Court Opinion

ID: 21475
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:45:44+00
Date Added: 2024-06-11T16:46:57.867130
License: Public Domain

UNITED STATES COURT OF APPEALS
                     For the Fifth Circuit

                         No. 98-31105

             LISA MARIE HOLLOWELL; TERRENCE PIERCE;
         EMMA CHESS, on their own behalf and on behalf
              of all similarly situated employees,

                             Plaintiffs-Appellees,

                            VERSUS

             ORLEANS REGIONAL HOSPITAL LLC; ET AL

                             Defendants,

         ORLEANS REGIONAL HOSPITAL LLC; NORTH LOUISIANA
     REGIONAL HOSPITAL INC.; MAGNOLIA HEALTH SYSTEMS LLC;
        PRECISION INC.; SUCCESS COUNSELING SERVICES LLC;
         NORTH LOUISIANA REGIONAL HOSPITAL PARTNERSHIP;
     WILLIAM C. WINDHAM; RICHARD W. WILLIAMS; JOHN TURNER;
              BRENTWOOD BEHAVIORAL HEALTHCARE LLC,

                             Defendants-Appellants.

                         No. 99-30123

LISA MARIE HOLLOWELL; TERRENCE PIERCE; EMMA CHESS, on their own
   behalf and on behalf of all similarly situated employees,

                             Plaintiffs-Appellees,

                            VERSUS

            ORLEANS REGIONAL HOSPITAL, Etc.; ET AL

                             Defendants,

             RICHARD W. WILLIAMS; PRECISION INC.,

                             Defendants-Appellants.
             Appeals from the United States District
    Court for the Eastern District of Louisiana, New Orleans

                            July 18, 2000

Before POLITZ and DAVIS, Circuit Judges, and RESTANI,* Judge:

RESTANI, Judge:

     This case involves the interpretation of various provisions

of the Worker Adjustment and Retraining Notification Act

(“WARN”), 29 U.S.C. § 2101 (1994), et seq., as well as the

application of Louisiana corporate law on piercing the corporate

veil of a limited liability company.      The case arises out of the

closure of Orleans Regional Hospital (“ORH”) on November 3, 1995.

Lisa Marie Hollowell, along with other former employees of ORH,

filed suit against ORH and a variety of individuals and limited

liability companies asserting WARN Act claims.

                             Background

     Orleans Regional Hospital was a medicaid funded psychiatric

hospital located in New Orleans, which primarily served

adolescents and children.   ORH was a limited liability company1

     *
       Judge of the United States Court of International Trade,
sitting by designation.
     1
          Limited liability companies (“LLCs”) are essentially
corporations which the Louisiana tax code taxes as partnerships.
See La. Rev. Stat. Ann. § 12:1301, et seq. (West 2000); Susan
Kalinka, The Louisiana Limited Liability Company Law After
“Check-the-Box”, 57 La. L. Rev. 715, 715 (1997) (noting
popularity of LLC because it offers investors limited liability
                                                   (continued...)

                                  2
under Louisiana law.   It was established in November 1993 with

three members: another limited liability company, NORS LLC,2 and

two corporations, North Louisiana Regional Hospital, Inc. (“North

Louisiana, Inc.”), and Precision, Inc. (“Precision”).    John C.

Turner and William C. Windham, defendants in this action, each

held a fifty percent interest in North Louisiana, Inc.    Richard

W. Williams, also a defendant, was the sole shareholder of

Precision.

     Together North Louisiana, Inc. and Precision also owned

North Louisiana Regional Hospital Partnership (“NLRHP”), a

hospital located in Shreveport.   NLRHP began operations in 1992.

NLRHP treated adolescents with psychiatric and chemical

dependence disorders, and received Medicaid reimbursements.

North Louisiana, Inc. and Precision also formed Magnolia Health

Systems, LLC (“Magnolia”), in January 1994.   Magnolia provided

management services to ORH and NLRHP, and developed other health-

related business.

     In 1994, changes in Medicaid policy began affecting the

admission and length of stay at psychiatric hospitals.    The

patient census at ORH began to drop as a result of these changes,

     1
      (...continued)
of corporate shareholders and partnership classification for tax
purposes).
     2
          Plaintiffs had originally included NORS as a defendant
in this action, but voluntarily dismissed their complaint against
NORS.

                                  3
and ORH began discharging employees.     During this period, ORH

began providing outpatient services through Spectrum Community

Counseling, LLC and Success Counseling Services, LLC (which were

the same program).   Williams, Windham, and Turner, along with

administrators from ORH and NLRHP were members of the

Success/Spectrum governing board.

     The patient census at ORH continued to decline in 1995, and

Williams, Windham, Turner and Peters decided to close ORH in

October 1995.   Prior to notifying the ORH employees of the

shutdown, the CFO at Magnolia calculated a cash distribution of

$1.5 million for Turner, Williams, and Windham, based on the

combined assets of NLRHP, Success, ORH, and Magnolia.     ORH

employees were notified on October 27, 1995 of ORH’s shutdown,

and the majority of ORH employees left the hospital on November

3, 1995.   Turner and Windham subsequently formed another limited

liability company, Brentwood Behavioral Healthcare, LLC

(“Brentwood”), which assumed NLRHP’s hospital license and

medicaid provider agreement when NLRHP dissolved in 1996.

Plaintiffs brought this action against ORH and the various other

LLCs, corporations, and individuals, for failure to provide them

with 60-days notice of ORH’s closing.

                            Discussion

I. WARN Act claims

     The district court granted in part and denied in part

                                 4
defendants’ motion for summary judgment and plaintiffs’ motion

for partial summary judgment.    We review the grant of summary

judgment de novo.    Carpenters Dist. Council v. Dillard Dep’t

Stores, 15 F.3d 1275, 1281 (5th Cir. 1994).

