Duane Morris Class Action Review - 2023 - Report - Page 376
C.
Rulings On Whether The COVID-19 Pandemic Qualifies Under The WARN
Act’s “Natural Disaster” And/Or “Unforeseen Business Circumstances”
Exceptions
There are several exceptions to the WARN Act’s notice requirements, including the
“natural disaster” exception; the “unforeseeable business circumstances” exception; and
the “faltering company” exception. These exceptions, if applicable, permit an employer
to provide fewer than 60 days’ advance written notice (but still require written notices
that must explain why the employer seeks to rely on the exception and why it could not
have provided the full 60 days of notice).
The faltering company exception, applicable only to plant closings, may come into play
where the pandemic has resulted in businesses simply shutting down due to lack of
funds or business. So far, however, the exceptions that have been addressed by courts
in COVID-19-related WARN Act suits are the natural disaster and unforeseeable
business circumstances exceptions.
“Natural Disaster” Exception. In Easom, et al. v. US Well Services, Inc., 37 F.4th 238
(5th Cir. 2022), the Fifth Circuit held that COVID-19 does not qualify as a natural
disaster under the WARN Act’s natural disaster exception. The plaintiffs filed a class
action against the defendant US Well Services, Inc. under the WARN Act, claiming that
their employment was terminated without notice. US Well argued that the termination,
which was caused by COVID-19, was proper under the WARN Act’s natural-disaster
exception. The parties cross-moved for summary judgment. The district court denied
both motions, but concluded that COVID-19 was a natural disaster, and that the natural
disaster exception uses but-for causation standards. The district court reasoned that
COVID-19 qualified as “natural” because people did not start or consciously spread it,
and it was a “disaster” based on how many people were killed or infected. Nonetheless,
the district court found that the record did not show that COVID-19 was the but-for
cause of the layoffs. On appeal, the Fifth Circuit disagreed with the district court’s
reasoning and held that “COVID-19 does not qualify as a natural disaster under the
WARN Act’s natural-disaster exception.” Id. at 244. The Fifth Circuit narrowly construed
the WARN Act’s language, which limited examples of natural disasters to “flood,
earthquake, or drought” and other hydrological, geological, and meteorological events.
Id. at 243-44. The Fifth Circuit also examined whether the phrase “due to” in the natural
disaster exception requires but-for or proximate causation. Pointing to Supreme Court
and other precedent equating direct causation and proximate causation, the Fifth Circuit
held that the WARN Act’s natural-disaster exception incorporates proximate causation.
In another case, Jones, et al. v. Scribe Opco, Inc., 591 F. Supp. 3d 1219 (M.D. Fla.
2022) (an earlier decision from the same Jones litigation discussed previously), the
court refused to dismiss a putative WARN Act class action because the employee
plausibly alleged that the plant closings and/or mass layoffs at issue were not directly
caused by the pandemic, but instead “were ‘due to’ the economic downturn [the
company’s] manufacturing business experienced,” which in turn was due to government
mandates and private-sector choices. Id. at 1228.
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Duane Morris Class Action Review – 2023
