CHARLES A. THOMAS, et al.,
v. No. 93-7613
NORTH STAR STEEL COMPANY, INC.,
BRIEF FOR APPELLANTS
This is an appeal from the dismissal of a damages action based on the failure of North Star Steel Company to give the plaintiffs advance warning of its intention to close down the plant at which they were employed, as required by the Worker Adjustment and Retraining Notification Act ("WARN"), 29 U.S.C. § 2101 et seq. Like almost 90% of employees nationwide, plaintiffs are not represented in collective bargaining by any union. Nevertheless, North Star argued below that, because the National Labor Relations Act ("NLRA") might have made it an unfair labor practice to fail to provide notice, had they been represented by a union, their WARN claim was untimely because it was not filed within the six-month period for filing unfair labor practice charges under the NLRA. Because the court below departed without justification from the general rule requiring courts to "borrow" limitations periods from state law for federal claims that do not have express limitations periods, absent exceptional circumstances not present here, the ruling below must be reversed.
The district court had jurisdiction of this action under 28 U.S.C. §§ 1331 and 1337, and 29 U.S.C. § 2104(a)(5). The district court granted summary judgment dismissing the action by order dated May 25, 1993. A motion for reconsideration under Rule 59(e) of the Federal Rules of Civil Procedure was denied on August 26, 1993. The notice of appeal was filed on September 3, 1993. This Court has jurisdiction under 28 U.S.C. § 1291.
Did the district court correctly rule that the statute of limitations for WARN damages claims should be borrowed from section 10(b) of the NLRA, in light of the general rule that, when Congress provides no express limitations period for federal causes of action, courts should borrow the most analogous state limitations period absent exceptional circumstances?
Until 1991, defendant-appellee North Star Steel Corporation ("North Star") operated a production facility in Milton, Pennsylvania, producing hot rolled steel bars and other steel products. Joint Appendix ("JA") 2. Most of its employees were paid by the hour and were represented in collective bargaining by the United Steelworkers of America ("USWA"). The plaintiffs-appellants in this case, by contrast, were salaried employees, some of them supervisors, who were not represented by any union. JA 2, 13.
On February 25, 1991, North Star announced that all of its employees would be laid off, effective immediately, for an indefinite period, and that the plant would be closed for the time being. JA 7. None of the employees, hourly or salaried, was given any advance notice of this action. JA 8. North Star refused to state how long the plant would be closed, or even whether the closure was permanent. JA 14. As a consequence, it refused to provide plaintiffs with the accumulated vacation and severance pay to which they would have entitled had their lay-off been admitted to have been permanent. JA 14-15, 16. Plaintiff Thomas, who was the controller at the Milton plant, made numerous inquiries about North Star's plans, but received only vague and inconclusive answers. Id.
On September 9, 1991, the USWA, not accepting North Star's claim that it was unsure how long the layoff would last, sued in the United States District Court for the Western District of Pennsylvania, claiming that North Star's failure to provide advance notice violated WARN. USWA v. North Star Steel, 809 F. Supp. 5, 6 (M.D. Pa. 1992), aff'd, 5 F.3d 48, 8 IER Cases 1281 (3d Cir. 1993). USWA sued only on behalf of the employees whom it represented, and it did not seek any relief for the plaintiffs here. Id. at 7. Although that suit was filed more than six months after the unannounced closing of the Milton plant, North Star apparently did not raise the statute of limitations as a defense.
Eventually, Thomas began to put his inquiries in writing. JA 15. Meanwhile, North Star conceded in the USWA suit that it had committed what it called a "technical" violation of WARN, and on April 9, 1992, the district court granted summary judgment against North Star, and later determined the number of days for which it was required to pay the USWA's members. USWA v. North Star Steel Co., supra. By letter dated May 21, 1992, North Star promised Thomas that it would make the same payments to its non-union employees as the district court decided had to be made to employees represented by the USWA. JA 16. Although North Star continued to make such promises, JA 18, it ultimately provided the plaintiffs only with their accumulated vacation and severance pay. JA 15. As late as August, 1992, North Star was claiming that it had anticipated that the lay-off would be only temporary, and that only in that month had it decided to make the closure permanent. JA 34.
B. Proceedings Below.
Two months later, on October 23, 1992, plaintiffs filed this action against North Star in the United States District Court for the Western District of Pennsylvania, alleging that North Star's failure to notify them violated WARN. North Star's answer did not deny that it had violated WARN, but it did raise the statute of limitations as an affirmative defense. JA 10-12.
On April 1, 1993, plaintiffs moved for summary judgment on the merits, arguing that the Court should follow the normal rule under which, when Congress fails to include an express limitations period in a statute, the courts should borrow the state limitations period governing the most analogous cause of action. Inasmuch as employees' wages and benefits are used to measure damages in a WARN suit, plaintiffs argued that the Court should borrow the three-year period provided by the Pennsylvania Wage Payment and Collection Law, 43 Pa. Stat. Ann. § 260.9a(g).
North Star cross-moved for summary judgment on the ground that the action was untimely. North Star acknowledged the usual rule under which a state limitations period should be borrowed, but argued for an exception, under which, according to North Star, a federal period should be borrowed if it was more closely analogous than any state period and the application of a state period would defeat the policies behind the federal law being enforced. On this ground, North Star argued for borrowing the six-month limitations period for filing unfair labor practice charges contained in section 10(b) of the NLRA, 29 U.S.C. § 160(b), even though none of the plaintiffs were represented by a union. Plaintiffs opposed this motion, pointing out that most courts had rejected the application of the six-month period, and arguing that the reasoning of these courts was more persuasive than the decisions on which North Star relied.(1)
On May 25, 1993, in an opinion that is reported at 8 IER Cases 1287, the district court granted North Star's motion for summary judgment. JA 19-28. The court concluded that WARN was most analogous to the NLRA, on the theory that both statutes protect employees from loss of their jobs. JA 24. It also opined that failure to adopt a federal statute would harm the policies behind WARN, but for one reason only -- that the lack of a uniform limitations period from state to state could lead to uncertainties among employers and employees about when the cause of action expired. JA 26. By a timely motion for reconsideration, JA 30, plaintiffs called the district court's attention to a number of decisions contrary to its ruling, but the district court adhered to its position. JA 31-33.
