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July 5 — A transportation company that terminated a class of more than 400 workers within two weeks of purchasing their former employer is liable for back pay and benefits under the Worker Adjustment and Retraining Notification Act, the Eighth Circuit ruled ( Day v. Celadon Trucking Servs., Inc. , 2016 BL 214623, 8th Cir., No. 15-1711, 7/5/16 ).
WARN Act cases that reach the federal appellate level are few and far between. The only other appeals court WARN Act ruling this year came from the U.S. Court of Appeals for the Sixth Circuit, which found in January that Vanderbilt University didn't violate the law.
Here, Celadon Trucking Services Inc. bought Continental Express Inc.'s assets with the intent to run Continental's trucking business indefinitely, the Eighth Circuit found.
This means that the companies' transaction involved the sale of a business as an ongoing concern. Under the WARN Act at 29 U.S.C. § 2101(a)(6), such a sale “creates a presumption that the buyer is the employer for WARN Act purposes if the seller still employs its employees on the day of the sale,” the court said.
The law also expressly provides that after the effective date of the sale of an employer's business, the buyer “shall be responsible for providing notice for any plant closing or mass layoff,” the court said.
The companies' purchase agreement required Celadon to retain Continental's employees for 14 days following the sale and to offer jobs to those who met Celadon's employment requirements, the court said.
The terminated employees were Celadon employees after the transaction and thus were entitled to 60 days' notice of the layoff from Celadon under the WARN Act, the court said, affirming partial summary judgment to the employees.
The Eighth Circuit also rejected Celadon's arguments that the lower district court erred by making the company prove which former employees should be excluded from the class and denying its motion to decertify the class.
With regard to the former issue, the court found no abuse of discretion by the lower court because, generally, the party that files a motion should bear the initial burden of establishing why the motion should be granted.
Once a class is certified under Rule 23 of the Federal Rules of Civil Procedure, it said, a district court must satisfy a duty to “assure that a class continues to be certifiable.”
“The existence of this independent obligation lends further support for requiring the movant to bear the burden of showing that the district court mistakenly maintained class certification,” the court said.
As to the merits of Celadon's decertification motion, the Eighth Circuit said it was properly denied because individual damage questions don't predominate over questions common to the class.
“Certainly, there are individualized inquiries for determining the rate of compensation for each employee,” it said. “But this is true of any WARN Act claim, and Celadon does not suggest that class actions are never appropriate for WARN Act violations.”
Judge Lavenski R. Smith wrote the opinion, joined by Judges Diana E. Murphy and William D. Benton.
Attorneys representing the workers and Celadon didn't immediately respond to Bloomberg BNA's July 5 requests for comment.
The Bogoslavsky Law Firm and John R. Myers represented the workers. Robins & Kaplan, Scopelitis & Garvin and the Wolff Law Firm represented Celadon.
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Text of the opinion is available at http://www.bloomberglaw.com/public/document/Day_v_Celadon_Trucking_Servs_Inc_No_151711_2016_BL_214623_8th_Cir.
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