The opinion
page cte
aie bbe
STATE OF ieiew..:.
Gumberland, gs, Gleri’s Gfirs
STATE OF MAINE SUPERIOP CO1'— SUPERIOR COURT
CUMBERLAND, ss. wd CIVIL ACTION
Ji * {e,00d DOCKET NO. CV-97-225"
; , EAA ic
VIKING FREIGHT, INC., R ECENVED
Plaintiff,
v. DECISION AND ORDER
MARK MOBERG, et al.,
Ne ee a ee ee Ne Ne Ne Se”
Defendants.
1 FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff Viking Freight, Inc. once operated four terminals of a nation-wide
trucking system in Maine. Stipulation, ¥1. The four terminals were located in
Bangor, Portland, Presque Isle and Sidney. Stipulation, (2. Additionally, Viking
operated a general corporate office in Bangor that served as headquarters for
Viking’s Northeast operations. Stipulation, 193-4. In September of 1996, Viking
announced the closing of the Bangor regional headquarters, which was comprised of
two buildings, a general office and an annex to that building. Stipulation, 156.
During 1997, Viking closed its four Maine terminals. Stipulation 11-12.
Viking commenced this action, seeking declaratory judgment to determine its
liability under Maine’s Severance Pay Statute, 26 M.R.S.A. §625-B. Intervening
Defendants (“Defendants”) counterclaimed under the federal Worker Adjustment
and Retraining Act (“WARN Act”), 29 U.S.C. §2101, under the Maine Severance Pay
statute and for unpaid wages pursuant to 26 M.R.S.A. §626. The Superior Court
(Calkins, J.) granted partial summary judgment in favor of plaintiff, holding that
three out of four of Viking’s Maine terminals (Sidney, Portland and Presque Isle)
were not “covered establishments” under the Severance Pay Statute. See Order, July
27, 1998. Justice Calkins also dismissed Defendants’ claim for unpaid wages. Id.
Remaining in this suit are the severance pay claims of those Defendants who
worked in Bangor or those Viking employees who “primarily worked out of the
Bangor facility to such an extent that the employee should be considered an
_ employee of the Bangor facility,” Order at 8-9, and their WARN Act claims. Plaintiff
and Defendants have filed cross-motions for summary judgment on these issues.
I. SEVERANCE PAY
If a company closes a facility that is a “covered establishment,” it is liable for
severance pay for employees of the covered establishment under 26 M.R.S.A. §625-
B!. That section defines “covered establishment” as “any industrial or commercial
facility or part thereof which employs or has employed at any time in the preceding
12-month period 100 or more persons.” Id. (emphasis added) In her July 27, 1998
Order (“Order”), Justice Calkins held that only Viking’s Bangor operations could
possibly constitute a “covered establishment” under the statute, since Bangor was
the only location that arguably employed over 100 employees during the year prior
to closing.
The issue was not raised and therefore Justice Calkins did not address
whether separate buildings operated by Viking within the same city should be
1 Section 625-B(2) states:
Any employer who relocates or terminates a covered establishment shall be liable to
his employees for severance pay at the rate of one week’s pay for each year of
employment by the employee in that establishment.
2
considered one facility or separate facilities. At issue currently is whether the
Bangor operations should be considered one “facility” for purposes of determining
liability as a covered establishment.
The three buildings that make up the Bangor “site” are the terminal, the
annex and the general office. Each should be examined separately to determine
whether they were part of the same “facility.” See Order at 7, quoting Justice
_ Alexander’s opinion in Ewing v. Fort Halifax Packing Co., No. CV-81-516 (Ken. Cty.,
Oct. 29, 1982). For the Bangor operation to be considered a “covered establishment,”
Defendants must succeed twice. First, all three of Viking’s Bangor buildings would
have to be considered one “facility.” No combination of two of the buildings would
bring the number of employees at Bangor over 100. Plaintiff's Statement of Material
Facts (”PSMF”) 912. Furthermore, Defendants have to show that the Bangor site
employed over 100 people within a year of the termination of operations.
A. Legislative Intent
The intent of the severance pay statute is to compensate a large number of
workers within a community who abruptly lose their jobs. See L.D. 424, Statement
of Fact (105th Legis. 1971)*. When a group of one community’s employees is
suddenly unemployed, the community must be able to absorb the impact of the
unemployment, Id. The statute seeks to soften the blow to a community faced with
such a situation. Id.
The number of employees specified in the statute serves the purpose of
furthering this legislative intent. The Legislature determined that any community
. that lost 100 jobs from the same employer within a year needs some help.
