Opinion
TH 99-C-141-T/H
August 31, 2001
ENTRY ON CROSS-MOTIONS FOR SUMMARY JUDGMENT
Though this entry is being made available to the public on the court's web site, it is not intended for commercial publication either electronically or in paper form. Under the law of the case doctrine, it is presumed that the ruling or rulings in this entry will govern throughout the litigation before this court. See, e.g., Tr. of Pension, Welfare, Vacation Fringe Benefit Funds of IBEW Local 701 v. Pyramid Elec., 223 F.3d 459, 468 n. 4 (7th Cir. 2000); Avitia v. Metro. Club of Chicago, Inc., 49 F.3d 1219, 1227 (7th Cir. 1995). It should be noted, however, that this district judge's decision has no precedential authority and, therefore, is not binding on other courts, other judges in this district, or even other cases before this district judge. See, e.g., Howard v. Wal-Mart Stores, Inc., 160 F.3d 358, 359 (7th Cir. 1998) ("a district court's decision does not have precedential authority"); Malabarba v. Chicago Tribune Co., 149 F.3d 690, 697 (7th Cir. 1998) ("district court opinions are of little or no authoritative value"); Old Republic Ins. Co. v. Chuhak Tecson, P.C., 84 F.3d 998, 1003 (7th Cir. 1996) ("decisions by district judges do not have the force of precedent"); Anderson v. Romero, 72 F.3d 518, 525 (7th Cir. 1995) ("District court decisions have no weight as precedents, no authority.").
Defendant Midwest Coal Company ("Midwest") closed its Chinook mine without giving the sixty-days' notice required under the Worker Adjustment and Retraining Notification Act ("WARN Act"), 29 U.S.C. § 2101-09. This cause is before the court on the parties' cross-motions for summary judgment regarding the categories of damages owed by Midwest to Plaintiffs, if any.
I. Facts
The following facts are taken from the parties' joint stipulation of fact. Defendant Midwest is a Delaware corporation that engaged in the business of mining, processing and/or selling coal at its facilities known collectively as the Chinook mine near Brazil, Indiana. Until December 17, 1998, Midwest employed 128 bargaining unit employees at the Chinook mine. Midwest is a wholly-owned subsidiary of West Virginia Indiana Coal Holding Company, Inc. ("Coal Holding Company"), a Delaware corporation, which in turn is a wholly-owned subsidiary of AEI Resources, Inc. ("AEI"), also a Delaware corporation.
For the limited purpose of this civil action, Coal Holding Company and AEI, in exchange for dismissal from this action by Plaintiffs, guarantee any judgment rendered against Midwest. For the limited purposes of this action, the actions or inactions of agents or employees of Coal Holding Company and AEI can be imputed to and considered the actions or inactions of Midwest with respect to the layoff of employees and closure of the Chinook mine in December 1998.
AEI and the United Mine Workers of America, International Union ("UMWA") entered into a collective bargaining agreement on December 11, 1998, which agreement also became effective on that date ("Chinook CBA"), covering the terms and conditions of employment at the Chinook mine. The Chinook CBA provided for a 30 cent increase in each bargaining unit employee's hourly wage, effective January 1, 1999.
Midwest sold the majority of its coal to Hoosier Energy Rural Electric Cooperative ("Hoosier Energy"). In the fall of 1998, there was an oversupply of coal in the Indiana mines owned by the Coal Holding Company, including Midwest, Beech Coal and Kindill Mining.
As a result, a change in the contract with Hoosier Energy was negotiated to switch coal from Midwest to Kindill Mining, another UMWA operation nearby that was a lower cost producer.
On November 19, 1998, a mechanical outage occurred at the Merom Plant, which plant purchased Midwest's coal, and the Midwest mine was temporarily idled because of this problem.
On December 14, 1998, the Hoosier Energy board of directors approved a switch in the contract source from Midwest to Kindill.
On December 16, 1998, Midwest announced an intention to close the Chinook mine site indefinitely on December 17, 1998. On December 17, Midwest permanently laid off 120 bargaining unit employees ("laid off employees") at the Chinook mine. Midwest did not give advance notice to the effected employees or to their representatives sixty days prior to ordering the Chinook plant closing.
On or about January 6, 1999, Midwest paid the laid off employees a lump sum severance payment based on the 41 work days that Midwest determined the employees would have worked in a 60-day period following the layoff. Midwest also paid the laid off employees for the three contractual holidays (Christmas Eve, Christmas and New Year's Day) that occurred during that 60-day period. Thirteen of the laid off employees were paid for Saturday, Sunday and holiday work that Midwest determined they would have performed in the 60-day period following lay off. The 30 cent increase in the Chinook CBA was not included in amounts paid to laid off employees. Midwest did not pay the laid off employees for vacation days (consisting of regular vacation, graduated vacation, floating vacation and personal days) that would have been due to active employees working on or after January 1, 1999, pursuant to the Chinook CBA. Vacation days are not covered by the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. Under the Chinook CBA, Midwest had an obligation to provide extended health care benefits to its laid off employees for an additional 12 months after lay off. Midwest provided 12 months' coverage and ceased paying the laid off employees' health care costs in December 1999. Midwest's health care costs in 1999 were $258.98 per employee per month. Health care payments would be covered by ERISA. Midwest's life insurance costs in 1998 were $16.23 per employee, per month. Life insurance payments would be covered by ERISA. Under the Chinook CBA, employees had the right to work on their birthday and receive triple time pay for such work. At least 16 of the laid off employees had a birthday within the 60 days following the December 17 lay off. Birthday pay would not be covered by ERISA.
