Opinion
EP-99-CA-260-DB.
October, 2000.
MEMORANDUM OPINION AND ORDER
On this day, the Court considered cross-summary judgment motions the Parties filed in this cause. On July 13, 2000, Defendant American Garment Finishers Corporation ("Defendant" or "AGF") filed its "Motion for Summary Judgment" and Plaintiffs filed an "Opposition to Defendant's Motion for Summary Judgment" on July 24, 2000. Meanwhile, Plaintiffs also filed a "Motion and Brief in Support of Partial Summary Judgment" on July 11, 2000, and a "Supplement" to Plaintiffs' Motion on July 31, 2000. Defendant filed a "Response to Plaintiffs' Motion for Partial Summary Judgment and Brief in Support of its Own Motion for Summary Judgment" on July 24, 2000.
After due consideration, the Court is of the opinion that both Plaintiffs' Motion for Partial Summary Judgment and Defendant's Motion for Summary Judgment should be denied for the reasons set forth below.
This cause was scheduled for jury trial commencing September 11, 2000. Just prior to that trial, the Court telephonically informed the Parties that the Court would deny both Parties' motions. Thereafter, the Parties informed the Court that they had reached a settlement agreement and, by Order entered September 11, 2000, the Court indefinitely continued the scheduled trial pending finalization of the proposed settlement, notice to the class and subclass and approval of the settlement. Furthermore, by Order entered October 11, 2000, the Court scheduled a hearing on the proposed settlement and directed Plaintiffs to send notice to all class and subclass, members. With settlement of this matter well under way, the Court tailors the instant memorandum opinion accordingly.
BACKGROUND
AGF, an industrial laundry in El Paso, Texas, performed garment finishing and laundering for manufacturers, primarily denim manufacturers. On or about February 27, 1999, AGF laid off some 308 employees (nearly fifty percent of its workforce). Previously, in November 1998, AGF laid off some 167 employees. Plaintiff Armando Marquez is an individual who was laid off in November 1998, and the remaining named Plaintiffs are former employees laid off in February 1999.Upon motion by the Plaintiffs, through an Order entered February 1, 2000, the Court certified the following class:
All employees who worked for American Garment Finishers Corporation in El Paso, Texas, who suffered an employment loss on or about February 27, 1999, and who did not receive sixty (60) days advance written notice of such plant closing or mass layoff.
Thereafter, by Order entered February 21, 2000, the Court certified the following subclass:
All employees who worked for American Garment Finishers Corporation in El Paso, Texas, who were temporarily laid off in November 1998 and suffered an employment loss because of the February 27, 1999, plant closing or mass layoff and did not receive sixty (60) days advance written notice of such plant closing or mass layoff.
According to Defendant, some ninety percent of its business was performed for Levi Strauss Co. ("Levi Strauss"). In 1990, AGF entered into a contract with Levi Strauss in which AGF agreed to provide Levi Strauss 300,000 finished garments (also referred to generally as "units") per week, with minor exceptions. The contract was twice formally amended. Levi Strauss, in turn, agreed to give AGF two years' notice of cancellation of the contract. Levi Strauss gave AGF notice on August 1, 1996, that it intended to terminate the contract effective August 1, 1998. In January 1998, Levi Strauss informed AGF that it would furnish to AGF 216,000 units per week for finishing through May 1998. Then, in February 1999, Levi Strauss informed AGF that it would send approximately 100,000 — 120,000 units per week through approximately May 1999. In the intervening period, AGF and Levi Strauss communicated regularly about work Levi Strauss was to send AGF.
Although Defendant states that Levi Strauss accounted for ninety percent of its business, Defendant does not discuss the amount, nature and status of the remainin ten percent of its business unrelated to Levi Strauss.
In the early 1990's, AGF employed nearly 1,700 people in El Paso; in 1995, that number dropped to approximately 1,000; in December 1997, AGF reduced its count to 868; and in the late summer of 1998, there were some 850-860 employees.
On December 22, 1999, Plaintiffs filed an Amended Complaint and Jury Demand based on the November 1998 and February 1999 layoffs, alleging that those layoffs came without at least sixty days of notice in violation of the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. § 2101-2109.
