Source: https://law.justia.com/cases/federal/appellate-courts/F3/86/553/538914/
Timestamp: 2019-07-24 02:08:45
Document Index: 40963568

Matched Legal Cases: ['§ 2102', '§ 639', '§ 639', '§ 2101', '§ 639', '§ 2101', '§ 2101', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2101', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2104', '§ 2101', '§ 2104', '§ 2102']

Beatrice D. Saxion, et al., Plaintiffs-appellees, v. Titan-c-manufacturing, Inc., et al., Defendants-appellants, 86 F.3d 553 (6th Cir. 1996) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Sixth Circuit › 1996 › Beatrice D. Saxion, et al., Plaintiffs-appellees, v. Titan-c-manufacturing, Inc., et al., Defendants...
Beatrice D. Saxion, et al., Plaintiffs-appellees, v. Titan-c-manufacturing, Inc., et al., Defendants-appellants, 86 F.3d 553 (6th Cir. 1996)
U.S. Court of Appeals for the Sixth Circuit - 86 F.3d 553 (6th Cir. 1996)
Argued July 27, 1995. Decided June 7, 1996
On March 25, 1992, the district court issued a decision in favor of the plaintiffs on the issue of liability. The court held that Titan-C was liable under the WARN Act because it had employed over one hundred workers at the relevant point in time and had failed to make a reasonable offer of transfer. A subsequent motion for relief from judgment under Rule 60(b), Fed. R. Civ. P., was denied.
We disagree. A district court may bifurcate a trial "in furtherance of convenience or to avoid prejudice, or when separate trials will be conducive to expedition and economy." Rule 42(b), Fed. R. Civ. P. Only one of these criteria need be met to justify bifurcation. MCI Communications Corp. v. American Telephone & Telegraph Co., 708 F.2d 1081, 1177 (7th Cir.), cert. denied, 464 U.S. 891, 104 S. Ct. 234, 78 L. Ed. 2d 226 (1983). The language of Rule 42(b) places the decision to bifurcate within the discretion of the district court. Davis v. Freels, 583 F.2d 337, 343 (7th Cir. 1978). The rule clearly suggests that a court may bifurcate a trial on its own motion. A decision ordering bifurcation is dependent on the facts and circumstances of each case. Idzojtic v. Pennsylvania Rr. Co., 456 F.2d 1228 (3d Cir. 1972).
This includes decisions to bifurcate after trial is already under way. We have recognized that "separating the issues of liability and damages 'at the virtual close of plaintiff's proofs' " need not be an abuse of discretion. Helminski v. Ayerst Laboratories, 766 F.2d 208, 212 (6th Cir.), cert. denied, 474 U.S. 981, 106 S. Ct. 386, 88 L. Ed. 2d 339 (1985). See also Berry v. Deloney, 28 F.3d 604, 606 (7th Cir. 1994) (no abuse of discretion in denying a motion to bifurcate made after trial had begun, where limiting instruction would cure threat of undue prejudice).
Titan-C also disputes the factual findings on the basis of which the district court concluded that Titan-C was liable under the WARN Act. These findings are subject to review under a "clearly erroneous" standard. Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 105 S. Ct. 1504, 84 L. Ed. 2d 518 (1985).
Titan-C first argues that it was exempt from WARN Act liability because it employed fewer than one hundred people. "With some exceptions and conditions, WARN forbids an employer of 100 or more employees to 'order a plant closing ... until the end of a 60-day period after the employer serves written notice of such an order.' " North Star Steel Co. v. Thomas, --- U.S. ----, ----, 115 S. Ct. 1927, 1928, 132 L. Ed. 2d 27 (1995) (quoting 29 U.S.C. § 2102(a) (1)). The number of employees is to be measured as of "the date the first notice is required to be given" unless, as may happen with cyclical businesses, this number is "clearly unrepresentative of the ordinary or average employment level." 20 C.F.R. § 639.5(a) (2). In such a case a more representative number may be used, but the governing regulation cautions that " [a]lternative methods cannot be used to evade the purposes of WARN and should be used only in unusual circumstances."
Regulations subsequently promulgated by the Department of Labor support the district court's conclusion that workers on temporary layoff should be counted as employees. See 20 C.F.R. § 639.3(a) (1) (ii) and Jones v. Kayser-Roth Hosiery, Inc., 748 F. Supp. 1292, 1297 (E.D. Tenn. 1990). We cannot say that the court's conclusion on this point was incorrect as a matter of law, and we are not persuaded that the court's findings of fact on the head-count issue were clearly erroneous.
Titan-C further contends that the liability issue ought to have been decided in its favor because it offered to transfer its employees to the Titan-S facility. There is no employment loss under the Act when (1) a plant closing "is the result of the relocation or consolidation of part or all of the employer's business" and (2) before laying off its employees the employer "offers to transfer the employee to a different site of employment within a reasonable commuting distance with no more than a six-month break in employment." 29 U.S.C. § 2101(b) (2) (A).
