IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

_____________________

Nos. 92-3419

 92-3613

_____________________

CARPENTERS DISTRICT COUNCIL OF

NEW ORLEANS & VICINITY, ET AL.,

Plaintiffs-Appellees,

Cross-Appellants,

versus

DILLARD DEPT. STORES, INC., Etc.,

ET AL.,

Defendants-Appellants,

Cross-Appellees.

*****************************************************************

STEPHEN J. PLESCIA, Etc., ET AL.,

Plaintiffs-Appellees,

versus

DILLARD DEPT. STORES, INC., ET AL.,

Defendants-Appellants.

_________________________________________________________________

Appeals from the United States District Court for the

Eastern District of Louisiana

_________________________________________________________________

( February 22, 1994 )

Before POLITZ, Chief Judge, REYNALDO G. GARZA, and JOLLY, Circuit

Judges.

E. GRADY JOLLY, Circuit Judge:

For the first time, this court is called upon to address the

Worker Adjustment and Retraining Notification Act ("WARN Act"), 29

U.S.C. § 2101 et seq. (Supp. 1993). It requires some employers--

generally those who are curtailing or closing an operation--to
-2-

provide sixty days notice to those employees who will be laid off

or whose hours will be substantially reduced. In 1989, D.H. Holmes

Co., Ltd. merged with Dillard Department Stores, Inc., resulting in

the layoff of a large number of people--mostly former Holmes

employees--whose job functions had become redundant. These former

employees sued Dillard, alleging that in the course of the ongoing

merger efforts, Holmes and Dillard had failed to provide adequate

notice of the pending terminations. The district court generally

ruled for the former employees and awarded some damages to them.

Both Dillard and the former employees appeal, raising various

issues that in turn we will address. We begin with the relevant

facts.

I

In 1988, as a result of steadily declining profits and

revenues, Holmes, a long-established and time-honored retail

department store headquartered in New Orleans, Louisiana, hired

investment counselors to find a solution to its financial problems.

Through the investment counselor's efforts, Holmes and Dillard

entered into negotiations in the latter part of 1988 for the merger

of the two corporations. A merger agreement was ultimately reached

between representatives of the two parties. Under this agreement,

Holmes would merge with DDS Acquisitions Corporation ("DDS"), a

wholly-owned transient subsidiary of Dillard, with Holmes
 

1In corporate tax parlance, this is known as a "reverse

triangular merger." See 26 U.S.C. § 368(a)(2)(E) (Supp. 1993); see

also BORIS I. BITTKER & JAMES S. EUSTICE, FEDERAL INCOME TAXATION OF

CORPORATIONS AND SHAREHOLDERS, § 14.15(1) (5th ed. 1987). See infra

note 12. Although technically, Holmes merged with DDS, for ease of

reference we will refer to this merger as the merger between Holmes

and Dillard unless specifically referred to otherwise. 

-3-

continuing as the surviving wholly-owned subsidiary of Dillard.1

On March 3 and 6, 1988, the agreement was approved by the

respective boards of directors of both Dillard and Holmes. Still,

it was not yet a done deal. One of the conditions of the agreement

was that no less than eighty percent of Holmes's stockholders must

approve the merger. Before any vote by the stockholders, however,

Dillard and Holmes were required to furnish Holmes's stockholders

with registration statements outlining the parties' respective

financial conditions. Further yet, the Securities and Exchange

Commission ("SEC") required that such registration statements must

be pre-approved by the SEC before issuance. Pursuant to SEC

regulation, Dillard and Holmes filed the proposed registration

statement with the SEC on or about March 7, 1989. Efforts were

made to have the SEC expedite its decision concerning the

registration statement; however, neither Holmes nor Dillard could

anticipate precisely when the SEC would approve the registration

statement. Approximately one month after the statement was filed,

the SEC approved the registration statement. Having received SEC

approval, Holmes then scheduled a stockholders' meeting for May 9,

1989. 
 

2In respect to events that occurred after the merger, a

reference to Dillard should be interpreted as including Holmes,

unless Holmes is specifically discussed separately.

-4-

On April 19, 1989, at the direction of Dillard's personnel,

Holmes notified its employees assigned to the corporate planning

division and the warehouse facilities that they would be terminated

as of May 9 if Holmes's stockholders approved the proposed merger

with Dillard. Certain "transitional" employees at the warehouse

facilities and the corporate offices received notification between

April 21 and 28, informing them that they would be laid off

sometime between May 9 and July 1. Finally, on May 12, employees

in the Canal Street retail store were notified that they would be

laid off between June 10 and July 8.

Because it was clear that the WARN Act sixty-day notice

requirement would not be met with respect to certain employees,

Dillard2 made efforts to comply with WARN's damages provision.

First, Dillard determined which employees were entitled to payments

under the WARN Act, and as to those employees, the amount owed.

Under Dillard's interpretation of the statute, part-time employees

were not entitled to the notice, and, as such, they were not

entitled to any damages in lieu of notice. Dillard further

determined that the sixty-day penalty period in 29 U.S.C. §

2104(a)(1)(A) referred to the number of work days within that

period rather than the number of actual calendar days. This

interpretation meant that each full-time employee who had not
 

3The former employees constitute a class that we will refer to

as "the former employees" or simply "the employees." That class is

composed of "all former employees of either D.H. Holmes Co., Ltd.

(Holmes) and or Dillard Department Stores, Inc. (Dillard) who were

involuntarily terminated from employment between May 8, 1989, and

August 9, 1989, as a result of the acquisition of Holmes by Dillard

and who did not receive sixty (60) days written notice of said

termination either personally or through their representative."

Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 778 F.Supp.

297, 300 (E.D. La. 1991).

-5-

received the full sixty-day notice would be entitled to payment for

those days the employee would have worked had the full sixty-day

notice been given. Relying on the provisions of § 2104(a)(2) of

the Act, Dillard also concluded that it could deduct from this

amount any severance pay or vacation pay that Dillard owed the

employee. 

After the two companies merged, and as a direct result of the

merger, numerous employees were involuntarily terminated between

May 8 and August 9, 1989. These former employees3 sued a number of

defendants, arguing that Dillard violated the WARN Act when it

failed to provide the "affected employees" the required sixty-day

notice of termination. In addition, the employees argued that

Dillard failed to pay them the proper amount of damages in lieu of

notice.

II

Initially, the employees sued Dillard and Holmes. Later,

however, the employees amended their complaint, adding as

defendants individual officers and directors of both Holmes and

Dillard, as well as the Federal Insurance Company ("Federal
 

4The WARN Act defines "affected employees" as "employees who

may reasonably be expected to experience an employment loss as a

consequence of a proposed plant closing or mass layoff by their

employers." 29 U.S.C. § 2101(a)(5) (Supp. 1993). 

-6-

Insurance"), Holmes's and Dillard's fiduciary liability insurer.

