Int'l Bhd. of Boilermakers v. Nassco Holdings Inc., D070620

• Decision Date: 30 November 2017
• Docket Number: D070620
• Citation: 226 Cal.Rptr.3d 206,17 Cal.App.5th 1105
• Court: California Court of Appeals Court of Appeals
• Parties: The INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, LOCAL 1998 et al., Plaintiffs and Respondents, v. NASSCO HOLDINGS INC. et al., Defendants and Appellants.

17 Cal.App.5th 1105

226 Cal.Rptr.3d 206

The INTERNATIONAL BROTHERHOOD OF BOILERMAKERS, IRON SHIP BUILDERS, BLACKSMITHS, FORGERS AND HELPERS, LOCAL 1998 et al., Plaintiffs and Respondents,

v.NASSCO HOLDINGS INC. et al., Defendants and Appellants.

D070620

Court of Appeal, Fourth District, Division 1, California.

Filed November 30, 2017

Morrison & Foerster, James R. Sigel, San Francisco, Miriam A. Vogel, Los Angeles; Morgan Lewis & Bockius and Jason Scott Mills, Los Angeles, for Defendants and Appellants.

U.S. Chamber Litigation Center, Janet Galeria ; California Manufacturers & Technology Association, Dorothy E. Rothrock; Munger, Tolles & Olson, Fred A. Rowley, Jr., Los Angeles, and Aaron D. Pennekamp, San Francisco, for Chamber of Commerce of the United States of America, National Association of Manufacturers, California Manufacturers &

Technology Association, and Shipbuilders Council of America as Amici Curiae on behalf of Defendants and Appellants.

Klapach & Klapach, Joseph S. Klapach, Beverly Hills; Kelley Semmel and Amy Semmel, Los Angeles, for Plaintiffs and Respondents.

HALLER, J.

Under a California law known as the California WARN Act, employers must provide 60 days' notice to affected employees before ordering a "mass layoff." ( Lab. Code, § 1400 et seq. )¹ A labor union and several employees sued an employer, alleging the employer violated this law by failing to provide notice before ordering about 90 employees not to return to work for four to five weeks. The employer countered that the California WARN Act was inapplicable because its action was a temporary furlough and not a "mass layoff." All parties recognized there was no liability under the parallel federal WARN Act because the federal law applies to a temporary layoff only if the layoff "exceed[s] 6 months." ( 29 U.S.C. § 2101(a)(6)(B).)

The parties filed cross summary judgment/adjudication motions raising primarily the duty issue: did the employer have a statutory duty to notify the affected employees even though the layoff was temporary, rather than permanent? The superior court concluded the California WARN Act did apply to the employer's temporary layoff, and therefore the employer owed a statutory notification duty to the affected workers. The court thus granted summary adjudication in plaintiffs' favor on this issue. The court then held a one-day bench trial on damages issues. After trial, the court entered judgment in plaintiffs' favor, awarding the workers $211,405 in backpay and lost pension benefits. The court denied plaintiffs' request for statutory penalties, finding the employer acted in good faith because the legal issues were "unsettled."

On appeal, the employer contends the court erred in interpreting the California WARN Act as applying to temporary layoffs. We affirm. Based on our analysis of the statutory language, statutory scheme, legislative history, federal WARN law, and policies underlying the California WARN Act, we determine the employer had a duty to provide statutory notice under the particular circumstances of this case, even if the layoffs were not permanent and were for less than six months.

FACTUAL AND PROCEDURAL BACKGROUND²

NASSCO Holdings Incorporated and National Steel and Shipbuilding Company (collectively NASSCO) employs thousands of workers in its ship building and repairing business. NASSCO employees are represented by The International Brotherhood of Boilermakers, Iron Ship Builders, Blacksmiths, Forgers, and Helpers, Local 1998 (the Union). NASSCO's staffing requirements change frequently, and its collective bargaining agreement contains rules applicable to terminations and short-term unpaid work stoppages. The agreement refers to a short-term work stoppage as a "layoff."

By early 2014, NASSCO determined it would need to temporarily reduce its labor force because there would be a lull in its shipyard production work. On March 3, 2014, NASSCO notified about 14 employees on the day they reported to work that they were not to return to work for at least three weeks. The written notice characterized the reduction as a layoff. NASSCO later notified these employees the layoff would be extended by several weeks. On March 17, 2014, NASSCO notified about 76 additional employees they were laid off for at least three weeks. They were not given prior notice of the layoff.

Between March 3, 2014 and March 17, 2014, a total of about 90 NASSCO employees were laid off, without work or pay (except for the reporting time pay on the day they were told not to return to work) for three to five weeks. Some of the laid-off employees returned to work on April 7, 2014, with the remainder returning on April 14, 2014. When the workers returned to work, they returned to their same job classifications.

