Foster v. K-V Pharmaceutical Company

Filing 39

MEMORANDUM (see attached order) In his complaint, Foster seeks to maintain his WARN Act action as a class action, on behalf of himself and all others similarly situated. (Doc. 1 at 20-29.) However, Foster has not suffered an employment loss within th e meaning of the WARN Act. He may not, therefore, prosecute a class action on behalf of other similarly situated employees.3 OShea v. Littleton, 414 U.S. 488, 494 (1974). An appropriate judgment order is issued herewith.. Signed by Magistrate Judge David D. Noce on 3/12/2010. (KMS)

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MISSOURI EASTERN DIVISION JOHN FOSTER on behalf of himself and all others similarly situated, Plaintiff, v. K-V PHARMACEUTICAL COMPANY, Defendant. ) ) ) ) ) ) ) ) ) )

No. 4:09 CV 408 DDN

MEMORANDUM This action is before the court on the motions of defendant K-V Pharmaceutical Company (K-V) to supplement (Doc. 17) and to dismiss, or in the alternative, for summary judgment (Docs. 9, 29). Foster has also moved for summary judgment. (Doc. 34.) Plaintiff John The parties have (Doc. 14.)

consented to the exercise of plenary authority by the undersigned United States Magistrate Judge pursuant to 28 U.S.C. § 636(c). I. BACKGROUND

On March 12, 2009, plaintiff John Foster commenced this action against K-V, alleging that K-V fired about 1,000 employees without providing the employees the requisite sixty days advance written notice. (Doc. 1 at ¶¶ 12-13, 17.) dismissal. § 2101. (Id. at ¶ 19.) Foster also alleges that K-V failed to Foster claims these actions violated the compensate him and the other employees for the sixty days following their Worker Adjustment and Retraining Notification Act (WARN Act), 29 U.S.C. (Id. at 1, 8.) Foster seeks to maintain this action as a class action, on behalf of himself and on behalf of all others similarly situated. (Id. at ¶¶ 20-29.) K-V has not answered the complaint; the company filed its motion to dismiss, or in the alternative, for summary judgment, in place of filing its answer. (Doc. 9.) The court has not held a Rule 16 Conference, and the parties have not participated in any discovery.

II.

MOTION TO SUPPLEMENT (Doc. 17.) The newly acquired

K-V moves to supplement its first motion to dismiss or for summary judgment with newly acquired evidence. evidence is an e-mail from Jack Foster to Arnold Breen, in which Foster stated that he has accepted a position at Covidien as an Engineering Manager. The e-mail is dated June 8, 2009, and bears the subject line, (Doc. 17, Ex. D.) He also "Resignation." does

Foster does not question the authenticity of this e-mail. record. (Doc. 20.) The motion to supplement is granted. LOOKING BEYOND THE PLEADINGS

not raise any specific objection to including this e-mail in the

III. summary judgment.

K-V has moved to dismiss the case, or in the alternative, for (Docs. 9, 29.) In support of its motions, K-V has (Doc. 30, Exs. 1-6.) filed affidavits and other supporting documents.

A court has complete discretion to determine whether or not to accept material beyond the pleadings, which is offered in connection with a motion to dismiss under Rule 12(b)(6). 327 F.3d 697, 701 (8th Cir. 2003). judgment under Rule 56. Stahl v. U.S. Dep't of Agric., But if the court does not exclude

this material, the motion to dismiss becomes a motion for summary Country Club Estates, L.L.C. v. Town of Loma When a court follows this Blair v. Wills, 420 F.3d Linda, 213 F.3d 1001, 1005 (8th Cir. 2000). the non-moving party is entitled to notice. 823, 826-27 (8th Cir. 2005).

procedure, converting a motion to dismiss to one for summary judgment, Without notice, the non-moving party is

unable to understand that he has the burden to produce affidavits - and not simply allegations from the pleadings - to rebut what has now become a motion for summary judgment. Country Club Estates, 213 F.3d at 1005. Blair, 420 F.3d at 827. The notice may be actual or constructive.

In this case, Foster has been given sufficient notice of the court's intention to treat the motion to dismiss as one for summary judgment. Indeed, Foster has submitted his own motion for summary judgment (Doc. 34), complete with his own supporting affidavit (Doc. 33) and statement of material facts (Doc. 35 at 15-20). Foster has also filed responses

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opposing each of K-V's motions.

