Employment-Sixth Circuit Rules That Plaintiffs Were Not Entitled To Receive A WARN Notice In Connection With The Employer’s Cessation Of Operations

In Bledsoe v. Emery Worldwide Airlines, Inc., No. 09-4346 (6th Cir. 2011), the plaintiffs, representing a class of former employees of the defendant, Emery Worldwide Airlines, Inc. (“EWA”), filed this suit against EWA claiming violations of the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”). The district court ruled against the plaintiffs, and they appealed. The principal issue on appeal was whether the district court erred in finding that the plaintiffs were not entitled to notice under the WARN Act, since they had no “reasonable expectation of recall” from layoff at the time that EWA permanently ceased operations.

EWA was a commercial air freight carrier. Problems developed between EWA and the Federal Aviation Administration (“FAA”). As a result of these issues, EWA’s airplanes were grounded in August 2001. This caused the temporary layoff of approximately 575 EWA employees, including the plaintiffs, between August 13 and 15, 2001. Letters were sent to these employees concerning the layoffs, indicating the temporary nature. Other letters followed, increasing the expected length of the layoffs and indicating that the layoffs could be permanent. On December 4, 2001, EWA’s parent corporation decided to permanently close EWA, thereby permanently ceasing operations. On December 5, 2001, the plaintiffs were notified that their layoffs were permanent, without affording them advance notice or pay in lieu thereof. Were the plaintiffs entitled to a WARN Act notice?

The Court stated that the WARN Act notice would be required if the plaintiffs were “affected employees” at the time EWA permanently ceased operations. The WARN Act defines “affected employees” as “employees who may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by their employer.” (29 U.S.C. § 2101(a)(5)). Earlier cases have held that this term includes temporarily laid-off employees who had a “reasonable expectation of recall” at the time of the employment loss. Factors used in establishing this expectation are: (1) the past experience of the employer; (2) the employer’s future plans; (3) the circumstances of the layoff; (4) the expected length of the layoff; and (5) industry practice. Factors (1) and (5) did not apply here. For factors (2), (3) and (4), the Court considered the dynamics and issues between EWA and the FAA, that EWA had told employees in the letters about the resulting unlikelihood that the issues would be resolved in a timely manner, and that the length of the layoffs increased prior to being made permanent. In particular, prior to December 4, 2001, it had became progressively more apparent to EWA and its parent company that the economics of complying with heightened FAA standards did not make sense from a business perspective, and EWA had been relaying its concerns in its letters about how this impacted the layoffs to the employees. The Court found that, by December 4, a reasonable employee under the circumstances would not have expected to be recalled.

Accordingly, the Court concluded that the plaintiffs were not entitled to a WARN Act notice, and affirmed the district court’s decision.