Wilson v. Airtherm Products, Inc.
| Decision Date | 03 February 2006 |
| Citation | 436 F.3d 906 |
| Parties | Charles T. WILSON; Caryless Vondran; Willie Ferell; Onixe Anderson; Dallas W. Watlington; Tommy Humphrey; Neartis Clark; Alvin Smith, Jr.; Tommie Outley; Billy Fleming; Lloyd A. Nichols; Gary R. Thomas; Alvin Smith; Jimmy L. Dooley; Kenneth Rogers; William Dawson; Samuel J. Cullum; Thomas Anthony; Corey Amos; Bobby Hedrick; Charles Busby; Larry Foster; Danny Doler; Percy Graham; Cora L. Jamison; Robert Thorn, Jr.; Jessie Hawkins; Curtis Bradley, Jr.; Donald Barger; Almos Andrews; Jesse Lee Ferrell; Eddie Lee Hodger; Leodis Seawood; Roy Lee Coleman; Larvan Hawkins; Steven Dearing; Tracy Hill; Jeffery Wright; John Brooks Jones; Clarence Treat; Saundra House; Kevin Lawrence; Aaron Barton; Odis L. Barton; Manuel Sanchez, Jr.; Stanley Barton; Evelyn Burgess; Bennie Wilson; Kristi McCain; Leo Deaviser; Ronald McFadden; Kendle Williams; Willie K. Ponder; George Robert Lawrence; Elmo Hilliard; Sammie Sinclair; Charlie L. Huckaba; Calvin Smith; Recorder Henderson; Huester Barton; Ruby Hall; Michael Stanley Norviel; Lewis E. Cook; Isacc Rogers; Carlton Hoggard; Robert Nelson; Lincoln Taylor, Jr.; Terry L. Gardner; Willie White; Walter L. Taylor; Barbara K. Dye: Troy Sparkmon; Paul Roger Clardy; Lester Taggart; Andy Anderson; Daron Sparkman; Lee A. Henderson; Jermaine Davis; Charles A. Hughes; Donald Strong; James Nobles; Floyd Stokes; Clyde V. Clark; Richard Thornton; Ronnie C. McShan; James E. Fingers; Donald R. Hall; Billy J. Jones, Appellees/Cross-Appellants, v. AIRTHERM PRODUCTS, INC., Appellant/Cross-Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Michael B. Wallace, argued, Jackson, Mississippi (M. Nan Alessandra and David M. Korn, New Orleans, Louisiana, on the brief), for appellant.
Pamela Dean Walker, Little Rock, Arkansas (James E. Nickels, North Little Rock, Arkansas, on the brief), for appellee.
Before MURPHY, BOWMAN, and GRUENDER, Circuit Judges.
Former employees of Airtherm Products, Inc. (API) sued API for failing to notify them of a plant closing as required by the Worker Adjustment and Retraining Notification Act (WARN Act), 29 U.S.C. §§ 2101-09 (2000), before API sold its business to Airtherm LLC (ALLC). Concluding that API violated the WARN Act by terminating its employees' employment without guaranteeing that ALLC would hire the employees after the sale was concluded, the District Court granted summary judgment to the former employees and awarded damages in the amount of $515,661.92. Reviewing de novo the District Court's grant of summary judgment, Smullin v. Mity Enter., Inc., 420 F.3d 836, 837 (8th Cir.2005), we conclude that the WARN Act's sale-of-business exclusion, 29 U.S.C. § 2101(b)(1), protected API from liability in the circumstances of this case. Therefore, we reverse.
