By Gerald L. Maatman, Jr., Rebecca S. Bjork, and Olga A. Romadin
Duane Morris Takeaways: On May 26, 2026, a unanimous panel of the U.S. Court of Appeals for the Fourth Circuit issued an opinion affirming a federal district court’s dismissal of a putative class action alleging violations of the Worker Adjustment and Retraining Notification (“WARN”) Act and the Employee Retirement Income Security Act (“ERISA”) in Tony Messer v. Garrison Investment Group, LP, No. 25-1657, 2026 WL 1465139 (4th Cir. May 26, 2026). Citing a 1996 U.S. Supreme Court decision, the Fourth Circuit ruled that the plaintiffs could not pursue a private equity firm they had voluntarily dismissed from their earlier suit for a judgment against their former employer because the district court had no jurisdiction over the firm.
Case Background
On October 19, 2018, plaintiffs, a group of several hundred former employees, brought a class action against Bristol Compressors International, LLC (“BCI”) and Garrison Investment Group LP, as BCI’s alter ego and successor, alleging that the manufacturer had failed to provide sufficient notice of the plant’s closure in violation of the WARN Act, and that it had failed to comply with ERISA in terminating the employee severance plan. Id. at *1. Following certification of three sub-classes and completion of discovery, Garrison moved for summary judgment, arguing that it could not be held vicariously liable for the actions of BCI. Id. Both Garrison and BCI also argued that the employee severance plan had been properly terminated, that members of a subclass had released their claims by signing an agreement, and that other workers had received proper notice of the plant closure under the WARN Act. Id. Plaintiffs moved to voluntarily dismiss Garrison without prejudice, citing conservation of resources, which Garrison opposed, predicting that if plaintiffs were unable to collect a judgment against BCI they would seek to collect it from Garrison instead. Id. at *2. The district court granted the plaintiffs’ motion to dismiss without prejudice. Id. Additionally, the district court granted partial summary judgment to BCI on the severance plan, and found that those workers who had signed an agreement releasing all of their claims against BCI could not participate in the suit. Id. At the subsequent trial on the remaining WARN Act claims, the district court found BCI liable, and awarded a judgment totaling $1,392,915.40, which, following an appeal to the Fourth Circuit and reversal of summary judgment on the severance plan, was increased to $4,078,105.11 on remand. Id.
In August 2024, unable to collect the judgement against BCI following its insolvency and dissolution, the plaintiffs brought an action against Garrison, its agents, owners, and related entities, alleging that it was BCI’s alter ego and seeking to pierce the corporate veil. Id. at *3. Plaintiffs argued that federal jurisdiction was proper because Garrison controlled BCI when it had violated federal laws, but the district court granted Garrison’s motion to dismiss, citing lack of subject matter jurisdiction as the judgement had been awarded against BCI following voluntary dismissal of Garrison from the earlier case, and, alternatively, finding that the statute of limitations. Id. The plaintiffs appealed.
The Fourth Circuit’s Decision
The Fourth Circuit determined that there was no federal question jurisdiction under 28 U.S.C. § 1331, and agreed with the district court’s interpretation of Peacock v. Thomas, 516 U.S. 349 (1996), where the U.S. Supreme Court found that federal courts do not have ancillary jurisdiction to impose liability over a party that was “not otherwise liable.” Id. at *3.
In, Peacock, an ERISA class action, the Supreme Court declined to extend subject matter jurisdiction over an officer and shareholder of the plaintiff’s former employer following a judgment of liability against the employer and determination that the officer and shareholder was a non-fiduciary third party and not liable for the judgement. Id. at *4. Noting that the Messer plaintiffs brought the action against Garrison “solely” because BCI could not pay, that no new violations were being alleged, and that neither ERISA nor the WARN Act impose liability on third parties, the Fourth Circuit found “no independent basis for subject matter jurisdiction.” Id. at *5. Further, the Fourth Circuit wrote that U.S. Department of Labor regulations explicitly “foreclose the applicability of duplicative theories of recovery such as piercing the corporate veil,” and the practice is disfavored both within the Fourth Circuit and other circuits. Id. at *5-6.
The Fourth Circuit was unconvinced by plaintiffs’ argument that their claims against Garrison were independent of its suit against BCI, which it dismissed on a brief overview of the record and conclusion that this was a mere attempt to piece the corporate veil in order to extend liability to Garrison. Id. at *6.
Finally, the Fourth Circuit, emphasizing the limited jurisdiction of federal courts, declined to exercise ancillary jurisdiction over the claims against Garrison on the grounds that the plaintiffs had voluntarily dismissed its claims against Garrison in their earlier suit, and proceeded to litigate exclusively against BCI, which in effect made BCI the only entity liable for the judgement. Id. at *7.
Implications For Employers
The Fourth Circuit’s decision in Messer highlights both the importance of maintaining practices that conform with applicable law, and proactive engagement with workforces who may fall under ERISA and the WARN Act when enacting reductions in force or similar measures. Key to this case, for example, was how employees were offered compensation in exchange for liability waivers. Further, this decision underscores how companies with outside ownership should consider the strategic advantage of litigating separately from affiliates, especially when risking joint and several liability.