October 6, 2023
On September 27, 2023, the Fifth Circuit revived a lawsuit under the Worker Adjustment and Retraining Notification Act (“WARN Act”) brought against private equity firm Black Diamond Capital Management LLC, concluding that there was a dispute about whether the firm exercised de facto control over one of its portfolio companies.[1]
Background: The WARN Act requires covered employers to provide affected employees with 60 days’ notice before a plant closure or mass layoff—often known as a WARN Act notice.[2] If an employer fails to comply, affected employees may sue the employer for backpay, benefits, and attorney’s fees.[3]
In this case, Bayou Steel operated a steel mill in LaPlace, Louisiana. On September 30, 2019, Bayou Steel closed the LaPlace mill without providing WARN Act notices. After briefly pursuing and then dismissing an action in bankruptcy court against Bayou Steel, Plaintiffs sued the Black Diamond holding company that indirectly owned Bayou Steel, as well as Black Diamond Capital Management, LLC (“BDCM”), the private equity firm acting as the investment advisor, alleging that those entities acted functionally as the combined “single employer” of Bayou Steel’s employees. The district court concluded at summary judgment that the defendants were not liable under the WARN Act because they did not act as a single employer with Plaintiffs’ actual employer, Bayou Steel. Plaintiffs appealed.
Issue Presented on Appeal: Can a private equity...
COVINGTON, Ky. (WKRC) - Two Erlanger-based manufacturing companies agreed to pay $2.5 million to settle allegations they improperly obtained pandemic-era Paycheck Protection Program loans, federal...