The instant cross-motions for summary judgment followed.
SUMMARY JUDGMENT STANDARD
Summary judgment should be granted only where "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). The party that moves for summary judgment bears the initial burden of identifying those portions of the pleadings and discovery on file, together with any affidavits, which it believes demonstrate the absence of a genuine issue of material fact. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). "If the moving party fails to meet this burden, the motion must be denied, regardless of the nonmovant's response." Tubacex, Inc. v. M/V Risan, 45 F.3d 951, 954 (5th Cir. 1995). If the movant does meet this burden, however, the nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial. See, e.g., Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. "If the non-movant fails to meet this burden, then summary judgment is appropriate." Tubacex, 45 F.3d at 954.
When making a determination under Rule 56, factual questions and inferences are viewed in a light most favorable to the nonmovant. See Lemelle v. Universal Mfg. Corp., 18 F.3d 1268, 1272 (5th Cir. 1994). The party opposing a motion supported by evidence cannot discharge his burden by alleging mere legal conclusions. See Anderson v. Liberty Lobby, 477 U.S. 242, 248-49, 106 S.Ct. 2505, 2509-10, 91 L.Ed.2d 202 (1986). Instead, the party must present affirmative evidence in order to defeat a properly supported motion for summary judgment. See id.
DISCUSSION
The WARN Act offers a simple rule to employers who wish to lay off significant portions of its workforce:
An employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order . . . (a) to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee. . . .29 U.S.C.A. § 2102(a) (West 1999). In this regard, "the term `affected employees' means employees who may reasonably be expected to experience an employment loss as a consequence of . . . a mass layoff by their employer." 29 U.S.C. § 2101(a)(5) (West 1999). However, an employer can avoid such trouble "if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required." Id. § 2102(b)(2)(A).
Defendant concedes that Plaintiffs have established a prima facie case for WARN Act violation with respect to the February 1999 layoffs. However, Defendant contends that the subclass employees — those terminated in November 1998 — do not come within the WARN Act definition of "affected employees" because they were permanently laid off and, thus, had no reasonable expectation of returning to work for AGF. Further, Defendant contends it is entitled to the "business circumstances" affirmative defense. Thus, in short, the Parties principally dispute (1) whether those employees laid off in November 1998 were temporarily laid off with an expectation to return in the Spring (of 1999), such that they experienced an employment loss in February 1999, and (2) whether the February 1999 layoff was "reasonably foreseeable," such that Defendant is entitled to the "business circumstances" defense.
A. Temporary Layoffs — November 1998
Initially, Plaintiffs asked the Court to include those employees laid off in November 1998 as part of the certified class. Pursuant to the Court's February 1, 2000, Memorandum Opinion and Order, the Court expressly declined to so include those employees. Thereafter, however, Plaintiffs convinced the Court to certify those employees as a subclass.
Here, Plaintiffs contend that the November 1998 employees were temporarily laid off, such that they had a reasonable expectation of returning to AGF in the Spring. Plaintiffs further contend that, when AGF terminated additional employees the following February, AGF effectively also terminated permanently those employees temporarily laid off in November 1998, who then experienced an "employment loss." Defendant contends that at no time were the November 1998 layoffs "temporary." After reviewing the Parties' affidavits and documentary evidence, and considering the Parties' arguments, the Court finds that neither party has shown that there is no genuine dispute about a material fact as to whether the employees expected to return to AGF in the fall, and whether such an expectation was reasonable. For example, Plaintiffs submit the affidavit of Armando Marquez, in which he states that he was told by unidentified AGF representatives that he would be rehired in the Spring, and that he expected to be rehired based on his experience with AGF temporary seasonal layoffs. Defendant, conversely, attaches the affidavit of Sylvia Firth, who avers that the layoffs were permanent. Such conflicting evidence makes it impossible for the Court to determine on summary judgment whether such employees were "affected employees" as a matter of law.