On March 17, 2014, the Union president wrote to NASSCO, claiming NASSCO's action in laying off more than 50 workers within a 30-day period triggered statutory notice protections. Later that day, NASSCO responded that it had not implemented a "layoff," and instead it was a "furlough[ ]" or a "manpower reduction," and that under the federal WARN Act , notice is not required "when the layoffs are for less than a 6 month period." NASSCO said it was aware of the impact the "furloughs may have on its employees. Therefore, ... NASSCO has continued to extend certain benefits to these furloughed employees," including that it has "1) continued to pay BOTH the employer contribution AND the employee portion of the health care premiums; and 2) allowed employees to continue to accrue seniority."

Despite the representation regarding the health care premiums, the workers were initially charged for and paid their own health care obligations. However, they were later reimbursed for these payments.

During their time off, the employees were not paid any wages (except for a few workers who elected to use their accrued vacation wages), nor did they earn vacation pay or accrue service credit for purposes of pension benefits.

In December 2014, the Union and three individual employees (Alberto Florian, Gustavo Perez, and Jose Rodarte) sued NASSCO alleging it violated the California WARN Act and seeking back pay and millions of dollars in statutory penalties.

Plaintiffs moved for summary judgment/adjudication claiming the undisputed facts showed NASSCO (1) had a statutory duty under the California WARN Act to give 60 days' notice before the March 2014 layoffs; (2) breached that duty; and (3) failed to conduct a reasonable investigation into whether its actions would violate the California WARN Act. In its cross-motion, NASSCO argued the undisputed facts showed (1) it had no statutory duty to provide notice of the layoffs and thus did not breach any duty; and (2) it was not subject to statutory penalties because it conducted a reasonable investigation in good faith as to whether it was required to give 60 days' notice under the California WARN Act.

In their moving and opposing papers, the parties agreed NASSCO is a "covered establishment" under the California WARN Act; the short term labor force reduction was the result of a lack of work; and the reduction was not necessitated by a physical calamity or an act of war. They also agreed that NASSCO did not provide 60 days' notice of the layoff to the employees. Both sets of parties also recognized the duty issue was dependent on the court's interpretation of the California WARN Act provisions, and each submitted numerous documents reflecting the Act's legislative history, of which the court took judicial notice.

After considering the arguments and written submissions, the court denied NASSCO's summary judgment motion, and granted plaintiffs' summary adjudication motion, finding the undisputed facts showed NASSCO violated its statutory obligation to provide advance notice of the layoffs under the California WARN Act. The court then conducted a trial on the damages issues. At the close of evidence, the court ruled that the laid-off employees were entitled to backpay and lost pension benefits, but declined to award civil penalties. The court then entered final judgment in plaintiffs' favor for $211,405 plus interest, costs, and attorney fees. NASSCO appeals, challenging the court's denial of its summary judgment motion and the court's grant of plaintiffs' summary adjudication motion. Several business organizations filed a joint amicus curiae brief supporting NASSCO's position.³

DISCUSSION

I. Review Standard

Summary judgment is proper if "all the papers submitted show that there is no triable issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." ( Code Civ. Proc., § 437c, subd. (c).) A court shall grant a summary adjudication motion on a duty issue if the undisputed facts show the "defendants either owed or did not owe a duty to the ... plaintiffs." ( Code Civ. Proc., § 437c, subd. (f).) We review summary judgment and summary adjudication rulings de novo. ( State of California v. Continental Ins. Co. (2017) 15 Cal.App.5th 1017, 1031, 223 Cal.Rptr.3d 716.)

II. Statutory Interpretation Rules

This appeals turns on the proper interpretation of the California WARN Act. In considering the parties' competing statutory interpretations, " ‘ "[o]ur fundamental task ..." ’ ... ‘ "is to ascertain the intent of the lawmakers so as to effectuate the purpose of the statute." ’ " ( People v. Pennington (2017) 3 Cal.5th 786, 795, 221 Cal.Rptr.3d 448, 400 P.3d 14 ( Pennington ).) We focus on " ‘the statute's actual words, the "most reliable indicator" of legislative intent, "assigning them their usual and ordinary meanings ...." ’ " ( Ibid. ) We view the statutory language in context, and do not determine its meaning " ‘from a single word or sentence.’ " ( Ibid. ) "[A]pparent ‘ambiguities often may be resolved by examining the context in which the language appears and adopting the construction which best serves to harmonize the statute internally and with related statutes ....’ " ( Ibid. )

If the statutory...