As this lawsuit progressed, a number of motions were filed and

ruled upon, and some of these rulings form the basis of this appeal

and cross-appeal. First, in February 1991, the employees moved for

partial summary judgment on the issue of liability under the WARN

Act. In turn, Dillard moved for partial summary judgment, seeking

to exclude from the plaintiff class certain groups of individuals

that Dillard argued were not "affected employees"4 under the

statute. Dillard further sought to dismiss the employees' claim

against the individual officers and directors of both Holmes and

Dillard. Ultimately, the court granted the employees' motion for

partial summary judgment, stating that Dillard violated the WARN

Act. As to Dillard's motion, the district court granted partial

summary judgment, dismissing the claims against the individual

officers and directors. The court, however, did not exclude any of

the contested members from the plaintiff class. In addition,

because the officers and directors had been essentially dismissed

from the suit, the court dismissed Federal Insurance from the suit

because its only liability was tied to the possible liability of

the officers and directors who had also been dismissed. See

Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 778 F.Supp.

297 (E.D. La. 1991). 
-7-

In addition to its motion for summary judgment, Dillard had

also filed a cross-claim against Federal Insurance and a thirdparty complaint against Liberty Mutual Insurance Company ("Liberty

Mutual"). Dillard alleged that both insurance companies owed

Dillard coverage, defense, and indemnity pursuant to a fiduciary

liability insurance policy issued by Federal Insurance, and

commercial general liability policies issued by Liberty Mutual. In

response to Dillard's cross-claim, Federal Insurance moved for

summary judgment, arguing that no coverage existed under its

policies based on the allegations contained within the plaintiffs'

complaint. Liberty Mutual also moved for summary judgment,

asserting lack of coverage. The court granted summary judgment for

both insurance companies. Id.

In September 1991, Dillard filed a second motion for summary

judgment, this time alleging that the WARN Act is unconstitutional.

The district court, in a separate opinion, denied Dillard's motion,

holding that the WARN Act did not suffer any constitutional

infirmities. See Carpenters Dist. Council v. Dillard Dep't Stores,

Inc., 778 F.Supp. 318 (E.D. La. 1991). 

In November 1991, the damages issue was tried to the district

court, and the court awarded damages to employees. Following the

trial, the employees sought prejudgment interest on the damage

award, which the district court granted. In February 1992, the

employees, in a separate civil action, further sought costs and

attorneys' fees. Following an evidentiary hearing, the court
 

5Dillard makes several arguments in support of its contention

that the WARN Act is unconstitutional. Their arguments are

meritless, and we affirm the district court's order denying

Dillard's motion for summary judgment on that basis. See

Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 778 F.Supp.

318 (E.D. La. 1991).

 

6Dillard argues that the district court erred in granting

summary judgment in favor of Federal Insurance and Liberty Mutual

because the plain language of the policies provide coverage, or

alternatively, if the language of the policies was ambiguous, the

policies should be construed in favor of coverage. Both policies,

however, clearly do not provide coverage for liability imposed by

the WARN Act. With respect to Federal Insurance, the policy in

question provided coverage only for specifically defined "wrongful

acts," of which violation of the WARN Act was not included. As to

Liberty Mutual, their policy provided coverage for liability

(continued...)

-8-

ordered Dillard to pay attorneys' fees and costs to the employees

for both the original action as well as for the subsequent action

seeking the attorneys' fees and costs. See Carpenters Dist.

Council v. Dillard Dep't Stores, Inc., 790 F.Supp. 663 (E.D. La.

1992). 

III

Dillard raises four issues on appeal. First, Dillard

challenges the district court's determination that the WARN Act is

constitutional.5 Next, Dillard argues that the district court

erred in holding that Dillard violated the WARN Act. However, even

if Dillard did in fact violate the Act, Dillard contends that the

district court improperly calculated the amount of damages Dillard

owed its former employees. Finally, Dillard asserts that the

district court erroneously granted summary judgment in favor of

Federal Insurance and Liberty Mutual.6
 

6(...continued)

arising out of errors in the administration of an employee benefit

program, or in connection with providing improper advice concerning

such programs. Thus, we affirm the district court's grant of

summary judgment on this issue. 

-9-

In their cross-appeal, the former employees raise four issues

for our consideration. First, the employees contend that the

district court mistakenly determined that certain employees--the

Bienville employees--were not "affected employees" as defined by

the statute, and, as a result, those employees were erroneously

denied benefits under the Act. Next, the employees argue that the

district court erroneously concluded that the notices of

termination that did not designate a specific date of termination

constituted notice. Third, the employees contend that the district

court improperly calculated the amount of attorneys' fees Dillard

owed the employees. And, finally, the employees argue that the

district court erred in applying regulations retroactively to a

specific employee to deny her pay.

 IV

We review a grant of summary judgment de novo. FDIC v. Myers,

955 F.2d 348, 349 (5th Cir. 1992). Summary judgment is appropriate

"if the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law." FED.

R. CIV. P. 56(c). We examine the record independently to determine
 

7Dillard does not challenge the fact that it initially falls

within the general scope of the WARN Act. Dillard does not assert

that it is not an "employer" within the meaning of WARN. 29 U.S.C.

§ 2101(a)(1) (Supp. 1993). Likewise, Dillard concedes that the

layoffs and closings of the facilities at issue here fall within

the WARN Act definition of "plant closing" and "mass layoff." 29

U.S.C. §§ 2101(a)(2), (3) (Supp. 1993).

-10-

if the movant is entitled to judgment as a matter of law, drawing

any factual inferences in the light most favorable to the nonmovant. Degan v. Ford Motor Co., 869 F.2d 889, 892 (5th Cir.

1989). Questions of law are subject to de novo review, United

States v. Long, 996 F.2d 731, 732 (5th Cir. 1993), while findings

of fact will be disturbed only if we find that they are clearly

erroneous. FED. R. CIV. P. 52(a).

A. Did Dillard Violate the WARN Act?

Although Dillard and Holmes acknowledge that certain affected

employees did not receive the full sixty days notice of

termination,7 they argue that they were excused from the notice

requirements because they fell within one of the two statutory

exemptions. Under the facts of this case, Dillard and Holmes can

escape WARN Act liability only if either the "faltering company"

exception or the "unforeseen business circumstances" exception

applies. 

To fall within the "faltering company" exemption, an employer

must meet four requirements. The Act states that

an employer may order the shutdown of single site of

employment before the conclusion of the 60-day period if

as of the time that notice would have been required the

employer was actively seeking capital or business which,
 

8Dillard, a financially healthy organization, has never argued

that it was entitled to "faltering company" status.

-11-

if obtained, would have enabled the employer to avoid or

postpone the shutdown and the employer reasonably and in

good faith believed that the giving the notice required

would have precluded the employer from obtaining the

needed capital or business. 

