many employees"? You think employees should give their employers one final act of altruism and sacrifice? For what? Shareholder fucking value?

The corporation doesn't give a fuck about your welfare, they have no business expecting you to give a damn about theirs.

Your selfish & its all about you.

You're fucking right I am. I'm selfish in the exact same way the corporations are -- I'm here to look out for myself. The only difference is in civilized countries there are laws which say you have to give employees severance so that the greedy, selfish assholes who run corporations can't just shit on their employees for their own gain.

Isn't "enlightened self interest" the whole fucking point of capitalism?

Not bending over so the corporation which laid you off can skip out on paying you what they owe you in the hopes that they might come out of it ... that is completely irrational from the perspective of the ex-employees. and somehow says "for the greater good, we should all sacrifice ourselves in the name of corporate profits".

Fuck that.

Re:So, the other side?

[ShanghaiBill]

That's the lawyers. But the injured parties probably got some of their compensation. Maybe even all.

I once worked for a company that had an office in France. To get rid of an employee, you had to give them an extra year of pay, and even then, they could sue you for more, and probably win. If you own a company, and create jobs, the French consider you to be a criminal. There is a reason they have 11% unemployment.

Re:So, the other side?

[tompaulco]

These 'greedy ex-employees' wanted their money & 'be damned with who gets hurt'.

Excuse me? If someone performs services for an employer for an agreed amount, they are selfish for wanting the employer to pay them? Apparently the judge ordered it paid all at once. So they are selfish for wanting the employer to pay them the wages they were due months ago in a manner that the courts said must be done? How about the employer is selfish for not having paid them in the first place. Why blame the victim. The employer is the one that did not fulfill the contract. The employees deserve every penny they worked for. If the company's business model was dependent upon not paying its employees than it is not the employees that should take it on the chin. That is what the C level people get paid for. To take risk. The people working for a pittance shouldn't be the ones taking all the risk.

Re:So, the other side?

[ShanghaiBill]

this actually sounds pretty good to me!

Yes, it is good. Unless you are among the 11% unemployed, or one of the many millions with short term contracts because no one wants to take the risk of offering you a real job. But once you get the permanent position, you can kick back, because the penalty for firing you is prohibitive, resulting in poor productivity growth, and a stagnant economy. But, no problem, just borrow more euros from the hard working Germans across the Rhine.

Not all French people dream about a secure job with little work. I know several that are hardworking entrepreneurs, bursting with ideas. Unfortunately for France, they emigrated to America, and are my co-workers and neighbors here in San Jose, California.

California wine is better too.

Re:So, the other side?

[Anonymous Coward]

All of Europe has a very "non-american" style hiring and firing system.

In the US, you can fire anyone who doesn't belong to a union, at any time, for any reason. This makes jobs have no sense of permanence, and as a result, you constantly get "more expensive, less efficient" people replaced with "cheaper, less competent" people.

In Europe, most countries do not have at-will employment, so you are essentially creating a job for life, so better get as much bank for your euro as possible, because those french employees are super-expensive to have.

And yes, like other posters will mention, no company that produces products except Louis Vuitton and Hermes are willing to create jobs in France. When you need French "support" you hire from Canada (Quebec.) When you want people who can be hired and fired like Americans, you hire Bilingual Canadians from outside of Quebec (eg New Brunswick) because Quebec's language and labor laws are nearly as stupid as France. The companies in Canada try not to hire in Quebec, because the laws there require all business to be done in French. That's why Quebec has it's own media company that also owns the television and wireless. Everyone outside Quebec... you will see "Bilingual" job postings, but the jobs will be outside Quebec.

I digress though. I'd rather Americans outsource to Canada, Australia, New Zealand and the UK. Because countries like India and the Philippines have no labor laws. So companies that outsource to those countries are trying to replace "one person who speaks and understands English competently" with "100 people who neither know English or the job competency."

Re:So, the other side?

