Court holds drug manufacturer accountable for failing to warn employees after government shutdown

The Worker Adjustment & Retraining Notification Act requires employers to "WARN" affected employees before a plant closing or mass layoff.  Caraco Pharm. Labs., Ltd.,  shut down its pharmaceutical manufacturing plant after the FDA seized its products.  It did not warn employees of the pending shut down.  The company argued that it was not obligated to provide a warning because its plant closing resulted from the FDA's seizure of its assets.

The Sixth Circuit rejected the company's reasoning.  The Court pointed out that for nearly a year prior to the FDA seizure, the company knew that an enforcement action was likely and would be difficult to avoid.  It had received several warning letters, was apprised of "significant objectionable conditions" during a plant inspection, and it had been warned by its consultants that a large-scale enforcement action was likely.  Therefore it was simply untrue that the company "did not 'reasonably foresee that the FDA would take the action that it did'."  Since it was reasonably foreseeable that the FDA action would occur, the company owed a duty under the act to warn its employees.