In litigation challenging amendments to New Jersey's WARN Act as preempted by ERISA, a New Jersey district court held that the plaintiff-trade association lacked standing to bring suit (ERISA Indus. Comm. v. Asaro-Angelo, (D.N.J. Apr. 6, 2023)).

This litigation involved amendments to New Jersey's WARN Act (Act) that:

(N.J. Stat. Ann. §§ 34:21-1 to 34:21-15 (Millville Dallas Airmotive Plant Job Loss Notification Act); S.B. 3170; see State Q&A, Mini-WARN Acts: New Jersey: Overview of State Mini-WARN Law and Severance Benefits, Plans, and Agreements Toolkit.)

Before the 2020 amendments, for example, the Act required employers with 100 or more full-time employees to provide 60 days' notice to affected full-time employees in the event of a mass layoff or a transfer or termination of operations (as defined under the Act). Covered employers under the Act were required to pay related penalties to certain employees if the employers failed to furnish the required amount of notice of termination or layoff.

Under the 2020 amendments, however, an employer that conducts a mass layoff or a transfer/termination of operations must pay each affected employee one week of severance for each full year of the employee's employment. These payments are imposed even if the employer furnishes adequate and timely notice. In addition, if an affected employee is eligible for severance under a collective bargaining agreement (CBA) for any reason, an employer must pay the greater of the statutorily mandated severance or the severance provided for the other reason.

A trade association that represents employer/plan sponsors of health, retirement, and other benefit plans sued New Jersey's DOL, seeking a declaration that ERISA preempted the 2020 amendments. In 2021, a district court denied the New Jersey DOL's motion to dismiss (ERISA Indus. Comm. v. Asaro-Angelo, (D.N.J. May 20, 2021); see Practice Note, ERISA Litigation: Preemption of State Laws (P to Z): New Jersey WARN Act (2020 Amendments) and ERISA Litigation Toolkit). The court also denied the association's request for a ruling without a trial and ordered discovery on the issue of standing ( (Feb. 16, 2023)). Following discovery, the parties again asked the court to rule without a trial.

On the threshold issue of standing, the court evaluated whether the association had standing (under the Constitution's Article III "case or controversy" requirement) to bring suit (US Const. art. III, § 2). The association asserted that it had standing on two independent bases—a direct organizational standing theory and an associational standing theory.

The district court rejected the association's argument that it had direct organizational standing to sue. The association claimed it suffered an injury based on having to spend time and resources educating members about the 2020 amendments. However, the district court concluded that the association failed to provide evidence demonstrating the specific amount of time or money spent on educating its members or the specific activities or meetings that occurred. For example, although the association's CEO testified that the association's staff performed many hours of work related to the amendments over the course of many months, the CEO was unable to identify the specific number of hours or dates that the association's staff performed this work.

The court also concluded that:

The district court also held that the association lacked associational standing. An association has standing to sue on behalf of its members when:

The association alleged that the 2020 amendments would considerably increase the ongoing administrative burdens for its member-employers that are subject to the amendments because they would need to determine:

New Jersey's DOL argued that the association could not meet the first element of the associational standing test because it had not identified a specific employer-member that would suffer an injury. In response, the association claimed that it was not required to identify a specific member because its members' identities were protected by associational privilege.

In rejecting the association's argument, the court reasoned that there was no evidence of hostility relating to the association's activities or that disclosing its members' identities would negatively affect the members. The court also rejected the association's argument that it was "relatively clear" that at least one of its members would be adversely affected by the amendments. In the court's view, it was merely speculative that the association had members in New Jersey that would be negatively affected. Because the association failed to identify a member that would suffer an injury, the court held that the association failed to establish associational standing.

Because the association's case has failed for lack of standing, the court did not reach the association's argument that the 2020 amendments require employers to implement the kind of "ongoing administrative scheme" that the Supreme Court indicated in Fort Halifax would make a severance arrangement an ERISA plan (see Practice Note, ERISA Litigation: Preemption of State Laws (P to Z): Severance Pay Arrangements). For example, the association asserted that employers will need to exercise discretion to assess who is eligible for severance benefits under the 2020 amendments (including whether employees were terminated for misconduct and therefore ineligible for severance benefits). The 2020 amendments are another instance of enactments at the state and municipal level that may frustrate ERISA's objective of national uniformity in benefits administration.