API formerly engaged in the business of manufacturing heating and air conditioning products. In 2000, ALLC's parent company, Mestek, Inc., which also manufactured heating and air conditioning products, became interested in purchasing API's business. When Mestek formed ALLC as a subsidiary for the purchase of API, Mestek decided to use the name Airtherm because that name had value in the heating and air conditioning market. On May 24, 2000, API and ALLC executed an Asset Purchase Agreement (Purchase Agreement) for the sale of API's manufacturing business to ALLC. Under the Purchase Agreement, ALLC agreed to offer employment to all of API's employees. An exhibit appended to the Purchase Agreement contained a list of API's employees. Closing was scheduled for June 30, but the parties did not close the sale on or before that date. On August 21, API and ALLC executed the First Amendment to Asset Purchase Agreement (Amended Purchase Agreement). The Amended Purchase Agreement replaced the section of the Purchase Agreement that included ALLC's promise to offer employment to all of API's employees with a section that included the following promise: "Effective on the next working day following the Closing Date, [ALLC] (a) shall offer employment to all salaried and clerical employees of [API] in St. Louis and Arkansas; and (b) shall offer employment to employees within the bargaining unit represented by the [union]." Joint Appendix at 138. The Amended Purchase Agreement also changed the closing date from June 30 to August 25. The Amended Purchase Agreement added provisions under which ALLC agreed to indemnify API for WARN Act violations and API agreed to notify the union in writing about the decision to close the manufacturing plant and allow the union to request bargaining over the effects of the plant closure. Specifically, API agreed to allow ALLC to approve the contents of the letter to the union, and once approved, ALLC promised to indemnify API for any liability under the WARN Act.1
On August 22, ALLC assured API in writing that ALLC would "hire a substantial number of [API's] current employees" such that "[t]he jobs of fewer than 50 people will be affected by termination." Id. at 99. The letter also included an "Employment Application Schedule" to be posted for API's employees so they would know that ALLC would accept applications from the employees on Monday, August 28, and on Tuesday, August 29. Id. at 100. In an August 23 letter from API's attorney to the union representing some of API's employees, API stated that it was "in the process of being sold" to ALLC and notified the union that it was exercising its rights under the labor agreement's "Severance Allowance" clause "to close the plant, terminate the bargaining unit employees, and pay all eligible employees their severance pay." Id. at 144. The letter also stated, Id. at 145.
The sale closed on August 25, the same day API terminated the employment of its employees. By September 25, ALLC had hired "a substantial number of former [API] employees."2 Wilson v. Airtherm Prods., Inc., No. 2:01 CV 00055-WRW, 2001 WL 34818807, at *2 (E.D.Ark. Sept.10, 2001). In March 2001, a number of API's former employees, including those hired by ALLC, sued API for failing to give notice of a plant closing under the WARN Act. The District Court granted summary judgment to the employees. In deciding this appeal, we do not address the majority of issues raised by API or the employees. Instead, we focus solely on the District Court's interpretation and application of the WARN Act's sale-of-business exclusion.
The WARN Act requires an employer to provide written notice to employees at least sixty days before a plant closing. 29 U.S.C. § 2102(a)(1). The purpose of the notice requirement is to provide "workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market." 20 C.F.R. § 639.1(a) (2005). Although the notice requirement may seem straightforward, its application often depends on the WARN Act's technical definitions. For instance, the WARN Act defines plant closing as "the permanent or temporary shutdown of a single site of employment . . . result[ing] in an employment loss . . . during any 30-day period for 50 or more [full-time] employees." 29 U.S.C. § 2101(a)(2). The WARN Act defines an employment loss as "an employment termination, other than a discharge for cause, voluntary departure, or retirement." Id. § 2101(a)(6)(A).
Critical to this case, however, is the WARN Act's exclusion of sales of businesses from what constitutes an employment loss:
In the case of a sale of part or all of an employer's business, the seller shall be responsible for providing notice for any plant closing . . . up to and including the effective date of the sale. After the effective date of the sale of part or all of an employer's business, the purchaser shall be responsible for providing notice for any plant closing.... Notwithstanding any other provision of this chapter, any person who is an employee of the seller (other than a part-time employee) as of the effective date of the sale shall be considered an employee of the purchaser immediately after the effective date of the sale.
Id. § 2101(b)(1) (emphasis added). This sale-of-business exclusion stresses that the WARN Act does not automatically require a seller of a business to give notice to its employees that their employment will be terminated as a result of the sale. The regulations explain, "Although a technical termination of the seller's employees may be deemed to have occurred when a sale becomes effective, WARN notice is only required where the employees, in fact, experience a covered employment loss." 20 C.F.R. § 639.6. Therefore, we must apply the sale-of-business exclusion to the facts of this case to determine whether API—as the seller—was required to give notice to its employees of a looming employment loss due to a plant closing.
The plain language of the sale-of-business exclusion supports API's contention that the WARN Act did not require it to provide notice to its employees of a plant closing. Even though a seller of a business technically terminates the employment of its employees—it would be difficult to imagine a sale of a business as a going concern where the seller does not terminate the employment of its employees—the WARN Act does not focus on technical terminations. See id. Instead, the WARN Act creates a system that allocates notice responsibility between the seller of the business and the buyer of the business, and only the party actually causing employment loss due to a plant closing is required to provide WARN Act notice. As long as the seller's employees are...
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