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Employment Law and Employee Termination: The AMPAC Case

SOURCE: Chapter 19, 9.662, #1 (David J. Walsh (2010) 3rd ed. Employment Law for Human Resource Practice

In the year prior to its closing, a meat packing plant with 350 employees received numerous (over 30) "noncompliance records" from the Agriculture Department (USDA), citing serious failures to maintain sanitary conditions and warning of possible "regulatory or administrative action." A handwritten letter delivered on September 17, 2001 carried the same warning. On October 31, 2001 the USDA withdrew inspection after a third incident of rodent droppings, forcing a halt in production. Production had to be stopped again due to unsanitary conditions on November2. On November 7, the company's request to ship its product was denied and the company ordered by the USDA to destroy the suspect meat. The company had made a number of changes in equipment and operating procedures over this period. On November 15, the company detailed plans to spend $3 million for new coolers if the plant would be allowed to operate, but the USDA again refused permission. Later the same day the owner decided to close the plant. Employees were informed when they showed up for work the next day that their employment had been terminated. A group of employees sued the company for not providing adequate notice of the plant closing.

- What was the issue in this case?
- What should the court decide and why?
- Look up the case on the Internet. What were some of the indicators in analyzing the case?
- What did the court decide and why?

Pena c. American Meat Packing Corp., 362F.3d 418 [7th Cir. 2004]

Solution Preview

The issue in the case:

The nature of ownership and product line of AMPAC:
American Meat Packing Corporation (AMPAC) specializes in the packing of meat products for distribution to different outlets in the U.S. The plant takes charged of the "slaughtering, butchering, and packing of 3,000 to 4,000 hogs every day".
The problem resulted when the plant was found by the United States Department of Agriculture (USDA) to have committed numerous insanitary practices. The plant was later receiving non-compliance report regarding its operation. Due to this, the AMPAC was prohibited to shift its products to the market and instead were ordered to destroy million pounds of meat worth about half a million dollars. Eventually, the USDA issued a closure order.

Finding it hard to commence commercial operations, AMPAC decided to close the plant on November 15, 2001 and the employees were officially informed of the decision the following ...

Solution Summary

This is a labor case issue between the American Meat Packing Corporation (AMPAC) and Rufino Pena, German Alvarado, Rosa Ayala, et al., all workers of the company. The US DA prohibited the transfer of AMPAC meat to the market due to unsanitary practices. AMPAC retaliated by closing down the company and terminated the services of its workers.

The issue in this case: Was the plant closure decision of AMPAC management displacing 350 employees without prior notice lawful?