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Enterprise Asks To Appeal Order Rejecting WARN Act Defense

By Carolina Bolado · January 20, 2021, 3:50 PM EST

Enterprise asked a Florida federal judge Tuesday for permission to appeal an order that rejected the company's legal argument that it can't be liable for unplanned layoffs as a result of the novel coronavirus, arguing the appeals court should address whether the pandemic falls under the WARN Act's natural disaster exception.

U.S. District Judge Roy B. Dalton's ruling allowing a proposed class action against Enterprise Holdings — the parent of car rental firms Enterprise Rent-A-Car, Alamo Rent a Car and others — to proceed "precludes application of the natural disaster exception with respect to any and all COVID-19 layoffs," Enterprise said in its motion.

The company argued that the appeals court should take a crack at the threshold issue of whether Enterprise can assert a defense that the COVID-19 pandemic falls under the natural disaster exception in the Worker Adjustment and Retraining Notification Act before the litigation continues.

"While interlocutory review is certainly not intended to be routine, the question and circumstances presented here are precisely those for which this procedural mechanism was put in place: the statutory question at issue is one of controlling law, that is of widespread importance beyond the litigants in this action, and does not require the Eleventh Circuit to 'delve beyond the surface of the record in order to determine the facts,'" Enterprise said.

The plaintiffs claim Enterprise violated the WARN Act when it axed hundreds of Florida workers this spring. The statute makes it illegal for companies to fire 50 or more people at once without giving them two months' notice, and two fired Sunshine State workers sued Enterprise last year asserting they were sent home with just a few days' warning or no notice at all.

Enterprise argued that the case should be thrown out, citing two key loopholes in the law that relax the statute's notice requirements. In the event of a natural disaster — which the law defines as "any form of natural disaster, such as a flood, earthquake, or the drought currently ravaging the farmlands of the United States" — businesses don't have to give any advance warning.

Or under the "unforeseeable business circumstances" defense, employers only need to give as much notice "as is practicable" if there's a "sudden, dramatic and unexpected action or condition outside the employer's control."

But Judge Dalton ruled earlier this month that neither argument sinks the case.

While he agreed that the global health crisis could qualify as a "natural disaster" under the law's definitions, he said one major caveat knocks it out of play. The loophole is only triggered when a plant closing or mass layoff comes as the "direct result" of a natural disaster, and the judge found the pandemic only indirectly influenced the Enterprise firings that sparked the suit.

The business downturn Enterprise experienced because of the pandemic prompted the terminations, not the pandemic itself, Judge Dalton argued.

He added that the health crisis "caused changes in travel patterns and an economic downturn, which affected defendants — so the natural disaster defense doesn't apply."

As for the second carveout, he said it may apply, but he noted that this provision doesn't eliminate the WARN Act's notice requirements — it just "softens" them to mandate that firms give as much notice as they can.

The case is one of the first tests of how WARN Act defenses apply to pandemic-related cuts.

Former Enterprise employee Elva Benson is represented by Brandon J. Hill and Luis A. Cabassa of Wenzel Fenton Cabassa PA.

Enterprise is represented by Jason C. Schwartz and Brian Richman of Gibson Dunn & Crutcher LLP and Christina M. Kennedy and Michael D. Leffel of Foley & Lardner LLP.

The case is Benson et al. v. Enterprise Leasing Company of Florida LLC et al., case number 6:20-cv-00891, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Anne Cullen. Editing by Daniel King.

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