     The WARN Act prohibits employers from ordering a “plant

closing or mass layoff until the end of a 60-day period after the

employer serves written notice” of the closing or layoff to its

employees.    29 U.S.C. § 2102(a).       An employer who violates this

notice provision is required to provide “back pay for each day of

violation.”    29 U.S.C. § 2104(a)(1).      “In short, WARN imposes a

statutory duty on businesses to notify workers of impending

large-scale job losses and allows for limited damages ‘designed

to penalize the wrongdoing employer, deter future violations, and

facilitate simplified damages proceedings.’” Staudt v. Glastron,

Inc., 92 F.3d 312, 314 (5th Cir. 1996) (citation omitted).

Defendants assert that the district court erred in finding that a

“plant closing,” had occurred at ORH, and in finding that ORH was

an “employer,” as both terms are defined by the WARN Act.        The

other issues decided by the district court at summary judgment

are not before us on appeal.3

     Section 2101(a)(2) of Title 29 defines the term “plant

closing” as “the permanent or temporary shutdown of a single site

     3
          These include the finding that no mass layoff had
occurred pursuant to 29 U.S.C. § 2101(a)(3) and that Turner,
Windham and Williams could not be held directly liable under
WARN.

                                     5
of employment . . . if the shutdown results in an employment loss

at the single site of employment during any 30-day period for 50

or more employees excluding any part-time employees.”    ORH shut

down on November 3, 1995.    In the 30 days preceding the shutdown,

48 employees were terminated.    Therefore, there was not a

shutdown of ORH pursuant to 29 U.S.C. § 2101(a)(2).    The district

court found, however, that there was a plant closing as defined

by 29 U.S.C. § 2102(d).    This section provides:

     [I]n determining whether a plant closing or mass layoff has
     occurred or will occur, employment losses for 2 or more
     groups at a single site of employment, each of which is less
     than the minimum number of employees specified in section
     2101(a)(2) or (3) of this title but which in the aggregate
     exceed that minimum number, and which occur within any 90-
     day period shall be considered to be a plant closing or mass
     layoff unless the employer demonstrates that the employment
     losses are the result of separate and distinct actions and
     causes and are not an attempt by the employer to evade the
     requirements of this chapter.

Defendants contest the district court’s conclusion that a plant

closing occurred pursuant to § 2102(d).

     Defendants first argue that they presented credible evidence

that lay-offs prior to October 24, 1995 were for “separate and

distinct causes.”    Defendants rely on statements made by Scott

Blakley, the ORH administrator, in his affidavit.    Blakley stated

that the layoffs which occurred before October 24, 1995 were the

result of separate and distinct actions because “they were the

result of adjusting the staffing to correspond with the current

patient census.”    “[T]hese layoffs were simply the result of a

business decision to adjust the employee census to account for

                                  6
the decline in the hospital’s patient census.”    Blakley stated

that no decision was made to close the hospital prior to October

24, 1995.   Blakley stated that ORH tried to pursue new business

opportunities which would have kept the hospital open, but that

those efforts failed.

     Section 2102(d) imposes an affirmative burden on the

employer to prove that the court should disaggregate employment

losses that occurred during the 90-day period.    As the district

court noted, “[e]ven assuming that ORH did not make the final

decision to shutdown its employment site until October 24, 1995,

this fact does not establish that the employment losses which

preceded this date were wholly unrelated to the shutdown.”

Blakley’s statement does not prove that separate and distinct

actions and causes led to the pre-October 24, 1995 lay-offs.

Indeed, his statements support the conclusion that ORH’s

declining profitability due to changes in Medicare reimbursements

led to the shutdown.    Blakley’s October 27, 1995 memorandum to

all the ORH employees stated that it was the “reductions in

Medicaid support for poor children [which] resulted in a

reduction in work force and the loss of your employment.”    As

noted by one district court, “layoffs that are occasioned by a

continuing and accelerating economic demise are not the result of

separate and distinct causes.”    United Paperworkers Int’l Union

v. Alden Corrugated Container Corp., 901 F. Supp. 426, 436 (D.

Mass. 1995).   Defendants failed to produce evidence that created

                                  7
a genuine issue of material fact tending to show that the layoffs

were due to separate and distinct causes.

     Defendants also argue that fewer than 50 employees were

terminated during the 90-day period, therefore no plant-closing

occurred.   Defendants maintain that the district court

incorrectly aggregated the pre-October 24 layoffs because the

court counted each individual employee that ORH laid off, rather

than each “group” of employees.   When aggregating employment

losses, 29 U.S.C. § 2102(d) allows courts to consider “employment

losses for 2 or more groups at a single site of employment, each

of which is less than [50 employees],” which occur in a 90-day

period.   Focusing on the word “groups,” defendants argue that the

court should not count any single individual laid off on any

given day because an individual cannot constitute a group.      See

Webster’s Third New Int’l Dictionary 1004 (1981) (defining group

as “two or more figures . . . forming a distinctive unit”).

Excluding the employees laid off on a day when no other employees

were terminated leads to a total of 48 layoffs in the 90-day

period.   Including those employees leads to a total of 62 layoffs

within the period.

     The district court interpreted 29 U.S.C. § 2102(d)’s use of

the word “groups” as referring to the group of employees within

the 30-day period and the group of employees outside of the 30-

day period, but within the 90-day period.   Other than their

reliance on the dictionary definition of the word “groups,”

                                  8
defendants have not presented any argument for why this court

should adopt their interpretation of § 2102(d).    Adopting

defendant’s interpretation would lead to the anomalous result

that an employer could terminate more than 50 employees in the

90-day period, but yet not be subject to WARN if the employer

terminated the employment of each individual employee on a

different day.   We conclude that the district court’s

interpretation is more in keeping with the purpose of the WARN

act, which is to notify employees of large-scale job losses, and

therefore agree that ORH experienced a “plant-closing.”

