Opposition Brief — APA Transportation Transportation Corp. v. Teamsters Local Union No. 560 (No. 08-812)

2] (a) FILED

No. 08-812 FEB 27 2003

SUPREME COURT, U.S.

IN THE

Supreme Court of the United States

A-P-A TRANSPORTATION CORPORATION,

Petitioner,

v.

TEAMSTERS LOCAL UNION NO, 560, et al.,

Respondents.

On PETITION FOR Writ OF CERTIORARI TO THE

UNITED STATES CouRT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION

DavID GROSSMAN

Counsel of Record

CoHEN, LEDER, MONTALBANO

& GROSSMAN, LLC

1790 Galloping Hill Read

Kenilworth, NJ 07033

(908) 298-8800

Counsel for Respondent

Teamsters Local Union No. 560

(Additional Counsel Listed on. Signature Page)

221357 ce

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

t

QUESTIONS PRESENTED

I. Whether Petitioner has presented compelling reasons

to grant the Petition where the Third Circuit’s Opinion

did a rigorous analysis of Petitioner’s evidence and

determined that the “faltering company” exception

under the Worker Adjustment Retraining Notification

Act, 29 U.S.C. §2102(b)(1) was not available to the

Petitioner, where said Opinion does not conflict with any

decision of this Court or a Court of Appeals, and where

Petitioner does not claim that the Third Circuit’s ruling

implicates an important federal question that has not

been settled by this Court.

IJ. The Third Circuit properly reversed the Decision

of the District Court because there was no dispute as to

any material fact, and judgment should have been

entered in favor of the Respondents.

11

RULE 14.1(b) STATEMENT

Respondents are: Teamsters Local Union No. 560,

Teamsters Pension Trust Fund of Philadelphia and

Vicinity, Teamsters Health & Welfare Fund of

Philadelphia and Vicinity, and Teamsters Local 470, and

Brian Campbell, et al., a certified class of nonunion

employees.

RULE 29.6 CORPORATE DISCLOSURE

None of the Respondents are corporations.

lit

TABLE OF CONTENTS

QUESTIONS PRESENTED .......ccccesees

RULE 14.1(b) STATEMENT «2.2.6 sc ccceecies

RULE 29.6 CORPORATE DISCLOSURE ....

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TABLE OF CITED AUTHORITIES .........

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STATEMENT OF THE CASE ...............

REASONS FOR DENYING THE PETITION

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I. The Third Circuit Correctly Determined

That The Petitioner Did Not Meet Its

Burden Of Proof Concerning The

Elements Of The Faltering Company

Exception To The Warn Act And Related

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II. The Third Circuit Properly Reversed The

Decision Of The District Court Since

There Was No Dispute As To Any

Material Facts And Judgment Should

Have Been Entered In Favor Of The

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Page

13

iv

TABLE OF CITED AUTHORITIES

Page

Cases:

Carpenters District Council

v. Dillard Department Stores,

15 F.3d 1275 (5 Cir. 1994), cert. denied,

BS Cie PU EIO vi stds icevedeyenyys 9

In re Old Electralloy Corp.,

GE em tar CWre. FO. POUR) oc coc cce cee ewes 10

Law v. American Capital Strategies,

Civil No. 3:05-0836, 2007 WL 221671*11

(ORD). TOR, UM. TR, DE) vo vc ic vce cc caes 9,10

Local 397, International Union of Electronic,

Electrical and Salaried Machine and

Furniture Workers, AFL-CIO v. Midwest

Fasteners Inc.,

779 F. Supp. 78 (D. N.J. F992) ............-- )

TKR Cable Co. v. Cable City Corp.,

BGT FOG 196 GG Ci, BODE) cn ccc cc env eves 6, 13

United Paperworkers International

v. Alden Corrugated Container Corp.,

901 F. Supp. 426 (D. Mass. 1995) ........... 10

v

Cited Authorities

Page

Statutes:

CE ]

eR 6 passim

EE 1

Regulations:

DE ag asec veceessesicevcecse vs 7

ED oc cece cb cverceeceerensn 8

eg SS 10, 11, 12, 18

Miscellaneous:

