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Ciarlante v. Brown & Williamson Tobacco Corp.

April 30, 1998

LOUIS A. CIARLANTE; THOMAS A. MARSHALL, INDIVIDUALLY AND ON BEHALF OF A CLASS OF INDIVIDUALS APPELLANTS/CROSS-APPELLEES IN APPEAL NO. 97-1174
v.
BROWN & WILLIAMSON TOBACCO CORPORATION; THE AMERICAN TOBACCO COMPANY; AMERICAN BRANDS, INC. BROWN & WILLIAMSON TOBACCO CORPORATION AND THE AMERICAN TOBACCO COMPANY, APPELLANTS/CROSS-APPELLEES IN APPEAL NO. 97-1152 AND 97-1725



On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 95-cv-04646) Argued Tuesday, November 4, 1997

Before: Becker, Roth and Garth, Circuit Judges

The opinion of the court was delivered by: Garth, Circuit Judge:

OPINION OF THE COURT

This appeal requires us to decide whether the district court properly granted summary judgment to the plaintiff class against the defendants. The district court held as a matter of law that the defendants' Chester, Virginia administrative center was the plaintiffs' "single site of employment" under the Worker Adjustment and Retraining Notification Act, 29 U.S.C. § 2101(a)(3)(B), and therefore awarded damages and attorneys' fees to the plaintiffs. We hold that a genuine issue exists as to whether the Chester center was the plaintiffs' "single site of employment," so that the district court's grant of summary judgment was improper. We will reverse and remand.

I.

The plaintiffs in this action are a class of over one hundred former employees of the American Tobacco Company ("the Company"), who worked throughout the United States as traveling salespeople. Officially titled Field Sales Representatives ("sales representatives"), the plaintiffs were each assigned to a geographical district in which they were responsible, along with other sales representatives, for selling the Company's products to wholesalers and retailers in that district. Altogether, the Company employed over one thousand sales representatives, located in 150 different districts covering the entire United States. Sales representatives were each provided a company car, and spent an overwhelming proportion of their time "on the road" visiting customers within their district.

The sales representatives communicated with other employees at the Company mostly by telephone. There were two primary contacts. First, each sales representative kept in close contact with a district sales manager, who, like the sales representatives, lived and worked in the designated district. Each district sales manager was responsible for managing the handful of sales representatives assigned within the district; like the sales representatives, most district sales managers worked from home, and had no other permanent office. The sales representatives' second significant contact was with the Company's administrative center in Chester, Virginia. Sales representatives called the Chester center every day to check messages, and also contacted the center regularly to order supplies.

The events that prompted this lawsuit occurred on January 11, 1995, soon after the defendant Brown & Williamson acquired the Company from American Brands, Inc. On that day, the Company summoned the sales representatives to "sales meetings" held across the country. At the "sales meetings," Company officials announced to the sales representatives that they were being laid off, effective immediately. The sales representatives were forced to hand over their keys, samples, and distribution lists to Company representatives before they were allowed to leave. The Company also encouraged the employees to sign release forms, which would entitle each employee to a week's pay and job counseling services in exchange for a waiver of rights to additional benefits.

The plaintiffs in this action are employees who did not sign the release form. They brought suit in the United States District Court for the Eastern District of Pennsylvania against Brown & Williamson, American Tobacco, and American Brands, Inc. (collectively, "B&W") alleging that B&W had violated the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. §§ 2101-09, by failing to warn the plaintiffs of their impending layoffs. *fn1 Enacted in 1988, WARN requires that employers provide written notice to those employees who will be subject to a "mass layoff" sixty days before the layoff occurs. See 29 U.S.C. § 2102(a). *fn2 Congress defined a "mass layoff" as "a reduction in force which . . . results in an employment loss at the single site of employment during any 30-day period for . . . at least 50 employees." 29 U.S.C. § 2101(a)(3) (emphasis added). The Act entitles affected employees who are not notified of an impending "mass layoff" to damages from their former employer in an amount equal to back pay for each day of the violation, for up to sixty days. See 29 U.S.C. § 2104(a).

Following class certification, it became clear that the plaintiffs' recovery hinged on whether B&W's action was a "mass layoff." Specifically, the central question was whether the action had resulted in an employment loss of more than fifty employees at one "single site of employment" as required by 29 U.S.C. § 2101(a)(3)(B). *fn3 In an order dated September 23, 1996, the district court announced that it would treat pending discovery applications as cross-motions for summary judgment, focusing on the "single site" requirement. The parties responded with both evidence and legal argument attempting to show as a matter of law that the single site requirement had (or had not) been satisfied.

