Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-02980/USCOURTS-caed-2_08-cv-02980-3/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 05:704 Labor Litigation

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UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

SERVICE EMPLOYEES 

INTERNATIONAL UNION, UNITED

HEALTHCARE WORKERS - WEST,

on behalf of represented

employees,

NO. CIV. S-08-2980 LKK/CMK

Plaintiffs,

v.

PRIME HEALTHCARE SERVICES,

INC.; PRIME HEALTHCARE 

SERVICES - SHASTA, LLC;

SHASTA REGIONAL MEDICAL 

CENTER, INC.; SHASTA O R D E R

REGIONAL MEDICAL CENTER, LLC;

MEDICAL PROPERTIES TRUST; MPT

OF SHASTA, LP; MPT OF SHASTA,

LLC; MPT OPERATING PARTNERSHIP,

LP; and DOES 1 through 25,

Defendants.

 /

This case concerns the transition of a hospital workforce from

an employer facing some financial struggles and with a unionized

workforce to an employer who reduced the number of employees at the

hospital and had a non-unionized workforce. Plaintiff, the Service

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 MPT is constituted by numerous entities. There is some 1

dispute as to whether plaintiff sued the correct MPT entities.

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Employees International Union, United Healthcare Workers - West

(“SEIU UHW”), brings claims against numerous defendants for failure

to comply with the federal and California Worker Adjustment

Relocation and Notification Acts (“WARN Acts”). All defendants move

for summary judgment on both claims. For the reasons described

below, the court grants defendants’ motions on plaintiff’s federal

WARN Act claim and declines supplemental jurisdiction over

plaintiff’s California WARN Act claim.

I. BACKGROUND

At issue here is a change in management at Shasta Regional

Medical Center (“hospital”). Plaintiff SEIU UHW brings claims

against numerous defendants for failing to notify hospital

employees about the change in management of the hospital. For

reference, the court will list the moving defendants below:

(1) Medical Properties Trust, Inc., MPT of Shasta L.P, MPT

of Shasta, LLC, and MPT Operating Partnership, L.P.,

(together “MPT defendants” or “MPT”).

(2) Prime Health Care Services, Inc. and Prime Healthcare

Services - Shasta, LLC (“Prime - Shasta”), (together

“Prime defendants” or “Prime”).

Prior to November 1, 2008, the hospital was managed by

Shasta Regional Medical Center, LLC (“SRMC LLC”). SRMC LLC leased

the hospital from MPT pursuant to a management contract. The 1

service and maintenance workers at SRMC LLC were part of the SEIU

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UFW. 

SRMC LLC suffered financial difficulties during the third

quarter of 2008. It could not pay its rent to MPT during this

time period. GE Capital was lending SRMC LLC money to cover its

operating expenses. In September 2008, GE Capital stopped lending

money to SRMC LLC. Defendants contend that SRMC LLC was in

serious crisis. Plaintiff argues that the crisis was exaggerated. 

MPT, apparently concerned with the financial viability of

SRMC LLC and the hospital, approached Prime to see if they would

be interested in operating the hospital. After making several

significant concessions, Prime agreed to run the hospital. MPT

was also involved in monitoring the financial condition of the

hospital as it had invested significant funds in SRMC LLC.

Pursuant to these arrangements, MPT entered a lease

agreement with Prime which took effect on November 1, 2008. MPT

terminated its management agreement with SRMC LLC effective

October 23, 2008 because SRMC LLC was in default. Prior to its

management of the hospital, Prime employees investigated the

hospital and prepared legal arrangements to manage the hospital

effective November 1, 2008.

On October 31, 2008 all approximately 768 employees were

terminated by SRMC LLC. Approximately 605 were given offers from

Prime effective November 1, 2008. The offers with Prime did not

include union membership. 

II. STANDARD FOR A FED. R. CIV. P. 56 MOTION FOR SUMMARY JUDGMENT

Summary judgment is appropriate when there exists no genuine

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issue as to any material fact. Such circumstances entitle the

moving party to judgment as a matter of law. Fed. R. Civ. P.

56(c); see also Adickes v. S.H. Kress & Co., 398 U.S. 144, 157

(1970); Secor Ltd. v. Cetus Corp., 51 F.3d 848, 853 (9th Cir.

