Oil, Chemical and Atomic Workers International Union, Local 7-629, Afl-Cio v. Rmi Titanium Company ( 2000 )

DAUGHTREY, J., delivered the opinion of the court, in which MARTIN, C.J., joined. HILLMAN, D.J. (pp. 886-98), delivered a separate dissenting opinion.

OPINION

DAUGHTREY, Circuit Judge.

The plaintiffs, Oil, Chemical and Atomic Workers’ (OCAW) Union Local 7-629, Kenneth Allen, and a class of OCAW members separated from employment during July and August 1991, advanced a claim for damages under the Worker Adjustment Retraining and Notification Act of 1988 (WARN) against the defendant, RMI Titanium Company. The plaintiffs alleged that by failing to give its employees adequate notice of the layoffs, the company violated provisions of the Act. In response to cross-motions for summary judgment, the district court ruled in the company’s favor, finding that the plaintiffs had failed to establish the requisite number of layoffs to trigger the notice provisions under WARN. We affirm.

I. PROCEDURAL AND FACTUAL BACKGROUND

The facts are largely undisputed. RMI Titanium experienced a downturn in its business beginning in 1990, which precipitated a series of layoffs as part of a continuing reduction in its workforce, beginning with an initial layoff of 60 unionized employees in 1990. In January 1991, the company warned union representatives of the need for further reductions and laid off another 29 employees in February 1991. Despite these efforts, RMI posted losses of $2.5 million in the first six months of 1991.

During the spring of 1991, approximately 197 unionized, non-salaried employees and 72 non-unionized, salaried employees were working full-time at RMI’s Metals Plant. Of the unionized employees, 14 senior union members participated in a “voluntary layoff’ program negotiated with RMI in 1986 and made available to employees during periods of workforce reduction. Employees taking a voluntary layoff received one month’s unpaid leave, subject to renewal, and were replaced by union members previously (involuntarily) laid off from the plant who possessed similar job skills. At the end of the senior employee’s voluntary layoff, the replacement was returned to “layoff’ status, unless he or she was asked to replace another senior employee.

Of the 72 non-unionized employees working at the Metals Plant during the first half of 1991, approximately 13 employees were assigned to a research and development project referred to internally as the Electrolytic Titanium Project (ETP). The project’s objective was the development of a variation on titanium production processes in use at the Metals Plant. RMI shared funding responsibilities for this project with an Italian company, Ginatta Torino Titanium.

The company continued its layoffs during the summer of 1991, laying off 85 additional unionized workers in July and August, and five non-unionized employees, including three members of the ETP team. Aso during this time, approximately 35 senior unionized employees took one- or two-month leaves under the voluntary layoff program; they were replaced by previously separated junior employees recalled from and then returned to layoff status. Apparently, none of the employees laid off during this period received advance notice of their change in job status.

Despite these measures, the company’s financial misfortunes continued, and it commenced shutting down some of its production facilities in January 1992. The Metals Plant closed on February 15, 1992. Later that year, the plaintiffs brought this WARN action against RMI, claiming violation of the notice provisions of the Act.

II. DISCUSSION

WARN Liability

The Worker Adjustment Retraining and Notification Act provides, in pertinent part, that:

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 ... 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. § 2102(a) (1994). The purpose of this provision is “to ensure that ‘workers receive advance notice of plant closures and mass layoffs that affect their jobs.’ ” Kildea v. Electro-Wire Products, Inc., 144 F.3d 400, 405 (6th Cir.1998) (quoting Marques v. Telles Ranch, Inc., 131 F.3d 1331, 1333 (9th Cir.1997)). Under WARN, an “affected employee” is an employee “who may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by their employer.” 29 U.S.C. § 2101(a)(5). An “employer” is “any business enterprise that employs ... 100 or more employees, excluding part-time employees.” 29 U.S.C. § 2101(a)(1)(A). An “employment loss” is “an employment termination, other than a discharge for cause, voluntary departure, or retirement ... a layoff exceeding 6 months, or ... a reduction in hours of work of more than 50 percent during each month of any 6-month period.” 29 U.S.C. § 2101(a)(6).

Certain statutory thresholds apply in order for a layoff or sequence of layoffs to constitute a “mass layoff’ and subject an employer to liability under WARN:

[T]he term “mass layoff’ means a reduction in 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); and

(II) at least 50 employees (excluding any part-time employees); or

(ii) at least 500 employees (excluding any part-time employees).