The sales representatives argued that they were entitled to judgment as a matter of law because the Chester, Virginia administrative center was their "single site of employment." The sales representatives offered statements by former employees suggesting that the Chester center was the primary contact point for sales representatives in the field. According to the statements, sales representatives received their instructions from and reported to the administrative center in Chester. App. 2208-10; App. 1936. Each sales representative was required to call Chester every day to check messages, which frequently included instructions from management left on the sales representative's voice mail. App. 1936-37. Sales representatives also communicated with the Chester center to obtain sales materials, supplies, and other items they needed to perform their job. App. 2178-79. The sales representatives argued that they were entitled to judgment because their affidavits proved that the Chester center was their "single site of employment."

B&W's affidavits and arguments pointed to a different Conclusion. According to B&W, it was entitled to judgment as a matter of law because the sales representatives' "single site[s] of employment" were the geographical districts where they actually worked. B&W maintained that the districts were the true hubs of the sales representatives' activities, as the local district sales managers were the employees who directed, managed, and monitored the sales representatives. B&W relied on various sources for support. First, they offered the affidavit of Mr. Randy Groonwald, a district sales manager from Milwaukee, who stated that his sales representatives were assigned work from him, not from Chester, Virginia. Groonwald also reported that he was responsible for the day-to-day concerns of his sales representatives, including hiring, training, job performance reviews, and approval of expenses. App. 1017- 18. Groonwald's statements were supported by B&W's internal documents, which showed that supervision of sales representatives was the major task of district sales managers. App. 1223. B&W also relied upon its official job description for the sales representative position, which indicated that the sales representatives' primary contact within the company was with their district sales managers. App. 1226.

In response to the sales representatives' position that Chester was their single site of employment, B&W maintained that the Chester center was simply an administrative hub through which certain mailings and messages authored outside of Chester were sent to the sales representatives. Sales representatives were hired, trained, and instructed within their district, B&W noted; they worked entirely within their district; and they reported to their district sales managers within their district. Sales representatives did not regularly visit the Chester, Virginia center. In fact, named plaintiff Thomas A. Marshall visited the center only twice, on special trips to recognize his outstanding sales record, App. 2266, and named plaintiff Louis A. Ciarlante never visited Chester at all. App. 2376. Accordingly, B&W argued that the districts, rather than the Chester center, were the plaintiffs' "single site of employment." Because there were fewer than fifty employees within each geographic district, B&W claimed that its action could not constitute a "mass layoff" under 29 U.S.C. § 2101(a)(3), and that it was entitled to judgment as a matter of law.

In an order dated November 6, 1996, the district court concluded as a matter of law that the Chester center was the plaintiffs' single site of employment and entered summary judgment in their favor. The district court reasoned that the voluminous record in the case "establishes, without any genuine dispute, that all instructions, assignments, rules, and orders to the plaintiff salesmen emanated from the Chester, Virginia headquarters." As a result, the Chester center was the plaintiffs' single site of employment. The court recognized that the local district sales managers played a role in issuing assignments to and receiving reports from the sales representatives, but found that the role of the sales managers was not significant. "Any contrary view," the court explained, "would . . . undermine the purposes of the statute. I am confident that Congress did not contemplate permitting a company to lay off its entire sales force of hundreds of people without being chargeable with having achieved a `mass layoff.'" *fn4

Having found B&W liable, the court next considered the damages owed to the sales representatives. The first issue was whether the full statutory damage award should be reduced by the amount of severance payments that B&W had made to the employees following the layoffs. B&W contended that the answer was "yes," because 29 U.S.C. § 2104(a)(2) directed that damage awards be reduced by "any wages paid by the employer to the employee for the period of the violations . . . [and] any voluntary and unconditional payment by the employer to the employee that is not required by any legal obligation." 29 U.S.C. § 2104(a)(2). The district court disagreed, holding that the damage award should not be reduced because the severance pay awards were ERISA payments that B&W was legally obligated to pay.

Second, the court held that the statutory damage award of back pay from a sixty day period as directed by 29 U.S.C. § 2104(a)(1) was to be calculated based on the pay equivalent of sixty actual working days, rather than the amount that a salaried employee would earn in a sixty day time period. The court thereupon entered an order granting summary judgment for the sales representatives.

B&W responded by submitting a Motion to Alter or Amend Judgment and for Reconsideration and Clarification. Attached to this motion were additional sworn declarations by Company employees. One such employee, Kathi Reynolds, stated that when she was a sales representative from 1985 to 1989, she sometimes received instructions that were mailed through the Chester facility, but that in almost every case, the true source of her instructions was the Company's executive headquarters in either Stamford, Connecticut or Conyers, Georgia. App. 2462. According to B&W, this affidavit illustrated that the district court had misunderstood the plaintiffs' statements that the sales representatives had received instructions "from" Chester. B&W asked the district court to reconsider its decision, in light of the new affidavits and the district court's haste in granting summary judgment in favor of the sales representatives.

