Day et al v. Celadon Trucking Services Inc
ORDER granting pltfs' 55 Motion for Partial Summary Judgment on the issue of liability; deft's 62 Cross Motion for Summary Judgment is denied. Signed by Judge Susan Webber Wright on 10/13/11. (vjt)
IN THE UNITED STATES DISTRICT COURT
.EASTERN DISTRICT OF ARKANSAS
STUART R. DAY, ET AL.
CELADON TRUCKING SERVICES,
NO: 4:09CV00031 SWW
Former employees of nonparty Continental Express, Inc. (“Continental”) bring this class
action against Celadon Trucking Services, Inc. (“Celadon”) pursuant to the Worker Adjustment
and Retraining Notification Act (“WARN Act”), 29 U.S.C. §§ 2101-2109. Plaintiffs claim that
Celadon purchased Continental and terminated their employment without providing sixty days’
advance notice as required under the WARN Act. Before the Court is Plaintiffs’ motion for
summary judgment on the issue of liability (docket entries #55, #56, #57), Celadon’s response in
opposition and cross-motion for summary judgment (docket entries #62, #63, #63), Plaintiffs’
reply in support of their motion for summary judgment (docket entry #67), Plaintiffs’ response in
opposition to Celadon’s cross-motion for summary judgement (docket entries #70, #71), and
Celadon’s reply (docket entry #74). After careful consideration, and for reasons that follow, the
Court finds that Plaintiffs are entitled to partial summary judgment on the issue of liability.
Summary judgment is appropriate when “the pleadings, the discovery and disclosure
materials on file, and any affidavits show that there is no genuine issue as to any material fact
and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). As a
prerequisite to summary judgment, a moving party must demonstrate “an absence of evidence to
support the non-moving party’s case.” Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
Once the moving party has properly supported its motion for summary judgment, the nonmoving party must “do more than simply show there is some metaphysical doubt as to the
material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
The non-moving party may not rest on mere allegations or denials of his pleading but
must “come forward with ‘specific facts showing a genuine issue for trial.’” Id. at 587 (quoting
Fed. R. Civ. P. 56(e)). “[A] genuine issue of material fact exists if: (1) there is a dispute of fact;
(2) the disputed fact is material to the outcome of the case; and (3) the dispute is genuine, that is,
a reasonable jury could return a verdict for either party.” RSBI Aerospace, Inc. v. Affiliated FM
Ins. Co., 49 F.3d 399, 401 (8th Cir. 1995).
The purpose of the WARN Act is to provide “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.” 20 C.F.R. § 639.1(a). The WARN Act prohibits employers from
ordering “a plant closing or mass layoff until the end of a sixty-day period after the employer
serves written notice of such an order.” 29 U.S.C. § 2102(a). “Any employer who orders a
plant closing or mass layoff [without providing the required notice] shall be liable to each
aggrieved employee who suffers an employment loss as a result of such a closing or layoff1 for
back pay for each day of the violation . . . . ” 29 U.S.C. § 2104(a)(1). The Act defines
“employment loss” as (1) an employment termination, other than a discharge for cause,
voluntary departure, or retirement; (2) a layoff exceeding 6 months; or (3) a reduction in hours of
work of more than 50 percent during each month of any 6-month period. See 29 U.S.C. § 2104.
Important to this case, the WARN Act includes an exception to the Act’s definition of
“employment loss” as follows:
In the case of a sale of part or all of an employer’s business, the seller shall be
responsible for providing notice for any plant closing or mass layoff . . . up to and
including the effective date of the sale. After the effective date of the sale of part or
all of an employer’s business, the purchaser shall be responsible for providing notice
for any plant closing or mass layoff . . . . Notwithstanding any other provision of this
chapter, any person who is an employee of the seller (other than a part-time
employee) as of the effective date of the sale shall be considered an employee of the
purchaser immediately after the effective date of the sale.
29 U.S.C. § 2101(b)(1)(emphasis added). Pursuant to the sale-of-business exception, the mere
sale of part or all of a business does not trigger the notice requirement, and workers who shift
from one employer to another as the result of a sale do not thereby suffer an employment loss.