Relocation or consolidation occurs when "some definable business, whether customer orders, product lines, or operations, is transferred to a different site of employment and that transfer results in a plant closing or mass layoff." 20 C.F.R. § 639.3(f) (4). Titan-C concedes that there was no "consolidation" here in a legal sense, but it argues that there was a "relocation" of its business.
The record, as we read it, does not support Titan-C's argument. Nowhere in the stipulations of fact, the exhibits, or the oral testimony was it shown that any of Titan-C's business was being relocated to Titan-S in North Canton. The letter on which the company relies in this connection simply states that the employees would be "performing a similar job" at North Canton. The defense called only two witnesses at the initial hearing, a secretary and a transportation specialist, neither of whom addressed the relocation-of-business issue. The district court took notice of, but dismissed as conclusory, an affidavit by Titan-S's president stating that " [a] decision was made to close Titan-C-Mfg., Inc. because of lack of work, a shutdown in production, and the opportunity of Titan-C-Mfg. to consolidate its operations with a separate corporation located in North Canton, Ohio." (The affidavit, submitted in support of a pretrial motion for summary judgment, was not received in evidence at trial.)
The statute, moreover, speaks in terms of a plant being closed as "the result" of a relocation of business. The statute does not provide an exemption where the plant is closed for other reasons. Evidence presented at the damages hearing, after the district court found Titan-C liable, indicated that the Medina plant was in fact closed because Titan-C lost a customer that had accounted for approximately 90 percent of its business.1 As a result of the closure, according to Titan-C, the remaining 10 percent of Titan-C's business was transferred elsewhere. But under the plain language of § 2101(b) (2), as we read it, the section can only apply where the closure is the result of the transfer, not the other way around.
The district court went on to determine that the written offer to let employees transfer to the Titan-S facility in North Canton was not valid. The court credited trial testimony indicating that Titan-C "immediately rescinded" the offer and told the employees that they were not guaranteed positions at North Canton, that they would have to apply at Titan-S like everyone else, and that they would not receive comparable pay, seniority, or benefits. Whether the district court was correct is an issue we need not reach, Titan-C not having met the first requirement of § 2101(b) (2).
With respect to damages, the WARN Act provides that an employer which orders a plant closing without the required notice "shall be liable to each aggrieved employee who suffers an employment loss ... for ... back pay for each day of violation at a rate of compensation not less than the higher of [inter al.] ... the final regular rate received by such employee...." 29 U.S.C. § 2104(a) (1) (A). The statute further provides that " [s]uch 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 the number of days the employee was employed by the employer." 29 U.S.C. § 2104(a) (1).
Only two other circuits have squarely decided the workday versus calendar day issue. (The district court did not have the benefit of either decision at the time it made its ruling.) The Court of Appeals for the Third Circuit has taken the position that WARN Act liability extends to each and every day in the violation period, whether a workday or not. United Steelworkers of America, AFL-CIO-CLC v. North Star Steel Co., Inc., 5 F.3d 39 (3d Cir. 1993), cert. denied, --- U.S. ----, 114 S. Ct. 1060, 127 L. Ed. 2d 380 (1994). The Court of Appeals for the Fifth Circuit has explicitly rejected the Third Circuit position; "back pay," in the Fifth Circuit's view, is measured by the pay the employees would have received had the plant remained open throughout the violation period. Carpenters Dist. Council of New Orleans & Vicinity v. Dillard Dept. Stores, 15 F.3d 1275, 1283-86 (5th Cir. 1994), cert. denied, --- U.S. ----, 115 S. Ct. 933, 130 L. Ed. 2d 879 (1995).
The first of the rules in question is that " [c]ourts should avoid a construction of a statute that renders any provision superfluous." North Star, 5 F.3d at 42, quoting Pennsylvania v. U.S. Dept. of Health and Human Servs., 928 F.2d 1378, 1385 (3d Cir. 1991). To read "back pay" as meaning lost earnings, the North Star court suggested, would be to render superfluous 29 U.S.C. § 2104(a) (2) (A), a provision stating that the amount of the employer's liability is to be reduced by "any wages paid by the employer to the employee for the period of the violation." There would be no need for Congress to prescribe such a reduction if "back pay" connoted lost earnings, the court reasoned; a lost earnings calculation would exclude such wages automatically.
But as the Fifth Circuit pointed out in Dillard, § 2104(a) (2) (A) could not apply where the employees had lost their jobs; "by definition," said the Dillard court, "an employee who has been terminated cannot earn any wages during the violation period." 15 F.3d at 1284 n. 14. The only situation in which § 2104(a) (2) (A) can apply is one where the aggrieved employee has suffered an "employment loss" of the sort defined by 29 U.S.C. § 2101(a) (6) (C)--"a reduction in hours of work of more than 50 percent during each month of any 6-month period." In that situation the aggrieved employee will still have wages, and these are the wages by which, § 2104(a) (2) (A) provides, the amount for which an employer is liable under § 2104(a) (1) shall be reduced.
