The lawsuit over unpaid severance pay at the former Merillat plant will proceed, after a judge on Wednesday denied a motion from Merillat’s parent company to dismiss the lawsuit.

U.S. District Court Judge Jeffrey Viken said the former employees of the particleboard plant satisfied federal requirements for pleading their case.

“Plaintiffs have alleged enough facts to state plausible claims for breach of contract and double damages,” Viken wrote in his order denying Masco Builder Cabinet Group’s motion to dismiss the case.

Masco argued in October that, because the Merillat employees were not actually released from their jobs, they are not owed severance pay. Also, the company said the workers’ allegations weren’t enough to state a legal claim.

Viken disagreed.

He wrote: “Plaintiffs have alleged sufficient facts to give rise to the reasonable inference that defendant promised to pay severance wages in exchange for plaintiffs’ continued work at the plant, that defendant breached this promise by refusing to pay severance wages, and that plaintiffs incurred damages as a result of the breach.”

Rapid City attorney Rex Hagg, who is representing the employees, said he was happy the judge found the complaint to have merit to continue.

"We do think there's a strong case to go forward with, and we intend to supply the proof," Hagg said.

Masco now has 20 days to file an answer to the lawsuit, then the discovery phase will begin.

The plaintiffs are about 160 Merillat employees who worked at the plant at the time it was sold. It is now operated as Dakota Panel by Countertops Inc. of Wisconsin, employing many of the former Merillat workers.

Reach Barbara Soderlin at 394-8417 or at barbara.soderlin@rapidcityjournal.com.