Sun Pharma US arm faces class action suit from ex-employees

MUMBAI: For Sun Pharmaceutical Industries, the run-ins with US authorities seem to be continuing. In the latest, the company is facing a class action suit over the closure of the unit's Caraco facility in Michigan six years ago.

India's largest pharma firm faces charges of violating the Worker Adjustment and Retraining Notification Act, which requires companies to give 60 days' notice before a plant is shut down.

The purpose of the law is to provide time for workers, their families and communities to adjust with plant closings and mass layoffs. "Advance notice provides workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market", said the United States District Court that accepted the suit.


The case filed by James Calloway, one of the nearly 600 people who were laid off, has alleged that Sun did not adhere to labour laws while shutting the plant.

In 2008, Caraco received a warning letter from the US Food and Drug Administration, and marshals entered the plant and seized some of the key products.

In its defence to this suit, Sun claimed that the closure was not under the WARN act as the shutdown took place due to an unforeseeable business circumstance, which exempts companies from complying with the act.

The exemption states that the 60-day notice is not required if the closing is "caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required".

In order to qualify for the exception, the defendant must prove two elements: that the circumstances complained were unforeseeable and caused the mass lay off or shutdown, Sun said in a notice to stock exchanges.

It said there was "no material impact" of the court's decision on the operations or performance of the company.

On Friday, Sun's shares closed 2% down at Rs 884.95 in a Mumbai market that ended 0.6% higher.