29 U.S.C. § 2101(a)(2). In order to trigger the notice requirement under this section, if the employer lays off fewer than 500 employees in an action unrelated to a plant closing, the number of employees laid off must exceed 50 and must also exceed 33 percent of the total number of employees. Department of Labor regulations governing WARN enforcement require that these figures be calculated at a “snapshot” date, the date notice is first required to be given. See 20 C.F.R. § 639.5(a)(2) (1999). Even where the number of layoffs does not exceed both 50 and 33 percent of the total number of employees, however, layoffs occurring in separate reduction actions may be aggregated into a “mass layoff’ if each set of layoffs involves fewer workers than required by the two statutory thresholds and all layoffs occur within the same 90-day period. See 29 U.S.C. § 2102(d). Where this is the case, the employer will be liable under WARN for failure to notify “unless [it] demonstrates that the employment losses are the result of separate and distinct actions and causes and are not an attempt by the employer to evade the requirements of [WARN].” Id.

In this case, the parties stipulate that RMI employed 269 workers on the “snapshot” date for the first of the layoffs in question, May 23, 1991. All parties also agree that 85 unionized and two non-unionized employees were laid off during the 90-day period following the initial layoffs, and that these layoffs may be added together to make 87 total layoffs, or 32.34 percent of the total employees. The parties disagree as to the district court’s conclusion that neither the layoffs of the three non-unionized members of the ETP team nor the layoffs of 27 OCAW members after temporary recall, events that took place during the same 90-day period, should be counted with the other layoffs in order to reach the “mass layoff’ threshold for WARN liability.

ETP Employees

The appellants argue that the ETP layoffs, like the earlier layoffs of unionized employees, resulted from “[RMI’s] continuing loss of income and resulting financial decline” and, therefore, that RMI failed to demonstrate “separate and distinct actions and causes” for the ETP layoffs that would allow it to avoid WARN liability. See 29 U.S.C. § 2102(d). RMI argues in response that the layoffs of the three ETP employees were due to the failure of project co-sponsor Ginatta to pay its required share of expenses. The company supported its summary judgment motion on this point with the affidavit of Jerome Bennett, who at the time of the layoffs in question was an RMI executive in charge of employee relations. Bennett’s affidavit referred to a letter from John F. Hornbostel, Jr., RMI’s general counsel, to Dr. Marco V. Ginatta, dated September 5, 1991, advising Ginatta that, since monies previously agreed to be provided by Ginatta to RMI “for May and June expenses” had not been received, RMI would “shut down the MX-4 Facility at RMI’s Metals Plant in Ashtabula, Ohio, tomorrow, Friday, September 6, 1991.” The record indicates that the three employees in question were terminated the following Monday. The district court considered the letter in reaching its decision on the motion, along with Bennett’s February 1994 affidavit and September 1993 deposition, in which he attributed the ETP layoffs to problems obtaining funding from Ginatta.

The appellants attempted to rebut RMI’s assertions only with the deposition testimony of Warren Jensen, RMI’s vice-president of personnel during 1991. Jensen, who was responsible for personnel matters at all five of RMI’s plants at the time, stated that RMI’s financial losses caused the “large force reductions in [its] salaried work force” during 1991. The record in this case shows that part of his deposition testimony included the following exchange:

Q: Do you know what the reasons were for that large force reduction in the salaried work force that you’d already made?

A: Certainly, it cut costs.

Q: Is it because of decreased sales and decreased profits during this time frame?

A: RMI was very definitely losing money at that time, yes.

We are unable to conclude that these somewhat ambiguous responses are sufficient to bring the three ETP layoffs within the ambit of the notice requirement, because the record fails to show the context of the questions put to Jensen.¹ We therefore agree with the district court’s determination that OCAW and the other plaintiffs failed to make a showing sufficient to raise a genuine issue of material fact as to RMI’s rationale for the September 1991 ETP layoffs. In response to a defendant’s summary judgment motion, a plaintiff “can no longer rest on ... ‘mere allegations,’ but must ‘set forth’ by affidavit or other evidence ‘specific facts,’ which for purposes of the summary judgment motion will be taken to be true.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992) (emphasis added) (citation omitted). Here the plaintiffs presented no specific evidence that would credibly controvert the September 5th letter from Hornbostel to Ginatta or offer an opposing theory for why the three ETP employees were terminated. As to the ETP layoffs then, the district court was correct in finding that they could not be aggregated with the other 87 layoffs in order to meet the threshold for WARN liability.

Post-Voluntary Layoff” Terminations

The appellants also argue that 27 unionized employees who returned to layoff status during the 90-day period beginning July 22, after being recalled to cover more senior employees on voluntary layoff, should have been counted as “laid off’ under WARN. RMI does not dispute that the employment status of the 27 employees changed during the 90-day period; rather, it argues that, as a matter of law, “layoffs” resulting from participation in the voluntary leave/temporary recall program should not be counted as layoffs for WARN purposes.

