February 2021 Covering 2020 Case Law - American Bar Association
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AMERICAN BAR ASSOCIATION
SECTION OF LABOR & EMPLOYMENT LAW
FEDERAL LABOR STANDARDS LEGISLATION COMMITTEE
2021 MIDWINTER MEETING
REPORT OF THE SUBCOMMITTEE ON THE WORKER ADJUSTMENT & RETRAINING
NOTIFICATION ACT AND THE EMPLOYEE POLYGRAPH PROTECTION ACT
February 2021
Covering 2020 Case Law
NICHOLS KASTER, LLP
Matthew C. Helland
235 Montgomery Street, Suite 810
San Francisco, CA 94104
Toll Free Telephone: (877) 448-0492
Email: helland@nka.com
Website: www.nka.com
Honigman LLP
Matthew S. Disbrow
2290 First National Building
660 Woodward Avenue
Detroit, MI 48226
Telephone: (313) 465-7372
Email: mdisbrow@honigman.com
Website: www.honigman.comCases under the WARN Act
1. Messer v. Bristol Compressors Int’l, LLC, , 2020 WL 4548125 (W.D. Va. Aug. 06, 2020) (employer’s
motion for partial summary judgment granted when employees received the required notice
but were not terminated until after the notice period had passed).
Plaintiffs sued Bristol Compressors Int’l, LLC (“Bristol”) in the U.S. District Court for the Western
District of Virginia after they were terminated in the closure of Bristol’s facility in Bristol, Virginia.
Bristol moved for partial summary judgment, arguing that Plaintiffs remained employed for more
than 60 days after receiving notice and were therefore not entitled to any damages under the WARN Act.
Specifically, Plaintiffs were told on July 31, 2018, that their employment would end sometime during the
month of August 2018. Bristol’s facility, however, did not close until November 2018 and Plaintiffs were
not terminated until October 19, 2018, more than sixty days after the July 31 notice. Plaintiffs argued that
they were entitled to WARN Act damages because the original notice was not sufficiently specific as to
the layoff date, and because they did not receive any additional notice after the predicted August closure
date.
The Court noted that the WARN Act regulations provide that notices “shall be based on the best
information available to the employer at the time” and that “[i]t is not the intent of the regulations that
errors . . . that occur because events subsequently change” should lead to violations. See 20 C.F.R. §§
639.5(a)(1); 639.7(a)(1), (4).The Court then decided, based in part on persuasive authority from other
circuits, that the notice constituted substantial compliance and that the technical defect in the timing of
the termination did not cause Plaintiffs any prejudice. Plaintiffs received notice that served the purpose
of the WARN Act and allowed them adequate time to prepare for losing their jobs. The Court granted
Bristol’s Motion for Partial Summary Judgment on those grounds.
22. Messer v. Bristol Compressors Int’l, LLC, 2020 WL 1472217 (W.D. Va. Mar. 26, 2020) (Denying
motion for summary judgment on Unforeseen Business Circumstances and Faltering Company
defenses).
Bristol moved for summary judgment on its “unexpected business circumstances” and “faltering
company” affirmative defenses to WARN Act liability. In April 2017, Bristol began working to develop new
technology that was of great interest to its customers. In May 2018, however, a Bristol customer was
unable to pay $1.9 million owed to Bristol. That account receivable had been an asset used as collateral
on a credit agreement with Wells Fargo. Wells Fargo notified Bristol that it was then in default under the
credit agreement.
Bristol believed that it had secured the necessary investment from its former owner, Johnson
Controls, Inc. (“JCI”), to continue as a going concern. JCI, however, later decided not to invest additional
funds into Bristol, causing Bristol to wind down its operations in late July 2018. Plaintiffs argued that
Bristol’s financial downfall was foreseeable prior to July 2018. Specifically, Plaintiffs pointed to Bristol’s
prior knowledge of the customer’s pending failure to pay and awareness of its dire financial situation by
that point, if not earlier. The Court determined that it could not decide whether either the unexpected
business circumstances or faltering company exceptions of the WARN Act could apply without the
resolution of factual disputes and credibility determinations, and therefore denied Bristol summary
judgment on that issue.