Though the parties' joint stipulation of fact describes this payment as a "severance payment," the parties appear to dispute whether it was, in fact, a severance payment, "back pay" or a WARN Act "liability" payment. The characterization of this payment as one or the other is of little consequence. The same may be said about the timing of the payment. Plaintiffs concede that the payment was a voluntary payment not required by any legal obligation. (See Pls.' Reply Br. Def.'s Opp'n Pls.' Mot. Summ. J. Pls.' Opp'n Def.'s Mot. Summ. J. at 16-17.) Because this was a voluntary payment not required by any legal obligation, Midwest's liability to the aggrieved employees is reduced by the amount paid pursuant to 29 U.S.C. § 2104(a)(2)(B) ("The amount for which an employer is liable under paragraph (1) shall be reduced by . . . any voluntary and unconditional payment by the employer to the employee that is not required by any legal obligation. . . .").
Midwest did not seek from the UMWA Health and Retirement Funds pension credit, on behalf of the laid off employees, for any hours worked after December 17, 1998. Such credits would be covered by ERISA. Midwest did list WARN payments made on the retirement/layoff certificate given to employees. Under the Chinook CBA, Midwest had a duty to make contributions to the UMWA 1993 Benefit Fund at the rate of 13 cents per hour for each hour worked. Midwest did not make contributions to the UMWA 1993 Benefit Fund attributable to work that would have been performed after December 17, 1998, by the laid off employees. Payments to the 1993 Benefit Fund would be covered by ERISA. Under the Chinook CBA, Midwest had a duty to make contributions to the UMWA/BCOA Training and Education Fund ("TE Fund") at the rate of 13 cents per hour for each hour worked. Midwest did not make contributions to the TE Fund attributable to work that would have been performed after the layoff by the laid off employees. Payments to the TE Fund would be covered by ERISA.
II. Discussion
Plaintiffs and Defendants move for summary judgment in their favor. Summary judgment is proper only if the record shows "that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). "With cross-motions, [the] review of the record requires that [the court] construe all inferences in favor of the party against whom the motion under consideration is made." O'Regan v. Arbitration Forums, Inc., 246 F.3d 975, 983 (7th Cir. 2001).
The WARN Act requires certain employers to give at least 60 days' advance written notice of plant closings and mass layoffs to effected employees. See 29 U.S.C. § 2101(a), 2102(a). The parties agree that Midwest is an "employer" under the WARN Act, see 29 U.S.C. § 2101(a)(1), and that the closing of the Chinook mine constituted a "plant closing," see 29 U.S.C. § 2101(a)(2). The parties further agree that Midwest failed to provide the requisite 60-day notice and is therefore liable under the WARN Act. Thus, the only issue before the court is damages. Specifically the dispute is over: (1) the 30 cent pay increase provided by the Chinook CBA as part of the pay rate used to calculate the employees' wages; (2) additional overtime for weekend work; (3) non-ERISA contractual benefits, that is, those benefits the employees would have received under the Chinook CBA, namely 24 1999 contractual benefit days; (4) health and life insurance benefits for January and February 2000; (5) triple time pay for 16 employees whose birthdays fell within the violation period; and (6) contributions to the UMWA 1974 Pension Plan, the UMWA 1993 Benefits Fund, and the UMWA/BCOA TE Fund for the work the Chinook employees did not actually perform. By agreement of the parties, the damages issue is limited to the categories of damages. The amount due under a given category, if any, is not to be determined by the pending cross-motions for summary judgment.
These are 13 graduated vacation days, 4 floating vacation days, 5 sickness and accident days and 2 regular vacation days.
The WARN Act contains a civil enforcement provision which provides in pertinent part:
(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 the 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). The WARN Act authorizes the court, in its discretion, to allow the prevailing party a reasonable attorney's fee as part of the costs. 29 U.S.C. § 2104(6). The remedies provided by § 2104 are "the exclusive remedies for any violation of [the] chapter." 29 U.S.C. § 2104(b). They are, however, in addition to rather than in lieu of "any other contractual or statutory rights and remedies of the employees. . . ." 29 U.S.C. § 2105; see also In Re Bluffton Casting Corp., 186 F.3d 857, 860 (7th Cir. 1999) ("§ 2105 explicitly states that the WARN Act was not meant to restrict rights or remedies provided in other statutes or contracts"), overruled on other grounds by In Re Bentz Metal Prods. Co., 253 F.3d 283 (7th Cir. 2001). The parties dispute the meaning of the civil enforcement provision.