1995). Under summary judgment practice, the moving party

always bears the initial responsibility of informing

the district court of the basis for its motion, and

identifying those portions of “the pleadings,

depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any,” which

it believes demonstrate the absence of a genuine issue

of material fact.

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.

R. Civ. P. 56(c)).

If the moving party meets its initial responsibility, the

burden then shifts to the opposing party to establish the

existence of a genuine issue of material fact. Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986);

see also First Nat’l Bank of Ariz. v. Cities Serv. Co., 391 U.S.

253, 288-89 (1968); Secor Ltd., 51 F.3d at 853. In doing so, the

opposing party may not rely upon the denials of its pleadings,

but must tender evidence of specific facts in the form of

affidavits and/or other admissible materials in support of its

contention that the dispute exists. Fed. R. Civ. P. 56(e); see

also First Nat’l Bank, 391 U.S. at 289. In evaluating the

evidence, the court draws all reasonable inferences from the

facts before it in favor of the opposing party. Matsushita, 475

U.S. at 587-88 (citing United States v. Diebold, Inc., 369 U.S.

654, 655 (1962) (per curiam)); County of Tuolumme v. Sonora Cmty.

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Hosp., 236 F.3d 1148, 1154 (9th Cir. 2001). Nevertheless, it is

the opposing party’s obligation to produce a factual predicate as

a basis for such inferences. See Richards v. Nielsen Freight

Lines, 810 F.2d 898, 902 (9th Cir. 1987). The opposing party

“must do more than simply show that there is some metaphysical

doubt as to the material facts . . . . Where the record taken as

a whole could not lead a rational trier of fact to find for the

nonmoving party, there is no ‘genuine issue for trial.’” 

Matsushita, 475 U.S. at 586-87 (citations omitted).

III. ANALYSIS

Plaintiffs brings two claims against all defendants: (1)

violation of the federal Worker Adjustment and Retraining

Notification (“WARN”) Act and (2) violation of the California

WARN Act. Defendants have moved for summary judgment on both

claims. For the reasons described below, the court grants

defendants’ motions for summary judgment as to the federal claim,

and declines to exercise supplemental jurisdiction over the state

claim.

A. Federal WARN Act

All defendants move for summary judgment on plaintiff’s

federal WARN Act claims. They argue that they were not required

to comply with the Act because no actionable employment loss

occurred. Specifically, they have presented evidence that an

insufficient number of employees were terminated to create

liability under the Act.

The federal WARN Act requires employers to provide employees

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with sixty (60) days advance warning before a plant closing or

mass layoff. A plant closing is defined as, “the permanent or

temporary shutdown of a single site of employment, or one or more

facilities or operating units within a single site of employment,

if the shutdown results in an employment loss at the single site

of employment during any 30-day period for 50 or more employees

excluding any part-time employees.” 29 U.S.C. § 2101(a)(2). The

statute defines a mass layoff as a reduction in the workforce

that “results in an employment loss at the single site of

employment during any 30-day period for . . . at least 33 percent

of the employees (excluding any part-time employees) . . . and at

least 50 employees (excluding any part-time employees); or

. . . at least 500 employees (excluding any part-time

employees).” 29 U.S.C. § 2101(a)(3). Here, plaintiff contends a

mass layoff has occurred. Accordingly, to survive summary

judgment, plaintiff must demonstrate either that 33 percent of

the full-time employees of the hospital suffered an employment

loss, as defined by the statute and the total number of employees

who suffered such a loss was at least 50 or that 500 full-time

employees suffered an employment loss, as defined by the statute.

For the reasons described below, plaintiff cannot meet either

standard.

1. Whether Plaintiff Has Presented Evidence that a

Sufficient Number of Hospital Employees Were Not

Offered Positions with Prime

Defendants have presented evidence that SRMC LLC employed

approximately 768 employees of which approximately 609 received

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job offers from Prime. Accordingly, defendants argue that only

approximately 159 employees suffered an employment loss, as

defined by the statute. These employees constitute about 21% of

the workforce. Thus, defendants argue that an insufficient

percentage of employees were terminated to require notice under

the federal WARN Act. 

