Wholesale & Retail Food v. Santa Fe Terminal Serv., CV 91-3230 WJR (Kx).

• Decision Date: 28 April 1993
• Docket Number: No. CV 91-3230 WJR (Kx).,CV 91-3230 WJR (Kx).
• Citation: 826 F. Supp. 326
• Court: U.S. District Court — Central District of California
• Parties: WHOLESALE AND RETAIL FOOD DISTRIBUTION LOCAL 63, etc., et al., Plaintiffs, v. SANTA FE TERMINAL SERVICES, INC., et al., Defendants.

826 F. Supp. 326

WHOLESALE AND RETAIL FOOD DISTRIBUTION LOCAL 63, etc., et al., Plaintiffs, v. SANTA FE TERMINAL SERVICES, INC., et al., Defendants.

No. CV 91-3230 WJR (Kx).

United States District Court, C.D. California.

April 28, 1993.

COPYRIGHT MATERIAL OMITTED

Robert D. Vogel, Wohlner, Kaplon, Phillips, Vogel & Young, Encino, CA, for plaintiffs.

James A. Bowles, Hill, Farrer & Burrill, Los Angeles, CA, for defendants.

MEMORANDUM AND ORDER

REA, District Judge.

This action came on for court trial December 9, 1992, before the Court, the Honorable William J. Rea presiding. Robert D. Vogel of Wohlner, Kaplon, Phillips, Vogel & Young, appeared on behalf of plaintiffs and James A. Bowles of Hill, Farrer & Burrill on behalf of defendants. The parties agreed that the issue of damages, if necessary, be bifurcated from the liability phase of the trial. After an eight (8) day court trial, on the issue of liability, the Court ordered the parties to submit written closing arguments. Based upon evidence introduced and adduced during the course of trial, the arguments of counsel and the applicable authorities, the Court rules as follows.

The following issues must be resolved:

(1) Should the Court reanalyze the statute of limitations issue;

(2) Whether a mass layoff within the meaning of the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. § 2101, et seq., occurred;

(3) If a mass layoff occurred, whether defendant Santa Fe Terminal Services Inc.'s ("SFTSI") failure to give sixty (60) days notice of its cessation of operations at the Los Angeles Santa Fe Railway terminal was excused by the unforeseeable business circumstance exception to WARN;

(4) Whether defendants' violation of WARN, if any, was based on a reasonable good faith belief that their actions were not in violation of the Act.

I. FACTS

Defendant Atchison, Topeka and Santa Fe Railroad Company ("Railway") and defendant SFTSI are employers as defined by WARN, 29 U.S.C. § 2101(a)(1). SFTSI is a wholly owned subsidiary of Railway. Railway owned, maintained and operated an intermodal rail terminal located in the City of Commerce, California, known as the Los Angeles Hobart Yard ("Hobart Yard").

Railway and SFTSI entered into a service agreement, by which SFTSI would perform ramping and deramping of rail freight at the Hobart Yard. From April 1, 1988, through March 31, 1990, plaintiffs were signatory to the National Master Freight Agreement (referred to as "NMFA" or "collective bargaining agreement"), which enunciated the terms and conditions of employment for individuals employed by SFTSI, and represented by plaintiff unions for purposes of collective bargaining. On or about February 22, 1990, Railway terminated the service agreement, effective March 31, 1990. On March 1, 1990, SFTSI notified the plaintiff labor representatives in writing that SFTSI would be permanently laying off all employees assigned to the Los Angeles Hobart Yard as of March 31, 1990. The layoff did in fact occur and as of April 1, 1990, SFTSI no longer performed the ramping and deramping services for Railway.

On June 14, 1991, plaintiff labor representatives filed the instant action for violation of WARN, alleging that defendants laid off employees without the required WARN notice.

II. DISCUSSION

A. The Worker Adjustment and Retraining Notification Act

WARN, 29 U.S.C. § 2101, et seq., governs the instant action. WARN requires that employers give sixty (60) days written notice to employees prior to a mass layoff. 29 U.S.C. § 2104(a)(1). An employer who orders a mass layoff in violation of the sixty (60) day notice requirement is liable for back pay for each day of violation. The maximum violation period for which back pay liability may be imposed is sixty (60) days. 29 U.S.C. § 2104(a)(1)(B).

B. The Statute of Limitations

The Court has previously addressed the statute of limitations issue on defendants' motion for summary judgment. In an order dated July 31, 1992, the Court adopted the three year statute of limitations contained in California Code of Civil Procedure § 338. Defendants argue, for the second time, that the instant action is barred by the statute of limitations. In spite of the fact that this issue was previously ruled upon, an analysis follows because both parties have thoroughly addressed and briefed the issue.

