Childress v. Darby Lumber, Inc., 357 F.3d 1000 (9th Cir. 2004)

Darby Lumber, Inc. (DLI) operated as a lumber mill and manufactured, marketed, and sold finished lumber. DLI owned 100 percent of the stock of Bob Russell Construction (BRC). During the 12 months prior to BRC’s closure, DLI employed 88 employees, each with more than 1,000 hours of employment with the company, and BRC employed 18 employees with more than 1,000 hours of employment. On September 24, 1998, DLI’s general manager placed a written statement in the paychecks of all DLI employees, advising them that due to the financial difficulties of the company, there would be a “major layoff.” The next day, DLI shut down the mill and laid off all of its employees; the employees of BRC were laid off over the next several months. When the former DLI employees filed this lawsuit, alleging a violation of the WARN Act (since fewer than 60 days’ notice of the layoff had been given to them), DLI asserted that the Act did not apply because the company had fewer than 100 full-time employees and in any case one of the statute’s affirmative defenses spared it from liability. The district court granted the employees 60 days of wages in the amount of $60,345.45 and $123,033.44 in attorney’s fees; the Ninth Circuit affirmed, holding that DLI and BRC were a single employer for purposes of the WARN Act since they had common ownership, management, centralized control of labor relations and interrelation of operations. The Court further held that none of the affirmative defenses under the Act (i.e., good faith, business circumstances, faltering company) protected DLI from liability in this case.