In the

United States Court of Appeals

For the Seventh Circuit

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No. 03-2396

RUFINO PENA, GERMAN ALVARADO, ROSA AYALA, et al.,

Plaintiffs-Appellants,

v.

AMERICAN MEAT PACKING CORPORATION,

Defendant-Appellee.

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Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 02 C 2763—Ruben Castillo, Judge.

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ARGUED JANUARY 23, 2004—DECIDED MARCH 25, 2004

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Before BAUER, DIANE P. WOOD, and WILLIAMS, Circuit

Judges.

BAUER, Circuit Judge. The American Meat Packing

Corporation (“AMPAC”) closed its Chicago facility on

November 16, 2001 without giving its 350 employees prior

notice of the plant closing. The employees filed a class

action suit against AMPAC for violations of the Worker

Adjustment and Retraining Notification Act (“WARN Act”).

At issue was whether AMPAC could have reasonably foreseen the plant shutdown so as to provide the employees
2 No. 03-2396

prior notice. The district court found for AMPAC on summary judgment. Plaintiffs appeal; we reverse.

I. Background

AMPAC acquired its Chicago plant in 1998. Daniel

Ochylski was the president of AMPAC; Paul Espinosa was

AMPAC’s director of operations. The plant conducted the

slaughtering, butchering and packing of between 3,000-

3,400 “butcher hogs” per day until November 16, 2001 when

it closed. The daily processing of the hogs began with the

delivery of live hogs and ended with the shipping of neatly

packaged, chilled meat to cold storage facilities. In the year

prior to its closing, AMPAC’s Chicago plant suffered from

two problems: it had repeated difficulty maintaining

sanitary conditions for the slaughtering and butchering of

the hogs, and it was operating at a loss due to recent

expenditures to renovate the facility. Ultimately, the plant

shut down due to its inability to bring the plant into

compliance with United States Department of Agriculture

(“USDA”) regulations. 

According to USDA regulation, “[e]ach official establishment must be operated and maintained in a manner

sufficient to prevent the creation of insanitary conditions

and to ensure that product is not adulterated.” 9 C.F.R.

416.1 (2004). In order to insure compliance with USDA

regulation, during its operation, AMPAC had five full-time

USDA inspectors at its plant to monitor sanitary conditions.

Each morning the inspectors would look over the various

areas of the plant to detect insanitary conditions. A reporting system was set up so that plant management was aware

of any insanitary conditions that existed, and had a chance

to remedy them. 

On occasion, the USDA inspectors would issue

Noncompliance Records (“NR”) to document conditions

that were not compliant with USDA standards. When an in-
No. 03-2396 3

1 That product was ultimately reconditioned and shipped.

spector issued a NR it would identify the date and time the

insanitary condition was found, and the name of the

supervisor notified of the condition. The NRs contained

standard language stating, “this document serves as written

notification that your failure to comply with regulatory

requirements could result in additional regulatory or administrative action,” in addition, AMPAC received a handwritten note to the same effect on September 17, 2001.

When AMPAC received NRs it was required to respond

formally to the USDA. No product could be shipped unless

the USDA approved of the production process. 

Prior to the plant’s shutdown, AMPAC received numerous

NRs. Specifically, during 2001 it received one in January,

one in February, three in March, four in May, one in July,

six in September, eight in October, and at least seven in

November. The NRs cited such insanitary conditions as:

water dripping onto the product, the presence of grease and

oil on hams, rust, hog carcasses on the floor, flaking paint,

rodent droppings, and the presence of meat with an open

abscess on cutting tables. On September 20, as a result of

the NRs, production was stopped temporarily; product was

also retained on September 14, 17 and 19.1

 In response,

AMPAC took the following corrective actions: it wiped the

condensation away, counseled its employees to monitor

sanitary conditions at the plant, welded shut a breach in

the exhaust system, and installed a new door to reduce

airflow.

On October 31, 2001 the USDA withheld inspection after

observing a third incident of rodent droppings at the facility; this resulted in a stop in production. In response that

same day AMPAC hired a new exterminating service,

Ecolab. It also retained a private food safety consultant to

audit conditions at the plant. Neither Ecolab nor the new
4 No. 03-2396

2 The cleaning effort included purchasing a new stainless steel

augur belt, plugging holes, covering previously uncovered floors

and beams, removing unused overhead apparatus and cleaning

the rendering building.

consultant told AMPAC that its building had structural

problems, and both represented that they could fix

AMPAC’s problems. AMPAC sent a report to the USDA on

November 1. The USDA resumed inspection only to withhold it again on November 2 after citing AMPAC with an

additional four NRs; AMPAC was forced to cease production. In response, AMPAC continued to try to improve

its facilities. It requested its employees help keep the

facility clean, retained an attorney to communicate with the

USDA on its behalf, asked the Chicago Department of

Public Health to rodent-proof an abandoned building adjacent to the facility, and invested 1500 man hours in an

intensive cleaning over the weekend at a cost of $34,000.2

The USDA was unpersuaded; it suspended its assignment

of USDA inspectors at the facility on November 5, 2001.

