_____________ No. 95-1584NI

_____________ Leona M. Adams; Richard P. * Boecher; William Borst; Denise * Campbell; David A. Christensen; * Lona Clingenpeel; Paul G. Dicks;* Mary F. Girard; Mary Godbersen; * Connie Godfrey; Walt R. Hansen; * Christopher Hast; Steven * Hayworth; William E. Ingalls; * Melvin J. Johnson; Mavis Juarez;* Steve Kroll; Lawrence Lacek; * Joann C. Lussier; Charmalee * McFarland; Darlene McKinley; * Joyce Montange; Donna Ozburn; * Jessie Roy; Mary A. Salisbury; * David R. Shute; Darlene * Stevenson; Denise Stroman; * Kathy Stroman; Pam Sullivan; * Appeal from the United States Joyce E. Swanson; Patricia * District Court for the Northern Thompson; Georgia R. Twinn; * District of Iowa. Peggy Sue Verzani; Teresa * Williams; Kellie Worden; Ken * Zentz; Rose Zimmerman, * * Plaintiffs-Appellants,* * v. * * Erwin Weller Company, also * known as Weller Plastics * Company; John F. Heinz, III; * Thomas Ford; * * Defendants, * * Westinghouse Credit Corporation,* *

Defendant-Appellee. *

_____________ Submitted: October 18, 1995 Filed: July 1, 1996

_____________ Before FAGG, HEANEY, and HANSEN, Circuit Judges.

_____________

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FAGG, Circuit Judge.

In this case, we must decide whether a lender's involvement with its borrower's business a ffairs makes the lender an employer under the Worker Adjustment and Retrai ning Notification Act, 29 U.S.C. §§ 2101-2109 (1994) (WARN).
Begi nning in 1988, Westinghouse Credit Corporation (WCC), a commercial lender, made a series of secured loans to the Erwin Welle r Company ( EWC). The loans were for the purchase of a plastic bottl e manufacturing plant in Sioux City, Iowa, for expansion of EWC's business operations elsewhere, and for working capital for EWC's daily operations. Almos t at once, EWC experienced serious financial difficulties, an d althoug hthe parties worked conscientiously to revive EWC's fortunes , nothing worked. In February 1991, WCC refused t o extend additional credit to its insolvent borr ower and decided to call the defaulted loans. After learning that WCC wou ld no longer provide EWC's financing, EWC closed the Sioux City manufacturing plant without giving its employees any advanc e notice.

Afterwards, a class of former EWC em ployees brought this WARN action against WCC. The emp loyees contend WCC was their employer when the plant closed, see id. § 2101(a)(1), and owes them backpay and benefits because it did not give them sixty days written notification before closing th e pla nt, id. § 2104(a)(1). The district court concluded WCC was not a n employer under WARN and granted WCC's motion for summary judgment. Th e employees appeal, and we affirm.
We review the district court's grant of summary judgment de nov o, and like the district court, we view the record in t he light most favorable to the nonmoving party. Christians v. Crystal Evan gelical Free Church (In re Young) , 82 F.3d 1407, 1413 (8th Cir. 1996). The existence of some factual disputes does not preclude

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summary judgment, however, unless the factual disputes could actuall y affect the outcome of the case. Id. ; Get Away Club, Inc. v. Coleman , 969 F.2 d 664, 666 (8th Cir. 1992). Having reviewed the record with thes e principles in mind, we conclude there are no disputed issues of material fact for trial.

Although § 2101(a)(1) does not tell us what it takes to be a n employer subject to WARN, we agree with the employees' contention tha t WARN 's obligations can apply to a secured lender. Chauffeurs, Sale s Drivers, Warehousemen& Helpers Union Local 572 v. Weslock Corp. , 66 F.3d 241, 244 (9th Cir. 19 95). Contrary to the employees' view, the mere fact the loan d ocuments give some control over the borrower to protect th e lender's security interest does not automatically make the lender a WARN employer. Id. A lender can legitimately restrict its borrower's financia l
an d business activities, monitor the borrower's business doings, an d par ticipate in the borrower's management, to protect the lender' s investmen t and the collateral securing its loan. See id. at 245; Kriv o Indus. Supply Co. v. Nat'l Distillers & Chem. Corp. , 483 F.2d 1098, 1105 (5thCir. 1973); Chicago Mill & Lumber Co. v. Boatmen's Bank , 234 F. 41, 46 (8th Cir. 1916). Understandably, lenders who loan large sums of money must be afforded substantial leeway in pursuing their bargained-for rights wit ha borrower in financial distress. Only when a lender becomes s o entangled with its borrower that it has assumed responsibility for th e overall management of the borrower's business will the degree of control necessary to support employer responsibility under WARN be achieved. Thus , we agree with the Ninth Circuit that a lender on ly becomes a WARN employer "[when ] the [lender] operates the [borrower's] asset[s] as a `busines s enterprise' in the `n ormal commercial sense.'" Weslock Corp. , 66 F.3d at 244 (quoting 54 Fed. Reg. 16,045 (1989)). In this case, we need not decid e how much operational decisionmaking it takes for a lender to be treated as a WARN employer becau se the record does not show the relationship between EWC and WCC was anything more than a debtor-creditor relationship.