The WARN Act does not contain a statute of limitations, thus the Court must determine which statute of limitations is applicable. The Supreme Court has held "given our longstanding practice of borrowing state law, and the congressional awareness of this practice, we can generally assume that Congress intends by its silence to borrow state law." Agency Holding Corp. v. Malley-Duff & Assocs., 483 U.S. 143, 147, 107 S.Ct. 2759, 2762, 97 L.Ed.2d 121 (1987). Alternatively, the Court may choose to adopt a federal statute of limitations when there exists an analogous federal law and federal policies which make the federal statute of limitations more appropriate. Del Costello v. Teamsters, 462 U.S. 151, 171-72, 103 S.Ct. 2281, 2294, 76 L.Ed.2d 476 (1983).

Defendants now urge the Court to adopt the six-month statute of limitations contained in the National Labor Relations Act, ("NLRA"), 29 U.S.C. § 160(b). Defendants failed to raise this argument earlier when the issue was briefed on a motion for summary judgment. Plaintiffs contend that defendants have waived the NLRA statute of limitations defense, relying on U.S. Postal Serv. v. American Postal Workers Union, 893 F.2d 1117 (9th Cir.1990).¹ However, the instant case is distinguishable from the U.S. Postal Serv. case because defendants pled the six-month NLRA statute of limitations as an affirmative defense in their Answer to plaintiffs' Complaint. In spite of pleading this statute in their Answer, defendants failed to raise the issue during the summary judgment proceeding or in the Pretrial Conference Order.² Accordingly, defendants have waived it.³

Thus, having concluded the NLRA statute of limitations should not be applied, the Court must determine the "appropriate state statute of limitations." International Union v. Hoosier Cardinal Corp., 383 U.S. 696, 704-05, 86 S.Ct. 1107, 1112-13, 16 L.Ed.2d 192 (1966). The resolution of this issue "depends upon an examination of the nature of the federal claim and the federal policies involved." United Parcel Serv., Inc. v. Mitchell, 451 U.S. 56, 60-61, 101 S.Ct. 1559, 1562-63, 67 L.Ed.2d 732 (1981).

Defendants argue the one year statute of limitations found in California Code of Civil Procedure § 340(1) should be applied. Plaintiffs' employees were laid off on March 31, 1990, and the instant action was filed on June 14, 1991. If the Court applies section 340(1), plaintiffs' action is barred.⁴

During the summary judgment hearing plaintiffs argued the Court should apply section 338, a three year statute of limitations. Section 338 applies to "an action upon liability created by statute, other than a penalty or forfeiture." The Court concludes, as it did in its July 31, 1992 order, that the applicable provision of the WARN Act is not a statute for penalty or forfeiture, and as a result, C.C.P. § 338 is the most appropriate statute of limitations.⁵

There is a paucity of cases which have addressed the statute of limitations applicable to cases brought pursuant to WARN. In In re Cargo, Inc., 138 B.R. 923 (Bankr. N.D.Iowa 1992), the court rejected the trustee's contention that WARN damages are statutory penalties. The court held, "Given the purposes of the WARN Act, I conclude that it is remedial, not punitive in nature." Id. at 927, citing, Solberg v. Inline Corp., 740 F.Supp. 680, 685 (D.Minn.1990). The court stated that the "back pay liability of the employer is comparable to privately negotiated severance pay. It is severance pay in lieu of notice, imposed by statute." Id.

WARN was enacted to "soften the blow" on the employee who is confronted with a sudden loss of employment. In spite of the fact that WARN provides for monetary awards in excess of compensatory damages (because the employee receives pay for the number of days the employer was in violation, regardless of how many days the employee is actually out of work), section 338 is the most "appropriate" statute of limitations with respect to the provisions of WARN in issue because its purpose is not penal in nature.⁶

The Court concludes, as it did on defendants' motion for summary judgment, the statute of limitations contained in California Code of Civil Procedure § 338 is applicable.⁷

C. Whether a Mass Layoff Occurred

A mass layoff within the meaning of WARN occurs when at least fifty employees suffer an employment loss at a single site of employment, which affects at least 33% of active employees. 20 C.F.R. § 636.3(c).

Defendants argue that the Los Angeles Hobart Yard, which included both SFTSI and Railway employees, constitutes a single site of employment. Defendants' argument is based on the assertion that there is a single product or service at the Hobart Yard (rail transportation), and all of the employees work in an integrated operation to provide this product and service. Plaintiffs, on the other hand, contend that SFTSI and Railway constitute two separate sites of employment because SFTSI and Railway employees performed separate and unique, albeit related, tasks independently of each other.

The Court need not determine whether the Hobart Yard constitutes a single site of employment or two separate sites of employment because even assuming the Hobart Yard is a single site of employment, a mass layoff has occurred.⁸ According to the evidence presented at trial two hundred and sixty one (261) SFTSI employees were permanently displaced as of March 31, 1990.⁹ At the time of the employment loss there were 512 Railway employees working in the Hobart tower and/or terminal.¹⁰ Two hundred and sixty one (261) employees were displaced out of seven hundred and seventy three (773)...