"Aggrieved employee" is defined as "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 section 2102 of this title, did not receive timely notice either directly or through his or her representative as required by section 2102 of this title." 29 U.S.C. § 2104(7).
In Re Bentz Metal Products Co. overrules the second aspect of the holding in In Re Bluffton Corp. which deals with preemption of state law pursuant to § 301 of the Labor Management Relations Act. See 29 U.S.C. § 185. The court's discussion of the WARN Act in In Re Bluffton Corp. is still good law as is the authority cited by the court in support of its decision. See, e.g., Local 217, Hotel Restaurant Employees Union v. MHM, Inc., 976 F.2d 805, 808-09 (2d Cir. 1992) and H.R. Conf. Rep. 100-576 (1988), cited by In Re Bluffton Corp., 186 F.3d at 861.
In interpreting a statute, the court begins with the statutory language. See Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438 (1999); Central States, S.E. S.W. Areas Pension Fund v. Fulkerson, 238 F.3d 891, 895 (7th Cir. 2001). The court applies conventional rules of statutory construction: according words and phrases their ordinary and natural meaning; avoiding rendering them meaningless, redundant, or superfluous; viewing words not in isolation but in context; favoring the more reasonable result; and avoiding a construction contrary to clear statutory intent. See Matter of Merchants Grain, Inc. By Through Mahern, 93 F.3d 1347, 1353-54 (7th Cir. 1996), cert. denied sub nom. Mahern v. Adkins, 519 U.S. 1111 (1997); see also Fulkerson, 238 F.3d at 895; Central States, S.E. S.W. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 941 (7th Cir. 2000), cert. denied, 121 S.Ct. 1406 (2001). The court need not consider legislative history or other aids of statutory construction unless the statutory language is ambiguous or leads to an unreasonable result. See, e.g., United States v. Thomas, 77 F.3d 989, 991-92 (7th Cir. 1996).
The WARN Act authorizes the Secretary of Labor to promulgate regulations necessary to effectuate the Act. 29 U.S.C. § 2107. The regulations promulgated under this authority state the purpose of the WARN Act is to provide
protection to workers, their families and communities by requiring employers to provide notification 60 calendar days in advance of plant closings and mass layoffs. Advance notice provides workers and their families some transition time to adjust to the prospective loss of employment, to seek and obtain alternative jobs and, if necessary, to enter skill training or retraining that will allow these workers to successfully compete in the job market. WARN also provides for notice to State dislocated worker units so that dislocated worker assistance can be promptly provided.20 C.F.R. § 639.1(a).
What Constitutes Back Pay Under the WARN Act?
A fundamental question presented by the cross-motions is what constitutes "back pay" under the WARN Act. Plaintiffs contend that the Act does not specify how back pay is to be calculated, but rather, provides a floor. Midwest, on the other hand, contends that the Act indicates back pay is limited to the greater of "the average regular rate received" by an employee during the last 3 years of employment or the "final regular rate received" by the employee. See 29 U.S.C. § 2104(a)(1)(A)(i), (ii). The court believes that Plaintiffs have the better view.
Plaintiffs' view is amply supported by a recent decision of the Ninth Circuit, the only decision of which this court is aware that directly addresses the issue. In Local Joint Executive Board of Culinary/Bartender Trust Fund v. Las Vegas Sands, Inc., 244 F.3d 1152 (9th Cir. 2001), the defendant Las Vegas Sands, Inc. ("Sands") violated the WARN Act by providing its employees less than 60 days advance notice of the closure of its hotel casino. Sands was sued under the WARN Act for damages, including tip income and holiday pay for the July 4th holiday. Id. at 1156. The Ninth Circuit held that tip income and holiday pay are included within the meaning of "back pay" under the WARN Act. Id. at 1156, 1159. In so holding, it relied on its prior conclusion that "`[t]he term back pay has traditionally been understood to mean a sum equal to what [workers] normally would have earned had the violation not occurred.'" Id. at 1157 (quoting Burns v. Stone Forest Indus., Inc., 147 F.3d 1182, 1185 (9th Cir. 1998) (citing Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941)), cert. denied, 525 U.S. 1040 (1998)). The court then reasoned that the term "back pay" as used in other federal statutes includes holiday and overtime pay. Id. at 1157-58 (citing cases, inter alia, Kossman v. Calumet County, 849 F.2d 1027, 1033 (7th Cir. 1988) (overtime pay included in back pay calculation under ADEA)).
Sands argued that back pay under the WARN Act was not a make-whole remedy but only a penalty designed to deter future violations such that neither tips nor holiday pay were included within the meaning of the term as used under the Act. Sands also argued based on subsections (A)(i) and (A)(ii) of § 2104 that back pay was not the amount an employee actually would have earned during the period of violation. Id. at 1158. The Ninth Circuit rejected both arguments concluding:
The Act states that an employer is liable for back pay at a rate not less than the higher of the calculations specified in subsections (A)(i) and (A)(ii). These subsections do not define "back pay"; rather, they establish a floor for WARN Act damages thereby preventing employers from lowering wages shortly before closure in order to diminish their WARN Act liability.