3. Morris v. Moon Ridge Foods, LLC, 2020 WL 2461888 (W.D. Mo. May 12, 2020) (plaintiffs’ request
for damages granted when sufficient evidence was presented to demonstrate back-pay and
benefits damages).
Plaintiffs sued Moon Ridge Foods, LLC (“Moon Ridge”) in the United States District Court for the
Western District of Missouri after they were terminated with insufficient notice after the closure of a hog-
processing facility. Moon Ridge never responded to Plaintiffs in the action.
3The Court determined that Plaintiffs were entitled to both back-pay and benefits damages under
the WARN Act. In addition, the Court determined that Plaintiffs submitted sufficient evidence to
reasonably demonstrate the amount of damages and awarded Plaintiffs $1.2 million.
4. Newman v. Crane, Heyman, Simon, Welch & Clar, 435 F. Supp. 3d 834 (N.D. Ill. 2020) (granting
partial summary judgment on bankruptcy trustee’s claim that bankruptcy counsel committed
malpractice by failing to advise debtor to issue WARN notice).
After World Marketing Holdings, LLC (“World Marketing”), was held in default by its primary
lender, it contacted the law firm of Crane Heyman about potential bankruptcy representation in
September 2015. World Marketing informed its employees on September 28, 2015 that World Marketing
was filing for bankruptcy and shutting down operations. A class of terminated employees sued World
Marketing for failure to serve a timely WARN notice after their termination. This claim was refiled in the
bankruptcy proceedings. The bankruptcy trustee (the “Trustee”) settled with the class and then sued
Crane Heyman for malpractice. Crane Heyman asserted affirmative defenses under the doctrines of
viability, plaintiff’s negligence, and intervening cause.
Crane Heyman argued that three WARN Act exceptions eliminated the WARN notice requirement:
the liquidating fiduciary exception, the unforeseen business circumstances exception, and the faltering
company exception. The Trustee argued that these were not viable exceptions as a matter of law.
The court held that the liquidating fiduciary exception did not apply because World Marketing
was not a liquidating fiduciary. Liquidation was not World Marketing’s sole function in declaring
bankruptcy and it received at least one offer to continue as a going concern. World Marketing also
indicated that it might intend to continue as a going concern in the bankruptcy proceedings.
The Court also held that the notice requirement was not eliminated and that, under Seventh
Circuit precedent, the 60-day notice period only could be eliminated in certain circumstances and that
notice itself could not be eliminated entirely. The WARN Act requires that employers relying on statutory
exceptions still must give as much notice as is practicable.
4The Court then held that the materials provided to employees failed to constitute adequate
notice. There was no statement of the basis for reducing the notification period as required under the
Act. Indeed, there was no reference to the Act at all. Therefore, the Court held that the exceptions World
Marketing relied on under Crane Heyman’s advice were not viable and granted the Trustee summary
judgment on that issue.
5. Pechulis v. Pipeline Health Sys. LLC, 2020 WL 4003519 (N.D. Ill. July 15, 2020) (motion to dismiss
denied where defendant health care provider failed to give required notice).
Defendant Pipeline Health Syst. LLC (“Pipeline”) became entangled in regulatory approval
proceedings while attempting to purchase a hospital. Pipeline then directed the hospital to file for
bankruptcy. The bankruptcy trustee (the “Trustee”) notified hospital employees, including Plaintiffs, on
August 19, 2019, of their termination effective August 16, 2019. Plaintiffs sued under the WARN Act, and
Pipeline moved to dismiss the case. Pipeline argued that it could not be liable under the WARN Act
because it was the Trustee, not Pipeline, who made the decision to terminate Plaintiffs’ employment. The
court held that it was Pipeline’s direction of the hospital to file for bankruptcy that triggered the obligation
to send WARN Act notices, and denied the motion to dismiss.
The Court also held that Plaintiffs alleged sufficient facts to hold Pipeline and the hospital liable
as a single employer. If it was an employer under the WARN Act, Pipeline was required to provide notice
as soon as possible. Plaintiffs alleged sufficient facts that the notice was insufficient based on the timeline
alone—Pipeline directed the hospital to file for bankruptcy on August 6 but did not send notice to the
employees until August 19.