     Defendants also contest the district court’s conclusion at

summary judgment that ORH was an “employer” as defined by WARN.

Section 2101 defines an employer as “any business enterprise that

employs - (A) 100 or more employees, excluding part-time

employees; or (B) 100 or more employees who in the aggregate work

at least 4,000 hours per week (exclusive of hours of overtime).”

29 U.S.C. § 2101(a)(1).    Defendants contest that there was

adequate evidence presented to the district court that they

employed 100 or more employees.    The Department of Labor’s

regulations, promulgated under WARN, state that “[t]he point in

time at which the number of employees is to be measured for the

purpose of determining coverage is the date the first notice is

required to be given.”    20 C.F.R. § 639.5(a)(2) (1999).   The

regulations also state that “[w]hen all employees are not

terminated on the same date, the date of the first individual

                                  9
termination within the statutory 30-day or 90-day period triggers

the 60-day notice requirement.”    20 C.F.R. § 639.5(a)(1).   The

first individual termination in the 90-day period occurred on

August 9, 1995.   This individual was entitled to notice 60 days

earlier, that is June 10, 1995.    The district court therefore

concluded that June 10, 19954 was the relevant date for

determining whether ORH was an employer within the meaning of

WARN.

     The evidence of employment levels is contained in ORH’s

payroll statements.   Defendants do not contest the accuracy of

the payroll statements, rather they assert that the payroll for

the two-week period June 1-15, 1995, does not establish that more

than 100 individuals were employed by ORH.    Excluding overtime

hours worked during this period, ORH employees worked an average

of 5564.25 hours per week.5   This is well over the 4,000 hours

required under 29 U.S.C. § 2101(a)(1)(B), which qualifies ORH as

an employer.6

     4
          Defendants focus on June 4, 1995 as the relevant date,
that is 60 days before the 90 day shutdown period. Whether June
4 or June 10 is used does not change the analysis.
     5
          These hours are calculated by adding the total number
of hours worked in the period (12241.35) and dividing by the
number of work days (11) which leads to an average of 1112.85
hours worked per day, multiplied by 5 equals an average of
5564.25 hours per week. Employees who worked more than 88 hours
in the period were calculated as having only worked 88 hours in
order to exclude their overtime hours.
     6
          Defendants dispute this calculation of hours worked
                                                   (continued...)

                                  10
     Although defendants state that they presented contrary

evidence to the determination that ORH was an employer,

defendants fail to cite to the record or describe such evidence.

The record before us presents no genuine issue of material fact

that ORH did not employ over 100 employees on June 10, 1995,

thereby rendering ORH an employer pursuant to WARN.

     The district court properly determined at summary judgment

that ORH was subject to the WARN notification requirement.

II. Trial issues

     At summary judgment, the district court found that the

limited liability “veil” of protection could be pierced if ORH

was acting as the alter ego of ORH’s members.   The court,

however, found that such a determination involved a fact-

intensive review of the relationships among the ORH members.   The

district court also found there to be factual issues regarding

whether ORH and other companies (but not the individual

defendants) operated as a “single business enterprise.”

Likewise, the issue of whether Brentwood assumed the liabilities

of NLRHP or ORH was a disputed issue of fact.

     After trial, the jury found Precision and North Louisiana,

Inc. to be the alter egos of ORH and responsible for ORH’s debts.

     6
      (...continued)
because it includes hours worked by part-time employees. Part-
time employees are excluded from the calculation under 29 U.S.C.
§ 2101(a)(1)(A), but subpart (B) of section 2101(a)(1) makes no
distinction between part-time and full-time employees when
aggregating hours worked.

                               11
The jury also found Williams to be the alter ego of Precision,

and Windham and Turner to be the alter egos of North Louisiana,

Inc.    The jury found that Precision, North Louisiana, Inc.,

Magnolia, NLRHP and Success constituted a “single business

enterprise.”    Regarding Brentwood, the jury found it to be the

successor to NLRHP and responsible for NLRHP’s liabilities.

       The district court denied defendants’ motion for judgment as

a matter of law pursuant to Fed. R. Civ. P. 50(b) and their

motion for a new trial, pursuant to Fed. R. Civ. P. 59.    We

review the Rule 50(b) motion using the same standards as the

district court, and reverse only if the jury could not reach the

conclusion it did.    Hiltgen v. Sumrall, 47 F.3d 695, 699 (5th

Cir. 1995) (“jury verdict must be upheld unless ‘there is no

legally sufficient evidentiary basis for a reasonable jury to

find’ as the jury did.”) (citing Fed. R. Civ. P. 50(a)(1)); see

also Brock v. Merrell Dow Pharms., Inc., 874 F.2d 307, 308 (5th

Cir. 1989) (judgment notwithstanding the verdict proper “only

when there can be only one reasonable conclusion drawn from the

evidence”).

A) Alter ego

       The question of whether to pierce the corporate veil is

primarily one of fact and therefore a very deferential standard

of review applies.    Huard v. Shreveport Pirates, Inc., 147 F.3d
406, 409 (5th Cir. 1998).    Defendants argue, however, that as a

                                 12
matter of Louisiana law, a court may not pierce the corporate

veil in the absence of either fraud or one of five specific

factors.   We review these questions of law de novo.    Randel v.

United States Dep’t of the Navy, 157 F.3d 392, 395 (5th Cir.

1998).

     Corporations function as distinct legal entities, separate

from the individuals who own them, and their shareholders are not

generally liable for the debts of the corporation.7    Riggins v.