134 Cong. Rec. S. 8686-01 (1988) ............. 9

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]

INTRODUCTION

Petitioner, APA Transport Corp. (“APA” or

“Petitioner”) has presented no “compelling reasons” for

its Petition for a Writ of Certiorari to be granted

(“Petition”). See, Sup. Ct. R. 10. Petitioner admits that

the Third Circuit’s August 29, 2008 Opinion (“Opinion”)

is not in conflict with any decision of this Court or

another Court of Appeals (Petition [“Pet.”] at 5) or that

the Third Circuit’s Opinion cited an important federal

question that has not been settled by this Court.

See, Sup. Ct. R. 10(a)-(c). At best, Petitioner limits its

argument to a half-hearted attempt to argue that the

Third Circuit’s Opinion may lead to a conflict in the

Circuits at some point in the future. (Pet. at 5). Petitioner

has offered no basis to justify granting certiorari,

therefore, the Petition for Certiorari should be denied.

APA was a trucking company. On February 20, 2002,

APA closed its terminals.

The Worker Adjustment Retraining Notification Act

(“WARN Act”) provides that covered employers -

generally, those that employ at least 100 full-time

workers at a single site of employment - must provide

sixty (60) days’ written notice before a closing or mass

layoff. See, 29 U.S.C. §2101, et. seg. Employers that

violate the WARN Act are liable to their employees for

back wages and benefits for each day that the notice is

not provided, up to a maximum of sixty (60) days.

29 U.S.C. §2104. APA failed to give the proper WARN

Act notice before its closure. Respondents filed a

Complaint against APA in the United States District

Court for the District of New Jersey for Petitioner’s

2

failure to provide the proper WARN Act notice. APA’s

defense was that it did not have to give the notice

because of the “faltering company” exception to the

WARN Act. 29 U.S.C. §2102(b)(1).

The matter proceeded through discovery. At the

conclusion of discovery, cross-motions for summary

judgment were filed.

The District Court gave a short slanted view of the

facts and a cursory review of the requirements of the

statute concerning the “faltering company” exception

and the regulation regarding same. The District Court

granted summary judgment in favor of APA. (Petition

Appendix [“Pet. App.” | 77a-82a).

In contrast, the Third Circuit performed a rigorous

analysis of the facts and the requirements that the

Petitioner was required to meet in order to be relieved

of the WARN requirements under the “faltering

company” exception and the related regulations. That

court concluded that the undisputed material facts

established that the Petitioner had not met its burden

under the exception. (Pet. App. 27a-27a).

The Petitioner has filed this Petition because it

disagrees with the Third Circuit’s findings of fact and

conclusion on the merits. That is not sufficient to grant

the Petition.

3

STATEMENT OF THE CASE

APA was a regional trucking company. APA had

collective bargaining agreements with local unions,

including the Teamsters Local Union No. 560 and

Teamsters Local Union No. 470, which were at two (2)

different locations. Brian Campbell is a member of the

certified class of non-union employees who were affected

by APA’s closure of its terminals.

On December 19, 1996, APA entered into a

Loan and Security Agreement (“Loan Agreement”)

with TransAmerica Business Capital Corporation

(“TransAmerica”). The Loan Agreement had a

termination of February 28, 2002. The Loan Agreement

provided APA with a revolving credit facility that allowed

it to borrow up to $40 Million, secured by property,

equipment and accounts receivable. (Pet. App. 5a).

The Loan Agreement required APA to provide

TransAmerica with regular reports as to its outstanding

accounts receivable and to comply with certain financial

covenants. (Pet. App. 6a).

Following the execution of the Loan Agreement, APA

suffered continual losses in business. (Pet. App. 6a). As

a result, APA defaulted on the loan covenants on multiple

occasions in 1999, 2000 and 2001. /d. After each such

default, TransAmerica and APA re-negotiated the Loan

Agreement, so that APA’s breaches were waived and/or

the applicable covenants were amended. Jd.