In response, plaintiff challenges defendants’ evidence in

support of the number of employees who were employed by SRMC LLC

and the number of employees who were rehired by Prime. Defendants

have offered a declaration from Cynthia Gordon, the chief nursing

officer of the hospital under Prime and former vice president of

operations and chief nursing officer of SRMC LLC, and Sandra

Speer, director of human resources of the hospital under Prime

and former vice president of human resources under SRMC LLC. Both

individuals have testified under penalty of perjury to the

numbers listed above. Plaintiff has moved to strike Gordon’s

declaration because during her Fed. R. Civ. P. 30(b)(1)

deposition she could not identify with certainty whether a list

of 609 employees was the list of employees who were offered jobs

with Prime. Plaintiff contends that Gordon’s declaration lacks

foundation because it does not explain how she is certain of the

number of employees now, but was not so certain at her

deposition. In response to plaintiff’s objections to the Gordon

declaration, Prime submitted the Speer declaration with its reply

brief. Speer testified to the same numbers as Gordon. She also

affirmed that she is “aware of these facts based on [her]

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involvement in the process of facilitating the offers of

employment and [her] role as head of the Human Resources

department.” Speer Decl. ¶ 4. She also testified that she was

uncertain whether the list presented to her by plaintiff at her

deposition was the final list of 609 employees, but nonetheless

is able to recall that approximately 609 employees of the

approximately 768 employees were offered positions with Prime.

Id. at ¶ 5. 

Plaintiff has presented no evidence that the number of

employees who were not offered positions with Prime exceeded 33%

of the workforce. Through discovery, plaintiff could have

discovered evidence through interrogatories, requests for

production, and Fed. R. Civ. P. 30(b)(6) depositions that is

contrary to the testimony of defendants’ fact witnesses, yet has

failed to do so. For these reasons, plaintiff has not met its

evidentiary burden to demonstrate that 33% of the hospital

workforce was terminated.

2. Whether All Hospital Employees Suffered an

Employment Loss Under the Act

Plaintiffs also argue that all hospital employees, including

those who were offered positions with Prime, suffered an

employment loss. As discussed above, SRMC LLC employed

approximately 768 employees of which approximately 609 received

job offers from Prime. Plaintiffs argue that the 609 employees

received job offers “with dramatically inferior terms and

conditions of employment. Prime’s offers included wage reductions

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 Defendants argue that plaintiff has not provided evidence 2

for these “losses” incurred in the job offers from Prime aside from

the loss of union membership. The court does not address this

argument because even if plaintiff has demonstrated these losses

they are not actionable under the federal WARN Act.

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for some employees, health and fringe benefit reductions, loss of

seniority, loss of Union representation, and loss of vacation.”2

Pl’s Mem. P. & A. Opp’n Defs. Prime Mot. Summ. J.(“Pl’s Opp’n

Prime Mot.”) 14. Accordingly, plaintiff argues that defendants’

failure to notify the hospital employees prior to their

termination and, for some, new offers of employment violated the

federal WARN Act. 

While the offers described by plaintiff constitute a loss in

employment as that term may be commonly understood, the offers do

not constitute an employment loss under the federal WARN Act. The

Act defines an employment loss as “(A) an employment termination,

other than a discharge for cause, voluntary departure, or

retirement, [¶] (B) a layoff exceeding 6 months, or [¶] (C) a

reduction in hours of work of more than 50 percent during each

month of any 6-month period. 29 U.S.C. § 2101(a)(6). The Ninth

Circuit has adopted the Department of Labor’s (“DOL”) definition

of termination. Chauffeurs Union Local 572 v. Westlock Corp., 66

F.3d 241, 243 (9th Cir. 1995) (citing Int’l Alliance of

Theatrical & Stage Emps. v. Compact Video Servs., Inc. (“Compact

Video”), 50 F.3d 1464, 1466 (9th Cir. 1995). The DOL defines

termination “to have [its] common sense meaning[ as] the

permanent cessation of the employment relationship . . . .” 54

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 Plaintiff attempts to distinguish Compact Video because it 3

“turns on construing ‘a ‘sales exception’ to WARN,” and therefore

is not applicable here. Pl’s Opp’n Prime Mot. 14. While part of

Compact Video does construe the sales exception, the section cited

here plainly concerns interpretation of the meaning of employment

loss under the statute. The Ninth Circuit confirmed this

interpretation in Chauffeurs, 66 F.3d at 243, which concerned a

WARN action against a secured creditor of an employer. The court

cited to Compact Video in support of the proposition that it had

“previously accepted the Department of Labor’s (DOL) explanation

that the word ‘termination’ is ‘to have its common sense meaning’

as ‘the permanent cessation of the employment relationship.’”

