## Facts

- Arthur Andersen LLP employed about 27,000 workers nationwide in early 2002 and provided audit and consulting services, including to Enron.
- After Enron’s collapse, Andersen faced SEC and DOJ scrutiny, including allegations that employees destroyed Enron-related documents before receipt of an SEC subpoena.
- Despite negative publicity, Andersen did not experience a significant loss of business through February 2002 and continued negotiating with DOJ.
- On February 22, 2002 (about 60 days before the challenged layoffs), Andersen was still negotiating and informed employees that discussions were ongoing and expected to conclude by month’s end.
- On March 1, 2002, DOJ informed Andersen it planned to indict the firm; Andersen continued efforts to avoid indictment.
- An indictment was filed under seal on March 7 and unsealed on March 14, 2002.
- After the indictment became public, Andersen experienced rapid, substantial client defections over the next two weeks.
- On April 8, 2002, Andersen issued termination notices to hundreds of employees, including Nancy Roquet, without providing 60 days’ advance notice under the WARN Act.
- Former employees filed a putative class action seeking back pay and benefits for the WARN notice period, alleging the layoffs were reasonably foreseeable by February 22.

## Issues

1. Whether the layoffs were “caused by business circumstances that were not reasonably foreseeable” as of the time WARN notice would have been required, permitting reliance on 29 U.S.C. § 2102(b)(2)(A).
2. Whether summary judgment was proper on the question of reasonable foreseeability of the indictment-related client exodus and resulting mass layoffs.

## Decision

- The Seventh Circuit affirmed summary judgment for Arthur Andersen.
- The court held the public indictment and ensuing sudden client flight were the circumstances that caused the mass layoffs.
- The court concluded those circumstances were not reasonably foreseeable as of the WARN notice date (about 60 days before the layoffs).
- The court ruled that no genuine dispute of material fact existed because no rational factfinder could find the triggering client exodus and layoffs reasonably foreseeable at the relevant time.

## Legal Principles

- The WARN Act’s unforeseen-business-circumstances exception applies when the event causing the layoff was not reasonably foreseeable at the time notice would have been required, assessed under an objective reasonableness standard.
- Foreseeability focuses on the circumstances that actually caused the layoff, not merely the existence of risk or the possibility of a worst-case outcome.
- Sudden, dramatic, unexpected events outside the employer’s control—such as abrupt loss of major clients—are paradigmatic examples supporting the exception (consistent with Department of Labor regulations).
- WARN does not require employers to issue notice based on speculative or contingent developments when the precipitating event remains uncertain and negotiations or other efforts to avert it are ongoing.
- Summary judgment is appropriate when the record permits only one reasonable conclusion on foreseeability at the WARN notice point.

## Conclusion

The court held Andersen was excused from providing 60 days’ WARN notice because the mass layoffs followed an indictment’s public release and a rapid client exodus that were not reasonably foreseeable when notice would have been due, making summary judgment for Andersen proper.


Roquet v. Arthur Andersen LLP, 398 F.3d 585 (7th Cir. 2005)