Watson v. Michigan Industrial Holdings, Inc., 01-1136.

• Decision Date: 21 November 2002
• Docket Number: No. 01-1136.,01-1136.
• Citation: 311 F.3d 760
• Parties: Robert WATSON, Sr.; Dennis Stetler; Albert P. Blossom; Debra Woodworth; Ronald R. Homminga; Jackie Henry; Heather Christie, Plaintiffs-Appellants, v. MICHIGAN INDUSTRIAL HOLDINGS, INC.; Mason Specialty Forge, Inc.; Mason Precision Forge, Inc.; Mason Forge and Die, Inc.; Horizon Industrial Group, Inc.; Andreas Zybell; Kenneth Smith; Pro Staff, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

311 F.3d 760

Robert WATSON, Sr.; Dennis Stetler; Albert P. Blossom; Debra Woodworth; Ronald R. Homminga; Jackie Henry; Heather Christie, Plaintiffs-Appellants, v. MICHIGAN INDUSTRIAL HOLDINGS, INC.; Mason Specialty Forge, Inc.; Mason Precision Forge, Inc.; Mason Forge and Die, Inc.; Horizon Industrial Group, Inc.; Andreas Zybell; Kenneth Smith; Pro Staff, Inc., Defendants-Appellees.

No. 01-1136.

United States Court of Appeals, Sixth Circuit.

Argued: August 2, 2002.

Decided and Filed: November 21, 2002.

Kenneth M. Gonko (briefed), The Danielson Group, P.C., St. Clair Shores, MI, Julie H. Hurwitz (briefed), Mark P. Fancher (argued and briefed), Sugar Law Center for Economic and Social Justice, Detroit, MI, for Plaintiffs-Appellants.

Mark C. Modras, Bogosian, Semaan, Modras & Allen, Rochester Hills, MI, Mark D. Evans (argued and briefed), Evans & Parker, Bloomfield Hills, MI, Ronald W. Chapman, Brian J. Richtarcik (briefed), Bloomfield Hills, MI, for Defendants-Appellees.

Before: SILER, COLE, and CLAY, Circuit Judges.

OPINION

SILER, Circuit Judge.

On January 19, 1996, defendant Michigan Industrial Holdings, Inc. ("MIHI") posted a notice announcing the immediate and permanent closing of its Jackson, Michigan facility. Plaintiffs Robert Watson Sr., Dennis Stetler, Albert P. Blossom, Debra Woodworth, Ronald R. Homminga, Jackie Henry and Heather Christie, former employees of MIHI, brought this action pursuant to the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. §§ 2101-2109, alleging that defendants MIHI, Pro Staff, Inc. ("PSI"), Mason Specialty Forge, Inc., Mason Precision Forge, Inc., Mason Forge and Die, Inc., Horizon Industrial Group, Inc., Andreas Zybell and Kenneth Smith violated the WARN Act by failing to provide sixty days' advance notice of their termination in connection with the closing of MIHI's plant. The district court granted summary judgment in favor of the defendants, finding that the unforeseeable business circumstances exception in 29 U.S.C. § 2102(b)(2)(A) relieved MIHI from any requirement under the WARN Act to provide advance notice of the Jackson plant closing. For the reasons that follow, we affirm.

Facts

MIHI was a Michigan Corporation formed around 1991. It purchased various assets of Columbus Auto Parts, including equipment used in forging automobile parts for the Dana Corporation ("Dana"), and established a facility in Jackson, Michigan. From its inception, MIHI supplied forgings to Dana under written supply agreements that were apparently renegotiated on a yearly basis. Dana purchased both aftermarket parts and original equipment parts from MIHI. The original equipment orders were the most lucrative for MIHI. During this relationship, MIHI and Dana often engaged in disputes regarding the quality of MIHI's product.

Around this same time, MIHI and Dana were engaged in discussions to continue their relationship past the expiration of the written supply agreement which was due to expire on August 31, 1995. On August 25, 1995, MIHI's president, Michael Galvin, met with Dana's general manager, Gary Bleckner, to discuss the future of their business relationship. According to MIHI, it was reassured during this meeting that it would continue to be a Dana supplier at least through the end of 1996. Ultimately, the contract was not renewed and business continued between the two companies on a month-to-month basis.

At the same time, Dana was apparently preparing another supplier, the W.P. Crow Company ("Crow"), to produce the original equipment parts that were previously produced by MIHI. An internal memo dated August 28, 1995, prepared by Bleckner, reflects that Dana planned to continue ordering original equipment parts from MIHI through February 1996 and that it intended to have MIHI produce twelve months of aftermarket parts which would have taken at least six months to a year to produce. Although MIHI was aware that Dana was preparing Crow to produce parts, MIHI believed that it was Dana's only viable supplier. During July or August 1995, Dana had shipped steel to MIHI from Crow and directed MIHI to produce parts that Crow was unable to produce. MIHI concluded that Dana needed MIHI more than ever because MIHI could not be replaced as a supplier without significant expense and lead time.