Id. The court found the "normal meaning" of back pay to be consistent with the overall purpose of the WARN Act, the primary purpose of which is remedial in nature. Id. The court stated: "the Act `is a wage worker's equivalent of business interruption insurance [that] protects a worker from being told on payday that the plant is closing that afternoon and his stream of income is shut off.'" Id. (quoting Burns, 147 F.3d at 1184). The court then reasoned that a "stream of income" "does not distinguish among sources of that income. Whether an employee's income is . . . regular or holiday pay, it is all part of an employee's `stream of income.'" Id.
The court concluded that the WARN Act's primary purpose was remedial and based this conclusion on three observations. First, the court noted the provision allowing waiver of the $500 per day penalty owed by the employer to the government if the employer pays laid-off employees "back pay" within 3 weeks of the ordered layoff. Id. at 1159 (citing 29 U.S.C. § 2104(a)(3)). Next, the court said that "Congress was clearly concerned with ensuring an income stream," id., as evidenced by the applicable regulation which expresses the need to "provide protection to workers, their families and communities." Id. (citing 20 C.F.R. § 639.1(a)). And, finally, the court relied on the Senate Report on the "Economic Dislocation and Worker Adjustment Assistance Act," from which the WARN Act came, which expressly states that the Act's purpose is to "assur[e] the most rapid possible readjustment and retraining of displaced workers" and to "eas[e] the personal and financial difficulties for workers who must make these transitions." Id. (quoting S. REP. NO. 100-62, at 3 (1987)).
This court finds the Sands decision persuasive. First, it is in accord with the other courts which have concluded that damages under the WARN Act are a make whole remedy and the Act is remedial in nature. Other courts have concluded that damages under the WARN Act are to be based on the wages the employee would have received absent the plant closing or deferral of the layoff until after the 60 day notice period. See Breedlove v. Earthgrains Baking Cos., 140 F.3d 797, 800-01 (8th Cir.), cert. denied, 525 U.S. 921 (1998); Saxion v. Titan-C-Mfg., Inc., 86 F.3d 553, 560 (6th Cir. 1996); Frymire v. Ampex Corp., 61 F.3d 757, 773 (10th Cir. 1995); Cruz v. Local Union No. 3 of the Int'l Bhd. of Elec. Workers, 34 F.3d 1148 (2nd Cir. 1994); Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 15 F.3d 1275, 1284-85 (5th Cir. 1994); United Mine Workers Of Am. Int'l Union v. Martinka Coal Co., 45 F. Supp.2d 521, 523, 526, 527 (N.D.W.Va. 1999) (recognizing the principle that "the aggrieved employees should be made whole"), aff'd, 202 F.3d 717 (4th Cir. 2000); but see Bentley v. Arlee Home Fashions, Inc., 861 F. Supp. 65, 68 (E.D.Ark. 1994) (stating the WARN Act is not a "make whole" statute).
Furthermore, the legislative history of the Act supports the conclusion that the Act is remedial. Though the Act's primary purpose is to provide advance notice of plant closings so as to allow a transition time, the Act has as another purpose to "eas[e] the personal and financial difficulties for workers who must make these transitions." Sands, 244 F.3d at 1159 (quoting S. REP. NO. 100-62, at 3 (1987)). This is clearly a purpose to provide the effected employees as close as possible with the pay they would have otherwise earned but for the plant closing and WARN Act violation.
Moreover, contrary to Plaintiffs' assertion, the WARN Act does not define "back pay"; rather, its plain language establishes the rate at which back pay must be calculated-not less than the higher of the two rates specified in subsections (A)(i) and (A)(ii). What forms of compensation constitute "back pay" is left unanswered by the text of the statute. The Ninth Circuit's explanation that the two rates merely establish a floor which prevents employers from lowering wages shortly before closure in order to diminish their WARN Act liability is a logical and convincing interpretation of the provision.