Dixie Shoring Co., 590 So. 2d 1164, 1167 (La. 1991).    Louisiana

law recognizes exceptions to limited liability, and in certain

circumstances permits   “piercing the corporate veil” on an alter

ego basis.   Id. at 1168.   This usually involves “situations where

fraud or deceit has been practiced by the shareholder acting

through the corporation.”    Id.   The Louisiana Supreme Court

stated in Riggins that:

     Some of the factors courts consider when determining whether
     to apply the alter ego doctrine include, but are not limited
     to: 1) commingling of corporate and shareholder funds; 2)
     failure to follow statutory formalities for incorporating
     and transacting corporate affairs; 3) undercapitalization;
     4) failure to provide separate bank accounts and bookkeeping
     records; and 5) failure to hold regular shareholder and
     director meetings.

     7
          The district court concluded that for alter ego
purposes, Louisiana would treat an LLC in the same manner as a
corporation. Neither party disputes this holding. Commentators
also agree that for purposes of piercing the corporate veil, an
LLC would be treated like a corporation. See Kalinka, 57 La. L.
Rev. at 794; Eric Fox, Piercing the Veil of Limited Liability
Companies, 62 Geo. Wash. L. Rev. 1143, 1167-68 (1994) (noting
that most commentators assume that doctrine of piercing the
corporate veil applies to LLCs).

                                   13
Riggins, 590 So. 2d at 1168 (emphasis added) (citation omitted).

     Defendants maintain that a finding of fraud is essential in

order to pierce the corporate veil in a contract action, and

further assert that a WARN Act claim is analogous to a contract

claim.    Several courts have considered the nature of a WARN Act

claim in order to determine the applicable statute of

limitations.   In this context, a WARN Act claim has been compared

to a contract claim.    See Aaron v. Brown Group, Inc., 80 F.3d
1220, 1225 (8th Cir. 1996) (“WARN action is most closely

analogous to an action to recover damages for a breach of an

implied contract.”); Frymire v. Ampex Corp., 61 F.3d 757, 764

(10th Cir. 1995) (same); United Paperworkers Int’l Union & its

Local 340 v. Specialty Paperboard, Inc., 999 F.2d 51, 57 (2d Cir.

1993) (finding no state substantive claim perfectly analogous to

WARN, but concluding that contract statute of limitations should

be applied).   We have noted that a WARN Act claim is not really a

contract or tort claim.    Staudt, 92 F.3d at 316 (“WARN action is

not particularly analogous to either [tort or contract]”).   In

Staudt we did not need to decide definitively whether WARN was

most like a contract or tort action, and we need not do so now

either.

     Even if the defendants are correct that a WARN action is

most akin to a contract action, they are mistaken that Louisiana

law requires a finding of fraud in order to pierce the corporate

veil in a contract action.   While we stated in Subway Equip.

                                 14
Leasing Corp. v. Sims (In re Sims), that fraud is an essential

component of an alter ego finding when a contract claim is at

issue, Sims did not involve the application of Louisiana law, but

rather involved a combination of federal common law, Delaware law

and Connecticut law.    994 F.2d 210, 218 n.11 (5th Cir. 1993)

(citing United States v. Jon-T Chems., Inc., 768 F.2d 686, 692

(5th Cir. 1985)).8   In Pine Tree Assocs. v. Doctors’ Assocs.,

Inc., defendants argued that in a case involving a contractual

dispute, fraud must be present in order to pierce the corporate

veil.    654 So. 2d 735, 739 (La. Ct. App. 1995).   The Louisiana

Court of Appeals rejected this argument, stating that Riggins

“establishes that even in situations where there has been no

proof of fraud, or allegations of fraud, a court may still apply

the ‘totality of the circumstances’ test to determine whether the

corporate veil should be pierced.” 654 So. 2d at 739.   We also

noted in Huard that when fraud is not alleged, a plaintiff

seeking to pierce the corporate veil “bears a heavy burden of

proof in demonstrating that the corporate form has been

disregarded,” but that Louisiana law “indicates that the

corporate veil may be pierced without the presence of fraud.”9

     8
          Jon-T Chems. likewise did not involve an application of
Louisiana law, but rather involved federal common law and Texas
law. 768 F.2d at 690 n.6.
     9
          Defendants argue that we should not rely on the
statement in Pine Tree Assocs. that Louisiana law does not
require a finding of fraud in order to pierce the corporate veil,
                                                   (continued...)

                                 15
147 F.3d at 410.

     Defendants further argue that the jury’s finding that under

the totality of circumstances the veils of North Louisiana, Inc.

and Precision could be pierced to reach the individual defendants

was error because the jury did not find any of the five Riggins’

factors present with regard to these individual defendants.   The

jury found no specific factors present in Turner and Windham’s

relationship with North Louisiana, Inc., and no specific factors

in Williams’ relationship with Precision.   The jury nevertheless

answered “yes” to the question that under the totality of the

     9
      (...continued)
because it represents the position of an intermediate state
court. We are bound to apply the law as interpreted by the
state’s highest court and “[w]hen the state’s court of last
resort has yet to speak on an issue . . . our task is to
determine . . . how that court would rule if the issue were
before it.” Ladue v. Chevron, U.S.A., Inc., 920 F.2d 272, 274
(5th Cir. 1991). We are bound by the decision of an intermediate
state court “when we remain unconvinced ‘by other . . . data that
the highest court of the state would decide otherwise.’” Id.
(quotation omitted).
     Defendants also argue that Riggins does in fact reflect the
position that fraud is an essential component of a veil piercing
claim. For this reading they rely in large part on Judge Dennis’
concurring opinion in the denial for rehearing in Riggins. See
Riggins v. Dixie Shoring Co., 592 So. 2d 1282, 1283 (La. 1992).
While Judge Dennis did state that when a contract is involved,
“courts have usually applied more stringent standards to piercing
the corporate veil,” id. at 1285, he did not state that fraud is
absolutely necessary. While we recognize that the standard for
piercing the corporate veil is more stringent in a contract
action than a tort action, we are not convinced that the
Louisiana Supreme Court would decide that fraud must be found in
order to pierce the corporate veil. We are therefore bound by
the holding in Pine Tree Assocs. See also Comment, Piercing the
Corporate Veil in Louisiana Absent Fraud or Deceit, 48 La. L.
Rev. 1229, 1232-33 (1988).

