Finkler v. Elsinore Shore Associates, Civ. A. No. 89-2330.
| Decision Date | 22 November 1989 |
| Docket Number | Civ. A. No. 89-2330. |
| Citation | 725 F. Supp. 828 |
| Parties | Daniel L. FINKLER; Doreen Vitalo; Frank Franceschini; John M. LeGrand; Kenneth Arthur; Christine Bednarsky; Jean Bruno; Paulette Chapman; Denise Lynne Crowe; Jerry Fisher; Al Glenn; Linda Pasquale Krause; Cheryl McCarty; Joseph Manno; Leon A. Sarao; Barry R. Shapiro; Tom Tavener; Babette Weinstein; Sallie Williamson; Lane F. Yoshida; David Owens; Edward Malesinski; Rose Brennan; Grace Jasper; Arturo Barrera; Lorrie Lennox; Ronald J. Sohl, Sr., on behalf of themselves and all others similarly situated, Plaintiffs, v. ELSINORE SHORE ASSOCIATES d/b/a Atlantis Casino Hotel; Elsub Corporation; Elsinore of Atlantic City; and Elsinore of New Jersey Inc.; Elsinore Corporation, Defendants. |
| Court | U.S. District Court — District of New Jersey |
Tomar, Simonoff, Adourian & O'Brien, P.C. by Theodore V. Lieverman, Haddonfield, N.J., for plaintiffs.
Saiber, Schlesinger, Satz & Goldstein by David M. Satz, Jr., Newark, N.J., for defendants.
This Worker Adjustment and Retraining Notification Act ("WARN") action instituted by captioned plaintiffs against the captioned defendants, is presently before the court on a motion by the defendants to dismiss the plaintiffs' complaint pursuant to Fed.R.Civ.P. 12(b)(6). Defendants contend that plaintiffs have not stated claims upon which relief can be granted. Plaintiffs, however, have stated at least two valid claims, contending defendants violated the "WARN" Act, and breached their contract for retroactive pay benefits. We hold that these are claims upon which relief can be granted. Relief cannot be granted on plaintiffs' claim under the New Jersey Wage Payment Law. Therefore defendants' motion to dismiss shall be denied in part and granted in part.
Defendants owned and operated the Atlantis, a hotel and casino, located in Atlantic City, New Jersey. In 1985 defendants filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. While under the protection of the Bankruptcy Court, defendants informed their employees that wage increases were not financially feasible. In 1988 a plan of reorganization was approved by the Bankruptcy Court and thereafter defendants continued to operate the Atlantis. In November of 1988 defendants announced that in consideration for the employees' hard work and loyalty, defendants were prepared to pay them retroactive pay benefits. A month later defendants entered into contracts with their employees regarding these retroactive pay benefits.
The Atlantis, however, continued having financial problems. In early 1989 defendants commenced negotiations for the sale of the Atlantis to DJT Inc. (Donald J. Trump Inc.). Plaintiffs contend that defendants knew that the sale would result in the termination of all casino operations. During the course of these negotiations, proceedings were conducted by the New Jersey Casino Control Commission ("Commission") on whether the it should renew defendants' casino license. Due to Atlantis' unfavorable financial situation, on April 7, 1989 the Commission denied defendants' application for a license.
On April 13, 1989 the Commission decided to appoint a Conservator. This allowed defendants to continue their operation without a license until a sale could be completed or Atlantis' cash reserves became insufficient to satisfy regulatory standards. The Conservator commenced his appointment on April 14, 1989. Immediately prior to this, defendants entered into a sales agreement with DJT Inc.1
Since defendants' financial situation continued to deteriorate, the Division of Gaming Enforcement of the New Jersey Attorney General's Office filed a petition with the Commission to determine whether Atlantis could continue to operate on a sound financial basis. After a hearing on this issue, the Commission concluded that Atlantis could not do so. It notified defendants on May 16, 1989 that all gaming operations had to cease at Atlantis on May 22, 1989. Defendants notified their employees on or about May 17, 1989 that they were "laid off"2 as of May 22, 1989. Subsequently plaintiffs filed a claim under the "WARN" Act contending that defendants violated their duty to notify affected employees sixty days prior to the "lay off", and a claim that defendants never completed payment of plaintiffs' retroactive pay benefits, in violation of the New Jersey Wage Payment Law 34 N.J.S.A. 11-4.2 and in breach of contract.
It is well established that all factual allegations set forth in the complaint and reasonable inferences drawn therefrom must be accepted as true and viewed in the light most favorable to plaintiffs, for purposes of a motion to dismiss. Further, a complaint should be dismissed "only if it appears to a certainty that no relief could be granted under any set of facts which could be proved." D.P. Enterprises, Inc. v. Bucks County Community College, 725 F.2d 943, 944 (3d Cir.1984); See also Sturm v. Clark, 835 F.2d 1009 (3d Cir. 1987).