[geoskd]

In the US, you can fire anyone who doesn't belong to a union, at any time, for any reason. This makes jobs have no sense of permanence, and as a result, you constantly get "more expensive, less efficient" people replaced with "cheaper, less competent" people.

It is the basic conflict that the conservatives hold as justification for anti union action, and anti labor stance. The trouble is that they are not wrong, and Mandirva is a perfect example why. A company that employed expensive employees in an extremely employee biased legal framework has now been destroyed and all of those employee are out of work. In replacement of that company are any number of companies that have the exact same business model except that they operate in places that do not afford employee protections. In essence, the jobs were not lost, simply transferred to another location (All those Mandriva customer are now Red Hat, or Microsoft customers). At the end of the day, all other things being equal, employment will work like any other unregulated economy, and the jobs go to the lowest bidders (In this case, anywhere except France). Ultimately Conservatives and Liberals are fighting about labor laws, when they have all accepted a bad premise. The problem is neither the conservative viewpoint nor the liberal viewpoint. The problem is that everyone works from the assumption that capitalism is mandatory. Everyone is so busy arguing about which political faction has the right answers, when in fact none of them do. There is not a single political group on earth that has the right answers. They are all too busy worrying about the short term details that ultimately are irrelevant to the problem. Meanwhile the real root cause (human nature) is being almost completely ignored.

Re:So, the other side?

[ChrisMaple]

the shareholders decided to bail instead of pay their debts

What part of "limited liability" of the stockholders of publicly traded corporations do you not understand? Do you think it reasonable that you hand over to your stockbroker $1000 to buy shares of XYZ Corp., and 3 years later the sheriff is knocking at your door demanding $300,000 to pay XYZ's debt?

Re:So, the other side?

[tompaulco]

They had already gotten what they worked for. They were stamping their feet and demanding severance money from a company that didn't have the money, and not caring if they destroyed the company and the lives of the superior employees who still worked there. Nasty, stupid children acting just as expected.

They were demanding severance pay that was already owed them by the company and had not been paid. The financial condition of the company is of no consequence.

Re:So, the other side?

[Anonymous Coward]

France seems to be one extreme, but the US is the other extreme. Both could adjust their policies to something more fair for all stakeholders.

Interesting statistic I found verifying the claims: France has a lower poverty rate than it's unemployment rate, while the US poverty rate is 3.5 times higher than it's unemployment rate. Just having a job isn't that great when you're still in poverty.

Everyone in France who is employed is not in poverty. Intact some people in France who are unemployed are still above poverty.

Re:So, the other side?

[jcr]

There is a reason they have 11% unemployment.

The only reason it's that low is due to all the french people who want to work fleeing to more business-friendly countries.

-jcr

Re:So, the other side?

[Tom]

Actually, it is of consequence, because if the CEO knew that his company had more debt than assets and was unable to pay debts due, he probably broke laws, including criminal laws, by not declaring bancruptcy then and there.

Re:So, the other side?

[Tom]

Yes, it is good. Unless you are among the 11% unemployed, or one of the many millions with short term contracts because no one wants to take the risk of offering you a real job.

I call bullshit.

So you think the american system is better, where due to lack of such laws, basically everyone has a short-term contract because if you can fire everyone with little consequences on short notice, that is what you have.

Look, I am one of those "hard working Germans across the Rhine". Our government spent the past 20 years or so slowly dismantling the social systems and employee protections that our fathers and grandfathers had spent and risked their lives establishing (I'm not joking, one of my grandfathers was a union secretary, killed by the Nazis for his efforts).

The result is that maybe on paper unemployment is lower, but several million people spend their days in low-pay (I can't even say "minimum wage", because we freaking don't even have that!), temporary jobs. Literally temporary: They hold contracts saying that on day X, they will be out of a job unless their employer offers them an extension. You don't even have to fire them, how convenient.

As a result, average income has dropped, spending on culture and arts is dropping constantly, life expectancy has stopped to rise despite better medicine, and by some statistics a quarter of the population is in a constant state of insecurity because losing your job can snowball into losing your home and everything else because wages are so low you can't build up reserves.