This Court recently affirmed the district court's judgment on the damages to be awarded to North Star's hourly employees, while vacating the denial of attorney fees. USWA v. North Star Steel Co., 5 F.3d 48, 8 IER Cases 1281 (September 14, 1993). The recently docketed appeal in USWA v. Crown, Cork & Seal, No. 93-2008, raises the same legal question as this appeal.
Because the action was dismissed based on a motion for summary judgment, this Court's review is de novo.
As a general rule, the limitations period for a federal cause of action is borrowed from the most closely analogous state law. In DelCostello v. Teamsters, 462 U.S. 151 (1983), the Supreme Court carved out what it characterized as a "narrow exception" to this general rule for the federal cause of action to enforce rights under collective bargaining agreements ("CBAs") when a union violates its duty of fair representation ("DFR"), which is implied by the NLRA. The Court decided that, because of the need to resolve disputes involving CBAs in order to maintain labor peace, a short limitations period was required to allow the bargaining parties to be certain that their resolutions of such disputes were in fact final. Accordingly, it ruled that the time allowed for filing unfair labor practice charges under the NLRA -- the six-month period of section 10(b) of the NLRA -- would be borrowed for DFR suits. The Court emphasized, however, both in DelCostello and in later cases, such as Reed v. UTU, 488 U.S. 319 (1989), that the borrowing of state limitations period was to remain the norm, for labor as well as other federal claims.
This general rule, and not the narrow exception, applies to WARN claims. To be sure, any labor law claim could be said to have some connection, in some cases, to bargaining disputes. But if the result in DelCostello is to remain an exception rather than become the rule, the application of section 10(b) must be confined to claims which carry the same direct and immediate threat to the finality of bargaining compromises that DFR claims do.
WARN claims pose no threat to finality. Indeed, WARN claims are fundamentally unlike DFR claims, which are based on workers' economic rights as members of a bargaining unit represented by a union; WARN claims, by contrast, are founded on employees' statutory rights, independent of any contract, even a CBA; indeed, only 10% of all employees protected by WARN are even represented by unions. Moreover, the adoption of a short statute of limitations threatens the remedial objectives of WARN, and, given the tenuous connection between WARN claims and bargaining compromises, there is no countervailing justification for endangering the ability of union members to protect their rights, comparable to the need for finality in DFR actions.
Under the general rule of borrowing from state law, either the three-year limitations period for enforcing claims under the Wage Payment Collection Law, or the two-year period for suing for a civil penalty, is the most analogous state period. Even if the Court chooses to borrow a federal limitations period, the two-year limitations period for filing wage claims under the Fair Labor Standards Act provides a better balance between defendants' interest in repose and plaintiffs' interest in protecting rights that Congress has granted them.
I. UNDER DELCOSTELLO AND ITS PROGENY, THE GENERAL RULE, "IN LABOR LAW AND ELSEWHERE," REQUIRES THE BORROWING OF STATE LIMITATIONS PERIODS, SUBJECT TO A "NARROW EXCEPTION" WHEN A "COMPELLING" CASE CAN BE MADE TO BORROW A FEDERAL PERIOD INSTEAD.
With some exceptions, federal statutes do not contain their own limitations periods; rather, they must be borrowed from other sources. The Supreme Court has repeatedly declared that, as a general rule, courts should apply the most closely analogous state statute of limitations. Johnson v. Railway Express Agency, 421 U.S. 454, 462 (1975); Runyon v. McCrary, 427 U.S. 160, 180 (1976). The determination of which state statute of limitations is to be borrowed frequently presents a difficult issue of characterization, because federal statutes often create rights for which there is no exact state parallel. The Court has made clear, however, that mere difficulty of characterization is not a sufficient reason to abandon the effort. DelCostello v. Teamsters, 462 U.S. 151, 171 (1983); Wilson v. Garcia, 471 U.S. 261 (1985).
There is a narrow exception to the general rule, however, for cases in which the use of analogous state statutes would frustrate the implementation of national policies. Occidental Life Ins. Co. v. EEOC, 432 U.S. 355, 367 (1977). As the Court held in DelCostello, the "hybrid" action against a union and an employer is one example. In order to place in context the reasons why the Court found it necessary to make an exception in that type of case, it is important to explain the precise role which "hybrid" actions play in federal labor law, and then to examine how they differ from WARN cases such as this.(2)
Individual employees, as well as their unions, may sue under section 301 of the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 185, to enforce rights conferred on them by CBAs between their employers and their unions. Smith v. Evening News Ass'n, 371 U.S. 195, 200 (1962). But the Court has erected a significant procedural barrier to prevent the courts from being inundated with suits to enforce CBAs -- the plaintiff must exhaust contractual grievance procedures, including arbitration, before suit is filed. Republic Steel v. Maddox, 379 U.S. 650 (1965). It has also erected a major substantive barrier to such suits -- the courts will not overturn arbitral awards unless the award cannot be justified as having drawn its essence from the CBA. Steelworkers v. Enterprise Wheel & Car Corp., 363 U.S. 593 (1960).
But the Court has recognized that employees may be prevented from exhausting the contractual procedures, or may be unable to obtain a fair hearing in arbitration, if the union breaches its DFR either in deciding not to pursue the contractual procedures or in the way it conducts them. Accordingly, the Court has ruled that individual employees seeking to enforce their rights under a CBA will be excused from the exhaustion requirement, and from the highly deferential standard of review under Enterprise Wheel, if, but only if, they can show that the union breached its DFR in handling the grievance. Vaca v. Sipes, 386 U.S. 171 (1967); Hines v. Anchor Motor Freight, 424 U.S. 554 (1976). A lawsuit in which employees seek to enforce both the CBA against the employer, and the DFR against the union, is known as a "hybrid" action.
The issue of the proper limitation period for hybrid actions first reached the Court in UPS v. Mitchell, 451 U.S. 56 (1981). In Mitchell, the narrow question on which certiorari was granted was which state statute was the most analogous for post-arbitration hybrid suits against employers alone, and the Court decided that the most analogous statute was that for suits to vacate arbitration awards. Id. at 61-62. In reaching that result, the Court relied on the fact that, absent a fairly short limitations period, the parties to the CBA could not be sure that an arbitrator's resolution of a dispute under the agreement was in fact final. It was for this reason that the Court rejected state limitations periods for enforcing contractual rights, because they allowed too long a period in which the arbitrator's disposition of a grievance was in question, and their use would frustrate federal policy favoring prompt resolution of labor-management disputes. Id. at 63-64.
