F I L E D
United States Court of Appeals
Tenth Circuit
October 25, 2006
PUBLISH
Elisabeth A. Shumaker
Clerk of Court
UNITED STATES COURT OF APPEALS
TENTH CIRCUIT
JULIE ALLEN , BRY AN BENSON, JESSICA BEN TZ,
M ATTHEW BESS, M ARK BRADLEY, GREGORY
ALLEN BU RG ESS, JASO N C AR ON E, JEFFREY L.
C OBUR N, FR ED RIC KA RL EGAN, AUGUSTO JAY
FALCO , ELLEN G ENTRY, JOH N JEFFREY
HA NSO N, DA NIEL H. HO DG SON , M ICH AEL
JENSEN, BEN KAFKA, KORM AN KING, CARRIE
LILJEN Q U IST, M A RSH A LU DLOW , GLENN
M cIN TOSH , WILLIA M M U LLOY, ANGELA PERRY,
STEV EN PETER SO N , JO H N H. SERMON, H. ALAN
No. 04-4045
STRANGE, LA NE W ALTERS, BEN P. W ILLIS,
Plaintiffs-Appellees,
v.
SY BA SE, IN C., a D elaw are corporation; FINANCIAL
FU SION, INC., a Delaware corporation,
Defendants-Appellants.
Appeal from the United States District Court
for the District of Utah
(D .C . No. 2:03-CV-149-TC)
Felicia R. Reid (John F. Baum and M elissa E. Lamfalusi, with her on the briefs)
of Curiale Dellaverson Hirschfeld & Kraemer, LLP, San Francisco, California, for
Defendants-Appellants.
Barnard N. M adsen (M ark D. Stubbs with him on the brief) of Fillmore Spencer
LLC, Provo, Utah, for Plaintiffs-Appellees.
Before KELLY, SEYM O UR, and EBEL, Circuit Judges.
SE YM O UR, Circuit Judge.
Plaintiffs, twenty-six 1 former employees of Financial Fusion, Inc. (FFI),
filed suit against FFI and its parent com pany, Sybase, Inc., (Sybase) (defendants),
for violations under the W orker Adjustment and Retraining Notification Act
(W ARN). 29 U.S.C. § 2101 et seq. The parties filed cross motions for sum mary
judgment, and the district court ruled for plaintiffs. The court subsequently
entered final judgment ordering defendant companies to pay damages, interest and
attorneys fees to plaintiffs in accordance with W ARN. Defendants appeal. W e
affirm in part, reverse in part, and remand for further proceedings. 2
I
In order to place the facts of this case in their relevant context, we begin
with a preliminary discussion of W ARN, which we will develop more fully in our
analysis. W ARN is a remedial statute that generally
provides protections to workers, their families and communities by
1
Originally, plaintiffs numbered twenty-eight, but two individuals withdrew
from the suit on October 14, 2003.
2
W e grant defendants’ M otion to Strike Attachment 1 to Appellees’ Brief.
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requiring employers to provide notification 60 calendar days in
advance of plant closings and mass layoffs. Advance notice provides
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). 3 W ARN directs that an employer can be liable for up to
sixty days’ back pay and benefits to certain employees who lose their jobs as part
of a plant closing or mass layoff 4 without receiving sixty days’ advanced notice.
See 29 U.S.C. § 2104(a)(1). 5 An employer may be excused from the sixty-day
notice requirement where a mass layoff was the result of an unforseen business
circumstance. Id. at § 2102(b)(2)(A). Nevertheless, an employer “shall give as
much notice as is practicable and at that time shall give a brief statement of the
basis for reducing the notification period.” Id. at § 2102(b)(3). W ARN also
directs that a number of smaller employment losses over a ninety-day period may
3
Pursuant to the statute, the Department of Labor is to “prescribe such
regulations as may be necessary to carry out [the Act].” 29 U.S.C. § 2107(a).
“The regulations are thus promulgated by the Department of Labor pursuant to
statutory authority, and, if substantive, they have the force of law unless they are
irreconcilable with the clear meaning of a statute, as revealed by its language,
purpose, and history.” United M ine Workers of Am. v. M artinka Coal Co., 202
F.3d 717, 720 n.2 (4th Cir. 2000) (quotations and citations omitted).
4
As we will discuss in more depth below , and as relevant here, a mass
layoff or plant closing generally occurs when fifty or more employees equaling
thirty-three percent of an employer’s work force at a single site are laid off during
a thirty-day period. 29 U.S.C. § 2101(a)(2)-(3).
5
Employers are held equally liable under W ARN for failure to provide the
required advance notice for plant closings and mass layoffs. This case relates to a
mass layoff.
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be aggregated to constitute a mass layoff, thereby imposing on an employer the
obligation to provide either statutory notice or sixty days’ back pay in lieu of
notice to relevant employees. Id. at § 2102(d). In these situations, however, the
employer may disprove the existence of a mass layoff if it shows that the
individual sets of employment losses were for separate and distinct causes. Id.;
20 C.F.R. § 639.5(a)(1)(ii).
Having outlined the basic principles of W ARN, we turn to the facts of this
case. Plaintiffs w ere employed by FFI, a software company specializing in retail
banking and capital markets software, with a broad base of its clients located in
New York City’s financial district. FFI is headquartered in Concord,
M assachusetts, but has facilities in various states across the country, including
one located in Orem, Utah, where plaintiffs were employed.
FFI is a wholly owned subsidiary of Sybase. Sybase acquired FFI in M arch
2000. During the 2000 fiscal year, FFI reported an operating loss of
approximately $20.3 million. According to Sybase’s Chief Financial Officer,
Pietier Van der Vorst, FFI continued to operate at a loss throughout the first three
quarters of 2001 and
fell far short of the revenue and project targets that Sybase had
budgeted for FFI in 2001. . . . Sybase’s m anagement team repeatedly
communicated to FFI throughout 2001 that, in order for FFI to meet
the financial target numbers that had been established by Sybase, it
would need to take actions to reduce its operating costs.
Aplt. App. at 188. Sybase directed FFI that it needed to be profitable by the
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fourth quarter of 2001.
In an effort to meet Sybase’s financial targets, FFI engaged in a series of
small layoffs during the first two quarters of 2001. The company dismissed four
employees during the first quarter and five in the second quarter. But FFI’s
operating costs still exceeded its revenues: during the first quarter of 2001, FFI
operated at a loss of $11 million; during the second quarter, the loss was $5.6
million.
In early August 2001, the middle of the third quarter, FFI cancelled
production for a product scheduled to be released during the first quarter of 2002.
It then moved all the project engineers w ho were assigned to the 2002 product,
including a majority of plaintiffs, to w ork on a different product with a release
date of September 24. During this same time frame, FFI planned a layoff in
comparable size to the job terminations earlier in the year. On September 7,
2001, the company terminated four employees at the Orem location, all of whom
eventually became plaintiffs in the instant case. FFI did not provide the
employees with advance notice of the terminations, nor sixty days’ pay in lieu of
such notice pursuant to WA R N .
The terminated employees were offered a severance package in exchange
for signing a release form in which they waived any claims they had against the
company. The relevant language in the form read:
I agree that my Severance Benefit is in full satisfaction of any
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claims, liabilities, demands or causes of action, known or unknown,
that I ever had, now have or may claim to have had against the
Company or any [of] its parents . . . as of the date of this Release,
except claims for workers’ compensation insurance and
unemployment insurance benefits. Any claims, whether for
discrimination, including claims under state law, Title VII of the
Civil Rights Act of 1964 or the Age Discrimination in Employment
Act, wrongful termination, breach of contract, breach of public
policy, physical or mental harm or distress or any other claims, are
hereby forever released and I agree and promise that I will not file
any legal action asserting any such claims.
Id. at 280. The employees were given seven days to consider the agreement and
consult with a lawyer, and were allowed an additional three days following
execution of the agreement to rescind. None of the employees consulted with an
attorney and each returned the signed waiver.
On September 24, 2001, FFI met its release date for the new product. Four
days later, on or about September 28, 2001, and two weeks after the September
11, 2001 airplane bombings of the W orld Trade Center and the Pentagon (9/11
bombings), FFI dismissed forty-one employees, many of whom had worked to
ensure that FFI’s new product was released on time. As with the employees
dismissed on September 7, none were provided advance written notice of the
terminations nor, in the alternative, sixty days’ pay and benefits under W ARN.
Likew ise, each of these employees signed a release form in exchange for a
severance package from FFI. Twenty-four of these fired employees became the
remaining plaintiffs in this case. FFI’s third quarter losses w ere slightly
improved, equaling $4.9 million, but nonetheless contributed to a total of $21.5
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million in losses thus far in 2001.
