Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jennifer Riley and associate Kathryn Brown with their discussion of key rulings issued in WARN Act class action litigation over the past year, and the notable challenges for employers defending WARN Act claims in the wake of the COVID-19 pandemic and the rise of remote work.
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Episode Transcript
Jennifer Riley: Thank you for being here again for the next episode of our weekly podcast, the Class Action Weekly Wire. I’m Jennifer Riley, partner at Duane Morris, and joining me today is Kathryn Brown. Thank you so much for being on the podcast, Kathryn.
Kathryn Brown: Great to be here, thanks for having me.
Jennifer: Today we wanted to discuss trends and important developments in class action litigation involving the Worker Adjustment and Retraining Notification Act, or the WARN Act. Class actions brought under the WARN Act remain an area of key focus for skilled class action litigators in the plaintiffs’ bar. Unlike the flood of cases we saw in 2022 examining the WARN Act in the context of the COVID-19 pandemic, the significant decisions in 2023 examined more foundational concepts under WARN in a variety of factual contexts. In sum, despite that shift, the WARN Act remains a high stakes fuel for class action litigation. Kathryn, can you explain to our listeners some of the requirements for employers under the WARN Act?
Kathryn: Sure, so the WARN Act requires employers to give written notice to affected employees at least 60 days before conducting a plant closing or mass layoff at a single site of employment. The WARN Act defines a plant closing as the permanent or temporary shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment, where the shutdown results in a defined employment loss during any 30-day period for at least 50 full-time employees. The WARN Act defines a mass layoff as a reduction in force that is not a plant closing, and that results in an employment loss at a single site of employment during any 30-day period for at least 50 full-time employees who constitute at least 33% of the active full-time employees at that single site of employment, or where 500 or more full-time employees at a single site of employment suffer employment losses during any 30-day period. The WARN Act regulations require aggregation of employment losses at a single site of employment during a rolling 90-day period, thereby in essence extending the statute’s 30-day period to 90 days.
Jennifer: Thanks so much for that overview. Can you speak to how often courts grant a class certification in these types of class Actions?
Kathryn: Yes. So, in 2023 plaintiffs’ lawyers achieved somewhat mixed results in their efforts to secure class certification in WARN Act cases. Overall, plaintiffs won a slight majority of class certification motions filed in WARN Act cases obtaining certification in 54% of the motions and with courts denying certification 46% of the time.
Jennifer: Wow, that sounds high, but that’s actually a big contrast to 2022 when courts granted class certification in 100% of WARN Act class actions. We track those numbers in the Duane Morris Class Action Review. What were some of the most significant rulings in WARN Act class actions over the past 12 months?
Kathryn: Well, one of the significant class certification rulings of the past year was Igarashi v. H.I.S. Guam, Inc., a WARN Act claim brought in the District Court for the Island of Guam. The plaintiff filed a class action alleging that the defendant, a travel service agency, violated the WARN Act when the plaintiff and other employees were terminated without 60 days advance notice. The plaintiff filed a motion for class certification pursuant to Rule 23, and the court granted the motion. The court found that the class met the numerosity requirements under Rule 23(a)(1), as there were approximately 96 employees affected by the mass termination. Likewise, the court found the class met the commonality requirement under Rule 23(a)(2). The court concluded that the plaintiff sufficiently demonstrated the existence of common questions of law and fact, including whether under the WARN Act: (i) the defendant is a covered employer; (ii) the class members were covered employees; (iii) the employees suffered a covered employment loss through a covered mass layoff; and finally (iv) there was a failure to issue the required 60 day written notice. The court also determined that typicality was met under Rule 23(a)(3) because the plaintiff and other class members experienced the same injury and the same course of conduct, i.e. a mass termination without the required WARN Act notice resulting in employment loss. The court also found that the Rule 23(a)(4) requirement for adequacy of representation was also satisfied. For the analysis of the Rule 23(b) factors, the court opined that common questions of fact predominated, because the issues were identical to each employee, because they all received the same separation notice, and any justification offered by the defendant for failing to provide a 60 day notice applied to each proposed class member. The court reasoned that common questions of law also predominated, including whether the WARN Act applied to the defendant’s mass layoff and whether the defendant was exempt from the requirements of the WARN Act. As to the superiority requirement, the court ruled that a class action would be the superior method of adjudication, because each proposed class member would also be analyzed under the same statutorily defined compensation framework under the WARN Act statute. Therefore, the court concluded that judicial economy would be served by certifying the class. So that’s one of the important rulings we saw in the past year.
Jennifer: Thanks so much, Kathryn, for that overview. The question as to what the single site of employment means for employees who work from home has become an increasingly significant issue with the dramatic rise of remote work, a trend that may well become a permanent fixture in the modern workplace. Do you have any examples of rulings addressing that question?
Kathryn: Yes, so under the WARN Act a plant closing is defined as the shutdown of a single site of employment, or one or more facilities or operating units within a single site of employment. The DOL’s regulations implementing the WARN Act define the terms single side of employment and operating unit. But the definitions are far from bright lined. So in a recent Second Circuit opinion, we can see how this question is addressed, and how it will continue to be a hot button issue. In the case of Roberts v. Genting N.Y., LLC, the Second Circuit Court of Appeals allowed a class action lawsuit by former employees of a buffet restaurant within a casino to proceed under the WARN Act and corresponding New York law on the basis that a question of fact existed as to whether the buffet was a covered operating unit under the WARN Act, which would entitle the employees to 60 days advance notice before the closing of the buffet. The plaintiffs, a group of 177 former employees, were provided no notice when the defendant casino closed the buffet located inside the casino where the plaintiffs worked. After both parties moved for summary judgment, the district court granted the defendant’s motion, dismissing the employees claims under the WARN Act, because it found that the buffet was neither a single site of employment nor an operating unit within a single site of employment as required to trigger the notice requirements under the WARN Act. In reaching this conclusion, the district court primarily focused on the fact that the buffet was dependent upon the casino’s centralized services. So in reversing the district court’s grant of summary judgment, the Second Circuit Court of Appeals concluded that whether the buffet could operate independent from the casino was not dispositive in deciding if it was operationally or organizationally distinct particularly in light, of the DOL’s inclusion of entities, such as housekeeping and its illustrative examples of operating units in the WARN Act regulations. The Second Circuit detailed several differences between the buffet employees and other employees of the casino that could evidence the status of the buffet as a distinct operating unit for purposes of WARN, such as employee uniforms that were particular to the buffet and managers that worked only for the buffet. In doing so, the Second Circuit gave no special weight to a collective bargaining agreement which did not identify the buffet as a separate department, division, or unit within the larger casino. Viewing the evidence as a whole, the Second Circuit found that the record before the district court did not clearly establish that the buffet was not an operating unit for WARN Act purposes. Therefore, the Second Circuit concluded that neither party was entitled to summary judgment, sending the case back to the district court for a trier of fact ultimately to decide.
Jennifer: Great insights and analysis, Kathryn, thank you so much for being here today and for sharing this information. I know that these are only some of the cases that had interesting rulings in 2023, in WARN Act class actions – 2024 is sure to give us some additional insights into the ways that class actions are evolving in the WARN Act space. Thanks so much for our audience for tuning in today, and we will see you next week on the Class Action Weekly Wire.