Two years later, in DelCostello, the issue was whether to apply a federal limitations period, instead of any of the state alternatives, in hybrid suits against both an employer and a union. The Court reiterated its concern that several of the analogous state limitations periods, such as actions for tortious injury or for professional malpractice, were so lengthy that employer-union disputes, and the compromises by which they were resolved (including negotiated terms, settled grievances, or even arbitral adjudications), could remain in limbo for years, and thus could endanger stability in labor relations and, in the long run, labor peace. 462 U.S. at 168-169. The other most analogous state statutes, such as those governing actions to vacate arbitration awards, were so short -- generally three months -- that aggrieved employees would not have enough time to file suit. Id. at 165-168. Moreover, the Court recognized that the most analogous state statutes were different for the employer and for the union, and if each were applied to their respective defendant, the result would be the application of different limitations periods to two parties to the same suit, which would clearly have been undesirable. Id. at 169 n.19.
Still, the Court said, "[t]hese objections to the resort to state law might have to be tolerated if state law were the only source reasonably available for borrowing, as it often is." Id. at 169. However, it found that section 10(b) of the NLRA, 29 U.S.C. § 160(b), was more appropriate than any of the state analogies, both because Congress had designed it to accommodate a "very similar balance of interests", i.e., employee rights versus the stability of private adjustment of labor disputes, and because the DFR cause of action was itself implied from the NLRA. Id. at 169-171.
The Court carefully emphasized the narrowness of its holding, however, and to admonish that courts should not too readily decline to adopt state limitation periods simply because state law fails to provide a perfect analogy: "We stress that our holding today should not be taken as a departure from prior practice in borrowing limitations periods for federal causes of action, in labor law or elsewhere. . . . [R]esort to state law remains the norm for borrowing of limitations periods [unless] a rule from elsewhere in federal law clearly provides a closer analogy than available state statutes, and . . . the federal policies at stake and the practicalities of litigation make the rule a significantly more appropriate vehicle." Id. at 171-172 (emphasis added).
As a result of these limits, the only other group of labor law suits to which Courts of Appeals have agreed to extend section 10(b) is hybrid suits against unions and employers under the Railway Labor Act ("RLA"). These cases are so similar that DelCostello's reasoning applies to require the borrowing of a federal limitations period in such cases as well. E.g., Sisco v. Conrail, 732 F.2d 1188 (3d Cir. 1984). The only other labor statute to which this Court now applies section 10(b) is the provision governing seniority of airline employees in the Airline Deregulation Act. Haggerty v. USAir, 952 F.2d 781 (3d Cir. 1992). This case presents a special situation, and is discussed at length infra at 28-29.
The predominant trend for non-DFR labor cases, however, is illustrated by Reed v. UTU, 488 U.S. 319 (1989), where the Supreme Court held that state limitations periods should be borrowed to govern claims under Title I of the Labor-Management Reporting and Disclosure Act of 1959. The Court rejected the contention that the six-month period of section 10(b) should be borrowed, on the theory that intra-union disputes will sometimes affect collective bargaining disputes, because such disputes were often not involved at all, and even when they were involved, LMRDA cases would have
substantially less immediate and less significant an impact on bargaining and private dispute settlement than that which led us to apply the § 10(b) statute to hybrid § 301/fair representation claims, which directly challenge both the employer's adherence to the collective bargaining agreement and the union's representation of the employee in grievance-and-arbitration procedures.
Id. at 331.
Moreover, the Court noted, the LMRDA had been enacted because Congress was dissatisfied with the NLRA's protection of the union member interests that the LMRDA was intended to safeguard. And, most important, the lower court in Reed had "fail[ed] to take seriously our admonition that analogous state statutes of limitations are to be used unless they frustrate or significantly interfere with federal policies," id. at 327, for which a "compelling demonstration" is required. Id. As the Court further emphasized,
This is a narrow exception to the general rule. As we made clear in DelCostello, "in labor law or elsewhere," application of a federal statute will be unusual, and "resort to state law remains the norm for borrowing of limitations periods."
Id. at 324.
See also Lampf, Pleva, Lipkind v. Gilbertson, 111 S. Ct. 2773, 2778 (1991) (emphasizing that "the 'state-borrowing doctrine' may not be lightly abandoned."
Similarly, the courts of appeals that have considered the proper limitations period under section 303 of the LMRA, 29 U.S.C. § 187, in actions to enforce the secondary boycott provisions of the NLRA, have opted not to apply the six-month period of section 10(b). Monarch Long Beach Corp. v. Teamsters Local 812, 762 F.2d 228, 231 (2d Cir. 1985); Carruthers Ready-Mix v. Cement Masons Local 520, 779 F.2d 320 (6th Cir. 1985); Prater v. UMW, 793 F.2d 1201, 1209-1210 (11th Cir. 1986). These courts applied longer, state limitations periods even though labor-management relations are directly affected by such suits, and a secondary boycott, like a breach of the DFR, is an unfair labor practice for which Congress expressly prescribed a six-month limitations period for filing charges with the NLRB. Despite the fact that case for borrowing section 10(b) is far more compelling for cases under section 303 than for WARN cases, these courts concluded that the effect of such litigation on stable labor-management relations, and consequently on labor peace, is insufficient to warrant a departure from the normal rule of borrowing analogous state limitations periods.
Moreover, the limitations periods in employment discrimination cases have been borrowed from state law, Johnson v. Railway Express Agency, 421 U.S. 454, 462 (1975), despite the fact that such suits frequently call into question matters which had been resolved between unions and employers. Id.; Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974) (Title VII case). The lower courts continued to apply state limitations periods in such suits under 42 U.S.C. § 1981, even against unionized employers, relying on the general rule discussed in DelCostello. E.g., Howard v. Roadway Express, 726 F.2d 1529, 1531 (11th Cir. 1984). See also Goodman v. Lukens Steel Co., 482 U.S. 656, 661-662 (1987) (suit against union alleging discriminatory grievance handling).