APA was negatively affected by the economic

conditions following the September 11, 2001 terrorist

attacks on the World Trade Center. Those conditions

4

contributed to an additional thirty (30%) percent decline

in APA’s revenues. /d. The resulting reduction in the

value of APA’s accounts receivable limited the amount

of money which it could continue to borrow from

TransAmerica under the Loan Agreement. /d.

On October 24, 2001, TransAmerica convened a

meeting with APA’s officers to discuss how APA was

going to operate going forward, “given its losses”. Jd.

At that meeting, TransAmerica’s President, Steven

Fisher, informed APA that TransAmerica would not

continue to fund operating losses and would require

additional contributions from APA’s owners before

granting additional loans and extensions. /d. APA made

no formal request at the October 24, 2001 meeting to

secure additional financing or to extend the Loan

Agreement. /d. at 7a.

In November of 2001, TransAmerica notified APA

that it was once again in default of a covenant of the

Loan Agreement. On December 10, 2001, TransAmerica

agreed to a Fifth Waiver and Amendment to the Loan

Agreement to cure the those defaults. /d. at 7a. The

waiver gave APA additional time to cure its default but

was not related to any attempt by APA to obtain

additional financing from TransAmerica.

During the period between October 24, 2001 and

December 20 or 28, 2001, there were no additional

meetings, no telephone conferences, and no

correspondence between APA and TransAmerica with

respect to possible additional financing. APA made no

written proposal or request to TransAmerica to obtain

additional financing.

i)

Pursuant to its terms, the Loan Agreement was

scheduled to expire on February 28, 2002, at which time

the entire loan would be due. Jd. at 7a. Under the Loan

Agreement, APA was required to make any request for

extensions or renewal of the Loan Agreement in writing

sixty (60) days before the termination date of the Loan

Agreement. /d. at 7a. Prior to the end of 2001, however,

APA had not made any written or oral request to

TransAmerica to extend or renew the Loan Agreement.

Id. at Ta.

On January 2, 2002, APA sent a letter to

TransAmerica requesting additional financing for APA,

which it proposed would be secured by mortgages on

two (2) freight terminals owned by companies related

to APA. /d. at 7a-8a. That letter did not request an

extension or renewal of the Loan Agreement.

On January 15, 2002, a second meeting was held

between TransAmerica and APA to discuss the state of

APA’s finances. Jd. at 8a. TransAmerica made no

commitment with respect to additional financing; nor

did it indicate that it would extend the loan beyond its

termination date or increase its lending to APA. /d. at

8a.

On January 24, 2002, APA again requested an

additional loan. /d. at 8a. TransAmerica did not respond

to that letter. Jd. at 9a.

On February 13, 2002, TransAmerica sent APA a

letter formally notifying it that the Loan Agreement

would terminate pursuant to its terms on February 28,

2002 and that TransAmerica would not agree to extend

6

the Loan Agreement to provide additional financing. /d.

at 8a. On or about February 14, 2002, APA notified its

employees that it would close its terminals effective

February 20, 2002. As a result of the shutdown, all of

APA’s employees were terminated. APA paid no wages

or benefits to any employees after February 22, 2002.

Approximately six (6) weeks after the shutdown, an

APA-related company lent APA between $10-15 Million

Dollars. The loan was secured by an open-ended

mortgage and security agreement dated June 5, 2002

on APA’s North Bergen, New Jersey terminal facility.

Id. at 10a.

REASONS FOR DENYING THE PETITION

The decision below does not conflict with a decision

of this Court or any Court of Appeals nor does it

implicate a federal question that has not been decided

by the Court. Accordingly, the Petitioner has not carried

met its burden of demonstrating any “compelling

reasons” for the Petition to be granted. See, Sup. Ct. R.

10.

On review by the Third Circuit, legal issues that

were decided at summary judgment are reviewed de

novo. TKR Cable Co. v. Cable City Corp., 267 F3d 196,

199 (3d Cir. 2001).

Contrary to the Petitioner’s assertion, the Third

Circuit’s decision is based on the undisputed material

facts, a thorough analysis of the legal requirements of

the faltering business exception of the WARN Act and

its interpretive regulations. The faltering business

7

exception to the WARN Act is to be construed narrowly

and access to that defense is strictly limited. Contrary

to Petitioner’s assertion, the Third Circuit’s decision

does not make the faltering business exception a nullity.

