Indiana District Courts Finds Private Equity Firm Potentially Liable In WARN Class Action

This seems to be the month for class action cases presenting unusual issues in combination. Last week we wrote about a class action disparate impact claim of disability discrimination against the obese in which the court ultimately awarded sanctions against the plaintiff. (Rare on all three counts). This week we have a WARN Act class action in which the court both certified the class and held that, at least based on the allegations set forth in the complaint, a private equity company might be held liable for the employment decisions made by a company it owned. (One simply unusual, the second extremely so).

This will be one of our longer blogs because both sets of issues addressed by the court require a little explanation, and both are worthy of comment.

In Young v. Fortis Plastics LLC, Case No. 3:12-cv-00364 (N.D. Ind. Sept. 24, 2013), the court addressed WARN Act claims arising out of the closing of a Fortis Plastics facility in Fort Smith, Arkansas in October, 2011. The plaintiff contended that he and approximately 90 other employees were not provided with the 60-day notice the WARN Act required. He attempted to assert claims on behalf of the affected employees, and also named as a defendant a private equity company that, the complaint alleged, owned Fortis and made employment decisions on its behalf. The employee sought class certification, and the private equity company sought to dismiss the claims against it. The court ultimately denied the motion to dismiss and certified a class of those who had worked at the facilities in the 60 days before it closed.

Let's start with the class action issue. If you want to read about the issue of the liability of the private equity firm, just skip over the next few paragraphs.

The Class Certification Issues

WARN Act claims are relatively uncommon due in large part to the very fortunate reason that plant closings affecting over 50 employees, while newsworthy, occur far less frequently than the types of decisions that might be challenged in other class actions (such as pay practices, promotions, etc., that occur every day). In addition, employers are generally aware of the WARN Act's requirements, and apart from having the foresight to give 60 days' notice, the drafting of the notices themselves typically is not a time-intensive process.

WARN Act cases, when they are brought, may be good subjects for class treatment. They almost by definition meet the numerosity requirement because the Act isn't even...