(Docs. 13, 20, 32.)

The court will

treat K-V's motions as motions for summary judgment. IV. John Foster began construction manager. 2008, onward. STATEMENT OF MATERIAL FACTS working for K-V on August 21, 2006, as a (Doc. 30, Ex. 1 at ¶ 4.) Arnold Breen, a Project

Engineering Director, served as Foster's supervisor from September 15, (Id. at ¶ 3.) (Doc. 33 at ¶ 1; Doc. 38, Ex. A.) The On February 2, 2009, Foster received a one-page memo, with the subject line "Difficult News." memo was addressed to all K-V employees, and stated that the company would be experiencing extensive layoffs and terminations. A.) (Doc. 38, Ex. After receiving the memo, Foster says he wrote to K-V management, (Doc. 33 at ¶ 2.) (Doc. 30, Ex. 3 at ¶ 5; Doc. 30, Ex. 2 at ¶ 4.)

and told them that he would be willing to work for a reduced salary if necessary. On February 2, and February 6, 2009, K-V laid off 467 employees for financial reasons. According to Bill Smith, K-V's Vice-President of Operations, these layoffs were to be temporary, and to last no longer than six months. (Doc. 30, Ex. 2 at ¶ 5. ) Because they were to be temporary, K-V did not (Doc. 30, Ex. 3 at ¶ 5.) (Id.) On provide these employees with WARN Act pay. at ¶ 4.)

February 6, 2009, the company laid off an additional 349 employees. (Id. These layoffs were to be permanent. According to Melissa Hughes, K-V's Vice-President of Human Resources, K-V provided these 349 employees with written notice, and the compensation required by the WARN Act.1 (Id.) (Doc. 30, Ex. 1 at ¶ 10; Doc. 30, Ex. 3 at (Doc. 30, Ex. 1 at ¶ 7.) This According to K-V policy, employee supervisors were responsible for instituting the layoffs. ¶ 6.) To help deliver this news, K-V provided each supervisor with a

script that they were required to read. script stated, in relevant part,

SCRIPT FOR PLANT MANAGERS There is no indication how much written notice K-V provided these employees. (Doc. 30, Ex. 3 at ¶ 4.) -31

Due to business circumstances, the decision has been made to temporarily lay off a number of employees. You are in the group that is being laid off, effective immediately. You do not need to report for work after today. We expect at this time that the layoff will be less than six months. If that changes, we will notify you. You are eligible for unemployment compensation and we will not contest your application. Your benefits (medical, dental) will continue until the end of the month and then you will be eligible for COBRA. At that time, we will send you a COBRA packet for enrollment. We have established a Human Resources help line during this temporary layoff to specifically address your questions about the layoff, benefits, including stock or 401(k). We are going to hand out a contact change form to ensure we have current information for future recalls. . . . Please turn in your contact change form along with your badge, keys, and any other company property in the envelope provided as you leave this room. You will be given a few minutes to remove any personal belongings from your locker. When you are finished please exit the facility. (Doc. 30, Ex. 4.) Breen received his copy of the script on February 5, 2009. 30, Ex. 1 at ¶ 8.) (Doc. The next day, Breen read from the script, telling

fifty-two employees of the Engineering Department that they were being laid off, but that the layoffs were expected to last less than six months. (Id. at ¶¶ 6, 9.) Foster was among these fifty-two employees, (Id. at ¶ 10.) But according to (Doc. 33 and Breen reached him by telephone to deliver the news. were not expected to last more than six months. at ¶ 4.) (Id.)

Breen asserts he read from the script, telling Foster that the layoffs Foster, Breen simply told him that he was being "furloughed."2 V, or get paid by K-V. (Id. at ¶¶ 9-10.)

After February 6, 2009, Foster did not perform any work for KFoster began receiving He also received (Id. at ¶ 11.)

unemployment benefits around this time. around this time. (Id. at § 12.)

information on how to continue receiving health insurance through COBRA

Foster also maintains that Breen did not read from the script. (Doc. 33 at ¶ 4.) -4-

2

On February 10, Breen and Foster spoke in person. at ¶ 11.) returning to K-V, unless "certain people [were] gone." returning to K-V even if he found another job. six months, or within a longer time period.