MIHI and Dana had numerous discussions about continuing their business relationship after the expiration of their written agreement in August. In a letter dated October 12, 1995, Dana advised MIHI that it intended to increase the aftermarket volumes for January and February 1996 from $450,000 to $750,000. Dana also expressed that it was "taking extraordinary steps to support MIHI as a future supplier of aftermarket parts." MIHI continued to pursue future business with Dana despite Dana's intention to use Crow and in a letter dated December 5, 1995, MIHI presented pricing information through December 1996.

MIHI did in fact continue to produce parts for Dana up until it closed its doors on January 19, 1996. At the time of the closing, due to MIHI's stressed financial condition and cash flow restraints, MIHI and Dana were operating on payment terms that required Dana to pay MIHI within seven days after being invoiced. On January 19, 1996, Dana's weekly payment did not arrive, as was the ordinary and usual course of dealing between the parties. Galvin traveled to Dana's office to pick up the check, at which time he was informed for the first time that Dana did not intend to pay MIHI. As a consequence of Dana's refusal to issue MIHI a check, MIHI was forced to close its doors and discontinue production. Dana admits that it did not give MIHI any prior notice that it was going to cease doing business with it.

Procedural Background

A group of former MIHI employees filed suit alleging that defendants MIHI and PSI violated the WARN Act by failing to provide sixty days' advance notice regarding the closure of MIHI's plant. Plaintiffs also alleged that liability extended to the other named defendants by virtue of the "single employer" and alter ego doctrines of the WARN Act.¹

The defendants filed motions for summary judgment on various grounds including, inter alia, the claim that the closing of the Jackson facility and the related termination of plaintiffs' employment were the result of unforseen business circumstances which relieved them of any notice requirements under the WARN Act, pursuant to 29 U.S.C. § 2102(b)(2)(A). In response, the plaintiffs argued that the closure was a foreseeable business circumstance requiring sixty days' advance notice. At oral argument before the district court, the plaintiffs, for the first time, produced a report from their purported expert, who provided his opinion as to whether "the eventual shut down of the MIHI manufacturing facility in Jackson, Michigan [was] foreseeable at least two months prior to January 19, 1996."

The district court explained that the parties agreed that plaintiffs' claims against each of the defendants were dependent upon MIHI's being obligated to provide notice under the WARN Act. Accordingly, it granted summary judgment in favor of all the defendants when it held that the unforeseeable business circumstances exception in § 2102(b)(2)(A) relieved MIHI from any requirement to provide advance notice to plaintiffs concerning the closure of its Jackson facility. Plaintiffs then brought a motion to alter or amend the judgment claiming that the court erred by failing to consider their expert's report, which they argued created a genuine issue of material fact that precluded summary judgment on the basis of § 2102(b)(2)(A). In denying that motion, the court stated that plaintiffs' expert offered no credible evidence to refute the fact that MIHI was presented with an unforeseeable business circumstance when its primary customer refused to pay and stopped doing business with MIHI.

Standard of Review

We review de novo the district court's grant of summary judgment in favor of the defendants and its subsequent order denying plaintiffs' motion to alter or amend the judgment. See Smith v. Wal-Mart Stores, Inc., 167 F.3d 286, 289 (6th Cir.1999). Summary judgment should be granted when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c).

Discussion

The WARN Act ordinarily requires sixty days' advance notice of plant closings or mass layoffs. See 29 U.S.C. § 2102(a). The purpose of the Act is to extend

protection to workers, their families and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice provides workers and their families some transition time to adjust to the prospective 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.

20 C.F.R. § 639.1(a).

WARN's sixty-day notice period is reduced or eliminated if the closing is "caused by business circumstances that are not reasonably foreseeable as of the time that notice would have been required." 29 U.S.C. § 2102(b)(2)(A). This provision, known as the "unforeseeable business circumstances exception," is the focal point of this appeal.

The Department of Labor has promulgated regulations interpreting the "not reasonably foreseeable" language.² "The commentary refuses to classify certain types of circumstances as per se unforeseeable and suggests that courts examine each case on its own merits to determine whether the employer in the exercise of `commercially reasonable business judgment' could have foreseen the particular circumstances that caused the closing." Hotel Employees & Rest. Employees Int'l Union Local 54 v. Elsinore Shore Assocs., 173 F.3d 175,...