29 U.S.C. § 2102(b)(1) (Supp. 1993). This exception applies only

when a layoff is caused by the employer's failure to obtain

sufficient capital. See 54 Fed. Reg. 16061 (April 20, 1989) ("The

need for notice will only be triggered if the employer fails to

obtain the business or financing it seeks."). In this case,

however, there is no causal connection between Holmes's8 search for

capital and the ultimate reduction in work force. Although it is

true that at the time notice should have been provided Holmes was

actively searching for a new line of credit, the actual cause of

the mass layoff was not a failure to obtain an adequate line of

credit; instead, the cause of the layoff was the merger between

Holmes and Dillard. Because there was no causal relationship

between Holmes's search for additional capital and the reduction in

its work force, the "faltering company" exception does not apply to

exempt it from liability for failing to give notice for the

ultimate layoff, which was in fact caused by the merger. 

Next, Dillard contends that its failure to provide the full

sixty days notice was excused under the "unforeseen business

circumstances" exemption. This exemption provides that "[a]n

employer may order a plant closing or mass layoff before the
 

9Examples provided by the regulations include "a principal

client's sudden and unexpected termination of a major contract with

the employer, a strike at a major supplier of the employer, and an

unanticipated and dramatic major economic downturn." 20 C.F.R. §

639.9(b)(2) (1988)(proposed regulations).

 

10The WARN Act was enacted on August 4, 1988, and it took

effect on February 4, 1989. The Department of Labor ("DOL")

promulgated proposed regulations in December 1988, and later issued

final regulations on April 20, 1989, which took effect on May 22.

See 54 Fed. Reg. 16042-01 (1989). In many respects, the proposed

regulations are identical to the final regulations. In those

cases, we will cite to the final regulations. However, in those

instances where the final regulations differ from the proposed

regulations, we will cite to those regulations in effect at the

time in question. See infra note 19.

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conclusion of the 60-day period if the closing or mass layoff is

caused by business circumstances that were not reasonably

foreseeable as of the time that notice would have been required."

29 U.S.C. § 2102(b)(2)(A) (Supp. 1993). According to the proposed

rules, an unforeseeable circumstance is "caused by some sudden and

unexpected action or condition outside the employer's control."9

20 C.F.R. § 639.9(b)(2) (1988)(proposed regulations).10 As with the

"faltering company" exception, this exception to the general rule

is to be narrowly construed. 20 C.F.R. § 639.9(a) (1989)(final

regulations). 

Dillard argues that there was some uncertainty as to when, or

even if, the SEC would approve the registration statement, and as

to whether Holmes's stockholders would approve the merger.

Therefore, it asserts, the resulting merger was an "unforeseen

business circumstance." We cannot agree. For several months prior

to March 9--the date notice should have been given for the May 9
 

11Even if Dillard and Holmes had fallen within the scope of

either the "faltering company" exemption or the "unforeseen

business circumstances" exemption, both failed to provide proper

notice under the DOL regulations. If an employer is providing less

than sixty days notice pursuant to one of the statutory exemptions,

the employer must "provide a brief statement of the reasons for

reducing the notice period. . . ." 20 C.F.R. § 639.9 (1989)(final

regulations). None of the notices provided to employees contained

a brief statement of the reasons for providing less than sixty days

notice. 

 

12Dillard also argues that the district court erred in

determining that Dillard and Holmes were jointly and severely

liable because the "merger" between Holmes and Dillard was not a

"sale" as contemplated by the Warn Act. Carpenters Dist. Council,

790 F.Supp. at 666-67; see also 29 U.S.C. § 2101(b)(1) (Supp.

1993). We disagree, and we affirm the district court's holding on

(continued...)

-13-

layoff--Dillard and Holmes had been intensely negotiating an

agreement that would allow the two companies to merge. On March 6,

three days before notice should have been given, a tentative

agreement was reached. Both companies then sought SEC approval,

and both companies actively promoted the merger. It is difficult

to see how two companies that were busy promoting their merger can

now argue that the resulting merger was unforeseeable. The fact

that there were some uncertainties in the merger process does not

make the resulting merger unforeseeable. We conclude that the

merger was in fact foreseeable. Consequently, we hold that neither

the merger itself nor any of the individual steps taken to effect

the merger constitute "unforeseen business circumstances."11

Because Dillard and Holmes are unable to satisfy the requirements

of either exception under the WARN Act, sixty days notice of

termination was required.12
 

12(...continued)

this issue except to the extent that the district court held that

the "merger" between Dillard and Holmes was not a "merger" under

Louisiana law. Carpenters Dist. Council, 790 F.Supp. at 666, n.7.

As the district court correctly noted, this "merger" consisted of

a transaction among three corporate entities--Holmes, Dillard, and

DDS Acquisition Corporation, a wholly owned subsidiary of Dillard.

After the respective stockholders of each corporation approved the

merger plan, DDS and Holmes merged, with Holmes continuing in

existence as the surviving wholly-owned subsidiary of Dillard. In

corporate tax parlance, this is known as a "reverse triangular

merger." See supra note 1.

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B. Work Days vs. Calendar Days

The next issue concerns whether the district court erred by

calculating damages on the basis of calendar days instead of work

days. Dillard contends that the district court improperly included

in the damage award payment for non-work days i.e., Saturdays,

Sundays, and holidays. The district court held that "the time

period for which penalty payments would be due are 60 individual

work days and not the number of work weeks contained within a 60

day period." Carpenters Dist. Council, 778 F.Supp. at 308. 

The absolute starting point for interpreting a statute is the

language of the statute itself. United States v. Sosa, 997 F.2d

1130, 1132 (5th Cir. 1993); In re Hammers, 988 F.2d 32, 34 (5th

Cir. 1993). If the language is clear and unambiguous, then the

court may end its inquiry. United States v. Sosa, 997 F.2d at

1132. If, however, a statute is susceptible to more than one

reasonable interpretation, then the reviewing court must look

beyond the language of the statute in an effort to ascertain the

intent of the legislative body. In re Hammers, 988 F.2d at 34. 
 

13Section 2104 provides in pertinent part:

(a) Civil actions against employers

(1) Any employer who orders a plant closing or mass

layoff in violation of [the WARN Act] shall be liable to

each aggrieved employee who suffers an employment loss as

a result of such closing or layoff for--

(A) back pay for each day of violation at a rate

of compensation not less than the higher of--

(i) the average regular rate received by such

employee during the last 3 years of the

employee's employment; or 

(ii) the final regular rate received by such

employee; * * *

Such liability shall be calculated for the period of the

violation, up to a maximum of 60 days, but in no event

for more than one-half of the number of days the employee

was employed by the employer.

