Think Tank

First Impression Decision: Under WARN Act Quitting Due to Business’s Imminent Closing is Not “Voluntary Departure”

Todd B. Scherwin

discuss

The Court in Collins v. Gee West Seattle LLC (No. 09-36110, opinion by Judge N.R. Smith available here) determined the meaning of the term “voluntary departure” under the Worker Adjustment and Retaining Notification (“WARN”) Act, 29 U.S.C. section 2101 et seq.

On an issue of first impression for the Ninth Circuit, the Court held that if an employee leaves a job because the business is closing that employee has not voluntarily departed, but instead has suffered an “employment loss” within the meaning of the WARN Act.

 In Collins, the employer, Gee West Seattle LLC (“Gee West”), operated several automobile franchises.  Due to financial losses, Gee West attempted to sell the business beginning in July of 2007.  On September 26, 2007, Gee West informed its employees that it was pursuing a sale of the business and that if the sale could not be finalized by October 7, 2007 the company would be shutting down.  Employees were further notified that notice could not be provided earlier because “Gee West was actively seeking business to keep the business running…and it was concerned that potential purchasers would not make a purchase, had its workforce been seeking alternate employment.”

Prior to its potential -closing announcement, Gee West had approximately 150 employees.  Following the announcement, several employees stopped reporting to work.  By October 5, 2007, only 30 employees reported to work at Gee West’s facilities.  Each employee who terminated his or her respective employment after September 26, 2007 stated that he or she had done so because the “business closed.”  Gee West officially closed on October 5, 2007, because too few employees remained to continue operations.

 The employees brought suit claiming Gee West violated the WARN Act by not providing 60-days notice to its employees before closing its doors.  The district court granted Gee West’s motion for summary judgment finding that the approximately 120 employees who had “voluntarily departed” Gee West had not suffered an “employment loss” as defined by the WARN Act.

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• Ninth Circuit Announces Criteria for Granting Discretionary Appeals Under the Class Action Fairness Act of 2005

  December 1,2010

  Coleman v. Estes Express, et al., 10-08152, (Nov. 30, 2010), per curiam opinion, Circuit Judges O'Scannlain, Trott, and Fletcher, W - an October 2010 motions panel decision. Facts: After being sued by Coleman on behalf of a proposed class in California state court, Estes Express removed the action to federal district court under the Class Action Fairness Act of 2005 ("CAFA").[1]  The district court remanded the action to state court because the case involved a local controversy, which provides an exception to federal jurisdiction.  Estes Express sought leave from the Ninth Circuit's October motions panel to appeal the remand order.  The Issue on Appeal: In its remand order, the district court noted that courts are split on the issue of whether to look beyond the complaint to determine whether the local controversy exception to CAFA applies.  This issue could be determinative of whether to exercise federal jurisdiction in this case.  While courts are split, this issue also remains an open question in the Ninth Circuit. The Ninth Circuit announces the criteria for determining whether a discretionary appeal under CAFA is appropriate. Under CAFA, a party may seek leave to appeal a remand order to the court of appeals, which has discretion whether to accept the appeal. 28 U.S.C. § 1453(c)(1).  The Ninth Circuit acknowledges that CAFA does not provide guidance to reviewing courts on how to determine whether to accept an appeal of a remand order.  In establishing criteria for future reviewing courts, the Ninth Circuit was guided by the First Circuit's decision in Coll. of Dental Surgeons of P.R. v. Conn. Gen. Life Ins. Co., 585 F.3d 33, 38-39 (1st Cir. 2009) and the Tenth Circuit's decision in BP Am., Inc. v. Oklahoma, 613 F.3d 1029, 1034-35 (10th Cir. 2010).

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  Wendy McGuire Coats

• The Fun is in the Footnotes – Ninth Circuit Affirmed in CLS v. Martinez ( . . . and maybe the Senators were right to be concerned about Alito after all?)

  July 6,2010

  A week ago, SCOTUS affirmed the Ninth Circuit's decision in CLS v. Martinez (full opinion available here).  The news media mostly focused its coverage with phrases like, "Justices Rule Against Group That Excludes Gay Students" (see NY Times article here) or "Supreme Court: Law School not obliged to recognized Christian group" (see Christian Science Monitor article here).  But, these articles gloss over the real meat in both the majority, concurring,  and dissenting opinions.   Big Picture Holding:  Justice Ginsburg writing for the majority (5-4) decision held that Hastings' non-discrimination policy/the "all-comers" policy did not violate CLS's First Amendment rights to free association and religious freedom.  ("the Ninth" addressed the positions and rationales of Hastings & CLS in previous posts available here).   The Court held that Hastings' anti-discrimination policy/ the all-comers policy was a reasonable, view-point neutral, condition placed on all organizations for participation in Hastings' RSO (registered student organization) limited-public forum. Once again, we find much of the fun to be in the footnotes.

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  Wendy McGuire Coats

• Jurors: Check Your Biases & Prejudices at the Door But Bring Your Common Sense and Life Experience With You

  May 25,2010

  Today, in Taylor v. Sisto, 09-15341 (full opinion available here) the Ninth Circuit reversed and remanded the denial of Taylor's petition for a writ of habeas corpus.  The issue involved the state court trial judge's admonishment to prospective jurors during jury selection about what to leave at the door when deciding the case.  In somewhat of a paradox, the prospective jurors were instructed to "bring their common sense" with them, but to leave their "life experiences" outside the courtroom.  Circuit Judges Noonan and Berzon (Cir. Judge Ikuta in dissent) announced the following: (1) "juries are made up of human beings" (2) human beings have varied life experiences; (3) this variety of life experience creates diversity in the jury pool; and (4) "a jury is meant to be made up of human beings whose experience is vital to the validity of the verdict."  Simply put, to ensure the guarantees of the Sixth Amendment, jurors can't, and more importantly, shouldn't be instructed to leave their "life experience" at the door.