In O ctober, Sybase’s Chief Financial Officer initiated “a plan to restructure
and consolidate on a company-wide basis Sybase’s Information Technology (‘IT’)
operations.” Id. at 189. In accordance with this plan, “Sybase directed FFI to
eliminate 6 IT positions at its Orem, Utah site. The elimination of these 6
positions w as the result of Sybase’s corporate consolidation and was unrelated to
FFI’s financial condition.” Id. In conjunction with the six dismissals ordered by
Sybase, FFI decided to terminate an additional five employees from its Orem
office “in an effort to cut fourth quarter expenses.” Id. at 193. The dismissals
occurred on October 31, 2001.
FFI’s human resources director, Neil M orris, was aware of WARN’s notice
and payment requirements and recognized that with the October 31 dismissals, the
company had fired more than fifty employees over a ninety-day period at the
Orem site. Therefore, FFI provided the eleven employees fired on October 31
with sixty days’ pay and benefits “in satisfaction of any obligations [the company
might] owe under state or Federal law.” Id. at 196. In January 2002, Sybase
proudly reported that FFI “bettered its [fourth quarter] forecast revenues and
expenses to produce the company’s first profitable quarter.” Id. at 79.
Plaintiffs filed this action on February 7, 2003, claiming they were fired
without notice in a mass layoff and defendants w ere therefore obligated to
provide them with sixty days’ back pay and benefits. Defendants denied liability
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under W ARN and argued that, in any event, plaintiffs had waived any W ARN
claims by signing the releases. W ith respect to W ARN, defendants asserted that
the job terminations between September 7 and October 31 did not represent a
planned mass layoff triggering any statutory obligations, and that the three
different layoffs during the relevant ninety-day period were separate and distinct
within the meaning of the Act. Finally, they claimed any potential W ARN
liability should be excused under the unforseen business circumstances exception
contained in the Act.
Plaintiffs filed a motion for summary judgment on M ay 2, 2003, contending
they lost their jobs in a mass layoff without notice in violation of W ARN. On
that same date, the court issued its scheduling order for the case, setting the
discovery deadline for October 15, 2003. On August 8, defendants filed a cross
motion for summary judgment contending plaintiffs had waived any W ARN
claims by signing the releases. A magistrate judge was appointed to address non-
dispositive matters for the case. Plaintiffs moved to strike portions of the
affidavit of Neil M orris, which defendants had submitted to support their
argument that the September 28 layoffs were the result of the unforeseen
economic impact associated with the 9/11 bombings. Plaintiffs asserted that
statements in the M orris affidavit constituted inadmissible hearsay. The
magistrate judge denied plaintiffs’ motion on October 3, 2003. During the
summary judgment hearing before the district court on November 25, however,
-8-
the court reconsidered the magistrate judge’s ruling and granted plaintiffs’ motion
to strike.
The district court subsequently granted summary judgment in favor of
plaintiffs, concluding that
[t]he W ARN Act and its implementing regulations make clear that
within any ninety-day period, all terminated employees (including
the first employee terminated during that period) w ho are properly
aggregated under Section 2102(d) are entitled to notice or, where
notice has been denied, to the remedy of sixty days of pay and
benefits lost, and possibly reasonable attorneys’s fees.
Id. at 959. The court held defendants had failed to satisfy their burden of
establishing that the three sets of layoffs between early September and late
October stemmed from separate and district causes under W ARN. The court
reasoned that even if the purpose for firing six of the employees in October was
due to the reorganization plan implemented by Sybase, the remaining five
employees were dismissed as part of FFI’s ongoing efforts to reduce its costs and
meet Sybase’s financial targets. According to the court, those five employees
contributed to a total of fifty-one dismissed workers. Id. at 962 n.3. 6
6
The parties do not contest that FFI fired over fifty employees equaling
thirty-three percent of its work force over a ninety-day period. Likewise, it
appears the parties and the district court agree that the total number of employees
fired during this period equaled fifty-seven. W e have been unable, however, to
determine how the parties and district court reached that number. Based on our
review of the parties’ briefs and the record on appeal, it appears that on
September 7, FFI fired four employees. On September 28, it fired an additional
forty-one employees. Finally, on October 31, a total of eleven employees were
fired from FFI’s Orem site. Based on our calculations, the number of laid off
(continued...)
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The court also determined plaintiffs did not waive their W ARN claims by
signing the release forms. The court read the language in the release to waive any
past or present claims plaintiffs had at the date they signed the agreement, but to
exclude future claims. The court concluded plaintiffs’ claims did not arise until
October 31, 2001, when the final set of employees was laid off and resulted in an
aggregated mass layoff under W ARN. The court reasoned that because the
W ARN violations came into being after plaintiffs signed their release forms, they
had not w aived those claims.
Finally, the court concluded defendants had not satisfied their burden to
show that the job terminations initiated on September 28 were due to the
unforeseen financial impact of the 9/11 bombings on FFI. Although defendants
argued to the district court that they needed “more time to determine whether
September 11, 2001 indeed caused the layoffs,” the court rejected this claim,
stating “Defendants have had ample time (over two years since September 11,
2001) to make that determination, and . . . have failed to provide any admissible
evidence.” Id. at 965. The court granted summary judgment in favor of plaintiffs
and ordered FFI and Sybase to pay the former employees sixty days’ pay, plus
costs and reasonable attorneys fees, as required by W ARN.
6
(...continued)
employees equals fifty-six, not fifty-seven, as the parties and court seem to agree.
This apparent but uncontested discrepancy is of no matter. In terms of
determining defendants’ liability under W ARN, the one employee difference does
not implicate our analysis.
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Defendants raise a number of issues on appeal in challenging the district
court’s ruling. First, they contend that if there was a W ARN violation, plaintiffs
waived their rights to seek redress by signing the release forms. Second, they
assert there was no mass layoff under W ARN because the three sets of employee
terminations were for separate and distinct causes. Defendants also argue they
should have been excused from any W ARN obligations because the forty-one
layoffs in September were precipitated by the unforeseeable financial impact of
the 9/11 bombings. In this context, they challenge the district court’s decision to
exclude certain statements from the M orris affidavit. Finally, they contend they
are not liable under W ARN because a mass layoff was not planned or intended,
and hence the individuals who lost their jobs are not “affected employees”
entitled to relief under the statute.
“O n cross-motions for summary judgment, our review of the summary
judgment record is de novo and we must view the inferences to be drawn from
affidavits, attached exhibits and depositions in the light most favorable to the
party that did not prevail,” in this case the defendants. Jacklovich v. Simmons,
392 F.3d 420, 425 (10th Cir. 2004) (citing United States v. Diebold, Inc., 369
U.S. 654, 655 (1962)); see also NISH v. Rumsfeld, 348 F.3d 1263, 1266 (10th
Cir. 2003). Summary judgment is appropriate “if the pleadings, depositions,
answ ers to interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that the
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moving party is entitled to judgment as a matter of law.” F ED . R. C IV . P. 56(c).
II
W e begin by examining whether defendants can be held liable to plaintiffs
for a mass layoff under W ARN. In this regard, defendants concede the number of
employees fired over a ninety-day period exceeded fifty. They argue that even
so, the different layoffs were for separate and distinct causes and did not
constitute a mass layoff.
A. W ARN liability generally
W hen one considers WA RN in broad strokes, it is easy to understand. A n
employer w ho engages in a mass layoff and does not give its employees sixty
days’ notice of the impending job terminations is liable for up to sixty days’ pay
and benefits to those employees who lost their jobs. This case, however, cannot
be reduced to broad general strokes. Rather, we must sort out the particular facts
and determine how they fit within the Act’s aggregated mass layoff provision, 29
U.S.C. § 2102(d).
Unfortunately, W ARN is less than clear with respect to mass layoffs
occurring in an aggregation setting. As we highlight below, the statute and
regulations generally speak in terms of planned, proposed, and foreseeable mass
layoffs and employer liability that arises from failure to provide notice in those
settings. Although W ARN creates employer liability for aggregated mass layoffs
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under § 2102(d), it does not explicitly state how and when employer duties arise
in an aggregated setting. Nor have we been able to find any directly relevant case
law to guide us in resolving the instant controversy. As our colleagues on the
Fourth Circuit commented, “while it is clear that the intent of the W ARN Act
would have all affected employees given 60 days’ notice before their layoffs to
permit them to arrange their employment affairs, the specific language of the Act
is inartful, if not confusing.” United M ine Workers of Am. v. M artinka Coal Co.,
202 F.3d 717, 720 (4th Cir. 2000).
W e begin with the portion of the statute that specifically outlines the terms
of an employer’s liability. Section 2104(a) of W ARN states
[a]ny employer who orders a plant closing or mass layoff in violation
of section 2102 of this title shall be liable to each aggrieved
employee who suffers an employment loss as a result of such closing
or layoff for – (A) back pay for each day of violation at a rate of
compensation not less than the higher of – (i) the average regular rate
received by such employee during the last 3 years of the employee’s
employment; or (ii) the final regular rate received by such employee;
and (B) benefits under an employee benefit plan described in section
1002(3) of this title, including the cost of medical expenses incurred
during the employment loss which would have been covered under an
employee benefit plan if the employment loss had not occurred.
