Employment: Corporate parent dodges suit by subsidiary’s employees

Although the plaintiffs previously obtained a judgment against their employer for failing to give proper notice of the plant’s closing and for failure to validly eliminate a severance plan, their suit seeking to have the judgment imposed against the parent company was dismissed. Because the parent was never found liable for the violations, this court does not have subject-matter jurisdiction over the claim.

Background

The plaintiffs in this case are former employees in a manufacturing plant. They won a class-action money judgment against the corporate operator of the plant for failure to give proper notice of the plant’s closing, in violation of the Worker Adjustment and Retraining Notification, or WARN, Act, and for failure to validly eliminate a severance plan prior to the employees’ termination.

In this new action, the plaintiffs seek to have the judgment also imposed against an alleged parent company and multiple companies and individuals, based on alter ego or veil-piercing theories. The defendants move to dismiss on multiple grounds.

Analysis

The Supreme Court decided in Peacock v. Thomas, 516 U.S. 349 (1996), that federal courts do not have “ancillary jurisdiction over new actions in which a federal judgment creditor seeks to impose liability for a money judgment on a person not otherwise liable for the judgment.” Moreover, piercing the corporate veil is not an independent cause of action under the WARN Act.

Because the complaint seeks only to enforce the previous judgment against Garrison, which was never found liable for the WARN Act or ERISA violations, this court does not have subject-matter jurisdiction over the claim, and it must be dismissed without prejudice.

Seeking to avoid this result, the plaintiffs argue that Peacock does not apply because their complaint “does include ERISA violations and defendants who ‘otherwise have liability.’” The plaintiff’s basis for their contention that Garrison violated ERISA is that the court of appeals found that BCI violated ERISA. And the plaintiffs were unable to bring this supposed ERISA violation claim against Garrison before the court of appeals issued its ruling, because that is when their claim against Garrison accrued.

However the statute of limitations has run for any claim that the plaintiffs may have had against Garrison, or any other named defendant, arising out of the closing of the plant and termination of the severance plan. There is no underlying ERISA violation that the plaintiffs may point to that will confer subject-matter jurisdiction.

And contrary to the plaintiffs’ argument, none of the defendants named are “otherwise liable” for the previous judgment. The plaintiffs dismissed Garrison from the previous action. The question of liability of any party besides BCI was not decided.

Defendants’ motion to dismiss granted.

Messer v. Garrison Investment Group LP, Case No. 1:24-cv-00037, May 14, 2025. WDVA at Abingdon (Jones). VLW 025-3-200. 17 pp.