Carpenters Dist. Council of New Orleans & Vicinity v. Dillard Dept. Stores, Inc. ( 1994 )


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  •               IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    _____________________
    Nos. 92-3419
    92-3613
    _____________________
    CARPENTERS DISTRICT COUNCIL OF
    NEW ORLEANS & VICINITY, ET AL.,
    Plaintiffs-Appellees,
    Cross-Appellants,
    versus
    DILLARD DEPT. STORES, INC., Etc.,
    ET AL.,
    Defendants-Appellants,
    Cross-Appellees.
    *****************************************************************
    STEPHEN J. PLESCIA, Etc., ET AL.,
    Plaintiffs-Appellees,
    versus
    DILLARD DEPT. STORES, INC., ET AL.,
    Defendants-Appellants.
    _________________________________________________________________
    Appeals from the United States District Court for the
    Eastern District of Louisiana
    _________________________________________________________________
    ( February 22, 1994 )
    Before POLITZ, Chief Judge, REYNALDO G. GARZA, and JOLLY, Circuit
    Judges.
    E. GRADY JOLLY, Circuit Judge:
    For the first time, this court is called upon to address the
    Worker Adjustment and Retraining Notification Act ("WARN Act"), 29
    U.S.C. § 2101 et seq. (Supp. 1993).   It requires some employers--
    generally those who are curtailing or closing an operation--to
    provide sixty days notice to those employees who will be laid off
    or whose hours will be substantially reduced. In 1989, D.H. Holmes
    Co., Ltd. merged with Dillard Department Stores, Inc., resulting in
    the layoff of a large number of people--mostly former Holmes
    employees--whose job functions had become redundant.                  These former
    employees sued Dillard, alleging that in the course of the ongoing
    merger efforts, Holmes and Dillard had failed to provide adequate
    notice of the pending terminations.              The district court generally
    ruled for the former employees and awarded some damages to them.
    Both Dillard and the former employees appeal, raising various
    issues that in turn we will address.               We begin with the relevant
    facts.
    I
    In   1988,    as   a   result   of       steadily    declining    profits   and
    revenues,   Holmes,     a   long-established            and   time-honored   retail
    department store headquartered in New Orleans, Louisiana, hired
    investment counselors to find a solution to its financial problems.
    Through the investment counselor's efforts, Holmes and Dillard
    entered into negotiations in the latter part of 1988 for the merger
    of the two corporations. A merger agreement was ultimately reached
    between representatives of the two parties.                   Under this agreement,
    Holmes would merge with DDS Acquisitions Corporation ("DDS"), a
    wholly-owned      transient     subsidiary         of     Dillard,    with   Holmes
    -2-
    continuing as the surviving wholly-owned subsidiary of Dillard.1
    On   March   3    and   6,    1988,    the   agreement   was     approved   by   the
    respective boards of directors of both Dillard and Holmes.                  Still,
    it was not yet a done deal.            One of the conditions of the agreement
    was that no less than eighty percent of Holmes's stockholders must
    approve the merger.          Before any vote by the stockholders, however,
    Dillard and Holmes were required to furnish Holmes's stockholders
    with registration statements outlining the parties' respective
    financial conditions.              Further yet, the Securities and Exchange
    Commission ("SEC") required that such registration statements must
    be pre-approved by the SEC before issuance.                      Pursuant to SEC
    regulation, Dillard and Holmes filed the proposed registration
    statement with the SEC on or about March 7, 1989.                    Efforts were
    made    to   have   the      SEC    expedite    its   decision    concerning     the
    registration statement; however, neither Holmes nor Dillard could
    anticipate precisely when the SEC would approve the registration
    statement.       Approximately one month after the statement was filed,
    the SEC approved the registration statement.               Having received SEC
    approval, Holmes then scheduled a stockholders' meeting for May 9,
    1989.
    1
    In corporate tax parlance, this is known as a "reverse
    triangular merger." See 26 U.S.C. § 368(a)(2)(E) (Supp. 1993); see
    also BORIS I. BITTKER & JAMES S. EUSTICE, FEDERAL INCOME TAXATION OF
    CORPORATIONS AND SHAREHOLDERS, § 14.15(1) (5th ed. 1987). See infra
    note 12. Although technically, Holmes merged with DDS, for ease of
    reference we will refer to this merger as the merger between Holmes
    and Dillard unless specifically referred to otherwise.
    -3-
    On April 19, 1989, at the direction of Dillard's personnel,
    Holmes notified its employees assigned to the corporate planning
    division and the warehouse facilities that they would be terminated
    as of May 9 if Holmes's stockholders approved the proposed merger
    with Dillard.   Certain "transitional" employees at the warehouse
    facilities and the corporate offices received notification between
    April 21 and 28, informing them that they would be laid off
    sometime between May 9 and July 1.          Finally, on May 12, employees
    in the Canal Street retail store were notified that they would be
    laid off between June 10 and July 8.
    Because it was clear that the WARN Act sixty-day notice
    requirement would not be met with respect to certain employees,
    Dillard2 made efforts to comply with WARN's damages provision.
    First, Dillard determined which employees were entitled to payments
    under the WARN Act, and as to those employees, the amount owed.
    Under Dillard's interpretation of the statute, part-time employees
    were not entitled to the notice, and, as such, they were not
    entitled to any damages in lieu of notice.                Dillard further
    determined   that   the   sixty-day    penalty   period   in   29   U.S.C. §
    2104(a)(1)(A) referred to the number of work days within that
    period rather than the number of actual calendar days.                  This
    interpretation meant that each full-time employee who had not
    2
    In respect to events that occurred after the merger, a
    reference to Dillard should be interpreted as including Holmes,
    unless Holmes is specifically discussed separately.
    -4-
    received the full sixty-day notice would be entitled to payment for
    those days the employee would have worked had the full sixty-day
    notice been given.        Relying on the provisions of § 2104(a)(2) of
    the Act, Dillard also concluded that it could deduct from this
    amount any severance pay or vacation pay that Dillard owed the
    employee.
    After the two companies merged, and as a direct result of the
    merger, numerous employees were involuntarily terminated between
    May 8 and August 9, 1989.           These former employees3 sued a number of
    defendants, arguing that Dillard violated the WARN Act when it
    failed to provide the "affected employees" the required sixty-day
    notice of termination.          In addition, the employees argued that
    Dillard failed to pay them the proper amount of damages in lieu of
    notice.
    II
    Initially, the employees sued Dillard and Holmes.                   Later,
    however,    the    employees        amended    their   complaint,    adding   as
    defendants individual officers and directors of both Holmes and
    Dillard,    as    well   as   the    Federal   Insurance   Company    ("Federal
    3
    The former employees constitute a class that we will refer to
    as "the former employees" or simply "the employees." That class is
    composed of "all former employees of either D.H. Holmes Co., Ltd.
    (Holmes) and or Dillard Department Stores, Inc. (Dillard) who were
    involuntarily terminated from employment between May 8, 1989, and
    August 9, 1989, as a result of the acquisition of Holmes by Dillard
    and who did not receive sixty (60) days written notice of said
    termination either personally or through their representative."
    Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 
    778 F. Supp. 297
    , 300 (E.D. La. 1991).
    -5-
    Insurance"), Holmes's and Dillard's fiduciary liability insurer.
    As this lawsuit progressed, a number of motions were filed and
    ruled upon, and some of these rulings form the basis of this appeal
    and cross-appeal. First, in February 1991, the employees moved for
    partial summary judgment on the issue of liability under the WARN
    Act.       In turn, Dillard moved for partial summary judgment, seeking
    to exclude from the plaintiff class certain groups of individuals
    that Dillard argued        were   not    "affected   employees"4   under   the
    statute.       Dillard further sought to dismiss the employees' claim
    against the individual officers and directors of both Holmes and
    Dillard.       Ultimately, the court granted the employees' motion for
    partial summary judgment, stating that Dillard violated the WARN
    Act.       As to Dillard's motion, the district court granted partial
    summary judgment, dismissing the claims against the individual
    officers and directors. The court, however, did not exclude any of
    the contested members from the plaintiff class.               In addition,
    because the officers and directors had been essentially dismissed
    from the suit, the court dismissed Federal Insurance from the suit
    because its only liability was tied to the possible liability of
    the officers and directors who had also been dismissed.                    See
    Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 
    778 F. Supp. 297
    (E.D. La. 1991).
    4
    The WARN Act defines "affected employees" as "employees who
    may reasonably be expected to experience an employment loss as a
    consequence of a proposed plant closing or mass layoff by their
    employers." 29 U.S.C. § 2101(a)(5) (Supp. 1993).
    -6-
    In addition to its motion for summary judgment, Dillard had
    also filed a cross-claim against Federal Insurance and a third-
    party complaint against Liberty Mutual Insurance Company ("Liberty
    Mutual").     Dillard alleged that both insurance companies owed
    Dillard coverage, defense, and indemnity pursuant to a fiduciary
    liability    insurance   policy    issued        by   Federal      Insurance,   and
    commercial general liability policies issued by Liberty Mutual. In
    response to Dillard's cross-claim, Federal Insurance moved for
    summary judgment, arguing that no coverage existed under its
    policies based on the allegations contained within the plaintiffs'
    complaint.     Liberty   Mutual    also     moved      for   summary    judgment,
    asserting lack of coverage. The court granted summary judgment for
    both insurance companies.      
    Id. In September
    1991, Dillard filed a second motion for summary
    judgment, this time alleging that the WARN Act is unconstitutional.
    The district court, in a separate opinion, denied Dillard's motion,
    holding that    the   WARN   Act   did     not    suffer     any   constitutional
    infirmities. See Carpenters Dist. Council v. Dillard Dep't Stores,
    Inc., 
    778 F. Supp. 318
    (E.D. La. 1991).
    In November 1991, the damages issue was tried to the district
    court, and the court awarded damages to employees.                  Following the
    trial, the employees sought prejudgment interest on the damage
    award, which the district court granted.                In February 1992, the
    employees, in a separate civil action, further sought costs and
    attorneys' fees.      Following an evidentiary hearing, the court
    -7-
    ordered Dillard to pay attorneys' fees and costs to the employees
    for both the original action as well as for the subsequent action
    seeking the attorneys' fees and costs.           See Carpenters Dist.
    Council v. Dillard Dep't Stores, Inc., 
    790 F. Supp. 663
    (E.D. La.
    1992).
    III
    Dillard   raises   four   issues   on   appeal.   First,   Dillard
    challenges the district court's determination that the WARN Act is
    constitutional.5   Next, Dillard argues that the district court
    erred in holding that Dillard violated the WARN Act.     However, even
    if Dillard did in fact violate the Act, Dillard contends that the
    district court improperly calculated the amount of damages Dillard
    owed its former employees.       Finally, Dillard asserts that the
    district court erroneously granted summary judgment in favor of
    Federal Insurance and Liberty Mutual.6
    5
    Dillard makes several arguments in support of its contention
    that the WARN Act is unconstitutional.        Their arguments are
    meritless, and we affirm the district court's order denying
    Dillard's motion for summary judgment on that basis.            See
    Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 
    778 F. Supp. 318
    (E.D. La. 1991).
    6
    Dillard argues that the district court erred in granting
    summary judgment in favor of Federal Insurance and Liberty Mutual
    because the plain language of the policies provide coverage, or
    alternatively, if the language of the policies was ambiguous, the
    policies should be construed in favor of coverage. Both policies,
    however, clearly do not provide coverage for liability imposed by
    the WARN Act. With respect to Federal Insurance, the policy in
    question provided coverage only for specifically defined "wrongful
    acts," of which violation of the WARN Act was not included. As to
    Liberty Mutual, their policy provided coverage for liability
    (continued...)
    -8-
    In their cross-appeal, the former employees raise four issues
    for our consideration.      First, the employees contend that the
    district court mistakenly determined that certain employees--the
    Bienville employees--were not "affected employees" as defined by
    the statute, and, as a result, those employees were erroneously
    denied benefits under the Act.    Next, the employees argue that the
    district   court    erroneously   concluded   that   the   notices    of
    termination that did not designate a specific date of termination
    constituted notice. Third, the employees contend that the district
    court improperly calculated the amount of attorneys' fees Dillard
    owed the employees.     And, finally, the employees argue that the
    district court erred in applying regulations retroactively to a
    specific employee to deny her pay.
    IV
    We review a grant of summary judgment de novo.    FDIC v. Myers,
    
