Childress v. Darby Lumber, Inc.
| Citation | 357 F.3d 1000 |
| Decision Date | 06 February 2004 |
| Docket Number | No. 01-35764.,01-35764. |
| Parties | Sharon CHILDRESS; Dwayne Springer; Mike Frisbie; Stuart Ingraham; Rick Buchanan; Scott Rotering; Phillip Cook; David Hall; Tari Conroy; Lyle Goracke; Robert Hackel; Gerald Behling; Brandon Zeiler; Ray Luchi; Randy Rennaker; Dan Wiseman, Jr.; Dan Wiseman, Sr.; Greg Holt; Steven Mossbrucker; and Dave Osborn, Plaintiffs-Appellees, v. DARBY LUMBER, INC. a Montana corporation; and Bob Russell Construction Inc. an Idaho corporation, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Richard A. Reep and Robert T. Bell of Reep, Spoon & Gordon P.C., Missoula, MT, for the defendants/appellants.
Lon J. Dale and G. Patrick HagEstad of Milodragovich, Dale, Steinbrenner & Binney, P.C. of Missoula, MT, for the plaintiffs/appellees.
Appeal from the United States District Court for the District of Montana; Donald W. Molloy, District Judge, Presiding. D.C. No. CV-99-16-M-DWM.
Before D.W. NELSON, THOMAS, Circuit Judges, and ILLSTON, District Judge.*
Darby Lumber and Bob Russell Construction, Inc. appeal the district court's grant of summary judgment in favor of Sharon Childress and other former employees in their action alleging violations of the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. §§ 2101-09. At issue is whether the district court erred in: 1) concluding that Darby Lumber and Bob Russell Construction constituted a single employer for purposes of the WARN Act; 2) concluding that the companies were not exempt from the WARN Act's sixty-day notice requirement for mass layoffs; 3) deciding various discovery disputes; and 4) awarding attorney's fees. We conclude that the district court was not in error, and therefore affirm its ruling in full.
This case arises under the Worker Adjustment and Retraining Notification Act. Id. Bob Russell Construction (BRC) was incorporated in the State of Idaho by Robert E. Russell (Russell) in 1976. In 1984, Darby Lumber, Inc. (DLI) was incorporated in the State of Montana. In January of 1996, DLI acquired 100% of the shares of BRC. At all times relevant to these proceedings, the stock of DLI was owned by Russell (approximately 49%) and the DLI Employees' Stock Ownership Trust (approximately 51%).
DLI operated as a lumber mill and manufactured, marketed, and sold finished lumber. BRC operated as a construction company, building log roads, hauling timber, and managing the log yard for DLI. During the period from September 17, 1997 to September 18, 1998, DLI employed 88 employees each with more than 1,000 hours of employment with the company. During the period from September 17, 1997 to September 18, 1998, BRC employed 18 employees each with more than 1,000 hours of employment with the company.
On September 24, 1998, Larry Guerrero, the general manager of the DLI mill, placed a written statement in the paychecks of all DLI employees, advising them of the financial difficulties of the company, and informing them that there would be a "major layoff." On September 25, 1998, DLI shut down the mill, and all mill employees were laid off. The planer operation at the mill continued to operate for several weeks thereafter, but was then shut down, and all of those employees were laid off. All of the employees of BRC were laid off over the next several months.
On February 8, 1999 this suit was filed by former DLI employees, alleging violations of the WARN Act, which requires a sixty-day notice of layoffs in certain situations. The WARN Act requires employers of 100 or more full-time employees to give at least sixty days advance notice of a plant closing if the shutdown results in an employment loss at a single employment site during any thirty-day period for fifty or more employees (excluding any part-time employees). Id. Appellants DLI and BRC asserted that the Act did not apply to them because each company had fewer than 100 full-time employees. Appellants further claimed that even if the WARN Act did apply, the affirmative defenses of "faltering company," "unforeseeable business circumstances," and/or "good faith" applied and would preclude application of the WARN Act. Appellees maintained that the two companies qualified as a "single employer" under the WARN Act, that the exceptions did not apply here, and that even if they did apply, WARN sanctions were warranted because the notice of termination was insufficient.