Such liability shall be calculated for the period of the violation, up to
a maximum of 60 days, but in no event for more than one-half the
number of days the employee was employed by the employer.
29 U.S.C. § 2104(a)(1) (emphasis added). An “employer” is “. . . any business
enterprise that employs – (A) 100 or more employees, excluding part-time
employees; or (B) 100 or more employees who in the aggregate work at least
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4,000 hours per week (exclusive of hours of overtime) . . . .” Id. at § 2101(a)(1).
A “mass layoff” is
a reduction in force which – (A) is not the result of a plant closing; 7
and (B) results in an employment loss at the single site of
employment during any 30-day period for – (i)(I) at least 33 percent
of the employees (excluding any part-time employees); and (II) at
least 50 employees (excluding any part-time employees); or (ii) at
least 500 employees (excluding any part-time employees) . . . .
Id. at § 2101(a)(3). 8
In further fleshing out the pertinent terms in § 2104(a)(1), the relevant
portion of § 2102 of W ARN dictates that “[a]n employer shall not order a . . .
mass layoff until the end of a 60-day period after the employer serves written
notice of such an order – (1) to each . . . affected employee . . . .” Id. at §
2102(a). An “affected employee” is one “who may reasonably be expected to
experience an employment loss as a consequence of a proposed . . . mass layoff
by their employer . . . .” Id. at § 2101(a)(5). 9 In other words, an affected
7
[T]he term “plant closing” means the permanent or temporary
shutdown of a single site of employment, or one or more facilities or
operating units w ithin 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 . . . .
Id. at § 2101(a)(2).
8
Neither subsections (B )(i)(II) or (B)(ii) of § 2101(a)(3) are at issue in this
case.
9
In determining when, and to whom, notice should be given, the W ARN
(continued...)
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employee is someone who reasonably could be expected, by virtue of a mass
layoff, to suffer an employment loss. As relevant here, an employment loss
means “an employment termination, other than discharge for cause, voluntary
departure, or retirement.” Id. at § 2101(a)(6). Finally, an “aggrieved employee”
is “an employee who has worked for the employer ordering the plant closing or
mass layoff and who, as a result of the failure by the employer to comply with
section 2102 of this title, did not receive timely notice . . . as required by section
2102 of this title.” Id. at § 2104(a)(7). Hence, an aggrieved employee is an
affected employee who loses his job in a mass layoff without the required notice.
Generally, therefore, when an employer foresees it could lay off enough
employees to constitute a mass layoff under W ARN, the employer must provide
9
(...continued)
regulations indicate that
notice must be given at least 60 calendar days prior to any planned
plant closing or mass layoff, as defined in these regulations. When
all employees are not terminated on the same date, the date of the
first individual termination within the statutory 30-day or 90-day
period triggers the 60-day notice requirement. A worker’s last day
of employment is considered the date of that worker’s layoff. The
first and each subsequent group of terminees are entitled to a full 60
days’ notice. In order for an employer to decide whether issuing
notice is required, the employer should – (i) Look ahead 30 days and
behind 30 days to determine whether employment actions both taken
and planned will, in the aggregate for any 30-day period, reach the
minimum numbers for a plant closing or a mass layoff and thus
trigger the notice requirement . . . .
20 C.F.R. § 639.5(a)(1) (emphasis added). The ninety-day period mentioned in
the regulation is associated with aggregated mass layoff claims under 29 U.S.C. §
2102(d), an issue we address infra.
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its employees with sixty days’ advance notice. W hen the employer fails to do so,
it must pay the terminated employees up to sixty days’ back pay and benefits in
lieu of notice. But as this case illustrates, business layoffs are not always so tidy
or contained. Section 2102(d) of the statute acknowledges that sometimes the
requisite number of employment losses sufficient to constitute a mass layoff
might not occur during a single thirty-day period. Rather, they might occur in
smaller increments, which in the aggregate and over a ninety-day period will
constitute a mass layoff. W ARN specifically directs that
in determining whether a . . . mass layoff has occurred or will occur,
employment losses for 2 or m ore groups at a single site of
employment, each of which is less than the minimum number of
employees specified in section [2101(a)(3)] of this title but which in
the aggregate exceed that minimum number, and which occur within
any 90-day period shall be considered to be a plant closing or mass
layoff unless the employer demonstrates that the employment losses
are the result of separate and distinct actions and causes and are not
an attempt by the employer to evade the requirements of this chapter.
Id. at § 2102(d) (emphasis added). The statute thus “imposes an affirmative
burden on the employer to prove that the court should disaggregate employment
losses that occurred during the 90-day period.” Hollowell v. Orleans Reg’l Hosp.
LLC, 217 F.3d 379, 383 (5th Cir. 2000). If the employer does not satisfy this
burden, the aggregate number of employees who have lost their jobs, “shall be
considered to be a . . . mass layoff . . . .” 29 U.S.C. § 2102(d) (emphasis added).
Between September 7 and October 31 – a fifty-eight-day period –
defendants dismissed fifty-six employees. There has been no assertion that these
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terminations represent less than thirty-three percent of the full time work force at
the FFI O rem site, or that FFI is not an employer under W ARN. See id. at §§
2101(a)(1); 2101(a)(3)(B)(i)(I). Applying § 2102(d) to this case, enough
employees were laid off to constitute an aggregated mass layoff under W ARN
unless defendants establish those job losses were for separate and distinct causes.
B. Separate and distinct causes
A mass layoff will not be deemed to have occurred if the employer can
show the employment losses were the “result of separate and distinct actions and
causes and are not an attempt by the employer to evade the requirements of”
W ARN. Id. at § 2102(d). W e agree with the district court that defendants have
not sufficiently raised an issue of fact on this point to survive summary judgment.
Defendants’ argument regarding the separate and distinct causes for the
three sets of layoffs represents a moving target. In their motion for summary
judgment they argued that
six of the em ployees terminated by FFI on October 31, 2001, were
laid off due to the “separate and distinct cause” of Sybase’s IT
reorganization plan. . . . FFI’s termination of these six IT employees
was unrelated to the financial difficulties that precipitated the other
layoffs at Orem within the 90-day period.
Aplt. App. at 184 (emphasis added). They appeared to contend that the six
Sybase IT October layoffs were separate and distinct from the September
employment losses, and therefore no mass layoff occurred. On appeal, however,
defendants shift their argument somewhat. In their opening brief they contend
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each of the layoffs in this case arose from distinct causes. They assert the four
September 7 job terminations w ere caused by FFI’s financial difficulties, while
the forty-one employment losses on September 28 were the result of “the
significant financial fallout from the events of 9/11.” Aplt. Br. at 52. Finally,
they maintain the O ctober 31 layoff of eleven employees was due to Sybase’s
reorganization of its IT department. Defendants argue accordingly that the
September 28 layoffs were separate and distinct from the September 7 layoffs, so
those two layoffs should not be aggregated. They claim, “[f]inancially-based
layoffs after September 11 were due to the new and different post-9/11 economic
realities. W hen the four September 7 layoffs are left out of the total, the number
of layoffs attributable to cost cutting measures in the wake of 9/11 is 46.” Id. at
52 (emphasis added). Hence, in contrast to their argument before the district
court, defendants now appear to assert that the first set of job terminations in
September are separate and distinct from the other two rounds of layoffs.
In their reply brief, defendants morph their “separate and distinct”
argument back to something more akin to the position they presented to the
district court. In this incarnation, they place the line of demarcation for separate
and distinct employment actions after the September 28 firings. They claim “[i]t
is clear that the entire October 31 [layoff] was due to causes separate and distinct
from either of the September layoffs and should not be aggregated with them.”
Aple. Reply Br. at 18.
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W e are underwhelmed by defendants’ inconsistent arguments and limit our
review to the position they presented to the district court. See Bancamerica
Commercial Corp. v. M osher Steel of Kan., Inc., 100 F.3d 792, 798-99 (10th Cir.