This Court's post-DelCostello decisions have reflected first a tendency to apply section 10(b) quite broadly, and then a recognition, tempered by Reed v. UTU, that the holding in DelCostello was indeed a narrow exception to the general rule. Thus, this Court initially applied section 10(b) to a wide variety of labor lawsuits under section 301 of the LMRA, Federation of Westinghouse Indep. Unions v. Westinghouse Elec. Corp., 736 F.2d 896 (3d Cir. 1984) (suit to compel arbitration); Taylor v. Ford Motor Co., 761 F.2d 931 (3d Cir. 1985) (DFR suit to enforce arbitration award); Lewis v. Teamsters Local 771, 826 F.2d 1310 (3d Cir. 1987) (suit to enforce union constitution); and even to LMRDA claims. Steelworkers Local 1397 v. Steelworkers, 748 F.2d 180 (3d Cir. 1984). Indeed, in Westinghouse, supra, the Court went so far as to indicate that the Supreme Court's adoption of a state limitations period in UAW v. Hoosier Cardinal Corp., 383 U.S. 696 (1966), had lost its vitality in light of DelCostello. The only labor claims that were regularly held subject to state limitations periods were those under ERISA. E.g., Adams v. Gould, Inc., 739 F.2d 858 (3d Cir. 1984) (claim to enforce collectively bargained pension rights); Edwards v. Wilkes-Barre Pub. Co. Pension Trust, 757 F.2d 52 (3d Cir. 1985) (suit to obtain pension benefits for strikers); Gavalik v. Continental Can Co., 812 F.2d 834 (3d Cir. 1987) (claim that plant closing was intended to prevent union members from exercising pension rights).
Since the Supreme Court's ruling in Reed v. UTU, this Court's decisions have evinced a reinvigorated emphasis on the narrowness of the DelCostello exception, "in labor law and elsewhere." Gomez v. Government of Virgin Islands, 882 F.2d 733, 736 and n.6 (3d Cir. 1989). Thus, state law periods now govern section 301 claims under a union's constitution, even when operation of a collectively bargained hiring hall has been challenged, Brenner v. Carpenters Local 514, 927 F.2d 1283 (3d Cir. 1991), as is true for suits under section 301 by unions or employers to confirm or vacate arbitral awards. Eichlay Corp. v. Iron Workers, 944 F.2d 1047 (3d Cir. 1991). And the Court again regards Hoosier Cardinal as a binding decision. SEIU v. City Cleaning Co., 982 F.2d 89, 95 (3d Cir. 1992); see also National Iranian Oil Co. v. Mapco Int'l, 983 F.2d 485, 492 (3d Cir. 1992).
Thus, the proposition that borrowing from state law is the general rule, and that federal law may be used only in "exceptional" cases, Gomez, supra, 882 F.2d at 736 n.6; National Iranian Oil, supra, 983 F.2d at 493, remains valid in this Circuit. A mere "family resemblance" between the cause of action and the NLRA is not enough to warrant application of section 10(b). Brenner v. Carpenters Local 514, 927 F.2d 1283, 1295 (3d Cir. 1991). In the next section of this brief, we demonstrate that there is every reason to follow the general rule here.
II. NORTH STAR HAS NOT MADE THE "COMPELLING DEMONSTRATION" NEEDED TO SUPPORT BORROWING A LIMITATIONS PERIOD FROM FEDERAL RATHER THAN STATE LAW.
The district court held that WARN warrants an exception to the general rule because, it believed, the NLRA was more analogous to WARN than any state statute, and because the failure to adopt a uniform federal limitations period would harm the policy objectives underlying WARN. Most courts, including the only court of appeals to address this question, squarely reject this reasoning. Paperworkers Local 340 v. Specialty Paperboard, 999 F.2d 51 (2d Cir. 1993); Frymire v. Ampex Corp., 821 F. Supp. 651 (D. Colo. 1993); Wallace v. Detroit Coke Corp., 818 F. Supp. 192 (E.D. Mich. 1993); Machinists Local 701 v. Santa Fe Terminal Serv., 8 IER Cases 897, 1993 U.S. Dist. LEXIS 5859 (N.D. Ill. 1993); Steelworkers v. Crown, Cork & Seal Co., 8 IER Cases 1285 (E.D. Pa. 1993); Teamsters Local 63 v. Santa Fe Terminal Serv., 8 IER Cases 778, 1993 U.S. Dist. LEXIS 8923 (C.D. Calif. 1993).(3) As we now show, neither the reasons advanced by the district court, nor any others that North Star advanced below, warrant a departure from the rule of borrowing from state law.
A. The NLRA Is Not Analogous to WARN.
The district court expressed the view that WARN's purposes are comparable to those of the NLRA, thus warranting the borrowing of the NLRA's six-month limitations period. In fact, the purposes of the two laws are quite different. The purposes of the NLRA are well-described in its preamble: to achieve long-term industrial peace, and prevent disputes between labor and management from becoming so serious as to cause constant industrial warfare, by encouraging workers to choose unions to represent them in collective bargaining, and then requiring employers to bargain in good faith with the workers' chosen representative. 29 U.S.C. §§ 141(b), 151. The method chosen by Congress was not to set minimum employment standards, Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 753-756 (1985); indeed, the NLRB is forbidden to require the parties to agree to any particular set of terms and conditions of employment. H.K. Porter Co. v. NLRB, 397 U.S. 99 (1970). Instead, Congress' strategy in the NLRA was to encourage the practice of collective bargaining, id., and to prevent all parties from acting in ways that are inconsistent with such bargaining. Emporium Capwell Co. v. Western Add'n Cmnty Org., 420 U.S. 50 (1975).
WARN, by contrast, promulgates a substantive standard of conduct for employers, and grants rights to all employees, regardless of whether they opt to engage in collective bargaining. Under the Act, before employees suffer an employment loss from the closing of an entire plant, or the layoff of a substantial number of workers at a plant, they are entitled to notice of the proposed action. The Act's purposes are explained in the Labor Department's implementing regulations:
[WARN] provides protection to workers, their families and communities by requiring employers to provide notification 60 calendar days in advance of plant closing and mass layoffs.
20 C.F.R. § 639.1 (1993).
Because it is a minimum labor standard, rather than a pro-collective bargaining statute, it makes no sense to borrow a limitations period that was intended to govern claims relating to the bargaining process and labor relations.