(2) The amount for which an employer is liable under

paragraph (1) shall be reduced by--

(A) any wages paid by the employer to the employee

for the period of violation;

(B) any voluntary and unconditional payment by the

employer to the employee that is not required by

any legal obligation; * * *

(3) Any employer who violates [the WARN Act] with

respect to a unit of local government shall be subject to

a civil penalty of not more than $500 for each day of

such violation * * * 

(6) In any such suit, the court, in its discretion, may

allow the prevailing party a reasonable attorney's fee as

part of the costs. * * * 

29 U.S.C. § 2104 (Supp. 1993).

-15-

Section 210413 spells out in some detail the amount of damages

an employer must pay if it does not provide its employees with
-16-

adequate notice of a mass layoff or a plant closing. If an

employer violates the notice provision, the employer must pay the

aggrieved employee "back pay for each day of the violation

[period]." 29 U.S.C. § 2104(a)(1)(A) (Supp. 1993). On one hand,

the term "back pay" connotes a remedy that would require the

payment of a sum such that the employees would be put in the same

position they would have been had the violation never occurred. On

the other hand, "each day of the violation" appears to require

payment of "back pay" damages for each calendar day within the

violation period, which would put the employees in a significantly

better position than they would have enjoyed had the employer

provided the full sixty-day notice. See United Steelworkers of

America v. North Star Steel Co., 5 F.3d 39 (3d Cir. 1993), petition

for cert. filed, 62 U.S.L.W. 3429 (U.S. Dec. 13, 1993)(No.

93-936)(holding that the statute requires payment of damages based

upon the number of calendar days within the violation period);

Jones v. Kayser-Roth Hosiery, Inc., 748 F.Supp. 1292, 1296 (E.D.

Tenn. 1990)(holding that the statute requires payment of damages

based upon the number of work days within the violation period).

Because the statute is susceptible to more than one reasonable

interpretation, we will examine all available materials to

determine the intent of Congress. Our starting point, however, is

the statute.

Interpreting WARN's damage provision as requiring payment for

work days only is well supported by the language of the section.
 

14The Third Circuit, however, provides two arguments for

interpreting the term "back pay" as requiring payment for each

calendar day within the violation period, and in doing so, they

have, in our view, essentially written the term out of the statute.

See United Steelworkers of America v. North Star Steel Co., 5 F.3d

at 41-43 (holding that "WARN uses the term `back pay' simply as a

label to describe the daily rate of damages payable"). In

Steelworkers, North Star Steel argued that the term "back pay"

should connote a "lost earnings" concept. Under the "lost

earnings" concept, an employee would receive payment for time he or

she would have worked during the sixty-day notice period, but was

not allowed to. The Third Circuit rejected this argument because

of the effect the "lost earnings" concept would have on other

sections of the statute. They reasoned that the lost earnings

concept would render superfluous § 2104(a)(2)--the damage provision

that allows an employer to reduce damages by wages paid for work

performed during the violation period. See supra note 13.

(continued...)

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First, the term "back pay" commonly means pay, i.e., wages,

benefits, etc., that an employee would have earned, or to which she

would have otherwise been entitled, if the event that affected such

job related compensation had not occurred. Indeed, the Supreme

Court has said that "back pay" requires "payment . . . of a sum

equal to what [the employees] normally would have earned" had the

violation never occurred. Phelps Dodge Corp. v. NLRB, 313 U.S.

177, 197, 61 S.Ct. 845, 854, 85 L.Ed. 1271 (1941). Further, the

Supreme Court has explained that "back pay" suggests a remedy such

that the damaged employee is restored "as nearly as possible, to

that which would have [been] obtained but for the [violation]."

Id. at 194. If aggrieved employees are paid only for days they

ordinarily would have worked during the sixty-day notice period,

then those employees are placed in the position they would have

occupied had the violation never occurred.14 But see United
 

14(...continued)

According to the Third Circuit, adopting the "lost earnings"

concept would render § 2104(a)(2) superfluous because "lost

earnings" reflect a net earnings figure; in other words, the "lost

earnings" calculation would by definition subtract wages an

employer had already paid the employee for work performed during

the violation period, and as such, there would be no need for §

2104(a)(2). This argument, however, is based upon a flawed reading

of the statute that disregards the statutory distinctions between

termination of an employee and reduction of an employee's work

hours. As the Conference Report clearly states, the violation

period is composed of those days after the employee has been

terminated or after the employee's hours have been substantially

reduced without adequate notice. H.R. CONF. REP. No. 100-576, 100th

Cong., 2nd Sess. 1052 (1988), reprinted in 1988 U.S.C.C.A.N. 2078,

2085. Section 2104(a)(2) allows an employer to deduct wages earned

for work performed during the violation period. This section is

effective only in those instances where the "employment loss" is a

substantial reduction in hours, as opposed to complete termination.

See 29 U.S.C. § 2101(a)(6)(C) (Supp. 1993). Where an employee's

hours are reduced without proper notice, the employee will continue

to work during the violation period. Where, as here, the employee

is terminated, § 2104(a)(2) is inapplicable because by definition

an employee who has been terminated cannot earn any wages during

the violation period. The Third Circuit mistakenly concluded that

employees who have been terminated can earn wages during the

violation period. They further concluded that § 2104(a)(2) allows

an employer to deduct wages earned before the violation period--

something that § 2104(a)(2) expressly disallows. Thus, the Third

Circuit's argument against using the lost earnings concept for

"back pay" fails to withstand scrutiny.

The Third Circuit further reasoned that there would be an

additional "conflict between Subsections 2104(a)(1) and

2104(a)(2)(A)" if "back pay" were interpreted as meaning "lost

earnings". United Steelworkers, 5 F.3d at 43. Under WARN, an

employer is entitled to reduce its liability to aggrieved employees

only by those payments within the categories set forth in §

2104(a)(2) that an employer paid to its employees. According to

the Third Circuit, the concept of lost earnings, which is remedial,

is inconsistent with the statutory scheme; a true lost earnings

scheme would allow the employer to reduce its liability by any

earnings that the employees received during the period of

violation, even if those earnings were received from a subsequent

employer. Id. The WARN Act, however, does not include a provision

that would allow an employer to deduct wages earned by an employee

from other sources. Consequently, the Third Circuit concluded,

(continued...)

-18-
 

14(...continued)

"back pay" could not have been intended to connote a lost earnings

concept. Id. We find this argument unpersuasive. Although we

agree that the lost earnings concept creates a remedy that is

generally remedial in nature, we are untroubled by the fact that

the statutory scheme fails to provide a remedy that is something

other than a pure "make whole" remedy. There are plausible reasons

why Congress could choose not to include a provision that would

make the WARN compensation provisions purely remedial, e.g., the

desire to avoid placing a burden on a terminated employee to

mitigate damages by taking any job offered, the desire to give a

terminated employee a window of time to readjust without

immediately having to search for a job, the desire for simplicity

in the statutory scheme, etc. Without express language or

legislative history directing us to a reason or other motivation

behind this decision, we will not speculate as to the hidden

significance, if any, behind the lack of such a provision.