1996) (“[W]here a litigant changes to a new theory on appeal that falls under the
same general category as an argument presented at trial or presents a theory that
was discussed in a vague and ambiguous way the theory will not be considered on
appeal.” (quotations and citation omitted)). As to defendants’ initial argument, it
is immaterial that the separate and distinct cause for six of the employment losses
on October 31 was Sybase’s reorganization of its company-w ide IT department.
Even excluding those six employees from the mass layoff calculation, FFI made
the independent decision to fire another five employees “in an effort to cut fourth
quarter expenses.” Aplt. App. at 193. W hen one adds together the four
employees from the September 7 job terminations, the forty-one employees from
the September 28 terminations, and the five employees from the October 31
terminations, the total employment losses equals fifty. 10 It was defendants’
burden to present evidence that the employment losses were due to something
other than FFI’s efforts to meet Sybase’s mandate to be profitable by the final
quarter of 2001. They failed to meet that burden. See United Paperworks Int’l
Union v. Alden Corrugated Container Corp., 901 F. Supp. 426, 435-36 (D. M ass.
10
See supra note 6.
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1995) (“Bates has failed to carry its burden of proof [of separate and distinct
causes for the layoffs] as allocated under § 2102(d).”). In the absence of
evidence showing the employment losses were for separate and distinct causes
and not all the result of FFI’s precarious financial situation, the job terminations
w ere properly aggregated to constitute a mass layoff under § 2102(d) of W ARN .
III
Even if an aggregated mass layoff occurred, defendants argue they are not
liable under W ARN because plaintiffs released any such claims. In the
alternative, they assert they escape liability under W ARN’s exceptions for
unforseen business circumstances, or because plaintiffs were not “affected
persons” entitled to relief as aggrieved parties under the statute. W e address each
argument in turn.
A. The release forms
In defendants’ motion for summary judgment, they contended plaintiffs
waived their rights to bring a civil action against them w hen they signed the
release forms. Defendants posit that if they violated W ARN in any manner, the
violations necessarily occurred at the time FFI terminated the plaintiffs without
prior notice. They state “a W ARN Act claim accrues w hen an employee is
notified that he or she is being terminated without having been given the requisite
60 days’ advance notice.” Aplt. Br. at 32. They thus assert plaintiffs’ W ARN
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claims were in existence at the time they signed the release forms and therefore
were waived.
A W ARN violation can occur only after a number of elements are satisfied,
which, due to the nature of an aggregated mass layoff, will not all happen at the
same time. First and foremost, there must be a mass layoff. Then, it must be
determined whether the employees who comprised the mass layoff should have
received notice, i.e., were affected employees. However, unless and until the
mass layoff threshold is crossed, the employer has not violated W ARN. Hence it
is the occurrence of a mass layoff that is crucial to trigger potential W ARN
liability for an employer. See, e.g., Amatuzio v. Gandalf Sys. Corp., 994 F. Supp.
253, 276 (D . N.J. 1998) (indicating no W ARN liability can be considered prior to
determining whether a mass layoff occurred); Bradley v. Sequoyah Fuels Corp.,
847 F. Supp. 863, 867 (E.D. Okla. 1994) (first element in considering a W ARN
claim is whether a mass layoff has occurred).
Arguing to the contrary, defendants cite a number of cases they claim
support their position that an employee’s W ARN claim accrues at the time the
employee learned of his or her termination. See Joe v. First Bank Sys., Inc., 202
F.3d 1067 (8th Cir. 2000); Frymire v. Ampex Corp., 61 F.3d 757 (10th Cir. 1995);
Hooper v. Polychrome, Inc., 916 F. Supp. 1111 (D. Kan. 1996); Auto. M ech.
Local 701 v. Santa Fe Terminal Servs., Inc., 830 F. Supp. 432 (N.D. Ill. 1993);
Wholesale & Retail Food Distrib. Local 63 v. Santa Fe Terminal Servs., Inc., 826
-21-
F. Supp. 326 (C.D. Cal. 1993). 11 Not only are these cases distinguishable from
the present controversy, they do not stand for the precise proposition urged by
defendants. First, the cited cases imply, if not directly state, that the terminated
employees’ W ARN claims accrued at the time they lost their jobs, rather than on
the date they learned they would lose those jobs. See Joe, 202 F.3d at 1070;
Frymire, 61 F.3d at 763; Hooper, 916 F. Supp. at 1113; Wholesale & Retail Food
Distrib. Local 63, 826 F. Supp. at 331-32. Second, none of these cases addresses
the accrual of a W ARN claim in an aggregated mass layoff under § 2102(d).
Finally, in Joe, Frymire, Hooper, and Wholesale & Retail Food Distrib. Local 63,
it appears all of the terminations that constituted mass layoffs or plant closings
occurred on the same date. See Joe, 202 F.3d at 1069-70; Frymire, 61 F.3d at
762-63; Hooper, 916 F. Supp. at 1113; Wholesale & Retail Food Distrib. Local
63, 826 F. Supp. at 331-32. It makes perfect sense that where terminations
coincide w ith the occurrence of a mass layoff or plant closing, an employee’s
W ARN claim would accrue at that time. The same cannot be said regarding an
11
As noted above, defendants assert “a WARN Act claim accrues when an
employee is notified that he or she is being terminated without having been given
the requisite 60 days’ advance notice.” Aplt. Br. at 32. W e are not convinced
this is what they mean. Based on the cases cited by defendants, it would appear
that what defendants really mean is that a W ARN claim accrues on the date of an
employee’s termination. Indeed, in their reply brief, defendants slightly restate
their position as “W ARN Act claims accrue at the time the employee is
terminated and/or notified of termination without the requisite 60 days advance
notice.” Aplt. Reply Br. at 5.
-22-
aggregated mass layoff.
Auto. M ech. Local 701 is factually distinguishable from the instant
controversy. The court there addressed a statute of limitations issue involving
whether the employees had suffered job terminations or had been merely laid off.
830 F. Supp. at 434. Pursuant to W ARN, a job termination “immediately
qualifies as an employment loss, but a layoff must last for more than six months
to qualify as an employment loss.” Id. at 433 (citations omitted and emphasis
added). W ith respect to the accrual date for the employees’ layoff, the court
disagreed with the employer’s assertion that the employees’ claims accrued at the
time of the layoff, determining instead that the claims would accrue six months
after the layoff. Id. at 434-35. If, in the alternative, the employees suffered job
terminations, the employees’ claims still fell within the relevant statute of
limitations applied by the court. Id. at 437.
W e decline to categorically hold that an employee’s W ARN claim accrues
at the time of termination without notice. Rather, accrual will be determined
based on the satisfaction of a number of different elements. A claim accrues
when there is (1) a mass layoff conducted by (2) an employer who fired
employees (3) who, pursuant to W ARN, are entitled notice. In the instant case,
barring determination of w hether plaintiffs were “aggrieved” employees, these
elements were satisfied on October, 31, 2001, the date FFI terminated enough
employees to constitute a mass layoff under § 2102(d) of W ARN. It was not until
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that date that plaintiffs’ claims came “into existence as an enforceable claim or
right.” B LACK ’ S L AW D ICTIONARY 22 (8th ed. 2004).
Having established the date upon which plaintiffs’ claims accrued, the
question remains w hether plaintiffs, in signing the release forms, waived their
right to seek legal redress for the W ARN violations. The pertinent language in
the release forms stated
I agree that my Severance Benefit is in full satisfaction of any
claims, liabilities, demands or causes of action, known or unknown,
that I ever had, now have or may claim to have had against the
Com pany or any [of] its parents . . . as of the date of this Release,
except claims for workers’ compensation insurance and
unemployment insurance benefits. Any claims, whether for
discrimination, including claims under state law, Title VII of the
Civil Rights Act of 1964 or the Age Discrimination in Employment
Act, wrongful termination, breach of contract, breach of public
policy, physical or mental harm or distress or any other claims, are
hereby forever released and I agree and promise that I will not file
any legal action asserting any such claims.
Aplt. App. at 280 (emphasis added). W e agree with the district court that “the
language of the Agreement, specifically the language ‘as of the date of this
Release,’ limits the waiver to claims past and present on the date of signing, and
excludes future claims.” Aplt. App. at 961. In particular, the phrase “may claim
to have had” only implicates claims made in the future, rather than claims that
arise in the future. Although the phrase “may claim” indicates futurity, use of the
past tense (“to have had”) refers back to the date of the releases. That is, each
release only encompasses claims that the signer “ever had,” that the signer “now
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ha[s],” or that the signer “may [in the future] claim to have had . . . [in the past,]
as of the date of [the] Release.” Aplt. App. at 280. Because the plaintiffs’
W ARN claims did not accrue until the mass layoff occurred on October 31, 2001,
those claims were not in existence “as of the date of [the] Release.” Id. at 280.