Since the WARN Act does not define "back pay," the court may look to other similar statutes to determine the meaning of this term. "Back pay" under other federal statutes is not limited to an employee's wage rate, but includes such compensation as overtime pay, vacation pay, and holiday pay. See, e.g., United States v. City of Warren, Mich., 138 F.3d 1083, 1097 (6th Cir. 1998) ("lost overtime is a well-established part of a back pay award under Title VII"); Kossman v. Calumet County, 849 F.2d 1027, 1033 (7th Cir. 1988) (affirming inclusion of overtime pay in back pay calculation under ADEA); Cox v. Am. Cast Iron Pipe Co., 784 F.2d 1546, 1562 (11th Cir. 1986) (concluding in Title VII case that "[b]ack pay awards . . . should not have been limited to `straight salary'; interest, overtime, shift differentials, and fringe benefits such as vacation and sick pay should also have been considered in fashioning award."); Rasimas v. Mich. Dep't of Mental Health, 714 F.2d 614, 626 (6th Cir. 1983) (stating in Title VII action that back pay includes "[s]ick leave, vacation pay, pension benefits and other fringe benefits the claimant would have received but for discrimination"); Pettway v. Am. Cast Iron Pipe Co., 494 F.2d 211, 263 (5th Cir. 1974) (stating in Title VII action that "the ingredients of back pay should include more than `straight salary.' Interest, overtime, shift differentials, and fringe benefits such as vacation and sick pay are among the items which should be included in back pay"); Walker v. Dalton, 89 F. Supp.2d 20, 26 (D.D.C. 2000) (stating in Title VII case that "[i]t is appropriate for a district court to consider overtime in calculating a back-pay award."); E.E.O.C. v. Joe's Stone Crab, Inc., 15 F. Supp.2d 1364, 1378 (S.D.Fla. 1998) ("Fringe benefits such as vacation, sick pay, insurance and retirement benefits are included" in back pay under Title VII); Minette Mills, Inc., 316 N.L.R.B. 1009, 1013 (1995) (affirming inclusion of credit for paid holidays in back pay calculation under NRLA).
This does not mean, however, that Plaintiffs are entitled to back pay at a rate including the 30 cent wage increase that was to take effect on January 1, 1999. Though the WARN Act does not define what back pay is, it is unambiguous with respect to the rate to be used to calculate back pay. Back pay is calculated based on the higher of the following two rates: the average regular rate received by the employee in the last 3 years of employment and the final regular rate received by such employee. The statute's use of the term "received" is a clear and unambiguous expression of Congressional intent that the rate be based on that amount an employee actually was paid rather than a rate he or she was to be paid in the future. To award the aggrieved employees the wage increase that would have been provided had they worked through the 60 day period following the announcement of the shutdown would be contrary to the statute's plain and unambiguous language. Therefore, the court concludes that Plaintiffs were not entitled to have any portion of their back pay calculated at the hourly rate which was to take effect on January 1, 1999.
The court does find, however, that Plaintiffs are entitled under the WARN Act to be paid for the non-ERISA contractual days consisting of regular vacation, graduated vacation, floating vacation and personal days. These contractual days come within the meaning of back pay under the Act. Las Vegas Sands holds that employees are entitled to holiday pay as part of back pay under the WARN Act, and this court believes that decision is correct and persuasive. See Las Vegas Sands, 244 F.3d at 1156, 1159 (holding employees are entitled to holiday pay as part of back pay under the WARN Act).
Vacation pay is similar to holiday pay — an employee is paid for a vacation or holiday even though the employee does not work on such a day.
Furthermore, a district court that considered the issue has held that when an employer violated the WARN Act's notice requirements, the employees were entitled to receive vacation pay and holiday pay as damages. See Martinka, 45 F. Supp. at 528.
Several courts have determined that vacation and holiday pay fall within the meaning of back pay under other federal statutes. See, e.g., Cox, 784 F.2d at 1562; Rasimas, 714 F.2d at 626; Pettway, 494 F.2d at 263; Joe's Stone Crab, 15 F. Supp.2d at 1378; Minette Mills, Inc., 316 N.L.R.B. at 1013. These same courts have concluded that sick pay comes within the meaning of back pay under Title VII. See Cox, 784 F.2d at 1562; Rasimas, 714 F.2d at 626; Pettway, 494 F.2d at 263; Joe's Stone Crab, 15 F. Supp.2d at 1378. Though under another federal statute, these decisions are indicative of the meaning of back pay under the WARN Act.
The court further finds that those employees that had a birthday during the 60 days following the December 17 layoff are entitled to be paid triple time pay for their birthday. (Triple time to be calculated as three times the greater of: (1) the average regular rate received by the employee in the last 3 years of employment, or (2) the final regular rate received by such employee.) This triple pay for birthdays is likened to holiday pay to which the employees are entitled. See Las Vegas Sands, 2001 WL 357104, at *1, 5 (holding employees are entitled to holiday pay as part of back pay under the WARN Act); Minette Mills, 316 N.L.R.B. at 1013 (affirming inclusion of credit for paid holidays in back pay calculation under NRLA).
As for additional overtime, the evidence is sufficient, though barely, to support a finding that the laid off employees are entitled to additional overtime pay. In Martinka Coal the court held the laid off miners were entitled to overtime pay as damages under the WARN Act because overtime was part of the employees regular rate and continued to be regularly available at the time of the plant closing. See Martinka, 45 F. Supp.2d at 527.
Midwest argues that though overtime had been available previously, there is no evidence that overtime continued to be regularly available at the time of the layoff. Midwest points to the evidence that the mine had been temporarily idled because of a mechanical outage at the Merom Plant which purchased Midwest's coal. But there is no suggestion in the record that this idling was anything other than temporary and that the mine's operations would have been any different after December 17 than they had been prior to the temporary idle.
Thus, the scales tip in favor of a finding that overtime would have been regularly available to the Plaintiffs during the period of the WARN Act violation. The court therefore concludes that Plaintiffs have shown an entitlement to overtime pay as part of their back pay award, the precise amounts of overtime to be determined.