AMPAC was unable to ship some one million pounds of

meat, valued at $638,000.

AMPAC continued its efforts to bring the facility into

compliance with USDA regulations. It took the following

actions: AMPAC retained another outside expert to assess

the facility, had Ecolab visit the facility and install over

one-hundred additional traps, retained the American Igloo

company to study and identify airflow problems that could

be causing the condensation problems, had management

review and update policy for meeting USDA requirements,

solicited quotes for the cost of testing the retained product

for contamination, assessed the cost for possibly repairing

a cooler, and it formed a crisis team to identify and correct

regulatory issues.

On November 7, AMPAC requested permission from the

USDA to ship its product; the USDA denied the request and
No. 03-2396 5

ordered the product be destroyed. On November 14, AMPAC

received information that repairs to its coolers would cost

$3 million and would take six months to complete. On

November 15, Ochylski again corresponded with the USDA,

detailing its efforts to improve the facility and outlining its

plan to spend the $3 million to upgrade the cooler if USDA

allowed them to continue operating. The USDA responded

that the measures taken up to that point were unsatisfactory, and AMPAC could not resume operations. The USDA

also ordered AMPAC to destroy an additional 1.2 million

pounds of previously inspected and approved product, worth

about $545,500. On November 15, Ochylski decided to close

the plant the following day; notice was sent to employees on

November 16.

II. Discussion

The district court granted AMPAC’s motion for summary

judgment, stating that the USDA’s actions, resulting in the

closure of the plant, were not reasonably foreseeable. We

review the district court’s decision to grant summary judgment de novo. Brademas v. Indiana Hous. Fin. Auth., 354

F.3d 681, 685 (7th Cir. 2004). Summary judgment is appropriate when there is no genuine issue of material fact and

the moving party is entitled to judgment as a matter of law.

FED. R. CIV. P. 56(c). In determining whether summary

judgment was appropriate we consider the evidence in the

light most favorable to the Plaintiffs.

The WARN Act requires employers, such as AMPAC,

to give its employees 60 days’ advance notice of a plant

closing. 29 U.S.C. § 2102(a). The purpose of the statute is to

provide workers transition time to seek alternative jobs

and, if necessary, seek retraining to allow them to successfully compete in the job market. 20 C.F.R. § 639.1

(2004). Under WARN, the required 60-day notice period

may be reduced or eliminated if the closing was caused by
6 No. 03-2396

3 In discussing such government actions, the Department of

Labor differentiated government actions that directly order the

closing of a business (as contemplated in the Regulations) and

government actions that indirectly do so (as discussed in the

Commentary). Indirect closings occur in such situations where an

(continued...)

“business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”

29 U.S.C. § 2102(b)(2)(A). Such unforeseen business circumstances must be, “caused by some sudden, dramatic,

and unexpected action or condition outside the employer’s

control.” 20 C.F.R. § 639.9(b)(1). 

The Department of Labor has been hesitant to create per

se rules as to what constitutes unforeseen business circumstances, and encourages a case-by-case examination of the

facts. Hotel Employees and Rest. Employees Int’l Union

Local 54 v. Elsinore Shore Assocs., 173 F.3d 175, 180 (3d

Cir. 1999); 54 Fed. Reg. 16,062, 16,062-63 (April 20, 1989).

In these situations, the Third Circuit has aptly noted,

“[w]hat is a harbinger of disaster in one context may be

an everyday occurrence in another.” Elsinore, 173 F.3d

at 186. In determining whether business circumstances

were “unforeseeable” we do not consider the employer’s own

subjective assessment, but rather whether it had exercised,

“such commercially reasonable business judgment as would

a similarly situated employer.” 20 C.F.R. § 639.9(b)(2)

(2004). In this case we consider whether a similarly situated meat packing facility would have foreseen heightened

USDA actions in November given AMPAC’s experiences

during the prior months. 