The district court agreed and based its holding for RMI on two alternative' grounds. First, it held that counting the return to layoff status after temporary voluntary recall as a WARN layoff would be “manifestly unfair” to RMI, since RMI had agreed to the voluntary layoff/temporary recall program as a benefit for its unionized employees. Second, the court held that, since Department of Labor regulations implementing WARN define a “mass layoff’ as a “reduction in force” that results in an “employment loss” for at least 33 percent of employees at a single site of employment, the return of employees to layoff status after being recalled temporarily could not be considered layoffs contributing to a mass layoff because this action involved no elimination of positions, and hence no reduction in force. Because we agree with the court’s reasoning on the second ground, we need not address the first.

The term “reduction in force,” used not only in the Labor regulations but in the WARN statute itself, see 29 U.S.C. § 2101(a)(3), is not without ambiguity. Congress did not define the phrase in enacting WARN, nor did the Department of Labor offer clarification when promulgating regulations enforcing WARN. In an employment case involving allegations of age discrimination, however, we defined a reduction in workforce as a situation where “business considerations cause an employer to eliminate one or more positions within the company” and added that “[a]n employee is not eliminated as part of a work force reduction when he or she is replaced after his or her discharge.” Barnes v. GenCorp, Inc., 896 F.2d 1457, 1465 (6th Cir.1990) (emphasis added); see also Matthews v. Allis-Chalmers, 769 F.2d 1215, 1217 (7th Cir.1985) (“[B]y definition, when the employer reduces his work force he hires no one to replace the ones he lets go.”). Use of the Barnes definition, which appears to reflect common parlance, is appropriate in this case because it distinguishes the phrase “reduction in force” from the term “employment loss,” also present in WARN’s definition of a mass layoff. See 29 U.S.C. § 2101(a)(6) (defining “employment loss” as “an employment termination, other than a discharge for cause, voluntary departure, or retirement ... a layoff exceeding 6 months, or ... a reduction in hours of work of more than 50 percent during each month of any 6-month period”). Applying this definition, we conclude that no reduction in force occurred when temporarily-recalled employees were ágain laid off, because they were replaced by the senior employees returning from voluntary layoff status. This distinguishes these “layoffs” from those of the other 85 unionized employees separated from employment during July and August 1991, undisputedly laid off due to RMI’s financial losses and for whom no replacements were hired. Because the return to layoff status of the 27 temporarily-recalled employees involved no reduction in force, we agree with the district court’s decision that these “layoffs” may not be added to the other layoffs to create a mass layoff triggering WARN liability.

III. CONCLUSION

WARN expressly encourages employers to notify employees before permanent layoffs are effected, whether or not the statute’s triggering thresholds are met. See 29 U.S.C. § 2106 (“It is the sense of Congress that an employer who is not required to comply with the notice requirements of section 2102 of this title should, to the extent possible, provide notice to its employees about a proposal to close a plant or permanently reduce its workforce.”). These sentiments were echoed by the Department of Labor in promulgating regulations enforcing the statute. See 20 C.F.R. § 639.1(e) (“It is civically desirable and it would appear to be good business practice for an employer to provide advance notice to its workers or unions, local government and the State when terminating a significant number of employees.... The Department encourages employers to give notice in all circumstances.”) (emphasis added). In the summer of 1991, RMI laid off 87 employees with no apparent notice, two terminations short of the number necessary to make this action a mass layoff. In so doing, RMI violated the spirit, if not the letter of the law, providing these workers and their families with no transition time to seek alternative employment or training for work outside the manufacturing sector, and causing almost a decade’s worth of ensuing litigation.²

Nevertheless, RMI has won the numbers game these parties ultimately played. We agree with the district court that there is no genuine issue of material fact that RMI terminated 87 employees within the 90-day period beginning July 22,1991, and that only these layoffs may be counted toward triggering the 33 percent threshold for purposes of WARN’s advance notification provision. As a matter of law, then, the aggregated layoffs did not count as a mass layoff under WARN for which affected employees must be notified. We therefore AFFIRM the judgment of the district court granting summary judgment in the defendant’s favor.

1 . The quoted material appears at the top of a page of the transcribed deposition. However, the previous pages are missing both from the joint appendix and from the record. We thus have no way to determine whether or not the colloquy was directed toward the ETP employees.

2 . See 20 C.F.R. § 639.1(e) (“It is ... prudent for employers to weigh the desirability of advance notice against the possibility of expensive and time-consuming litigation to resolve disputes where notice has not been given.”).