(Doc. 30, Ex. 1 (Id.) Foster

According to Breen, Foster told him that he would not be

denies saying this, and asserts that he told Breen he was interested in (Doc. 33 at ¶ 6.) According to Foster, K-V never indicated that he would be recalled within (Id. at ¶ 8.) In April 2009, Foster received a notice from Fidelity, the company holding his 401(k), informing him that he needed to start making loan r epayments. (Id. at ¶ 13.) In response to the notice, Foster called (Id.) Fidelity. (Id.) According to Foster, Fidelity informed him that K-V had changed his employment status to "terminated." K-V since losing his job. at ¶ 15.) (Id. at ¶ 14.) As of early June, Foster had not received any correspondence from At the same time, he had been (Id. hearing reports that K-V's financial condition was deteriorating.

Concerned that he might lose his accrued vacation pay and (Id.; Doc. 17, Ex. D.)

other benefits, Foster sent Breen an e-mail on June 8, 2009, with the word "Resignation" in the subject line. The e-mail stated: From:Foster, Jack C . . . . Sent:Monday, June 8, 2009 1:22 PM To:Breen, Arnold Subject:Resignation Arnold, I have accepted a position at Covidien as Engineering Manager. With being furloughed, I'm not sure what steps I need to take with KV to end employment, receive remaining vacation pay and my 401K. If you can direct me to the right person I would greatly appreciate it. It was a pleasure working with you and I wish you and KV nothing but the best! Thanks, Jack Foster Engineering Manager Covidien (Doc. 17, Ex. D) (Id. ) Foster sent the e-mail from his new Covidien account.

Foster says he used the word "resignation" in the subject line

because he wanted to prompt K-V to handle his request without appearing -5-

confrontational. at ¶ 18.)

(Doc. 33 at ¶ 16.)

After reading the e-mail, Breen (Doc. 30, Ex. 1

believed that Foster had resigned from his job at K-V.

On March 9, 2009, K-V began recalling some of the employees who had been temporarily laid off the month before. (Doc. 30, Ex. 2 at ¶ 9.) In all, K-V recalled 167 employees between March 9, and July 6, 2009. (Id. at ¶ 10.) Among those recalled, thirty-three employees resigned and chose not to return to K-V. return. (Id.) Of the recalled employees, six were K-V recalled the engineering from the Engineering Department, one of whom resigned and chose not to (Doc. 30, Ex. 1 at ¶ 19.) (Id.) employees on July 6, 2009. position. According to Breen and Smith, Foster K-V ultimately

was not included in the recall because he had already resigned from his (Id. at ¶ 20; Doc. 30, Ex. 2 at ¶ 11.) (Doc. 30, Ex. 2 at ¶ 11.) eliminated Foster's position.

On July 6, 2009, K-V determined that it would have to permanently lay off 301 of the employees who had been temporarily laid off in February . (Doc. 30, Ex. 3 at ¶ 9.) According to Hughes, K-V informed (Id. at ¶ 10.) With the these employees of the decision on July 8, and provided them with all of the compensation required by the WARN Act. exception of those employees who voluntarily resigned, Hughes states that all the employees that were temporarily laid off in February have either been recalled, or have received their WARN Act compensation. ¶ 11.) V. SUMMARY JUDGMENT STANDARD Summary judgment must be granted when the pleadings and proffer of evidence demonstrate that no genuine issue of material fact exists and that the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Citrate, 477 U.S. 317, 322 (1986); Devin v. Schwan's Home Serv., Inc., 491 F.3d 778, 785 (8th Cir. 2007). The court must view the evidence in the light most favorable to the nonmoving party and accord it the benefit of all reasonable inferences. Devin, 491 F.3d at 785. A fact is "material" if it could affect the ultimate disposition of the case, and a factual dispute is "genuine" if there is substantial evidence to support a reasonable jury verdict in (Id. at

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favor of the non-moving party.

Die-Cutting Diversified, Inc. v. United

Nat'l Ins. Co., 353 F. Supp. 2d 1053, 1054-55 (E.D. Mo. 2004). Initially, the moving party must demonstrate the absence of an issue for trial. Celotex, 477 U.S. at 323. Once a motion is properly made and supported, the nonmoving party may not rest upon the allegations in its pleadings but must instead proffer admissible evidence that demonstrates a genuine issue of material fact. Fed. R. Civ. P. 56(e); Howard v. Columbia Pub. Sch. Dist., 363 F.3d 797, 800 (8th Cir. 2004); Krein v. DBA Corp., 327 F.3d 723, 726 (8th Cir. 2003). VI. is entitled to summary judgment. ARGUMENTS First, K-V argues that Foster did not Second, K-V

