John Ellis v. DHL Express, Incorpo
2011 U.S. App. LEXIS 500, 31 I.E.R. Cas. (BNA) 1159, 633 F.3d 522 (2011)
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Rule of Law:
An employee's departure is considered voluntary under the Worker Adjustment and Retraining Notification (WARN) Act, even when prompted by an impending layoff and a short decision deadline, as long as the choice was free from employer coercion, fraud, or misinformation. The pressure of a difficult economic choice does not, by itself, render the departure involuntary.
Facts:
- On November 10, 2008, package delivery service DHL Express publicly announced it would cease its U.S. domestic shipping operations on January 30, 2009.
- In response, the International Brotherhood of Teamsters Local 705, the union representing DHL's drivers and clerical workers, negotiated severance agreements with DHL.
- The agreements, finalized on December 5, 2008, offered workers severance pay and benefits in exchange for signing a 'General Waiver and Release.'
- The waiver discharged DHL from all legal claims, including any under the federal WARN Act.
- One severance plan required drivers to decide whether to accept the offer within two business days, by the close of business on December 11, 2008.
- A total of 506 workers accepted a severance package and signed a release.
- John Ellis and Timothy Price, two DHL drivers and union members, were laid off but did not accept a severance package or sign the release.
- The collective bargaining agreements covering the workers did not otherwise provide for severance benefits.
Procedural Posture:
- John Ellis and Timothy Price filed a putative class action lawsuit against DHL Express and its parent company, Deutsche Post, in federal district court.
- The complaint alleged that the defendants violated the Worker Adjustment and Retraining Notification (WARN) Act.
- DHL filed a motion for summary judgment.
- The district court granted summary judgment in favor of DHL, finding the WARN Act did not apply because the employee departures were voluntary.
- The district court also sua sponte granted summary judgment in favor of the non-moving defendant, Deutsche Post.
- Ellis and Price, as appellants, appealed the district court's judgment to the U.S. Court of Appeals for the Seventh Circuit.
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Issue:
Does an employee's acceptance of a severance package, which includes a waiver of legal claims, constitute a 'voluntary departure' under the WARN Act when offered under the pressure of an impending mass layoff with a short decision timeframe?
Opinions:
Majority - Tinder, Circuit Judge.
Yes. An employee's acceptance of a severance package under such circumstances constitutes a 'voluntary departure' under the WARN Act, provided the employee's choice was free from fraud, misconduct, or coercion. The WARN Act explicitly excludes 'voluntary departures' from the definition of 'employment loss' that triggers its 60-day notice requirement. Drawing on Department of Labor guidance and analogous case law concerning early retirement offers, the court found that voluntariness turns on whether the employee received adequate information, had a real opportunity to decline, and was not subjected to fraud or other misconduct. The court reasoned that although the DHL workers faced a difficult choice under a tight deadline, these pressures alone do not render their decision involuntary. The severance agreements were negotiated by the employees' union, written in plain English, advised consultation with an attorney, and included a seven-day revocation period, all of which supported the conclusion that the choice was informed and voluntary. As the 506 departures were voluntary, they could not be counted toward the numerical threshold for a 'mass layoff,' meaning DHL had no obligation to provide WARN Act notice.
Analysis:
This decision significantly clarifies the 'voluntary departure' exception under the WARN Act, establishing that employers may use severance incentive programs to downsize without triggering the Act's notice requirements. It aligns the WARN Act voluntariness standard with that used in age discrimination cases, focusing on the absence of employer coercion rather than the employee's subjective feeling of pressure. The ruling provides employers with a strategic pathway to manage workforce reductions while avoiding WARN Act liability. For employees, it underscores that accepting a severance package, even under duress, will likely be deemed a voluntary act that waives their right to sue under the Act.