The Supreme Court has specifically invoked this difference in recognizing the distinction between the purposes of plant closing statutes and of the NLRA. In Fort Halifax Packing Co. v. Coyne, 482 U.S. 1 (1987), the issue was whether the NLRA preempted a Maine statute, comparable to WARN, that required employers to give prior notice of plant closings. The Court ruled that "the NLRA is concerned with ensuring an equitable bargaining process, not with the substantive terms that may emerge from such bargaining," id. at 20-21, and thus held that the NLRA, being directed at a different purpose than the state one, did not preempt the Maine law.
Moreover, as the Second Circuit pointed out in Paperworkers Local 340 v. Specialty Paperboard, 999 F.2d 51 (1993), far from being solely a labor statute, as the NLRA is, WARN protects communities as well as workers. As the Act's sponsors recognized, both communities and workers pay a heavy price for the dislocation that follows a surprise plant closing, as taxpayer expenses for unemployment compensation and welfare mount, and as workers lose their ability to spend money at community businesses and to pay their mortgages to community financial institutions. See 134 Cong. Rec. 15514 (Sen. Byrd), 16690-16691 (Sen. Warner). It is for that reason that the statute requires employers to give notice to the chief officer of the affected unit of local government, as well as to the state's dislocated worker agency, 29 U.S.C. § 2102(a)(2), and gives the local governments a claim of $500 for each day that notice is withheld. 29 U.S.C. § 2104(a)(3). Indeed, the statutory provision under which plaintiff sued here is the very one that entitles local governments to sue, 29 U.S.C. § 2104(a)(5). It is inconceivable that the cause of action for the local government bears any resemblance to the NLRA, so that there would be no justification for making the government sue within six months. Nor would it be sensible to hold that Congress intended the same cause of action to have two different limitations periods, depending on whether the plaintiff was a worker or a municipality. Cf. DelCostello v. Teamsters, 462 U.S. 151, 169 n.19 (1983) (refusing to employ analogies that would result in different limitations periods against different defendants). For this reason, as well, the NLRA should not be held to be the analogous statute from which the statute of limitations should be borrowed.
Not only the purposes, but also the relief available under the two statutes is very different. If the NLRA is violated, the NLRB may issue an order requiring the company to bargain with the union. Stevens Pontiac-GMC, 295 NLRB 599, 603 (1989). Employees who have been laid off may be entitled to reinstatement to their positions, North Carolina Coastal Motor Lines, 219 NLRB 1009, 1009-1010, 1015 (1975), enf'd, 542 F.2d 637, 638 (4th Cir. 1976). The NLRB may require the employer to offer them positions at other plants, Royal Norton Mfg. Co., 189 NLRB 489, 489, 495 (1971), or even, in some cases, to reopen an operation pending the completion of the required bargaining with the union. Florida-Texas Freight. Corp., 203 NLRB 509, 511 (1973), enf'd mem., 489 F.2d 1275 (6th Cir. 1974). In theory, preliminary relief could be granted under section 10(j) ordering an employer not to close the plant in the first place. The employees are also awarded back pay, but not from the date of the closing; rather, a formula has been developed that is intended to encourage an employer to bargain in good faith once the Board has ruled, although interim earnings and various other sums may be deducted. Transmarine Navig. Corp., 170 NLRB 389 (1968).
WARN relief is quite different. First, the Act expressly forbids injunctions against a plant closing or layoff, 29 U.S.C. § 2104(b), a bar which, a fortiori, prevents an order that a plant be reopened. There is no role for collective bargaining of WARN rights, and so that relief, as well as reinstatement to employment, is unavailable. The only relief for employees is an award of damages, which are calculated very differently than under the NLRA. Thus, although the employees' wages, benefits, and medical expenses provide the measure of the damages for each day on which required notice was not given, 29 U.S.C. § 2104(a)(1), there are no offsets for unemployment compensation, wages from other employers, or payments otherwise owing to employees at the time of shutdown. 29 U.S.C. § 2104(a)(2), H.R. Conf. Rep. on H.R. 3, No. 100-576, 100th Cong., 2d Sess., at 1053. And, as this Court has held, employees need not show on which days during the period of withheld notice they would in fact have worked, as the NLRA would require. USWA v. North Star Steel Co., 5 F.3d 48, 8 IER Cases 1281 (1993).
In the district court, North Star based its argument for an analogy between the NLRA and WARN on the proposition that an employer may have a duty to bargain over the effects of a plant closure (or, depending on the text of the collective bargaining agreement, over the closure decision itself). First National Maintenance Corp. v. NLRB, 452 U.S. 666, 681 (1981); Milwaukee Spring, 268 NLRB 601 (1984), enf'd sub nom. UAW Local 547 v. NLRB, 765 F.2d 175 (D.C. Cir. 1985). This duty, in turn, requires the employer to inform the union of its plans in sufficient time to permit meaningful bargaining. Gar Wood-Detroit Truck Equipment, 274 NLRB 113 (1985), What this argument ignores -- apart from the significant differences between the NLRA duty and WARN's requirements -- is that such a duty exists only when the workers are represented by a union and the duty has not been waived by the union. The reason for this limitation is that the duty to bargain is owed only to a union, and not to individual employees. 29 U.S.C. § 158(a)(5). And yet, only 11.5% of all private sector employees are union members. Bureau of National Affairs, Proportion of Union Membership Hits 15.8% [including public employees], 142 Labor Relations Reporter 180, 181 (February 15, 1993). Thus, if the fact that a small fraction of all possible WARN employee-plaintiffs (not including plaintiffs here) enjoy limited protection under the NLRA, were the basis for holding that the NLRA is analogous to WARN for limitations purposes, then the tail would indeed be wagging the dog.
Just as the Supreme Court declined to extend the application of section 10(b) to actions under the LMRDA, simply because some such suits might directly implicate challenges to collective bargaining agreements and thus closely resemble DFR actions, Reed v. UTU, 488 U.S. 319, 331-332 n.6 (1989), so the fact that some WARN plaintiffs may have NLRA protection should not affect the selection of the limitations period. Small wonder, then, that in upholding North Star's limitations argument, the district court did not endorse this aspect of North Star's argument.