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  Wendy McGuire Coats

• Couple’s Landscaping Leads to Squabble over President’s Ability to Fire Commissioner

  May 19,2010

  According to published news accounts, Shirley-Ann and Herbert Leu purchased property near the Washington State and Canadian border for their retirement home.[1]  As they set about landscaping their new home, they stumbled into an international dispute and an interesting squabble over the President’s power to appoint a commissioner to the International Boundary Commission (“IBC”).  To provide some perspective on how this issue arose, Shirley-Ann and Herbert Leu purchased property in Blaine, Washington and erected a wall 7 feet from the Canadian border.[2]  The wall, apparently, encroached some border buffer zone by 30 inches that raised the ire of the Royal Canadian Mountain Police who then referred the matter to the IBC.  Shirley-Ann responded that: “I was expecting to come here and retire, I wasn't expecting this to be an international incident.”[3]

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  Matthew A. Berliner

• The Edwards “Get out of Jail Free” Problem with White-Collar Criminals

  September 24,2010

  If this wasn't a detailed and thorough court order, but a short and sweet post-it note style memo, it could read something like this: To: The Ninth Circuit (and the district courts!)  Subject: Lenient (NO JAIL TIME) Sentences for White-Collar Offenders Must Stop 1. It's not fair.                                  2. It's not right. 3. It makes the Sentencing Guidelines useless. 4. It sends the wrong message. 5. Our court's wrong. From: Judges Gould, Bybee, Callahan & Bea On September 20, 2010, Circuit Judge Gould joined by Circuit Judges Bybee, Callahan, and Bea issued an order dissenting from the denial of rehearing en banc in United States v. Edwards (08-30055, 08-30056, 08-30059) (dissent available here) and the original three-judge panel decision is available here.  The order essentially is a call to arms to get the "no jail time" sentences imposed on white-collar offenders by district courts under control and to some extent - eliminated.

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  Wendy McGuire Coats

• Barry Bonds Perjury Trial: Blood/Urine Sample Evidence Out (No Exceptions!); A Reminder of What Deference Looks Like; and What This Means For Bonds’ Trial

  June 16,2010

  USA v. Bonds, 09-10079 (Circuit Judges Reinhardt & Schroeder, Judge Bea in dissent) (full opinion available here). You may or may not know that the government is currently prosecuting Barry Bonds (SF Giants player who hit 71 home runs in 2001 . . . more here) for perjury (lying under oath).  Basically, the government's position is that in 2003 Bonds lied to the grand jury when he swore under oath that he had not taken performance enhancing drugs.  To convict Bonds of perjury, it must prove he lied.  To prove the lie, the government has blood and urine samples and test result log sheets from San Francisco based BALCO Laboratories, Inc. under the name "Barry Bonds" that purportedly show positive test results for performance enhancing drugs.  The government's big hurdle, which it notably failed to clear, is that it must prove that the tested samples BALCO recorded actually came from Barry Bonds.  It's a game of connect the dots:  Barry Bonds' blood/urine . . .to  Anderson . . .  to Valente . . . BALCO samples & tests results.

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  Wendy McGuire Coats

• The Ninth Circuit’s Active En Banc Review & Cases Slated to Be Heard En Banc in June

  May 22,2010

  June is approaching and three cases are slated for an en banc hearing in Pasadena . . . Norse v. City of Santa Cruz, 07-15814, Guggenheim v. City of Goleta, 06-56306, and United States v. Lopez-Velasquez, 07-30241.  Click here for a link to the Ninth Circuit's status report of pending en banc cases. Getting A Case Reheard En Banc (almost a snowball's chance . . . ) In the Spring 2006 issue of the ABTL Northern California Report, Ninth Circuit Judge Carlos T. Bea authored, "Bettering Your Chances for Ninth Circuit Rehearing En Banc."  (full article available here).  Last Tuesday, I had the pleasure of listening to Judge Bea discuss the Ninth Circuit's active en banc caseload at the Bar Association of San Francisco - Appellate Section's monthly meeting.  Some estimated statistics regarding the Ninth Circuit from Judge Bea:  Approximately 1000 Petitions for Rehearing En Banc are made each year.  Of those 1000, approximately 40-50 receive an en banc "call" to vote on whether the case should be reheard en banc, and of those 40-50 only about 15-25 actually receive the simple majority vote of active judges needed to have the case reheard.  That's a .25% chance - at best.

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  Wendy McGuire Coats

• FINANCIAL INSTITUTIONS IN NINTH CIRCUIT BREATHE A (QUALIFIED) SIGH OF RELIEF

  May 10,2010

  On May 3, 2010, the Supreme Court denied certiorari on a Second Circuit decision discussing the exemption from overtime pay for employees evaluating loans.  J.P. Morgan Chase & Co. v. Whalen, No. 09-1160.  The Second Circuit held that a home equity loan underwriter was not subject to the administrative exemption, which applies to “workers whose duties are directly related to management policies or general business operations” and who “customarily and regularly exercise[] discretion and independent judgment.”  Whalen v. J.P. Morgan Chase & Co., No. 08-4092-cv (2d Cir., November 20, 2009) (citing 29 C.F.R. § 541.2(a)).  The appellate court reasoned that because the employee followed detailed company guidelines in deciding whether to issue loans, he was performing production work (rather than administrative work), meaning he “directly engaged in creating the ‘goods’ – loans and other financial services – produced and sold by Chase.”  Id.  This decision has far-reaching impact, but it particularly affects the many financial institutions based in New York, who may now be subject to liability for failure to pay overtime under the Federal Labor Standards Act (“FLSA”). 

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  Jamie C. Chanin