                               16
circumstances North Louisiana, Inc. was the alter ego of Turner

and Windham, and Precision was the alter ego of Williams.

Although the five Riggins factors “are usually considered

relevant in evaluating adherence to corporate formalities,”

Huard, 147 F.3d at 409, Riggins itself recognizes that courts are

not limited to these five factors when invoking the alter ego

doctrine, 590 So. 2d at 1168.   Under Louisiana law more than the

five factors may be considered.    Pine Tree Assocs., 654 So. 2d at

738-39 (courts consider the five factors, but are not limited to

those factors); Green v. Champion Ins. Co., 577 So. 2d 249, 257-58

(La. Ct. App. 1991) (listing eighteen factors which courts

consider in determining whether a corporation is the alter ego of

another, and noting that list is “illustrative and is not

intended as an exhaustive list of relevant factors.”); United

States v. Clinical Leasing Serv., Inc., 982 F.2d 900, 903 (5th

Cir. 1992) (district court did not commit error in adding two

factors to alter ego determination because Louisiana courts had

recognized additional factors under alter ego theory); see also

Glenn G. Morris, Piercing the Corporate Veil in Louisiana, 52 La.
L. Rev. 271, 284 (1991) (noting that more than five factors may

be considered under the totality of the circumstances).

     In denying defendants’ Rule 50(b) motion, the district court

noted that even though the jury did not find evidence of the five

factors:

     [T]he jury was presented with ample evidence in which to

                                  17
     find that the individual defendants exercised dominion and
     control over ORH: that the individual defendants held
     themselves out as the owners and directors of the [ORH]
     enterprise; that the individual defendants indeed controlled
     decisions of the ORH enterprise; that the owners profited
     from the enterprise at the expense of their employees; and
     that distributions flowed from [NLRHP] to [North Louisiana,
     Inc.] and Precision and from [North Louisiana, Inc.] and
     Precision to the individual defendants.

The owners’ ability to receive a $1.5 million distribution on the

eve of ORH’s shutdown further demonstrates their control over

ORH, and indeed, all the entities.

     The jury may also have considered the individual defendants’

use of the companies for non-corporate purposes.   For example,

the owners charged Magnolia for the purchase and maintenance of

an airplane which was solely for their personal use.   In 1994,

ORH was charged directly for the costs of the airplane and in

1995 Magnolia charged NLRHP, ORH and Success for the airplane

fees as part of Magnolia’s management fees.   Magnolia also

pursued other business opportunities for the owners in several

Southern states, and the salaries of Magnolia employees were

charged to ORH.   All of Magnolia’s expenses were covered by the

management fees paid by ORH, NLRHP, and Success.   Furthermore,

even if certain evidence cuts against the jury’s conclusion, it

was for the fact finder to weigh all of the evidence and make the

alter ego determination.   Jon-T Chems., 768 F.2d at 695-96

(“Although the evidence . . . does not all point in one direction

. . . it was for the factfinder . . . to weigh the evidence and

to determine, based on the totality of the evidence, whether an

                                18
alter ego relationship existed”); see also Byles Welding &

Tractor Co. v. Butts Sales & Serv., Inc., 541 So. 2d 992, 993-94

(La. Ct. App. 1989) (“When a party seeks to pierce the corporate

veil, the situation must be viewed with regard to the totality of

the circumstances.    Whether individual liability will be assigned

to shareholders is primarily a factual finding to be made by the

trial court.”)

     Defendants also urge us to set aside the jury’s findings

that North Louisiana, Inc. commingled funds with ORH and that

there was evidence of undercapitalization.    The jury found that

North Louisiana, Inc. commingled funds with ORH and that the two

entities failed to maintain separate bank accounts and

bookkeeping records.    Defendants assert that the only evidence of

commingling was between NLRHP and ORH, not between North

Louisiana, Inc. and ORH.    Defendants cite to testimony by

plaintiffs’ expert that NLRHP and ORH commingled funds.

Likewise, defendants contest the jury’s conclusion that ORH was

undercapitalized.    They assert that the only basis for this

conclusion is the fact that ORH was capitalized with loans from

NLRHP.10   Even if we accept defendants’ argument, the argument

     10
          Defendants maintain that shareholder loans may properly
be considered capital. See Sea Tang Fisheries, Inc. v. You’ll
See Sea Foods, Inc., 569 So. 2d 992, 997 (La. Ct. App. 1990)
(stating that interest free loans to corporation from shareholder
were not grounds for piercing the veil). They also assert that
undercapitalization, in and of itself, is not sufficient reason
to make an alter ego finding. See McGregor v. United Film Corp.,
                                                   (continued...)

                                 19
fails to take into account the fact that the jury also found that

North Louisiana, Inc. and Precision were the alter egos of ORH

based on the totality of the circumstances.   Defendants focus

their arguments on commingling and undercapitalization and do not

present a challenge to the sufficiency of the evidence on the

totality finding.   As already discussed, the totality of the

circumstances can include factors other than the five enumerated

Riggins factors. The district court therefore did not commit

reversible error in allowing the jury to consider factors other

than the enumerated factors, and in affirming the jury’s

findings.

