Under the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”), 29 U.S.C. §§ 2101-2109, an employer of 100 or more full-time employees is forbidden from “order[ing] a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order,” where the failure for so doing may result in civil penalties and specified damages to the affected employees. In a case interpreting the WARN Act, the Sixth Circuit concludes that plaintiffs bringing a WARN claim have no right to a jury trial and have no right to notice under the Act if they have no “reasonable expectation of recall” by their employer.
The facts underlying Bledsoe v. Emery Worldwide Airlines, Inc. (6th Cir., No. 09-4346) [PDF], date back to 2001, when the Federal Aviation Administration (FAA) ordered the grounding of EWA planes due to safety concerns. As a result of the grounding, EWA laid off 575 employees in August 2001, and the company sent letters to these employees stating that, if EWA could resolve its issues with the FAA, the layoffs would last less than 6 months. But in September 2001, the FAA placed additional requirements on EWA such that effectively required the company to complete certification as if it were a new carrier entering the market. In October 2001, EWA sent letters to its employees stating its uncertainty as to the timing of resolving the FAA issues and indicating that it had no plans at that point to recall laid-off employees. The following month, EWA sent another letter to employees stating that the layoffs would last more than 6 months and that employees’ layoffs would “continue until at least April 1, 2002.” Early in December 2001, as a result of the FAA requirements, EWA’s parent company decided to permanently cease operations, and the next day notified the remaining active EWA employees of a 60-day layoff with pay, pending their termination in February 2002; the company also notified the previously laid-off employees that their layoffs were permanent, offering no further notice or pay. These previously laid-off employees brought a class action against EWA, asserting violations of the WARN Act, and the district court certified the class. The district court rejected a jury demand by the plaintiffs, conducted a bench trial and ruled against the plaintiffs, finding that they no longer had a “reasonable expectation of recall” under the WARN Act.
With Judge Guy writing for a unanimous panel that included Judges Boggs and Gibbons, the Sixth Circuit affirmed. First, because the WARN Act was silent as to whether it included or forbade jury trials, the panel examined whether the rights involved would be considered legal or equitable under the Seventh Amendment. The Court found that the WARN Act expressly provided that its remedies were exclusive, and placed the entire potential damage award to employees – the liability for back pay and benefits – within the discretion of the district court. The Court found that, under such circumstances, such ‘damages’ were actually a form of equitable, restitutionary relief and that, therefore, neither the Seventh Amendment nor the Act provided a right to jury trial.
Second, applying the underlying facts to the WARN Act, the Court concluded that the plaintiffs had no “reasonable expectation of recall” by EWA based upon the company’s letters, which depicted the negative dynamics between the FAA and EWA and informed the plaintiffs that timely resolution of the problem was unlikely. The Court observed that while EWA and its employees initially expected that the FAA problems could be resolved and that the layoffs would be temporary, the situation rapidly deteriorated and EWA accurately communicated such deterioration to the plaintiffs. Applying an objective standard, the Court found that, under such circumstances, the plaintiffs could not have reasonably expected to have been recalled by the company.