    955 F.2d 348
    , 349 (5th Cir. 1992). Summary judgment is appropriate
    "if 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).   We examine the record independently to determine
    6
    (...continued)
    arising out of errors in the administration of an employee benefit
    program, or in connection with providing improper advice concerning
    such programs.     Thus, we affirm the district court's grant of
    summary judgment on this issue.
    -9-
    if the movant is entitled to judgment as a matter of law, drawing
    any factual inferences in the light most favorable to the non-
    movant.     Degan v. Ford Motor Co., 
    869 F.2d 889
    , 892 (5th Cir.
    1989).     Questions of law are subject to de novo review, United
    States v. Long, 
    996 F.2d 731
    , 732 (5th Cir. 1993), while findings
    of fact will be disturbed only if we find that they are clearly
    erroneous.    FED. R. CIV. P. 52(a).
    A.    Did Dillard Violate the WARN Act?
    Although Dillard and Holmes acknowledge that certain affected
    employees     did    not   receive   the    full   sixty   days   notice   of
    termination,7 they argue that they were excused from the notice
    requirements because they fell within one of the two statutory
    exemptions.    Under the facts of this case, Dillard and Holmes can
    escape WARN Act liability only if either the "faltering company"
    exception or the "unforeseen business circumstances" exception
    applies.
    To fall within the "faltering company" exemption, an employer
    must meet four requirements.         The Act states that
    an employer may order the shutdown of single site of
    employment before the conclusion of the 60-day period if
    as of the time that notice would have been required the
    employer was actively seeking capital or business which,
    7
    Dillard does not challenge the fact that it initially falls
    within the general scope of the WARN Act. Dillard does not assert
    that it is not an "employer" within the meaning of WARN. 29 U.S.C.
    § 2101(a)(1) (Supp. 1993). Likewise, Dillard concedes that the
    layoffs and closings of the facilities at issue here fall within
    the WARN Act definition of "plant closing" and "mass layoff."   29
    U.S.C. §§ 2101(a)(2), (3) (Supp. 1993).
    -10-
    if obtained, would have enabled the employer to avoid or
    postpone the shutdown and the employer reasonably and in
    good faith believed that the giving the notice required
    would have precluded the employer from obtaining the
    needed capital or business.
    29 U.S.C. § 2102(b)(1) (Supp. 1993).     This exception applies only
    when a layoff is caused by the employer's failure to obtain
    sufficient capital.    See 54 Fed. Reg. 16061 (April 20, 1989) ("The
    need for notice will only be triggered if the employer fails to
    obtain the business or financing it seeks.").         In this case,
    however, there is no causal connection between Holmes's8 search for
    capital and the ultimate reduction in work force.     Although it is
    true that at the time notice should have been provided Holmes was
    actively searching for a new line of credit, the actual cause of
    the mass layoff was not a failure to obtain an adequate line of
    credit; instead, the cause of the layoff was the merger between
    Holmes and Dillard.       Because there was no causal relationship
    between Holmes's search for additional capital and the reduction in
    its work force, the "faltering company" exception does not apply to
    exempt it from liability for failing to give notice for the
    ultimate layoff, which was in fact caused by the merger.
    Next, Dillard contends that its failure to provide the full
    sixty days notice was excused under the "unforeseen business
    circumstances" exemption.       This exemption provides that "[a]n
    employer may order a plant closing or mass layoff before the
    8
    Dillard, a financially healthy organization, has never argued
    that it was entitled to "faltering company" status.
    -11-
    conclusion of the 60-day period 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."
    29 U.S.C. § 2102(b)(2)(A) (Supp. 1993).          According to the proposed
    rules, an unforeseeable circumstance is "caused by some sudden and
    unexpected action or condition outside the employer's control."9
    20 C.F.R. § 639.9(b)(2) (1988)(proposed regulations).10 As with the
    "faltering company" exception, this exception to the general rule
    is to be narrowly construed.          20 C.F.R. § 639.9(a) (1989)(final
    regulations).
    Dillard argues that there was some uncertainty as to when, or
    even if, the SEC would approve the registration statement, and as
    to   whether       Holmes's   stockholders    would   approve      the   merger.
    Therefore, it asserts, the resulting merger was an "unforeseen
    business circumstance." We cannot agree. For several months prior
    to March 9--the date notice should have been given for the May 9
    9
    Examples provided by the regulations include "a principal
    client's sudden and unexpected termination of a major contract with
    the employer, a strike at a major supplier of the employer, and an
    unanticipated and dramatic major economic downturn." 20 C.F.R. §
    639.9(b)(2) (1988)(proposed regulations).
    10
    The WARN Act was enacted on August 4, 1988, and it took
    effect on February 4, 1989.      The Department of Labor ("DOL")
    promulgated proposed regulations in December 1988, and later issued
    final regulations on April 20, 1989, which took effect on May 22.
    See 54 Fed. Reg. 16042-01 (1989). In many respects, the proposed
    regulations are identical to the final regulations.       In those
    cases, we will cite to the final regulations. However, in those
    instances where the final regulations differ from the proposed
    regulations, we will cite to those regulations in effect at the
    time in question. See infra note 19.
    -12-
    layoff--Dillard    and   Holmes   had   been   intensely    negotiating   an
    agreement that would allow the two companies to merge.          On March 6,
    three days before notice should have been given, a tentative
    agreement was reached.       Both companies then sought SEC approval,
    and both companies actively promoted the merger.            It is difficult
    to see how two companies that were busy promoting their merger can
    now argue that the resulting merger was unforeseeable.             The fact
    that there were some uncertainties in the merger process does not
    make the resulting merger unforeseeable.            We conclude that the
    merger was in fact foreseeable. Consequently, we hold that neither
    the merger itself nor any of the individual steps taken to effect
    the   merger    constitute   "unforeseen       business    circumstances."11
    Because Dillard and Holmes are unable to satisfy the requirements
    of either exception under the WARN Act, sixty days notice of
    termination was required.12
    11
    Even if Dillard and Holmes had fallen within the scope of
    either the "faltering company" exemption or the "unforeseen
    business circumstances" exemption, both failed to provide proper
    notice under the DOL regulations. If an employer is providing less
    than sixty days notice pursuant to one of the statutory exemptions,
    the employer must "provide a brief statement of the reasons for
    reducing the notice period. . . ." 20 C.F.R. § 639.9 (1989)(final
    regulations). None of the notices provided to employees contained
    a brief statement of the reasons for providing less than sixty days
    notice.
    12
    Dillard also argues that the district court erred in
    determining that Dillard and Holmes were jointly and severely
    liable because the "merger" between Holmes and Dillard was not a
    "sale" as contemplated by the Warn Act. Carpenters Dist. 
    Council, 790 F. Supp. at 666-67
    ; see also 29 U.S.C. § 2101(b)(1) (Supp.
    1993). We disagree, and we affirm the district court's holding on
    (continued...)
    -13-
    B.   Work Days vs. Calendar Days
    The next issue concerns whether the district court erred by
    calculating damages on the basis of calendar days instead of work
    days. Dillard contends that the district court improperly included
    in the damage award payment for non-work days i.e., Saturdays,
    Sundays, and holidays.     The district court held that "the time
    period for which penalty payments would be due are 60 individual
    work days and not the number of work weeks contained within a 60
    day period."   Carpenters Dist. 
    Council, 778 F. Supp. at 308
    .
    The absolute starting point for interpreting a statute is the
    language of the statute itself.    United States v. Sosa, 
    997 F.2d 1130
    , 1132 (5th Cir. 1993); In re Hammers, 
    988 F.2d 32
    , 34 (5th
    Cir. 1993).    If the language is clear and unambiguous, then the
    court may end its inquiry.     United States v. 
    Sosa, 997 F.2d at 1132
    .     If, however, a statute is susceptible to more than one
    reasonable interpretation, then the reviewing court must look
    beyond the language of the statute in an effort to ascertain the
    intent of the legislative body.    In re 
    Hammers, 988 F.2d at 34
    .
    12
    (...continued)
    this issue except to the extent that the district court held that
    the "merger" between Dillard and Holmes was not a "merger" under
    Louisiana law. Carpenters Dist. 
    Council, 790 F. Supp. at 666
    , n.7.
    As the district court correctly noted, this "merger" consisted of
    a transaction among three corporate entities--Holmes, Dillard, and
    DDS Acquisition Corporation, a wholly owned subsidiary of Dillard.
    After the respective stockholders of each corporation approved the
    merger plan, DDS and Holmes merged, with Holmes continuing in
    existence as the surviving wholly-owned subsidiary of Dillard. In
    corporate tax parlance, this is known as a "reverse triangular
    merger." See supra note 1.
    -14-
    Section 210413 spells out in some detail the amount of damages
    an employer must pay if it does not provide its employees with
    13
    Section 2104 provides in pertinent part:
    (a)     Civil actions against employers
    (1)   Any employer who orders a plant closing or mass
    layoff in violation of [the WARN Act] shall be liable to
    each aggrieved employee who suffers an employment loss as
    a result of such closing or layoff for--
    (A) back pay for each day of violation at a rate
    of compensation not less than the higher of--
    (i) the average regular rate received by such
    employee during the last 3 years of the
    employee's employment; or
    (ii) the final regular rate received by such
    employee; * * *
    Such liability shall be calculated for the period of the
    violation, up to a maximum of 60 days, but in no event
    for more than one-half of the number of days the employee
    was employed by the employer.
    (2) The amount for which an employer is liable under
    paragraph (1) shall be reduced by--
    (A) any wages paid by the employer to the employee
    for the period of violation;
    (B) any voluntary and unconditional payment by the
    employer to the employee that is not required by
    any legal obligation; * * *
    (3)   Any employer who violates [the WARN Act] with
    respect to a unit of local government shall be subject to
    a civil penalty of not more than $500 for each day of
    such violation * * *
    (6) In any such suit, the court, in its discretion, may
    allow the prevailing party a reasonable attorney's fee as
    part of the costs. * * *
    29 U.S.C. § 2104 (Supp. 1993).
    -15-
    adequate notice of a mass layoff or a plant closing.                         If an
    employer violates the notice provision, the employer must pay the
    aggrieved     employee    "back   pay    for     each    day   of   the   violation
    [period]." 29 U.S.C. § 2104(a)(1)(A) (Supp. 1993).                   On one hand,
    the term "back pay" connotes a remedy that would require the
    payment of a sum such that the employees would be put in the same
    position they would have been had the violation never occurred.                  On
    the other hand, "each day of the violation" appears to require
    payment of "back pay" damages for each calendar day within the
    violation period, which would put the employees in a significantly
    better position than they would have enjoyed had the employer
    provided the full sixty-day notice.               See United Steelworkers of
    America v. North Star Steel Co., 
    5 F.3d 39
    (3d Cir. 1993), petition
    for   cert.   filed,     
    62 U.S.L.W. 3429
       (U.S.     Dec.    13,   1993)(No.
    93-936)(holding that the statute requires payment of damages based
    upon the number of calendar days within the violation period);
    Jones v. Kayser-Roth Hosiery, Inc., 
    748 F. Supp. 1292
    , 1296 (E.D.
    Tenn. 1990)(holding that the statute requires payment of damages
    based upon the number of work days within the violation period).
    Because the statute is susceptible to more than one reasonable
    interpretation,     we    will    examine      all      available   materials    to
    determine the intent of Congress.           Our starting point, however, is
    the statute.
    Interpreting WARN's damage provision as requiring payment for
    work days only is well supported by the language of the section.
    -16-
    First, the    term   "back   pay"   commonly   means    pay,   i.e.,   wages,
    benefits, etc., that an employee would have earned, or to which she
    would have otherwise been entitled, if the event that affected such
    job related compensation had not occurred.             Indeed, the Supreme
    Court has said that "back pay" requires "payment . . . of a sum
    equal to what [the employees] normally would have earned" had the
    violation never occurred.       Phelps Dodge Corp. v. NLRB, 
    313 U.S. 177
    , 197, 
    61 S. Ct. 845
    , 854, 
    85 L. Ed. 1271
    (1941).             Further, the
    Supreme Court has explained that "back pay" suggests a remedy such
    that the damaged employee is restored "as nearly as possible, to
    that which would have [been] obtained but for the [violation]."
    