B) Single business enterprise

     The jury found that Precision, North Louisiana, Inc.,

Magnolia, NLRHP and Success, together with ORH, all formed a

“single business enterprise” and were therefore liable for ORH’s

WARN Act violation.   WARN defines an “employer” as a “business

enterprise” that has 100 or more employees, but does not further

     10
      (...continued)
351 So. 2d 1224, 1229 (La. Ct. App. 1977) (stating that limited or
inadequate capitalization “does not of itself indicate fraud or
raise any presumption of fraud, deceit or ill practices on the
part of a stockholder.”)
     We have recognized, however, that continual loans can serve
as proof of undercapitalization. In Jon-T Chems. we stated that
“[t]he fact that [a corporation] continually had net operating
losses and survived due to massive and ongoing transfusions . . .
does not indicate that [the corporation] ever stood on its own
two feet. Quite the contrary; it reinforces the . . . conclusion
that [the corporation] did not have any separate financial
existence.” 768 F.2d at 694-95.

                                20
define the term.   See 29 U.S.C. § 2101(a)(1).   The Department of

Labor’s regulations state that the following factors should be

considered in order to determine the independence of subsidiaries

and independent contractors from a parent company: “(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.”    20

C.F.R. § 639.3(a)(2).11   The district court instructed the jury

to consider these five factors in order to decide whether the

five companies at issue constituted a single business enterprise

with ORH.12

     11
          The DOL explained that “[t]he intent of the regulatory
provision relating to independent contractors and subsidiaries is
not to create a special definition of these terms for WARN
purposes; the definition is intended only to summarize existing
law that has developed under State Corporations laws and such
statutes as the NLRA, the Fair Labor Standards Act (FLSA) and the
Employee Retirement Income Security Act (ERISA). The Department
does not believe that there is any reason to attempt to create
new law in this area especially for WARN purposes when relevant
concepts of State and federal law adequately cover the issue . .
. . Similarly, the regulation is not intended to foreclose any
application of existing law or to identify the source of legal
authority for making determinations of whether related entities
are separate.” Worker Adjustment and Retraining Notification, 54
Fed. Reg. 16,042, 16,045 (1989).
     12
          These factors are similar to those applied in civil
rights actions, when determining whether superficially distinct
entities may be exposed to liability if they are in fact, a
“single, integrated enterprise.” Schweitzer v. Advanced
Telemarketing Corp., 104 F.3d 761, 763 (5th Cir. 1997). The four
part test considers “(1) interrelation of operations; (2)
centralized control of labor relations; (3) common management;
and (4) common ownership or financial control.” Id. at 764; see
also International Bhd. of Teamsters v. American Delivery Serv.
                                                   (continued...)

                                 21
     Defendants primarily argue that there is insufficient

evidence to support the jury’s finding that the companies

constituted a single business enterprise.   Defendants also argue,

however, that the district court provided the jury with an

inaccurate legal standard.   They state that common ownership is

the least important factor and should not be sufficient reason to

consider the companies a single enterprise.   See NLRB v. Carson

Cable TV, 795 F.2d 879, 881 (9th Cir. 1986) (noting that factors

other than common ownership have been stressed by the NLRB).

Defendants, however, failed to object to the jury instructions

and therefore waived the right to contest those instructions.

See Fed. R. Civ. P. 51 (“No party may assign as error the giving

or the failure to give an instruction unless that party objects

thereto before the jury retires to consider its verdict”).    We

therefore focus on whether there was sufficient evidence for the

jury to determine that the five companies, along with ORH,

constituted a single business enterprise.

     Defendants concede the common ownership of NLRHP and ORH,

but reiterate that common ownership is the least important factor

in determining the existence of a single enterprise.   We decline

to decide the relative importance of the five WARN factors,

however, and simply note that the common ownership of NLRHP and

     12
      (...continued)
Co., 50 F.3d 770, 775-76 (9th Cir. 1995) (noting the similarity
of “single employer” test under WARN and other federal statutes).

                                22
ORH supports the jury’s finding of a single business enterprise.

Although defendants further argue that NLRHP and ORH had separate

managers and that the plaintiffs were never supervised by a NLRHP

administrator, there is sufficient evidence to uphold the jury’s

finding.

     There is evidence of common management.     Magnolia itself was

established in early 1994 to manage all of the entities in which

North Louisiana, Inc. had an ownership interest.     Moreover,

Blakley, the ORH administrator, was also Vice-President of

Magnolia.   The companies were perceived as linked.    For example,

ORH is referred to as a “sister company” on Timothy Doolin’s job

description as CFO for North Louisiana.     Doolin also referred to

Success as a “sister operation” to ORH and NLRHP, which provided

complimentary outpatient care to ORH and NLRHP’s inpatient

services.   The record also supports the conclusion that there was

a unified employment policy.   The employees of the various

entities were all covered by the same benefits plan.     Employees

who moved from one entity to another did not experience a change

in coverage, nor did they have to wait a 90-day period to receive

their benefits, as required of new employees.     Employee insurance

documents also listed the policyholder as “North Louisiana

Regional Hospital d/b/a Orleans Regional Hospital LLC.”     Most

telling is the fact that the owners themselves conceived of the

entities as a single enterprise.     When the owners decided to

receive a cash distribution in October 1995, the assets and cash

                                23
from all the entities were considered collectively.    They listed

the assets of each entity and added them together and then

decided to distribute $1.5 million to the owners.   This decision

shows a disregard for the corporate separateness of the entities.

     There is a legally sufficient basis for the jury’s

conclusion that the various entities, NLRHP, North Louisiana,

Inc., Success, Precision and Magnolia, along with ORH, formed a

single business enterprise.   We therefore affirm the jury verdict

on this issue.

