Deveraturda v. Globe Aviation Security, No. 04-16633.

• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)
• Writing for the Court: Rymer
• Citation: 454 F.3d 1043
• Parties: Virgil DEVERATURDA; Bernard Sapitalo; Shirley Sampayan; Maria Lillibeth Edano, Plaintiffs-Appellants, v. GLOBE AVIATION SECURITY SERVICES, Defendant-Appellee.
• Docket Number: No. 04-16633.
• Decision Date: 24 July 2006

454 F.3d 1043 Virgil DEVERATURDA; Bernard Sapitalo; Shirley Sampayan; Maria Lillibeth Edano, Plaintiffs-Appellants,
v.
GLOBE AVIATION SECURITY SERVICES, Defendant-Appellee. No. 04-16633. United States Court of Appeals, Ninth Circuit. Argued and Submitted June 14, 2006. Filed July 24, 2006.

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G. Scott Emblidge, Moscone Emblidge & Quadra, San Francisco, CA, for the plaintiffs-appellants.

Samuel T. McAdam, Seyfarth Shaw, Sacramento, CA, for the defendant-appellee.

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CV-03-03887-JW.

Before: RYMER and T.G. NELSON, Circuit Judges, and KING,^* District Judge.

RYMER, Circuit Judge:

This appeal presents the novel question whether the Worker Adjustment and Retraining Notification Act (WARN Act), 29 U.S.C. § 2101 et seq., which prohibits an employer from ordering a mass layoff without giving 60 days' notice, applies to a mass layoff of employees who worked for a private employer as airport security screeners until the United States government federalized airport security services and took over operations at their airport.

Virgil Deveraturda, Bernard Sapitalo, Shirley Sampayan, and Maria Lillibeth Edano (collectively, Deveraturda) were employed by Globe Airport Security Services, Inc. to provide screening services at San Jose International Airport (SJC). However, they and others were let go as a result of the Aviation and Transportation Security Act (ATSA) of 2001. Pub.L. No. 107-71, 115 Stat. 597 (Nov. 19, 2001). Believing that Globe should have given 60 days' notice under the WARN Act, which it did not do, Deveraturda brought a class action for relief under the Act.¹

The district court granted Globe's motion for judgment on the pleadings, holding that it was the federal government that took over control of airport security without any ability on Globe's part to dictate the nature, scope, or timing of the takeover. As it was the government that ordered the layoff and ousted Globe from providing security personnel at SJC, the court concluded that the WARN Act does not apply. We agree that the Act does not apply, and affirm.

I

Taking the allegations in the complaint to be true, as we must,² Deveraturda was a

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full-time employee of Globe at its head-quarters facility located in San Jose, California. On November 19, 2001, Congress enacted the ATSA and, on February 19, 2002, airport security in the United States was federalized. On August 7, 2002, Globe issued a facsimile memo to its employees informing them how to apply for a position with the Transportation Security Administration (TSA), and, sometime that month, held an informational meeting. Globe informed employees that if they were U.S. citizens, they would be rehired by TSA after undergoing an assessment test administered by TSA. TSA began administering those tests in September 2002. On September 27, Globe issued a memorandum to Airport Terminal C employees announcing that the federal government will "tentatively take over responsibilities for aviation screening services at SJC Airport on October 1, 2002. As of that date aviation screening services employees at SJC Terminal C checkpoints will be relieved of those duties." On September 30, Globe announced the first of a series of four layoffs that occurred between October 1 and January 2003. Deveraturda did not receive 60 days' notice as provided by the WARN Act, and Globe gave no reason for shortened notice. The mass layoffs "were the direct and proximate result of defendant's long known withdrawal from airport security at San Jose International Airport. The terminations were a product of the [ATSA], enacted in 2001, by the federal government to replace private airport security with federal employees, not because of any new or sudden reversal of defendant's prospects or failure to obtain capital or business."

Globe's answer admits that Deveraturda was employed at its San Jose facility; that he was laid off on November 15, 2002 (Sampayan was laid off on September 30); and that "[t]he layoffs were the result of defendant being notified by the Federal Government (the Transportation Security Administration) on September 27, 2002 that defendant's operations at the San Jose International Airport in San Jose, California were going to be transitioned to the Government, pursuant to federal law, effective October 1, 2002."³

Globe filed a motion for judgment on the pleadings on Deveraturda's WARN Act claim on March 22, 2004, which the district court granted, after hearing argument, on May 10. The court acknowledged the dearth of precedent but reasoned from the case it found most analogous, Buck v. FDIC, 75 F.3d 1285 (8th Cir.1996), where employees of a bank taken over by the Federal Deposit Insurance Corporation (FDIC) sued the FDIC for WARN Act violations, that the WARN Act does not apply in the context of government-ordered closures over which the employer has no control. In these circumstances, the court concluded, the layoffs are not effectively ordered by the employer, but by the government.⁴

On May 24, 2004, Deveraturda sought leave to file an amended complaint to allege that Globe had more than 60 days' notice from the federal government of its intention to replace Globe's private airport security with federal employees, and that Globe provided WARN Act notice to employees at other airports in California, but not at SJC. The district court found the additional allegations insufficient to fix the

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infirmity in the original complaint, and denied the motion. Deveraturda timely appeals both rulings.

II

We review a dismissal on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) de novo. Living Designs, Inc. v. E.I. Dupont de Nemours & Co., 431 F.3d 353, 360 (9th Cir.2005); Turner v. Cook, 362 F.3d 1219, 1225 (9th Cir.2004). On review of a judgment on the pleadings, "[t]he appellate court must `accept all material allegations in the complaint as true and construe them in the light most favorable to [the non-moving party].'" Turner, 362 F.3d at 1225 (alteration in original) (quoting NL Industries, Inc. v. Kaplan, 792 F.2d 896, 898 (9th Cir.1986)). "A dismissal may be affirmed `only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations.'" Id. (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002)).

The district court's denial of a motion for leave to amend is reviewed for abuse of discretion. Smith v. Pac. Props. & Dev. Corp., 358 F.3d 1097, 1100 (9th Cir.2004); Bowles v. Reade, 198 F.3d 752, 757 (9th Cir.1999). We have held that "`[a] district court does not err in denying leave to amend where the amendment would be futile.'" Thinket Ink Info. Res., Inc. v. Sun Microsystems, Inc., 368 F.3d 1053, 1061 (9th Cir.2004) (alteration in original) (quoting Saul v. United States, 928 F.2d 829, 843 (9th Cir.1991)).

III

This appeal turns entirely on what the WARN Act covers.

Deveraturda focuses on its purpose—to provide "protection to workers, their families and communities by requiring employers to provide notification 60 calendar days in advance of . . . mass layoffs. Advance notice provides workers and their families some transition time to adjust to the prospective 8175 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." Childress v. Darby Lumber, Inc., 357 F.3d 1000, 1005 (9th Cir.2004) (citing 20 C.F.R. § 639.1). He argues that it is enough that Globe was his employer, and laid him off without the required notice. He also maintains that there is no blanket "government takeover" exemption, but rather application of the WARN Act depends upon the amount of government control and whether the employer had notice of the takeover. See Hotel Employees and Restaurant Employees Int'l Union Local 54 v. Elsinore Shore Assocs., 173 F.3d 175, 180-82...