No WARN liability for private equity

In Fleming v. Black Diamond Capital Management, L.L.C., the Fifth Circuit affirmed a  judgment that a private equity sponsor was not liable under the Worker Adjustment and Retraining Notification (WARN) Act for a portfolio company’s mass layoff, because plaintiffs failed to prove the sponsor “specifically directed” the plant closing that triggered the layoffs.

The panel acknowledged circumstantial evidence that the sponsor exercised pervasive influence over its portfolio company’s operations, but cautioned that proof of general control was not the same as proof of specific direction of the challenged decision. A dissent argued that the majority’s narrow framing of de facto control will make it nearly impossible for plaintiffs to prevail absent an admission of fault by the parent. No. 24-30291 (May 11, 2026)