Therefore, plaintiffs did not waive their rights to sue defendants for violation of
their W ARN Act rights.
B. Unforeseen business circumstances
Defendants also claim refuge from liability under W ARN’s exception for
unforeseen business circumstances. The statute directs that “[a]n employer may
order a plant closing or mass layoff before the conclusion of the 60-day period if
the closing or mass layoff is caused by business circumstances that were not
reasonably foreseeable as of the time that notice would have been required.” 29
U.S.C. § 2102(b)(2)(A ); see also 20 C.F.R. § 639.9(b)(1) (unforeseen business
circumstance “is caused by some sudden, dramatic, and unexpected action or
condition outside the employer’s control,” such as “[a] principal client’s sudden
and unexpected termination of a major contract with the employer, a strike at a
major supplier of the employer, and an unanticipated and dramatic major
economic downturn . . . .”).
“The test for determining when business circumstances are not reasonably
foreseeable focuses on an employer’s business judgment. The employer must
exercise such commercially reasonable business judgment as would a similarly
-25-
situated employer in predicting the demands of its particular market.” 20 C.F.R.
§ 639.9(b)(2). Commentary to the regulations indicates this is “an objective test
[which focuses] on the commercial reasonableness of the employer’s actions.”
W orker Adjustment and Retraining Notification, 54 Fed. Reg. 16,042, *16,062
(April 20, 1989) (codified at 20 C.F.R. 639). The burden is thus on the
“employer to show that a ‘sudden, dramatic and unexpected’ event occurred
which precipitated a” mass layoff under W ARN. Id. W here an unforeseen
business circumstance has prevented an employer from providing timely notice
under W ARN, the employer must still “give as much notice as is practicable and
at that time shall give a brief statement of the basis for reducing the notification
period.” 29 U.S.C. § 2102(b)(3).
Defendants contend contested issues of fact exist regarding whether the
9/11 bombings were an unforeseen business circumstance that prompted the
September 28 firings, thereby precluding summary judgment for plaintiffs. The
district court disagreed, holding defendants had failed to proffer admissible
evidence raising a fact issue on this matter. See Loehrer v. M cDonnell Douglas
Corp., 98 F.3d 1056, 1060 (8th Cir. 1996) (defendant em ployer has burden to
show statutory affirmative defenses apply).
D efendants’ unforeseen business circumstance argument hinges on two
sentences appearing in an affidavit of FFI’s Human Resource Director, Neil
M orris. Those sentences state the following:
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Based on a conversation I had with a Sybase executive and senior
human resources employee on the evening of September 11, 2001, I
understood that the day’s events would likely have a devastating
impact on a broad segment of FFI’s customer base – i.e. its capital
market clients – and that this would lead to significant additional
layoffs at Orem. Therefore, my understanding at the time of the
September 28, 2001 layoff was that the events of September 11 had,
in substantial part, precipitated the layoff.
Aplt. App. at 191-92. Defendants rely on these two sentences as the evidentiary
basis of their claim that the unforeseen impact of the 9/11 bombings was the
cause of the September 28, 2001 terminations at the Orem site. In essence, they
argue that this statement is evidence that the impact of the 9/11 bombings
required M orris to fire the forty-one employees.
In arguing for the admissibility of M orris’ statement, defendants concede
that his reference to his conversation with the Sybase executives is hearsay. They
nonetheless claim the statements are admissible under the exception for
statements of remembered belief. F ED . R. E VID . 803(3). 12 Rule 803(3) permits
evidence of out-of-court statements regarding a declarant’s then existing state of
mind where the statement goes to the declarant’s intent to perform a certain act.
12
Rule 803(3) permits hearsay where the statement relates to
the declarant’s then existing state of mind, emotion, sensation, or
physical condition (such as intent, plan, motive, design, mental
feeling, pain, and bodily health), but not including a statement of
memory or belief to prove the fact remembered or believed unless it
relates to the execution, revocation, identification, or terms of
declarant’s w ill.
F ED . R. E VID . 803(3).
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See United States v. Best, 219 F.3d 192, 198 (2d Cir. 2000) (“A declarant’s out-
of-court statement as to his intent to perform a certain act in the future is not
excludable on hearsay grounds.”); United States v. Donley, 878 F.2d 735, 738 (3d
Cir. 1989) (“Statements admitted under Fed.R.Evid. 803(3) to show the
declarant’s intent or plan may be used to show that the declarant acted in accord
with that plan.”); United States v. Freeman, 514 F.2d 1184, 1190 (10th Cir. 1975)
(Rule 803(3) allows admission of an out-of-court statement to show a future
intent of the declarant to perform an act).
In making their argument, defendants point to a general statement
appearing earlier in M orris’ affidavit that states
I comm enced my employment with FFI in November 1999 in the
position of Senior D irector of Human Resources. In this position, I
am responsible for a variety of employment-related issues, including
conducting and overseeing layoffs, and interpreting and applying
employment policies and practices in compliance with state and
federal employment laws.
Aplt. App. at 191. Defendants marry this language with M orris’ hearsay
statement regarding the “conversation [he] had with a Sybase executive and
senior human resources employee” regarding the likely impact the 9/11 bombings
would have on Sybase and its subsidiaries. From this, they argue M orris’
statement evidences his “then existing state of mind . . . such as intent, plan,
motive, design,” F ED . R. E VID . 803(3), which led him to decide to fire the forty-
one employees on September 28.
-28-
The district court rejected defendants’ argument and held the contested
portions of M orris’ statements should be excluded. The court then determined
that because defendants had presented no other evidence that the September 28
layoffs were caused by the 9/11 bombings, they failed to create a triable issue of
fact supporting the unforeseen business circumstances exception.
On appeal, defendants contest the district court’s exclusion of portions of
the M orris affidavit. In the midst of this evidentiary issue is a procedural
quagmire. As referenced earlier in this opinion, a magistrate judge was assigned
in this case to address non-dispositive matters. See 28 U.S.C. § 636(b)(1)(A ); see
also Lithuanian Commerce Corp. LTD v. Sara Lee Hosier, 179 F.R.D. 450, 456
(D . N.J. 1998) (magistrate’s evidentiary rulings, even where they may ultimately
affect the outcome of a claim or defense, are non-dispositive orders under 28
U.S.C. § 636(b)(1)(A)). Plaintiffs filed a motion to strike the two contested
sentences from the M orris affidavit, claiming they lacked foundation and were
based on inadmissible hearsay. The parties briefed the issue and presented oral
arguments to the magistrate judge. At the hearing, the judge stated that M orris’
“statem ents constitute hearsay, but I find that they are admissible pursuant to
[Rule 803(3)’s] state of mind exception . . . .” Aplt. App. at 1008. The
magistrate judge’s order on the same issue simply stated “Plaintiffs’ M otion to
Strike Portions of the Declaration of Neil M orris . . . is denied . . . .” Id. at 783.
Plaintiffs failed to file a timely objection to the magistrate judge’s decision
-29-
pursuant to Rule 72(a) of the Federal Rules of Civil Procedure. That rule states
[w]ithin 10 days after being served with a copy of the magistrate
judge’s order, a party may serve and file objections to the order; a
party may not thereafter assign as error a defect in the magistrate
judge’s order to which objection was not timely made. The district
judge to whom the case is assigned shall consider such objections
and shall modify or set aside any portion of the magistrate judge’s
order found to be clearly erroneous or contrary to law.
F ED . R. C IV . P. 72(a). See also 28 U.S.C. § 636(b)(1)(A) (“A judge of the court
may reconsider any pretrial matter under this subparagraph (A) where it has been
shown that the magistrate judge’s order is clearly erroneous or contrary to law.”).
Nevertheless, during the summary judgment hearing before the district court,
plaintiffs again raised their motion to strike. The court initially stated it agreed
with the magistrate judge’s decision but would permit plaintiffs to convince it
otherwise. The court stated its understanding that “M r. M orris was the decision
maker and that since he had heard from someone that [the 9/11 bombings w ould
have a] devastating effect [on the company] he went ahead” and decided to fire
the forty-one employees on September 28. Aplt. App. at 1019. Plaintiffs pointed
out that M orris never asserted in his affidavit that he made the decision to
conduct the September 28 layoffs. In response, the court asked defendants to
address the issue. Id.
