Yes, you can sue them. But usually it is a long drawn affair.

You can also confront the other company that bought the services of your employees. They are also to blame. It all depends on if you want to continue doing business with them or not. Companies don't want to make a big mess of these things because newer clients will feel jittery about the stability and the ability of the company to cope with these things and provide good service.

These are tough times for you guys. Grin and bear. Try to get out of this mess as soon as possible. Send a clear signal to other employees by firing these guys. If you had made these guys indispensable, then maybe you had made a mistake of not compensating them enough.

Welcome to the 'Piranha Club' that is business.