Stuart Day v. Celadon Trucking Services, Inc
827 F.3d 817
8th Cir.2016Background
- Continental Express sold its trucking business to Celadon under an Asset Purchase Agreement (APA) effective December 4, 2008; Celadon purchased business name, customer lists, contracts and related operational assets. Celadon agreed to offer employment to many drivers but only hired 201 of Continental’s ~658 employees.
- The APA allocated WARN Act notice responsibility to Continental and stated Celadon would not assume WARN liabilities; Continental agreed to defend Celadon in the ensuing litigation and initially answered the complaint.
- 449 former Continental employees were identified as suffering an "employment loss" after the sale; employees filed a class action under the WARN Act seeking statutory damages for failure to give 60 days’ notice.
- The district court certified a Rule 23(b)(3) class, granted partial summary judgment for WARN liability (finding the transaction a sale of a business as a going concern), and later awarded damages after a burdenshifting damages procedure because Continental’s personnel/payroll records were unavailable.
- Celadon challenged liability, class certification, admissibility of representative evidence of damages, and sought a reduction under the WARN Act’s good-faith defense; the district court denied relief on those fronts and the Eighth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Celadon was the WARN Act employer after the sale (sale of going concern vs. mere asset sale) | Sale transferred business as a going concern so purchaser (Celadon) became employer and thus liable for post-sale employment losses | Transaction was a mere asset sale; therefore seller (Continental) retained WARN notice obligation | Transaction was a sale of a business as a going concern; Celadon was the statutory employer for post-sale employment losses, so liability attached to Celadon |
| Whether the district court erred in placing burden on Celadon to identify excluded class members on decertification motion | Class certification was proper; employees met Rule 23 and burden to certify; Celadon must identify excluded members after earlier rulings and notice | District court improperly shifted burden to defendant on decertification | No abuse of discretion; given procedural history, district court properly required Celadon to show which certified-members should be excluded |
| Whether individualized damage questions required decertification under Rule 23(b)(3) | WARN liability and damages are common and appropriate for class treatment; individualized rate calculations are ministerial | Individualized damage inquiries predominate and warrant decertification | Class certification under Rule 23(b)(3) stands; common issues predominate and individualized damages do not defeat class treatment |
| Whether the district court properly used Mt. Clemens burden-shifting and admitted representative evidence to calculate damages given missing records | Employees made a sufficient initial showing; burden shift appropriate; representative evidence admissible if reliable | Mt. Clemens inapplicable; lack of WARN record-keeping obligation prevents burden shift; representative evidence unreliable | District court did not abuse discretion: Mt. Clemens-style burden-shift appropriate due to missing records; representative evidence permitted and Celadon failed to rebut it |
| Whether Celadon was entitled to reduction of liability under WARN Act good-faith defense | Celadon contends its legal interpretation was objectively reasonable and thus warrants reduction | Employees argue statutory allocation and facts show no reasonable basis for Celadon to believe it had no notice duty | Court declined reduction: Celadon failed to show objective reasonableness; no abuse of discretion in denying good-faith reduction |
Key Cases Cited
- Rifkin v. McDonnell Douglas Corp., 78 F.3d 1277 (8th Cir. 1996) (standard of review for summary judgment)
- Wilson v. Airtherm Prods., Inc., 436 F.3d 906 (8th Cir. 2006) (distinguishing asset sales from sales of a business as a going concern under WARN)
- Smullin v. Mity Enters., Inc., 420 F.3d 836 (8th Cir. 2005) (statutory focus on common-sense "sale of a business" concept)
- Burnsides v. MJ Optical, Inc., 128 F.3d 700 (8th Cir. 1997) (discussion of employer responsibility when sale effective date coincides with employment loss)
- Mt. Clemens Pottery Co. v. Andrews, 328 U.S. 680 (U.S. 1946) (burden-shifting when employer records are inadequate)
- Tyson Foods, Inc. v. Bouaphakeo, 136 S. Ct. 1036 (U.S. 2016) (permissibility of representative evidence depends on reliability)
- Castro v. Chicago Hous. Auth., 360 F.3d 721 (7th Cir. 2004) (standard for WARN Act good-faith defense)