In addition, Defendant contends that the November 1998 employees cannot recover in this cause because the November 1998 layoffs were not part of a "plant closing or mass layoff." Clearly, the layoffs did not close AGF's plant and, thus, do not constitute a "plant closing." See 29 U.S.C.A. § 2101(a)(2) (defining "plant closing" to mean, among other requirements, "the permanent or temporary shutdown of a single site of employment"). The WARN Act defines "mass layoff" as follows:
(3) the term "mass layoff" means a reduction of force which —
(A) is not the result of a plant closing; and
(B) results in an employment loss at the single site of employment during any 30-day period for —
(i)(I) at least 33 percent of the employees (excluding any part-time employees); (II) and at least 50 employees (excluding any part-time employees); or
(ii) at least 500 employees (excluding any part-time employees).29 U.S.C.A. § 2101(a)(3). Defendant contends that the November 1998 layoffs neither constituted a thirty-three percent reduction nor totaled 500 employees. While perhaps true, Defendant misses the point. Plaintiffs merely contend that the November 1998 employees were effectively terminated as part of the February 1999 "mass layoff." Cf. See Kildea v. Electro-Wire Prods., Inc., 144 F.3d 400, 405 (8th Cir. 1998) (finding that temporary employees are "effected employees" under WARN Act); Marques v. Telles Ranch, Inc., 131 F.3d 1331, 1334-35 (9th Cir. 1997) (finding that seasonal workers did not suffer "employment loss" in November, when they normally stopped working, but in April when they were not recalled); Kalwaytis v. Preferred Meal Sys., Inc., 78 F.3d 117, 120-22 (3d Cir. 1996); see also 29 C.F.R. § 639.3 ("Workers on temporary layoff or on leave who have a reasonable expectation of recall are counted as employees . . . when he/she understands, through notification or through industry practice, that his/her employment with the employer has been temporarily interrupted and that he/she will be recalled. . . ."). Hence, Defendant's agreement is inapposite.
Also, Defendant has not shown that the November 1998 layoffs, even if not temporary, did not constitute thirty-three percent of the AGF workforce at that plant. For example, although Defendant plainly states that only 167 of 809 total employees were terminated, Defendant has not shown that all 809 employees were not part-time employees, which are excluded from the "mass layoff" calculation. See § 2101(a)(3).
Accordingly, the Court finds that neither party is entitled to summary judgment on liability for the November 1998 layoffs.
B. Business Circumstances Exception
Next, Defendant contends that it is entitled to an affirmative defense based on the "business circumstances" exception set forth in § 2102(b)(2)(B). That section sets forth an exception to the notice requirement where an unforeseen business event brings about an equally unforeseen need to effect a mass layoff or plant closing. See, e.g., Halkias v. General Dynamics Corp., 137 F.3d 333, 335-36 (5th Cir. 1998). To avail itself of the defense, Defendant need only show that it had no knowledge that the particular unforeseen circumstance was probable, even if the circumstance was known to be possible. See id. at 336.
Here, Defendant contends that it's business with Levi Strauss, which made up some ninety percent of its finishing business, was abruptly reduced via a February 1999 correspondence by email from Levi Strauss, cutting that company's orders in half (from 216,000 units to 100,000 — 120,000 units). On the other hand, Defendant also tells the Court that Levi Strauss notified Defendant in August 1996 that it would cancel the contract effective August 1, 1998. It appears that this interim period — August 1996 through February 1999 — in which AGF continued to do business with Levi Strauss at various levels, will determine whether the February 1999 slowdown was foreseeable. However, after thoroughly reviewing the evidence, affidavits and briefs filed on the instant motions, the Court finds that neither Party has shown there to be no genuine dispute about a material fact respecting Defendant's affirmative defense. Accordingly, summary judgment is not proper here.
After due consideration, the Court is of the opinion that both summary judgment motions should be denied.
Accordingly, IT IS HEREBY ORDERED that Defendant American Garment Finishers Corporation's "Motion for Summary Judgment" is DENIED.
IT IS FURTHER ORDERED Plaintiffs' "Motion and Brief in Support of Partial Summary Judgment" is DENIED.