Labor & Employment Law Daily Wrap Up, LABOR—LAYOFFS—S.D.NY.: Court grants preliminary approval of class action settlement of WARN Act dispute, (Aug 3, 2026)

By George Basharis, J.D.

A proposed settlement would resolve federal and New York WARN Act claims arising from the closure of a Manhattan student housing security site, with workers receiving pro rata payments based on lost wages and benefits.

A security guard for Mulligan Security LLC won preliminary approval of a proposed class settlement resolving claims that the employer failed to provide advance notice before terminating dozens of security employees after the closure of a Manhattan student housing security site. Concluding that the agreement fell within the range of reasonableness given the risks of continued litigation, disputed successor liability, and unresolved arbitration issues, a federal district court in New York conditionally certified an 86-member settlement class, approved notice to class members, and appointed the security guard who filed the action as class representative in litigation alleging violations of the federal Worker Adjustment and Retraining Notification Act and the New York WARN Act (Mossiah v. Mulligan Security LLC, No. 25-CV-04561 (JAV) (S.D.N.Y. July 31, 2026)).

The security guard alleged that Mulligan hired her in July 2022 and terminated her employment on November 24, 2024, without providing the advance notice required by the federal WARN Act and the New York WARN Act after the company closed its security operation at the Bird Dorms student housing complex in Manhattan. She further alleged that Universal Protection Service LLC was liable as Mulligan’s successor and sought to represent a class of employees who allegedly suffered an employment loss because of the closure.

Settlement terms. Under the proposed agreement, Mulligan will fund a $230,000 common fund to pay class members, attorneys’ fees and costs, settlement administration expenses, payroll taxes, and a proposed service award for the class representative. After those deductions, participating workers will receive pro rata distributions based on payroll records reflecting their lost wages and benefits. The agreement allocates 77 percent of the net settlement among 61 workers whose employment losses are undisputed and the remaining 23 percent among 25 workers whose entitlement to relief the defendants contested. Settlement payments will be treated in part as wages for tax purposes and reported on IRS Forms W-2 and 1099, with the employer’s share of payroll taxes paid from the common fund.

Class counsel intends to seek up to $77,304 in attorney fees and costs, representing one-third of the settlement fund plus litigation expenses. The agreement also provides for a proposed $15,000 service award for the class representative, subject to final approval.

Class certification. The court found the proposed settlement class satisfied the requirements for class certification for settlement purposes. Numerosity was met because the proposed class consists of 86 individuals, making joinder impracticable. Commonality was satisfied because the claims turn on shared legal and factual questions, including whether the closure of the Bird Dorms operation triggered the WARN Acts’ notice requirements, whether any statutory exceptions or good-faith defenses apply, and whether Universal may be liable as Mulligan’s successor. The court further concluded that the class representative’s claims were typical because they arose from the same alleged failure to provide WARN notice following the facility’s closure. It also found that neither the class representative nor class counsel had interests antagonistic to absent class members and that they could adequately represent the class.

Moreover, predominance and superiority supported certification because the central liability issues, including whether the WARN Acts required advance notice of the Bird Dorms closure, were common to all class members and could be resolved on a class-wide basis. The court further found that each worker’s potential recovery was too modest to justify separate litigation and that a single proceeding would promote efficiency while avoiding duplicative litigation and inconsistent results.

Litigation risks. In granting preliminary approval, the court emphasized that the proposed settlement represented nearly half of the workers’ maximum potential recovery while avoiding substantial litigation risks that could have reduced or eliminated any recovery. According to class counsel, the settlement represents approximately 47 percent of the class’s potential damages if the workers prevailed on every issue.

The defendants asserted several defenses, including that unforeseeable business circumstances excused any failure to provide WARN notice. The court also noted that Mulligan is no longer operating and reportedly has no assets, making any judgment against the company alone likely uncollectible. As a result, the workers’ ability to recover depended largely on establishing successor liability against Universal, a claim Universal disputed.

The settlement also eliminated uncertainty created by an earlier ruling finding a factual dispute over whether the employee had agreed to arbitrate her claims. A trial had already been scheduled to resolve that threshold issue when the parties reached their agreement. Given the time and risks associated with litigating the arbitration issue, successor liability, and the WARN claims themselves, the court concluded that the settlement fell within a reasonable range.

Although the court preliminarily approved the proposed $15,000 service award, it directed the class representative to provide additional support before final approval demonstrating that the award is justified and neither excessive considering the services performed nor unfair to absent class members. Similarly, the court reserved judgment on the requested attorney fees until the final approval stage.

Notice approved. The court approved the proposed notice procedure, concluding that individual mailings provide an appropriate means of notifying class members after minor revisions to reflect the deadlines established in the order. Class members will have 60 days after the notices are mailed to object to the settlement or request exclusion from the class. A final fairness hearing is scheduled for October 27, 2026, when the court will decide whether to grant final approval of the settlement and rule on the requests for attorney fees, litigation costs, settlement administration expenses, and the proposed service award.

The case is No. 25-CV-04561 (JAV).

Judge: Vargas, J.

Attorneys: Alex Rissmiller (Rissmiller PLLC) for Leneisje Mossiah. Michael J. Lingle (Nixon Peabody) for Mulligan Security LLC and Universal Protection Service, LLC.

Companies: Mulligan Security LLC; Universal Protection Service, LLC

Cases: Labor Layoffs ClassActions Arbitration NewYorkNews