In a December 18, 1996 order, the district court found this argument "disingenuous," and concluded that B&W was not entitled to have the court consider the additional materials. Citing "an abundance of caution," the court nevertheless looked at the new documents, and concluded that B&W had presented no triable issues of fact, as the motion for reconsideration and new documents "merely revisit[ed] arguments previously made and rejected."

The court did revise its Conclusion concerning damages, however. The court held that it had misconstrued the scope of United Steelworkers of America v. North Star Steel Co., 5 F.3d 39 (3d Cir. 1993), and that the North Star case left open the question of how to calculate back pay damages according to 29 U.S.C. § 2104(a)(1) in the case of salaried employees. The district court concluded that the proper award of back pay damages for a 60 day period in the case of a salaried employee was simply two months's salary.

On January 28, 1997, the district court entered an order calculating a damage award for each of the sales representatives in the class of plaintiffs. The total value of the judgment was $696,785.44, plus interest from the date of the termination. On September 2, 1997, the court awarded attorney's fees to the plaintiffs pursuant to § 29 U.S.C. § 2104(a)(6) in the amount of $334,466.30 in fees and $26,855.83 in expenses.

II.

Summary judgment is appropriate when there are no genuine disputes as to any material facts. See Fed. R. Civ. P. 56(c). In such a case, a trial is unnecessary because a reasonable fact finder could not enter a judgment for the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct. 2505, 2510 (1986). Accordingly, we exercise plenary review, construing all evidence and resolving all doubts raised by affidavits, depositions, answers to interrogatories, and admissions on file in favor of the non-moving party. See SEC v. Hughes Capital Corp., 124 F.3d 449, 452 (3d Cir. 1997). Our task is to lay out the substantive law governing the action, and then in light of that law determine whether there is a genuine dispute over dispositive facts. See Liberty Lobby, 477 U.S. at 248, 106 S. Ct. at 2510.

III.

The issue in this case is whether the district court was correct as a matter of law that the Chester, Virginia administrative center was the plaintiffs' "single site of employment" according to 29 U.S.C. § 2101(a)(3). *fn5 The WARN act does not define the phrase "single site of employment." Congress did, however, expressly delegate to the Department of Labor the authority to promulgate regulations interpreting WARN. See 29 U.S.C. § 2107. These regulations must be given "controlling weight unless they are arbitrary, capricious, or manifestly contrary to the statute." Chevron, U.S.A., Inc. v. Natural Resources Defense Council, 467 U.S. 837, 843-44, 104 S. Ct. 2778, 2782 (1984).

The regulation applicable to this case appears at 20 C.F.R. § 639.3(i)(6). It states:

For workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties involve work outside any of the employer's regular employment sites (e.g., railroad workers, bus drivers, salespersons), the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report will be the single site in which they are covered for WARN purposes.

20 C.F.R. § 639.3(i)(6) (1989).

This regulation narrows the inquiry considerably: we need only consider whether the Chester, Virginia administrative center was the site of employment to which the sales representatives were assigned as their home base; whether the Chester center was the site from which the sales representatives' work was assigned; and whether the Chester center was the site to which they reported. If any one of these three inquiries can be answered in the affirmative, then the Chester center is a covered "single site of employment." See Teamsters Local Union 413 v. Driver's, Inc., 101 F.3d 1107, 1110 (6th Cir. 1996) ("This subpart is written in the disjunctive: any one of the alternatives may qualify as the definition of `single site.'"). Because at least fifty employees lost their jobs following the January 11, 1995 "sales meetings," a determination that Chester is a covered site under WARN as a matter of law would lead us to affirm the district court's entry of summary judgment in favor of the plaintiffs. See 29 U.S.C. § 2101(a)(3)(B)(i).

However, if we conclude as a matter of law that Chester, Virginia was not the site of employment to which the sales representatives were assigned as their home base, nor the site from which their work was assigned, nor the site to which they reported, then the Chester center is not a covered WARN site. Because the plaintiffs have not indicated the existence of any other covered sites at which fifty or more employees lost their jobs on January 11, 1995, the Conclusion that Chester is not a covered site would lead us to reverse the order of the district court and enter summary judgment for B&W.

Finally, if a genuine issue of material fact exists as to whether the Chester center is a covered site for WARN purposes, then we must reverse the district court's order and remand.

A.