    Id. at 194.
       If aggrieved employees are paid only for days they
    ordinarily would have worked during the sixty-day notice period,
    then those employees are placed in the position they would have
    occupied had the violation never occurred.14               But see     United
    14
    The Third Circuit, however, provides two arguments for
    interpreting the term "back pay" as requiring payment for each
    calendar day within the violation period, and in doing so, they
    have, in our view, essentially written the term out of the statute.
    See United Steelworkers of America v. North Star Steel 
    Co., 5 F.3d at 41-43
    (holding that "WARN uses the term ``back pay' simply as a
    label to describe the daily rate of damages payable").           In
    Steelworkers, North Star Steel argued that the term "back pay"
    should connote a "lost earnings" concept.         Under the "lost
    earnings" concept, an employee would receive payment for time he or
    she would have worked during the sixty-day notice period, but was
    not allowed to. The Third Circuit rejected this argument because
    of the effect the "lost earnings" concept would have on other
    sections of the statute.    They reasoned that the lost earnings
    concept would render superfluous § 2104(a)(2)--the damage provision
    that allows an employer to reduce damages by wages paid for work
    performed during the violation period.        See supra note 13.
    (continued...)
    -17-
    14
    (...continued)
    According to the Third Circuit, adopting the "lost earnings"
    concept would render § 2104(a)(2) superfluous because "lost
    earnings" reflect a net earnings figure; in other words, the "lost
    earnings" calculation would by definition subtract wages an
    employer had already paid the employee for work performed during
    the violation period, and as such, there would be no need for §
    2104(a)(2). This argument, however, is based upon a flawed reading
    of the statute that disregards the statutory distinctions between
    termination of an employee and reduction of an employee's work
    hours.   As the Conference Report clearly states, the violation
    period is composed of those days after the employee has been
    terminated or after the employee's hours have been substantially
    reduced without adequate notice. H.R. CONF. REP. No. 100-576, 100th
    Cong., 2nd Sess. 1052 (1988), reprinted in 1988 U.S.C.C.A.N. 2078,
    2085. Section 2104(a)(2) allows an employer to deduct wages earned
    for work performed during the violation period. This section is
    effective only in those instances where the "employment loss" is a
    substantial reduction in hours, as opposed to complete termination.
    See 29 U.S.C. § 2101(a)(6)(C) (Supp. 1993). Where an employee's
    hours are reduced without proper notice, the employee will continue
    to work during the violation period. Where, as here, the employee
    is terminated, § 2104(a)(2) is inapplicable because by definition
    an employee who has been terminated cannot earn any wages during
    the violation period. The Third Circuit mistakenly concluded that
    employees who have been terminated can earn wages during the
    violation period. They further concluded that § 2104(a)(2) allows
    an employer to deduct wages earned before the violation period--
    something that § 2104(a)(2) expressly disallows. Thus, the Third
    Circuit's argument against using the lost earnings concept for
    "back pay" fails to withstand scrutiny.
    The Third Circuit further reasoned that there would be an
    additional    "conflict   between   Subsections    2104(a)(1)   and
    2104(a)(2)(A)" if "back pay" were interpreted as meaning "lost
    earnings".   United 
    Steelworkers, 5 F.3d at 43
    .     Under WARN, an
    employer is entitled to reduce its liability to aggrieved employees
    only by those payments within the categories set forth in §
    2104(a)(2) that an employer paid to its employees. According to
    the Third Circuit, the concept of lost earnings, which is remedial,
    is inconsistent with the statutory scheme; a true lost earnings
    scheme would allow the employer to reduce its liability by any
    earnings that the employees received during the period of
    violation, even if those earnings were received from a subsequent
    employer. 
    Id. The WARN
    Act, however, does not include a provision
    that would allow an employer to deduct wages earned by an employee
    from other sources. Consequently, the Third Circuit concluded,
    (continued...)
    -18-
    Paperworkers Int'l Union v. Specialty Paperboard, Inc., 
    999 F.2d 51
    , 55 (2d Cir. 1993)(stating in dicta that a WARN Act claim is not
    a true claim for back pay because it does not compensate for past
    services, but nevertheless stating damages "are measured as two
    months pay and benefits").
    Second, the legislative history makes it clear that Congress
    intended the "back pay" language in WARN to connote the traditional
    back pay remedy as discussed in Phelps Dodge Corp. v. NLRB, 
    313 U.S. 177
    , 197, 
    61 S. Ct. 845
    , 854, 
    85 L. Ed. 1271
    (1941)(damages "of
    a sum equal to what [the employees] normally would have earned" had
    the violation never occurred).    The Senate Report states that
    [f]or violations of the notice provisions, damages are to
    be measured by the wages . . . the employee would have
    received had the plant remained open or the layoff had
    been deferred until the conclusion of the notice period,
    less any wages or fringe benefits received from the
    violating employer during that period. This is in effect
    a liquidated damages provisions [sic], designed to
    penalize   the   wrongdoing   employer,    deter   future
    14
    (...continued)
    "back pay" could not have been intended to connote a lost earnings
    concept. 
    Id. We find
    this argument unpersuasive. Although we
    agree that the lost earnings concept creates a remedy that is
    generally remedial in nature, we are untroubled by the fact that
    the statutory scheme fails to provide a remedy that is something
    other than a pure "make whole" remedy. There are plausible reasons
    why Congress could choose not to include a provision that would
    make the WARN compensation provisions purely remedial, e.g., the
    desire to avoid placing a burden on a terminated employee to
    mitigate damages by taking any job offered, the desire to give a
    terminated employee a window of time to readjust without
    immediately having to search for a job, the desire for simplicity
    in the statutory scheme, etc.        Without express language or
    legislative history directing us to a reason or other motivation
    behind this decision, we will not speculate as to the hidden
    significance, if any, behind the lack of such a provision.
    -19-
    violations,    and        facilitate   simplified      damages
    proceedings.
    S. R EP. NO. 62, 100th Cong., 1st Sess. 24 (1987)(emphasis added).
    Damages calculated by measuring the wages the employee would have
    received had the employee continued working requires a calculation
    using the number of work days in the violation period rather than
    the number of calendar days.      To use calendar days would provide an
    employee with damages in excess of what he or she would have
    received had the plant remained open, or had the layoff been
    deferred until the conclusion of the notice period.
    Finally,   unlike   the    "calendar-day"   approach   advocated   in
    United Steelworkers of America v. North Star Steel Co., 
    5 F.3d 39
    ,
    43 (3d Cir. 1993), petition for cert. filed, 
    62 U.S.L.W. 3429
    (U.S.
    Dec. 13, 1993)(No. 93-936), the "work-day" interpretation of WARN's
    damages provision does not lead to anomalous results.            A well-
    accepted canon of statutory construction requires the reviewing
    court to avoid any interpretation that would lead to absurd or
    unreasonable outcomes. Birdwell v. Skeen, 
    983 F.2d 1332
    , 1337 (5th
    Cir. 1993). In United Steelworkers, defendant North Star Steel Co.
    provided the court with a hypothetical situation which, they
    argued, demonstrated the inequities inherent in the "calendar-day"
    approach.   United Steelworkers of America v. North Star Steel 
    Co., 5 F.3d at 43
    .   The Third Circuit, however, dismissed North Star's
    -20-
    argument,15 but we find North Star's hypothetical to be a good
    example of why the "calendar-day" approach cannot be the approach
    Congress intended.    In this hypothetical situation, an employer
    violates the WARN Act by terminating employees without providing
    any advance notice.     Thus, the violation period contains sixty
    days.     Employee "A" is a full-time employee who works a regular
    eight-hour shift each weekday.     However, employee "B" is a part-
    time employee who works just one ten-hour shift each Saturday.
    Under the Third Circuit's calendar-day approach, employee "A" would
    receive 480 hours pay in lieu of notice (eight hours per day times
    sixty days), while part-time employee "B" would receive 600 hours
    pay (ten hours per day times sixty days).      As North Star Steel
    argued, it would be anomalous for the one-day-per-week part-time
    employee to receive 120 hours pay over and above that paid to the
    five-days-per-week full-time employee.     Under this calendar-day
    system, not only is the employer severely penalized for choosing to
    pay damages in lieu of notice, but the full-time employee is
    15
    The Third Circuit dismissed North Star Steel's hypothetical