-19-

Paperworkers Int'l Union v. Specialty Paperboard, Inc., 999 F.2d

51, 55 (2d Cir. 1993)(stating in dicta that a WARN Act claim is not

a true claim for back pay because it does not compensate for past

services, but nevertheless stating damages "are measured as two

months pay and benefits"). 

Second, the legislative history makes it clear that Congress

intended the "back pay" language in WARN to connote the traditional

back pay remedy as discussed in Phelps Dodge Corp. v. NLRB, 313

U.S. 177, 197, 61 S.Ct. 845, 854, 85 L.Ed. 1271 (1941)(damages "of

a sum equal to what [the employees] normally would have earned" had

the violation never occurred). The Senate Report states that 

[f]or violations of the notice provisions, damages are to

be measured by the wages . . . the employee would have

received had the plant remained open or the layoff had

been deferred until the conclusion of the notice period,

less any wages or fringe benefits received from the

violating employer during that period. This is in effect

a liquidated damages provisions [sic], designed to

penalize the wrongdoing employer, deter future
-20-

violations, and facilitate simplified damages

proceedings. 

S. REP. NO. 62, 100th Cong., 1st Sess. 24 (1987)(emphasis added).

Damages calculated by measuring the wages the employee would have

received had the employee continued working requires a calculation

using the number of work days in the violation period rather than

the number of calendar days. To use calendar days would provide an

employee with damages in excess of what he or she would have

received had the plant remained open, or had the layoff been

deferred until the conclusion of the notice period.

Finally, unlike the "calendar-day" approach advocated in

United Steelworkers of America v. North Star Steel Co., 5 F.3d 39,

43 (3d Cir. 1993), petition for cert. filed, 62 U.S.L.W. 3429 (U.S.

Dec. 13, 1993)(No. 93-936), the "work-day" interpretation of WARN's

damages provision does not lead to anomalous results. A wellaccepted canon of statutory construction requires the reviewing

court to avoid any interpretation that would lead to absurd or

unreasonable outcomes. Birdwell v. Skeen, 983 F.2d 1332, 1337 (5th

Cir. 1993). In United Steelworkers, defendant North Star Steel Co.

provided the court with a hypothetical situation which, they

argued, demonstrated the inequities inherent in the "calendar-day"

approach. United Steelworkers of America v. North Star Steel Co.,

5 F.3d at 43. The Third Circuit, however, dismissed North Star's
 

15The Third Circuit dismissed North Star Steel's hypothetical

situation because it was unwilling to discuss the method of

calculating daily damages under §§ 2104(a)(1)(A)(i) and (ii).

United Steelworkers of America v. North Star Steel Co., 5 F.3d at

43. We find it unnecessary to discuss the method of calculating

daily damage rates under those provisions before discussing the

hypothetical situation presented by North Star Steel; indeed, the

precise method of calculation raises many questions. It is clear,

however, that those provisions require the calculation of damages

based on the daily amount an employee earns, and regardless on how

the amount of daily damages is reached, North Star Steel's

hypothetical situation illustrates the anomalous results that

emanate from the calendar day approach.

-21-

argument,15 but we find North Star's hypothetical to be a good

example of why the "calendar-day" approach cannot be the approach

Congress intended. In this hypothetical situation, an employer

violates the WARN Act by terminating employees without providing

any advance notice. Thus, the violation period contains sixty

days. Employee "A" is a full-time employee who works a regular

eight-hour shift each weekday. However, employee "B" is a parttime employee who works just one ten-hour shift each Saturday.

Under the Third Circuit's calendar-day approach, employee "A" would

receive 480 hours pay in lieu of notice (eight hours per day times

sixty days), while part-time employee "B" would receive 600 hours

pay (ten hours per day times sixty days). As North Star Steel

argued, it would be anomalous for the one-day-per-week part-time

employee to receive 120 hours pay over and above that paid to the

five-days-per-week full-time employee. Under this calendar-day

system, not only is the employer severely penalized for choosing to

pay damages in lieu of notice, but the full-time employee is
 

16The number of examples demonstrating the inequitable effects

of the "calendar-day" approach are seemingly never ending. For

example, a similarly inequitable result is achieved if one fulltime hourly-wage employee works eight hours per day, five days per

week, while another full-time hourly-wage employee works ten hours

per day but only four days per week. Under the calendar day

approach, the first employee would be entitled to 480 hours worth

of pay over a sixty-day violation period while the second employee

would be entitled to 600 hours of pay, notwithstanding that each

was paid the same wages, and worked the same number of hours per

week.

-22-

treated inequitably, and the part-time employee gets a windfall.16

Under the "work-day" approach, however, such bizarre results do not

occur. Employee "A" is paid for the number of work days Employee

"A" would have worked within the sixty-day period, which would work

out approximately to eight hours per day times five days per week

times eight weeks. Employee "B", on the other hand, would receive

payment in lieu of notice that would reflect the employee's parttime status, i.e., approximately ten hours per week times eight

weeks. This is a plain-sense result in a day and time when it is

common to find employees with work schedules that vary from the

traditional eight-hour day, forty-hour work week. It is for the

foregoing reasons that we now hold that damages in lieu of the WARN

Act notice are to be calculated using on the number of work days

within the violation period.
 

17The term "aggrieved employee" means "an employee who has

worked for the employer ordering the plant closing or mass layoff

and who, as a result of the failure by the employer to comply with

[the WARN Act] did not receive timely notice either directly or

through his or her representative as requires by [the Act]." 29

U.S.C. § 2104(a)(7) (Supp. 1993). 

 

18Between April 21 and 28, 1989, Dillard informed certain

affected employees that they would be laid off between May 9 and

July 1. Notices were also issued on May 12 to a third group of

employees informing the employees that they would be terminated

between June 10 and July 8. 

-23-

C. Which Employees Are Entitled to Damages

Next, Dillard contends that the district court erred in

determining which employees were "aggrieved employees"17 because the

court included certain employees who actually received sixty days

notice of termination prior to their actual termination. To notify

its employees of their termination dates, Dillard sent out three

sets of notices. Because Dillard was unable to predict with

absolute precision the number of employees needed during the

transition period, the last two sets of notices provided the

employees with a range of dates in which the termination would

likely occur.18 Although Dillard anticipated that the employees

would be terminated within the estimated range of dates, in

actuality, some of the employees continued working past the

estimated termination dates such that they actually received the

entire sixty days notice prior to termination. So, even though the

original notice dates provided less than sixty-days notice, those

employees who continued working had the benefit of full notice.

The district court, however, determined that 
-24-

in those instances where an employee was advised that he

would be terminated between two set dates, and the

earliest set date was less than 60 days from the date

notice was received, the employer has failed to comply

with the Act . . . even if . . . the employee was

actually discharged more than 60 days from receiving

notice. Notice that sets the earliest date an employee

could be discharged, at less than 60 days from receipt of

notice, by its very terms, fails to meet the requirements

of the Act. 