Pipeline further argued that it was prevented from providing notice under the bankruptcy
automatic stay. The Court reiterated that Plaintiffs alleged that it was Pipeline’s initial direction of the
hospital to file for bankruptcy that triggered the WARN Act requirements, and that the bankruptcy
automatic stay had not yet triggered. Therefore, the Court denied Pipeline’s motion to dismiss as to the
WARN Act claims.
56. Philips v. Munchery Inc., 2020 WL 6135996BL 402469 (N.D. Cal. Oct. 19, 2020) (granting
preliminary approval of a class action settlement).
Munchery Inc. (“Munchery”) filed for bankruptcy in January 2019. Plaintiffs sued Munchery for
failure to provide sixty days’ written notice.
The parties settled for $400,000.00. Because the agreement was reached prior to class
certification, the court evaluated the class conditionally. The court held that the class was satisfactorily
numerous, had common claims, the class representatives’ claims were typical, and there was adequate
representation of the class. In addition, the alleged bad acts were common to all affected employees and
therefore the Court held there were no predominance or superiority concerns.
The Court also determined that the proposed settlement agreement was fair, adequate, and
reasonable. It was fair because the process involved mediation and extensive negotiations. There were
no obvious deficiencies, and there was no preferential treatment to any class member due to the
reasonable incentive awards. In addition, the agreement fell into the range of possible approval at 26
percent of the total claim. The Court also held that notice to the class members was satisfactory because
it clearly and completely explained the settlement to members.
Finally, the Court instructed Plaintiffs’ counsel to submit additional information and motions
regarding attorneys’ fees and costs.
7. Piron v. General Dynamic’s Information Technology, Inc., 2020 WL 1159383 (E.D. Va. Mar. 10,
2020) (employer’s motion to dismiss granted when conclusory allegations did not meet the
remote worker standard).
Plaintiffs, a class of approximately 1,500 employees, sued General Dynamic’s Information
Technology, Inc. (“GDIT”) in the United States District Court for the Eastern District of Virginia after
Plaintiffs were terminated with less than 60 days’ advance written notice due to the termination of a
federal contract.
6GDIT moved to dismiss Plaintiffs’ Amended Complaint, arguing that it failed to state a claim upon
which relief could be granted. Specifically, GDIT argued that there was no mass layoff at a single site of
employment. The WARN Act requires sixty days of advance notice for mass layoffs, defined as “a reduction
in force which . . . results in an employment loss at a single site of employment during any 30-day period
for . . . at least 50 employees.” The Department of Labor (“DOL”) has defined a “single site of
employment” to be “either a single location or a group of contiguous locations.” The Court evaluated
whether Plaintiff’s Amended Complaint adequately alleged an employment loss at a single site of
employment.
Plaintiffs argued that they worked remotely at GDIT’s headquarters. The Court applied Meson v.
GTX Techs. Servs. Corp., 507 F.3d 803 (4th Cir. 2007), which analyzed DOL regulations that provide guidance
for non-traditional workplaces. Specifically, the Meson court reviewed 20 C.F.R. § 649(i)(6), which
provides:
For workers whose primary duties require travel from point to point, who are
outstationed, or whose primary duties involve work outside any of the employer's regular
employment sites (e.g., railroad workers, bus drivers, salespersons), the single site of
employment to which they are assigned as their home base, from which their work is
assigned, or to which they report will be the single site in which they are covered for
WARN purposes.
Meson held that this regulation only applies to truly mobile workers, not all remote workers.
The Court determined that Plaintiffs’ Amended Complaint did not contain factual allegations
plausibly stating that Plaintiffs were “mobile” workers within the meaning of Meson. Plaintiffs only
alleged that they “worked remotely” and that alone was insufficient. The Court granted the motion to
dismiss without prejudice.
8. Schmidt v. FCI Enters. LLC, 2020 WL 2748499 (E.D. Va. Jan. 3, 2020) (denying defendants’ post-
trial motion for judgment as a matter of law).
After a jury trial in which FCI was held to have violated the WARN Act and the plaintiffs were
awarded damages, FCI moved for judgment as a matter of law. The court held that FCI’s motion simply
7restated earlier arguments that FCI was not an employer and that a plant closing did not occur. The court
reiterated FCI did employ approximately 150 individuals and was an employer under the WARN Act.
