United Paperworkers v. ALDEN CORRUGATED CONTAINER

• Decision Date: 06 September 1995
• Docket Number: Civ. A. No. 91-11763-WGY,91-10327-WGY.
• Citation: 901 F. Supp. 426
• Parties: UNITED PAPERWORKERS INTERNATIONAL UNION, AFL-CIO, CLC, and United Paperworkers International Union, AFL-CIO, CLC, Local 408, v. ALDEN CORRUGATED CONTAINER CORPORATION, Bates Corrugated Box Corporation, Scales Lane Realty Corporation, Harman Realty & Trading Corporation, Corrugated Management Services Corporation, and Alden Holdings Corporation. UNITED PAPERWORKERS INTERNATIONAL UNION LOCAL 996, v. BATES CORRUGATED BOX CORPORATION v. FIRST FEDERAL SAVINGS BANK OF AMERICA.
• Court: U.S. District Court — District of Massachusetts

901 F. Supp. 426

UNITED PAPERWORKERS INTERNATIONAL UNION, AFL-CIO, CLC, and United Paperworkers International Union, AFL-CIO, CLC, Local 408, v. ALDEN CORRUGATED CONTAINER CORPORATION, Bates Corrugated Box Corporation, Scales Lane Realty Corporation, Harman Realty & Trading Corporation, Corrugated Management Services Corporation, and Alden Holdings Corporation.

UNITED PAPERWORKERS INTERNATIONAL UNION LOCAL 996, v. BATES CORRUGATED BOX CORPORATION v. FIRST FEDERAL SAVINGS BANK OF AMERICA.

Civ. A. Nos. 91-11763-WGY, 91-10327-WGY.

United States District Court, D. Massachusetts.

September 6, 1995.

COPYRIGHT MATERIAL OMITTED

Thomas M. Bovenzi, Bovenzi, Moriarty & Blackburn, Springfield, MA, for plaintiff United Paperworkers International Union, Local 996.

Robert M. Novack, Sherwin, Gottlieb & Lowenstein, Fall River, MA, for defendant Bates Corrugated Box Corp.

Ned F. Tentindo, First National Bank of Boston Law Office, Boston, MA, Peter G. Collias, Fall River, MA, for trustee First National Bank of Boston, as trustee in the above-entitled matter.

OPINION

COLLINGS, United States Magistrate Judge.

I. INTRODUCTION

These actions arise out of the 1991 closings of two corrugated cardboard product manufacturing plants. Consolidated for trial,¹ the two cases are brought under the Worker Adjustment and Retraining Act ("WARN"), 29 U.S.C. § 2101, et seq. (1994). The thrust of the plaintiffs' claim is that the defendants failed to provide the affected workers with the sixty days written notification of the plant closings mandated by the WARN Act and, consequently, are liable to the employees for back pay and fringe benefits for each day that the notice was required but not forthcoming.

During the course of pretrial conferences, it became apparent that counsel for all parties shared the view that the historical facts underlying each of the cases were undisputed. The point at which the parties diverge is with respect to the construction to be given those facts vis-a-vis the interpretation and applicability of the provisions of the WARN Act. In the interest of judicial economy, it was agreed that the cases would be tried to the Court based upon a stipulation of uncontested facts (# 52) and memoranda of law (# # 53, 56, 57, 58). With the requisite submissions having been filed, and oral argument having been heard, the record is now complete. The following constitutes the Court's findings of fact and conclusions of law thereon pursuant to Rule 52, Fed. R.Civ.P.

II. THE FACTS

A. The Parties

Plaintiffs United Paperworkers International Union, AFL-CIO, CLC and United Paperworkers International Union, AFL-CIO, CLC, Local 408 (hereinafter collectively the "Union") together are the sole collective bargaining agent for their members who worked at a corrugated cardboard products manufacturing plant owned by defendant Harman Realty & Trust Corp. (hereinafter "Harman") and located at 1 Church Street, New Bedford, Massachusetts (hereinafter the "Alden Plant") (Stipulations of Uncontested Facts, # 52a, tt) (hereinafter "Stip.") The Alden Plant was leased to, and operated by, defendant Alden Corrugated Container Corporation (hereinafter "Alden"), a Massachusetts corporation with a principal place of business in New Bedford, Massachusetts. (Stip. iiii, kkkk) Defendant Alden Holdings Corp. (hereinafter "Alden Holdings"), a holding company that does not engage in any business activities, owns one hundred percent (100%) of the stock of Alden. (Stip. n, vv) Defendant Corrugated Management Services Corp. (hereinafter "Corrugated") paid the salary of one Stanley Jacobson during the time that Mr. Jacobson served both as the executive vice president of Alden and the president of defendant Bates Corrugated Box Corp. (hereinafter "Bates"). (Stip. vv, aaaa)

Plaintiff United Paperworkers International Union Local 996² (hereinafter "Local 996"), a duly organized union, is the bargaining unit representing certain of the former employees of Bates, a Massachusetts corporation with a principal place of business in Townsend, Massachusetts. (Stip. mmm, iii) In addition to its union members, for purposes of this litigation Local 996 is also the representative of eleven non-union Bates employees. (Stip. vvvv) Bates, a full-line corrugating manufacturer, operated its business out of a plant in Townsend, Massachusetts (hereinafter the "Bates Plant") that was owned by, and leased from, defendant Scales Lane Realty Corp. (hereinafter "Scales"). (Stip. ppp, kkkk) Alden Holdings owns ninety-one percent (91%) of the common stock of Bates. (Stip. o)