The faltering business exception is an affirmative

defense to liability, which means that the employer bears

the burden of establishing the elements for the faltering

business exception. 20 C.F.R. §639.9. The Third Circuit

correctly determined that APA failed to meet its burden

of proof.

I. The Third Circuit Correctly Determined That The

Petitioner Did Not Meet Its Burden Of Proof

Concerning The Elements Of The Faltering

Company Exception To The Warn Act And Related

Regulation.

As a threshold matter, a company seeking to qualify

as a “faltering company” must demonstrate that it had

inadequate capital to continue functioning and, as such,

was in a faitering state. 20 C.F. R. §639.9. (Pet. App. at

28a). Petitioner admits that fact.

The statutory provision states that:

(a) an employer may order the shutdown of a

single site of employment before the

conclusion of the sixty (60) day period if as of

the time that the notice would have been

required the employer was actively seeking

capital or business which, if obtained, would

have enabled the employer to avoid or

postpone the shutdown and the employer

reasonably and in good faith believes that

8

giving a notice required (by the WARN Act)

would have precluded the employer from

obtaining a needed capital or business.

29 U.S.C. §2102(b)(1) (emphasis added).

The Department of Labor regulations which

interpret the “faltering company” exception of WARN

break the provision into four (4) required component

parts, so that to benefit from the defense an employer

must prove: (1) it was actively seeking capital at the time

the sixty (60) day notice would have been required, (2)

it had a realistic opportunity to obtain the financing

sought, (3) the financing would have been sufficient, if

obtained, to enable the employer to avoid or postpone

the shutdown, and (4) the employer reasonably and in

good faith believed that the sending of the sixty (60)

day notice would have precluded it from obtaining the

financing. 20 C.F-R. §639.9(a). (Pet. App. at 28a-29a).

The Respondents conceded Points (3) and (4) above

but asserted that APA had failed to meet its burden of

proof on points (1) and (2) above. The legislative history

of the WARN Act makes clear that the faltering

company defense applies only when the employer can

demonstrate that all of the above-referenced factors

existed sixty (60) days before the closing, at the time

when the WARN Act notice was required to be given or

shortly before.

9

According to the Congressional Conference Repart,

issued when Congress passed the WARN Act, the key

elements of the defense, which is intended to be a

“narrow one” are that: (i) the employer was “actively

seeking capital or business”; (ii), if the employer

obtained this capital or business, it “would have enabled

the employer” to prevent or forestall the shutdown; and

(iii), that the employer “reasonably and in good faith

believed” that giving the notice required would have

precluded the employer from obtaining the necessary

capital or business that it had a reasonable opportunity

to obtain. Thus, to avail itself of this defense, an

employer must prove the specific steps it had taken, at

or shortly before the time notice would have been

required, to obtain a loan, to issue bonds or stocks, or

secure new business. This duty to seek canital or

business falls on the employer .. . 1384 Cong. Rec. S.

8686-01 (1988), See also, Carpenters District Council »v.

Dillard Department Stores, 15 F.3 1275, 1281 (5 Cir.

1994), cert. denied, 513 U.S. 1126 (1995).

The legislative history and the regulation makes

clear that the critical time when the employer must be

taking specific steps to obtain financing capital to secure

new business is “at” or “shortly before” the sixty (60)

days prior to the shutdown. Law v. American Capital

Strategies, Civil No. 3:05-0836, 2007 WL 221671*11

(M.D. Tenn. Jan. 26, 2007); also see, Local 397,

International Union of Electronic, Electrical and

Salaried Machine and Furniture Workers, AFL-CIO

v. Midwest Fasteners Inc., 779 F. Supp. 78, 82 (D. N.J.

1992).

10

To be “actively seeking capital or business”, a

company must be “seeking financing or refinancing

through the arrangement of loans, the issuance stock,

bond or other methods of internally generated financiag

or the employer must have been seeking additional

money, credit or business through any commercially

reasonable method”. 29 U.S.C. §2102(b)(1), 20 C.ER.

