Carpenters Dist. Council of New Orleans & Vicinity v. Dillard Dept. Stores, Inc.
| Citation | 15 F.3d 1275 |
| Decision Date | 22 February 1994 |
| Docket Number | Nos. 92-3419,92-3613,s. 92-3419 |
| Parties | , 127 Lab.Cas. P 11,024, 9 Indiv.Empl.Rts.Cas. (BNA) 289 CARPENTERS DISTRICT COUNCIL OF NEW ORLEANS & VICINITY, et al., Plaintiffs-Appellees, Cross-Appellants, v. DILLARD DEPT. STORES, INC., Etc., et al., Defendants-Appellants, Cross-Appellees. Stephen J. PLESCIA, Etc., et al., Plaintiffs-Appellees, v. DILLARD DEPT. STORES, INC., et al., Defendants-Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
Stephen P. Beiser, McGlinchey, Stafford, Cellini-Lang, J. Forrest Hinton, Jr., Adams & Reese, New Orleans, LA, for defendants-appellants.
Daniel V. Yager, Asst. Gen. Counsel, Washington, DC, amicus curiae Labor Policy Assoc. Richard Monroe Garner, Metairie, LA, for Stephen J. Plescia, et al.
William Lurye, Nancy Picard, Robein, Urann & Lurye, Metairie, LA, for Carpenters Dist. Council, etc.
F. Lee Butler, Adams & Reese, New Orleans, LA, for Fed. Ins.
Jerome M. Volk, Jr., Mark J. Armato, DeMartini, Leblanc, D'Aquila & Volk, Kenner, LA, for Liberty Mut. Ins. Co.
Wendy M. Keats, Douglas N. Letter, Stuart M. Gerson, Asst. Atty. Gen., Civil Div., Dept. of Justice, Washington, DC, Harry Rosenberg, U.S. Atty., New Orleans, LA, for intervenor.
Appeal from the United States District Court for the Eastern District of Louisiana.
Before POLITZ, Chief Judge, REYNALDO G. GARZA, and JOLLY, Circuit Judges.
For the first time, this court is called upon to address the Worker Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C. Sec. 2101 et seq. (Supp.1993). It requires some employers--generally those who are curtailing or closing an operation--to provide sixty days notice to those employees who will be laid off or whose hours will be substantially reduced. In 1989, D.H. Holmes Co., Ltd. merged with Dillard Department Stores, Inc., resulting in the layoff of a large number of people--mostly former Holmes employees--whose job functions had become redundant. These former employees sued Dillard, alleging that in the course of the ongoing merger efforts, Holmes and Dillard had failed to provide adequate notice of the pending terminations. The district court generally ruled for the former employees and awarded some damages to them. Both Dillard and the former employees appeal, raising various issues that in turn we will address. We begin with the relevant facts.
In 1988, as a result of steadily declining profits and revenues, Holmes, a long-established and time-honored retail department store headquartered in New Orleans, Louisiana, hired investment counselors to find a solution to its financial problems. Through the investment counselor's efforts, Holmes and Dillard entered into negotiations in the latter part of 1988 for the merger of the two corporations. A merger agreement was ultimately reached between representatives of the two parties. Under this agreement, Holmes would merge with DDS Acquisitions Corporation ("DDS"), a wholly-owned transient subsidiary of Dillard, with Holmes continuing as the surviving wholly-owned subsidiary of Dillard. 1 On March 3 and 6, 1988, the agreement was approved by the respective boards of directors of both Dillard and Holmes. Still, it was not yet a done deal. One of the conditions of the agreement was that no less than eighty percent of Holmes's stockholders must approve the merger. Before any vote by the stockholders, however, Dillard and Holmes were required to furnish Holmes's stockholders with registration statements outlining the parties' respective financial conditions. Further yet, the Securities and Exchange Commission ("SEC") required that such registration statements must be pre-approved by the SEC before issuance. Pursuant to SEC regulation, Dillard and Holmes filed the proposed registration statement with the SEC on or about March 7, 1989. Efforts were made to have the SEC expedite its decision concerning the registration statement; however, neither Holmes nor Dillard could anticipate precisely when the SEC would approve the registration statement. Approximately one month after the statement was filed, the SEC approved the registration statement. Having received SEC approval, Holmes then scheduled a stockholders' meeting for May 9, 1989.