Are Damages Based on Work Days or Calendar Days?
Another important issue raised by the parties' motions is whether Midwest's liability is to be based on work days or calendar days during the period of violation. Five of the six circuit courts that have examined the issue have concluded that an employer's liability to effected employees for a violation of the WARN Act's notice requirement is based on the number of work days rather than calendar days within the violation period. See Joe v. First Bank Sys., Inc., 202 F.3d 1067, 1072 (8th Cir. 2000); Burns v. Stone Forest Indus., Inc., 147 F.3d 1182, 1183-85 (9th Cir.), cert. denied, 525 U.S. 1040 (1998); Carpenters Dist. Council v. Dillard Dep't Stores, Inc., 15 F.3d 1275, 1282-86 (5th Cir. 1994), cert. denied, 513 U.S. 1126 (1995); Saxion v. Titan-C Mfg., Inc., 86 F.3d 553, 558-61 (6th Cir. 1996); Frymire v. Ampex Corp., 61 F.3d 757, 771-72 (10th Cir. 1995); but see United Steelworkers of Am. v. North Star Steel Co., Inc., 5 F.3d 39, 42-44 (3d Cir. 1993), cert. denied, 510 U.S. 1114 (1994). The Seventh Circuit has yet to decide the issue. A district court within the Seventh Circuit has concluded that the work day approach is the most appropriate. See Local 1239, Int'l Broth. of Boilermakers, Iron Shipbuilders, Blacksmiths, Forgers Helpers v. Allsteel, Inc., 9 F. Supp.2d 901, 904-06 (N.D.Ill. 1998).
This court believes that the majority is correct. The work day approach to calculating damages is more in keeping with the purpose and intent of the WARN Act and makes the most sense. Compensating workers for days on which they would not have worked would give them a windfall, making them better off than they would have been had the employer complied with the Act's notice provisions. The calendar approach, on the other hand, would lead to the arbitrary compensation of workers — a worker who worked four ten-hour shifts in a week would receive much greater compensation than a worker who worked five eight-hours shifts per week. See, e.g., Burns, 147 F.3d at 1184; Dillard, 15 F.3d at 1285. The worker who works longer shifts would receive more compensation than he would had there been no plant shutdown. The difference is arbitrary and serves no useful purpose. The court concludes that the employees are to be compensated only for work days, not calendar days, within the violation period.
Are Laid-Off Employees Entitled to Additional Life and Health Benefits?
Plaintiffs argue that the Chinook CBA required Midwest to provide health benefits and life insurance for the months of January and February 2000. Plaintiffs correctly point out that § 2105 of the WARN Act states that the rights and remedies available "are in addition to, and not in lieu of, any other contractual or statutory rights and remedies of the employees. . . ." 29 U.S.C. § 2105; see also 20 C.F.R. § 639.1(g) ("The provisions of WARN do not supersede any laws or collective bargaining agreements that provide for . . . additional rights and remedies. . . . Collective bargaining agreements may be used to clarify and amplify the terms and conditions of WARN, but may not reduce WARN rights.").
The Seventh Circuit recently has spoken on the exclusivity of WARN Act remedies. The court said: "When the substantive basis for a claim is the WARN Act, the sole remedies available are those provided in § 2104(b)." In Re Bluffton Casting Corp., 186 F.3d at 861.
The court added that "claims based on the same set of facts, yet arising out of another substantive right, are not preempted pursuant to § 2105." Id. Plaintiffs ask the court to enforce through WARN Act claims rights created solely by contract through the Chinook CBA. This is impermissible under the controlling authority of In Re Bluffton Casting Corp.
The court acknowledges that the district court in Martinka Coal found the employer liable under the WARN Act for 60 days of contractually required health, life, and accident benefits. See United Mine Workers Of Am. Int'l Union v. Martinka Coal Co., 45 F. Supp.2d 521, 528 (N.D.W.Va. 1999), aff'd, 202 F.3d 717 (4th Cir. 2000). In doing so, the court relied on its ruling that the aggrieved employees were entitled to be made whole under the WARN Act as well as § 2105 and 20 C.F.R. § 639.1(g). Id. The court agrees that employees aggrieved by a WARN Act violation should be made whole, but only to the extent possible consistent with the language of the Act. The court parts ways with Martinka Coal because it believes that awarding aggrieved employees an extra two months of life and health benefits is inconsistent with the plain language of § 2104. Such an award also is contrary to Seventh Circuit's clear direction in In Re Bluffton Casting Corp. The court does not read § 639.1(g) as creating additional rights or remedies in aggrieved employees beyond those expressly provided for by the Act itself. If, however, the regulation should be so read, it is not entitled to deference as it conflicts with the plain terms of the Act, see Chevron U.S.A., Inc. v. Natural Res. Defense Council, Inc., 467 U.S. 837, 843 (1984). Plaintiffs' reliance on Frymire v. Ampex Corp., 61 F.3d 757, 769-70 (10th Cir. 1995), is puzzling. Plaintiffs cite Frymire for its holding that an employer could not offset WARN damages by severance pay based on implied contract to provide pay in lieu of notice. Id. Frymire does not address the issue under consideration here — whether Midwest is liable for two more months of life and health benefits to the aggrieved employees.
