Allen v. Sybase, Inc.

Decision Date25 October 2006
Docket NumberNo. 04-4045.,04-4045.
Citation468 F.3d 642
PartiesJulie ALLEN, Bryan Benson, Jessica Bentz, Matthew Bess, Mark Bradley, Gregory Allen Burgess, Jason Carone, Jeffrey J. Coburn, Fredric Karl Egan, Augusto Jay Falco, Ellen Gentry, John Jeffrey Hanson, Daniel H. Hodgson, Michael Jensen, Ben Kafka, Korman King, Carrie Liljenquist, Marsha Ludlow, Glenn McIntosh, William Mulloy, Angela Perry, Steven Peterson, John H. Sermon, H. Alan Strange, Lane Walters, Ben P. Willis, Plaintiffs-Appellees, v. SYBASE, INC., a Delaware corporation; Financial Fusion, Inc., a Delaware corporation, Defendants-Appellants.
CourtU.S. Court of Appeals — Tenth Circuit

Felicia R. Reid (John F. Baum and Melissa E. Lamfalusi, with her on the briefs) of Curiale Dellaverson Hirschfeld & Kraemer, LLP, San Francisco, CA, for Defendants-Appellants.

Barnard N. Madsen (Mark D. Stubbs with him on the brief) of Fillmore Spencer LLC, Provo, UT, for Plaintiffs-Appellees.

Before KELLY, SEYMOUR, and EBEL, Circuit Judges.

SEYMOUR, Circuit Judge.

Plaintiffs, twenty-six1 former employees of Financial Fusion, Inc. (FFI), filed suit against FFI and its parent company, Sybase, Inc., (Sybase) (defendants), for violations under the Worker Adjustment and Retraining Notification Act (WARN). 29 U.S.C. § 2101 et seq. The parties filed cross motions for summary judgment, and the district court ruled for plaintiffs. The court subsequently entered final judgment ordering defendant companies to pay damages, interest and attorneys fees to plaintiffs in accordance with WARN. Defendants appeal. We affirm in part, reverse in part, and remand for further proceedings.2

I

In order to place the facts of this case in their relevant context, we begin with a preliminary discussion of WARN, which we will develop more fully in our analysis. WARN is a remedial statute that generally

provides protections to workers, their families and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice provides 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).3 WARN directs that an employer can be liable for up to sixty days' back pay and benefits to certain employees who lose their jobs as part of a plant closing or mass layoff4 without receiving sixty days' advanced notice. See 29 U.S.C. § 2104(a)(1).5 An employer may be excused from the sixty-day notice requirement where a mass layoff was the result of an unforseen business circumstance. Id. at § 2102(b)(2)(A). Nevertheless, an employer "shall give as much notice as is practicable and at that time shall give a brief statement of the basis for reducing the notification period." Id. at § 2102(b)(3). WARN also directs that a number of smaller employment losses over a ninety-day period may be aggregated to constitute a mass layoff, thereby imposing on an employer the obligation to provide either statutory notice or sixty days' back pay in lieu of notice to relevant employees. Id. at § 2102(d). In these situations, however, the employer may disprove the existence of a mass layoff if it shows that the individual sets of employment losses were for separate and distinct causes. Id.; 20 C.F.R. § 639.5(a)(1)(ii).

Having outlined the basic principles of WARN, we turn to the facts of this case. Plaintiffs were employed by FFI, a software company specializing in retail banking and capital markets software, with a broad base of its clients located in New York City's financial district. FFI is headquartered in Concord, Massachusetts, but has facilities in various states across the country, including one located in Orem, Utah, where plaintiffs were employed.

FFI is a wholly owned subsidiary of Sybase. Sybase acquired FFI in March 2000. During the 2000 fiscal year, FFI reported an operating loss of approximately $20.3 million. According to Sybase's Chief Financial Officer, Pietier Van der Vorst, FFI continued to operate at a loss throughout the first three quarters of 2001 and

fell far short of the revenue and project targets that Sybase had budgeted for FFI in 2001.... Sybase's management team repeatedly communicated to FFI throughout 2001 that, in order for FFI to meet the financial target numbers that had been established by Sybase, it would need to take actions to reduce its operating costs.

Aplt.App. at 188. Sybase directed FFI that it needed to be profitable by the fourth quarter of 2001.