It is true, we believe, that if § 2104(a) (2) (A) had been omitted from the statute, an employer that had wrongfully reduced its employees' hours of work by more than 50 percent could still have presented a strong argument that the amount of its statutory liability should exclude wages actually paid. Given the not inconsiderable complexities of § 2104(a) (1), however, it seems to us that Congress could reasonably have envisioned some risk that this argument might fail. By adding § 2104(a) (2) (A), Congress ensured that statutory damages could never duplicate wages already received. It is far from self-evident that in thus acting to protect the interests of WARN Act violators who reduced their employees' hours by more than 50 percent, Congress sabotaged the interests of other WARN Act violators--such as Titan-C--by manifesting an understanding that "back pay," as used in § 2104(a) (1) (A), does not mean what it normally means. We think that the proposition is sufficiently dubious, at least, to make it eminently sensible to consult the legislative history for whatever guidance might be found there.
The second rule of statutory construction cited by the Third Circuit is the rule that "a court should avoid an interpretation of a statute that would lead to absurd or unreasonable results." North Star, 5 F.3d at 42, quoting Robert T. Winzinger, Inc. v. Management Recruiters, Inc., 841 F.2d 497, 500 (3d Cir. 1988). It would be unreasonable to construe "back pay" as meaning lost earnings, the North Star court argued, and then to reduce the employer's statutory liability under § 2104(a) (2) (A) by earnings that had not in fact been lost. 5 F.3d at 42-43.
Because the hypothetical part-time employee was not before the court, the Third Circuit did not find the hypothetical case a persuasive reason for consulting the legislative history. As pointed out above, however, no employee whose hours of work were reduced in the manner contemplated by § 2101(a) (6) (C) is before this court in the case at bar--and the hypothetical risk that the employer of such a person might argue for a double credit does not strike us as a persuasive reason for ignoring the legislative history.
The third rule of statutory construction advanced by the North Star court as a justification for declining to look at the legislative history is the rule that "a statute's provisions should be read to be consistent with one another, rather than the contrary." North Star, 5 F.3d at 43. To interpret "back pay" as meaning lost earnings, said the Third Circuit, would be to create a conflict between sections 2104(a) (1) and 2104(a) (2) (A) by allowing the employer "to reduce its liability by any earnings that the employees received during the period of the violation, even if those earnings were received from a different employer." Id.
" [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 violations, and facilitate simplified damages proceedings." (Emphasis by the court.)
The understanding reflected in the Senate report is consistent, as the Dillard court noted at 15 F.3d at 1283-84, with the Supreme Court's understanding of what is meant by the term "back pay." See Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197, 61 S. Ct. 845, 854, 85 L. Ed. 1271 (1941), a National Labor Relations Act case where the Court used the term to mean "payment ... of a sum equal to what [an employee] normally would have earned" absent a violation of the statute. Case law interpreting the National Labor Relations Act can be helpful in interpreting the WARN Act, see United Mine Workers of America, AFL-CIO v. Peabody Coal Co., 38 F.3d 850, 853 (6th Cir. 1994), and so it is here. "Back pay" has a well-established meaning, and the interpretation adopted by the North Star court has "essentially written the term out of the statute." Dillard, 15 F.3d at 1283-84 n. 14.
The bankruptcy courts, finally, have consistently held that where a WARN Act violator seeks bankruptcy protection, the statutory liability for "back pay" is a liability for wages; WARN Act claims for back pay are given priority accordingly. See, e.g., In re Hanlin Group, Inc., 176 B.R. 329, 333 (Bkrtcy.D.N.J. 1995), and In re Riker Industries, Inc., 151 B.R. 823, 827 (Bkrtcy.N.D. Ohio 1993). The understanding of the WARN Act reflected in these cases corresponds to that articulated in the legislative history and adopted by the Fifth Circuit in Dillard.
Titan-C also maintains that the district court should have reduced its liability under 29 U.S.C. § 2104(a) (4) because it made a good faith attempt to comply with the statute.2 "Any assessment of an employer's good faith or grounds for its belief in the legal propriety of its conduct is necessarily a finding of fact, to be disturbed on appeal only if clearly erroneous." Dillard, 15 F.3d at 1287.
The district court accepted the proposition that Titan-C acted in subjective good faith. The court found, however, that the company's conduct was not objectively reasonable. An employer must show objective good faith to qualify for a reduction in damages under the WARN Act. Oil, Chemical & Atomic Workers Int'l Union, Local 7-515, AFL-CIO v. American Home Products Corp., 790 F. Supp. 1441, 1452 (N.D. Ind. 1992).
Because this fact was never mentioned at the original hearing--indeed, Titan-C did not tell its own lawyer about the lost customer until months later--Titan-C cannot avail itself of the WARN Act's exception for "unforeseeable business circumstances." 29 U.S.C. § 2102(b) (1). And a litigant's carelessness or negligence does not constitute grounds for relief under Rule 60(b) (1), Fed.R.Civ.P
Section 2104(a) (4) provides as follows: