Guippone v. BH S & B Holdings LLC
737 F.3d 221
2d Cir.2013Background
- Guippone sues on behalf of himself and others alleging WARN violations as to multiple corporate defendants.
- HoldCo is the holding company and sole manager of Holdings, which purchased Steve & Barry’s assets and employed the plaintiff and putative class members.
- Holdings filed for Chapter 11 bankruptcy in 2008, with HoldCo board hiring managers and approving actions impacting Holdings’ operations.
- RAS Management advised and the HoldCo board authorized layoffs and a reduction in force, leading to WARN notices beginning November 2008.
- The district court granted summary judgment against HoldCo but dismissed related defendants; court held Bay Harbour and York Capital liable as separate entities, and HoldCo not liable as a single employer.
- On appeal, the Second Circuit reverses as to HoldCo on the single-employer issue, while affirming dismissal of the remaining defendants for failure to state a claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether HoldCo and Holdings are a single WARN employer | Guippone argues HoldCo exercised de facto control over Holdings. | HoldCo contends separate legal entities; lack of independent decision-making. | Material factual issue exists; not entitled to summary judgment on single-employer theory. |
| Application of DOL five-factor test to related entities | The factors show unity and control supporting single-employer liability. | Factors do not incontrovertibly show control by HoldCo over Holdings. | Court adopts the five-factor test and requires fact-specific balancing. |
| Whether Holdings’ layoffs were directed by HoldCo | HoldCo-directed layoffs through authority to authorize reductions in force. | RAS and Holdings acted with some independent decisions. | Evidence could support jury finding HoldCo directed the layoffs. |
Key Cases Cited
- Pearson v. Component Tech. Corp., 247 F.3d 471 (3d Cir.2001) (non-exclusive factors for determining single-employer status under WARN; de facto control considered)
- In re APA Transp. Corp. Consol. Litig., 541 F.3d 233 (3d Cir.2008) (de facto control as a factor in employment-practice decisions)
- Coppola v. Bear Stearns & Co., 499 F.3d 144 (2d Cir.2007) (test for whether creditor is an employer under WARN; focus on control over going concern)