In an effort to meet Sybase's financial targets, FFI engaged in a series of small layoffs during the first two quarters of 2001. The company dismissed four employees during the first quarter and five in the second quarter. But FFI's operating costs still exceeded its revenues: during the first quarter of 2001, FFI operated at a loss of $11 million; during the second quarter, the loss was $5.6 million.

In early August 2001, the middle of the third quarter, FFI cancelled production for a product scheduled to be released during the first quarter of 2002. It then moved all the project engineers who were assigned to the 2002 product, including a majority of plaintiffs, to work on a different product with a release date of September 24. During this same time frame, FFI planned a layoff in comparable size to the job terminations earlier in the year. On September 7, 2001, the company terminated four employees at the Orem location, all of whom eventually became plaintiffs in the instant case. FFI did not provide the employees with advance notice of the terminations, nor sixty days' pay in lieu of such notice pursuant to WARN.

The terminated employees were offered a severance package in exchange for signing a release form in which they waived any claims they had against the company. The relevant language in the form read:

I agree that my Severance Benefit is in full satisfaction of any claims, liabilities, demands or causes of action, known or unknown, that I ever had, now have or may claim to have had against the Company or any [of] its parents . . . as of the date of this Release, except claims for workers' compensation insurance and unemployment insurance benefits. Any claims, whether for discrimination, including claims under state law, Title VII of the Civil Rights Act of 1964 or the Age Discrimination in Employment Act, wrongful termination, breach of contract, breach of public policy, physical or mental harm or distress or any other claims, are hereby forever released and I agree and promise that I will not file any legal action asserting any such claims.

Id. at 280. The employees were given seven days to consider the agreement and consult with a lawyer, and were allowed an additional three days following execution of the agreement to rescind. None of the employees consulted with an attorney and each returned the signed waiver.

On September 24, 2001, FFI met its release date for the new product. Four days later, on or about September 28, 2001, and two weeks after the September 11, 2001 airplane bombings of the World Trade Center and the Pentagon (9/11 bombings), FFI dismissed forty-one employees, many of whom had worked to ensure that FFI's new product was released on time. As with the employees dismissed on September 7, none were provided advance written notice of the terminations nor, in the alternative, sixty days' pay and benefits under WARN. Likewise, each of these employees signed a release form in exchange for a severance package from FFI. Twenty-four of these fired employees became the remaining plaintiffs in this case. FFI's third quarter losses were slightly improved, equaling $4.9 million, but nonetheless contributed to a total of $21.5 million in losses thus far in 2001.

In October, Sybase's Chief Financial Officer initiated "a plan to restructure and consolidate on a company-wide basis Sybase's Information Technology (`IT') operations." Id. at 189. In accordance with this plan, "Sybase directed FFI to eliminate 6 IT positions at its Orem, Utah site. The elimination of these 6 positions was the result of Sybase's corporate consolidation and was unrelated to FFI's financial condition." Id. In conjunction with the six dismissals ordered by Sybase, FFI decided to terminate an additional five employees from its Orem office "in an effort to cut fourth quarter expenses." Id. at 193. The dismissals occurred on October 31, 2001.

FFI's human resources director, Neil Morris, was aware of WARN's notice and payment requirements and recognized that with the October 31 dismissals, the company had fired more than fifty employees over a ninety-day period at the Orem site. Therefore, FFI provided the eleven employees fired on October 31 with sixty days' pay and benefits "in satisfaction of any obligations [the company might] owe under state or Federal law." Id. at 196. In January 2002, Sybase proudly reported that FFI "bettered its [fourth quarter] forecast revenues and expenses to produce the company's first profitable quarter." Id. at 79.

Plaintiffs filed this action on February 7, 2003, claiming they were fired without notice in a mass layoff and defendants were therefore obligated to provide them with sixty days' back pay and benefits. Defendants denied liability under WARN and argued that, in any event, plaintiffs had waived any WARN claims by signing the releases. With respect to WARN, defendants asserted that the job terminations between September 7 and October 31 did not represent a planned mass layoff triggering any statutory obligations, and that the three different layoffs during the relevant ninety-day period were separate and distinct within the meaning of the Act. Finally, they claimed any potential WARN liability should be excused under the unforseen business circumstances...

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