K-V argues that there are no material issues of fact, and that it suffer an employment loss because he voluntarily resigned.

argues that Foster did not suffer an employment loss because a temporary layoff of less than six months does not constitute an employment loss. Third, K-V argues that Foster lacks standing to represent class members if his own claims fail as a matter of law. Fourth, K-V argues that Foster's claims on behalf of other employees also fail, because those employees were either recalled, or given proper notice and payment under the WARN Act. 22, 29.) Foster also argues that he is entitled to summary judgment. First, Foster argues that he suffered an employment loss when he was terminated or laid off, and that his resignation e-mail did not change his status under the WARN Act. Once he was terminated, he did not have a position He notes that the Department of Labor's Second, Foster, apply to an He also argues from which he could resign. Fifth, K-V argues that any motion to amend should be (Docs. 10, 16, denied because the claims are unrelated to the WARN Act.

regulations establish that an employment loss begins at the layoff date, and does not depend on the employer's terminology. argues that the term "voluntary departure" can employee's actions before being terminated or laid off. only

that the voluntary departure exception does not apply to layoffs. Third, Foster argues that the WARN Act is designed to penalize wrongdoing, rather than to provide an employee with back-pay. -7(Docs. 13, 32, 38.)

VII.

DISCUSSION 29 U.S.C. § 2102(a).

The WARN Act requires an employer to give sixty days' notice to all affected workers before ordering a mass layoff. An affected employee is an employee who "may reasonably be expected to experience an employment loss as a consequence of a proposed plant closing or mass layoff by their employer." 29 U.S.C. § 2101(a)(5). An employment loss is defined as either (A) an employment termination, other than a discharge for cause, voluntary departure, or retirement, (B) a layoff exceeding six months, or (C) a reduction in hours of work of more than fifty percent during each month of any six-month period. § 2101(a)(6). Congress passed the WARN Act 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." Rifkin v. McDonnell Douglas Corp., 78 F.3d It is because 1277, 1282 (8th Cir. 1996) (quoting 20 C.F.R. § 639.1). See id. 29 U.S.C.

of this purpose that the WARN Act defines an employment loss as it does. Employees who choose early retirement or who are rehired within Id. at 1282-83; six months of a layoff do not fall within the WARN Act's purpose because there is no need for retraining or alternative jobs. 2003). Termination Foster argues he suffered an employment loss because he was terminated from his position before he sent his resignation e-mail. The Department of Labor uses the term "termination" to mean a permanent cessation of the employment relationship. 16047 (Apr. 20, 1989)(final rule). Rivkin, 78 F.3d at 1282. 54 Fed. Reg. 16042, As a result, an employee is not Kephart v. Data Sys. Int'l, Inc., 243 F. Supp. 2d 1205, 1224-25 (D. Kan.

terminated if he or she is eventually rehired in the same position. In determining whether an employee has been terminated, "it is the actuality of a termination which controls and not the expectations of the employees." Id. An employee's subjective belief about the likelihood of his or her future employment is not to be used -8-

in

determining

whether

that

employee

suffered

an

employment

loss.

See Martin v. AMR Servs. Corp., 877 F. Supp. 108, 115 (E.D.N.Y. 1995), aff'd sub nom., Gonzalez v. AMR Servs. Corp., 68 F.3d 1529 (2d Cir. 1995)(per curiam). In this case, the affidavits show that K-V terminated and laid off several hundred employees in February 2009. At the time, the layoffs Indeed, were intended to be temporary, lasting no more than six months. layoffs.

the script for plant managers emphasized the temporary nature of the It noted that the layoffs were expected to last "less than six months," and noted that a help line had been established to address questions concerning "this temporary layoff." (Doc. 30, Ex. 4.) By July 2009, K-V had recalled 167 of the 467 employees who were part of the temporary layoff, illustrating that K-V had reasonably believed that the layoffs would not be permanent. The remaining 300 employees were permanently laid off, and received WARN Act payments. John Foster was one of the 467 employees who was temporarily laid off in February 2009. There is no evidence he was among the 349 There is no evidence Foster employees who were initially terminated. permanently laid off.