    situation because it was unwilling to discuss the method of
    calculating daily damages under §§ 2104(a)(1)(A)(i) and (ii).
    United Steelworkers of America v. North Star Steel 
    Co., 5 F.3d at 43
    . We find it unnecessary to discuss the method of calculating
    daily damage rates under those provisions before discussing the
    hypothetical situation presented by North Star Steel; indeed, the
    precise method of calculation raises many questions. It is clear,
    however, that those provisions require the calculation of damages
    based on the daily amount an employee earns, and regardless on how
    the amount of daily damages is reached, North Star Steel's
    hypothetical situation illustrates the anomalous results that
    emanate from the calendar day approach.
    -21-
    treated inequitably, and the part-time employee gets a windfall.16
    Under the "work-day" approach, however, such bizarre results do not
    occur.   Employee "A" is paid for the number of work days Employee
    "A" would have worked within the sixty-day period, which would work
    out approximately to eight hours per day times five days per week
    times eight weeks.   Employee "B", on the other hand, would receive
    payment in lieu of notice that would reflect the employee's part-
    time status, i.e., approximately ten hours per week times eight
    weeks.   This is a plain-sense result in a day and time when it is
    common to find employees with work schedules that vary from the
    traditional eight-hour day, forty-hour work week.    It is for the
    foregoing reasons that we now hold that damages in lieu of the WARN
    Act notice are to be calculated using on the number of work days
    within the violation period.
    16
    The number of examples demonstrating the inequitable effects
    of the "calendar-day" approach are seemingly never ending. For
    example, a similarly inequitable result is achieved if one full-
    time hourly-wage employee works eight hours per day, five days per
    week, while another full-time hourly-wage employee works ten hours
    per day but only four days per week.      Under the calendar day
    approach, the first employee would be entitled to 480 hours worth
    of pay over a sixty-day violation period while the second employee
    would be entitled to 600 hours of pay, notwithstanding that each
    was paid the same wages, and worked the same number of hours per
    week.
    -22-
    C.   Which Employees Are Entitled to Damages
    Next, Dillard contends that the district court erred in
    determining which employees were "aggrieved employees"17 because the
    court included certain employees who actually received sixty days
    notice of termination prior to their actual termination. To notify
    its employees of their termination dates, Dillard sent out three
    sets of notices.          Because Dillard was unable to predict with
    absolute precision the number of employees needed during the
    transition period, the last two sets of notices provided the
    employees with a range of dates in which the termination would
    likely occur.18      Although Dillard anticipated that the employees
    would be     terminated    within   the   estimated   range   of   dates,    in
    actuality,    some   of    the   employees   continued   working   past     the
    estimated termination dates such that they actually received the
    entire sixty days notice prior to termination. So, even though the
    original notice dates provided less than sixty-days notice, those
    employees who continued working had the benefit of full notice.
    The district court, however, determined that
    17
    The term "aggrieved employee" means "an employee who has
    worked for the employer ordering the plant closing or mass layoff
    and who, as a result of the failure by the employer to comply with
    [the WARN Act] did not receive timely notice either directly or
    through his or her representative as requires by [the Act]." 29
    U.S.C. § 2104(a)(7) (Supp. 1993).
    18
    Between April 21 and 28, 1989, Dillard informed certain
    affected employees that they would be laid off between May 9 and
    July 1. Notices were also issued on May 12 to a third group of
    employees informing the employees that they would be terminated
    between June 10 and July 8.
    -23-
    in those instances where an employee was advised that he
    would be terminated between two set dates, and the
    earliest set date was less than 60 days from the date
    notice was received, the employer has failed to comply
    with the Act . . . even if . . . the employee was
    actually discharged more than 60 days from receiving
    notice. Notice that sets the earliest date an employee
    could be discharged, at less than 60 days from receipt of
    notice, by its very terms, fails to meet the requirements
    of the Act.
    Carpenters Dist. 
    Council, 778 F. Supp. at 312
    .              The effect of the
    district court's ruling was that Dillard was required to pay
    damages to some employees who actually were afforded sixty days of
    notice as required by the WARN Act.
    Dillard argues that the district court's interpretation is
    inconsistent with both the language and the purpose of the Act, and
    we agree.     The WARN Act only requires that employers provide sixty
    days notice of any plant closing or mass layoff.                29 U.S.C. §
    2102(a)      (Supp.     1993);   20    C.F.R.    §   639.1(a)   (1989)(final
    regulations).      As noted above, if an employee receives less than
    sixty days notice, then the employee is entitled to back pay for
    each   day   of   the   violation     period.     The   violation   period   is
    comprised only of those "days after the shutdown or layoff in
    violation of [the WARN Act] and extends for the number of days that
    notice was required but not given."             H.R. CONF. REP. NO. 100-576,
    100th Cong., 2nd Sess. 1052 (1988), reprinted in 1988 U.S.C.C.A.N.
    2078, 2085.       Thus, if an employee was provided with a range of
    possible termination dates, some before the sixty-day period ended
    and some beyond the sixtieth day, and the employee was terminated
    -24-
    beyond     that    sixty-day   period,   such   that   he   actually   worked
    throughout the entire notice period, then there is no violation
    period.        Because there is no violation period, "back pay for each
    day of violation" would amount to zero damages.             See 29 U.S.C. §
    2104(a)(1)(A) (Supp. 1993). However, if that employee was actually
    terminated within the sixty-day notice period, such that the
    employee actually received less than the full sixty days notice,
    then the violation period would range from the actual date of
    termination until the end of the sixty-day notice period.              In such
    a case, the employee would then be entitled to damages for "each
    day of violation."        We hold, therefore, that those employees who
    actually received sixty days notice before their termination are
    not entitled to "back pay" damages.19             Because we reverse the
    19
    The employees argue that the second and third sets of
    notices, which provided a range of estimated termination dates,
    should be treated as no notice, rather than defective notice. They
    argue that under the final regulations, the range of estimated
    termination dates must be fourteen days or less, and because the
    range provided by Dillard greatly exceeded fourteen days, the
    notice provided amounted to no notice. See 20 C.F.R. § 639.7(b)
    (1989)(final regulations). We disagree. First, as the district
    court correctly noted, neither the regulations nor the Act itself
    addresses how the courts are to treat notices that are determined
    to be defective or inadequate.      Carpenters Dist. 
    Council, 778 F. Supp. at 312
    , n.16. As such, neither the Act nor the regulations
    suggest that defective notice is automatically to be treated as
    though no notice had been provided at all. Moreover, we are not
    persuaded that the regulations require such. Although the final
    regulations, which became effective on May 22, 1989, require that
    a range of estimated termination dates cannot exceed fourteen days,
    the interim regulations did not address the matter. See 20 C.F.R.
    § 639.7 (1988)(proposed regulations). Thus, at the time Dillard
    provided notice to its employees, the proposed regulations were in
    effect, although the layoffs occurred after May 22, after the final
    (continued...)
    -25-
    district court's holding with respect to the number of compensable
    days within the violation period and the number of employees who
    are   entitled   to   damages,   we   must   remand   this   case   for   a
    determination of damages consistent with this opinion.
    D. Good Faith Reduction of Damages
    Dillard argues that the district court abused its discretion
    by not reducing its liability because Dillard acted in good faith
    and reasonably believed that it had complied with the Act.            Any
    assessment of an employer's good faith or grounds for its belief in
    the legal propriety of his conduct is necessarily a finding of
    fact, to be disturbed on appeal only if clearly erroneous.          Laffey
    v. Northwest Airlines, Inc., 
    567 F.2d 429
    , 464 (D.C. Cir. 1976),
    19
    (...continued)
    regulations became effective. The employees argue, however, that
    the date of the layoffs, rather than the date of the notices, ought
    to determine which regulations applied to Dillard's notices. They
    rely upon a district court case, Finnan v. L.F. Rothschild & Co.,
    
