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District of Delaware applies five-factor test to protect private equity firm from “single employer” liability for subsidiary’s WARN Act violation
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On September 29, 2014, the United States District Court for the District of Delaware affirmed the order of the Bankruptcy Court granting summary judgment in favor of Sun Capital Partners, Inc. and its affiliates (“Sun Cap”) and denied an appeal taken by certain employees (the “Jevic Employees”) of Jevic Transportation, Inc. (“Jevic”). In its ruling, the District Court held that Sun Cap, which had acquired Jevic in a leveraged buyout, was not liable as a “single employer” for alleged violations by Jevic under the Worker Adjustment and Retraining Notification Act (the “WARN Act”). The District Court, focusing on five factors set forth by the Department of Labor, found that common ownership, common management, control incident to stock ownership, and involvement in implementing a restructuring plan of a subsidiary were insufficient to support a finding of “single employer” liability of the parent.
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