Under "WARN" relief may be granted if an employer, with one hundred or more full time employees, permanently shuts down an operating unit within a single site of employment, without notifying the affected employees sixty days in advance.3 29 U.S.C. § 2101(a) (Supp.1989); 29 U.S.C. § 2102(a) (Supp.1989). An affected employee is one who "may reasonably be expected to experience an employment loss as a consequence of" a permanent "shut down" of an operating unit. 29 U.S.C. § 2101(a) (Supp.1989). "WARN" refers to a permanent "shut down" as a plant closing. Id.
Defendants do not dispute that prior to April 14, 1989 they were employers for purposes of the "WARN" Act. They contend, however, that plaintiffs are not affected employees, or in the alternative that they were discharged of all responsibility under the "WARN" Act when the New Jersey Casino Control Commission appointed a Conservator pursuant to 5 N.J.S.A. § 12-130.1 (1988). Defendants thereupon maintain that the Conservator became the employer for purposes of the Act.
Plaintiffs allege that defendants ordered a "mass layoff" without notifying employees. The "WARN" act only provides a remedy in the case of a "mass layoff" when it is more than six months in duration. 29 U.S.C. § 2101(a) (Supp.1989). Defendants claim that no case or controversy exists because plaintiffs filed this action only four days after the commencement of the "mass layoff".
Firstly, although both parties characterized defendants' action as a "mass layoff", these actions actually resulted in a plant closing. Defendants responded to the Commission's Order requiring them to cease all gaming operations. When they ceased these operations, they had no expectations of resuming them and rehiring plaintiffs. Defendants terminated plaintiffs' employment permanently.
Secondly, even if we assume that defendants ordered a "mass layoff", plaintiffs need not wait six months in the case of a "mass layoff" to institute an action. As long as a "mass layoff" is reasonably expected to last more than six months and the employees "may reasonably be expected to experience an employment loss as a consequence", employees may institute an action under "WARN". 29 U.S.C. § 2101(a) (Supp.1989).
Even assuming that the defendants ordered a "mass layoff" instead of a plant closing, plaintiffs reasonably concluded that it would exceed six months. If the "mass layoff" is not going to exceed six months, defendants could very easily inform their employees of that fact. The defendants have not asserted at any time that the "shut down" is temporary. We therefore conclude that plaintiffs are affected employees and have stated a valid cause of action under the "WARN" Act.
If instead of the Conservator's appointment, there had been a sale, "the seller would have been responsible for providing notice of any plant closings ... which took place up to and including the sale ... The buyer would have been responsible for providing notice of any plant closing ... that took place thereafter." 20 C.F.R. § 639.4(c) (1989). In other words, whoever is the employer at the time of the plant closing is responsible for notifying the employees sixty days in advance.
If, as defendants contend, the Conservator filled the role of the employer, then the Conservator would have succeeded to the obligations of the "WARN" Act. The Department of Labor considers that a trustee appointed by a Bankruptcy Court who "may continue to operate the business for the benefit of creditors,"4 succeeds to "WARN" Act obligations. A trustee appointed by the Bankruptcy Court, however, only succeeds to these obligations when he/she "continues the business in operation." 54 Fed.Reg. 16045 (1989). This is the test to apply. If the Conservator continued the business in operation, then he filled the role of the employer for purposes of "WARN". Plaintiffs contend that the Conservator did not do so. Rather, they maintain that defendants continued the business in operation and the Conservator simply monitored and assessed the business in consultation with the Commission.
Defendants claim that the Commission's Order appointing the Conservator clearly places the Conservator in the...
To continue reading
Request your trial
-
Solberg v. Inline Corp.
...decisions applying WARN are reported: Finnan v. L.F. Rothschild & Co., Inc., 726 F.Supp. 460 (S.D.N.Y.1989); Finkler v. Elsinore Shore Assocs., 725 F.Supp. 828 (D.N.J. 1989); and Hotel Employees Restaurant Employees Int'l Union, Local 54 v. Elsinore Shore Assocs., 724 F.Supp. 333 (D.N.J.198......
-
LOCAL 217 v. MHM, INC.
...Restaurant Employees Int'l Union Local 54 v. Elsinore Shore Associates, 724 F.Supp. 333 (D.N.J.1989) and Finkler v. Elsinore Shore Associates, 725 F.Supp. 828 (D.N.J. 1989), issued within eight days of one another, concern the Atlantis, a hotel and casino owned by the defendants, which in 1......
-
Local 217, Hotel & Restaurant Employees Union v. MHM, Inc.
...Restaurant Employees Int'l Union Local 54 v. Elsinore Shore Associates, 724 F.Supp. 333 (D.N.J.1989) and Finkler v. Elsinore Shore Associates, 725 F.Supp. 828 (D.N.J.1989), she stated that because CCELP exercised ultimate authority for the closing of the hotel, it, rather than MHM, was the ......
-
Finkler v. Elsinore Shore Associates
...in this case, denying a motion to dismiss, Judge Cohen rejected a similar argument made by defendants. See Finkler v. Elsinore Shore Associates, 725 F.Supp. 828 (D.N.J. 1989). There, defendants argued that when the Conservator was appointed, he essentially usurped ESA's position and became ......