Defendants argued that this question had already been fully briefed by the
parties and decided by the magistrate judge. Pointing to nothing other than the
M orris affidavit and some unverified documents accompanying it, defendants also
-30-
tried to persuade the court that M orris did more than merely conduct or oversee
the September 28 firings. The court was not convinced, at one point exclaiming
with exasperation “for heaven’s sakes, he’s not the decision maker, that’s the
problem.” Id. at 1042. The court then excluded M orris statements as hearsay.
On appeal, defendants note plaintiffs failed to file a timely objection to the
magistrate judge’s ruling pursuant to Rule 72(a), thereby waiving their right to
have the district court review the magistrate judge’s order denying their motion to
strike. Defendants contend the district court should not have entertained
plaintiffs’ belated arguments regarding the M orris affidavit. Defendants are only
partially correct.
Rule 72(a), and its statutory companion, see 28 U.S.C. § 636(b)(1), place
limits on a party’s ability to seek review of a magistrate judge’s non-dispositive
order. However, a party’s failure to seek timely review does not strip a district
court of its power to revisit the issue. See, e.g., United States v. Flaherty, 668
F.2d 566, 585 (1st Cir. 1981); Phillips v. Raymond Corp., 213 F.R.D. 521, 523,
525 (N .D. Ill. 2003); Anderson v. Hale, 159 F. Supp. 2d 1116, 1117 (N .D. Ill.
2001); Johnson v. Cadillac Plastic Group, Inc., 930 F. Supp. 1437, 1439 (D.
Colo. 1996); see also generally 12 C HARLES A LAN W RIGHT , A RTHUR R. M ILLER &
R ICHARD L. M ARCUS , F EDERAL P RACTICE & P ROCEDURE § 3069, 353-56 (2d ed.
1997). Case law has similarly so held in the related matter of a district court’s
authority to review dispositive magistrate judge orders to which a party has failed
-31-
to object. See, e.g., Kruger v. Apfel, 214 F.3d 784, 786-87 (7th Cir. 2000); Webb
v. Califano, 468 F. Supp. 825, 829 (E.D. Cal. 1979); see also generally W RIGHT
& M ILLER , supra, § 3070.1, 366. In the instant case, therefore, the district court
was w ithin its power to reexamine the hearsay question surrounding the M orris
affidavit.
In reexamining this question, the district court was required to “defer to the
magistrate judge’s ruling unless it [was] clearly erroneous or contrary to law.”
Hutchinson v. Pfeil, 105 F.3d 562, 566 (10th Cir. 1997) (citing 28 U.S.C. §
636(b)(1)(A ); F ED . R. C IV . P. 72(a); Grimes v. City & County of San Francisco,
951 F.2d 236, 240 (9th Cir. 1991)). Under the clearly erroneous standard, “the
reviewing court [must] affirm unless it ‘on the entire evidence is left with the
definite and firm conviction that a mistake has been committed.’” Ocelot Oil
Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir. 1988) (quoting United
States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)).
In turn, we review the district court’s final evidentiary ruling for abuse of
discretion. United States v. Cestnik, 36 F.3d 904, 906 (10th Cir. 1994). “Under
this standard, a trial court’s decision will not be reversed unless the appellate
court has a definite and firm conviction that the lower court made a clear error of
judgment or exceeded the bounds of permissible choice in the circumstances.”
Bryant v. Farmers Ins. Exch., 432 F.3d 1114, 1122 (10th Cir. 2005) (internal
quotation and citation omitted).
-32-
W e do not think the district court’s ultimate evidentiary decision represents
an abuse of discretion. Defendants concede the two contested statements in the
M orris affidavit are hearsay but assert the statements are admissible under the
state of mind exception in F ED . R. E VID . 803(3). See Freeman, 514 F.2d at 1190
(exception “allows the admission of an extrajudicial statement, not to prove the
truth of the matter asserted, but to show a future intent of the declarant to perform
an act if the occurrence of that act is in issue”). D efendants are incorrect.
As noted above, Rule 803(3) permits an out-of-court statement regarding a
declarant’s then-existing state of mind where the statement serves as evidence of
the declarant’s intent to perform an act. Defendants argue that M orris’
understanding regarding the impact of the 9/11 bombings on Sybase and FFI led
him to make the decision to fire the forty-one employees on September 28.
M orris does assert he is responsible for “conducting and overseeing layoffs,” aplt.
app. at 191, but we agree with the district court that there is nothing to indicate he
was the individual who issued the order to fire the forty-one employees. If
M orris was not the decision maker regarding those firings, then his thoughts,
beliefs or remembrances regarding the 9/11 bombings and their impact on Sybase
and FFI are irrelevant. They are more accurately deemed to fall within the
exception listed in Rule 803(3) that makes inadmissible statements “of memory or
belief to prove the fact remembered or believed.” F ED . R. E VID . 803(3). His
statements “spoke not to then-existing state of mind, but ‘spoke to a past act, and
-33-
more than that, to an act by some one not the speaker.’” United States v. Cintolo,
818 F.2d 980, 1001 (1st Cir. 1987) (quoting Shepard v. United States, 290 U.S.
96, 106 (1933)). At most, M orris’ statements provide a factual recitation of
events and his belief as to the cause of those events.
Even if we were to broadly infer from M orris’ affidavit that he did make
the decision to fire the employees on September 28, Rule 803(3)’s hearsay
exception still would not aid defendants. Certainly, “[a] declarant’s out-of-court
statement as to his intent to perform a certain act in the future is not excludable
on hearsay grounds. If relevant, such a statement may be introduced to prove that
the declarant thereafter acted in accordance with the stated intent.” Best, 219
F.3d at 198 (emphasis added) (internal citations omitted). See also Donley, 878
F.2d at 738; Freeman, 514 F.2d at 1190. Here, however, M orris’ “understanding”
of the “likely” impact of the 9/11 bombings does not help defendants, who were
required to offer at least some evidence that the 9/11 bombings, the unforeseen
event, did in fact “cause” the mass layoff. See 29 U.S.C. § 2102(b)(2)(A). 13
13
In this regard, we disagree with defendant’s reliance on Loehrer v.
M cDonnell Douglas Corp., 98 F.3d 1056 (8th Cir. 1996). Loehrer addressed a
mass layoff that occurred after the government cancelled a defense construction
contract. Id. at 1057. The employer claimed it should be excused from the notice
requirements under W ARN because the contract cancellation represented an
unforeseen business circumstance. The court agreed. Id. at 1062. Even though,
with hindsight, the court concluded the “death knell” for the specific contract at
issue began to sound prior to its actual cancellation, the court nonetheless held the
cancellation was unforeseeable at the time. The court stated
[t]he Act and its regulations necessarily recognize that even the most
(continued...)
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M orris’ perception that the 9/11 bombings would likely have an impact on
Sybase and FFI w as based, at most, on an alleged conversation he had with two
unnamed and unidentified Sybase employees. These hearsay statements cannot
serve as the foundational basis for M orris’ understandings regarding the 9/11
bombings. See Hong v. Children’s M em’l Hosp., 993 F.2d 1257, 1265 (7th Cir.
1993). Nor does M orris’ statement provide any other foundation to support his
understanding that the 9/11 bombings actually precipitated the September 28
layoffs. The contested statements lack sufficient foundation because they fail to
demonstrate they are “rationally based on the perception of the witness.” F ED . R.
E VID . 701(a). The district court did not abuse its discretion in deeming
inadmissible portions of the M orris affidavit. 14
13
(...continued)
conscientious employers are not perfect, and they thus allow needed
flexibility for predictions about ultimate consequences that, though
objectively reasonable, proved wrong. So long as it may still fairly
be said that the eventual plant closing or mass layoff is caused by a
sudden, dramatic, and unexpected event outside the employer’s
control, the exception applies.
Id. at 1061. Hence, even though it was evident after the fact that the contract
cancellation had been pending, the employer was still able to rely on the
unforeseen business circumstances exception because it acted as “would
reasonable employers within its own market” by not giving notice sooner. Id.
The same cannot be said here. In Loehrer, the mass layoff was in fact caused by
the unforeseen event of the contract cancellation. Thus, causation was not at
issue in that case. In contrast, and as w e discuss more fully in the text, here
defendants have presented no admissible evidence as to causation. Therefore,
Loehrer is inapposite.
14
At base, defendants are confused as to Rule 803(3)’s applicability. The
(continued...)