    726 F. Supp. 460
    , 463 (S.D.N.Y. 1989), in which the court was faced
    with a question far different from the question posed here. In
    Finnan, the employer terminated employees within the sixty-day
    period after the WARN Act was first enacted. Thus, the court was
    faced with the question of whether a layoff or plant closing that
    occurs within the first sixty days of the enactment of WARN was
    subject to the Act. In determining whether the Act applied at all,
    the court noted that the "language of the statute focuses on the
    closing or layoff as the affected event." 
    Id. at 463.
    In the case
    at bar, we are faced with the question of when the proposed
    regulations versus the final regulations apply. The Department of
    Labor's regulations are designed to help employers determine when
    notice is required, what that notice should contain, and what
    constitutes a violation of the Act. Because the WARN Act focuses
    upon employer notification of employees concerning impending mass
    layoffs and plant closings, we find that the regulations in effect
    at the time the notices were provided controls.
    -26-
    cert. denied, 
    434 U.S. 1086
    , 
    98 S. Ct. 1281
    . 
    55 L. Ed. 2d 792
    (1978).
    The WARN Act states that
    [i]f an employer which has violated this chapter proves
    to the satisfaction of the court that the act or omission
    that violated [the WARN Act] was in good faith and that
    the employer had reasonable grounds for believing that
    the act or omission was not a violation of this chapter
    the court may, in its discretion, reduce the amount of
    the liability or penalty provided for [in the Act].
    29 U.S.C. § 2104(a)(4) (Supp. 1993).
    In this case, after the damages issues were tried to the
    court, the district court held that no good faith reduction of
    damages was warranted. First, the court found that Dillard did not
    subjectively believe that it complied with the notice requirements
    of the Act.   The court noted that there was evidence that at the
    time the WARN Act requirements were discussed with Dillard's legal
    advisors, Dillard knew that it was well within the sixty-day notice
    period based on the projected date of the layoffs, and Dillard
    conceded that it was not relying on the two exceptions to establish
    its qualification for a reduction in damages based on its good
    faith.   Moreover, throughout the process of calculating the WARN
    Act damages, when faced with any arguable point of law, Dillard
    consistently resolved any questionable issue in its favor. Dillard
    concluded, for example, that it could deduct from damages any
    vacation pay it already owed its employees, a conclusion that
    Dillard's own legal advisors characterized as "aggressive" or "on
    tenuous grounds." The district court concluded that at some point,
    Dillard's conclusions concerning the calculation of damages become
    -27-
    objectively unreasonable, and as such, Dillard was not entitled to
    a "good faith" reduction in damages.              Although we are mindful that
    Dillard was caught in a difficult position with respect to the
    notification requirements, and although we recognize that Dillard
    made    significant   WARN     payments      to    a   significant    number   of
    employees, we cannot say that the district court's refusal to
    reduce damages is clearly erroneous.
    E.    Prejudgment Interest
    Dillard argues that the district court's award of prejudgment
    interest was improper.        See Carpenters Dist. 
    Council, 790 F. Supp. at 673-75
    .    We disagree.       As the district court noted, federal law
    governs the range of remedies, including the allowance and rate of
    prejudgment interest, where a cause of action, as in this case,
    arises out of federal statute.         F.D. Rich Co. v. United States ex
    rel. Industrial Lumber Co., 
    417 U.S. 116
    , 127, 
    94 S. Ct. 2157
    , 2164,
    
