Introduction
Fleming v. Black Diamond Capital Management L.L.C. (5th Cir. May 11, 2026) is a second-appeal decision arising from the sudden shutdown of the Bayou Steel plant in LaPlace, Louisiana, and the termination of approximately 300 employees without the 60 days’ notice generally required by the Worker Adjustment Retraining Notification (“WARN”) Act.
The plaintiffs (Troy Fleming and similarly situated former employees) sought to hold Black Diamond Capital Management L.L.C.—a private equity owner of Bayou Steel through subsidiaries—liable for Bayou Steel’s undisputed WARN Act violation under a “single employer” theory. The central dispute on remand was narrow: whether Black Diamond specifically directed the plant closing that produced the WARN-violating layoffs. After a limited bench trial, the district court found plaintiffs did not prove that specific direction, and the Fifth Circuit affirmed.
The case is unpublished, but it is notable for the way the panel (1) enforces the prior remand’s framing as the controlling “law of the case,” and (2) illustrates the evidentiary burden plaintiffs face at trial on the WARN “de facto control” factor when direct proof of a closure directive is absent.
Summary of the Opinion
The Fifth Circuit affirmed a defense judgment after bench trial. Although the record contained evidence that Black Diamond was heavily involved in Bayou Steel’s affairs, the court held that the decisive factual question—whether Black Diamond specifically directed the mill’s closing/layoffs without adequate WARN notice—was not proven. With no direct evidence and only inconclusive circumstantial evidence, the district court’s inference that the closure was “inevitable” once funding ceased and that “independent directors . . . apparently made the ultimate decision” was not clearly erroneous.
The majority also rejected plaintiffs’ attempt to broaden the inquiry beyond “specific direction,” invoking United States v. Agofsky to apply the law-of-the-case doctrine: the prior panel in Fleming v. Bayou Steel BD Holdings II L.L.C. had already reduced the remand issue to the “specifically directed” question, and the court would not revisit that framing.
Judge Higginson dissented, warning that the “specific direction” framing unduly narrows the “de facto control” inquiry and makes WARN affiliate liability nearly impossible absent an admission, given “voluminous evidence” of operational control.
Analysis
Precedents Cited
1) The prior appeal as controlling framework: Fleming v. Bayou Steel BD Holdings II L.L.C.
The opinion’s most consequential move is not an abstract interpretation of WARN, but its procedural enforcement of the prior panel’s remand instruction. In Fleming v. Bayou Steel BD Holdings II L.L.C., 83 F.4th 278, the court (a) affirmed the district court’s resolution of four of the five Department of Labor factors against plaintiffs, and (b) held a genuine factual dispute remained only as to “de facto exercise of control,” remanding to determine whether Black Diamond “specifically directed the closing of the mill without proper notice.”
In the 2026 decision, that remand instruction becomes dispositive: when the dissent urged a broader “functional” de facto-control analysis, the majority treated the question as foreclosed by the earlier panel’s framing, applying law-of-the-case to keep the inquiry fixed on “specific direction.”
2) The single-employer factors and de facto control: Administaff Cos., Inc. v. N.Y. Joint Bd., Shirt & Leisurewear Div.
The court again ties Fifth Circuit WARN “single employer” analysis to Department of Labor regulations, citing Administaff Cos., Inc. v. N.Y. Joint Bd., Shirt & Leisurewear Div., 337 F.3d 454 and 20 C.F.R. § 639.3(a)(2). Those factors are:
- common ownership
- common directors and/or officers
- de facto exercise of control
- unity of personnel policies emanating from a common source
- dependency of operations
The majority quotes Administaff for the controlling gloss on factor (iii): de facto control “considers whether the defendant has specifically directed the allegedly illegal employment practice.” That sentence effectively becomes the legal yardstick for the remanded trial.
Plaintiffs attempted to treat Administaff as supporting an inference of liability where evidence “only supports” defendant direction. The panel rejects that reading, describing Administaff more narrowly: it stands for the proposition that an entity cannot “specifically direct” an employment decision it did not make; it does not impose liability merely because an entity is connected to, or had knowledge of, the illegal practice.
3) Cross-circuit influence and the “even without other factors” concept: Pearson v. Component Tech. Corp.
The earlier Fleming opinion (and the remand instruction quoted here) borrowed from the Third Circuit’s WARN analysis in Pearson v. Component Tech. Corp., 247 F.3d 471, including Pearson’s observation (quoted in the prior appeal) that de facto control may, in some circumstances, warrant liability “even in absence of the other factors.”
In this second appeal, the majority does not re-engage Pearson’s broader “functional assessment” language (emphasized by the dissent). Instead, it treats the controlling inquiry as a fact question under the “specifically directed” formulation.
4) Standards of review and evidentiary posture
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Guzman v. Hacienda Recs. & Recording Studio, Inc. supplies the basic appellate framework: factual findings after a bench trial are reviewed for clear error; legal issues de novo.
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Anderson v. City of Bessemer City provides the classic “definite and firm conviction” definition of clear error.