§639.9(a)(1), American Capital Strategies, 2007 WL

221671*10; United Paperworkers International v.

Alden Corrugated Container Corp., 901 F. Supp. 426,

440-441 (D. Mass. 1995). Although, APA bore the burden

of proof, it failed to show that it had taken specific steps

at or shortly before the time the WARN Act notice wouid

have been required, to obtain a loan, to issue bonds or

stocks, to secure new business, or other internally-

generated financing, or to seek additional money, credit

or business through any commercially reasonable

method. American Capital Strategies, 2007 WL

221671*10, also see, In re Old Electralloy Corp., 62 BR

121 (W.D. Pa. 1993); United Paperworkers, 901 F. Supp.

at 440-441.

In this case, with a closure of the terminals on

February 20, 2002, APA was required to have given the

sixty (60) day’s WARN Act notice by December 20, 2001.

Petitioner reads the Third Circuit Opinion to indicate

that APA had to take specific steps on December 20,

2001. (Pet. App. at 10). That reading is absurd. The

Third Circuit indicated that APA had to demonstrate

certain steps it took to seek financing by December 20,

2001. The undisputed material facts relied upon by the

Third Circuit showed that Petitioner did not take any

steps prior to December 20, 2001 to seek additional

financing. This determination is consistent with the text

of 20 C.F-R. §639.9(a)(1).

11

The Petitioner argues that the meeting of October 24,

2001 between TransAmerica and APA was a sign that APA

was actively seeking financing. (Pet. at 12). To the contrary,

at the October 24, 2001 meeting, TransAmerica clearly

indicated that it would not continue to fund APA’s

operating losses and that the owners would have to put

additional capital into the company before TransAmerica

would extend any additional financing. (Pet. App. at 6a).

Contrary to the Petitioner’s assertion, the Third Circuit

did take into account a statement by a TransAmerica

subordinate that options were open. (Pet. App. at 7a). It

was also noted that APA did not request additional

financing or an extension of the Loan Agreement at the

meeting. (Pet. App. at 7a). The Third Circuit also noted

that TransAmerica’s statements at the October 24, 2001

meeting made APA fully aware that TransAmerica would

not provide additional financing, and that as a result the

October 24, 2001 meeting did not comply with actively

seeking financing requirement within the meaning of 29

U.S.C. §2102(b)(1) and 20 C.F-R. §639.9(a)(1). Moreover, it

is undisputed that pursuant to APA’s arrangement with

‘TransAmerica, TransAmerica was the only possible source

of financing for APA. (Pet. App. at 7a n.3).

There was no evidence of any correspondence or

telephone calls to TransAmerica to seek additional

financing between the October 24, 2001 meeting and

December 20, 2001.

It must be noted that APA’s affiliates (who shared

common owners with APA) had assets to lend APA as

evidenced by their $10-15 Million loan only weeks after

the shutdown of APA (Pet. App. 10a). The owners of

APA simply chose not to have the affiliates loan any

12

monies to APA before the WARN Act date for

notification. Petitioner asserts that it could not predict

what would happen sixty (60) days prior to the closing

date. (Pet. at 6) (Pet. App. at 3la). The owners’ decision

not to have the affiliates loan monies to APA prior to

the sixty (60) day notification date prevented APA from

getting additional financing from TransAmerica. The

owners’ decision not to have the affiliates loan APA

monies doomed the company to closure and was clearly

something APA could have predicted.

The fact that APA got a waiver of default from

TransAmerica on or about December 10, 2001 merely

stopped the default on the loan. That waiver did not

provide any additional capital to APA, nor did it provide

any assurances that additional capital would be available.

While the waiver indicates that TransAmerica gave APA

additional time to pay its debts, it does not indicate that

APA was actively seeking financing prior to the sixty

(60) day notification date, as required by 20 C.F.R.

§639.9(a)(1). TransAmerica was clearly aware that APA’s

affiliates were able to provide the necessary capital to

extend the loan. In fact, TransAmerica suggested such

a transfer to APA during the October 24, 2001 meeting.

APA’s owners simply decided not to provide those funds

until shortly after the shutdown and the subsequent

expiration of the Loan Agreement.

