Breedlove v. Earthgrains Baking Companies, Inc.

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 97-2057
___________
Richard Breedlove, individually, *
and on behalf of all others similarly *
situated; Nadine Tanner, individually, *
and on behalf of all others similarly *
situated, *
*
Plaintiffs/Appellants, *
* Appeal from the United
States
v. * District Court for the
Eastern
* District of Arkansas.
Earthgrains Baking Companies, Inc., *
doing business as Campbell *
Taggart Baking Company, Inc., *
*
Defendant/Appellee. *
___________
Submitted: November 19, 1997
Filed: April 9, 1998
___________
Before McMILLIAN and WOLLMAN, Circuit Judges, and
STEVENS, District Judge.1
STEVENS, District Judge.
Plaintiffs/appellants are former employees of
appellee/defendant Earthgrains
The Honorable Joseph E. Stevens, Jr., United States District Judge for the
1
Western District of Missouri, sitting by designation.
1
Baking Companies, Inc. (“Earthgrains”). Plaintiffs
brought this suit against Earthgrains pursuant to the
Worker Adjustment and Retraining Notification (“WARN”)
Act, 29 U.S.C. § 2101 et seq. The district court2 granted
Earthgrains’ motion to dismiss on the ground that
plaintiffs had been compensated fully under the WARN Act.
See Breedlove v. Earthgrains Baking Companies, Inc., 936
F. Supp. 802 (E.D. Ark. 1997). We affirm.
I.
Plaintiffs worked at Earthgrains’ baking plant in
Little Rock, Arkansas. In December of 1995, Earthgrains
notified its employees, including plaintiffs, that it
would close the Little Rock plant. Plaintiffs then
brought suit alleging that Earthgrains had violated the
WARN Act’s notice provision, 29 U.S.C. § 2102, which
requires certain employers “to provide written notice to
each affected employee sixty (60) days in advance” of the
closing of a covered facility.3 In their complaint, the
plaintiffs sought recovery of wages that they claim
should have been paid during the notice period. They
admitted that Earthgrains had “paid [them] for working
days within the required 60 day notification period.”
App. 95, Compl. ¶ 14. However, the employees alleged
that they were entitled to wages for each calendar day
within the violation period.
Earthgrains then moved to dismiss the action.
Earthgrains claimed, on the basis of plaintiffs’
admission that Earthgrains had paid wages for working
2
The Honorable James M. Moody, United States District Judge for the Eastern
District of Arkansas.
3
On this appeal, there is no dispute that Earthgrains was an “employer” subject
to the WARN Act’s provisions and that Earthgrains’ actions triggered the notice
requirement.
2
days within the notification period, plaintiffs had not
stated a claim for relief. Earthgrains contended that
these wages constituted the entire amount they were
obligated to pay under the
3
WARN Act. Plaintiffs concurrently moved for summary
judgment claiming that they were entitled to wages for
each calendar day within the violation period as a matter
of law. The district court granted Earthgrains’ motion
to dismiss and denied plaintiffs’ motion for summary
judgment, holding that the employees were entitled only
to wages for each working day within the notification
period. The district court found that the damages
provision of the WARN Act was capable of more than one
reasonable interpretation and, therefore, examined the
legislative history to discern Congressional intent.
Finally, the district court found that the legislative
history demonstrated that Congress “unequivocally”
intended that damages be measured by working days rather
than calendar days. See 963 F. Supp. at 805.
II.
The standard for a district court to employ in ruling
a motion to dismiss is clear. A district court must
accept the allegations contained in the complaint as
true, see Hishon v. King & Spalding, 467 U.S. 69, 73
(1984), and all reasonable inferences from the complaint
must be drawn in favor of the nonmoving party. See
Hafley v. Lohman, 90 F.3d 264, 266 (8th Cir. 1996).
“[D]ismissal is inappropriate ‘unless it appears beyond
doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief.’”
McCormack v. Citibank, N.A., 979 F.2d 643, 646 (8th Cir.
1992) (quoting Conley v. Gibson, 355 U.S. 41, 45-46
(1957)). Our standard of review of a district court’s
grant of a motion to dismiss is similarly clear. We
review de novo. See Hafley, 90 F.3d at 266; First
Commercial Trust Co., N.A. v. Colt’s Mfg. Co., Inc., 77
F.3d 1081, 1083 (8th Cir. 1996); Weaver v. Clarke, 45
F.3d 1253, 1255 (8th Cir.1995).
4
III.
