Davis v. Signal Int'l Tex. GP, L.L.C.

• Decision Date: 28 August 2013
• Docket Number: No. 12–41262.,12–41262.
• Citation: 728 F.3d 482
• Parties: Philip A. DAVIS; Byron Day, Plaintiffs–Appellees v. SIGNAL INTERNATIONAL TEXAS GP, L.L.C.; Signal International, L.L.C.; Signal International Texas, L.P., Defendants–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

728 F.3d 482

Philip A. DAVIS; Byron Day, Plaintiffs–Appellees

v.SIGNAL INTERNATIONAL TEXAS GP, L.L.C.; Signal International, L.L.C.; Signal International Texas, L.P., Defendants–Appellants.

No. 12–41262.

United States Court of Appeals,Fifth Circuit.

Aug. 28, 2013.

Bryan Adam Terrell, Weller, Green, Toups & Terrell, Tommy Lee Yeates, Moore Landrey, L.L.P., Beaumont, TX, for Plaintiff–Appellee.

David Sinnott Bland, LeBlanc Bland, P.L.L.C., New Orleans, LA, Robert Prentice Vining, Charles Lee Winkelman, Attorney, LeBlanc Bland, P.L.L.C., Houston, TX, for Defendant–Appellant.

Appeals from the United States District Court for the Eastern District of Texas.

Before REAVLEY, ELROD, and GRAVES, Circuit Judges.

REAVLEY, Circuit Judge.

This appeal involves the Worker Adjustment and Retraining Notification Act (“WARN Act”), 29 U.S.C. §§ 2101 et seq. The WARN Act requires that certain employers provide written notice within 60 days in advance of any “mass layoff” at “a single site of employment.” In 2009, Defendant–Appellant Signal International, a Gulf Coast marine services and shipbuilding company, fired a number of its workers without providing advance written notice. Plaintiffs–Appellees allege that Signal's reduction in employment constituted a mass layoff under the WARN Act, and thus that Signal violated the Act by failing to provide proper notice. The district court held that there was a mass layoff and entered judgment against Signal. We AFFIRM.

Defendant–Appellant Signal International ¹ is “a leading Gulf of Mexico provider of marine and fabrication services, including new construction, heavy fabrication, [and] offshore drilling rig and ship overhaul, repair, upgrade, and conversion.” ² From July to September 2009, Signal permanently laid off 159 of its full-time workers at its two facilities in Orange, Texas,³ including Plaintiffs–Appellees Phillip A. Davis and Byron Day.

The central issue before the district court was whether there had been a mass layoff under the WARN Act. The district court first concluded that Signal's two facilities in Orange, Texas, constituted a single site of employment because the facilities fell into a regulatory exception for “truly unusual organizational situations,” and thus that workforce levels were to be measured across both facilities. The district court further concluded that the proper “snapshot” for measuring Signal's workforce levels was July 24, 2009, the date of the first layoff alleged by Plaintiffs. Based on these two conclusions, the court ruled that there had been a mass layoff during the 90–day period following July 24, 2009. The court entered a final judgment against Signal. Signal timely appealed.

1. “Single site of employment” and the unusual organization exception

On appeal, Signal asserts two errors by the district court. Signal first argues that the district court erred in concluding that the company's two facilities in Orange constituted a single site of employment. Whether Signal's two facilities constituted a single site of employment under the WARN Act is a mixed question of fact and law. Carpenters Dist. Council of New Orleans & Vicinity v. Dillard Dep't Stores, Inc., 15 F.3d 1275, 1289 (5th Cir.1994). We review the district court's findings of underlying fact for clear error. Id. We review the legal question of whether there was a single site of employment based on the underlying historical facts de novo. Id.

The WARN Act does not define what constitutes a single site of employment, but the Department of Labor's regulations provide guidance. See Viator v. Delchamps Inc., 109 F.3d 1124, 1127 (5th Cir.1997). The general rule is that “separate facilities are separate sites.” 54 Fed.Reg. 16042, 16050 (Apr. 21, 1989); see Viator, 109 F.3d at 1127. Labor Department regulations provide some exceptions to that rule, including 20 C.F.R. § 639.3(i)(8), which states, “The term ‘single site of employment’ may also apply to truly unusual organizational situations where the [preceding paragraphs] do not reasonably apply.” The district court ruled that although Signal's facilities were non-contiguous, they nevertheless fell under the unusual organization exception and thus constituted a single site of employment.

