Opinion ID: 785066
Heading Depth: 3
Heading Rank: 2

Heading: Single employer analysis of DLI and BRC

Text: 21 Appellants contend that there was significant evidence to establish that DLI and BRC were separate companies, neither of which independently employed 100 employees. Int'l Bhd. of Teamsters v. American Delivery Serv. Co., 50 F.3d 770 (9th Cir.1995) analyzed the single employer test for the WARN Act and the Labor Management Relations Act together: 22 To determine single employer status under the LMRA, we consider these four factors: (1) common ownership; (2) common management; (3) centralized control of labor relations; and (4) interrelation of operations. 23 Common ownership is the least important factor, and the remaining three factors are guideposts only. Single employer status ultimately depends on all the circumstances of the case and is characterized as an absence of an arms length relationship found among unintegrated companies. 24 . . . 25 The relevant regulations under WARN provide that Under existing legal rules, independent contractors and subsidiaries which are wholly or partially owned by a parent company are treated as separate employers or as a part of the parent or contracting company depending on the degree of their independence from the parent. Some of the factors to be considered in making this determination are (i) common ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies emanating from a common source, and (v) the dependency of operations. 26 Id. at 775 (quoting 20 C.F.R. § 639.3(a)(2), internal citations omitted). The five WARN factors are analyzed as follows. 27
28 BRC is the wholly owned subsidiary of DLI. While appellants deny common ownership, they admit that DLI owns 100% of the shares of BRC, and that Russell owns 49% of the shares of DLI and is the trustee for the other 51% of the shares. While technical common ownership is avoided by corporate formalities, this actual commonality of ownership satisfies this least important factor. Id. 29 It is undisputed that BRC and DLI share common directors and officers, as appellants admitted in their responses to plaintiffs' discovery requests. 30
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32 The parties contest the extent of DLI's de facto control over BRC. Appellants assert that the companies maintained separate employment policies, had separate managers, and had separate workforces with separate pay scales, payrolls, workers compensation, employee health benefits, and separate middle management. Appellees rejoin that DLI's manager was given daily reports on the activities of both DLI and BRC, and at times directed the activities of BRC. DLI's manager made the decision to move employees from the payroll of DLI to that of BRC, and to have employees on the BRC payroll work in the DLI log yard. Russell admitted in his deposition that he directed both the DLI manager and the BRC manager to shut down the respective companies when the time came. Finally, appellants admitted in discovery responses that management of BRC would ultimately answer to higher management at Darby Lumber, Inc. 33 This Court agrees with the district court that these factors, on balance, demonstrate de facto exercise of control by DLI over BRC. 34
35 Appellees do not seriously dispute appellants' showing of significant differences in personnel policies between DLI and BRC, including differences in overtime, breaks, methods of pay, and health insurance premiums. 36
37 Appellees maintain that BRC's operation was overwhelmingly dependent on DLI. Citing deposition testimony that over ninety percent of BRC's activities and revenues were derived from DLI in 1998, appellees argue that BRC's main purpose was to provide support services for the DLI mill. In addition, BRC maintained its financial records at DLI's facilities, and, as previously noted, some BRC employees worked in the DLI log yard. 38 Appellants counter that Russell, in his affidavit, declared that BRC was not dependent: 39 BRC was not dependent upon DLI for its operational existence. BRC existed as a viable operating company for many years before DLI even came in to being. The services BRC provided such as road building, hauling, trucking and delivery could easily have been provided to entities other than DLI. In fact, they were provided to others for many years before DLI existed and continued after DLI closed. 40 However, although Russell states that BRC could easily have provided these services to others, the facts demonstrate that while DLI and BRC were both in existence, BRC regularly provided these services almost exclusively to DLI. Further, BRC shut down operations just months after the DLI mill closed, suggesting that BRC was dependent upon DLI for business. 41 Accordingly, the evidence demonstrates dependency of operations between DLI and BRC. 42 The relevant factors, taken as a whole, support the district court's finding that BRC and DLI operated as a single employer for the purposes of the WARN Act, and that the WARN Act applies to their conduct. 43