    40 L. Ed. 2d 703
    (1974); Hansen v. Continental Ins. Co., 
    940 F.2d 971
    , 983 (5th Cir. 1991).         Federal law provides, inter alia, that
    interest "shall be allowed on any money judgment in a civil case
    recovered in a district court."         28 U.S.C. § 1961(a) (Supp. 1993);
    see also Guidry v. Booker Drilling Co., 
    901 F.2d 485
    , 488 (5th Cir.
    1990)(holding    that     when    a   federal       court's   jurisdiction     is
    predicated upon a federal question, § 1961 does not preclude the
    award of prejudgment interest).              The determination of whether
    prejudgment    interest      should   be     awarded     requires    a   two-step
    analysis:     does the federal act creating the cause of action
    -28-
    preclude an award of prejudgment interest, and if not, does an
    award of prejudgment interest further the congressional policies of
    the federal act.       Hansen v. Continental Ins. 
    Co., 940 F.2d at 984
    n.11;    Guidry   v.   Booker   Drilling      
    Co., 901 F.2d at 488
    .      If
    prejudgment interest can be awarded under the two-prong test,
    whether such interest is awarded in any given case is within the
    court's discretion. Calderon v. Presidio Valley Farmers Ass'n, 
    863 F.2d 384
    , 392 (5th Cir. 1989) cert. denied, 
    493 U.S. 821
    , 
    110 S. Ct. 79
    , 
    107 L. Ed. 2d 45
    (1989); Oil, Chemical & Atomic Workers Int'l
    Union v. American Cyanamid Co., 
    546 F.2d 1144
    , 1144 (5th Cir.
    1977).
    In this case, the district court's award of prejudgment
    interest was not an abuse of discretion.             First, the WARN Act does
    not preclude an award of prejudgment interest.              Although § 2104(b)
    states that "[t]he remedies provided for in this section shall be
    the exclusive remedies for any violation of this chapter[,]" the
    Act also    states     that   "[t]he   rights    and   remedies    provided      to
    employees by this chapter are in addition to and not in lieu of,
    any other contractual or statutory rights and remedies of the
    employees, and are not intended to alter or affect such rights and
    remedies. . . ."       29 U.S.C. §§ 2104(b), 2105 (Supp. 1993).               Thus,
    the "back pay" remedy provided under § 2104, while the only remedy
    provided to employees under the WARN Act, does not preclude the
    award of prejudgment interest under 28 U.S.C. § 1961.                  Moreover,
    given our holding that back pay damages essentially are wages to
    -29-
    which    employees   would    have   received   had    proper    notice    been
    provided,    an     award    of   prejudgment   interest        furthers   the
    congressional purpose behind the WARN Act--providing compensation
    to employees in lieu of proper notice such that the employees would
    be put in the same position as if the full sixty days notice had
    been    provided.     As    the   district   court    accurately    detailed,
    prejudgment interest will fully compensate employees for the lost
    use of wages that should have been paid if an employer fails to
    provide adequate notice. Prejudgment interest will also provide an
    incentive for employers to settle meritorious claims of aggrieved
    employees quickly, fairly, and without unnecessary delay.                   See
    Carpenters Dist. 
    Council, 790 F. Supp. at 674
    .           Therefore, we hold
    that a trial court may, in its discretion, award prejudgment
    interest to aggrieved employees for the WARN Act violations.                 We
    further hold that the district court in this case did not abuse its
    discretion in awarding prejudgment interest.20
    20
    Dillard's chief argument against the award of prejudgment
    interest centers upon the district court's award of back-pay
    damages based upon the number of calendar days within the violation
    period. Dillard argues that the penalty effect of the calendar-day
    approach makes the WARN Act an inappropriate vehicle for
    prejudgment interest, since the purpose of such interest is to
    compensate the victim, rather than punish the wrongdoer.       See,
    e.g., Illinois Cent. R.R. Co. v. Texas E. Transmission Corp., 
    551 F.2d 943
    , 944 (5th Cir. 1977). In the light of the fact that we
    have reversed the district court's ruling concerning the use of
    calendar days rather than working days to calculate the amount of
    back pay owed each employee, thus, removing the penalty effect of
    the back-pay damage award, Dillard's point is essentially moot.
    -30-
    F.   The "Bienville" Employees
    In its cross-appeal, the employees contend that the district
    court    erred   in   determining    that    certain   employees    who     were
    terminated on May 9 were not entitled to WARN notice.                     These
    employees made up part of Holmes's corporate division, although
    they were not based in the "regular" corporate office in the Canal
    Street site.21    Instead, because of space considerations, they were
    located some distance away from the Canal Street location in
    offices known as the "Bienville site."             The district court held
    that the Canal Street corporate division and the Bienville site did
    not comprise a "single site of employment" under the WARN Act.
    Further, the district court held that "there were insufficient
    numbers of employees assigned to [the Bienville site] to [bring the
    Bienville site itself] within the Act."           Carpenters Dist. 
    Council, 790 F. Supp. at 667
    .        As such, the district court held that those
    Bienville    site     employees     were    not   entitled   to    notice     of
    termination. The employees have appealed this decision, contending
    that the two offices constituted a "single site of employment"
    under the WARN Act.
    As a preliminary matter, we must determine the standard of
    review to be applied.       Neither Dillard nor the employees endorse a
    particular standard of review, and we have been unable to locate
    21
    At the same location on Canal Street were two "sites" of
    employment for the purposes of the WARN Act:    the Canal retail
    store and Holmes's corporate division. We are concerned here only
    with Holmes's corporate division.
    -31-
    any existing case law on this particular WARN Act question.                 Upon
    reflection, we conclude that the question of whether multiple work
    locations constitute a "single site of employment" under the WARN
    Act is a mixed question of fact and law.                Federal Rule of Civil
    Procedure 52(a) prescribes the clearly erroneous standard for
    findings of underlying fact. Whether multiple locations constitute
    a "single site" under the WARN Act, however, is a legal conclusion
    to be drawn from the underlying historical facts.                The underlying
    facts relevant to a determination of the "single site" issue in
    this case are largely undisputed, and as such, we have no occasion
    to apply the clearly erroneous standard.               As a conclusion of law,
    however,    the    issue   of   whether     the   two    employment   locations
    constitute a "single site of employment" is reviewed de novo by
    this court.       Cf. Radio WHKW, Inc. v. Yarber, 
    838 F.2d 1439
    , 1442
    (5th Cir. 1988).        We now turn to the merits of the employees'
    argument.
    Under the WARN Act, notice of mass layoffs or plant closings
    is required if there is a sufficiently large "plant closing" or
    "mass layoff" at a single site of employment.                  See 29 U.S.C. §§
    2101(a)(2) and (3) (Supp. 1993). If the threshold requirements are
    met, the employer is required to provide notice of termination to
    all   affected     employees    at   that    "single    site   of   employment."
    Although the statute itself does not define the term "single site
    of employment," the regulations promulgated by the Department of
    Labor provides some guidance. The proposed regulations stated that
    -32-
    (1) A single site of employment can refer to either
    a single location or a group of contiguous locations.
    Groups of structures which form a campus or industrial
    park, or separate facilities across the street from one
    another, may be considered a single site of employment.
    (2)   Separate buildings or areas which are not
    directly connected or in immediate proximity may be
    considered a single site of employment if they are in
    reasonable geographic proximity, used for the same
    purpose, and share the same staff and equipment.       An
    example is an employer who manages a number of warehouses
    in an area but who regularly shifts or rotates the same
    employees form one building to another.
    (3)   Non-contiguous sites in the same geographic
    area which do not share the same staff or operational
    purpose should not be considered a single site.       For
    example, assembly plants which are located on opposite
