Hollowell v. Orleans Regional Hospital

• Decision Date: 18 July 2000
• Docket Number: No. 98-31105,N,98-31105
• Citation: 217 F.3d 379
• Parties: (5th Cir. 2000) LISA MARIE HOLLOWELL; TERRENCE PIERCE; EMMA CHESS, on their own behalf and on behalf of all similarly situated employees, Plaintiffs-Appellees, v. ORLEANS REGIONAL HOSPITAL LLC; ET AL Defendants, ORLEANS REGIONAL HOSPITAL LLC; NORTH LOUISIANA REGIONAL HOSPITAL INC.; MAGNOLIA HEALTH SYSTEMS LLC; PRECISION INC.; SUCCESS COUNSELING SERVICES LLC; NORTH LOUISIANA REGIONAL HOSPITAL PARTNERSHIP; WILLIAM C. WINDHAM; RICHARD W. WILLIAMS; JOHN TURNER; BRENTWOOD BEHAVIORAL HEALTHCARE LLC, Defendants-Appellants. LISA MARIE HOLLOWELL; TERRENCE PIERCE; EMMA CHESS, on their own behalf and on behalf of all similarly situated employees, Plaintiffs-Appellees, v. ORLEANS REGIONAL HOSPITAL, Etc.; ET AL Defendants, RICHARD W. WILLIAMS; PRECISION INC., Defendants-Appellants. o. 99-30123
• Court: U.S. Court of Appeals — Fifth Circuit

Page 379

217 F.3d 379 (5th Cir. 2000)

LISA MARIE HOLLOWELL; TERRENCE PIERCE; EMMA CHESS, on their own behalf and on behalf of all similarly situated employees, Plaintiffs-Appellees, v. ORLEANS REGIONAL HOSPITAL LLC; ET AL Defendants, ORLEANS REGIONAL HOSPITAL LLC; NORTH LOUISIANA REGIONAL HOSPITAL INC.; MAGNOLIA HEALTH SYSTEMS LLC; PRECISION INC.; SUCCESS COUNSELING SERVICES LLC; NORTH LOUISIANA REGIONAL HOSPITAL PARTNERSHIP; WILLIAM C. WINDHAM; RICHARD W. WILLIAMS; JOHN TURNER; BRENTWOOD BEHAVIORAL HEALTHCARE LLC, Defendants-Appellants.

LISA MARIE HOLLOWELL; TERRENCE PIERCE; EMMA CHESS, on their own behalf and on behalf of all similarly situated employees, Plaintiffs-Appellees, v. ORLEANS REGIONAL HOSPITAL, Etc.; ET AL Defendants, RICHARD W. WILLIAMS; PRECISION INC., Defendants-Appellants.

No. 98-31105, No. 99-30123

UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

July 18, 2000, Decided

Rehearing and Rehearing En Banc Denied August 21, 2000.^*

[Copyrighted Material Omitted] Appeals from the United States District Court for the Eastern District of Louisiana, New Orleans. 95-CV-4029-S. Mary Ann Vial Lemmon, US District Judge.

Before POLITZ and DAVIS, Circuit Judges, and RESTANI,^** Judge:

RESTANI, Judge:

This case involves the interpretation of various provisions of the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. 2101 (1994), et seq., as well as the application of Louisiana corporate law on piercing the corporate veil of a limited liability company. The case arises out of the closure of Orleans Regional Hospital ("ORH") on November 3, 1995. Lisa Marie Hollowell, along with other former employees of ORH, filed suit against ORH and a variety of individuals and limited liability companies asserting WARN Act claims.

Background

Orleans Regional Hospital was a medicaid funded psychiatric hospital located in New Orleans, which primarily served adolescents and children. ORH was a limited liability company¹ under Louisiana law. It was established in November 1993 with three members: another limited liability company, NORS LLC,² and two corporations, North Louisiana Regional Hospital, Inc. ("North Louisiana, Inc."), and Precision, Inc. ("Precision"). John C. Turner and William C. Windham, defendants in this action, each held a fifty percent interest in North Louisiana, Inc. Richard W. Williams, also a defendant, was the sole shareholder of Precision.

Together North Louisiana, Inc. and Precision also owned North Louisiana Regional Hospital Partnership ("NLRHP"), a hospital located in Shreveport. NLRHP began operations in 1992. NLRHP treated adolescents with psychiatric and chemical dependence disorders, and received Medicaid reimbursements. North Louisiana, Inc. and Precision also formed Magnolia Health Systems, LLC ("Magnolia"), in January 1994. Magnolia provided management services to ORH and NLRHP, and developed other health-related business.

In 1994, changes in Medicaid policy began affecting the admission and length of stay at psychiatric hospitals. The patient census at ORH began to drop as a result of these changes, and ORH began discharging employees. During this period, ORH began providing outpatient services through Spectrum Community Counseling, LLC and Success Counseling Services, LLC (which were the same program). Williams, Windham, and Turner, along with administrators from ORH and NLRHP were members of the Success/Spectrum governing board.

