WARN Act Class Certified in the District of Maine

Last week, United States District Court Judge George Singal granted class certification to a group of former employees of automobile part manufacturer Formed Fiber Technologies, LLC, who allege they were subjected to a “mass layoff” without the 60 days’ advance written notice required by the Worker Adjustment and Retraining Notification (“WARN”) Act.

The facts, which can be gleaned from earlier decisions including the Court’s orders granting the plaintiff leave to file an amended class action complaint and Formed Fiber’s motion for summary judgment, are relatively straightforward. Formed Fiber laid off approximately162 of its 300 employees in December of 2008. The initial plaintiff, Steven Nelson, was among a group of employees recalled briefly, but laid off again in late January of 2009. Shortly thereafter, on February 11, Formed Fiber sent the laid off employees a letter, indicating that the layoffs—which the company initially believed would be only temporary—may in fact extend beyond six months due to “changed business forecasts,” “unforeseen circumstances,” and “sharp declines in automobile sales,” and may therefore constitute a “mass layoff” under the WARN Act. Formed Fiber sent a similar letter to the Maine Department of Labor. Approximately 40 of the 162 workers laid off in December of 2008 and January of 2009 were recalled within six months, but Nelson was not one of them. Nelson secured alternate employment with a trucking company and, in May of 2009, he formally resigned from Formed Fiber.

In November of 2010, Nelson sued, alleging violations of the WARN Act as well as Maine’s Severance Pay Act. Formed Fiber filed a motion to dismiss the severance pay claim, which was granted, and a motion for summary judgment on the WARN Act claim. The basis for seeking summary judgment was Nelson’s resignation fewer than six months after the lay off, which Formed Fiber argued had the effect of erasing any “employment loss,” as required by the WARN Act. The court agreed and ultimately dismissed Nelson from the case. While the summary judgment motion was pending, however, Nelson filed a motion to amend the complaint to add another plaintiff, Paul Applegate, which was granted. Applegate, like Nelson, was laid off in December of 2008; unlike Nelson, however, he was not temporarily recalled in January and he did not formally resign within six months of the layoff.

Applegate conceded that the class definition should exclude individuals who, like Nelson, resigned within six months of the layoff, but sought to certify a class consisting of all of the other former Formed Fiber employees who were laid off on in December of 2008, not provided written notice until Feburary of 2009, and recalled for only a couple of weeks in January of 2009 or not at all. In assessing the merits of the certification motion, Judge Singal marched through the requirements of Rule 23(a) and 23(b)(3):

Numerosity. Formed Fiber argued that Applegate failed to produce sufficient evidentiary support for his class size estimate of between 120 and 162 plaintiffs, contended that the approximately 40 employees who were briefly recalled in January of 2009 could not be counted because they did not experience an “employment loss” under the WARN Act, and maintained that the number of employees who received the February 11 notification (at least 50) was not a reliable indicator of class size, since it sent the notice to employees who, like Nelson, did not experience an “employment loss.” Judge Singal rejected these arguments, concluding that the notification letter established there were “potentially” at least 49 employees (50 less Nelson) subjected to a mass lay off without adequate WARN Act notice and stating, without elaboration, that additional factors such as ease in identifying class members, nature of the action, the size of each plaintiff’s claim, judicial economy, and the ability of members to institute individual suits, weighed in favor of finding joinder of all members impracticable.

Commonality. Again holding up the approximately 40 employees who were briefly recalled, Formed Fiber argued that Applegate failed to establish commonality. Judge Singal disagreed, and, without discussing Formed Fiber’s argument that the recalled employees did not suffer an “employment loss” or whether Dukes raised what First Circuit precedent has described as a “low bar” for meeting the commonality requirement, reasoned that the only difference between those who were temporarily recalled and those who were not was in the amount of damages they may recover. Reasoning that differences in damages are insufficient to bar class certification, he concluded that the commonality element was met.

Typicality and Adequacy. The court easily concluded that the claims of the proposed class were based on the same legal theory as Applegate’s—that Formed Fiber failed to provide timely notice of mass layoff—and that their alleged injuries arose from the same events—the layoffs at the Auburn plant in December of 2008 and January of 2009. It also found that Applegate would fairly and adequately protect the class’s interest, as required under Rule 23(a)(4), because no divergence exists between Applegate’s and other class members’ interests and because Plaintiff’s counsel was sufficiently qualified and experienced.

Rule 23(b)(3). Moving on to analyze the propriety of class action treatment under Rule 23(b)(3), Judge Singal applied the factors listed in the rule itself and found them met. In so doing, he dismissed Formed Fiber’s argument that common questions did not predominate because its affirmative defenses—such as reasonable foreseeability concerning the layoff, good faith, and WARN Act compliance itself—would need to be addressed on an individualized basis, stating there was “no reason to believe that these defenses might apply differently to different plaintiffs” and opining that, if Formed Fiber was correct, then class actions in WARN Act cases would never be certified, a result that would undermine the statutory language of the WARN Act, which expressly provides that “a representative of employees . . . may sue . . . . for other persons similarly situated.” 29 U.S.C. § 2104(a)(5). Judge Singal went on to find that class treatment would be the superior method for adjudicating the claims, given the small damages per putative class member and the absence of any known difficulties associated with managing the litigation as a class action.