Carpenters Dist. Council, 778 F.Supp. at 312. The effect of the

district court's ruling was that Dillard was required to pay

damages to some employees who actually were afforded sixty days of

notice as required by the WARN Act.

Dillard argues that the district court's interpretation is

inconsistent with both the language and the purpose of the Act, and

we agree. The WARN Act only requires that employers provide sixty

days notice of any plant closing or mass layoff. 29 U.S.C. §

2102(a) (Supp. 1993); 20 C.F.R. § 639.1(a) (1989)(final

regulations). As noted above, if an employee receives less than

sixty days notice, then the employee is entitled to back pay for

each day of the violation period. The violation period is

comprised only of those "days after the shutdown or layoff in

violation of [the WARN Act] and extends for the number of days that

notice was required but not given." H.R. CONF. REP. NO. 100-576,

100th Cong., 2nd Sess. 1052 (1988), reprinted in 1988 U.S.C.C.A.N.

2078, 2085. Thus, if an employee was provided with a range of

possible termination dates, some before the sixty-day period ended

and some beyond the sixtieth day, and the employee was terminated
 

19The employees argue that the second and third sets of

notices, which provided a range of estimated termination dates,

should be treated as no notice, rather than defective notice. They

argue that under the final regulations, the range of estimated

termination dates must be fourteen days or less, and because the

range provided by Dillard greatly exceeded fourteen days, the

notice provided amounted to no notice. See 20 C.F.R. § 639.7(b)

(1989)(final regulations). We disagree. First, as the district

court correctly noted, neither the regulations nor the Act itself

addresses how the courts are to treat notices that are determined

to be defective or inadequate. Carpenters Dist. Council, 778

F.Supp. at 312, n.16. As such, neither the Act nor the regulations

suggest that defective notice is automatically to be treated as

though no notice had been provided at all. Moreover, we are not

persuaded that the regulations require such. Although the final

regulations, which became effective on May 22, 1989, require that

a range of estimated termination dates cannot exceed fourteen days,

the interim regulations did not address the matter. See 20 C.F.R.

§ 639.7 (1988)(proposed regulations). Thus, at the time Dillard

provided notice to its employees, the proposed regulations were in

effect, although the layoffs occurred after May 22, after the final

(continued...)

-25-

beyond that sixty-day period, such that he actually worked

throughout the entire notice period, then there is no violation

period. Because there is no violation period, "back pay for each

day of violation" would amount to zero damages. See 29 U.S.C. §

2104(a)(1)(A) (Supp. 1993). However, if that employee was actually

terminated within the sixty-day notice period, such that the

employee actually received less than the full sixty days notice,

then the violation period would range from the actual date of

termination until the end of the sixty-day notice period. In such

a case, the employee would then be entitled to damages for "each

day of violation." We hold, therefore, that those employees who

actually received sixty days notice before their termination are

not entitled to "back pay" damages.19 Because we reverse the
 

19(...continued)

regulations became effective. The employees argue, however, that

the date of the layoffs, rather than the date of the notices, ought

to determine which regulations applied to Dillard's notices. They

rely upon a district court case, Finnan v. L.F. Rothschild & Co.,

726 F.Supp. 460, 463 (S.D.N.Y. 1989), in which the court was faced

with a question far different from the question posed here. In

Finnan, the employer terminated employees within the sixty-day

period after the WARN Act was first enacted. Thus, the court was

faced with the question of whether a layoff or plant closing that

occurs within the first sixty days of the enactment of WARN was

subject to the Act. In determining whether the Act applied at all,

the court noted that the "language of the statute focuses on the

closing or layoff as the affected event." Id. at 463. In the case

at bar, we are faced with the question of when the proposed

regulations versus the final regulations apply. The Department of

Labor's regulations are designed to help employers determine when

notice is required, what that notice should contain, and what

constitutes a violation of the Act. Because the WARN Act focuses

upon employer notification of employees concerning impending mass

layoffs and plant closings, we find that the regulations in effect

at the time the notices were provided controls.

-26-

district court's holding with respect to the number of compensable

days within the violation period and the number of employees who

are entitled to damages, we must remand this case for a

determination of damages consistent with this opinion.

D. Good Faith Reduction of Damages

Dillard argues that the district court abused its discretion

by not reducing its liability because Dillard acted in good faith

and reasonably believed that it had complied with the Act. Any

assessment of an employer's good faith or grounds for its belief in

the legal propriety of his conduct is necessarily a finding of

fact, to be disturbed on appeal only if clearly erroneous. Laffey

v. Northwest Airlines, Inc., 567 F.2d 429, 464 (D.C. Cir. 1976),
-27-

cert. denied, 434 U.S. 1086, 98 S.Ct. 1281. 55 L.Ed.2d 792 (1978).

The WARN Act states that 

[i]f an employer which has violated this chapter proves

to the satisfaction of the court that the act or omission

that violated [the WARN Act] was in good faith and that

the employer had reasonable grounds for believing that

the act or omission was not a violation of this chapter

the court may, in its discretion, reduce the amount of

the liability or penalty provided for [in the Act].

29 U.S.C. § 2104(a)(4) (Supp. 1993). 

In this case, after the damages issues were tried to the

court, the district court held that no good faith reduction of

damages was warranted. First, the court found that Dillard did not

subjectively believe that it complied with the notice requirements

of the Act. The court noted that there was evidence that at the

time the WARN Act requirements were discussed with Dillard's legal

advisors, Dillard knew that it was well within the sixty-day notice

period based on the projected date of the layoffs, and Dillard

conceded that it was not relying on the two exceptions to establish

its qualification for a reduction in damages based on its good

faith. Moreover, throughout the process of calculating the WARN

Act damages, when faced with any arguable point of law, Dillard

consistently resolved any questionable issue in its favor. Dillard

concluded, for example, that it could deduct from damages any

vacation pay it already owed its employees, a conclusion that

Dillard's own legal advisors characterized as "aggressive" or "on

tenuous grounds." The district court concluded that at some point,

Dillard's conclusions concerning the calculation of damages become
-28-

objectively unreasonable, and as such, Dillard was not entitled to

a "good faith" reduction in damages. Although we are mindful that

Dillard was caught in a difficult position with respect to the

notification requirements, and although we recognize that Dillard

made significant WARN payments to a significant number of

employees, we cannot say that the district court's refusal to

reduce damages is clearly erroneous. 