The Court also awarded Plaintiffs’ counsel its attorneys’ fees and costs, but reduced the amount
of fees by 30% in total. The Court reduced the award by 5% for inadequate documentation and several
instances of block billing, by a further 10% for an unsuccessful and unrelated FLSA claim, and finally by
15% for the relative degree of success in terms of the damages awarded. With regard to costs, the Court
did not allow for the payments made to private process servers, but did allow costs for depositions taken
and travel.
9. Bonanini v. Kids Behavioral Health of Montana, Inc., 2020 WL 3446336 (D. Mont. June 24, 2020)
(denying motion, without prejudice, that sought to dismiss a union as a party plaintiff based on
standing issues, and finding the motion was premature, but subject to possible renewal if and
when the proposed class is certified).
After Defendant Kids Behavioral Health of Montana, Inc., abruptly ceased operations, thirty
former employees filed a putative class action against the defendant seeking unpaid wages and benefits
under the WARN Act. Shortly after the class action was filed, the Montana Federation of Public
Employees (the "Union") filed a similar lawsuit on behalf of itself and the former employees of the
defendant. Subsequently, the two cases were consolidated and the plaintiffs filed an Amended
Complaint. The consolidated case included over 130 former employees, including union and non-union
parties.
Defendant filed a Rule 12(b)(6) motion to dismiss the Union as a party based on lack of standing.
Defendant argued that because a union's standing under the WARN Act is representational, the Union's
members were "already being represented in the putative class.” The Court, however, held that the
Union's members’ right to proceed as part of a certified class was yet to be determined. Although the
Amended Complaint was filed as a class action and sought relief on behalf of a proposed class that
included union and non-union parties, the issue of class certification had yet to be determined. If the
8class was not certified, the Union might have standing to proceed under the WARN Act on behalf of its
members. Therefore, the Court denied the Motion to Dismiss without prejudice.
10. Carroll v. World Mktg. Holdings, LLC, 418 F. Supp. 3d 299 (E.D. Wis. 2019) (granting, in part,
plaintiffs’ motion for summary judgment and denying defendant’s cross motion).
Defendants were the holding company and managing members of a group of affiliated
companies. The affiliated companies terminated their employees after filing bankruptcy. Defendants did
not file bankruptcy. Plaintiffs filed this case action against the defendants alleging that they were jointly
liable because the affiliated companies were part of a single “employer” that failed to provide the
required 60-day advanced notice. Plaintiffs moved for summary judgment on the following issues:
1. Whether the closings of the facilities were "plant closings" under the WARN Act.
Plaintiffs relied on a declaration from an attorney to prove that more than 50 full-time
employees were terminated. The court found that the declaration was not sufficient to support a
motion for summary judgment. To the contrary, the declaration relied on inadmissible information and
did not identify its source for some of the information it purported to be true. Therefore, the court
denied the plaintiffs’ request for summary judgment on the issue of whether the shutdown resulted in
the termination of 50 or more non-part-time employees.
2. Whether Defendants may rely on certain statutory exceptions to the WARN Act's
60-day notice requirement.
The defendants conceded that they did not give their employees 60 days’ notice as required
under the WARN Act. However, they contended that two statutory exceptions to the WARN Act applied
– the unforeseen business circumstances and faltering company exceptions. The plaintiffs argued that
the defendants were precluded from relying on the exceptions because they failed to provide proper
shortened notice. The court agreed with the plaintiffs and found that the defendants were required to
provide “as much notice as is practicable.” The court granted the plaintiffs’ request for summary
9judgment on the issue of whether the defendants are precluded from relying on a WARN Act statutory
exception.
3. Whether Defendants and the bankrupt entities together comprised a single
"employer" under the WARN Act and were not liquidating fiduciaries.
The defendants conceded that they employed 100 or more non-part time employees. However,
they contended that that they were a liquidating fiduciary and not a "business enterprise" at the time
WARN Act notice would have been required. To Court rejected this argument. At the time the WARN Act
notice was required, the defendants had described the bankruptcy as a reorganization. The defendants
had also announced to their employees that the company’s assets would be “acquired by a new owner.”