B. The Events

Alden and Bates, which were physically located approximately ninety (90) miles apart, both engaged in the corrugated cardboard product manufacturing business albeit at different levels of the industry. (Stip. s, jjjj) Alden manufactured corrugated sheets, the raw material out of which corrugated products were produced; Bates, a full-line corrugating operation, manufactured corrugated boxes for retail sales. (Stip. ppp, jjjj)

For the most part, Alden and Bates had their own respective employees, used separate equipment and serviced their own individual customers. (Stip. jjjj) On some occasions, the two corporations competed with each other, while at other times they sold products to each other. (Stip. t, jjjj) Alden did not have any ownership interest in Bates' assets, nor did Bates own any of Alden's assets. (Stip. jjjj) As noted earlier, Alden Holdings owned most if not all of the common stock of the two corporations. (Stip. n, o) Moreover, certain individuals were simultaneously officers, directors and part owners of both corporations. (Stip. y, aa, jjjj)

The fiscal fortunes of Alden and Bates mirrored the overall economic malaise and depression experienced in New England during the late eighties and early nineties. (Stip. llll) In 1987, the two corporations reaped a meager profit. (Stip. llll) However, beginning in 1988 and continuing through 1990, Alden and Bates lost substantial and increasing amounts of money. (Stip. llll)

By unanimous consent of its directors, in 1987 Alden Holdings established a two million eight hundred thousand dollar ($2,800,000.00) line of credit with the Bank of Boston for the use and benefit of Alden and Bates. (Stip. r, ss, Exh. D) Prior to May of 1990, presumably pursuant to the line of credit granted to Alden Holdings, Alden and Bates each had loans from the Bank of Boston. (Stip. ss, mmmm) The two loans were not cross-collateralized: the loan to Alden was secured only by Alden assets and the loan to Bates was secured solely by Bates assets. (Stip. mmmm) As Alden and Bates continued to falter financially, the Bank of Boston transferred both of their loans into its "workout" department. (Stip. eeee, mmmm)

In May, 1990, Alden and Bates underwent an extensive reorganization. (Stip. mmmm) Alden was converted to a corrugated sheets only manufacturing operation; Bates' manufacturing capacity was significantly expanded in order to handle all of the finished box business previously generated at Alden. (Stip. nnnn, tttt) Consequent to the restructuring and conversion, Alden, which then employed more than one hundred (100) people, laid off approximately seventy-five (75) employees after giving those workers notice pursuant to the WARN Act. (Stip. nnnn) In addition, several employees of Alden, including the plant manager, Edward Barber, and five or six salespeople, were offered and accepted positions at the Bates Plant. (Stip. bbbb, cccc)

After its box business was transferred to Bates, Alden authorized Bates to assume the trade name of "Alden Bates Container" in order to permit Bates to take advantage of the Alden name in the retail market. (Stip. pp, oooo) This authorization was gratuitous; Alden received no compensation from Bates. (Stip. pp) At the same time, Alden began to operate under the trade name "Corrsheet" so as to avoid confusion, reflect its new status and maintain the distinction between the two corporate entities. (Stip. qq, oooo)

Coincident with the business reorganization in May of 1990, the Bank of Boston agreed to restructure the Alden and Bates loans and to extend a one million eight hundred thousand dollar ($1,800,000.00) line of credit to the two corporations. (Stip. mmmm) However, as a condition to the restructuring arrangement, the bank was resolute in demanding that the loans be cross-collateralized. (Stip. mmmm) Thus, the amounts loaned to Alden and Bates were secured by the property of Alden, Bates and Scales, each of whom became parties to cross-collateralization agreements with the Bank of Boston. (Stip. hh, ii, mmmm, Exh. D, documents A-K)³

In September, 1990, Alden, Bates and Alden Holdings convened a meeting with their major paper suppliers who were creditors of Alden and Bates. (Stip. jj, kk) During the course of the meeting, the representatives of Alden, Bates and Alden Holdings, i.e., Stanley Jacobson, Edward Barber, Benjamin Gottlieb, Walter Zuckerman, Danny Vaz and Don Perry, shared information concerning the business and financial affairs of Alden and Bates with the paper suppliers. (Stip. kk, ll) The upshot of the meeting was a decision by the attending creditors to supply Alden and Bates with paper exclusively on a cash-on-delivery basis. (Stip. gggg, oooo) At the same meeting, Alden and Bates coordinated some of their paper purchases from the paper suppliers. (Stip. nn)

As of September 11, 1990, Bates had at least one hundred twenty-three (123) employees working at the Bates Plant, ninety-seven (97) of whom were members of Local 996. (Stip. sss) On that date, Bates laid off thirty (30) members of Local 996. (Stip. ttt) A decision was made by Bates in October or November, 1990, to endeavor to sell its operation. (Stip. dddd) At that time, Bates was in a "workout" mode with the Bank of Boston. (Stip. eeee) With no advance written notice to the union, Bates laid off another twenty-four (24) members of Local 996 on November...