On August 26, 2024, the U.S. District Court for the District of Maryland decided in Teamsters Local Union No. 355 v. Total Distribution Services, Inc., that the Maryland Economic Stabilization Act (“Maryland WARN Act” or “Act”) does not provide individuals with the right to file suit in their personal capacity to enforce a legal claim under the Act. The Maryland WARN Act still may be enforced by the Maryland Department of Labor. The Act is based, in part, on its federal counterpart, the Worker Adjustment and Retraining Notification (WARN) Act, with important differences.
Background
The individual plaintiff formerly worked for defendants at an automobile distribution facility in Jessup, Maryland, known as the Annapolis Junction. During this time, Teamsters Local Union 355 represented employees, including the plaintiff, working at the Annapolis Junction in negotiations to establish an updated collective bargaining agreement for the bargaining unit. On May 10, 2023, the defendants terminated 60 employees at that location—which included all 47 unionized employees at this facility—without providing any written notice before terminations commenced.
The Maryland WARN Act requires qualifying employers to provide at least 60 days’ notice to qualified employees, collective bargaining representatives, and certain government entities before a covered reduction in operations occurs.
Teamsters Local Union No. 355 and the individual plaintiff filed suit against the defendants, alleging violation of the Maryland WARN Act for failing to provide 60 days’ written notice of the terminations. Defendants filed respective motions to dismiss the complaint, claiming that the Maryland WARN Act does not provide a private right of action to the union or individual employees. In response, the plaintiffs filed opposition briefs alleging the Maryland WARN Act provides an implied right of action for them to sue.
Analysis
A private right of action allows individuals to bring an action in their personal capacity to enforce a legal claim. Maryland courts do not read an implied private right of action into a statute without clear indication that the legislature intended it to do so. In determining whether an implied private right of action exists in a given statute, Maryland courts consider the following: (i) whether the plaintiff is part of the class for whose special benefit the statute was enacted; (ii) whether there is any indication of legislative intent – explicit or implicit – to create such a remedy or deny one; and (iii) whether it is consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff.
On the first point, the court held that the plaintiffs are members of the class of individuals and organizations that the Maryland WARN Act was enacted to protect because it specifically provides protections for workers employed by qualifying employers by requiring 60 days’ advance notice of certain larger layoffs referred to in the statute as “reductions in operations.”
On the second point, the court held that there is no evidence in the legislative history of the Maryland WARN Act of the intent to create a private right of action. Specifically, the court found that the Act focused on administrative enforcement only—to the exclusion of private enforcement—when addressing such mechanisms. Accordingly, the court concluded that the Maryland legislature intended the Maryland WARN Act to be enforced by a regulatory scheme and not by a private right of action. In contrast, the federal WARN Act contains an explicit private right of action, which allows plaintiffs to file civil actions for damages.1
Lastly, the court held that an implied private right of action in the Maryland WARN Act is not consistent with the overall legislative scheme of the Act. The Act contains a robust administrative enforcement mechanism but is silent on any private right of action—indicating that the Maryland legislature did not intend to provide such remedy under the Act.2 Accordingly, the court acknowledged that reading a private right of action in the Act may create challenges when enforcing its provisions.
The court concluded that the Maryland WARN Act does not provide individuals with the right to file suit in their personal capacity to enforce a legal claim under the Act.
Recommendations
The federal district court’s holding that the Maryland WARN Act does not provide a private right of action is an important limitation on the enforcement of the Act. This Act is particularly concerning in many respects because it requires notice for as few as 15 employees laid off in a reduction in operations at a covered establishment. In addition, the Act includes the largest potential penalty of any federal or state WARN Act. Employers may be liable for penalties of as much as $10,000 a day (as much as $600,000 for a full 60-day period) for failure to comply with the Maryland WARN Act notice obligations. The Maryland Department of Labor may enforce the statute and employers should not assume this decision precludes any legal challenge for failure to comply with the terms of the Maryland WARN Act including the potential $600,000 penalty. Moreover, should this issue be presented to a state court in Maryland, it is possible that the state court might reach a different conclusion than the federal court in this case. As a result, employers should consider taking the following steps:
- Review the Maryland WARN Act notice requirements to ensure compliance with its provisions well in advance of any reduction in force that might trigger notice obligations under the Maryland WARN Act.
- Explore the definitions, options, and exceptions to Maryland-WARN to determine if there may be reasons that notice is not otherwise required.
- Consult with counsel experienced with these statutes prior to any planned group termination action, as the federal and state WARN Acts are notoriously complicated to understand and administer.
Footnotes
1 See 29 U.S.C. §2104 (a)(1) (stating that “[a]ny employer who orders a plant closing or mass layoff in violation of section 2102 of this title shall be liable to each aggrieved employee who suffers an employment loss as a result of such closing or layoff...”); §2104(a)(5) (noting that “[a] person seeking to enforce such liability...may sue either for such person or for other persons similarly situated, or both, in any district court of the United States for any district in which the violation is alleged to have occurred, or in which the employer transacts business.”)
2 See Md. Code Ann., Lab. & Empl. § 11-306 (describing penalties for violation of statute to be enforced by Maryland Secretary of Labor).