On April 19, 1989, at the direction of Dillard's personnel, Holmes notified its employees assigned to the corporate planning division and the warehouse facilities that they would be terminated as of May 9 if Holmes's stockholders approved the proposed merger with Dillard. Certain "transitional" employees at the warehouse facilities and the corporate offices received notification between April 21 and 28, informing them that they would be laid off sometime between May 9 and July 1. Finally, on May 12, employees in the Canal Street retail store were notified that they would be laid off between June 10 and July 8.
Because it was clear that the WARN Act sixty-day notice requirement would not be met with respect to certain employees, Dillard 2 made efforts to comply with WARN's damages provision. First, Dillard determined which employees were entitled to payments under the WARN Act, and as to those employees, the amount owed. Under Dillard's interpretation of the statute, part-time employees were not entitled to the notice, and, as such, they were not entitled to any damages in lieu of notice. Dillard further determined that the sixty-day penalty period in 29 U.S.C. Sec. 2104(a)(1)(A) referred to the number of work days within that period rather than the number of actual calendar days. This interpretation meant that each full-time employee who had not received the full sixty-day notice would be entitled to payment for those days the employee would have worked had the full sixty-day notice been given. Relying on the provisions of Sec. 2104(a)(2) of the Act, Dillard also concluded that it could deduct from this amount any severance pay or vacation pay that Dillard owed the employee.
After the two companies merged, and as a direct result of the merger, numerous employees were involuntarily terminated between May 8 and August 9, 1989. These former employees 3 sued a number of defendants, arguing that Dillard violated the WARN Act when it failed to provide the "affected employees" the required sixty-day notice of termination. In addition, the employees argued that Dillard failed to pay them the proper amount of damages in lieu of notice.
Initially, the employees sued Dillard and Holmes. Later, however, the employees amended their complaint, adding as defendants individual officers and directors of both Holmes and Dillard, as well as the Federal Insurance Company ("Federal Insurance"), Holmes's and Dillard's fiduciary liability insurer. As this lawsuit progressed, a number of motions were filed and ruled upon, and some of these rulings form the basis of this appeal and cross-appeal. First, in February 1991, the employees moved for partial summary judgment on the issue of liability under the WARN Act. In turn, Dillard moved for partial summary judgment, seeking to exclude from the plaintiff class certain groups of individuals that Dillard argued were not "affected employees" 4 under the statute. Dillard further sought to dismiss the employees' claim against the individual officers and directors of both Holmes and Dillard. Ultimately, the court granted the employees' motion for partial summary judgment, stating that Dillard violated the WARN Act. As to Dillard's motion, the district court granted partial summary judgment, dismissing the claims against the individual officers and directors. The court, however, did not exclude any of the contested members from the plaintiff class. In addition, because the officers and directors had been essentially dismissed from the suit, the court dismissed Federal Insurance from the suit because its only liability was tied to the possible liability of the officers and directors who had also been dismissed. See Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 778 F.Supp. 297 (E.D.La.1991).
In addition to its motion for summary judgment, Dillard had also filed a cross-claim against Federal Insurance and a third-party complaint against Liberty Mutual Insurance Company ("Liberty Mutual"). Dillard alleged that both insurance companies owed Dillard coverage, defense, and indemnity pursuant to a fiduciary liability insurance policy issued by Federal Insurance, and commercial general liability policies issued by Liberty Mutual. In response to Dillard's cross-claim, Federal Insurance moved for summary judgment, arguing that no coverage existed under its policies based on the allegations contained within the plaintiffs' complaint. Liberty Mutual also moved for summary judgment, asserting lack of coverage. The court granted summary judgment for both insurance companies. Id.
In September 1991, Dillard filed a second motion for summary judgment, this time alleging that the WARN Act is unconstitutional. The district court, in a separate opinion, denied Dillard's motion, holding that the WARN Act did not suffer any constitutional infirmities. See Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 778 F.Supp. 318 (E.D.La.1991).
In November 1991, the damages issue was tried to the district court, and the court awarded damages to employees. Following the trial, the employees sought prejudgment interest on the damage award, which the district court granted. In February 1992, the employees, in a separate civil action, further sought costs and attorneys' fees. Following an evidentiary hearing, the court ordered Dillard to pay attorneys' fees and costs to the employees for both the original action as well as for the subsequent action seeking the attorneys' fees and costs. See Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 790 F.Supp. 663 (E.D.La.1992).
Dillard raises four issues on appeal. First, Dillard challenges the district court's determination that the WARN Act is...
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