Boston Litigators Try Case in the SDNY, From Boston, and Prevail

(December 29, 2020, Boston, MA) – Sheehan Phinney litigation attorneys Michael Lambert and Michael Stanley, both based in the firm’s Boston office, recently secured a resounding victory for one of the largest privately held trucking companies in the northeast. Following one of the first remote trials conducted in the Southern District of New York after it reopened in July, Judge Judith McCarthy issued a 39-page opinion and judgment in favor the firm’s client in a class action lawsuit brought under the WARN Act and the NY WARN Act.

This case arose out of the client’s purchase of certain assets of a failing trucking company in 2016. During the due diligence process but prior to finalizing the purchase agreement, the selling company closed three terminals, two in New Jersey and one in New York, laying off hundreds of employees. Class Plaintiffs claimed that each of these “plant closures” constituted a violation of the federal WARN Act and the state WARN Act analogues. Sheehan Phinney successfully moved for summary judgment on the claims related to the New Jersey terminals. The Class Plaintiffs proceeded to trial on the WARN Act and New York WARN Act claims arising from the closure of the New York terminal. Because the NY WARN Act has a lower threshold, Class Plaintiffs were only required to prove that at least twenty- five employees suffered an “employment loss.”

The factual and legal battlelines at trial focused on the exact number of employees that the selling company terminated when it closed the New York Terminal. Class Plaintiffs put on evidence and argued that none of 60 employees at the New York terminal left voluntarily and therefore all of them suffered an “employment loss.” Sheehan Phinney convinced the Court to apply the Department of Labor guidance, as opposed to caselaw cited by the Class Plaintiffs, on the issue of when employee’s departure is considered “voluntary” in the context of a company’s looming closure. Additionally, Attorneys Lambert and Stanley convinced the Court that when calculating which employees suffered an “employment loss,” it could not consider truck drivers where the New York terminal was not their “home base,” certain part-time employees, or employees that were transferred to other positions. The Court found that only 22 employees suffered an employment loss – three less than needed to establish NY WARN Act liability.

The Court also held that even if the selling company violated the WARN Acts when it closed the New York terminal, the buyer could not be liable under any theory of successor liability. In an intensely factual inquiry at trial spanning multiple witnesses and hundreds of documents, Sheehan Phinney established that its client’s principals played no role in the decision to close the terminals and that the Class Plaintiffs failed to meet their burden to show that the firm’s client exercised de facto control over the selling company.

A judgment for the Class Plaintiffs would have approached $2 million when accounting for interest and attorneys’ fees. Naturally, Sheehan Phinney’s client is thrilled with the result and the representation by Attorneys Lambert and Stanley over the past 4-plus years. This victory highlights Sheehan’s top-notch trial skills on complex matters, our ability to represent clients in multiple jurisdictions and our proficiency with the use of trial technology.

About the Firm

Sheehan Phinney is a full service business law firm representing local, national and international clients with innovative approaches and practical solutions. Founded in 1937, Sheehan Phinney has grown to over 65 attorneys with four offices throughout New Hampshire and Massachusetts and is known for professional excellence, practical counsel and commitment to both its clients and the communities it serves. Sheehan Phinney is the exclusive member in New Hampshire of Lex Mundi, the world’s leading association of premier independent law firms.