ever received any correspondence from K-V that suggested he had been See Martin, 877 F. Supp. at 116 (noting that the In his e-mail, laid off employees had not received any payment for accrued vacation time, which was typically sent to terminated employees). Foster indicated he was the one interested in ending his employment with K-V. The e-mail was titled "Resignation," and referred to his furlough not his termination. "furlough." (Doc. In his affidavit, Foster again used the word 17, Ex. D.) There is simply no evidence K-V

terminated Foster in February 2009. Foster argues that Fidelity told him K-V had changed his employment status to "terminated." This statement constitutes hearsay, and can only be used to show Foster's state of mind; it cannot be used to show Foster was actually terminated. Fed. R. Evid. 801(c); Fed. R. Evid. 803(3). Foster also And under Rifkin and Martin, the employee's own beliefs and expectations do not determine whether an employment loss has occurred. COBRA in February 2009. notes that he began receiving unemployment benefits and information on Again, this evidence does not show that K-V

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terminated

Foster. stated

In that

its

script off

for

laid

off were

employees, eligible

K-V for

specifically packet.

laid

employees

unemployment compensation, and that they would be receiving a COBRA (Doc. 30, Ex. 4); see also Martin, 877 F. Supp. at 115 (noting Taken as a whole, together with the that an employer's reference to COBRA rights is not a reliable basis for distinguishing between a layoff and a termination). terminated. To the contrary, Foster's e-mail, Foster has failed to offer legally sufficient evidence that he was supporting affidavits, demonstrate that he voluntarily resigned from his position with K-V, to accept a job with Covidien. Absent allegations of constructive discharge, when an employee leaves a company of his own free will, the employee has voluntarily departed, and has not suffered an employment loss within the meaning of the WARN Act. Collins v. Gee West Seattle, LLC, No. C08-238 MJP, 2009 An employee's departure See WL 3784336, at *3 (W.D. Wash. Nov. 10, 2009).

is voluntary even if the employee feared he would soon be unemployed, and even if his departure follows the announcement of a mass layoff. id.; Ellis v. DHL Express (USA), No. 08 C 6541, 2009 WL 3060272, at *5 (N.D. Ill. Sept. 21, 2009); see also 54 Fed. Reg. at 16048 ("DOL does not, however, agree that a worker who, after the announcement of a plant closing or mass layoff, decides to leave early has necessarily been constructively discharged or quit `involuntarily.'"). Foster resigned from his position with K-V after he was included in a company-wide layoff. under the WARN Act. Looking to Rifkin, Collins, and the Department of Labor's Regulations, Foster's resignation was a voluntary departure As a result, he did not suffer an employment loss within the meaning of the statute. Layoff Foster argues he suffered an employment loss because he was laid off for a period exceeding six months. He also argues that the voluntary departure exception only applies to terminations. Under the plain language of the WARN Act, a layoff exceeding six months constitutes an employment loss. 29 U.S.C. § 2101(a)(6)(B). On February 6, 2009, Breen informed Foster that he was being temporarily - 10 -

laid off.

On June 8, 2009, Foster wrote to Breen, and told him he had Taken together, Foster resigned from

accepted a position with Covidien.

his position at K-V before his layoff reached the six-month threshold, and before he suffered an employment loss within the meaning of the statute. Any suggestion that a layoff continues beyond an employee's voluntary departure date would produce illogical results. It would force employers to hypothesize about every departed employee's future recall status, and would allow departed employees to collect WARN Act payments despite being employed or retired. with the WARN Act's stated purpose. by the Act. The suggestion would also conflict Workers who have voluntarily left

their jobs during a temporary layoff do not need the protections provided Rifkin, 78 F.3d at 1282-83; Kephart, 243 F. Supp at 1224-25.

Class Action Status In his complaint, Foster seeks to maintain his WARN Act action as a class action, on behalf of himself and all others similarly situated. (Doc. 1 at ¶¶ 20-29.) However, Foster has not suffered an employment He may not, therefore, loss within the meaning of the WARN Act. O'Shea v. Littleton, 414 U.S. 488, 494 (1974). An appropriate judgment order is issued herewith.

prosecute a class action on behalf of other similarly situated employees.3

/S/ David D. Noce UNITED STATES MAGISTRATE JUDGE Signed on March 12, 2010.

The court does not take any position on the claims of any other K-V employee. Those claims are not before the court. See Golden v. Zwickler, 394 U.S. 103, 108 (1969) ("The federal courts . . . do not render advisory opinions."). - 11 -

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