The patient census at ORH continued to decline in 1995, and Williams, Windham, Turner and Peters decided to close ORH in October 1995. Prior to notifying the ORH employees of the shutdown, the CFO at Magnolia calculated a cash distribution of $ 1.5 million for Turner, Williams, and Windham, based on the combined assets of NLRHP, Success, ORH, and Magnolia. ORH employees were notified on October 27, 1995 of ORH's shutdown, and the majority of ORH employees left the hospital on November 3, 1995. Turner and Windham subsequently formed another limited liability company, Brentwood Behavioral Healthcare, LLC ("Brentwood"), which assumed NLRHP's hospital license and medicaid provider agreement when NLRHP dissolved in 1996. Plaintiffs brought this action against ORH and the various other LLCs, corporations, and individuals, for failure to provide them with 60-days notice of ORH's closing.

Discussion

I. WARN Act claims

The district court granted in part and denied in part defendants' motion for summary judgment and plaintiffs' motion for partial summary judgment. We review the grant of summary judgment de novo. Carpenters Dist. Council v. Dillard Dep't Stores, 15 F.3d 1275, 1281 (5th Cir. 1994).

The WARN Act prohibits employers from ordering a "plant closing or mass layoff until the end of a 60-day period after the employer serves written notice" of the closing or layoff to its employees. 29 U.S.C. 2102 (a). An employer who violates this notice provision is required to provide "back pay for each day of violation." 29 U.S.C. 2104(a)(1). "In short, WARN imposes a statutory duty on businesses to notify workers of impending large-scale job losses and allows for limited damages 'designed to penalize the wrongdoing employer, deter future violations, and facilitate simplified damages proceedings.'" Staudt v. Glastron, Inc., 92 F.3d 312, 314 (5th Cir. 1996) (citation omitted). Defendants assert that the district court erred in finding that a "plant closing," had occurred at ORH, and in finding that ORH was an "employer," as both terms are defined by the WARN Act. The other issues decided by the district court at summary judgment are not before us on appeal.³

Section 2101(a)(2) of Title 29 defines the term "plant closing" as "the permanent or temporary shutdown of a single site of employment . . . if the shutdown results in an employment loss at the single site of employment during any 30-day period for 50 or more employees excluding any part-time employees." ORH shut down on November 3, 1995. In the 30 days preceding the shutdown, 48 employees were terminated. Therefore, there was not a shutdown of ORH pursuant to 29 U.S.C. 2101(a)(2). The district court found, however, that there was a plant closing as defined by 29 U.S.C. 2102(d). This section provides:

[I]n determining whether a plant closing or mass layoff has occurred or will occur, employment losses for 2 or more groups at a single site of employment, each of which is less than the minimum number of employees specified in section 2101(a)(2) or (3) of this title but which in the aggregate exceed that minimum number, and which occur within any 90-day period shall be considered to be a plant closing or mass layoff unless the employer demonstrates that the employment losses are the result of separate and distinct actions and causes and are not an attempt by the employer to evade the requirements of this chapter.

Defendants contest the district court's conclusion that a plant closing occurred pursuant to 2102(d).

Defendants first argue that they presented credible evidence that lay-offs prior to October 24, 1995 were for "separate and distinct causes." Defendants rely on statements made by Scott Blakley, the ORH administrator, in his affidavit. Blakley stated that the layoffs which occurred before October 24, 1995 were the result of separate and distinct actions because "they were the result of adjusting the staffing to correspond with the current patient census." "These layoffs were simply the result of a business decision to adjust the employee census to account for the decline in the hospital's patient census." Blakley stated that no decision was made to close the hospital prior to October 24, 1995. Blakley stated that ORH tried to pursue new business opportunities which would have kept the hospital open, but that those efforts failed.

Section 2102(d) imposes an affirmative burden on the employer to prove that the court should disaggregate employment losses that occurred during the 90-day period. As the district court noted, "even assuming that ORH did not make the final decision to shutdown its employment site until October 24, 1995, this fact does not establish that the employment losses which preceded this date were wholly unrelated to the shutdown." Blakley's statement does not prove that separate and distinct actions and causes led to the pre-October 24, 1995 lay-offs. Indeed, his statements support the conclusion that ORH's declining profitability due to changes in Medicare reimbursements led to the shutdown. Blakley's October 27, 1995 memorandum to all the ORH employees stated that it was the "reductions in Medicaid support for poor children [which] resulted in a reduction in work force and the loss of your employment." As noted by one district court, "layoffs that are occasioned by a continuing and accelerating economic demise are not the result of separate and distinct causes." United Paperworkers Int'l Union v. Alden Corrugated Container Corp., 901 F. Supp. 426, 436 (D. Mass. 1995). Defendants failed to produce evidence that created a genuine issue of material fact tending to show that the layoffs were due to separate and distinct causes.

Defendants also argue that fewer than 50 employees were terminated during the 90-day period, therefore no plant-closing occurred. Defendants maintain that the district court incorrectly aggregated the pre-October 24 layoffs because the court counted each individual employee that ORH laid off, rather than each "group" of employees. When aggregating employment losses, 29 U.S.C. 2102(d) allows courts to consider "employment losses for 2 or more groups at a single site of employment, each of which is less than [50 employees]," which occur in a 90-day period. Focusing on the word "groups," defendants argue that the court should not count any single individual laid off on any given day because an individual cannot constitute a group. See Webster's Third New Int'l Dictionary 1004 (1981) (defining group as "two or more figures . . . forming a...