The issue of whether an employer’s liability to
affected employees due to a violation of the WARN Act’s
notice requirement should be calculated based on
5
working days or calendar days has been addressed by
several courts. The majority of Circuit Courts have held
working days to be the proper basis for the calculation.
See Carpenters District Council v. Dillard Dept. Stores,
Inc., 15 F.3d 1275, 1282-86 (5th Cir. 1994), cert.
denied, 513 U.S. 1126 (1995); Saxion v. Titan-C
Manufacturing, Inc., 86 F.3d 553, 558-61 (6th Cir. 1996);
Frymire v. Ampex Corp., 61 F.3d 757, 771-72 (10th Cir.
1995), cert. dismissed, 116 S. Ct. 1588 (1996). Only one
Circuit Court has held that compensation to employees for
a violation of the WARN Act’s notice provisions is based
on calendar days rather than working days. See United
Steel Workers of America v. North Star Steel Co., Inc.,
5 F.3d 39 (3d Cir. 1993), cert. denied, 510 U.S. 1114
(1994). As noted above, the district court in this case
found working days to be the proper basis, see 963 F.
Supp. at 805, while another judge of the same district
previously held that liability was based on calendar
days. See Joshlin v. Gannett River States Publ’g Corp.,
840 F. Supp. 660 (E.D. Ark. 1993). The issue, however,
is one of first impression for this Court.
A.
An employee’s compensation when an employer violates
the WARN Act’s notice requirement is governed by 29
U.S.C. § 2104(a)(1). The statute provides that any
employer who violates the notice provision “shall be
liable to each aggrieved employee who suffers an
employment loss for “back pay for each day of violation.”
Id. Our analysis, of course, begins by examining the
language of the statute. See United States v. Ron Pair
Enterprises, Inc., 489 U.S. 235, 241 (1989) (citing
Landreth Timber Co. v. Landreth, 471 U.S. 681, 685
(1985)); American Tobacco Co. v. Patterson, 456 U.S. 63,
68 (1982) (citing Reiter v. Sonotone Corp., 442 U.S. 330,
337 (1979)); United States v. Bishop, 894 F.2d 981, 985
6
(8th Cir.), cert. denied, 498 U.S. 836 (1990). If the
statute is clear and unambiguous because it is not
possible to construe it in more than one reasonable
manner, we need go no further. See In re Erickson
Partnership, 856 F.2d 1068, 1070 (8th Cir. 1988); Beef
Nebraska, Inc. v. United States, 807 F.2d 712, 717-18
(8th Cir. 1986) (citing Maine v. Thiboutot, 448
7
U.S. 1, 6 n.4 (1980)).
The statute defining compensation to be paid for a
notice violation reads as follows:
(1) Any employer who orders a plant closing
or mass layoff in violation of section 2102 of
this title 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; and
(B) benefits under an employee benefit
plan described in section 1002(3) of this
title, including the cost of medical
expenses incurred during the employment loss
which would have been covered under an
employee benefit plan if the employment loss
had not occurred.
Such liability shall be calculated for the
period of violation, up to a maximum of 60 days,
but in no event for more than one-half the
number of days the employee was employed by the
employer.
29 U.S.C. § 2104(a)(1).
Of course, the relevant language in this case is the
phrase “back pay for each day of violation.” Id. §
2104(a)(1)(A). On one hand, the term “back pay” seems to
imply wages that the employee would have received absent
a violation. The Supreme Court construed the term “back
pay” as used in the National Labor Relations Act as
“payment of a sum equal to what [an employee] normally
would have earned absent a violation of the statute.”
Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 197 (1941).
8
Using working days to calculate an employer’s liability
could be a reasonable interpretation of this language.
On the other hand, the phrase “for each day of
9
violation” seems to imply that an employee would receive
daily wages for each day of the violation period. Using
calendar days to calculate an employer’s liability could
be a reasonable interpretation of this language.
Thus, in our view, the statute is susceptible to more
than one reasonable interpretation. If “for each day of
violation” mandated the use of calendar days, employees
would be paid for days on which they do not work. Such
an interpretation would fly in the face of what is
commonly thought of as “back pay.” To interpret the
phrase “back pay for each day of violation” to mean that
employees should receive wages on days they otherwise
would not have been paid would be to write the “back pay”
out of the statute. But to interpret the statute, on its
face, as requiring the use of working days alone to
arrive at a figure for “back pay,” would not fully
account for the phrase “for each day of violation.”
The Third Circuit in North Star Steel came to the
opposite conclusion, finding that the statute could not
be reasonably construed in more than one way. The North
Star Steel Court held that the term “back pay” is “simply
a label used to describe the amount of damages for which
an employer is liable for each day of the violation.”