The fact that TransAmerica failed to give sixty (60)

days’ written notice prior to the Loan Agreement

termination date confirmed that monies due under the

Loan Agreement would be due in total! on that date, and

doomed the company to closure because APA would be

left with no financing after that date.

13

APA's first attempt to get additional financing was

on January 2, 2002 and as the Third Circuit found, that

was too little and too late.

As argued previously, Petitioner makes no argument

of any legal issues but instead tries to find fault with

the Third Circuit’s findings and interpretation of

29 U.S.C. §2102(b)(1) and 20 C.F R. §639.9(a)(1). This

Court must conclude that the Third Circuit’s Opinion is

consistent with the statutory and regulatory language

and the Petition for Certiorari should not be granted.

Il. The Third Circuit Properly Reversed The

Decision Of The District Court Since There Was

No Dispute As To Any Material Facts And

Judgement Should Have Been Entered In Favor

Of The Respondents.

The Petitioner asserts that the Third Circuit applied

the wrong legal standard in reversing the Decision of

the District Court (Pet. at 19). This assertion overlooks

the legal standard applied by the Third Circuit, that

legal issues decided at summary judgment are reviewed

de novo. TKR Cable Comp., supra.

In this case, the factors concerning actively seeking

financing have been conceded by the Petitioner in that

the only steps it took were: (1) the meeting of October

24, 2001; (2) the waiver of the default on December 10,

2001; and (3) the request for additional financing

with the tender of two properties on January 2, 2002.

(Pet. at 12).

14

Essentially, the Petitioner argues that it believed

that TransAmerica would extend additional financing

and would extend the Loan Agreement simply because

of its long-term relationship. (Pet. at 13, 20). That

argument ignores the fact that in late 2000 and

continuing into May of 2001, APA had negotiated a

Fourth Amendment to the Loan Agreement with

TransAmerica so that TransAmerica would provide

additional financing. This Fourth Amendment required

extensive dccumentation and extensive negotiations,

which finally led TransAmerica to provide APA with an

additional $4.7 Million solely to pay down the credit limit

with TransAmerica to comply with the covenants of the

Loan Agreement. Moreover, in order to obtain the loan,

APA’s owners and affiliate had to pledge $8.3 Million to

get financing of $4.7 Million.

It is clear from the record that for the period of

October 24, 2001 through the date the WARN notice

was required on December 20, 2001, APA took no steps

remotely similar to those it took in the negotiations to

get additional] financing in the Spring of 2001.

Again, it was also undisputed that TransAmerica was

APA’s only source of financing and there was no

evidence put into the record to show any steps that APA

took to get additional financing from TransAmerica in

the period prior to December 20, 2001. The Third Circuit

correctly determined that judgment should be entered

in favor of the Respondents.

15

The Petitioner argues that the Third Circuit erred

in not remanding the matter for trial or hearing so to

better develop the record or consider additional

testimony and other evidence “not previously reviewed.”

(Pet. at 20-22). This argument overlooks the fact APA

was a movant on summary judgment and was obligated

to present all evidence and highlight material and

relevant facts in its argument. The Petitioner is not

entitled to a second opportunity to present evidence and

argument not raised in the district court.

CONCLUSION

The Petition for a writ of certiorari should be denied.

Respectfully submitted,

Davip GROSSMAN

Counsel of Record

COHEN, LEDER, MONTALBANO

& Grossman, LLC

1700 Galloping Hill Road

Kenilworth, NJ 07033

(908) 298-8800

Counsel for Respondent

Teamsters Local Union No. 560

16

PauL A. FRIEDMAN

BLANK, RoME LLP

405 Lexington Avenue

New York, NY 10174

(212) 885-5000

Counsel for Respondents

Teamsters Pension Trust Fund

of Philadelphia and Vicinity,

Teamsters Health & Welfare Fund

of Philadelphia and Vicinity and

Teamsters Local No. 470

JOHN C. LANKENAU

LANKENAU & MILLER LLP

132 Nassau Street, Suite 423

New York, NY 10088

Counsel for Respondents

Brian Campbell, et al.