It appears that in seeking the extra two months of life and health benefits Plaintiffs are seeking to enforce rights and remedies created by contract rather than rights under the WARN Act. Plaintiffs concede this by stating that "Midwest had a clear contractual duty to contribute to the ERISA funds. . . ." (Pls.' Reply Br. Def's Opp'n Pls.' Mot. Summ. J. Pls.' Opp'n Def.'s Mot. Summ. J. at 11.) This action is founded solely upon the WARN Act, and the Act is not the proper vehicle for enforcing those contractual rights and remedies. Plaintiffs must enforce their contractual rights and remedies to additional life and health benefits, if any, under the governing CBA.
The Act's plain language is unambiguous: an employer's liability for benefits under an employee benefit plan is based on at most "the period of violation, up to a maximum of 60 days. . . ." 29 U.S.C. § 2104(a)(1). Midwest provided the laid off employees with twelve months of life and health insurance benefits. Thus, Midwest satisfied its WARN Act obligations to provide such benefits. The court concludes that the Act does not require Midwest to provide the laid off employees with life and health benefits for the months of January and February 2000. This conclusion comports with the plain language of §§ 2104 and 2105.
Must Midwest Make Contributions to the Pension Plan and Funds?
Plaintiffs assert that "Midwest had a contractual obligation to report to the UMWA Health Retirement Funds bargaining unit employees' hours of work," (Pls.' Mem. Supp. Mot. Summ. J. at 6), but did not report any hours attributable to work the laid off employees would have performed after December 17, 1998, during the WARN Act violation period. Plaintiffs claim "Midwest also had a contractual duty to make contributions" to the UMWA 1993 Benefit Fund, (id. at 6-7), and had a duty under the CBA to make contributions to the Training Education Fund, (id. at 7), but did not do so for any hours of work the laid off employees would have performed during the violation period. Plaintiffs argue Midwest is liable for contributions to these funds for the 60 days of the violation period. In support of this argument Plaintiffs rely on § 2104(a)(1)(B), the Senate Report accompanying the Act and cases citing that report and concluding that the Act provides a "make whole" remedy, § 2105, 29 C.F.R. § 639.1(g), Martinka and Frymire. For the most part, these are the same authorities relied upon by Plaintiffs in claiming a right under the WARN Act to receive life and health insurance benefits for two months in addition to that provided by Midwest. For the reasons discussed above, the court does not interpret the authorities as supporting the conclusion that Midwest is liable for the fund contributions sought by Plaintiffs. The court concludes that § 2104(a)(1)(B) does not support Plaintiffs' claim either.
Plaintiffs quote the following from the report:
For violations of notice provisions, damages are to be measured by the wages and fringe benefits (including reimbursement for medical expenses) the employee would have received had the plant remained open or the layoff 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 provision, designed to penalize the wrongdoing employer, deter future violations, and facilitate simplified damages proceedings.
S. REP. No. 62.
Local 1239, Int'l Bhd. v. Allsteel, 9 F. Supp.2d 901, 904 (N.D.Ill. 1998) (holding WARN Act imposes damages only for work days within violation period); United Mine Workers of Am. v. Martinka Coal Co., 45 F. Supp.2d 521 (N.D.W.Va. 1999), aff'd, 202 F.3d 717 (4th Cir. 2000); Saxion v. Titan-C Mfg., Inc., 86 F.3d 553, 560-61 (6th Cir. 1996) (same); Breedlove v. Earthgrains Baking Co., 140 F.3d 797, 801 (8th Cir. 1997) (same), cert. denied, 525 U.S. 921 (1998); Burns v. Stone Forest Indus., Inc., 147 F.3d 1182, 1184-85 (9th Cir. 1997) (same), cert. denied, 525 U.S. 1040 (1998); Frymire, 61 F.3d at 771-72 (same). The employer's liability to make contributions to funds such as those at issue in this case was not at issue or addressed in any of these cases other than Martinka, see 45 F. Supp.2d at 528. But for that single case, which was wrongly decided, none of these cases holds that an employer who violates the WARN Act's notice requirements is liable for such contributions.
That subsection of the statute provides that an employer is liable to aggrieved employees for benefits under certain employee benefit plans. 29 U.S.C. § 2104(a)(1)(B). But that subsection cannot be read in isolation. As the language following subparagraph (B) clearly reveals, liability for such benefits "shall be calculated for the period of the violation, up to a maximum of 60 days. . . ." 29 U.S.C. § 2104(a)(1). As for the Senate Report, it states that damages are to be based on the wages and fringe benefits the employee would have received absent the WARN Act violation. The report does not directly speak to the employer's liability to make contributions to funds or plans on behalf of aggrieved employees. The Act's civil enforcement provision's plain language limits an employer's liability to "each aggrieved employee who suffers an employment loss as a result of such closing or layoff." 29 U.S.C. § 2104(a)(1). None of the funds for which Plaintiffs seek contributions by Midwest qualifies as an "aggrieved employee" under the Act. See 29 U.S.C. § 2104(a)(7) (defining "aggrieved employee" as "an employee who has worked for the employer. . . ."). Further, to the extent it reasonably can be read to support Plaintiffs' claim for contributions to the funds or plans, the court finds the report to be in tension with the plain language of § 2104(a)(1) as quoted above.