Accordingly, this court must reject plaintiff’s efforts to

distinguish Compact Video. To be frank, the court is not persuaded

by Compact Video or Chauffeurs. The common sense understandings is

that the employees lost their job with SRMC LLC and obtained a new

job with Prime. Whether I am persuaded or not, however, I am bound.

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Fed. Rev. 16,047 (1989). Further, the Circuit reasoned, “[t]hat

Congress applied WARN notice requirements to reductions in work

hours, in (C), persuades us that WARN does not apply to any other

modifications of the terms of employment.” Compact Video, 50 F.3d

at 1469. The court continued to advise employees to “look to

other sources of law, for example federal labor laws, ERISA, or

common law contract principles, to remedy an improper

modification of the terms of their employment.” Id.3

Other Circuits have addressed the issue of whether an

employment loss occurs in the event of a sale, where prior to the

sale all employees are terminated by the selling employer and

then given offers of employment by the purchasing employer. The

Sixth and Third Circuits have held that, “An employee cannot be

defined as ‘terminated’ if he or she is, in fact, rehired in the

same position.” Wiltz v. M/G Transport Services, Inc., 128 F.3d

957, 965 (6th Cir. 1997) (quoting Moore v. Warehouse Club, Inc.,

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992 F.2d 27, 30 (3d Cir. 1993)); see also Headrick v. Rockwell

Intern. Corp., 24 F.3d 1272, 1280-81 (10th Cir. 1994) (holding

that termination by a selling company followed by hiring a

millisecond later by a purchasing company does not constitute

termination under the federal WARN Act and suggesting that this

would be the case even if the statute did not have a sales

exception); Int’l Oil, Local 7-517 v. Uno, 170 F.3d 779 (7th Cir.

1999). 

In Moore, however, the court did not consider a sale.

Rather, a business closed one location and made offers of

employment to its employees to work at different locations.

Moore, 992 F.2d at 28. Likewise, in Rifkin v. McDonnell Douglas

Corp., the Eighth Circuit applied the same test for employment

loss where a lay off was not permanent, and held that the

employees who were laid off were not terminated as understood in

the statute. 78 F.3d 1277, 1282 (8th Cir. 1996). Specifically, it

reasoned that the rehired employees did not suffer an employment

loss. Id. The court has not found any appellate cases that

considered a technical termination immediately followed by an

offer of employment to qualify as an employment loss under the

Act.

Here, plaintiff has not presented any evidence that all

employees of the hospital suffered an employment loss when they

were terminated by SRMC LLC and most were offered employment with

Prime. Because plaintiff also has failed to demonstrate that 33%

of employees were terminated, as defined by the statute, the

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court grants both motions for summary judgment on plaintiff’s

federal WARN claim.

B. Supplemental Jurisdiction

The court has entered judgment for defendants as to

plaintiff’s only federal claim. Although the court may retain

supplemental jurisdiction over plaintiff's state law claim, the

court declines to do so in this case. See 28 U.S.C. § 1367(c);

Arbaugh v. Y & H Corp., 546 U.S. 500 (2006).

C. Motions to Seal

Plaintiff and the MPT defendants filed four motions to seal

along with their summary judgment filings. The court tentatively

granted these motions, but has not yet decided whether the

documents at issue should be permanently sealed. There is a

strong presumption in favor of public access to documents filed

in connection with dispositive motions such as a motion for

summary judgment, and this presumption weighs against sealing

such documents. Kamakana v. City & County of Honolulu, 447 F.3d

1172, 1178 (9th Cir. 2006). In the context of a dispositive

motion, “the district court must base its decision [to seal

materials] on a compelling reason and articulate the factual

basis for its ruling, without relying on hypothesis or

conjecture.” Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d

1122, 1135 (9th Cir. 2003).