B. Integration of the Three Buildings
In order to apply the legislative intent, the three judges who have interpreted
the meaning of “covered establishment” have developed an “integration”
paradigm, in which buildings’ proximity and function are analyzed for similarities.
See Order at 6-8 (Calkins, J.); see also Faloon v. W.S. Libbey Co., No. CV-91-158 (And.
Cty. Nov. 24, 1992) (Lipez, J.) (“although the word ‘facility’ may sometimes connote a
single location, a ‘single location’ definition of facility makes no sense when an
employer operates an integrated group of facilities in one city”); Director of Bureau
of Labor Standards v. Fort Halifax Packing Co., 510 A.2d 1054, 1064 (Me. 1986)
(upholding severance pay to employees not stationed in covered establishment but
2 26 M.R.S.A. §625-B was originally enacted as 26 M.R.S.A. §625. The severance pay provision
was added in 1971. The Statement of Fact accompanying that enactment states:
Employers of large numbers of employees have closed their businesses
without notification to their employees of the impending closedown.
Such lack of notice enhances a period of economic recession which
invariably results in a community where large numbers of people simultaneously
lose their jobs.
This bill would alleviate the adverse economic impact upon the
employees and the community in which they live.
4
who performed jobs “essential” to functions of covered establishment and who lost
their jobs aa a result of closing of covered establishment), aff’g Ewing v. Fort Halifax
Packing Co., No. CV-81-516 (Ken. Cty. Oct. 29, 1982) (Alexander, J.).
The various functions of the annex, general office and terminal must be
studied to gain perspective on whether Viking’s Bangor operations are sufficiently
integrated to be considered one “facility.”
As a threshold matter, it can be determined that the annex and general office
should be considered the same “facility,” even though the annex was located 2/10 of
a mile down the road from the general office. Stipulation, [8. The general office
and annex performed virtually the same functions, and the annex was created to
contain the overflow from the general office once the general office became too
crowded for the operations conducted there. Id. Both the general office and the
annex closed in September of 1996. Stipulation, 957.
The terminal and general office were located on “a single piece of real estate.”
Stipulation, 13. The terminal employees provided service to company vehicles
used by employees of the general office. Stipulation, 128. The terminal building
had a storage area used by the annex and the general office. Stipulation, (29. Before
the general office closed in December of 1996, the Bangor terminal compiled its
payroll information and forwarded it to the general office to be further processed.
Stipulation, 7932-22. The general office employees handled damaged freight.
Stipulation, 738. Employees of the terminal occasionally provided routine
maintenance to the general office and also helped move furniture and picked up
mail. Stipulation, ¥39. The terminal’s billing clerk provided some help to the
general office, and vice-versa. Stipulation, 939, 47. A central switchboard located in
the general office routed calls to its office, as well as to the terminal and the annex.
Stipulation, 752. Several employees were transferred between the three Bangor
locations. Stipulation, 755.
Since Viking’s Bangor facilities were located close to each other and
_ performed cooperative and complementary functions in the shipping business, they
can be considered as component parts of a whole “facility.” Holding that the Bangor
operations constituted one “facility” is consistent with the legislative intent to
protect employees who lose their jobs en masse within a community. To allow an
employer to scatter its employees into separate buildings within a community and
avoid the 100-person threshold would permit those employers to evade the intent
of the statute by elevating form over substance. Accordingly, this court holds that
the three buildings together made up Viking’s Bangor “facility.”
Cc. Number of employees
The severance pay issue is not decided simply by holding that the buildings
made up one “facility,” because the facility also must have employed over 100
people during the relevant time period before it can be considered a “covered
establishment.” Both parties stipulated that, during its last year of operations,
Viking employed at least 99 people in Bangor. Stipulation, (15. Defendants
submitted at least seven arguments in their attempts to increase the total of
employees from the stipulated 99 to the 100 employee minimum.
One of these arguments has merit, raising a genuine issue of material fact as
to when Viking ceased operations in Bangor. Stipulation, (15-16. The arguably
valid contention is that the date of the closing was earlier than asserted by Plaintiff.
Defendants assert that the date of closing was in fact March 27, 1997 and not
April 2, 1997, as Viking contends. On March 28, 1996, Viking employed at least 101
people. Two employees left between March 28, 1996 and April 2, 1996, one on March
_ 29 and one on April 1. Stipulation, 116(bé&e).