There is another respect in which North Star's NLRA analogy is inconsistent with precedent: the Supreme Court and this Court have held that a mere "family resemblance" between a federal statutory claim and some aspect of the NLRA is insufficient to warrant adoption of section 10(b). Brenner v. Carpenters Local 514, 927 F.2d 1283, 1295 (3d Cir. 1991). Rather, there is sufficient similarity between the NLRA and the federal claim only when the claim directly challenges the private resolution of a dispute between a union and an employer, and thus implicates the long-term bargaining relationship between the two. Reed v. UTU, 488 U.S. 319, 331 and n.6 (1989); Grasty v. Clothing Textile Workers, 828 F.2d 123, 131-133 (3d Cir. 1987).
As we more fully discuss below, that is assuredly not the case here. Not only does WARN apply regardless of whether there is a union involved, and regardless of whether the union and employer have attempted to resolve any dispute about the plant closing, but any rights that even union members may enjoy under the NLRA are in addition to their WARN rights, as WARN expressly provides. 29 U.S.C. § 2105. Consequently, even if the union and employer reached some agreement about the closing, and union members nevertheless mounted an attack on the employer's compliance with WARN, they would be enforcing independent rights, not attacking the dispute resolution itself. Cf. Barrentine v. Arkansas-Best Freight Lines, 450 U.S. 728 (1981).
B. The Six-Month Limitations Period Is Not Needed to Protect Federal Labor Policies, and Its Adoption Could Easily Frustrate WARN's Own Policies.
North Star's argument also fails because it has not demonstrated that "the federal policies at stake and the practicalities of litigation make [section 10(b)] a significantly more appropriate vehicle." DelCostello, supra, 462 U.S. at 171-172 (emphasis added). See also National Iranian Oil Co. v. Mapco Int'l, 983 F.2d 485, 493 (3d Cir. 1992) (requiring "exceptional circumstances").
1. Section 10(b) Is Not Needed to Effectuate
The sole reason given by the district court for its conclusion that section 10(b) was required by the "federal policies" prong of the DelCostello test was that, otherwise, there would not be a "uniform" limitations period to govern actions brought in federal forums in every state. JA 25-26. If this were a sufficient reason to justify departure from the general rule of borrowing from state law, then it would never be proper to borrow from state law, because, by the very nature of federalism, different states have different limitations statutes establishing different time limits for filing suit. Thus, under the district court's approach, the exception would swallow the rule, which would surely be inconsistent with over a century of Supreme Court precedent, followed as recently as Lampf, Pleva, Lipkind v. Gilbertson, 111 S. Ct. 2773 (1991).
There are a few Supreme Court decisions in which considerations of uniformity provided part of the basis for holding that the second prong of the exception had been satisfied, but that was only where the federal statute embraced many different kinds of claims, to which different state limitations periods might apply by analogy, depending on the nature of the particular claim. For example, in Agency Holding Corp. v. Malley-Duff & Assoc., 483 U.S. 143 (1987), the Court was impelled to use a federal limitations period for RICO because RICO "encompass[ed] numerous and diverse topics and subtopics," which, depending on the precise claim, might be analogous to at least nine different state causes of action. Id. at 149. In those circumstances, so much time and energy might be spent litigating limitations questions, with even the Supreme Court unable to answer such questions for all RICO cases with a single ruling, that the practicalities of litigation required the adoption of a single federal period to govern all possible actions under that statute. Id. at 150.
That argument does not apply to WARN because it affords only one type of claim -- an action for damages for failure to provide sufficient notification. Although there has been some disagreement among the lower federal courts about which limitations period to borrow, it will take only one Supreme Court decision to resolve the question for all WARN claims (assuming that the courts of appeals do not uniformly agree with the Second Circuit, in which case it is unlikely that the Court will ever consider it). The "uniformity" argument thus does not show the need to borrow from federal rather than state law.
The district court appeared to be worried about a different uniformity issue -- whether a single large company might be subject to different limitations periods because it operates in different states. JA 26. However, WARN is quite clear in providing that the obligation to provide notice is specific to individual sites. A "plant closing" is defined by the Act as the permanent or temporary closing of a single site of employment, that causes loss of a specified amount of employment at that single site. 29 U.S.C. § 2101(a)(2). Moreover, the danger of forum shopping is minimal because, as the Second Circuit noted in Paperworkers, the law of the site of the plant is almost certain to be chosen to govern the limitations period for an action pertaining to that site. 999 F.2d at 56 n.9.
In addition, the statutes at issue in Reed v. UTU and Hoosier Cardinal -- the LMRDA and section 301 of the LMRA -- applied to many defendants that operated in more than one state, but that did not prevent the Supreme Court from following the normal federal rule by borrowing from state law. In this day and age, large companies that have facilities in multiple locations have learned to adapt to the different substantive and procedural requirements of all of the jurisdictions in which they do business. That is one of the consequences of federalism. To the extent that some companies regulated by WARN may have to take different limitations periods into account in assessing their contingent liabilities, it is hard to imagine that the application to WARN of the normal federal rule of borrowing state limitations periods will have any significant impact on those companies' operations, especially inasmuch as plant closings are not a daily occurrence in any business.
In the court below, North Star made a second argument for using a six-month statute to avoid frustration of federal policies -- that a longer period runs the risk of interfering with collective bargaining, thus warranting adoption of section 10(b) by the same reasoning as that adopted by the Supreme Court in DelCostello. Of course, it was not mere interference with collective bargaining in some general sense that motivated the Court in DelCostello, but rather the overturning of union-employer dispute resolutions:
the grievance and arbitration procedure often processes disputes involving interpretation of critical terms in the collective-bargaining agreement affecting the entire relationship between company and union . . . This system, with its heavy emphasis on grievance, arbitration, and the 'law of the shop,' could easily become unworkable if a decision which has given 'meaning and content' to the terms of an agreement, and even affected subsequent modifications of the agreement, could suddenly be called into question as much as [three] years later.
462 U.S. at 169, quoting UPS v. Mitchell, 451 U.S. 56, 63-64 (1981).
But, as we demonstrated in the previous section of this brief, WARN claims do not attack arbitral awards nor otherwise challenge union-employer agreements, and hence this rationale is inapplicable.