E. Prejudgment Interest

Dillard argues that the district court's award of prejudgment

interest was improper. See Carpenters Dist. Council, 790 F.Supp.

at 673-75. We disagree. As the district court noted, federal law

governs the range of remedies, including the allowance and rate of

prejudgment interest, where a cause of action, as in this case,

arises out of federal statute. F.D. Rich Co. v. United States ex

rel. Industrial Lumber Co., 417 U.S. 116, 127, 94 S.Ct. 2157, 2164,

40 L.Ed.2d 703 (1974); Hansen v. Continental Ins. Co., 940 F.2d

971, 983 (5th Cir. 1991). Federal law provides, inter alia, that

interest "shall be allowed on any money judgment in a civil case

recovered in a district court." 28 U.S.C. § 1961(a) (Supp. 1993);

see also Guidry v. Booker Drilling Co., 901 F.2d 485, 488 (5th Cir.

1990)(holding that when a federal court's jurisdiction is

predicated upon a federal question, § 1961 does not preclude the

award of prejudgment interest). The determination of whether

prejudgment interest should be awarded requires a two-step

analysis: does the federal act creating the cause of action
-29-

preclude an award of prejudgment interest, and if not, does an

award of prejudgment interest further the congressional policies of

the federal act. Hansen v. Continental Ins. Co., 940 F.2d at 984

n.11; Guidry v. Booker Drilling Co., 901 F.2d at 488. If

prejudgment interest can be awarded under the two-prong test,

whether such interest is awarded in any given case is within the

court's discretion. Calderon v. Presidio Valley Farmers Ass'n, 863

F.2d 384, 392 (5th Cir. 1989) cert. denied, 493 U.S. 821, 110 S.Ct.

79, 107 L.Ed.2d 45 (1989); Oil, Chemical & Atomic Workers Int'l

Union v. American Cyanamid Co., 546 F.2d 1144, 1144 (5th Cir.

1977). 

In this case, the district court's award of prejudgment

interest was not an abuse of discretion. First, the WARN Act does

not preclude an award of prejudgment interest. Although § 2104(b)

states that "[t]he remedies provided for in this section shall be

the exclusive remedies for any violation of this chapter[,]" the

Act also states that "[t]he rights and remedies provided to

employees by this chapter are in addition to and not in lieu of,

any other contractual or statutory rights and remedies of the

employees, and are not intended to alter or affect such rights and

remedies. . . ." 29 U.S.C. §§ 2104(b), 2105 (Supp. 1993). Thus,

the "back pay" remedy provided under § 2104, while the only remedy

provided to employees under the WARN Act, does not preclude the

award of prejudgment interest under 28 U.S.C. § 1961. Moreover,

given our holding that back pay damages essentially are wages to
 

20Dillard's chief argument against the award of prejudgment

interest centers upon the district court's award of back-pay

damages based upon the number of calendar days within the violation

period. Dillard argues that the penalty effect of the calendar-day

approach makes the WARN Act an inappropriate vehicle for

prejudgment interest, since the purpose of such interest is to

compensate the victim, rather than punish the wrongdoer. See,

e.g., Illinois Cent. R.R. Co. v. Texas E. Transmission Corp., 551

F.2d 943, 944 (5th Cir. 1977). In the light of the fact that we

have reversed the district court's ruling concerning the use of

calendar days rather than working days to calculate the amount of

back pay owed each employee, thus, removing the penalty effect of

the back-pay damage award, Dillard's point is essentially moot.

-30-

which employees would have received had proper notice been

provided, an award of prejudgment interest furthers the

congressional purpose behind the WARN Act--providing compensation

to employees in lieu of proper notice such that the employees would

be put in the same position as if the full sixty days notice had

been provided. As the district court accurately detailed,

prejudgment interest will fully compensate employees for the lost

use of wages that should have been paid if an employer fails to

provide adequate notice. Prejudgment interest will also provide an

incentive for employers to settle meritorious claims of aggrieved

employees quickly, fairly, and without unnecessary delay. See

Carpenters Dist. Council, 790 F.Supp. at 674. Therefore, we hold

that a trial court may, in its discretion, award prejudgment

interest to aggrieved employees for the WARN Act violations. We

further hold that the district court in this case did not abuse its

discretion in awarding prejudgment interest.20
 

21At the same location on Canal Street were two "sites" of

employment for the purposes of the WARN Act: the Canal retail

store and Holmes's corporate division. We are concerned here only

with Holmes's corporate division. 

-31-

F. The "Bienville" Employees

In its cross-appeal, the employees contend that the district

court erred in determining that certain employees who were

terminated on May 9 were not entitled to WARN notice. These

employees made up part of Holmes's corporate division, although

they were not based in the "regular" corporate office in the Canal

Street site.21 Instead, because of space considerations, they were

located some distance away from the Canal Street location in

offices known as the "Bienville site." The district court held

that the Canal Street corporate division and the Bienville site did

not comprise a "single site of employment" under the WARN Act.

Further, the district court held that "there were insufficient

numbers of employees assigned to [the Bienville site] to [bring the

Bienville site itself] within the Act." Carpenters Dist. Council,

790 F.Supp. at 667. As such, the district court held that those

Bienville site employees were not entitled to notice of

termination. The employees have appealed this decision, contending

that the two offices constituted a "single site of employment"

under the WARN Act.

As a preliminary matter, we must determine the standard of

review to be applied. Neither Dillard nor the employees endorse a

particular standard of review, and we have been unable to locate
-32-

any existing case law on this particular WARN Act question. Upon

reflection, we conclude that the question of whether multiple work

locations constitute a "single site of employment" under the WARN

Act is a mixed question of fact and law. Federal Rule of Civil

Procedure 52(a) prescribes the clearly erroneous standard for

findings of underlying fact. Whether multiple locations constitute

a "single site" under the WARN Act, however, is a legal conclusion

to be drawn from the underlying historical facts. The underlying

facts relevant to a determination of the "single site" issue in

this case are largely undisputed, and as such, we have no occasion

to apply the clearly erroneous standard. As a conclusion of law,

however, the issue of whether the two employment locations

constitute a "single site of employment" is reviewed de novo by

this court. Cf. Radio WHKW, Inc. v. Yarber, 838 F.2d 1439, 1442

(5th Cir. 1988). We now turn to the merits of the employees'

argument. 

Under the WARN Act, notice of mass layoffs or plant closings

is required if there is a sufficiently large "plant closing" or

"mass layoff" at a single site of employment. See 29 U.S.C. §§

2101(a)(2) and (3) (Supp. 1993). If the threshold requirements are

met, the employer is required to provide notice of termination to

all affected employees at that "single site of employment."

Although the statute itself does not define the term "single site

of employment," the regulations promulgated by the Department of

Labor provides some guidance. The proposed regulations stated that
-33-

(1) A single site of employment can refer to either

a single location or a group of contiguous locations.

Groups of structures which form a campus or industrial

park, or separate facilities across the street from one

another, may be considered a single site of employment.

(2) Separate buildings or areas which are not

directly connected or in immediate proximity may be

considered a single site of employment if they are in

reasonable geographic proximity, used for the same

purpose, and share the same staff and equipment. An

example is an employer who manages a number of warehouses

in an area but who regularly shifts or rotates the same

employees form one building to another.

