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A Minnesota federal judge has ruled that U.S. Steel Corp. did not violate the federal law requiring advance notice of plant closings because the depth of the recent economic crisis was not foreseeable. Although the company did not comply with the provisions of the law, the judge found that the unforeseeable business circumstances exception to the law applies. On Aug. 16, Judge John Tunheim of the District of Minnesota disposed of a case against the company brought by United Steel Workers of America Local 2660 pursuant to the Worker Adjustment and Retraining Notification (WARN) Act. He granted a motion for summary judgment brought by the company in the case, United Steel Workers of America Local 2660 v. United States Steel Corp. The WARN Act generally requires companies with 100 or more employees to provide workers with 60 days’ warning of plant closings and mass layoffs. A plant closing is defined as a facility shutdown for more than six months, or when 50 or more employees lose their jobs during any 30 day period at a single employment site. A mass layoff occurs when 50 to 499 workers are laid off during a 30-day period at a single employment site for at least six months and when the number of workers is at least one-third of the workforce at the site. “Because the Court finds unforeseeable the depth of the economic crisis that triggered the layoffs, and the unprecedented high demand for steel just prior to the economic downturn would have heavily factored into the decision to delay the plant shutdown, U.S. Steel has shown it acted within the scope of commercially reasonable business judgment,” Tunheim wrote. Local 2660 sued U.S. Steel in Aug. 2009. The complaint claims the company conducted a mass layoff or a plant closing at a facility in Keewatin, Minn. from Dec. 5, 2008 through Dec. 18 of that year without the required 60-day notice. According to the complaint, approximately 340 union workers were affected. Local 2660 asked the court to award unpaid wages, commissions, bonuses, accrued holiday and vacation pay, pension and 401(k) contributions and other benefits for 60 days following the union members’ termination plus interest. The union also asked the court to award attorney fees. According to the opinion, 313 workers were affected by the sudden shutdown of the iron ore plant. Also, during the first three quarters of 2008, the company “reported some of the highest sales and net income in its history.” The company idled three plants in the fall of 2008, when the future outlook for steel demand weakened, including the one at issue in the lawsuit. The company’s executive management committee approved the plan on Dec. 1, 2008. U.S. Steel issued the WARN Act notice on Dec. 3 and conducted layoffs between Dec. 7 and Dec. 21 of that year. The company recalled 145 of the affected employees on Jan. 4, 2009, to a nearby plant although. They were laid off again in March 2009, but by that December, the company recalled all of the laid off workers. Tunheim wrote that the unforeseeable business circumstances exception to the WARN Act rules applied to U.S. Steel. Although the law still requires an employer to give as much notice as “practicable” and “a brief statement of the basis for reducing the notification period,” it “does not impose upon an employer a requirement to provide sixty days of notice or continue in business to its detriment for the sixty day notice period, simply because it is economically feasible or possible to do so.” Tunheim went on to note that what U.S. Steel knew about its business prospects on Oct. 8, 2008, which is 60 days before the layoffs began or the so-called “the snapshot date” determines whether the shortened notice period was legal. “The combination of very high demand for steel and, even when the economy started crumbling, the widely anticipated bailout of the automobile industry are unique factors in this case which cause the Court to find that the unforeseeable circumstances exception to the WARN Act notice requirement applies,” Tunheim wrote. U.S. Steel’s lawyer, Bruce Douglas, who chairs the business litigation department at Minneapolis-based Larkin Hoffman Daly & Lindgren Ltd., did not respond to requests for comment. Company spokeswoman Courtney Boone said “we do not comment on matters of litigation.” The steel workers’ union and most of its lawyers also did not respond to requests for comment. The Gardner Firm in Mobile, Ala. represented the union, along with Stuart Miller of New York-based WARN act boutique Lankenau & Miller. Local counsel Robert Metcalf of Metcalf, Kaspari, Engdahl & Lazarus in Minneapolis declined to comment. Gerald Hathaway, a New York partner at San Francisco’s Littler Mendelson, who isn’t involved in the case, said the ruling is an unusual “because it allowed a company to rely on the sudden downturn in the general economy to justify a shortened WARN notice.” “What made the company’s argument compelling was that on the date that preceded the actual layoff by 60 days, the company was at full capacity,” Hathaway said. Sheri Qualters can be contacted at [email protected].

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