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Roquet v. Arthur Andersen LLP
United States Court of Appeals for the Seventh Circuit
398 F.3d 585 (2005)
Arthur Andersen LLP (Andersen) (defendant) audited the financial statements of and provided consulting services to Enron Corporation, an energy company that infamously imploded after the Securities and Exchange Commission (SEC) discovered that Enron had grossly misstated its earnings. The SEC’s investigation also revealed that Andersen employees had improperly destroyed thousands of Enron-related documents during the weeks preceding Andersen’s receipt of a subpoena for the materials. Over the next few months, Andersen worked to resolve its legal problems with the SEC and the Department of Justice (DOJ). Despite the negative publicity Andersen was receiving, Andersen did not experience a significant loss of business at that point. On February 22, 2002, Andersen met with the DOJ and reported to employees on the following day that negotiations were ongoing and that the parties were working to bring the matter to a conclusion by the end of the month. On March 1, the DOJ advised Andersen that it planned to indict the firm for obstructing the SEC investigation. Andersen continued to negotiate, but the indictment was filed under seal on March 7 and made public on March 14, triggering a mass defection of Andersen’s clients over the next two weeks. On April 8, Andersen gave termination notices to 560 employees, including Nancy Roquet (plaintiff). Roquet remained on Andersen’s payroll for two weeks after receiving her notice. Roquet and another discharged employee (employees) initiated a class action, alleging that Andersen violated the federal Worker Adjustment and Retraining Notification Act (WARN Act) by failing to give workers 60 days’ notice before laying them off. The district court found that Andersen was exempt from liability under the WARN Act’s unforeseen-business-circumstances exception and granted Andersen’s motion for summary judgment. The employees appealed.
Rule of Law
Holding and Reasoning (Evans, J.)
Dissent (Wood, J.)
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