LOCAL 54 v. Elsinore Shore Associates, Civ. A. No. 89-2143.

• Decision Date: 14 November 1989
• Docket Number: Civ. A. No. 89-2143.
• Parties: HOTEL EMPLOYEES RESTAURANT EMPLOYEES INTERNATIONAL UNION LOCAL 54, Plaintiffs, v. ELSINORE SHORE ASSOCIATES d/b/a Atlantis Hotel and Casino, Elsinore Corporation, Elsub Corporation, Elsinore Atlantic City, and Elsinore of New Jersey, Inc., Defendants.
• Court: U.S. District Court — District of New Jersey

724 F. Supp. 333

HOTEL EMPLOYEES RESTAURANT EMPLOYEES INTERNATIONAL UNION LOCAL 54, Plaintiffs, v. ELSINORE SHORE ASSOCIATES d/b/a Atlantis Hotel and Casino, Elsinore Corporation, Elsub Corporation, Elsinore Atlantic City, and Elsinore of New Jersey, Inc., Defendants.

Civ. A. No. 89-2143.

United States District Court, D. New Jersey.

November 14, 1989.

Meranze and Katz by Michael N. Katz, Cherry Hill, N.J., for plaintiffs.

Saiber, Schlesinger, Satz & Goldstein by David M. Satz, Newark, N.J., for defendants.

COHEN, Senior District Judge:

This Worker Adjustment and Retraining Notification Act ("WARN") case comes before this court on a motion to dismiss by defendants, Elsinore Shore Associates d/b/a Atlantis Hotel and Casino, Elsinore Corporation, Elsub Corporation, Elsinore Atlantic City and Elsinore of New Jersey (Elsinore) against plaintiff, Hotel Employees Restaurant Employees International Union Local 54. Defendants contend that plaintiff has not stated a claim upon which relief can be granted, and therefore the court should dismiss its complaint pursuant to Fed.R.Civ.P. 12(b)(6). Plaintiff, however, has stated a valid claim. Therefore defendants' motion to dismiss shall be denied.

FACTS

Defendants owned and operated the Atlantis, a hotel and casino. In 1985 defendants filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. In 1988 a plan of reorganization was approved by the Bankruptcy Court and thereafter defendants continued to operate the Atlantis. The Atlantis, however, continued having financial problems. In early 1989 defendants commenced negotiations for the sale of the Atlantis to DJT Inc. Plaintiff contends 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 Commission 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 began 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 deteriorating, 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 continue to operate. 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 as of May 22, 1989. Subsequently plaintiff filed a claim under the "WARN" act contending that defendants violated their duty to notify affected employees sixty days prior to the lay off.²

DISCUSSION

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 plaintiff, 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). 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. Id. "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 the purposes of the "WARN" act, and that plaintiff represents affected employees. Defendants contend, however, that they were discharged of all responsibility under the "WARN" act when the New Jersey Casino Control Commission appointed a Conservator pursuant to N.J.S.A. 5:12-130.1 (1988). Defendants claim that the Conservator became the employer for purposes of the 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 defendant contends, 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 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". Plaintiff contends that the Conservator did not continue the business in operation. Rather that defendants continued the business in operation and the Conservator simply monitored and assessed the business in consultation with the Commission.⁵ We agree.

Defendants claim that the Commission's order appointing the Conservator clearly places the Conservator in the position of an employer. The order, however, states that "the operations of the casino hotel shall be conducted by defendants under the general guidance and oversight, but without specific review or approval, of the Conservator." State of New Jersey Casino Control...