North Star Steel, 5 F.3d at 42. It reached this
conclusion using three common rules of statutory
construction. See id. at 42-43. We, however, agree with
the conclusions of the Fifth and Sixth Circuits that none
of the rules of statutory construction used by the Third
Circuit compelled the result that the Third Circuit
reached. See Dillard, 15 F.3d at 1283 n.14; Saxion, 86
F.3d at 559-60. As demonstrated by their analyses, we
believe that interpreting this provision on its face
using rules of statutory construction creates even more
ambiguity as to its proper meaning.
10
A statute can also be considered ambiguous when a
particular interpretation from the face of a statute
could lead to an anomalous, unusual or absurd result. A
hypothetical situation, as set forth in Dillard is
illustrative.
11
[T]he 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
. . . 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).
Dillard, 15 F.3d at 1285. Although Congress could
possibly have intended this result, we believe that this
hypothetical outcome is so unusual that we cannot ignore
the likelihood that the legislative history would clarify
Congress’ intent.
B.
Having determined that there is ambiguity in the
statute because it is subject to more than one reasonable
interpretation, we next turn to the legislative history.
As the Fifth and Sixth Circuits noted, a Senate Report
regarding this legislation provides the answer. See
Dillard, 15 F.3d at 1284-85; Saxion, 86 F.3d at 560.
For 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 violations, and facilitate simplified
damages proceedings.
S. Rep. No. 62, 100th Cong. 1st Sess. 24 (1987). Since
“damages are to be measured by the wages the employee
would have received,” id., the number of working days
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within the violation period must be used to calculate the
amount owed by the employer. See Dillard, 15 F.3d at
1284. Also, the Senate Report language “mirrors” the
interpretation of “back pay” in Phelps Dodge Corp. v.
NLRB. Jeffrey Turner, Comment, Damages Under the Workers
Adjustment and Retraining Act (WARN):
13
Why Damages Cannot Be Based on Calendar Days, 12 T.M.
Cooley L. Rev. 197, 213 (1995). Therefore, we believe
that the Senate Report’s statement decides the issue.4
Plaintiffs argue that there is an inconsistency
between the first sentence and the second sentence of the
Senate Report statement quoted above. Plaintiffs reason
that the first sentence indicates a “make-whole”
calculation of damages while the second sentence mandates
a remedy which is punitive in nature. We are unpersuaded
that there is an inconsistency. Employers are, in a
sense, penalized by not using the notice provisions
because they must pay affected workers wages although no
work was done. The WARN Act’s provisions can still be
viewed as punitive or deterrent even though the employees
do not receive an undue windfall. Ultimately, however,
we find the clear statement of the Senate Report
controlling.
Plaintiffs also argue that the purpose of the WARN
Act is to provide workers who are laid off notice so that
they may adjust to changed circumstances, describing the
WARN Act as requiring notice so that employees may
continue to be at the plant or factory location and
gather to receive counseling and training. Plaintiffs
refer to legislative debate which rejected an amendment
to the WARN Act to allow “severance pay in lieu of
notice.” 134 Cong. Rec. 15,926 (1988) (statement of Sen.
Quayle). See also id. at 15,928 (statement of Sen.
Metzenbaum) (“[T]he bill is about giving notice. It is
not a mandatory severance bill . . . .”). Although the
debate evinces a purpose to require employers to give
notice rather than allowing them to thwart the purposes
4
We also note that the Senate appears to have reached a consensus that the
WARN Act is not a way “to place an additional financial burden on the employers of
this country.” 134 Cong. Rec. 15,928 (1988) (statement of Sen. Metzenbaum).
14
of the statute by giving affected workers “severance
pay,” we believe it does not overcome the clear intention
manifested in the Senate Report.
Moreover, this Court has characterized the WARN Act
as “most closely
15
analogous to an action to recover damages for a breach of
an implied contract (or breach of an obligation) to
notify employees for terminating them.” Aaron v. Brown
Group, Inc., 80 F.3d 1220, 1225 (8th Cir. 1996). This
bolsters our conclusion that Congress did not intend to
provide employees who did not receive notice more
compensation than they would have received had notice
been given.
IV.
We hold that an employer’s liability under the WARN
Act’s compensation provision, 29 U.S.C. § 2104(a)(1), is
calculated based on working days. Because the employees
admitted in their complaint that they were paid all wages
for working days within the violation period, we affirm
the decision of the district court to dismiss the
complaint for failure to state a claim upon which relief
could be granted.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT
16