Hollowell v. Orleans Regional Hospital

United States Court of Appeals for the Fifth Circuit · 2000 · Corporations

217 F.3d 379 (2000)

Updated August 22, 2026

CorporationsWARN Actpiercing the corporate veilsingle business enterprisesuccessor liabilityattorney's feesWARNplant closing

Facts

ORH was a Louisiana limited liability company operating a Medicaid-funded psychiatric hospital in New Orleans. As Medicaid policy changes reduced patient census, ORH discharged employees during 1994 and 1995, and in October 1995 Williams, Windham, Turner, and Peters decided to close ORH; before notifying employees, Magnolia's CFO calculated a $1.5 million distribution to Turner, Williams, and Windham based on combined assets of ORH and related entities. Employees were notified on October 27, 1995, and most left on November 3, 1995. After trial, the jury found related corporations and LLCs were alter egos or part of a single business enterprise with ORH, and found Brentwood to be NLRHP's successor.

Issue

Whether ORH's shutdown qualified as a WARN plant closing and whether ORH was a WARN employer, and whether the evidence supported piercing the veils of related entities and individuals, treating related companies as a single business enterprise, imposing successor liability on Brentwood, and awarding attorney's fees to plaintiffs. The case also asked whether Louisiana law requires fraud to pierce the corporate veil or impose successor liability.

Rule

Under WARN, employment losses within a 90-day period may be aggregated into a plant closing unless the employer affirmatively proves the losses resulted from separate and distinct actions and causes rather than an attempt to evade WARN. WARN employer coverage is measured on the date the first notice was required, and an entity qualifies if 100 or more employees in the aggregate work at least 4,000 hours per week exclusive of overtime. Under Louisiana law, veil piercing may be based on the totality of the circumstances and is not limited to fraud or the five Riggins factors, and successor liability may exist not only for fraud but also when the new company is merely a continuation of the old one.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A behavioral clinic in Tucson, Arizona dismissed 16 employees in January, 14 in February, and 24 when it permanently shut down in March. The clinic says WARN does not apply because no 30-day period included 50 terminations and the January and February cuts were made to match a steady decline in patient demand.

Under the governing rule, is the clinic most likely subject to WARN's plant-closing notice requirement?

Explanation. WARN allows aggregation of employment losses for two or more groups at a single site within a 90-day period when the aggregate exceeds the statutory minimum. The employer bears the affirmative burden to show the losses resulted from separate and distinct actions and causes and were not an attempt to evade WARN. A continuing economic decline leading to both earlier layoffs and the final shutdown does not satisfy that burden.