Halkias v. General DynamicsHalkias v. General Dynamics
I. FACTS & PROCEDURAL HISTORY
On January 13, 1988, General Dynamics and McDonnell Douglas Corporation were awarded a contract by the United States Navy to jointly develop a new generation of carrier-based, medium attack aircraft to be known as the A-12 “Avenger“. The contract contained several provisions reflecting a concern for the abusive cost overruns of the past. Costs between the target price of $4.4 billion and the ceiling price of $4.8 billion would be shared by the government and the contractors (60% by the government and 40% by the contractors). All costs over the ceiling price would be absorbed by the contractors.
By May, 1990, the A-12 contractors had incurred substantial unforeseen production difficulties and by its own estimate, General Dynamics concluded that the cost of completion would be $700 million more than planned. On June 13, 1990, the contractors notified the Navy that the costs of completion would overrun the contract ceiling by an amount that the contractors could not absorb. Throughout the remainder of 1990 production continued amidst various attempts to restructure the contract, which did result in a new delivery schedule. However, the Navy would not agree to change the contract ceiling price. Meanwhile, the threat of contract cancellation loomed overhead.
On December 14, 1990, the Secretary of Defense directed the Navy to show cause by January 4, 1991, why the A-12 contract should not be canceled. Later that same day, General Dynamics received informal notice of the Secretary‘s show cause order. On December 17, 1990, the Navy gave the contractors notice that their performance on the A-12 contract was “unsatisfactory” and that unless specified conditions were met by January 2, 1991, the contract might be terminated. On December 20, 1990, General Dynamics issued a special bulletin to all of its employees notifying them that the A-12 contract was in jeopardy and promising to provide notices the next day to each individual employee who might lose his or her job. As promised, on December 21, 1990, General Dynamic sent out individual notices to all potentially affected employees, providing official but conditional notification that they might be terminated in the event that the A-12 contract were canceled. On January 7, 1991, Secretary Cheney announced his decision to terminate the A-12 contract effective immediately. As a result General Dynamics immediately began laying off affected employees. Approximately 2000 non-union salaried employees were laid off from General Dynamics’ Fort Worth, Texas, and Tulsa, Oklahoma, facilities.
On November 24, 1992, Plaintiff John Halkias filed suit under the Worker Adjustment and Retraining Notification Act,
On October 3, 1995, the district court determined that the Texas four-year statute of limitations for actions for debt,
On December 12, 1996, the district court issued a scheduling order establishing July 31, 1997, as the deadline for completion of discovery. On January 16, 1997, General Dynamics filed its motion for summary judgment, arguing that sixty-day advance written notice was not required in this case, because the layoffs were “caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.”
- Did the district court err by refusing to continue General Dynamics’ motion for summary judgment so that additional discovery might be conducted in accordance with
Fed. R. Civ. P. 56(f) ? - Did the district court err by granting General Dynamics’ motion for summary judgment?
II. LAW & ANALYSIS
A. The WARN Act
The WARN Act provides that:
“[a]n employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order ... 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....”
“[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 ... An employer relying on this subsection 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.”
General Dynamics argues that the cancellation of the A-12 contract and the resultant
Appellant argues that General Dynamics knew or should have known that the A-12 contract would be canceled. As evidence that the cancellation was reasonably foreseeable, Appellant offered the testimony of its expert, Dr. Lawrence Korb, in another WARN Act case arising out of these layoffs, wherein Dr. Korb testified that General Dynamics knew as early as October, 1990, that if it did not pass the Defense Acquisition Board‘s review in December, 1990, the project would not go forward.2 Appellant also offered various minutes from General Dynamics’ board of directors meetings wherein the A-12 project and its possible termination were discussed. Appellant argued that those minutes showed that General Dynamics’ CEO Stanley Pace was aware of the cancellation of a similar Lockheed aircraft project because of cost overruns and production delays.
Before we may review the evidence, some clarification of the precise question before this Court is in order. We must determine whether the evidence before the district court supported a finding, as a matter of law, that 60-days before the layoffs in this case General Dynamics could not reasonably have foreseen the cancellation of the A-12 contract which precipitated these layoffs. Yet, the question of reasonable foreseeability begs another question: by adopting “reasonable foreseeability” as a standard, does the WARN Act envision the probability of an unforeseen business circumstance (i.e. the contract cancellation) or instead the mere possibility of such a circumstance? We can only conclude that it is the probability of occurrence that makes a business circumstance “reasonably foreseeable” and thereby forecloses use of the
B. The Evidence
Having reviewed the summary judgment evidence closely, we must conclude that the district court properly granted summary judgment. There is no doubt that the evidence showed General Dynamics’ board of directors knew of the possibility of contract cancellation and mass lay-offs as early as June, 1990. In particular, as early as June 6, 1990, minutes of the General Dynamics board of directors meeting indicate that the board was aware of the likelihood of a substantial cost overrun and production delay, that the Navy and Department of Defense were aware of these problems and that General Dynamics had begun negotiations with the Navy and Department of Defense to restructure the contract.
At the August 1, 1990, meeting of the board of directors, the Chairman of the board, Mr. Stanley Pace discussed with the board members the recent experience of the Lockheed corporation in its development of an aircraft for the Navy. It was reported by Mr. Pace that Lockheed had received insufficient
Therefore, by November 7, 1990, it is clear that three possibilities existed. Either the contract would be restructured, the contract would be canceled, or General Dynamics would simply default rather than absorb the cost overruns. The minutes of various board meetings would support a jury‘s conclusion that the board was aware of the possibility that the contract would be canceled. Nevertheless, the evidence in mitigation of the potential for contract cancellation, precludes that possibility from becoming a probability. As noted previously, the Navy and Secretary Cheney had expressed their continuing support for the A- 12 program up to the last minute. Given that unwavering support, it seemed less than probable that the contract would be canceled. Therefore, even if the evidence presented a good faith dispute as to the possibility of contract cancellation, in the face of the Navy‘s and Secretary Cheney‘s continuing support, no rational jury could have concluded that contract cancellation was a foreseeable probability until the last minute, i.e., December 14, 1990.
III. CONCLUSION
Having concluded that summary judgment was appropriate, we affirm. We do not reach the question of whether the district court erred by refusing to allow further discovery before ruling on General Dynamics’ motion for summary judgment. Appellants have not demonstrated to this Court that further discovery would lead to any evidence, which might raise the A-12 contract cancellation from a possibility to a probability any sooner than December 14, 1990. AFFIRMED.