Carpenters Dist. Council v. DILLARD DEPT. STORES

• Decision Date: 21 April 1992
• Docket Number: Civ. A. No. 89-3680,89-3751.
• Citation: 790 F. Supp. 663
• Parties: CARPENTERS DISTRICT COUNCIL OF NEW ORLEANS AND VICINITY, et al. v. DILLARD DEPARTMENT STORES, INC., et al.
• Court: U.S. District Court — Eastern District of Louisiana

790 F. Supp. 663

CARPENTERS DISTRICT COUNCIL OF NEW ORLEANS AND VICINITY, et al. v. DILLARD DEPARTMENT STORES, INC., et al.

Civ. A. Nos. 89-3680, 89-3751.

United States District Court, E.D. Louisiana.

April 21, 1992.

COPYRIGHT MATERIAL OMITTED

William Lurye, Nancy Picard, Gardner, Robein & Urann, Metairie, La., R. Monroe Garner, New Orleans, La., for plaintiff class.

J. Forrest Hinton, Stephen P. Beiser, McGlinchey, Stafford, Cellini & Lang, New Orleans, La., for defendants D.H. Holmes, Ltd. and Dillard Dept. Stores, Inc.

ORDER AND REASONS

FONSECA, United States Magistrate Judge.

These consolidated matters are brought pursuant to the Worker Adjustment and Retraining Notification Act (WARN), 29 U.S.C. § 2101 et seq. We granted plaintiffs' partial motion for summary judgment on most of the liability issues presented in this action on August 29, 1991.¹ Trial on damages and the remaining issues of liability was held between November 4 and 6, 1991. Subsequent thereto, the parties submitted stipulations, together with an itemization of damages that would be due each class member calculated according to the formula established by this Court in the aforementioned order.² Having considered the testimony of the witnesses, the exhibits, the stipulations submitted, and the argument, we are ready to enter our final findings and conclusions of law. To the extent any finding is considered to be a conclusion of law, it is to be so treated; to the extent any conclusion of law is found to be a finding of fact, it likewise is to be so treated. To the extent not inconsistent herein, we adopt and incorporate by reference the findings and conclusions contained in the previous opinions in this case³ as well as the oral findings and conclusions entered on the record on November 6, 1991.

The history and background of this litigation are set forth in detail in an earlier opinion⁴ and need not be recounted here. For purposes of this opinion, it is sufficient to recall that this class action arose as a result of the termination of employment by defendants, D.H. Holmes, Ltd. (Holmes) and Dillard Department Stores, Inc. (Dillard), in connection with Dillard's merger with Holmes on May 9, 1989, of employees assigned to the Canal Street retail store, Holmes' Corporate Planning Division, and two warehouse facilities. Notices of termination were delivered to all employees⁵ who were later discharged on dates ranging between May 9, 1989 and July 22, 1989. The defendants failed to comply with the provisions of WARN which required a 60 day notice of termination to affected employees prior to a plant closing or mass layoff, and are therefore liable for the damages provided by that statute.

LIABILITY

Before proceeding to the calculation of damages, there remain two issues of liability that must be resolved and one prior finding that must be revisited.

In our prior Order and Reasons, we indicated that Holmes would have been responsible under WARN only for notification of employment terminations which occurred prior to its merger with Dillard, implying that Holmes alone would be liable for WARN damages due employees terminated on or before May 9, 1989, and that Dillard would be liable for WARN damages due employees terminated after that date.⁶ We arrived at this conclusion by treating the dealings between defendants as a "sale" of Holmes' business to Dillard, and then literally applying the language contained in Section 2101(b)(1) of the Act to that transaction. We conclude, on reconsidering the evidence presented to us, that it was an error to treat the transaction between the defendants as a sale of a business and hereby vacate that portion of our prior opinion which so held.

Essentially, the agreement which the parties have loosely referred to from time to time in their argument as "the merger" consisted of a transaction between three corporate entities, Holmes, Dillard, and DDS Acquisition Corporation (DDS), a wholly owned subsidiary of Dillard. Upon approval of the plan by the respective stockholders of each corporation, DDS and Holmes would merge, with Holmes continuing in existence as the surviving corporation. All of Holmes' shares of common stock then would be acquired by Dillard in an exchange, at a predetermined formula, for Dillard's Class A Common Stock. There was no sale of Holmes' business or assets, merely a change in the ownership of Holmes' stock. Implementation of the agreement made Holmes a wholly owned subsidiary of Dillard with both corporations continuing in operation subsequent to the May 9, 1989 "merger."⁷

Section 2101(a)(1) of the Act defines the term "employer" as "any business enterprise," however, the Act fails to provide either a definition for "business enterprise" or how parent-subsidiary relationships are to be treated. The final regulations promulgated by the Department of Labor contemplate treating a parent corporation as "the employer" under the Act, depending on the degree of control exercised by it over the affairs of its subsidiary.