“Instead, the WARN Act creates a system that allocates notice responsibility between the seller
Whether an “employment loss” comes as a result of “plant closing” or “mass layoff”
depends on the number of employees affected. A “plant closing” occurs with “the permanent or
temporary shutdown of a single site of employment, or one or more facilities or operating units
within a single site of employment, if the shutdown results in an employment loss at the single
site of employment during any 30-day period for 50 or more employees excluding any part-time
employees.” 29 U.S.C. § 2101(a)(2). A “mass layoff” occurs when there is a reduction in force
that is not the result of a plant closing that results in an “employment loss” (1) at a single site, for
at least 33 percent of the employees (excluding any part-time employees) and at least 50
employees (excluding any part-time employees) or (2) at least 500 employees (excluding any
part-time employees). See 29 U.S.C. § 2101(a)(3).
of the business and the buyer of the business, and only the party actually causing an employment
loss due to plant closing [or mass layoff] is required to provide WARN Act notice.” Wilson v.
Airtherm Products, Inc., 436 F.3d 906, 901 (8th Cir. 2006). “As long as the seller’s employees
are employed by the seller on the effective date of the sale, those employees are considered to be
employees for the buyer ‘immediately after the effective date of the sale.’” Id.(citing 29 U.S.C.
In this case, Continental operated a trucking business headquartered in Little Rock
Arkansas. On December 4, 2008, Continental and Celadon entered an asset purchase agreement,
whereby Celadon purchased substantially all of Continental’s assets. Plaintiffs worked full time
for Continental, and they allege that on December 4, 2008, “they were told, for the first time, that
Continental had been sold to Celadon, and . . . their employment would end on or about
December 17, 2008.” Amend. Compl., ¶ 6.
On the date of the sale, Continental had 658 employees, and after the sale, Celadon
offered employment to 201 of those 658 employees. Compare Plfs.’ St. Mat. Facts (docket entry
#57) ¶¶ 14-15, with Def.’s St. Mat. Facts (docket entry #64) ¶ 6. Plaintiffs did not receive an
offer of employment from Celadon, and their employment was terminated during the period from
December 5 through December 17, 2008.2 No plaintiff received written notice regarding the
Plaintiffs’ statement of material facts not in dispute provides that Plaintiffs continued to
be employed after the December 4, 2008 sale date and that most of them continued to be
employed through December 17, 2008. See Plfs.’ St. Mat. Facts (docket entry #57), ¶ 6. In its
responsive statement, Celadon does not controvert the foregoing statement, but it states that
plaintiffs continued to be employed as employees of Continental, not Celadon. See Def.’s St.
Mat. Facts (docket entry #3).
termination of his or her employment.
Plaintiffs maintain that Celadon’s purchase of Continental’s assets qualifies as the “sale
of part or all” of Continental’s business and that they became Celadon employees immediately
after the date of the sale, December 4, 2008, by operation of § 2101(b)(1). Plaintiffs further
assert that they suffered an employment loss as a result of a mass layoff that occurred after the
sale and that Celadon failed to provide them notice as required under the WARN Act.
Celadon does not dispute that plaintiffs suffered an “employment loss” as a result of a
“mass layoff,” nor does Celadon dispute that Plaintiffs were terminated without receiving sixty
days’ advance written notice. However, Celadon maintains that no genuine issues exist for trial
because Plaintiffs remained Continental employees after the sale, and § 2101(b)(1) does not
apply to its purchase of Continental’s assets.
The Eighth Circuit has “recognized that when a case involves simply a sale of assets as
opposed to the sale of a business as a going concern, the seller retains the WARN Act notice
requirement because the seller is the party actually closing the plant that results in employment
losses . . . . ” Wilson v. Airtherm Products, Inc., 436 F.3d 906, 910 (8th Cir. 2006)(citing Smullin
v. Mity Enterprises, Inc. 420 F.3d 836, 839-40 (8th Cir. 2005). However, when a business is sold
as a going concern, any potential notice requirement falls on the buyer’s shoulders. Id.
According to Celadon, its purchase of Continental’s assets did not amount to the “sale of
Local Rule 56.1 provides that a party moving for summary judgment must submit a
statement of the material facts as to which it contends there is no genuine issue to be tried, and
the non-moving party must file a responsive statement of the material facts as to which it
contends a genuine issue exists to be tried. “All material facts set forth in the statement filed by
the moving party . . . shall be deemed admitted unless controverted by the statement filed by the
non-moving party . . . . ” Local Rule 56.1(c).
all or part of a business” under § 2101(b)(1) because it merely “incorporated the purchased
assets from [Continental] into its own business.” Docket entry #63, at 9.
description of the transaction is not determinative. The Eighth Circuit has explained that “the
universe of transactions for which the WARN Act deems the seller’s employees to be employees
of the buyer immediately after the sale” includes “any transaction that transfers all or part of the
employer’s overall operations as a going concern.” Smullin v. Mity Enterprises, Inc., 420 F.3d
836, 839 (8th Cir. 2005).