### -4- EWC's employees point to several facts they claim establish WC C participated in the operational management of the Sioux City plant. First , the employees contend WCC crossed the line between lender and employe r becaus e WCC dominated EWC's financial affairs by virtue of variou s restri ctions in the loan documents. Among other restrictions, th e employees mention WCC's extensive security interest in EWC's assets, the lockbo xarrangement for EWC's cash receivables, the revolving line o f working capital for EWC's daily operations, and the provisions enabling WC C to monitor EWC's asse ts, inventory, and expenditures, and banning changes in EWC's capital structure. Having reviewed the loan documents, w e conclude none of the restrictions imposed on EWC 's activities were unusual for a lend er loaning over eighteen million dollars. Although WCC ha d signifi cant leverage over EWC, the loan documents make clear that WC C neither had the right to manage EWC's business activities nor to tell EWC how to spend its working capital. Like the lend er in Weslock Corp. , WCC's use of legitimate financial controls to protect its security interest does not make WCC an employer under WARN. Weslock Corp. , 66 F.3d at 245.
Second, the employees contend WCC should be considered their em ployer because "WCC's influence affected the management of the corporation. " Faced with a precario us financial situation, EWC asked WCC for additional working capital and amore liberalized payment schedule on its loans. In
res ponse, WCC expressed concerns about the effectiveness of EWC' s management, and sugge sted that EWC hire a crisis-management consultant to help improve the comp any's financial performance. Acting on its own, EWC replaced its president with one of the consultants recommended by WCC

. Based on the consultant's evaluation of EWC's future prospects, WCC grante d EWC's request for additional working capital. Although the employee s contend this interplay shows WCC was actually incontrol of EWC's business operations, these act ions were nothing more than a major lender's attempt to work w ith a troubled borrower and nurse it back to financial health

. Contrary to the employees' view, WCC

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did not become a WARN employer because it proposed methods to improve EWC' s profitability, sugges ted new management, and stepped up its verifications to keep track of EWC's deteriorating financial condition. Major lenders do these sort of things all the time. Indeed, lenders often mak e suggestions to troubled borrowers and, unlike this case, the suggestions are frequently coupled with financial threats.
Although WCC's position as EWC's financial life-line undoubtedl y gave it th e capacity to exert influence over EWC's decisions, this power i s inhere nt in any debtor-creditor relationship and its exercise does no t translate into decision-making control for the p urposes of WARN's employer rule. We thus reject the employees' suggestion that a major lender must timidlysit on the sidelines and watch its loan unravel and its security erode, or otherwise incur WARN responsibility. WCC's challenged conduct
was entirely "consistent with the type of control a secured credito r legitimately may exercise over a defaulting debtor to protect [its securit y interest]." Weslock Corp. , 66 F.3d at 245.
Finally, the employees contend WCC became their employer when i t decided to cut off EWC's supply of working capit al and call its loans, and thus effectively closed the Sioux City plant. A ccording to the employees, "WCC was f ully aware that its funding was necessary for [EWC's] dail y operat ions [and] without these funds EWC would not continue busines s operations nor meet payroll, and [EWC] would have to close." Even so, a len der's refusal to loan additional working capital to an insolvent an d delinq uent borrower who cannot repay over eighteen million dollars i n secured debt does not make the lender an employer for WARN purposes. See 29 U.S.C. § 2101(a)(1). The record clearly show s EWC made the decision to close the plant and terminate the employees' jobs. Further, WCC neve r assumed an employer-employee relationship by hiring, firing, paying, o r supervising any of EW C's employees. After EWC closed the plant, WCC took possession of its collateral and never reopened

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the plant for busines s. WCC lost about seven million dollars on its loan with EWC.

We conclu de WCC never operated EWC's Sioux City plant as a business enterprise in the normal commercial sense. WCC exercised the prerogatives of a secured lender a nd never became a WARN employer. We thus affirm the district court's judgment.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.