Under existing legal rules, independent contractors and subsidiaries which are wholly or partially owned by a parent company are treated as separate employers or as a part of the parent or contracting company depending upon the degree of their independence from the parent. Some of the factors to be considered in making this determination are (i) common ownership, (ii) common directors and/or officers, (iii) de facto exercise of control, (iv) unity of personnel policies emanating from a common source, and (v) the dependency of operations.

20 C.F.R. § 639.2(a)(2).

Defendants have stipulated that Dillard was responsible for the decisions to close the business sites involved in this case, to terminate all employees, and when and to whom to send the WARN notices. The Agreement and Plan of Merger provided that, upon its effective date, the directors of DDS would be added as directors of Holmes and that Dillard could, after acquiring over one million of Holmes shares, require Holmes' directors to submit their resignations. (R., Joint Exhibit 19, paragraphs 1.4, 5.3.).

It is abundantly clear from the evidence that "but for" Dillard exercising its newly acquired powers under the Agreement as Holmes' parent, no sites would have been closed and no employees discharged.⁸ It is therefore proper to treat both Holmes and Dillard as the employer of all class members and impose on them joint liability under WARN.

SEPARATE SITES OF EMPLOYMENT

Defendants contend that those employees that were assigned to the Holmes Planning Department and to its Riverbend warehouse, and who were discharged as a result of the merger agreement, were not entitled to notice under the Act since less than 50 employees from those respective sites were laid off. Under the Act, the definitions of both "plant closing" and "mass layoff" require that at least 50 employees be laid off at a "single site of employment." § 2101(a)(2) and (3). Determination of this issue, which was raised in defendants' motion for partial summary judgment, was deferred until additional evidence could be submitted at trial on the merits. Plaintiffs, while not disputing that the physical locations of the above sites were physically separate from other Holmes' sites, contend that the operations of the Planning Department, Canal Street store, and the Riverbend warehouse, Elmwood warehouse were so intricately intertwined with each other as to constitute two separate sites, i.e., the Canal Street store and Planning Department site and the Elmwood and Riverbend warehouse site.

On November 6, 1991, at the conclusion of the trial on the merits, we determined, for reasons orally assigned on the record, that the Planning Department and Riverbend warehouse are in fact separate sites and that there were insufficient numbers of employees assigned to those locations to fall within the Act. We adopt and incorporate herein our assigned oral reasons.

The Holmes Planning Department was located on Bienville Street in New Orleans, several miles distant from the Canal Street Store. Personnel assigned to the Planning Department were engineers, electricians, and carpenters who were responsible for the repair and maintenance of all of Holmes retail facilities, located both in and outside of the State of Louisiana. Several of the employees assigned to the Bienville location testified at trial that they spent a considerable percentage of their time working at the Canal Street store, however, that was due almost exclusively to the fact that the Canal Street store was the oldest of Holmes' properties and, consequently, required more maintenance than the others. On any given day, however, the Bienville site employees could be assigned work at any of Holmes' other outlets. The Bienville employees' payroll checks were issued from the Canal Street store, but this was an insufficient connection by itself to view the Bienville location and the Canal Street store as one site.

Similarly, there existed insufficient commonality between the Riverbend and Elmwood warehouses to consider them to be one site. The Riverbend warehouse was located approximately five to ten miles from the Elmwood warehouse. The Elmwood warehouse was solely responsible for ordering, storage and distribution of "hard ticket items"⁹ to Holmes retail outlets. Riverbend performed the same function for merchandise considered to be "soft goods." Each warehouse had its own manager, who reported to a division vice-president who was located at the Elmwood warehouse. One employee was designated responsibility for personnel functions for both warehouses.

The two warehouses, although serving similar functions, that is, the storage and distribution of goods to Holmes' retail outlets, operated independently of each other. Personnel were assigned to a particular facility and did not change places with employees at the other.¹⁰ There was no evidence to suggest that, in Holmes' operations, the ordering,...