4th Circuit is suspicious of the offer to extend liability under the WARN Act

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  • According to judges, the utility company had no control over the contractor’s employees
  • According to the Chamber of Commerce, the ruling could have an impact on COVID cases

(Reuters) – U.S. appeals court judges on Wednesday sounded skeptical of an offer to hold a utility accountable for allegedly failing to notify 4,000 employees in a timely manner of a mass layoff, an issue that could be critical to businesses, workers amid the COVID-19 pandemic.

During a hearing, two of the three judges on a U.S. 4th appeals panel gave an attorney from a proposed group of former employees of the construction company Fluor Corp their own workers at least 60 days in advance and did not extend to contractor workers.

District Judge J. Harvie Wilkinson said holding otherwise could lead to “endless confusion” about how the WARN Act applies when multiple independent companies are operating.

“I just don’t see how you can get your way on these matters without extending the scope of this statute to an extraordinary degree,” said Wilkinson.

Plaintiffs ‘attorney, Jack Raisner of Raisner Roupinian, told the panel that the WARN Act places liability on the company that violates workers’ early layoffs rights, even if it does not directly employ the workers.

Workers laid off during the COVID-19 pandemic have made WARN Act claims against a number of companies, including rental car services Enterprise Holdings Inc and Hertz Global Holdings Inc, restaurant chain Hooters, and Rosen Hotels and Resorts Inc.

In one (n Amicus letter In Wednesday’s case, the US Chamber of Commerce warned the 4th District that a full interpretation of WARN Act liability could have “devastating effects” on companies involved in pending litigation.

The case dates back to a construction project at a nuclear facility in South Carolina that was being carried out by a unit of SCANA Corp. which is now a subsidiary of Dominion Energy Inc. SCANA hired Westinghouse Electric Corp to do the work on the facility, and Westinghouse, in turn, had a contract with Fluor, according to court records.

SCANA abruptly ceased operations at the facility in July 2017, forcing Fluor to immediately fire about 4,000 of its employees. A group of Fluor employees sued both companies earlier that year, claiming they violated the WARN law by not terminating the layoffs.

SCANA argued that it could not be held liable under the law as it did not employ the Fluor employees. Fluor claimed that SCANA’s abrupt suspension of the project was an “unforeseen business circumstance” that exempted it from the WARN Act’s notification requirements.

US District Judge J. Michelle Childs agreed in January and granted summary judgment to the companies.

On Wednesday, Wilkinson urged Raisner whether SCANA was even able to identify all of Fluor’s employees in order to inform them of the impending layoffs.

“You don’t need to know; you need to know where the CEO of Fluor is,” replied Raisner, “and tell the CEO, ‘we’re going to close in 60 days.'”

But Wilkinson and District Judge Paul Niemeyer seemed unmoved. Niemeyer repeatedly pointed out that SCANA had no control over whether Fluor employees were fired, reassigned, or paid for an initial period after the project was discontinued.

“This is not a cross-company issue; this is a question of whether Fluor employees are under the control of SCANA,” said Niemeyer.

District judge Diana Motz, who did not speak during the arguments on Wednesday, is a member of the panel.

The case is Pennington v Fluor Corp, 4th Court of Appeal, No. 21-1141.

For the plaintiffs: Jack Raisner of Raisner Roupinian; and Charles Ercole by Klehr Harrison Harvey Branzburg

For Fluor: Hagood Tighe by Fisher Phillips

For SCANA: Ted Speth from Ogletree Deakins Nash Smoak & Stewart


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