It is undisputed that Viking announced that it was closing down the entire
Northeastern Division on March 27, 1997. Stipulation, 162. That evening, Viking
held a meeting for employees informing them. Id. At the meeting, Viking
informed its 36 Bangor terminal employees that any freight currently in the system
was to be delivered on March 28, 1997, and that any freight remaining would be
delivered by another carrier. Id. Employees were given the opportunity to
volunteer, in order of their seniority, to work delivering freight and assisting with
the shutdown. Stipulation, 763. All of the drivers, dock workers and office
employees worked on Friday, March 28°. Id. The next Monday, March 31, six
employees worked cleaning the terminal and the office. Id. During that week, some
drivers worked driving empty trailers and some employees continued to work in
the shop. No drivers worked after April 2. Id. Most of the work was completed not
later than April 2, but several mechanics and the terminal manager continued to
3 The Stipulation, 163, reads “a number of the drivers, dock workers and office employees
worked Friday, March 28.” However, paragraphs 63-64 of the Stipulation show that all of those
workers worked on that date.
work. Id. Thirteen of the 36 employees worked their last day on March 28, two
more on March 31, two more on April 1, eleven more on April 2 and the remaining
8 on or after April 4. Stipulation, 164.
Section 625-B(1)(G) defines termination as “the substantial cessation of
industrial or commercial operations in a covered establishment.” The parties have
raised a genuine issue as to whether Viking’s operations had substantially ceased
_ prior to April 2, 1997.
WARN_ ACT
The WARN Act, 29 U.S.C. §2104, requires employers to give employees
advance notice of an impending layoff. The WARN Act analysis, however, differs
from that of the Maine Severance Pay statute in that it is triggered when 50
employees will be affected within a 30-day period. The WARN Act requires
employers to give “affected employees sixty-day notice before mass layoffs or plant
closings which would result in the termination of a large number of jobs.”
Washington v. Aircap Indus. Corp., 831 F.Supp. 1292, 1295 (D.S.C. 1993) (emphasis
added). 29 U.S.C. §2101(a)(2) defines “plant closing” as:
the permanent or temporary shutdown of a single site of
employment#, or one or more facilities or operating units
420 C.F.R. §639.3(i) illustrates what constitutes a “single site of employment:”
(1) A single site of employment can refer to either a single location or a group of contiguous
locations. Groups of structures which form a campus or industrial park, or separate
facilities across the street from one another, may be considered a single site of
employment.
(3) Separate buildings or areas which are not directly connected or in immediate proximity
may be considered a single site of employment if they are in reasonable geographic
proximity, used for the same purpose, and share the same staff and equipment. An
example is an employer who manages a number of warehouses in an area but who
8
within a single site of employment if the shutdown results
in an employment loss during any 30 day period for
50 or more employees excluding part-time employees.
For Plaintiff to be liable under the WARN statute, it must have announced a
shutdown of a “single site of employment,” causing 50 full-time employees to suffer
a job loss within a 30 day period. The parties stipulate that the number of employees
at the Bangor terminal at the time of the closing announcement was 36°.
_ Stipulation, 464. The Presque Isle terminal had ten employees at the time of the
~ announcement. PSMF 19, 42.
Defendants’ WARN Act claim fails. The Bangor and Presque Isle terminals
do not constitute a “single site of employment.” See Wiltz. v. M/G Transport
(4)
(5)
(6)
(8)
regularly shifts or rotates the same employees from one building to another.
Non-contiguous sites in the same geographic area which do not share the same staff or
operational purpose should not be considered a single site. For example, assembly
plants which are located on opposite sides of a town and which are managed by a single
employer are separate sites if they employ different workers.
Contiguous buildings owned by the same employer which have separate management,
produce different products, and have separate workforces are considered separate
single sites of employment.
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.
The term "single site of employment” may also apply to truly unusual organizational
situations where the above criteria do not reasonably apply. The application of this
definition with the intent to evade the purpose of the Act to provide notice is not
acceptable.
See also Wiltz, 925 F.Supp. at 504 (“The regulations only fine tune the application of the
WARN Act in ambiguous situations within the same locality”).
° The employees assigned to the annex and general office in Bangor are not relevant to this
discussion because those buildings ceased operations in December 1996, well removed from the 30-day
window of the WARN Act.
Services, Inc. 925 F. Supp. 500, 503-04 (E.D. Ky. 1996), rev'd in part on other grounds,
128 F.3d 957 (6th Cir. 1997) (“[w]here... the sites are not in the same geographic area,
they are separate sites of employment as a-matter of law”); In re Jamesway Corp.,
1997 WL 327105, *16 (Bankr. S.D.N.Y. 1997) (“Local communities are not as adversely
affected by the sudden unemployment of a large number of workers at a
geographically separate site”).
The entry is
Plaintiff’s Motion for Summary Judgment on the WARN Act
count is GRANTED. Both Plaintiffs and Defendants’ Motions
for Summary Judgment on the Severance Pay counts are DENIED.