    sides of town and which are managed by a single employer
    may be considered separate sites if they employ different
    workers.
    (4) The term "single site of employment" may also
    apply to unusual organizational situations where the
    above criteria do not reasonably apply.
    20 C.F.R. § 639.3(i) (1988)(proposed regulation).          Dillard argued,
    and the district court held, that Holmes's corporate division at
    the Canal Street location and the employees at the Bienville site
    were two separate and distinct sites of employment under WARN.
    Specifically, the court noted that the two sites were several miles
    apart, that the personnel assigned to the Bienville site--those
    employees who performed construction facilities management, energy
    management and store planning--performed functions different from
    the functions provided by the workers in the Canal Street corporate
    division.    The   court   noted   that   although   the   Bienville   site
    employees'   payroll   checks   were   issued   from   the   Canal   Street
    -33-
    location, "this was an insufficient connection by itself to view
    the Bienville location and the Canal Street store as one site."
    Carpenters Dist. 
    Council, 790 F. Supp. at 667
    .
    On appeal, the employees contend that the Bienville site and
    the   Canal    Street   corporate   division     were    a   "single    site   of
    employment" because the job functions of the Bienville employees
    were closely integrated with the job functions of the Canal Street
    corporate division.         A complete review of the underlying facts
    leads us to agree with the employees' contention.                 The evidence
    before the district court demonstrated that up until 1980 or 1981,
    the Bienville site employees were housed along with all other
    corporate employees at the Canal Street corporate division office.
    As the corporate division grew, it could no longer be comfortably
    housed in the Canal Street corporate division offices.                    In an
    effort    to    relieve     overcrowding    in   those       offices,   certain
    divisions--including construction facilities management, energy
    management, and store planning--were relocated to the Bienville
    site.    Once moved to the Bienville site, those employees continued
    to perform precisely the same company-wide functions they provided
    when housed in the Canal Street location.                The Bienville site
    employees remained integrated with the Canal Street corporate
    division after the move.       The Bienville site had no support staff,
    and the Bienville employees continued to rely upon the support
    staff at the corporate division office.           In spite of the move to
    the     Bienville   site,     the   employees    nevertheless       considered
    -34-
    themselves part of the corporate division, and Holmes continued to
    consider them corporate employees for payroll purposes.              It is not
    irrelevant that the employees--precisely, like the Canal Street
    employees--were made redundant and lost their jobs directly because
    of the merger.22        These factors lead us to conclude that the
    Bienville site and the Canal Street corporate division were merely
    one   site    of    employment   that    was   separated   because   of   space
    considerations.       In our view, this situation may be classified as
    "an unusual organizational situation" under the DOL regulations.
    See 20 C.F.R. § 639.3(i)(4) (1988)(proposed regulations).                 These
    employees were entitled to the WARN Act notice of termination, and,
    consequently, Dillard is liable for any damages associated with
    providing inadequate notice.23
    G.    Retroactive Application of Regulations
    Finally, the employees in their cross-appeal argue that the
    district court erroneously applied final regulations retroactively
    to deny a former Holmes employee back pay damages in lieu of
    notice.      The former Holmes employee, Mary S. Krajcer, was a retail
    22
    It appears that Dillard also considered the Bienville site
    employees part of the Canal Street corporate division. Employees
    at both sites were terminated on May 9, the layoff letters sent to
    both sites specifically stated that the layoff was occurring as a
    result of the discontinuance of the corporate functions at the
    Canal Street store.
    23
    It is unclear from the record whether the Bienville site
    employees received no notice of termination, or whether they
    received less than sixty days notice.    On remand, the district
    court will be required to determine what notice, if any, each
    affected employee received, and to calculate damages accordingly.
    -35-
    buyer for Holmes.          As a buyer, she worked a regular forty-hour
    week, and as a rule, she worked weekends only a few times a year
    while on buying trips.        She had no administrative duties, and she
    earned $36,000 per year plus bonuses.          On April 18, 1989, Dillard
    offered Krajcer a position as a merchandising manager in one of its
    retail outlets.        That position would have placed her second in
    command at that location, requiring her to hire and fire personnel,
    open and close the store each day, and work some nights, every
    Saturday,    and   some     Sundays.      Although   the   base    salary   was
    comparable to her position with Holmes, Krajcer would not be
    eligible for bonuses, and she would be required to work longer
    hours.    When Krajcer refused Dillard's offer, Dillard terminated
    Krajcer     on   May   9   without     providing   any   advance   notice    of
    termination.
    Before the district court, the employees argued that Krajcer
    should have been paid back pay damages in lieu of notice.                   The
    district court, however, held that Krajcer was not entitled to such
    damages because she refused Dillard's offer of employment as a
    merchandising manager.        Essentially, the district court held that
    the position offered by Dillard did not amount to a "constructive
    discharge," and as such, her refusal to accept the new position
    amounted to a voluntary termination of employment, which does not
    require WARN notice. Carpenters Dist. 
    Council, 790 F. Supp. at 669
    -
    70; see also 20 C.F.R. § 639.5(b)(2) (1989)(final regulations). In
    arriving at this determination, the district court applied the
    -36-
    final regulations, which became effective on May 22, 1989, see 54
    Fed. Reg. 16042-01 (1989), rather than the proposed regulations
    that were in effect at the time Krajcer was terminated.                            The
    proposed      regulations     required       that   the    new   job     must       be
    "substantially equivalent in terms of pay and working conditions."
    20 C.F.R. § 639.5(b)(2) (1988)(proposed regulations). On the other
    hand, the final regulations merely required that "the offer of
    reassignment to a different site of employment not be deemed a
    ``transfer' if the new job constitutes a ``constructive discharge.'"
    20   C.F.R.    §   639.5(b)(2)    (1989)(final       regulations).           Because
    administrative rules should not be construed as having retroactive
    effect unless their language requires that result, see, e.g.,
    Sierra Medical Ctr. v. Sullivan, 
    902 F.2d 388
    , 392 (5th Cir. 1990),
    we hold that the district court erred in applying the final
    regulations.        Therefore, without expressing any view as to the
    merits, we remand this matter to the district court to determine
    whether, under the interim rules, Krajcer is entitled to back-pay
    damages.
    V
    For the foregoing reasons, we AFFIRM the district court's
    ruling on the constitutionality of the WARN Act, the summary
    judgment in favor of Federal Insurance and Liberty Mutual, the
    finding that Dillard violated the WARN Act, the refusal to reduce
    damages for good faith, and the award of prejudgment interest.                      We
    REVERSE    the     district   court's    ruling     that   damages     are    to    be
    -37-
    calculated using calendar days, the decision that the Bienville
    site and the Canal Street corporate division were not a "single
    site of employment," the finding that employees who were actually
    provided sixty days notice are entitled to damages because notice
    of termination contained a range of dates, and the retroactive
    application of regulation to employee Mary Krajcer.          As a result,
    we REMAND this case to the district court with instructions to
    calculate   damages   in   a   manner   consistent   with   this   opinion.
    Because this opinion affects the amount of damages Dillard will be
    required to pay the employees, the district court should also
    reconsider the award of attorney's fees accordingly.
    AFFIRMED in Part, REVERSED in Part, and REMANDED.
    -38-
    

