Court Says Sun's Caraco Not Off the Hook for WARN Compliance Following FDA Raid

Aug. 27, 2015

Caraco Pharma shut down two Michigan plants after they were raided by the FDA, but this does not exempt the drug maker from a law requiring employers to give notice before they lay off workers, an appeals court ruled.

After years of warnings from the FDA and consultants, Caraco, owned by India's Sun Pharma, failed to take corrective actions at its two plants. In 2009, Caraco issued a nationwide drug recall due to meds contaminated with metal scrapings and the FDA filed a complaint, served Caraco, and seized products. Days later, Caraco began a mass layoff, indicating that it did not “reasonably foresee" the FDA action.

Caraco failed to issue a federal WARN notice regarding the layoffs -- which require companies to give workers 60 days notice -- until 11 days after the plants were closed.

A three-judge panel of the 6th U.S. Circuit Court of Appeals ruled that Caraco should have expected the 2009 raid by the FDA and thus is not excused from WARN Act compliance.

Read the Justia case details