The Federal Regulations contemplate the situation before

us and explicitly state that “[a] government ordered closing

of an employment site . . . may be an unforeseeable business circumstance.” 20 C.F.R. § 639.9(b)(1) (2004).3

 The
No. 03-2396 7

(...continued)

agency, “take[s] enforcement actions which might result in the

closing of a plant by the employer either to remedy the violation

or because it cannot continue to operate.” 54 Fed. Reg. 16,042,

16,053-54 (April 20, 1989). The commentary goes on to state,

“[s]uch [indirect] closings, although they may result from a government action, are not government ordered and are not subject

to the same treatment.” Id. The USDA’s actions are properly

classified as an indirect closing of AMPAC’s facility in Chicago.

commentary to the regulations instructs that, “[d]epending

on the length of the notice given, a claim that [indirect

government] closings qualify for reduced notice under the

unforeseeable business circumstances exception may be

available.” 54 Fed. Reg. 16,042, 16,053-54 (April 20, 1989)

(emphasis added).

AMPAC argues that it was excused from its notification

requirement because the actions taken by the USDA in midNovember were sudden and “not reasonably foreseeable” in

September. AMPAC believes the following three actions by

the USDA led to its decision to close the plant: its November 5 suspension of inspection, its combined November 7

and 15 orders to destroy over 2 million pounds of meat, and

its November 15 insistence on costly repairs to the cooler at

the facility. Whether these actions were reasonably foreseeable depends on how a similarly situated manager of a meat

packing facility would react armed with the knowledge of

the conditions of its facility, the extent of its attempts to

repair the facility, and how the USDA generally operates

with regard to non-compliance with sanitation regulations.

We know that by mid-September (60 days prior to the

closing) AMPAC was receiving an escalating number of

NRs. Plaintiffs contend that AMPAC’s President, Ochylski,

was aware of the problematic conditions of the facility as far

as a year earlier, as evidenced by plans in 2000 to improve

the coolers that were later scrapped. Record at 23, ¶ 145-47
8 No. 03-2396

(Statement of Uncontested Facts). They also assert that he

knew the remedial actions he was taking in response to the

NRs were ineffective to correct the underlying problems due

to the receipt of multiple citations for the same problems,

and the relatively small amount of money expended to

correct the conditions. Br. of Plaintiffs-Appellants at 16, 20.

Finally, Plaintiffs believe that Ochylski was unfamiliar

with USDA procedures and the seriousness of NRs. Record

at 30, ¶ 34 and 184. In short, they contend that a similarly

situated business person, exercising reasonable commercial

judgment would have foreseen in September the escalating

NRs would result in the USDA’s November actions, causing

the plant to close. 

Case law on this topic is sparse and offers us little

guidance. The most similar fact pattern arose in the Third

Circuit. Elsinore, 173 F.3d at 175. In that case a casino was

shut down when a government agency refused to renew its

license due to the casino’s ongoing financial difficulties. The

court held that the shutdown was unforeseeable because

the commission in question had never before refused to

renew a casino license “even for applicants in serious

financial distress.” Id. at 186. In this case, AMPAC hopes to

align itself with Elsinore by asserting that Ochylski and

Espinosa had a combined fifty years of experience operating

slaughterhouses, and had never experienced similar harsh

actions on the part of the USDA following the issuance of

NRs. In our case the waters are further muddied by the fact

that beginning in January 2000 the USDA implemented

new rules regarding sanitation requirements for meat and

poultry establishments. The new rules were to be resultsdriven standards, rather than a list of dos and don’ts. The

Commentary to the Regulations contemplates such situations and states that changes in agency rules are not

always unforeseeable because “regulatory changes are often

preceded by lengthy notice and comment procedures, [and]

often have delayed effective dates.” 54 Fed. Reg. 16,042,
No. 03-2396 9

16,062-63 (April 20, 1989). This analysis seems appropriate

to our situation, given the fact that the USDA published its

proposal for these changes in 1997. So, even though

Ochylski and Espinosa had not previously experienced a

plant shutdown due to USDA withholding of inspection

following its issuance of multiple NRs, a reasonable,

similarly situated business person might have foreseen that

the new USDA rules would result in such actions, especially

given the fact that the new rules focused on results (rather

than efforts), and AMPAC had been unable to provide

effective remedies to its sanitation problems. 

Viewed in a light most favorable to Plaintiffs, we think

that there exists a genuine issue of material fact as to

whether the business conditions that caused AMPAC to

close its facility were unforeseeable. Further, if the conditions were unforeseeable, it is unclear whether this qualifies AMPAC for merely a reduction in its required notice

period or the complete elimination of it. We believe these

questions are best answered by a finder of fact. For this

reason, we REVERSE.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit 

USCA-02-C-0072—3-25-04