Former Redbox Parent Employees Sue Company for Alleged Greed

A group of 11 former employees of bankrupt Redbox parent Chicken Soup for the Soul Entertainment have filed a lawsuit against the company and ex-CEO Bill Rouhana, claiming “greed at shocking levels.” The suit, filed in LA Superior Court, seeks damages of up to $1 billion. This legal action comes after the company went through a series of financial struggles before ultimately filing for Chapter 11 bankruptcy protection.

The lawsuit alleges that the defendants, including Rouhana and his wife Amy Newmark, engaged in a scheme to defraud employees out of their rightful compensation. The suit claims that wages were deducted for medical and dental premiums, but the policies were allowed to lapse, resulting in employees incurring unreimbursed medical expenses. The defendants are also accused of setting up multiple business entities under the Chicken Soup for the Soul brand, leading to what is described as an elaborate ‘Ponzi Scheme’.

Chicken Soup for the Soul Entertainment expanded through acquisitions, including taking over streaming service Crackle from Sony, film outfits Screen Media and 1091, and production entity Sonar Entertainment. The purchase of Redbox in 2022 for $50 million in stock and the assumption of $325 million in debt turned out to be disastrous for the company. The decline in physical media, coupled with issues with lenders and suppliers, led to the downfall of the company.

The plaintiffs in the lawsuit include several former employees of Chicken Soup for the Soul Entertainment. The judge will need to determine whether the case can be certified as a class-action lawsuit, allowing other affected employees to seek relief. The complaint was provided by AlderLaw and filed with the LA Superior Court, although the court’s filing system has experienced technical difficulties.

The lawsuit against Chicken Soup for the Soul Entertainment and former CEO Bill Rouhana sheds light on alleged mismanagement, fraud, and greed at the company. The fallout from the bankruptcy and financial troubles has left many employees without proper compensation and benefits. The legal battle will likely continue as the plaintiffs seek justice for their losses.