The case will proceed to trial to resolve the issue of the number
of employees at the Plaintiff's integrated Bangor “facility.”
Tan f 26°06
Dated: December 28-1999 CL SEbo A
Robert E. Crowley
Justice, Superior Court
10
”
Date Filed 04/11/97 CUMBERLAND
County
(judgment 9-9-99)
VIKING FREIGHT, INC.
Docket No. CV97-225 a al
ALAN-HINSEY, DIR. BUR. LABOR STANDARDS, STATE OF MAINE;
MARECMOBERC “MARY HILSONS PHILE LP-RUSSE BIN; HA EER EW
ActionEQUITABLE ACTION - DECLARATORY JUDGMENT deere eee ae RERTIE SHUDDARDS HEGHAEL
KONDAS, VIRGID WHITNET > STEVERTIRAVERS, “LORS eesse8—
GESE CARTERS FRED BOASCHRE, PETER SREWER, Nil
HCULLUANT THOMAS SHAFER; JOSEPH BERNARD; “ANDREW —
NCPUEREON,- JUHN WALLS, “CART GRAVEL; THEODURE GONSKA,
PENNEY MEADER, DOSALIT FORTIN SRS “Exe! MORES CERES
DAME SARE-SEATE; J GEORGE ADAMS, MARY LOU GALLAGHER,
PATRICIA HUGHES, ELIZABETH JOHNSON, DONALD POWERS,
WILLIAM TRACY, DOUGLAS BRADFORD, RUSSELL JIPSON,
CHRISTOPHER LYNDS, ALYSON MORRISSEY, CARY BISHOP,
HERMON BROWN, RICHARD BROWN, PAUL BURNETT, HENRY
CHASE ILI, DAVID CROTEAU, LINWOOD EICHEL, RICHARD
FLOREY, TOMMY HILIMAN, GEORGE LAVOIE, GARY LUSIGNAN,
Plaintiff’s Attorney
MARY DELANO ESQ. 775-3581
PO BOX 7486, PTLD ME 04112-7486
DONALD L. GAPSRECHT 4
__VS- AEAN MEAGHER, LEWIS NORRIS, GARY RICKER, ROBERT
ROBINSON II, ROBERT SHAW JR., KENNETH STEVENSON, judg.
DAVID VIOLETTE, HAROLD WHITE, WESBEAR-KING, DANTE
MAYNARD; CKENNETECNCPHEE 7 ELMER" MORENS -REEPH-O" BREEN, 9-9-99
EDRUND-PELLETIER, ALAN ROOPE, SYEVIO’-SAUCEER
DEFENDANTS ATTORNEY:
GWENDOLYN THOMAS AAG (A.HINSEY & ME) 626-8!
6 STATE HOUSE STA. AUGUSTA ME 04333-0006
LWILLIAM-LAUBENSTEIN-ESQ. (ALL OTHERS) 623-5.
LAW LisriadtY mPO BOX 29, AUGUSTA ME 04332-0029 &
(paTLLIP JOHNSON ESQ. (CO-COUNSEL)
FEB 2% 2000 CHARLES GILBERT (ADAMS/37 Others) 947-222
Date of PO BOX 2339 BANGOR ME 04402-2339
Entry
1997
Apr. 11 Received 04/11/97:
Complaint Summary Sheet filed.
Complaint filed.
May 05 Received 05/05/97:
Order filed. (Brennan J.)
It is hereby ORDERED, upon motion of Defendants and without objection by
Plaintiff, that the deadline for filing an Answer in the above-captioned
case is enlarged to June 05, 1997.
On 05/08/97: Copy mailed to Mary Delano and Gwendolyn Thomas Esqs.
won Received 05/08/97:
Summons filed.
Defendant, Bureau of Labor Standards served on 04/16/97 to Alan Hinsey,
Director.
" " Defendant, State of Maine served by certified mail on 04/14/97 to
Gwendolyn Thomas AAG.
June 04 | Received 06/04/97:
Defendant's Motion for Enlargement of Time to File Answer filed.
June 06 | Received 06/05/97:
Order filed. (Calkins J.)
It is hereby ORDERED, upon motion of Defendants and without objection by
Plaintiff, that the deadline for filing an Answer in the above-captioned
case is enlarged to June 26, 1997.
On 06/06/97: Copy mailed to Mary Delano and Gwendolyn Thomas Esqs.
June 26 |Received 06/26/97:
Defendant, Alan Hinsey, Director, Bureau of Labor Standards and State of
Maine's Answer. filed.
July 10 Received 07/10/97:
Case File Notice and Pretrial Scheduling Statement and Jury Demand filed.