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Pearson v. Component Technology Corp.

Grant of summary judgment to the major secured lender of a now-defunct corporation in suit brought by employees for corporation's unnoticed plant closure affirmed because lender's actions never reached the point where even a more conventional parent company would become liable under the Worker Adjustment and Retraining Notification Act of 1988 (the WARN Act).

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Argued: October 24, 2000

OPINION OF THE COURT

The Worker Adjustment and Retraining Notification Act of 1988 (the WARN Act), 29 U.S.C. S 2101 et seq., mandates that employers provide workers with 60 days’ notice (subject to certain exceptions not at issue in this appeal) prior to a plant closing or mass layoff, and allows various remedies for workers when closures ar e not preceded by the requisite notification. Because a plant closure often presages a corporation’s demise, leaving workers with no source of satisfaction from their employer , plaintiffs have frequently sought damages from affiliated corporations. In a parallel series of cases, plaintiffs with claims arising from non-WARN Act sources of law against debt-laden or bankrupt corporations have occasionally attempted to sue the corporations’ major secured lenders, on the theory that the lenders have exercised such control over the corporations that veil-piercing is appr opriate. This case implicates both lines of precedent.

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