On cross-motions for summary judgment, the district court found, based on an analysis of the Labor Management Relations Act and WARN Act factors for determining single employer status, that "BRC and Darby Lumber are a single employer for the purposes of the WARN Act." Childress v. Darby Lumber, Inc., 126 F.Supp.2d 1310 (D.Mont. Jan.4, 2001)(order granting summary judgment). The district court went on to find that neither the good faith, business circumstances, nor faltering company exceptions applied. The district court then found that Darby Lumber would still be liable even if some of the exceptions applied, because its notice was inadequate. In subsequent orders, the Court granted plaintiffs' motion for attorney's fees in the amount of $123,033.44 and ordered defendants to pay damages to plaintiffs in the amount of $60,345.45, which was sixty work days of wages/benefits lost to the individual plaintiffs from the layoff date of September 25, 1998, minus any days worked.
A district court's grant of summary judgment is reviewed de novo. T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Ass'n, 809 F.2d 626, 629 (9th Cir.1987). "A grant of summary judgment is reviewed de novo to determine whether, viewing the evidence in a light most favorable to the nonmoving party, there are any genuine issues of material fact and whether the district court applied the relevant substantive law." Tzung v. State Farm Fire and Cas. Co., 873 F.2d 1338, 1339-40 (9th Cir.1989).
The purpose of the WARN Act is to provide:
protection 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. Employers with 100 or more full-time employees are barred from ordering a plant closing or mass layoff "until the end of a 60-day period after the employer serves written notice of such an order to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee." 29 U.S.C. § 2101(a), 2102(a)(1).
Under the WARN Act, the term "mass layoff" means a reduction in force which:
(A) is not the result of a plant closing; and
(B) results in an employment loss at the single site of employment during any 30 day period for —
(I) (I) at least 33 percent of the employees (excluding any part-time employees); and (II) at least 50 employees (excluding any part-time employees); or
(ii) at least 500 employees (excluding any part-time employees)
Id. § 2101(a)(3). These figures are calculated from the "snap-shot" date of the last date upon which the notice would be required to be given, in this case, July 27, 1998, sixty days before September 25, 1998, the date of the layoff. See 20 C.F.R. § 639.5(a)(2). On July 27, 1998, DLI and BRC had more than 100 employees combined, while alone, each company had fewer than 100 employees.
Appellants contend that there was significant evidence to establish that DLI and BRC were separate companies, neither of which independently employed 100 employees. Int'l Bhd. of Teamsters v. American Delivery Serv. Co., 50 F.3d 770 (9th Cir.1995) analyzed the single employer test for the WARN Act and the Labor Management Relations Act together:
To determine "single employer" status under the LMRA, we consider these four factors: (1) common ownership; (2) common management; (3) centralized control of labor relations; and (4) interrelation of operations.
Common ownership is the least important factor, and the remaining three factors are guideposts only. Single employer status ultimately depends on all the circumstances of the case and is characterized as an absence of an arms length relationship found among unintegrated companies.
. . .
The relevant regulations under WARN provide that 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 on 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.
Id. at 775 (quoting 20 C.F.R. § 639.3(a)(2), internal citations omitted). The five WARN factors are analyzed as follows.
BRC is the wholly owned subsidiary of DLI. While appellants deny common ownership, they admit that DLI owns 100% of the shares of BRC, and that Russell owns 49% of the shares of DLI and is the trustee for the other 51% of the shares. While technical common ownership is avoided by corporate formalities, this actual commonality of ownership satisfies this "least important factor." Id.
It is undisputed that BRC and DLI share common directors and officers, as appellants admitted in their responses to plaintiffs' discovery requests.
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...v. New York State Dept. of Labor , 638 F.Supp.2d 316, 322 n.3 (N.D.N.Y. July 31, 2009), §21:1.A.1 Childress v. Darby Lumber, Inc. , 357 F.3d 1000 (9th Cir. 2004), §1:8.D.2 Chittister v. Department of Community and Econ. Dev ., 226 F.3d 223 (3d Cir. 2000), App. 25-2 Choi v. McKenzie , 975 S.......
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...they were created with WARN Act policies in mind”); 20 C.F.R. §639.3(a)(2) (DOL regulations). In Childress v. Darby Lumber, Inc. , 357 F.3d 1000 (9th Cir. 2004), the Ninth Circuit analyzed the “single employer” concept under the WARN Act to determine if plaintiffs were entitled to 60 days n......
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Table of cases
...v. New York State Dept. of Labor , 638 F.Supp.2d 316, 322 n.3 (N.D.N.Y. July 31, 2009), §21:1.A.1 Childress v. Darby Lumber, Inc. , 357 F.3d 1000 (9th Cir. 2004), §1:8.D.2 Chittister v. Department of Community and Econ. Dev ., 226 F.3d 223 (3d Cir. 2000), App. 25-2 Choi v. McKenzie , 975 S.......