The court found that the defendants’ conduct and activities after filing for bankruptcy and terminating a
majority of the employees demonstrated an effort to reorganize and not to liquidate. Therefore, the
court granted the plaintiffs’ request for summary judgment on the issue of whether the defendants
were part of a single “employer” and not liquidating fiduciaries.
11. In re TransCare Corp., 611 B.R. 160 (S.D.N.Y. 2020) (plaintiffs’ motion for summary judgment on
WARN Act defenses granted in part and denied in part).
The defendants provided ambulance and paratransit transportation New York, Pennsylvania,
and Maryland. When faced with financial problems, they embarked on a restructuring plan that would
allow approximately 700 employees to remain employed. The defendants sent two notices to the
employees on February 24. The first notice explained the restructuring plan. That same day, after the
defendants had filed for Chapter 7 bankruptcy protection, a notice was sent to all employees and held
out the hope of continued employment for an indefinite period. This second notice was signed by the
management team and provided no contact information. Two days later, on February 26, the trustee
provided another notice to a subset of employees.
10Plaintiff brought this class action against the defendants for violations under the federal WARN
Act and the New York State WARN Act. Plaintiff filed a motion to preclude the defendants from asserting
statutory defenses to the WARN Act claims.
The court held that the February 24th notices were insufficient under the WARN act because,
among other things, (1) the first notice instructed employees to report to work and await instructions
from the bankruptcy trustee; (2) the second notice indicated the companies would not immediately shut
down; and (3) neither notice provided contact information. The court held, however, that the notice
sent February 26th was sufficient because it explained why shortened notice was being given.
Accordingly, the court granted the plaintiffs’ motion as to those employees who received the February
24th notices, but denied the motion as to those employees who received the February 26th notice.
11Cases under the Employee Polygraph Protection Act
1. Kautz v. Springfield Pool & Spa, LLC, 2020 WL 3884870 (W.D. Mo. July 9, 2020) (denying
plaintiff’s motion for partial summary judgment; Kautz v. Springfield Pool & Spa, LLC, 2020 WL
4676383 (W.D. Mo. Aug. 12, 2020) (denying defendant’s cross motion for summary judgment)
The plaintiff worked for defendant Springfield Pool & Spa, LLC... After petty cash in the amount
of $603.17 went missing from the defendant's property, it asked several of its employees to take a
polygraph test, including the plaintiff. The plaintiff took and failed the polygraph test and was fired three
days later. Plaintiff sued under the EPPA.
One of the defendant’s employees testified in deposition that the plaintiff’s failed polygraph
“played a small part” in the decision to terminate her. Plaintiff moved for summary judgment, arguing
that she was entitled to judgment if the polygraph test paid any role in the decision to terminate her.
The defendant argued that a “but-for” causation applies to EPPA claims, and that fact questions
precluded judgment to the plaintiff under that standard. The court agreed with the defendant on the
applicable standard and denied the plaintiff’s motion. On that basis, the court also denied the
defendant’s cross motion for summary judgment, finding that a reasonable jury could find that the
polygraph test was the “but-for” cause of the plaintiff’s termination, given the timing of the termination
relative to the test and the absence of any other disciplinary action prior to termination.
2. Estate of Accurso v. Infra-Red Servs., Inc., 805 F. App'x 95 (3d Cir. 2020) (upholding trial court’s
denial of the plaintiff’s motion for new trial on his EPPA claim)
In the course of the plaintiff’s work selling roofing contracts, the defendants suspected the
plaintiff of diverting funds. One of the defendants asked the plaintiff to take a lie detector test and
scheduled that test. However, the parties disputed whether the plaintiff actually took the test. The
plaintiff argued that the defendants violated the EPPA by failing to provide the notices required by the
statute.
12At trial, the jury returned a verdict in the defendants’ favor on the plaintiffs’ EPPA claim. The
trial court denied the plaintiff’s motion for new trial or to alter or amend the judgment. The Third Circuit
affirmed, holding that the jury could have credited testimony from defense witnesses that they believed
the plaintiff never took the polygraph test at issue. If the plaintiff never took the test, then he never
became an “examinee” for purposes of the statute and the defendants were not required to provide any
disclosures.
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