-35-
Upon excluding portions of M orris’ statement, the district court determined
that defendants failed to present any evidence to create a triable issue as to
whether the September 28 layoffs were in fact caused by the 9/11 bombings. The
court also rejected defendants’ suggestion that they needed “more time to
determine whether September 11, 2001 indeed caused the layoffs.” Aplt. App. at
965. The court ruled “Defendants have had ample time (over two years since
September 11, 2001) to make that determination, and . . . have failed to provide
any admissible evidence.” Id. 15
14
(...continued)
relevant declarant in this case is not M orris, but the unnamed Sybase executive or
human resources employee mentioned in M orris’ affidavit. Defendants are not
asserting that we should consider the statements of those unnamed and
unidentified executives to prove their existing state of mind, intent, plan or
motive. See F ED . R. E VID . 803(3). Rather, defendants contend M orris’ statem ents
regarding the conversations he had with the Sybase executives show M orris’
intent and plan to fire the forty-one employees because of the 9/11 bombings.
This is an impermissible application of Rule 803(3). The rule cannot be used to
“authorize receipt of a statement by one person [here, the Sybase executives’
statements,] as proof of another’s [M orris’] state of mind.” Hong v. Children’s
M em’l Hosp., 993 F.2d 1257, 1265 (7th Cir. 1993). See also United States v. Joe,
8 F.3d 1488, 1493 n.4 (10th Cir. 1933) (“An out-of-court statement relating a
third-party’s state of mind falls outside the scope of the hearsay exception
because such a statement necessarily is one of memory or belief.”); H.R. R EP . N O .
93-650 (1973) reprinted in 1974 U.S.C.C.A.N. 7075, 7087 (“the Committee
intends that [Rule 803(3)] be construed . . . so as to render statements of intent by
a declarant admissible only to prove his future conduct, not the future conduct of
another person”). Again, M orris’ statements are in regard to his memory and
belief, and cannot be construed as proof of his intent, plan or motive. See F ED . R.
E VID . 803(3).
15
W e note, in this regard, that FFI submitted an affidavit from Sybase’s
chief financial officer, Pieter Van der Vorst, dated July 24, 2003, which describes
(continued...)
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W e agree with the court’s decision not to provide defendants w ith
additional discovery time. First, and as detailed in the regulations supporting
W ARN, “[t]he test for determining when business circumstances are not
reasonably foreseeable focuses on an employer’s business judgment.” 20 C.F.R.
§ 639.9(b)(2). This is an objective test that requires the “employer to show that a
‘sudden, dramatic and unexpected’ event occurred w hich precipitated a” mass
layoff under W ARN. W orker Adjustment and Retraining Notification, 54 Fed.
Reg. 16,042, *16,062 (April 20, 1989) (codified at 20 C.F.R. 639). Of course, the
9/11 bombings w ere an unexpected and unforeseen event. However, as aptly
noted by the district court, defendants failed to produce, even up to two years
after the event, any evidence that the 9/11 bombings did in fact cause the layoffs.
They have not even begun to meet their burden on this point. M oreover, if
defendants wanted more time for discovery prior to the district court’s
consideration of the plaintiffs’ motion for summary judgment, they should have
filed a Rule 56(f) motion. Pursuant to Rule 56(f),
[s]hould it appear from the affidavits of a party opposing the motion
that the party cannot for reasons stated present by affidavit facts
essential to justify the party’s opposition, the court may refuse the
application for judgment or may order a continuance to permit
affidavits to be obtained or depositions to be taken or discovery to be
had or may make such other order as is just.
15
(...continued)
the financial decline of FFI but makes no mention of how or to what extent the
9/11 bombings impacted the company. See Aplt. App. 187-89.
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F ED . R. C IV . P. 56(f). Defendants did not act in accordance with Rule 56(f).
Plaintiffs filed their motion for sum mary judgment on M ay 2, 2003. In
defendants’ response to this motion, they argued in a footnote that they should be
afforded more time to engage in discovery to determine how exactly the 9/11
bombings impacted their financial status. They contended that
[a]t a minimum, the Court should allow Defendants additional time
to conduct thorough and detailed financial analysis regarding the
precise nature of 9/11’s impact on its business and the causal
relationship between the financial effects of 9/11 and the September
28, 2001 layoff at Orem. The issue of when, if at all, Defendants
may have owed W ARN notice to Plaintiffs cannot be prematurely
disposed of on summary judgment given the unforeseeable business
circumstance of 9/11.
Aplt. App. at 183 n.11. In their reply to defendants’ opposition, plaintiffs noted
that “if Defendants wanted ‘additional time to conduct thorough and detailed
financial analysis’ to meet their burden of proof . . . they should have sought a
stipulation or filed a Rule 56(f) affidavit and motion before filing their
Opposition.” Id. at 727, n.4. Regardless, defendants took no action.
Additionally, and pursuant to the scheduling order set in place by the district
court, defendants technically still had until October 15, 2003, more than a month
prior to the summary judgment hearing, see aplt. app. at 1012, to complete
discovery and gather evidence to support their argument that the 9/11 bombings
were the cause of the September 28 layoffs at the Orem site. Defendants do not
appear to have taken any steps along these lines. Indeed, as asserted by plaintiffs
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in filings before the district court, and raised again by this court at oral
arguments, “[o]ne wonders why Defendants chose not to submit an affidavit from
[the unnamed Sybase executive referenced in the M orris affidavit], or information
about who directed or decided to conduct the layoff on 28 September 2003,” and
for what reason. Aplt. App. at 725, n.3.
Defendants’ footnote request in its brief for additional discovery time does
not pass muster under rule 56(f). In Comm. for the First Amendment v. Campbell,
962 F.2d 1517, 1522-23 (10th Cir. 1992), we deemed insufficient for the purposes
of Rule 56(f) unverified statements in attorney memoranda regarding the need for
additional discovery. See also M iller v. Auto. Club of N.M ., 420 F.3d 1098, 1118
n.17 (10th Cir. 2005); Pasternak v. Lear Petroleum Exploration, Inc., 790 F.2d
828, 832-33 (10th Cir. 1986). Even if defendants were disadvantaged by the
district court’s exclusion of portions of the M orris affidavit, they undermined
their own argument regarding the unforeseen business circumstances exception by
failing to properly request additional discovery time. In light of the absence of
causation evidence, the district court did not err in ruling against defendants on
this issue.
C . Were plaintiffs affected/aggrieved employees under W ARN?
Even where a mass layoff has occurred pursuant to § 2102(d), an employer
is not automatically liable under W ARN. An employee who has suffered an
employment loss in a mass layoff must still show he or she is “aggrieved” under
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the statute.
As noted above, aggrieved employees are those who lose their jobs in a
mass layoff without receiving the notice WARN requires an employer to provide
them as affected employees. Affected employees are those “who may reasonably
be expected to experience an employment loss as a consequence of a proposed
. . . mass layoff by their employer . . . .” 29 U.S.C. at § 2101(a)(5) (emphasis
added). The question remains whether any plaintiffs are aggrieved employees
under the statute.
Defendants assert they do not have any obligations to plaintiffs under
W ARN because the mass layoff was not proposed or planned and plaintiffs are
therefore not “affected employees.” Defendants contend they did not know on
September 7 or September 28, when they laid off two separate groups of
employees, that a mass layoff might occur in the following month. They claim it
was only in late October, with the final set of job terminations, that they knew
they had fired enough employees to constitute a mass layoff, at which point they
provided the last set of terminated employees sixty days’ pay and benefits.
Therefore, they say, it was impossible for them to provide the required sixty days’
notice to the employees whose jobs were terminated in September. The mass
layoff that ultimately arose because of plaintiffs’ terminations was thus not
planned or foreseeable and plaintiffs were not “affected employees” to whom
notice w as due under WA R N .
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In plaintiffs’ motion for summary judgment on this issue, they argued in
the broadest of terms that when defendants laid off enough employees in a ninety-
day period to constitute a mass layoff pursuant to § 2102(d), the laid off
employees w ere entitled to sixty-days back pay and benefits because defendants
did not provide notice to them. Aplt. App. at 66. They thus asserted that an
employer is liable to all employees dismissed in the layoff. Although the district
court essentially agreed with plaintiffs reasoning, we are not persuaded.
Plaintiffs’ argument ignores the statutory command that em ployer liability
only extends to aggrieved employees, i.e., employees “who [have] worked for the
employer ordering the . . . mass layoff and who, as a result of the failure of the
employer to comply with section 2102 of [W ARN] did not receive timely notice .
. . as required by [the Act.].” 29 U.S.C. § 2104(a)(7). As we noted earlier in the
opinion, aggrieved employees must also be affected employees, i.e., “employees
who may reasonably be expected to experience an em ployment loss as a
consequence of a proposed . . . mass layoff by their employer.” Id. at §
2101(a)(5) (emphasis added). Plaintiffs have not established they are aggrieved
employees and therefore are not entitled to summary judgment.