Sorry, I'd rather live in a world where people around me are not in a constant state of fear and stress.

Re:So, the other side?

[Tom]

A company that employed expensive employees in an extremely employee biased legal framework has now been destroyed and all of those employee are out of work.

The company was not in trouble because of employee laws. All this is the fallout of a "restructuring", which is just the bullshit bingo word for mass layoffs, which in turn were the result of the company being in trouble.

If your attempt to save your troubled company didn't work because you didn't take into account the effects of your actions, then that is 100% your fault. It's not like these are secret laws only told to you after the fact.

employment will work like any other unregulated economy

There is no such thing as an unregulated economy. That's just the bullshit bingo word for "company-friendly regulations".

Re:So, the other side?

[thegarbz]

The company was asking to be allowed to pay installments so they could avoid bankruptcy.

I have a question for you: The idea of instalments assumes the company has a growth prospect and the ability to survive. Companies with those prospects can get loans to get them through those tough moments.

The fact that they didn't do this, or weren't able to do this, or weren't able to find some other investor to get them through this phase is more telling than any court decision. As an ex-employee there's no way in hell I'd be accepting "instalments" from a company that looks like it's about to go under.

Re:So, the other side?

[tomhath]

those affected throw their sabot into the gears when treated in a way they perceive is incorrect,

That only works once. You get yours (maybe), nobody else will have the opportunity to get anything. In this case it appears the terminated employees will get less than they would have if they had compromised rather than taking down the company.

Re:So, the other side?

[AmiMoJo]

That's not correct. In France, as in most of Europe, it's standard for severance pay to increase with the amount of time worked. More over, the general expectation is that companies should try to avoid firing people. They can offer training, or move them to anther position first.

We are trying to avoid the race to the bottom that the US finds itself in, where people are discarded the moment someone slightly cheaper comes along. Shit jobs are a false economy for society, which is why living standards in France are so much better than most of the US.

Re:So, the other side?

[_Sharp'r_]

They're typically defining "poverty" as less than 1/2 the median income. It's really a dumb way to compare poverty across countries.

The U.S median income for a household is much higher than in France, thus someone below the "poverty rate" in the Unites States can be much wealthier than someone above the "poverty rate" in France.

In France, even with purchasing power parity, the median household income is (depending on if you use Gallup or OECD numbers) 70-77% of what it is in the United States. Using Gallup numbers, the "poverty line" in the US would be $22K/year vs $16K/year in France. Remember, these number take into account purchasing power parity (PPP), so you can literally buy about the same things in each country.

To put that into perspective for variations within the United States, the median income in Maine or Hawaii is 65% of that of Virginia or Utah (adjusted for cost of living).

According to the OECD, the "poverty rate" in Mexico is about $2250, based on a PPP median income of $4500. By their measurement, a barely "poor" person in the U.S. ($22K) would be considered upper middle class in Mexico. I won't bring up the really poor countries in Africa and elsewhere, but the "poverty rate" they're talking about is virtually valueless across countries for comparison purposes.

Put another way, the median income and thus "poverty rate" of Mississippi is higher than that of France, so I know which country I'd rather live in...

Labour laws

[phorm]

Uh, so you got hit with penalties in court because "labour laws are very generous towards the employees in France", which really means "we weren't following the labour laws in the country in which we had an office and did business", and probably finally means "we tried to screw employees in a way that would have worked perfectly fine in North America or other countries but got called on it in France, which cost us a bundle" ...

Re:Labour laws

[rahvin112]

Mandriva marketed their "Frenchness" pretty heavily. For the CEO to get up and lambast the same political system he was using as marketing to win business just means he's a dick and I hope some of the money those employee's got comes out of his own pocket.

Re:Labour laws

[Lunix Nutcase]

Nothing is funnier than someone who is actually mad that other countries might *gasp* not just allow employers to fuck over their employees at will.