C) Successor liability

     In March 1996, Windham, Turner and Blakley established

Brentwood Behavior Healthcare, another LLC.   NLRHP assigned

certain rights and interests to Brentwood in April 1996.   Among

these rights, NLRHP assigned Brentwood its Louisiana hospital

license, as well as several medicaid provider numbers, and its

managed care contracts.13   Pursuant to this assignment, NLRHP

avoided liabilities estimated at more than $200,000.   Brentwood

began operating a psychiatric hospital on April 1, 1996, in the

same facility formerly occupied by NLRHP, in Shreveport,

Louisiana.

     The district court instructed the jury that under Louisiana

law, Brentwood was the “successor company” of either ORH or

NLRHP, if “(1) The new company expressly assumed the liabilities

     13
        On March 31, 1996 the shareholders of North Louisiana,
Inc. had approved the assignment from NLRHP to Brentwood.

                                 24
of the old company; or (2) The formation of the new company was

entered into to defraud the creditors of the old company; or (3)

The circumstances attending the creation of the new company and

its succession to the business and property of the old company

are such that the new company was merely a continuation of the

old company.”    The court further instructed the jury to consider

the following eight factors in determining whether a new company

is a mere continuation of an older company:

       (1)   retention of the same employees;
       (2)   retention of the same supervisory personnel;
       (3)   retention of the same production facility in the same
             physical location;
       (4)   production of the same product;
       (5)   retention of the same name;
       (6)   continuity of assets;
       (7)   continuity of general business operations; and
       (8)   whether the successor holds itself out as the
             continuation of the previous enterprise.

The jury concluded that Brentwood succeeded to NLRHP, but not

ORH.    Defendants challenged this conclusion in their Rule 50(b)

motion, and they renew their arguments here.

       Defendants first maintain that, as a matter of law,

successor liability cannot be found in the absence of fraud, and

that plaintiffs did not allege fraud.    Under Louisiana law:

       [A] newly organized corporation is liable for the debts of
       an old one . . . where it is shown that the succession was
       the result of a transaction entered into in fraud of the
       creditors of the old corporation, or that the circumstances
       attending the creation of the new . . . were of such a
       character as to warrant the finding that the new, is merely
       a continuation of the old, corporation.

Wolff v. Shreveport Gas, Elec. Light & Power Co., 70 So. 789, 794

                                  25
(La. 1916)(emphasis added); see also Industrial Equip. Sales &

Serv. Co. v. Sec. Plumbing Inc., 666 So. 2d 1165, 1166-67 (La. Ct.

App. 1995) (stating same); Russell v. Sunamerica Secs., Inc., 962
F.2d 1169, 1175-76 (5th Cir. 1992) (“[w]hen the successor may be

considered a ‘mere continuation’ of the predecessor,” corporation

which acquires assets of another may be obligated for the

liabilities of corporation from which assets were acquired).

     The clear language of Wolff establishes that defendants are

incorrect that fraud is a necessary component of successor

liability and establishes that the district court set out the

proper legal standard for the jury.   Furthermore, defendants

failed to object to the jury instructions on the ground that

fraud is a necessary component of successor liability.

Defendants therefore waived this argument.14

     Defendants also challenge the sufficiency of the evidence

that Brentwood succeeded to NLRHP.    The eight factors included in

the jury instructions are the same as those we listed in Russell.
962 F.2d at 1176 n.2.   Although defendants insist that there is

insubstantial evidence to find that Brentwood succeeded to NLRHP,

we must uphold the jury verdict unless there is “no legally

     14
          Defendants maintain that there can be no successor
liability in the absence of a written agreement, pursuant to La.
Civ. Code Ann. art. 1821 (West 2000). Defendants do recognize,
however, that Wolff represents an exception to this rule.
Defendants’ failure to object to the jury instructions on the
successor liability theory also precludes assertion of this
argument on appeal.

                                26
sufficient evidentiary basis for a reasonable jury to find” as

the jury did. Hiltgen, 47 F.3d at 699.

     Most of the employees who were still employed at NLRHP

become employees for Brentwood and some of the same supervisory

personnel were retained by Brentwood.    Brentwood also operated in

the same physical location as NLRHP and retained the same phone

number.   Although defendants insist that Brentwood served a

different patient population and provided different medical

services, both Brentwood and NLRHP treated psychiatric and

substance abuse disorders.   These factors being among those which

lead to successor liability, there is a legally sufficient

evidentiary basis for a reasonable jury to conclude that

Brentwood succeeded to NLRHP.

     Accordingly, we affirm the jury findings in their entirety.

III. Attorneys’ fees

     Plaintiffs moved for attorney’s fees, and the district court

referred this motion to a magistrate judge.   The magistrate judge

calculated the lodestar, calculating the number of hours

reasonably expended on the litigation by a reasonable hourly

billing rate.   The magistrate judge also noted the twelve factors

set forth in Johnson v. Georgia Highway Express, Inc., 488 F.2d
714, 717-19 (5th Cir. 1974) pursuant to which the district court

may adjust the lodestar upward or downward.   The magistrate

recommended awarding $300,703.10 for attorneys fees (including

                                27
legal research costs) and $5,289.51 in expenses, for a total

award of $305,992.61.   The district court adopted the

magistrate’s report and recommendation in its entirety.    We

review the district court’s factual findings for clear error, and

the district court’s award of attorneys’ fees for abuse of

discretion.   Riley v. City of Jackson, 99 F.3d 757, 759 (5th Cir.

1996).

     Section 2104(a)(6) of WARN provides: “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(a)(6).15

Defendants claim that plaintiffs are not “prevailing parties” in

this litigation.   Plaintiffs can be considered “prevailing

parties” if they “succeed[ed] on any significant issue in

litigation which achieves some of the benefits [plaintiffs]

sought in bringing suit.”   Hensley v. Eckerhart, 461 U.S. 424,

433 (1983) (quotation omitted).    Defendants are simply mistaken

that all of plaintiffs’ WARN Act claims failed at summary

judgment.   Plaintiffs did lose their mass-layoff claim, but were

successful on the plant-closing claim.    The court found that ORH

was a WARN Act employer and that a plant closing had occurred.