In the court below, North Star relied heavily on Haggerty v. USAir, 952 F.2d 781 (3d Cir. 1992), to support using section 10(b), but that case involved a very different substantive statute. The issue there was the limitations period to be borrowed for the Employee Protection Program of the Airline Deregulation Act of 1978 ("EPP"). This Court found that, although the statute did not directly challenge CBA grievance settlements, decisions on EPP claims would sufficiently affect bargaining between airline unions and employers that the reasoning of DelCostello applied with full force.
But the very factors on which this Court relied in Haggerty serve to distinguish WARN. Thus, the Court noted, "the level of unionization in the airline industry is nearly 90 percent," 952 F.2d at 787, so that almost every EPP case would involve relief for a union employee, and it would be unrealistic to distinguish the NLRA from the EPP on the theory that the EPP it is irrelevant to the relations between unions and employers. Id. at 787-788. Here, by contrast, almost 90% of the covered employees are non-union.
Similarly, in Haggerty this Court relied heavily on the fact that a large part of the relief available under the EPP, such as reinstatement and retroactive seniority, would affect the seniority relationships of other employees. Id. at 787. The Court deemed this effect to be quite similar to the need for rapid resolution of challenges to grievance settlements which, as the Court noted in DelCostello, could upset the parties' expectations and make it hard for the parties to rely on settled interpretations of the CBA. The only relief available under WARN, however, is damages in the amount of up to 60 days of back pay, and the courts are strictly forbidden from enjoining the closing of a plant or the effectuation of a layoff. 29 U.S.C. § 2104(b). Thus, in contrast to Haggerty, there is no possibility of upsetting the expectations of other employees, or of unions that represent them, even in the 10% of all cases where there is a union involved.
Indeed, WARN claims will generally be made when an employer has ceased its operations at the plant involved, thus terminating its collective bargaining relationship with any union that might have been representing its employees. A limitations argument that is predicated on the proposition that choosing the wrong statute to borrow might have undue impact on the employer's future relations with that union is, therefore, quite farfetched.(4)
2. Adoption of Section 10(b) Would Make It Difficult to Enforce WARN.
Far from being needed to effectuate federal policy, the use of section 10(b) would harm the policies underlying WARN, because a six-month limitations period is too short to permit many WARN claims to be brought. There are two reasons for such concern.
First, workers, unions and communities that consider bringing a WARN action must confront a number of issues. See generally McHugh, Fair Warning or Foul? An Analysis of the [WARN] Act in Practice, 14 Berkeley J. Emp. & Labor Law 1 (1993). If an entire plant has been permanently closed, their task is relatively simple: they must only ascertain the original number of employees, 29 U.S.C. §§ 2101(a)(1) and (2), with due regard for the number of hours worked by part-time employees, § 2101(a)(8). But if the plant continues in operation, potential plaintiffs also must assess the number and percentage of employees laid off over any thirty or ninety day period, 29 U.S.C. §§ 2101(a)(3), 2102(d), taking into account the number of employees who have been offered transfers to other locations. 29 U.S.C. § 2101(b). Even assuming that a union could use its rights under section 8(a)(5) of the NLRA to obtain such information fast enough to decide within six months whether a suit is warranted, unrepresented employees are unlikely to have any access to it. Moreover, WARN affords a variety of defenses related to considerations of reasonable business and legal judgment, as well as, in the case of partial closures, the employer's foresight concerning the likelihood of future layoffs at the time an initial layoff is imposed, as well as concerning the likely duration of the initial layoff. E.g., 29 U.S.C. §§ 2102(b), 2103(1).
Second, if the employer does not announce at the outset that the layoff or closing is permanent, prospective plaintiffs must make the judgment whether the layoff is likely to last more than six months. In this case, for example, North Star initially took the position that its layoff was indefinite, and hopefully temporary, and it steadfastly refused to clarify the matter despite repeated inquiries from plaintiff Thomas. Employees put in this position should not be required to be mind-readers in deciding whether to rush into court before the expiration of six months after the layoff began.
The borrowing of section 10(b) would require the employees, and their counsel, to obtain the necessary information and make such calculations within a mere six months. And, unlike the filing of charges with the NLRB, which is done by completing a simple government form, after which the Board's General Counsel has an unlimited time in which to investigate before deciding whether to file a complaint, initiation of a WARN complaint requires the filing of a complaint in a United States District Court, subject to Rule 11 of the Federal Rules of Civil Procedure.
In DelCostello, the Supreme Court was plainly troubled that a limitations period of a few months might be too short a time to bring suit. However, impelled to choose between time periods even shorter than six months that would endanger the enforceability of the DFR, or lengthy periods that might seriously threaten federal labor policies favoring the finality of grievance settlements, it opted for section 10(b) because the analogy between the NLRA and the DFR was so close. 462 U.S. at 169.(5) Here, by contrast, as we showed supra at 18 to 24, the analogy to the NLRA is tenuous at best, and as we showed supra at 24 to 29, federal labor policies will not be endangered by a limitations period measured in years rather than months, but adoptiion of a six-month period would endanger WARN's own policies. Supra 29 to 31. Accordingly, the case for borrowing from federal law rather than state law simply has not been made, and the decision below should be reversed.(6)
III. THIS ACTION WOULD BE TIMELY BASED ON ANY OF THE ANALOGOUS STATE LIMITATIONS PERIODS.
State law contains several limitations periods that are analogous to the claim here. The best choice, in our view, is the three years allowed by 43 Pa. Stat. Ann. § 260.9a(g) for bringing claims under the Pennsylvania Wage Payment and Collection Law ("WPCL"). Because employees' wage rates provide the measure of damages for claims under WARN, the WPCL provides a sound analogy to the WARN cause of action. This Court has previously adopted that limitations period for the enforcement of claims for unpaid pension contributions under a CBA. Connors v. Consolidation Coal Co., 866 F.2d 599, 603-604 (3d Cir. 1989).
