Opinion ID: 785066
Heading Depth: 3
Heading Rank: 2

Heading: Business circumstances exception

Text: 50 The WARN Act's sixty-day notice requirements do not apply if the closing or mass layoff is caused by 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). The Code of Federal Regulations gives guidance on what types of business circumstances will be considered not reasonably foreseeable: 51 (1) An important indicator of a business circumstance that is not reasonably foreseeable is that the circumstance is caused by some sudden, dramatic, and unexpected action or condition outside the employer's control. A principal client's sudden and unexpected termination of a major contract with the employer, a strike at a major supplier of the employer, and an unanticipated and dramatic major economic downturn might each be considered a business circumstance that is not reasonably foreseeable. A government ordered closing of an employment site that occurs without prior notice also may be an unforeseeable business circumstance. 52 (2) The test for determining when business circumstances are not reasonably foreseeable focuses on an employer's business judgment. The employer must exercise such commercially reasonable business judgment as would a similarly situated employer in predicting the demands of its particular market. The employer is not required, however, to accurately predict general economic conditions that also may affect demand for its products or services. 53 20 C.F.R. § 639.9(b)(1)-(2). 54 Appellants point to the decision by U.S. Bank on September 7, 1998, refusing to rewrite DLI's credit, as the sudden and unforeseeable event that caused the shutdown of the mill. However, appellants' own response to a discovery request stated: 55 The closure of the plant and layoffs in September 1998 was occasioned by losses to the company which could not be sustained any longer. These losses were a function of the depressed lumber market, increased cost of raw materials, operational difficulty in the startup of a new planer, and factors effected by the price of raw materials and finished goods beyond the control of Darby Lumber, Inc. In turn, raw materials and finished goods markets and prices were effected by the general economic downturn in Pacific rim countries, influences by NAFTA, and significantly influenced by environmental pressure to halt sales of forest service timber. 56 This statement makes it evident that the plant closure was not caused solely by the decision of U.S. Bank, but was caused by a variety of factors which accumulated over time, making the closure foreseeable. Indeed, as the district court noted, while U.S. Bank decided not to rewrite DLI's loans on September 7, 1998, the company did not actually lose its credit with the bank until November 1998, a month following the mass layoff. 57 Appellants failed to meet their burden of showing that the business circumstances exception applies in this case. Accordingly, we affirm the district court's finding that the business circumstances exception did not apply.