On May 18, 2010, the magistrate judge adopted a stipulation

regarding the use of private and confidential information

(“Protective Order”). The stipulation granted a party the ability

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to “designate as ‘Confidential’ all or portions of any documents,

material things, testimony, or other information that contains

‘Confidential Information.’” Protective Order ¶ 3. The order

defines “Confidential Information” as, 

documents or other information constituting trade

secrets under FRCP 26 (c) (1) (G), proprietary or other

confidential commercial information that belongs to a

Stipulating Party and which if disclosed could place

the Stipulating Party at a competitive disadvantage in

the marketplace or cause disclosure of information

protected by the right to privacy, including the

following specific categories of documents: (1)

documents that reveal confidential employee information

such as name, address, telephone number, or other

personal information; (2) documents that reveal

financial or other commercial terms of private

agreements not available to the public; (3) and

documents that reveal confidential financial or

commercial information regarding a Stipulating Party’s

business that is not available to the public or a

Stipulating Party’s competitors, and which if disclosed

could place a Stipulating Party at a competitive

disadvantage in the marketplace or cause disclosure of

information protected by the right to privacy.

Protective Order ¶ 4. 

With respect to its original motion, the MPT defendants seek

to seal three lines of their memorandum of points and authorities

in support of their motion, two lines of a declaration filed in

support of the motion, and MPT’s leases with SRMC LLC and Prime.

The court has reviewed this narrowly drawn sealing request, and

finds sealing to be appropriate because this information contains

commercially sensitive information regarding MPT’s leases.

In the papers the MPT defendants filed in reply to

plaintiff’s opposition, they seek to seal seventeen of their

responses to plaintiff’s separate statement of undisputed facts

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 The court notes that judgment shall be entered with the 4

issuance of this order. Even though the court will be issuing an

additional order on sealing, the deadline for parties’ to appeal

this decision will be triggered by the entrance of judgment, and

not this court’s final sealing order.

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and a paragraph of a declaration. These objections are also

narrowly drawn to prevent making public information about MPT’s

leases. Thus, these documents are also properly sealed. The court

instructs MPT below on how to file these documents.

Plaintiff, however, seeks to seal numerous documents and

sections of their opposition briefs. It states that it seeks to

seal these documents and sections of their briefs because the

information cited or discussed was marked as confidential by MPT.

Because the court has a duty to narrowly construe requests to

seal, the court orders MPT to review the documents and sections

of briefs that plaintiff has moved to seal. MPT will then notify

the court as to what information it wants the court to seal.

Along with this notification, MPT will explain why this

information should be sealed. Upon receipt of MPT’s notice, the

court will issue an order on plaintiff’s motions to seal.4

IV. CONCLUSION

For the foregoing reasons,

(1) Defendants MPT’s and Prime’s motions for summary

judgment, ECF Nos. 35, 44, are GRANTED as to

plaintiff’s federal WARN Act claim. 

(2) The court DECLINES to exercise supplemental

jurisdiction over plaintiff’s state law claim and,

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thus, dismisses, without prejudice, plaintiff’s

California WARN Act claim. 

(3) Within seven (7) days of the issuance of this order,

the MPT defendants shall re-file their tentatively

sealed documents in the following manner: Mail two

compact discs (“CDs”) to the Clerk of Court. The first

CD should be labeled “Sealed Filings,” and include

complete PDF versions of all sealed documents. The

second CD should be labeled “Redacted Filings,” and

include redacted PDF versions of all sealed documents.

The redacted PDF versions should not include documents

that are being sealed in their entirety, including the

leases. With each CD, the parties shall enclose a

letter listing all the documents on each CD. This list

shall include a short title for the document, the file

name for the document, as saved on the CD, and the date

upon which the document was initially filed. The CDs

and the letters shall also include the case number and

party name. Please direct any questions concerning the

filing of the sealed documents to Ana Rivas, Courtroom

Deputy, at (916) 930-4133.

(4) Also within seven (7) days of the issuance of this

order, the MPT defendants shall file a notice to the

court of the documents filed by plaintiff that the MPT

defendants want to be sealed. This notice shall

indicate the reasons for sealing. The court cautions

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MPT to request sealing as narrowly as possible.

(5) The Clerk of Court is instructed to enter judgment in

this case.

IT IS SO ORDERED. 

DATED: July 16, 2010.

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