First we consider whether the Chester, Virginia administrative center is "the single site of employment to which [the sales representatives] are assigned as their home base." 20 C.F.R. § 639.3(i)(6). The underlying facts here are undisputed. Sales representatives spent the great majority of their time servicing customers within their geographical district. They mostly worked out of their cars, and were in frequent contact with their district sales managers, who lived within their respective districts and also worked from their own homes and cars. Sales representatives did not physically visit Chester, Virginia in the normal course of business; however, they did telephone the Chester site on a daily basis to check messages and complete administrative tasks.

Whether Chester, Virginia was the sales representatives' "home base" depends on our legal construction of the term "home base" in the Secretary's regulation. B&W argues that an employee's assigned "home base" is the place from which the employee physically works on a regular basis. Under this interpretation, it is argued that the Chester center cannot be the sales representatives' home base. In contrast, the sales representatives focus less on the employee's whereabouts than on the physical location of the employer's major contacts with its employees. Accordingly, they maintain that an employee's "home base" must be a fixed physical building or structure of some kind owned by the employer. Because both the sales representatives and district sales managers worked from their homes and cars, the sales representatives contend that the Chester center must by default be considered the employees' "home base."

We agree with B&W that a traveling employee's "home base" must at a minimum be a location at which the employee is physically present at some point during a typical business trip. This follows from the text of 20 C.F.R. § 639.3(i)(6), which contrasts "the employer's regular employment sites" with the site of employment "to which [the employees] are assigned as their home base." We think that this language cannot be squared with the sales representatives's interpretation of "home base," as it effectively equates "home base"with a "regular employment site." In the context of 20 C.F.R. § 639.3(i)(6), we think that the term "home base" refers not to the physical base of the employer's operations, as the sales representatives would have it, but rather to the physical base of the employee.

Our construction is consistent with both Teamsters Local Union 413 v. Driver's, Inc., 101 F.3d 1107, 1110 (6th Cir. 1996) and Wiltz v. M/G Transport Services, Inc., 128 F.3d 957, 961-62 (6th Cir. 1997). The plaintiffs in Driver's, Inc. were eighty-five truck drivers who had been discharged without warning. Although their former employer's management functions were located in Delaware, Ohio, the drivers had each been permanently assigned to one of eleven different base terminals in six different states. The maximum number of employees who were assigned to any one base terminal was eighteen, such that the plaintiffs' right to recover hinged upon whether the drivers' "single site of employment" was the one base terminal to which they were each assigned, or rather the amalgamation of all eleven terminals. Addressing the question of which site was the truckers' "home base," the Sixth Circuit concluded that each base terminal provided the plaintiffs' home base because it was the physical location where "[e]ach trucker starts and ends his or her workweek." Id. at 1110.

In Wiltz, the plaintiffs were former crewmen for a towboat operator based in Paducah, Kentucky. See Wiltz, 128 F.3d at 959. Typically, the crewmen would report to Paducah for assignment to the boats, and then embark on a thirty day voyage escorting barges throughout the Ohio, Mississippi, and Tennessee River Systems, returning in the end to Paducah. Following layoffs that prompted a WARN lawsuit, the Wiltz court noted (albeit in dicta) that Paducah was the crewmen's home base because "80% of the crews physically reported to Paducah for assignment to the towboats." Id. at 962.

In both Driver's, Inc. and Wiltz, the employees' home bases were the sites where they began and ended their business trips. Accordingly, these cases are consistent with our view that a traveling employee's "home base" must be a site that the employee visits during the course of a typical business trip.

Reviewing the record, there is no evidence that any of the plaintiffs regularly visited the Chester, Virginia administrative center in the ordinary course of their business trips. We know that named plaintiff Thomas A. Marshall visited the center only twice, on special trips to recognize his outstanding sales record, App. 2266, and that named plaintiff Louis A. Ciarlante never visited Chester at all. App. 2376. From the record as it now stands, we would be inclined to hold as a matter of law that Chester is not the sales representatives' "home base." However, because we are remanding this case to the district court for further factual development, we will not foreclose the factfinder below from examining whether the sales representatives can prove that some of their number did in fact use the Chester center as their "home base" under the legal standard we have enunciated.

B.

We next consider whether the Chester, Virginia administrative center was the site "from which [the sales representatives'] work [was] assigned." 20 C.F.R. § 639.3(i)(6). Our concern here is with the source of the "day-to-day" instructions received by the sales representatives, notwithstanding "centralized payroll and certain other centralized managerial or personnel functions." Driver's, Inc., 101 F.3d at 1111 (citing International Union, United Mine Workers v. Jim Walter Resources, Inc., 6 F.3d 722, 724-26 (11th Cir. 1993)). Given the unusual working arrangements that 20 C.F.R. ยง 639.3(i)(6) covers, this legal standard may require a developed factual record in order to distinguish the true source of the instructions from mere conduits through which the instructions passed. We ...


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