ROQUET v. ARTHUR ANDERSEN LLP
398 F.3d 585 (2005)
Nancy J. ROQUET and Coretta Robinson, Plaintiffs-Appellants, Cross-Appellees,
v.
ARTHUR ANDERSEN LLP, Defendant-Appellee, Cross-Appellant.
Nos. 04-1616, 04-1838.
United States Court of Appeals, Seventh Circuit.
Argued October 28, 2004.
Decided February 9, 2005.
Daniel A. Edelman, argued, Edelman, Combs & Latturner, Chicago, IL, for Plaintiffs-Appellants.
John A. McDonald, argued, Quarles & Brady, Chicago, IL, for Defendant-Appellee.
Before RIPPLE, WOOD, and EVANS, Circuit Judges.
TERENCE T. EVANS, Circuit Judge.
This case involves the Worker Adjustment and Retraining Notification Act, 29 U.S.C. §§ 2101-2109, better known by its shortened name, the WARN Act. The Act became law in 1989, and its purpose is to soften the economic blow suffered by workers who unexpectedly face plant closings or mass layoffs. Among other things, the Act requires that companies subject to its reach (generally large employers) give employees 60 days notice in advance of any mass layoffs or plant closings. The notice gives affected workers a little time to adjust to a job loss, find new employment, or, if necessary, obtain retraining.
Our case, however, is not your typical WARN Act fare as it involves hot-button topics like "Enron," "document shredding," and "indictment." And it concerns an exception to the WARN Act's notification requirement: the Act's 60-day-notice obligation is eliminated, or reduced to a shorter term, if a mass layoff or plant closing is "caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required." Id. § 2102(b)(2)(A). The defendant here, the giant accounting and consulting firm Arthur Andersen LLP, convinced the district court that its failure to comply with the Act was excused by the exception we just quoted. The plaintiffs, a purported class of former Andersen employees, are here challenging that decision on appeal.
First, a little background. As of early 2002, Andersen had over 27,000 employees in 80 locations throughout the country. In addition to providing direct accounting and consulting services for clients, Andersen performed administrative support services for approximately 80 international practice firms that used the Andersen name. One of the firm's major clients was the Enron Corporation, the infamous Houston, Texas, energy marketer that fell like a house of cards in 2001 when it came to light that the company had grossly misstated its earnings. Andersen was at the center of Hurricane Enron — it audited the company's publicly filed financial statements and provided internal counseling. See United States v. Arthur Andersen, LLP,374 F.3d 281 (5th Cir.2004).In November of 2001, Andersen received bad news in the form of a subpoena from the SEC requesting Enron-related documents. During the course of its investigation, the SEC discovered that Andersen employees destroyed thousands of relevant documents in the 6 weeks leading up to its receipt of the subpoena. Over the next few months, the media began to speculate about Andersen's continuing viability. Stories also circulated that Andersen's employees were concerned about layoffs and that some of the company's clients were contemplating defection.
During this time, Andersen worked hard to try to resolve its Enron-related ills with the SEC and the Department of Justice (DOJ). As of February 22, 2002, Andersen had not suffered a significant loss of business nor was it giving any thought to a mass layoff. That day, Andersen's lawyers met with lawyers from the DOJ. The next day, counsel briefed Andersen's management team, and a participating manager e-mailed the following update to employees:
At our meeting on Saturday, February 23, the current status of the investigation into document destruction was presented by the outside lawyers from Davis Polk. They are moving forward as quickly as possible to bring this matter to a conclusion as it relates to the Firm with the Department of Justice. Our desired timetable is to be in a position at the end of February to have the desired conclusion and an agreement in principle with the DOJ, so that we can finalize our disciplinary actions and prepare an internal announcement followed closely by a public announcement of the resolution of this investigation.
1. This rather unprecedented step will be considered soon by the Supreme Court, which just recently agreed to consider whether indicting (and convicting) the company as an entity was a proper application of 18 U.S.C. § 1512(b)(2).