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In re Luhr Bros., Inc. reinforces deference where “two permissible views of the evidence” exist.
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United States v. Fletcher is invoked to caution that appellate courts should not discount reasonable inferences drawn by the district court.
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Turner v. Baylor Richardson Med. Ctr. is used to contrast summary-judgment inferences (drawn for the nonmovant) with trial burdens (proof by the party bearing the burden).
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United States v. Agofsky is used to enforce law-of-the-case, preventing re-litigation of issues decided in the earlier appeal.
Legal Reasoning
1) The WARN Act liability hook: “employer who orders” the closing
The panel begins from the statutory premise that WARN liability is imposed on “the employer who orders a plant closing or mass layoff” without adequate notice (quoting 29 U.S.C. § 2104(a)(1)). Because Bayou Steel employed the workers, Black Diamond’s liability depended on treating Black Diamond and Bayou Steel as a “single employer” under the DOL’s five-factor test (20 C.F.R. § 639.3(a)(2)).
2) The case’s procedural narrowing: only “de facto control,” and only “specific direction”
The court emphasizes that the first appeal resolved the other four factors against plaintiffs; thus the only remaining pathway was de facto control. And even within de facto control, the remand framed the inquiry as whether Black Diamond “specifically directed” the plant closing/layoffs without proper notice. The majority treats that framing as binding under law-of-the-case.
3) Applying clear-error deference to an evidentiary vacuum
The panel’s affirmance is driven by the combination of (a) no direct evidence of who made the closure/layoff decision, and (b) the restrictive standard of review. Multiple directors—Black Diamond-affiliated and independent—either denied that the board made the decision or could not recall who did. The only director offering a recollection (Archambault) gave inconsistent testimony. Plaintiffs largely asked the trial court to infer specific direction from Black Diamond’s broader pattern of involvement.
The district court instead inferred inevitability: without additional funding and after lender acceleration, the plant could not meet payroll, and “apparently” independent directors made the ultimate call to close and terminate quickly. On appeal, even if Black Diamond might have seemed the “likeliest culprit,” the panel held that the circumstantial record allowed multiple permissible views; therefore it could not be “left with the definite and firm conviction” of mistake required to find clear error.
4) Summary judgment posture versus trial proof
The majority directly addresses the intuitive reaction that “surely, someone made the decision.” At summary judgment, that intuition could support a reasonable inference for plaintiffs, and therefore a triable dispute. But after a bench trial, plaintiffs bore the burden of proof on the specific-direction question; inability to identify (by direct or sufficiently persuasive circumstantial evidence) who directed the closure meant plaintiffs did not carry that burden.
5) Addressing plaintiffs’ use of Administaff
Plaintiffs argued Administaff compelled reversal. The court disagreed, reading Administaff as preventing liability where the defendant did not make or direct the illegal decision—not as creating a presumption that an involved affiliate must have directed it. In effect, the panel refuses to convert “involvement” into “specific direction” as a matter of law.
6) The dissent’s warning and the majority’s response
The dissent contends the “specifically directed” lens improperly displaces Pearson’s broader “functional assessment of the amount of control involved,” rendering de facto control nearly impossible to prove without an admission. The majority responds procedurally rather than substantively: whatever the best articulation of de facto control in the abstract, the earlier Fleming panel fixed this case’s inquiry, and law-of-the-case prevents revisiting it.
Impact
Although unpublished, the decision highlights several practical and doctrinal consequences for WARN litigation in the Fifth Circuit:
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Proof problems on de facto control: When plaintiffs must show an affiliate “specifically directed” a closure, a record dominated by “no recall,” abstentions, resignations, and inconsistent testimony may defeat liability even amid significant evidence of general operational involvement.
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Appellate deference is outcome-determinative: Once the district court draws a permissible inference against specific direction, clear-error review makes reversal difficult unless the evidentiary record compels the opposite conclusion.
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Law-of-the-case can lock in the liability lens: The panel’s reliance on United States v. Agofsky underscores that the framing of a remand instruction can become as important as the underlying WARN doctrine. Litigants must treat first-appeal issue framing as potentially dispositive for later proceedings.
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Strategic implication for plaintiffs: Plaintiffs pursuing private-equity or affiliate liability may need early, targeted discovery aimed at decision provenance (who instructed counsel; who approved notice timing; who directed HR; who controlled cash decisions that forced immediate layoffs), anticipating that “broad control” evidence may not substitute for “specific direction.”
Conclusion
Fleming v. Black Diamond Capital Management L.L.C. affirms that, in this litigation posture, WARN affiliate liability turned on a narrow question: whether the private equity owner specifically directed the closure that caused WARN-violating layoffs. With no direct evidence and ambiguous circumstantial proof, the district court’s inference against specific direction survived clear-error review.
The decision’s broader significance lies in its procedural and evidentiary lessons: remand framing can harden into law-of-the-case; “voluminous” involvement evidence may not substitute for proof of the closure directive; and at trial (unlike summary judgment) plaintiffs must convert plausible inferences into persuasive proof.