Re:Labour laws

[gstoddart]

When the company began to run into problems from external sources the laws of the country we had set up in did not give us the flexibility we needed to continue trading and maintain at least some of the worker's jobs.

No, if you read TFA, it really comes down to the people they had "restructured" out of jobs found that the company lacked the liquidity to pay them their legally required severance, and a court agreed to pay them so they didn't become victims of a failing company trying to buy time.

Sorry, but if you think the employees should roll over and get fucked and not get paid so that company can try to stay in business ... you're sadly mistaken.

You may think it's perfectly reasonable to expect employees to get screwed over to keep the company going, but the rest of the world doesn't.

These kinds of laws exist precisely so you can't just fire people for free. America may think at-will employment because it lets corporations be greedy douchebags -- but the rest of the world has pretty much figured out that screwing over the employees to benefit the corporation is a stupid fucking idea.

Because they probably would have gone under anyway. Any employee who would voluntarily get screwed to keep the company going is an idiot. Because they sure as hell won't do it for you.

Boo hoo. A corporation didn't get to leave its employees holding the bag.

No sympathy whatsoever.

Re:Labour laws

[Kozar_The_Malignant]

It's not like they were used to doing business in Kansas and moved to France for the atmosphere and got surprised by the laws. From the very start, they have been a French company, and all of the principals are French. They knew exactly what they were doing and what the labor laws were.

Re:Labour laws

[ranton]

Boo hoo. A corporation didn't get to leave its employees holding the bag.

No sympathy whatsoever.

The employees were left holding the bag anyway, since the company filed bankruptcy and won't be able to pay them. Literally no one won in this scenario. Probably the only people who won were the executives who can now get another CxO job at a company that can give bigger bonuses.

CEO shirks responsibility for negative outcomes?

[Anonymous Coward]

There's a shocker! Here I thought he was going to blame his lack of foresight and his inability to appropriate and prioritize resources in the correct proportions to the respective aspects of his business representing "revenues" and "liabilities".

I can picture it now: "Due to my inexperience with the legal environment of France, and as a consequence of lacking both humility, and respect/concern for the emotions/financial future of my employees: my mismanagement of Mandriva lead to betrayed expectations and violated commitments to such a grave extent that the company I was tasked with steering through troubled waters found itself embroiled in courtrooms, racked by legal expenses, and profoundly under-capitalized to endure or weather the extent of litigation that was invited by my perceived immunity to repercussions when using/abusing people and then throwing them away.

If I could do things differently, I would have been less patronizing and smug and found a way to make these tough financial decisions less offensive and antagonizing to their victims. I would have used resources more conservatively, and planned for the future contingencies better such that I did not find myself belabored to achieve the necessary market penetration and corporate vision/monetization-strategy to support my ambitious hiring decisions in accumulating headcount. Further, I would have utilized contractors and temps to a greater extent during periods of extreme demand, and avoided salaried employees so I could reduce hours worked when times were slow."

I know nothing about this guy or Mandriva, but based on his decision to blame-shift it sounds like a classic case of lack of planning coupled with big promises in exchange for sacrifice, followed by a hiring binge and subsequent layoffs/broken promises when the "ad hoc"/"make it up as I go" flying by the seat of the pants management style eventually came to a head. I say this having observed more than my share of shit heal executives building fiefdoms through nepotism, only to watch their house of cards collapse under it's own weight when profitability can no longer be delayed(I.E. change in the business cycle).

Better Headline

[Anonymous Coward]

Mandriva Driven from Market after Losing Lawsuits from Men Driven from Mandriva

FTFY

[jklovanc]

The company was having trouble in 2013 so it laid off some employees without compensating them as required by French law

Had they compensated the employees correctly there would have been no lawsuits and no judgement to pay.

The employees who were laid off in 2013 sued and won

Where is the evidence that the lawsuits were filed after 2014. If they were filed before 2014 the fact that the company did better in 2014 is irrelevant.

Had the company had compensated the employees according to law it would not have had to pay lawyers and probably court costs and may have survived.