There is a dearth of case law on what constitutes a “truly unusual organizational situation” within the meaning of § 639.3(i)(8). The only decision in this circuit interpreting the exception is Carpenters, 15 F.3d 1275, on which the district court relied. There we held that two facilities constituted a single site of employment where the company's operations were once housed together in one corporate office but were later separated due to overcrowding. However, in Carpenters we relied specifically on the version of § 639.3(i)(8) from the Labor Department's proposed regulations, rather than the final, adopted regulations that govern the present appeal.⁴ Whereas the proposed regulations used the phrase “unusual organizational situations,” the final regulations use the phrase “ truly unusual organizational situations.” Compare53 Fed.Reg. 49076, 49083 (1988) (proposed regulations), with54 Fed.Reg. 16042, 16066 (1989) (final rule), and20 C.F.R. § 639.3(i)(8) (1995) (current version) (emphasis added). We do not need to determine the significance of that distinction, because we now rely on the current language of § 639.3(i)(8).⁵

The relevant facts regarding Signal's facilities are as follows. Since October 2008, Signal has had two facilities located in Orange, Texas, one primarily dedicated to fabrication and the other primarily to administration. Signal's fabrication facility covers 77 acres and is located at 91 West Front Street, where it has been located since Signal's incorporation. It is sometimes referred to as “the Orange yard,” or simply “the yard.”

From 2003 to 2008, Signal's administrative office was housed in Port Arthur, Texas, 35 miles from the Orange yard. Signal acquired the Port Arthur office pursuant to a lease that it assumed from its predecessor, which lease was set to expire in May 2008. Signal permitted the lease to expire and moved administration to Orange in order to, among other things, consolidate support and have personnel closer to the shipyard operation. Signal began housing its administrative personnel in mobile office units located at the periphery of the Orange yard. It is disputed whether the mobile units were meant to be temporary or permanent, although we agree with the district court's finding that Signal intended to keep its administrative employees at that location for “longer than a few months.”

About three months later, Hurricane Ike struck the Gulf Coast, causing severe damage to the Orange yard. In October 2008, because of the unprecedented damage from Ike and because a rental space had become available a mile away, Signal moved the bulk of its administrative employees there to what is now the Administration Building. The Administration Building is a two-story office complex located at 905 Pier Road. It is sometimes referred to as “the Administration Annex,” or simply “the annex.”

The record demonstrates that after the October 2008 move to the annex, a large number of administrative employees remained housed at the Orange yard. Rodney Meisetschlaeger, General Manager of Texas Operations, testified that “approximately two dozen” administrative employees continued to be housed at the yard after Ike. The record further demonstrates that at the time of the alleged layoffs, employees housed in the annex regularly carried out business in the yard, and vice versa. In particular, a mandatory meeting was held at the annex each Monday and was attended by many employees who were housed in the yard. Some employees who were housed in the annex would regularly—even daily—visit the yard to perform management and/or production duties. Some employees maintained offices at both the annex and the yard. It is undisputed that Meisetschlaeger, as General Manager, managed both facilities' day-to-day operations. Signal employees who were shared by and carried out daily duties for both facilities included security, health and safety, quality control, custodial services, payroll, IT, and maintenance personnel.

Based on these facts, we conclude that Signal's two facilities in Orange constituteda single site of employment under § 639.3(i)(8), in particular because the situation presented here is one of the “truly unusual organizational situations” contemplated by that Labor Department regulation. ⁶ To begin with, there was regular sharing of staff between the annex and the yard. The Labor Department has explicated that in considering exceptions to the general rule that separate sites are separate facilities, any sharing of staff between separate facilities must be regular rather than occasional. See20 C.F.R. § 639.3(i)(3) (referring to an employer who “regularly shifts or rotates the same employees from one building to another”); Viator, 109 F.3d at 1128 (quoting § 639.3(i)(3) and stating that “occasional intermingling of various employees is insufficient to place an employer within the act's coverage”); see also Int'l Union, United Mine Workers v. Jim Walter Res., Inc., 6 F.3d 722, 726 (11th Cir.1993) (“[T]he essence of WARN [is] the day-to-day management and personnel.”). Here, the sharing of staff between the yard and annex was not merely occasional but in fact regular, with certain employees maintaining offices at both buildings, regular visits by personnel from one facility to the other, and use of the same security, payroll, and other staff.⁷

We are unconvinced by Signal's argument that the annex and yard had different operational purposes. Of course it is true that different units within the same operation will have different purposes if one dissects those purposes finely enough. However, what matters in determining whether separate facilities constitute a single site of employment is not the immediate purpose of this or that...