The district court cited Haggerty v. USAir, 952 F.2d 781 (3d Cir. 1992), in refusing to borrow the WPCL's limitations period, but the reasons why this Court found the WPCL not to be analogous to the EPP cause of action have no application here. Haggerty rested on the fact that the EPP creates a statutory right to be hired, while the WPCL requires payment of wages to persons who are already employees, premised on an existing a contractual obligation between the employer and the employee. Id. at 786. So, here, under WARN, the obligation to pay the plaintiffs (and North Star's other employees) at a certain rate was contractual in nature, and the existing contract, as interpreted with the WARN's requirements read into it, establishes the level of compensation that is to be awarded. That the contract with the hourly employees was a written one (i.e., the CBA), while the contract with the plaintiffs was unwritten, based on the contractual relationship presumed by Pennsylvania law to be at-will, makes no difference for WPCL purposes.
A number of the federal courts that have borrowed state limitations periods for WARN have invoked state law statutes governing actions on contract. Paperworkers Local 340 v. Specialty Paperboard, 999 F.2d 51, 57 (2d Cir. 1993); Frymire v. Ampex Corp., 821 F. Supp. 651, 655 (D. Colo. 1993); Wallace v. Detroit Coke Corp., 818 F. Supp. 192, 196-197 (E.D. Mich. 1993). In Pennsylvania, this would allow four years if the contract is deemed one either implied in law or based on an agreement not in writing. See 42 Pa. Cons. Stat. Ann. § 5525(3) or (4).
Another alternative is the six-year period allowed by the Pennsylvania residual statute of limitations, which applies "to any civil action or proceeding which is [not] subject to another limitation specified in this subchapter." 42 Pa. Cons. Stat. Ann. § 5527. This Court endorsed the borrowing of this statute in the labor context only last year, on the ground that, by its terms, "it encompasses any cause of action -- either federal or state -- for which a limitation has not been expressly created by the legislature or by Congress." SEIU v. City Cleaning Co., 982 F.2d 89, 95 (3d Cir. 1992). Similarly, if no other state limitations period will do, the Court should borrow section 5527.
Another possible analogy is with Pennsylvania's two-year statute of limitations for enforcing civil penalties. 42 Pa. Cons. Stat. Ann. § 5524(5). WARN damages operate, at least in part, as a civil penalty. This is true not only for communities, which are entitled to $500 per day regardless of the amount of wages involved, but at least part of the reason for WARN damages is to deter employers from failing to provide 60 days' notice of a shut-down, and to punish employers when they fail to do so. That may be the best explanation for Congress' considered decision not to impose any duty to mitigate on employees, or to reduce their recovery according to whether and to what extent they sustained "actual damages" because they might not have worked on some of the sixty days in question, or because they actually found employment for some part of the sixty days. Instead, the only way in which employers can limit their exposure to WARN damages is through a demonstration of good faith, either in the commission of the violation itself, or the provision of unconditional and voluntary benefits to employees denied notice, 29 U.S.C. §§ 2104(a)(2) and (4). These factors are related more to deterrence than to compensation of employees for actual harm.
The fact that none of these possible limitations periods may provide a perfect analogy is not surprising, because states rarely enact their limitations periods with federal statutes in mind. But, as this Court stated in Gavalik v. Continental Can Co., 812 F.2d 834 (1987), in explaining its decision to borrow the six-year residual limitations period in section 5527(6) to govern retaliation claims under section 510 of ERISA,
the DelCostello Court emphasized that 'federal courts should [not] eschew use of state limitations periods anytime state law fails to provide a perfect analogy.' 462 U.S. at 171 (emphasis added). The Court recognized that 'there is not always an obvious state-law choice for application to a given federal cause of action.' Id. Nevertheless, the Court concluded that 'resort to state law remains the norm for borrowing of limitations periods.' Id. Thus, only if 'a rule from elsewhere in federal law clearly provides a closer analogy, id. at 172 (emphasis added), may we 'turn away from state law.' Id.
812 F.2d at 847 (emphasis added in original; parallel citations deleted).
The judgment of the district court should be reversed, and the case remanded for proceedings on the merits of plaintiffs' claims.
Paul Alan Levy
Alan B. Morrison
Public Citizen Litigation Group
November 9, 1993 Attorneys for Plaintiffs-Appellants(7)
Section 3(a) of WARN, 29 U.S.C. § 2102(a), provides as follows:
An employer shall not order a plant closing or mass lay-off until the end of a sixty-day period after the employer serves written notice of such an order--
(1) to each representative of the affected employees as of the time of the notice or, if there is no such representative at that time, to each affected employee; and
(2) to the State dislocated worker unit (designated or created under title III of the Job Training Partnership Act [29 U.S.C. § 1651 et seq.]) and the chief elected official of the unit of local government within which such closing or layoff is to occur.
If there is more than one such unit, the unit of local government which the employer shall notify is the unit of local government to which the employer pays the highest taxes for the year preceding the year for which the determination is made.
Section 5 of WARN, 29 U.S.C. § 2104, provides as follows, in pertinent part:
(a) Civil actions against employers
(1) Any 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 employee loss would not have 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.
(3) Any employer who violates the provisions of section 2102 of this title with respect to a unit of local government shall be subject to a civil penalty of not more than $500 per day of such violation, except that such penalty shall not apply if the employer pays to each aggrieved employee the amount for which the employer is liable to that employee within 3 weeks from the date the employer orders the shutdown or layoff.
(5) A person seeking to enforce such liability, including a representative of employees or a unit of government aggrieved under paragraph (1) or (3), may sue either for such person or for other persons similarly situated, or both, in any district court of the United States for any district in which the violation is alleged to have occurred, or in which the employer transacts business.
(b) Exclusivity of remedies
The remedies provided for in this section shall be the exclusive remedies for any violation of this chapter. Under this chapter, a Federal court shall not have authority to enjoin a plant closing or mass layoff.
Section 6 of WARN, 29 U.S.C. § 2105, provides as follows,
The rights and remedies provides to employees by this chapter are in addition to, and not in lieu of, any other contractual or statutory rights and remedies of the employees, and are not intended to alter or affect such rights and remedies, except that the period of notification required by this chapter shall run concurrently with any period of notification provided by contract or by any other statute.
Section 10(b) of the National Labor Relations Act, 29 U.S.C. § 160(b), provides as follows, in pertinent part:
Whenever it is charged that ny such person has engaged in or is engaging in any such unfair labor practice, the Board, or any agent or agency designated by the Board for such purposes, shall have power to issue and caused to be served upon such person a complaint stating the charges in that respect, and containing a notice of hearing before the Board or a member thereof