At trial, plaintiffs won on all of their veil-piercing and alter

     15
          This provision is modeled on the attorney’s fees
provision of the Civil Rights Act. See S. Rep. No. 100-62, at 24
(1987) (“standards for determining an entitlement to fees, and
the method of calculating the amount of the fees, are to be those
already established pursuant to the Civil Rights Attorneys Fees
Awards Act of 1978, 42 U.S.C. sec. 1988").

                                  28
ego claims.    The district court therefore properly concluded that

plaintiffs were the prevailing parties in this litigation.

     Defendants also contest the attorney’s fees award as

excessive, claiming that the attorney’s fees exceed the damages

award.   Defendants mischaracterize the award.   The district court

entered judgment on the damages award for $334,046.28 plus

prejudgment interest, and granted attorney’s fees for

$305,992.61.   Moreover, we have previously declined to adopt a

rule of proportionality between damages and attorney’s fees.      See

Cobb v. Miller, 818 F.2d 1227, 1235 (5th Cir. 1987).

Interpreting the Supreme Court’s plurality opinion in City of

Riverside v. Rivera, 477 U.S. 561 (1986), we found that while a

low damages award is one factor which a district court may

consider in setting the amount of attorney’s fees, this factor

alone should not lead the district court to reduce a fee award.

Cobb, 818 F.2d at 1235.

     Defendants argue that plaintiffs should not be entitled to

any fees pursuant to WARN because of the failure of one of the

federal claims.   Defendants rely on McDonald v. Doe, 748 F.2d
1055 (5th Cir. 1984) for this proposition.   In McDonald, we found

that a plaintiff who only prevailed on pendent state law claims

was not entitled to attorney’s fees pursuant to 42 U.S.C. § 1988.
748 F.2d at 1057.   In this case, plaintiffs did succeed on a

federal claim and plaintiffs’ state law claims were not separate

from the federal claim.   They were the mechanism for recovery on

                                 29
the federal claim on which plaintiff succeeded.16    The district

court did not abuse its discretion in finding the state law

claims sufficiently related to the federal claim for purposes of

awarding attorney’s fees.

     Defendants also claim that plaintiffs’ counsel failed to

exercise reasonable billing judgment.    The magistrate’s report

and recommendation reflects that the court carefully considered

plaintiffs’ counsel’s billing records, and notes that counsel

eliminated duplicative charges and fees relating to the

unsuccessful mass layoff claim.17    The district court has “broad

discretion in determining the amount of a fee award.”     Associated

Builders & Contractors of Louisiana, Inc. v. Orleans Parish Sch.

Bd., 919 F.2d 374, 379 (5th Cir. 1990).    In light of the detailed

records submitted by plaintiffs’ counsel, and the careful review

by the magistrate judge of all the time entries, we find

defendants’ argument that the billing records reflect

noncompensable time or duplicative charges unavailing.

     Defendants further question plaintiffs’ counsel’s billing

     16
        Defendants’ argument that the veil piercing claims had
nothing to do with the WARN Act claim is disingenuous. The
district court found ORH liable under WARN and because of ORH’s
dissolution, the only way for plaintiffs to recover damages was
to pursue the veil piercing claim under state law.
     17
        Defendants assert that plaintiffs’ counsel failed to
explain the reductions made as an exercise of billing judgment.
On the contrary, plaintiffs’ counsel did explain the reductions
in the initial request for fees and in response to defendants’
objections, made further reductions in fees which could have been
related to the unsuccessful mass-layoff claim.

                                30
judgment by asserting that counsel “lumped” the time entries,

grouping tasks performed into a single bill, thereby preventing

the court from evaluating the reasonableness of the bill.18

Defendants do not cite to specific entries, but rather allege

that all of the time entries are lumped together.   The district

court, however, found the contemporaneous billing records

specific enough to determine that the hours claimed were

reasonable for the work performed.   Defendants’ blanket

allegation that the entries are unreasonable does not persuade us

that the district court abused its discretion.   See Wegner v.

Standard Ins. Co., 129 F.3d 814, 823 (5th Cir. 1997) (where

defendant failed to provide court with detailed information on

how total number of hours claimed in attorneys fees were

unreasonable, “the district court’s familiarity with the legal

work done on this . . . case as well as our deferential standard

of review . . . [constrained court] to hold that the district

     18
        Defendants rely on several bankruptcy court opinions for
the proposition that fees may not be awarded for “lumped” time
entries. See, e.g. In re NRG Resources, Inc., 64 B.R. 643, 654
(W.D. La. 1986) (stating that counsel “should not group all tasks
performed in one day into a single billing, and each type of
service should be listed with the corresponding specific time
allotment”). While counsel should always exercise billing
judgment, we do not find NRG’s statements, made in the bankruptcy
context, applicable in granting fees under a statutory fee-
shifting provisions such as WARN. Indeed, even a failure to
provide contemporaneous billing statements “does not preclude an
award of fees per se, as long as the evidence produced is
adequate to determine reasonable hours.” Louisiana Power & Light
Co. v. Kellstrom, 50 F.3d 319, 325 (5th Cir. 1995). The evidence
produced by plaintiffs’ counsel here was certainly adequate for
the district court to determine reasonable hours.

                               31
court had sufficient information before it to determine

reasonable hours”).

     We conclude that the district court did not abuse its

discretion in granting plaintiffs’ request for attorney’s fees,

and affirm the award of $305,992.61.

                           Conclusion

     We affirm the district court’s grant of summary judgment in

favor of plaintiffs on the WARN Act claim.   We also uphold the

jury verdict in its entirety and affirm the grant of attorney’s

fees.

AFFIRMED.

                               32