(3) Non-contiguous sites in the same geographic

area which do not share the same staff or operational

purpose should not be considered a single site. For

example, assembly plants which are located on opposite

sides of town and which are managed by a single employer

may be considered separate sites if they employ different

workers. 

(4) The term "single site of employment" may also

apply to unusual organizational situations where the

above criteria do not reasonably apply. 

20 C.F.R. § 639.3(i) (1988)(proposed regulation). Dillard argued,

and the district court held, that Holmes's corporate division at

the Canal Street location and the employees at the Bienville site

were two separate and distinct sites of employment under WARN.

Specifically, the court noted that the two sites were several miles

apart, that the personnel assigned to the Bienville site--those

employees who performed construction facilities management, energy

management and store planning--performed functions different from

the functions provided by the workers in the Canal Street corporate

division. The court noted that although the Bienville site

employees' payroll checks were issued from the Canal Street
-34-

location, "this was an insufficient connection by itself to view

the Bienville location and the Canal Street store as one site."

Carpenters Dist. Council, 790 F. Supp. at 667. 

On appeal, the employees contend that the Bienville site and

the Canal Street corporate division were a "single site of

employment" because the job functions of the Bienville employees

were closely integrated with the job functions of the Canal Street

corporate division. A complete review of the underlying facts

leads us to agree with the employees' contention. The evidence

before the district court demonstrated that up until 1980 or 1981,

the Bienville site employees were housed along with all other

corporate employees at the Canal Street corporate division office.

As the corporate division grew, it could no longer be comfortably

housed in the Canal Street corporate division offices. In an

effort to relieve overcrowding in those offices, certain

divisions--including construction facilities management, energy

management, and store planning--were relocated to the Bienville

site. Once moved to the Bienville site, those employees continued

to perform precisely the same company-wide functions they provided

when housed in the Canal Street location. The Bienville site

employees remained integrated with the Canal Street corporate

division after the move. The Bienville site had no support staff,

and the Bienville employees continued to rely upon the support

staff at the corporate division office. In spite of the move to

the Bienville site, the employees nevertheless considered
 

22It appears that Dillard also considered the Bienville site

employees part of the Canal Street corporate division. Employees

at both sites were terminated on May 9, the layoff letters sent to

both sites specifically stated that the layoff was occurring as a

result of the discontinuance of the corporate functions at the

Canal Street store.

 

23It is unclear from the record whether the Bienville site

employees received no notice of termination, or whether they

received less than sixty days notice. On remand, the district

court will be required to determine what notice, if any, each

affected employee received, and to calculate damages accordingly.

-35-

themselves part of the corporate division, and Holmes continued to

consider them corporate employees for payroll purposes. It is not

irrelevant that the employees--precisely, like the Canal Street

employees--were made redundant and lost their jobs directly because

of the merger.

22 These factors lead us to conclude that the

Bienville site and the Canal Street corporate division were merely

one site of employment that was separated because of space

considerations. In our view, this situation may be classified as

"an unusual organizational situation" under the DOL regulations.

See 20 C.F.R. § 639.3(i)(4) (1988)(proposed regulations). These

employees were entitled to the WARN Act notice of termination, and,

consequently, Dillard is liable for any damages associated with

providing inadequate notice.23 

G. Retroactive Application of Regulations

Finally, the employees in their cross-appeal argue that the

district court erroneously applied final regulations retroactively

to deny a former Holmes employee back pay damages in lieu of

notice. The former Holmes employee, Mary S. Krajcer, was a retail
-36-

buyer for Holmes. As a buyer, she worked a regular forty-hour

week, and as a rule, she worked weekends only a few times a year

while on buying trips. She had no administrative duties, and she

earned $36,000 per year plus bonuses. On April 18, 1989, Dillard

offered Krajcer a position as a merchandising manager in one of its

retail outlets. That position would have placed her second in

command at that location, requiring her to hire and fire personnel,

open and close the store each day, and work some nights, every

Saturday, and some Sundays. Although the base salary was

comparable to her position with Holmes, Krajcer would not be

eligible for bonuses, and she would be required to work longer

hours. When Krajcer refused Dillard's offer, Dillard terminated

Krajcer on May 9 without providing any advance notice of

termination. 

Before the district court, the employees argued that Krajcer

should have been paid back pay damages in lieu of notice. The

district court, however, held that Krajcer was not entitled to such

damages because she refused Dillard's offer of employment as a

merchandising manager. Essentially, the district court held that

the position offered by Dillard did not amount to a "constructive

discharge," and as such, her refusal to accept the new position

amounted to a voluntary termination of employment, which does not

require WARN notice. Carpenters Dist. Council, 790 F.Supp. at 669-

70; see also 20 C.F.R. § 639.5(b)(2) (1989)(final regulations). In

arriving at this determination, the district court applied the
-37-

final regulations, which became effective on May 22, 1989, see 54

Fed. Reg. 16042-01 (1989), rather than the proposed regulations

that were in effect at the time Krajcer was terminated. The

proposed regulations required that the new job must be

"substantially equivalent in terms of pay and working conditions."

20 C.F.R. § 639.5(b)(2) (1988)(proposed regulations). On the other

hand, the final regulations merely required that "the offer of

reassignment to a different site of employment not be deemed a

`transfer' if the new job constitutes a `constructive discharge.'"

20 C.F.R. § 639.5(b)(2) (1989)(final regulations). Because

administrative rules should not be construed as having retroactive

effect unless their language requires that result, see, e.g.,

Sierra Medical Ctr. v. Sullivan, 902 F.2d 388, 392 (5th Cir. 1990),

we hold that the district court erred in applying the final

regulations. Therefore, without expressing any view as to the

merits, we remand this matter to the district court to determine

whether, under the interim rules, Krajcer is entitled to back-pay

damages.

V

For the foregoing reasons, we AFFIRM the district court's

ruling on the constitutionality of the WARN Act, the summary

judgment in favor of Federal Insurance and Liberty Mutual, the

finding that Dillard violated the WARN Act, the refusal to reduce

damages for good faith, and the award of prejudgment interest. We

REVERSE the district court's ruling that damages are to be
-38-

calculated using calendar days, the decision that the Bienville

site and the Canal Street corporate division were not a "single

site of employment," the finding that employees who were actually

provided sixty days notice are entitled to damages because notice

of termination contained a range of dates, and the retroactive

application of regulation to employee Mary Krajcer. As a result,

we REMAND this case to the district court with instructions to

calculate damages in a manner consistent with this opinion.

Because this opinion affects the amount of damages Dillard will be

required to pay the employees, the district court should also

reconsider the award of attorney's fees accordingly.

AFFIRMED in Part, REVERSED in Part, and REMANDED.