The court notes the WARN Act's civil penalty provision under which an employer who violates the Act also may be liable to a unit of local government. See 29 U.S.C. § 2104(a)(3). That provision cannot be the source of Midwest's liability to make contributions as none of the funds at issue is a unit of local government.
Finally, it is apparent from Plaintiffs' arguments that they base their claim to contributions to the funds on a contractual liability rather than any direct liability under the WARN Act. (See Pls.' Reply Br. Def.'s Opp'n Pls.' Mot. Summ. J. Pls.' Opp'n Def.'s Mot. Summ. J. at 11 ("Midwest had a clear contractual duty to contribute to the ERISA funds. . . .")). Again, Plaintiffs are attempting to enforce under the WARN Act rights and remedies created solely by contract. This is impermissible under the controlling authority of In Re Bluffton Casting Corp. In addition, the laid off employees simply did not perform work for the hours Plaintiffs seek to require Midwest to report to the UMWA Health Retirement Funds. Such a requirement would seem contrary to the contractual agreement as well as being beyond the reach of the WARN Act. The court therefore concludes that Midwest is not liable for contributions to the funds during the WARN Act violation period.
Good Faith, Attorney's Fees and Prejudgment Interest Midwest has raised the good faith defense. The WARN Act provides in pertinent part that:
If an employer which has violated this chapter proves to the satisfaction of the court that the act or omission that violated this chapter 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 this section.29 U.S.C. § 2104(a)(4). In their summary judgment motion, Plaintiffs contend that the court should reject Midwest's good faith defense. Midwest argues that the good faith defense is not ripe for decision.
The court agrees that it should not reach the issue of good faith at this juncture. The cross-motions for summary judgment are both based on the Joint Stipulations Of Fact Between Plaintiffs and Defendants. That Joint Stipulation does not contain material facts directed at the good faith defense. It would be improper to rely on the factual assertions in Plaintiffs' briefs that are not included in the Joint Stipulation and not otherwise contained within a Local Rule 56.1 factual statement. Furthermore, deferring a decision on the good faith defense is in keeping with the Entry of August 1, 2000, that liability and categories of damages be determined on the cross-motions for summary judgment and § 2104(a)(4).
(See Entry Following Argument On Mot. Leave Amend at 1.) The matter of an employer's good faith does not arise unless and until it is first determined that the employer is liable for some amount under § 2104.
That entry provides in pertinent part: "This case is referred to Magistrate Judge William Hussman to schedule a telephone conference to review what the court expects will be an agreed briefing schedule on cross motions for summary judgment on liability and categories of damages. The court recommends that the question of damages be addressed in summary judgment by categories rather than itemized damages. . . ."
The WARN Act provides for attorney's fees to prevailing parties as part of the costs. See 29 U.S.C. § 2104(6) ("the court, in its discretion, may allow the prevailing party a reasonable attorney's fee as part of the costs."). As this entry reflects, Midwest did violate the WARN Act's notice requirements and Plaintiffs may be entitled to some damages which are claimed but not others. However, because the matter of Midwest's good faith defense has yet to be resolved, it would be premature to decide whether Plaintiffs should be awarded attorney's fees under the Act. It is possible that Midwest's liability could be reduced to zero; if so, Plaintiffs may not be considered prevailing parties under the Act. See Kildea v. Electro Wire Prods., Inc., 60 F. Supp.2d 710, 716 (E.D. Mich. 1999), aff'd, 238 F.3d 422 (6th Cir. 2000). Consequently, the matter of prejudgment interest is not properly before the court at this time. Resolution of these issues must await another day.
The court is hopeful that the parties can resolve these issues on their own without the court's assistance.
III. Conclusion
Plaintiffs' motion for summary judgment is GRANTED IN PART as to additional overtime; the non-ERISA contractual benefits days; and triple time pay for those employees whose birthdays fell within the violation period; and Defendants' motion for summary judgment is GRANTED IN PART as to the 30 cent pay increase; health and life insurance benefits for January and February 2000; and contributions to the UMWA 1974 Pension Plan, the UMWA 1993 Benefits Fund, and the UMWA/BCOA TE Fund. The motions are DENIED in all other respects.By agreement of the parties, this entry does not determine the amounts due, if any, under any of these categories of damages or to any individual employee. The issues of calculation of damages in these categories, good faith, attorney's fees and prejudgment interest are left for another day.
A telephonic conference will be set under separate order for purposes of scheduling a final pretrial conference and trial preparation deadlines.