On July 2, 2012, the US Court of Appeals for the Eighth Circuit issued an opinion in United Steel Workers v. United States Steel Corp., affirming the district court's grant of summary judgment for the defendant employer. The key issue in the case was whether the unforeseeable business circumstances exception to the WARN Act applied, permitting the employer to provide less than 60 days notice of a mass layoff.

The United States Steel Corporation (US Steel) operates an iron ore plant in Keewatin, Minnesota, which produces iron pellets used at other US Steel facilities, primarily to produce steel for the construction and automotive industries. During the first three quarters of 2008, the company reported high sales and income and was operating at near full capacity. When the economic downturn began in late 2008, US Steel initially responded by taking gradual cost-cutting measures, including the temporary idling of blast furnaces. In November 2008, with the economic downturn worsening and a dramatic decrease in customer orders, US Steel decided to idle operations at the Keewatin plant and lay off 313 employees represented by the United Steel Workers (the Union).

On November 28 and 29, 2008, US Steel developed its plan for idling and layoffs at the Keewatin plant. On December 1, 2008, the plan was approved by the Executive Management Committee. The Board of Directors and the Union were informed of the decision on December 2, 2008, and a WARN Act notice was sent to the Union on December 3, 2008. The company laid off employees between December 7 and 21, 2008.

The Union sued US Steel alleging WARN Act violations because of US Steel's failure to provide the statutorily required 60 days notice of the mass layoff to the Union or affected employees. US Steel moved for summary judgment, acknowledging that the WARN Act applied, but arguing that it did not have to give the statutorily required 60 days notice because the WARN Act's unforeseeable business circumstances exception applied. Specifically, US Steel argued that the sudden economic downturn in late 2008, the severity of which was unforeseen by the company, and the resulting dramatically reduced demand for steel made it necessary to carry out layoffs immediately.

The district court granted summary judgment for US Steel, finding that the unforeseeable business circumstances exception applied and that 60 days notice was not required under the circumstances.

The Union appealed.

The Eighth Circuit affirmed, holding that the economic crisis of late 2008, together with the dramatic decline in customer orders at US Steel, constituted an unforeseeable business circumstance under the WARN Act.

The Eighth Circuit explained that the WARN Act generally requires covered employers that order a plant closing or mass layoff to provide 60 days notice to affected employees or their union representatives, among others. One exception to this requirement is the unforeseeable business circumstances exception, which allows an employer to order a mass layoff with less than 60 days notice if the layoff is caused by business circumstances that were not reasonably foreseeable at the time notice would have been required. The employer has the burden of proving that the exception applies and must show that notice was given as soon as practicable.

The Union argued that the economic crisis began before October 8, 2008, the sixtieth day before the layoff, and that there had been no unforeseeable business circumstance after October 8, 2008, such that US Steel had sufficient time to satisfy the 60 day notice requirement.

In analyzing whether US Steel experienced an unforeseeable business circumstance, however, the Eighth Circuit explained:

The Eighth Circuit found nothing in the record indicating that the severity of the economic downturn or its effects on the steel industry were probable before late November 2008. The court noted:

The Eighth Circuit further found that US Steel exercised commercially reasonable business judgment, including by implementing cost-cutting measures before the layoff and then taking immediate action when the unprecedented effects of the economy on the steel industry became clear in late November 2008. In light of the circumstances, the court held that US Steel met its burden of showing that the WARN Act's unforeseeable business circumstances exception applied.

The Union also claimed that US Steel failed to provide sufficient notice. The court rejected this argument, finding that:

The Eighth Circuit's opinion clarifies how to analyze the unforeseen business circumstances exception to the WARN Act, including:

The opinion also emphasizes that an employer's efforts to mitigate the effects of a difficult economic climate will not be counted against it under the WARN Act analysis when subsequent unforeseen circumstances necessitate immediate layoffs.