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Phason v. Meridian Rail Corp.

April 25, 2008

ROBERT PHASON, JUAN ORTIZ, CLIFFORD RUSH, AND RICHARD ZIMMERMAN, INDIVIDUALLY AND ON BEHALF OF A CLASS OF SIMILARLY SITUATED PERSONS, PLAINTIFFS,
v.
MERIDIAN RAIL CORP., DEFENDANTS.



The opinion of the court was delivered by: James F. Holderman Chief Judge, United States District Court

OPINION AND ORDER AFTER BENCH TRIAL

JAMES F. HOLDERMAN, Chief Judge

On March 15, 2007, the United States Court of Appeals for the Seventh Circuit held in this class action lawsuit that Meridian Rail Corp. ("Meridian") violated the WARN Act, see 29 U.S.C. §§ 2101-2109, when it closed its production plant in Chicago Heights, Illinois, without adequate notice to its employees. That court then remanded the case to this court for determination of an appropriate remedy. Phason v. Meridian Rail Corp., 479 F.3d 527, 531 (7th Cir. 2007). The Seventh Circuit found the following facts in this case, among others:

On December 31, 2003, an "employment termination" within the meaning of § 2101(a)(6)(A) occurred, and as more than 50 workers lost their jobs that day a statutory "plant closing" likewise took place.

Id. at 529. The Seventh Circuit also found that:

For the purpose of § 2101(b)(1), the "effective date" of the sale was January 8, 2004. Any employee of Meridian on that date "shall be considered an employee of the purchaser". The number of workers Meridian employed at the Chicago Heights plant on January 8, 2004, was zero. Section 2101(b)(1) therefore cannot avoid the classification of the events as an "employment loss."

Id. at 529-30.

After remand and after completion by the parties of their pretrial discovery, this court conducted a two-day bench trial at which the parties presented evidence on the only two disputed issues of fact remaining in the case: (1) whether 32 individuals who Meridian allegedly continued to pay or employ after Meridian's closing of the plant on December 31, 2003, and who Nortrak employed immediately upon assuming operation of the plant, suffered an employment loss and thus should be included in the class for the purpose of calculating damages, and (2) whether there should be a reduction of the damages to be recovered by the individual class members under Title 29 U.S.C. § 2104(a)(4).

Background

In mid-December 2003, VAE Nortrak North America, Inc. ("Nortrak") agreed to purchase Meridian's production plant in Chicago Heights, Illinois. On December 12, 2003, Meridian sent out notice to its hourly and salaried employees advising that it anticipated a sale of assets to Nortrak, and three days later Nortrak sent out notice to Meridian's active employees inviting them to apply for employment with Nortrak. Meridian subsequently posted a notice that most hourly employees' last day would be December 31, 2003. Although Meridian retained a handful of employees to perform a point of sale inventory during the first week of January 2004, Meridian in fact closed its doors on December 31, 2003, severing its ties to most of its employees on that day. Meridian severed its ties to the remainder of its employees on or before January 7, 2004. The sale to Nortrak closed on January 8, 2004. The employees of Meridian who sought and received employment with Nortrak began working for Nortrak on or after January 8, 2004.

The individuals who became former Meridian employees as a result of the plant closing, brought this lawsuit under the WARN Act for damages arising out of Meridian's failure to provide notice of the plant closing as required by 29 U.S.C. § 2102. The procedural history of this case is complex, but only three rulings require discussion here. First, given that Nortrak hired all but about 40 of the former Meridian employees, this court granted summary judgment for Meridian, reasoning that statutory notice under the WARN Act was not required because fewer than 50 employees suffered an employment loss as a result of Meridian's sale of the Chicago Heights plant to Nortrak. Phason v. Meridian Rail Corp., No. 04 C 5845, 2006 WL 1235090, at *6 (N.D. Ill. May 8, 2006) (unpublished order). The Seventh Circuit, however, reversed, finding that Meridian violated the WARN Act because:

This sale closed on January 8, 2004, more than a week after Meridian let almost all of its employees go. Meridian tells us that it retained a handful of workers during the first week of January to take inventory (though plaintiffs say otherwise); no matter who is right on that issue, almost all were done with Meridian's employ at the end of 2003. On December 31, 2003, an "employment termination" within the meaning of § 2101(a)(6)(A) occurred, and as more than 50 workers lost their jobs that day a statutory "plant closing" likewise took place. It is enough that § 2101(a)(6)(A) is satisfied. Meridian supplied the district court with elaborate calculations demonstrating that § 2101(a)(6)(C) was not satisfied, given the number of people Nortrak hired. But what of that? An "employment loss" occurs when any one of the subsections applies. "You're fired, but you have prospects of catching on with someone else real soon now" is a "termination" under subsection (A).

For the purpose of § 2101(b)(1), the "effective date" of the sale was January 8, 2004. Any employee of Meridian on that date "shall be considered an employee of the purchaser". The number of workers Meridian employed at the Chicago Heights plant on January 8, 2004, was zero. Section 2101(b)(1) therefore cannot avoid the classification of the events as an "employment loss."

Phason, 479 F.3d at 529-30 (emphasis in original). On remand this court granted class certification and defined the class as requested ...


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