In an effort to show that Celadon’s purchase constituted the sale of Continental’s
business as a going concern, Plaintiffs present the following undisputed evidence:
On December 4, 2008, Celadon purchased substantially all of Continental’s assets, including
all “Agreements, contracts, commitments, leases, plans, bids, quotations, proposals,
instruments, computer programs and software, data bases . . . related objects and source
codes, manuals and guidebooks, price books and price lists, customer and subscriber lists,
supplier lists, sales records, files, correspondences, legal opinions, rulings issued by
governmental entities, and other documents, books, records, papers, files, office supplies,
furniture and fixtures, company vehicles, yellow iron equipment, equipments . . . and data
. . . . ” Docket entry #55, Ex. #3 (Asset Purchase Agreement, § 7.1.i).
The Continental/Celadon asset purchase agreement provides that Celadon will offer
employment to some of Continental’s “driver and non-driver” employees. See id. (Asset
Purchase Agreement, § 5.2). The agreement states that simultaneous with the execution of
the purchase agreement on December 4, 2008, Celadon will provide Continental three
lists–one naming Continental drivers that Celadon intends to hire, one naming Continental
drivers that Celadon will not hire, and one naming Continental non-drivers that Celadon
intends to hire. See id. (Asset Purchase Agreement, § 5.2). The agreement states: “Seller
shall sent the notices required by the [WARN] Act and be responsible for any costs and
expenses connected therewith.”3 Id. (Asset Purchase Agreement, § 5.2(e)).
The purchase agreement provides that on the closing date “Seller and/or Purchaser” shall
The purchaser of a going concern cannot, by contract, transfer its WARN Act duties to
the seller. See Wilson v. Airtherm Products, Inc., 436 F.3d 906, 912 & n.4 (8th Cir.
2006)(attempts to structure a sale in such a way to avoid purchaser liability has no effect).
contact individuals on the “Non-hired Driver List” and instruct them to “deliver to the
nearest Purchaser turn-in location any rolling stock and/or other assets included in the
Purchased Assets.” Id. (Asset Purchase Agreement § 5.2(b)).
By affidavit, Plaintiff Karl Hill testifies that he worked for Continental as a truck driver prior
to December 4, 2008. Docket entry #55, Ex. #8. Hill testifies that on December 5, 2008,
he was driving a truck in Illinois and received notice that Continental had been sold to
Celadon. Id., ¶ 4. Hill reports that he was instructed to drive his truck to Celadon’s
terminal in Indianapolis, and when he arrived at the terminal, he and other drivers were
informed that they were being terminated. Id., ¶ 5. Hill testifies that he waited in a
breakroom for eight hours and eventually received a bus ticket home. Id., ¶ 6. According
to Hill, he was never paid for the work he performed on December 5, 2008 or for the eight
hours he spent waiting for a way home. Id., ¶ 8.
Continental and Celadon entered a one-year lease agreement dated December 4, 2008,
whereby Celadon leased Continental property located in Little Rock for the stated purpose
of “conducting its business of transporting property by motor carrier . . . .” Docket entry
#67, Ex. #2.
Timothy Hodnett served as Continental’s vice president of human resources. According to
Hodnett’s affidavit testimony, he participated in “transition activities” after December 4,
2008. Docket entry #55, Ex. #5, ¶ 2. Hodnett testifies that individuals who worked for
Continental before December 4, 2008 and were not offered permanent employment with
Celadon remained employed after the sale to “either perform their regular job duties or assist
Celadon in the sales transition.” Id., ¶ 5. Hodnett further testifies that after the sale, Celadon
continued to operate trucks out of the Little Rock terminal, and Celadon officers directed the
aforementioned employees to perform tasks such as recruitment and dispatch operations
from the Little Rock worksite. Docket entry #67, Ex. #1, ¶ 5.
By affidavit, Plaintiff Stuart R. Day testifies that he served as Continental’s vice president
of operations and participated in “transition activities” after December 4, 2008. See docket
entry #55, Ex. #6, ¶ 2. According to Day, individuals who worked for Continental before
December 4, 2008 and were not offered permanent employment by Celadon remained
employed after the sale to assist Celadon. Day states that some employees changed signage
on trucks and replaced Continental decals with Celadon’s, and other employees contacted
Continental’s former customers to notify them of Celadon’s purchase. Id., ¶ 5.