This is why France doesn't do startups

[Bruce66423]

The fear of this sort of fiasco makes establishing the company in London instead far more attractive. So the French are ever more stripped of talent. As a Brit I am grateful to the French for sending us so many talented people, but for the folk in France this is BAD NEWS. And this sort of story will discourage risk taking there even more.

Re:This is why France doesn't do startups

[dskoll]

It's not just startups. Trying to do business in France is insane. The bureaucracy is nightmarish and I really suspect bidding processes are rigged. The labour laws are far too skewed towards workers and away from companies. I certainly don't believe in exploitation, but you need balance.

I run a small software company with customers all over the world, including North America, Europe, Australia and South Africa. We do very well in Europe except in France; that's a desert for us. We've basically given up because it's just too difficult to do business there, and we're happy enough to work with more business-friendly countries like the UK, Netherlands, Sweden, Switzerland, etc.

Re:I don't really buy it

[farble1670]

the company was by law required to provide a severance package when laying off employees, which they did not. the employees sued for the severance package, and won.

This CEO now wishes his company was in the USA

[hwstar]

This always ends badly for employees in the US.

Companies in the US typically fold and stiff their employees because there are no strong laws which protect employees in this situation which have any teeth.

In the US:

1. There is employment at will. The CEO can dismiss staff with no recourse, provided all back pay is paid in a short time.
2. Most states don't require vacation accruals be paid out. California is an exception here.
3. Senior debt and taxes take precedence over paying employees, and there is a limit to how much back pay can be paid out (180 days or around $12,000 whichever is lower).
4. Most employees are covered by predispute arbitration contracts preventing them from going to a jury trial. California may change this with AB 465
5. State departments of labor are toothless and or afraid of going after businesses.
6. There is no legal mandate to pay severance pay.

French law is much more employee friendly. If a company is on its last legs, the employees should get the wages they worked for/

To those who never could run any business ...

[Anonymous Coward]

...

So? You think running a successful business takes some kind of extra special skill set? Higher levels of skill, talent, and perseverance than earning a PhD, and/or making a discovery, advancing science?

I have done both and I can tell you that the set of talent to obtain a PhD degree is different from the set of talent required to successfully run a business

The quality of Slashdot crowd has sunk to a new low, with people actually posting comments ridiculing people with skill set other than theirs

Where is the humbleness of a scholar, the curiosity of a adventurer and the tenacity of a researcher?

In other words, instead of nerds that we are attracting, Slashdot ends up attracting a bunch of ignorant assholes who think they are smarter than the rest of the humankind

Re:To those who never could run any business ...

[narcc]

Where is the humbleness of a scholar, the curiosity of a adventurer and the tenacity of a researcher?

This is Slashdot. By long tradition, we present first the ego of the autodidact and the arrogance of the Trekkie. As for tenacity, the Slashdot user is unrivaled -- holding fast to the belief that their thoughts opinions are infallible.

In other words, instead of nerds that we are attracting, Slashdot ends up attracting a bunch of ignorant assholes who think they are smarter than the rest of the humankind

That would be correct. Though to be fair, it's really only been this way since ~1997.

cry me a river

[Tom]

I'm beginning to feel disgusted by these cry-baby CEOs and investors.

Look, it's very simple: There are laws of physics. If your product cannot work with the set of laws of physics we have on this planet, then your product doesn't work, end of discussion. You can't cry over not being able to make the flying car of your dreams because gravity is so mean to you.

There are also man-made laws. If your company cannot work with the set of laws valid in your country, then your company doesn't work, period. You can't cry over not being able to make a profit because they are so mean to you.

It's really selfish, stupid and ignorant to enjoy the nice things that laws and regulations give you, like having a civilized country, safety, clean streets, heck streets at all, the ability to make contracts and enforce them (absolutely essential for every business!) and a thousand other things, and then cry that the evil laws make your business impossible. Quite the opposite, you imbecile! The laws make your business possible in the first place. Without them, you wouldn't have a business, and if you tried the first guy with a bigger club would take it away from you.