Defendants recognized below that plaintiffs “filed numerous affidavits in
which they imply that Defendants had advance knowledge of Plaintiffs’ layoffs
and conducted these layoffs according to [a] predetermined scheme or schedule.”
Aplt. App. at 180. They then asserted “Plaintiffs’ allegations directly conflict
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with evidence adduced by Defendants regarding their plans with respect to layoffs
at the Orem site . . . .” Id. In particular, defendants proffered an affidavit from
Neil M orris that indicated in part that
[o]n September 7, FFI laid off a total of 4 employees from the Orem
site, all of whom are Plaintiffs in this lawsuit. During the 90-day
preceding and including September 7, 2001, FFI laid off a total of 12
employees from its Orem site. As of September 7, 2001, FFI did not
plan to conduct any significant additional layoffs during the
remainder of the third quarter of 2001.
Id. at 191. Plaintiffs’ contrary evidence provides support for the general
proposition that they were “affected employees” in that they could “reasonably be
expected to experience an employment loss as a consequence of a proposed . . .
mass layoff by their employer.” 29 U.S.C. § 2101(a)(5). But the cited portion of
the M orris affidavit creates a disputed issue of material fact regarding whether
plaintiffs w ere in fact “affected employees,” precluding summary judgment in
favor of plaintiffs. W e therefore reverse this portion of the district court’s
summary judgment ruling, and we remand for further proceedings on the disputed
issue of w hether plaintiffs were affected employees under 29 U.S.C. § 2101(a)(5).
IV
For the foregoing reasons, we AFFIRM the district court’s denial of
summary judgment to defendants, REV ER SE in part its grant of summary
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judgment to plaintiffs, and R EM AND for further proceedings in light of this
opinion.
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No. 04-4045, Julie Allen v. Sybase, Inc.
KELLY, Circuit Judge, dissenting.
The defendants bought their peace with the plaintiffs when each plaintiff
signed a broad release in exchange for a severance benefit (that otherwise would
not have been paid) consisting of four weeks of the plaintiff-employee’s base
salary, plus two additional weeks of base salary for every completed year of
service. Under the court’s analysis, the plaintiffs may be entitled not only to the
severance pay granted in exchange for the release, but also sixty days back pay in
accordance with the W ARN Act.
The court holds that in the case of an aggregated mass layoff, an
employee’s W ARN Act claims do not accrue until all elements of such a claim are
satisfied, including the requirement of a mass layoff. At the same time, the court
holds that the duty to notify occurs prior to the layoffs that will ultimately be
aggregated to comprise the mass layoff. According to the court, the release in
this case 1 only covers past and present claims as of the date of signing, and
1
The release provides in pertinent part;
I agree that my Severance Benefit is in full satisfaction of any
claims, liabilities, demands or causes of action, known or unknown,
that I ever had, now have or may claim to have had against the
Company or any [of] its parents, . . . as of the date of this Release,
except claims for workers’ compensation insurance and
unemployment insurance benefits. Any claims whether for
discrimination, including claims under state law, Title VII of the
(continued...)
excludes future claims, including claims which accrue after the release was
signed. The court reasons that because the W ARN Act claims did not accrue until
after the release was signed, the plaintiffs are not barred by the release. In other
words, once the W ARN Act claims accrued, the W ARN Act applies and only then
would the plaintiffs have such claims to release. Some authority exists for the
proposition that a release containing a temporal limitation does not encompass
claims that have not accrued because certain elements must later come into
existence unless such claims fall within a fair reading of the release terms. In re
Vehm Eng’g Corp., 521 F.2d 186, 188-89 (9th Cir. 1975); see also Sherman v.
Am. W ater Heater Co., Inc., 50 S.W .3d 455, 459-461 (Tenn. Ct. App. 2001)
(claim for mandatory indemnification did not arise until employee had a final,
favorable judgment which came after release); Schenck v. M inolta Office Sys.,
Inc., 802 P.2d 1131, 1135 (Colo. Ct. App. 1990) (malicious prosecution claim did
not accrue until after subsequent favorable termination of prosecution, which
came after release).
1
(...continued)
Civil Rights Act of 1964 or the Age Discrimination in Employment
Act, wrongful termination, breach of contract, breach of public policy,
physical or mental harm or distress, or any other claims, are hereby
forever released and I agree and promise that I will not file any legal
action asserting any such claims.
Aplt. App. 280.
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Here, the legal duty to notify and its breach occurred before the release was
executed, and a fair reading of the release is that it encompasses such claims. It
is a mistake to focus on the date of accrual in these circumstances, rather than the
date on which the defendants breached their legal duty to the plaintiffs. This
breach must have occurred, if at all, “as of the date of this release,” and therefore
the agreement released the defendants from all potential legal liability arising
from it.
W e begin with the proposition that “[o]nce a party establishes that his
opponent signed a release that addresses the claims at issue, received adequate
consideration, and breached the release, the opponent has the burden of
demonstrating that the release was invalid because of fraud, duress, material
mistake, or some other defense.” W illiams v. Phillips Petroleum C o., 23 F.3d
930, 935 (5th Cir. 1994). The parties in this case disagree about whether the
release is broad enough to encompass the W ARN Act claims; there is no dispute
that the release is enforceable as to the claims it encompasses. See W right v.
Southwestern Bell Tel. Co., 925 F.2d 1288, 1292 (10th Cir. 1991) (listing seven
factors to be considered in deciding whether a release is knowing and voluntary).
In interpreting a release, our job is to give effect to the intent of the parties
when the release was signed. Joe v. First Bank Sys., Inc., 202 F.3d 1067, 1070
(8th Cir. 2000). A release need not specifically mention W ARN Act claims to
encompass them. See Int’l Ass’n of M achinist & Aerospace W orkers, AFL-CIO
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v. Compania M exicana de A viacion, S.A. De C.V., 199 F.3d 796, 799 (5th Cir.
2000); W illiams, 23 F.3d at 936. Public policy favors enforcement of
unambiguous release agreements. Joe, 202 F.3d at 1070.
According to the plaintiffs, the defendants “could have drafted Plaintiffs’
releases to include any and all claims, known and unknown, past, present and
future. They did not. Instead, they drafted it to include only claims that had
arisen (known or unknown) ‘as of the date of this Release.’” Aplees. Br. at 35
(emphasis in original). This analysis fails to consider the terms of the release as a
whole. By its terms, this very broad release encompasses “any claims, liabilities,
demands, or causes of action, known or unknown, that I have ever had, now have,
or may claim to have had.” There is a past, present and future orientation and the
claims may be know n or unknow n–it is clear that the defendants exchanged
generous severance benefits for a release of all claims relating to the layoffs. The
phrase “as of the date of this release” is really no different than limiting the
release to events occurring on or before its execution–a standard feature of most
release agreements. See, e.g., Rogers v. General Elec. Co., 781 F.2d 452, 455
(5th Cir. 1986); Smith v. Verizon Commc’ns, Inc., No. CIV-04-190-M , 2005 W L
1907307, at *1-3 (W .D. Okla. Aug. 10, 2005).
Indeed, it is doubtful that a release could validly waive claims lacking a
nexus to events which have occurred and still be consistent w ith public policy.
There is no requirement that every element of a cause of action be satisfied as of
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the date of the release. Rather past, present and future claims, liabilities,
demands, or causes of action are contemplated. See Chaplin v. NationsCredit
Corp., 307 F.3d 368, 372 (5th Cir. 2002) (construing release “from any and all
claims, suits, demands, or other causes of action of any kind . . . arising at any
time in the unlimited past” and noting that “[t]he terms of the releases
unambiguously reveal an intent to cover every imaginable cause of action . . .”);
Shutes v. Harrisburg Elementary Sch., No. 98-35330, 1999 W L 1020963, at *2
(9th Cir. Nov. 8, 1999) (in concluding that attorney’s fees were barred by a
similar release, court noted the absence of ambiguity when the release was
considered as a whole and that the terms “demand” and “claims” have “no
implication of being limited to the assertion of a cause of action”). Here, the
claim, demand, or cause of action is based upon a failure to give notice as of the
date of termination in accordance with the W ARN Act. The only reasonable
construction of the agreement in light of the facts is that the failure had occurred
“as of the date of this release” and is encompassed therein. W hen coupled with
its reference to the payment as a “Severance Benefit,” it is plain that the
agreement was intended to exchange severance benefits for a release of all
liability related to the layoffs. The difficulty with the court’s construction is that
it confuses the potential legal implications of the facts (which would become
apparent later) with the facts themselves. I respectfully dissent.
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