In a press release dated December 4, 2008, Celadon announced that it purchased the
“truckload, intermodal and brokerage business, as well as approximately 400 tractors and
1,000 trailers of Continental . . . . ” Docket entry #55, Ex. #1. The press release quotes
Celadon’s CEO, who states: “Based on our evaluation of the business, we believe
Continental has quality customers and drivers, but suffered from a cost structure that plagues
may mid-sized carriers. We expect to integrate the acquired operations promptly.” Id.
The Court finds that the foregoing evidence demonstrates that Celadon purchased
Continental’s assets with the intent to run the business as a going concern and that Celadon
carried out that plan. The fact that Celadon integrated Continental’s business into its own does
nothing to negate the fact that Celadon purchased Continental’s business as a going concern.
Celadon asserts that after December 4, 2010, Plaintiffs were retained as employees for
Continental for the purpose of assisting the company in winding up its own affairs. See docket
entry #63, at 2. Celadon presents a copy of a document titled “Consent to Action by the Board
of Directors and Shareholders of Continental Express, Inc.” (docket entry #62, Ex. B), which
acknowledges the sale of Continental’s revenue equipment and operating assets to Celadon on
December 4, 2008 and states that “following the closing, the Company [Continental] is
authorized and directed to take such actions that may be necessary to wind down its business
affairs . . . . ” Id. The fact that Continental began “winding up its own affairs” after the sale to
Celadon lends no support to Celadon’s position that it did not purchase Continental’s business as
a going concern. Furthermore, Celadon presents no evidence to contradict the testimony of
former Continental employees, who testify that they remained employed for a short period after
Celadon’s purchase and assisted Celadon with transition activities.
Despite undisputed evidence demonstrating that Celadon purchased Continental as a
going concern and that Plaintiffs became Celadon employees after the sale by operation of
§ 2101(b)(1), Celadon contends that Plaintiffs should be judicially estopped from proceeding
with their WARN Act claims. Celadon reports that some of the plaintiffs in this case filed a
breach of contract action against Continental in state court, seeking payment for unused vacation
time. Celadon notes that in the state court proceeding, the plaintiffs alleged that Continental
served as their employer and terminated their employment; but in this case, Plaintiffs take the
position that Celadon, as Plaintiffs’ employer under § 2101(b)(1), breached its duty to provide
WARN Act notice.
Judicial estoppel is an equitable doctrine intended to prevent the improper use of judicial
machinery, and it should be applied when a party’s later position is “clearly inconsistent” with
its earlier position. See New Hampshire v. Maine, 532 U.S. 742, 750, 121 S.Ct. 1808, 1815
(2001)(citations omitted). “A court invokes judicial estoppel when a party abuses the judicial
forum or process by making a knowing misrepresentation to the court or perpetrating a fraud on
the court.” Stallings v. Hussmann Corp. 447 F.3d 1041, 1047 (8th Cir. 2006). “[A] party that
takes a certain position in a legal proceeding, ‘and succeeds in maintaining that position,’ is
prohibited from thereafter assuming a contrary position ‘simply because his interests have
changed,’ especially if doing so prejudices the party ‘who acquiesced in the position formerly
taken by him.’” Id. (quoting New Hampshire v. Maine, 532 U.S.742, 748, 121 S.Ct. 1808
The substantive basis for Plaintiffs’ WARN Act claim, that Celadon is deemed Plaintiffs’
employer under § 2101(b)(1) for purposes of the WARN Act notice requirement, is not
inconsistent with a claim that Plaintiffs and Continental shared an employment relationship and
that Continental breached a contractual duty to pay Plaintiffs for unused vacation time. The
WARN Act provides: “The rights and remedies provided to employees by this chapter are in
addition to, and not in lieu of, any other contractual or statutory rights and remedies of the
employees, and are not intended to alter or affect such rights and remedies . . . . ” 29 U.S.C. §
2105. The Court disagrees that judicial estoppel bars Plaintiffs from asserting a claim under the
For the reasons stated, the Court finds that Plaintiffs’ motion for partial summary
judgment on the issue of liability (docket entry #55) should be and it is hereby GRANTED.
Defendant’s cross motion for summary judgment (docket entry #62) is DENIED.
IT IS SO ORDERED THIS 13TH DAY OF OCTOBER, 2011.
/s/Susan Webber Wright
UNITED STATES DISTRICT JUDGE
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