Duane Morris Takeaway: This week's episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman and special counsel Kathryn Brown with their analysis of key developments in class action litigation involving the Worker Adjustment and Retraining Notification ("WARN") Act.
Check out today's episode and subscribe to our show from your preferred podcast platform: Spotify, Amazon Music, Apple Podcasts, Samsung Podcasts, Podcast Index, Tune In, Listen Notes, iHeartRadio, Deezer, and YouTube.
Episode Transcript
Jerry Maatman: Hello everyone and welcome to the Class Action Weekly Wire, the podcast where we explore critical issues in class action litigation. I'm Jerry Maatman of Duane Morris, and joining me today is Kathryn Brown, one of our class action lawyers based in Ohio. Great to see you, Kathryn. Welcome to the podcast.
Kathryn Brown: Thanks, Jerry. I'm so glad to be here.
Jerry: Today, we're diving into a very complex area in the class action world – class actions under the WARN Act. Let's start with some of the basics. Kathryn, can you describe for our listeners what WARN is all about?
Kathryn: Sure, the WARN Act, which stands for the Worker Adjustment and Retraining Notification Act, is a federal law that requires large employers, those with 100 or more full-time employees, to give at least 60 days' notice before conducting a mass layoff or plant closing. What's made this area explode recently, especially post-COVID, is the sheer volume of layoffs that occurred with little or no notice that opened the door for a wave of class actions which are still weaving through the courts. Now, if employers fail to comply with the WARN Act, they may owe up to 60 days of wages and benefits to each impacted employee.
Jerry: COVID-19 certainly has been a tipping point in the courthouse in many areas of litigation. Specifically, how has it shaped WARN Act litigation?
Kathryn: It's been a game-changer. Many employers tried to argue that the COVID-19 pandemic was a natural disaster or an unforeseeable business circumstance that excused the 60-day notice requirement under the WARN Act, but some courts rejected those defenses outright – especially where the employer failed to give any notice or gave only partial notice.
Jerry: Really interesting, both from a legal and societal perspective, in terms of, I take it, courts still expected companies, employers to abide by the prescriptions of WARN, despite all the challenges posed by COVID-19.
Kathryn: Yes, and some of the 2024 decisions confirm that courts looked closely at whether employers gave as much notice as possible as required, even under those exceptions, to WARN.
Jerry: Well, you've done a lot of writing in this area, and you were one of the authors of the Duane Morris Class Action Review. In your opinion, what are some of the standout decisions in this space in 2024?
Kathryn: There were several. One important case was Staley v. FSR International Hotel, which involved the Four Seasons Hotel in New York City. The court in Staley granted class certification of a class of hotel workers furloughed during the pandemic. The court found that common issues of law and fact predominated because the central issues in the case – whether the extended furlough qualified as a "mass layoff" or "plant closing" under the WARN Act, and whether the employees were entitled to severance pay – were common issues across all class members. The court opined that although there were some individual differences among the class members, such as the fact that some employees worked at other hotel properties after the hotel closed, the court determined that these variations did not override the predominance of common legal questions.
Jerry: So even in certain circumstances, extended furloughs rather than terminations can trigger WARN Act obligations?
Kathryn: They can, especially if they last over six months. Courts are treating those as employment losses under both federal and state WARN acts. Other important rulings under the WARN Act in 2024 addressed employers' notice obligations when an anticipated date of termination is postponed, the need to provide a brief statement of the reason for a shortened notice period, employers' greater risk of exposure to liability under state law versions of the WARN Act, and how back pay damages owed to affected employees are calculated following a determination of liability. This was the case in Messer v. Bristol Compressors, where the employer postponed the employees' final termination date, but failed to issue additional notice. The court held that once a shutdown is delayed by 60 days or more, a new 60-day notice under warrant is required.
Jerry: I know if the compliance obligations weren't tough enough, we also are dealing with a patchwork quilt of state law mini-WARN acts. Have there been decisions, in your mind, in terms of those state law provisions that also complicated this space?
Kathryn: Absolutely. The New York and New Jersey WARN Acts, for example, often require longer notice periods than the federal WARN Act. They require notice periods of up to 90 days and impose stricter requirements than under the federal WARN Act. States often have different definitions, different notice formats, and different exceptions than under the federal WARN Act. The plaintiffs' bar knows this and uses it to their advantage.
Jerry: Well, the plaintiffs' bar is nothing if not innovative, and certainly is always kind of chasing that money trail. What sorts of verdicts, damages, settlements did you see in the past year on the WARN front?
Kathryn: Right, so a core component of potential damages in a WARN Act lawsuit is back pay owed to affected employees for the period of the violation. Given the strict standards for notification under the WARN Act, it's no surprise that the standards of calculation of damages owed to affected employees likewise heavily favor employees. So, one case is Chaney v. Vermont Bread Company. In that case, the court awarded millions of dollars in back pay, even rejecting attempts by the employer to offset damages based on help the employer provided after the layoffs or payments made by a receiver. The court provided guidelines as to acceptable forms of calculating damages in WARN Act cases, as well as made clear that employers cannot mitigate damages based on efforts to assist employees post-layoff or by suggesting that payments made by a receiver should offset their liability.
Jerry: One of the attributes of the Duane Morris Class Action Review is an analysis of major settlements in the class action world. What about in the WARN area – what were some of the major class action settlements over the past year?
Kathryn: Well, in the case of Nunn v. Bitwise, the court approved a $20 million settlement to resolve claims under both the federal WARN Act and the California WARN Act. WARN Act settlements often come through bankruptcy proceedings, which adds certain amount of complexity – but does not erase liability.
Jerry: At the end of the day, then, what would be your takeaways for employers in dealing with WARN Act issues in the class action space?
Kathryn: The key takeaway is to treat WARN notice obligations extremely seriously, and get counsel involved. If you're downsizing or restructuring, you may be triggering WARN Act, and failing to comply can lead to massive liability.
Jerry: Well, that's great succinct advice. Kathryn, thanks so much for joining us on the podcast today.
Kathryn: Thank you so much for having me, Jerry, and thank you, listeners.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.