Document Info

Docket Number: 92-03419

Filed Date: 2/16/1994

Precedential Status: Precedential

Modified Date: 12/21/2014

Authorities (20)

Phelps Dodge Corp. v. National Labor Relations Board , 61 S. Ct. 845 ( 1941 )

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Jones v. Kayser-Roth Hosiery, Inc. , 748 F. Supp. 1292 ( 1990 )

Carpenters District Council v. Dillard Department Stores, ... , 778 F. Supp. 297 ( 1991 )

Finnan v. LF Rothschild & Co., Inc. , 726 F. Supp. 460 ( 1989 )

David Andrew Birdwell v. Jack Skeen, Jr., Criminal District ... , 983 F.2d 1332 ( 1993 )

Illinois Central Railroad Company, Cross-Appellant v. Texas ... , 551 F.2d 943 ( 1977 )

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United States v. Jose Hernandez Sosa , 997 F.2d 1130 ( 1993 )

SIERRA MEDICAL CENTER, Plaintiff-Appellee, v. Louis W. ... , 902 F.2d 388 ( 1990 )

sidney-w-degan-jr-v-ford-motor-company-and-the-international-union , 869 F.2d 889 ( 1989 )

united-paperworkers-international-union-and-its-local-340-on-behalf-of , 999 F.2d 51 ( 1993 )

Carpenters District Council v. Dillard Department Stores, ... , 778 F. Supp. 318 ( 1991 )

United States v. William J. Long , 996 F.2d 731 ( 1993 )

united-steelworkers-of-america-afl-cio-clc-v-north-star-steel-company , 5 F.3d 39 ( 1993 )

leno-j-guidry-jr-sidney-l-patin-and-henderson-haneman-and-morris-a , 901 F.2d 485 ( 1990 )

Radio Whkw, Inc., an Alabama Corporation v. Ben Yarber , 838 F.2d 1439 ( 1988 )

Oil, Chemical & Atomic Workers International Union, Local 4-... , 546 F.2d 1144 ( 1977 )

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