LOCAL JOINT EXECUTIVE BOARD OF CULINARY/BARTENDER TRUST FUND; BARTENDERS UNION, LOCAL 165; CULINARY WORKERS UNION, LOCAL 226; HARVEY MCCOY; RON BYFORD, Plaintiffs-Appellants,
v.
LAS VEGAS SANDS, INC., dba Sands Hotel Casino, Defendant-Appellee.
LOCAL JOINT EXECUTIVE BOARD OF CULINARY/BARTENDER TRUST FUND; BARTENDERS UNION, LOCAL 165; CULINARY WORKERS UNION, LOCAL 226; HARVEY MCCOY; RON BYFORD, Plaintiffs-Appellees,
v.
LAS VEGAS SANDS, INC., dba Sands Hotel Casino, Defendant-Appellant.
No. 98-17065, 98-17322
UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
Argued and Submitted February 14, 2000
Filed April 11, 2001
[Copyrighted Material Omitted][Copyrighted Material Omitted]
Andrew J. Kahn, McCracken, Stemerman, Bowen & Holsberry, Las Vegas, Nevada, for the plaintiffs-appellants-crossappellees.
David N. Frederick, Lionel, Sawyer & Collins, Las Vegas, Nevada, for the defendant-appellee-cross-appellant.
Appeal from the United States District Court for the District of Nevada Philip M. Pro, District Judge, Presiding. D.C. No.CV-96-00755-PMP/LRL, D.C. No.CV-96-00755-PMP/LRL
Before: Alex Kozinski, Ferdinand F. Fernandez, and William A. Fletcher, Circuit Judges.
W. FLETCHER, Circuit Judge:
Las Vegas Sands, Inc. ("Sands") violated the Worker Adjustment Retraining and Notification Act ("WARN Act" or "Act"), 29 U.S.C. SS 2101-2109, by giving its employees 45 rather than 60 days advance notice of the closure of its hotel casino in Las Vegas. The Local Joint Executive Board of Las Vegas ("the Union") and two individual representatives of nonunion employees sued for damages under the Act. Sands does not dispute that it violated the Act and must pay damages, but it contends that payments it made shortly after the closure satisfy its statutory obligations. On cross-motions for summary judgment, the district court granted partial summary judgment to both sides. Both sides appeal.
We affirm all the substantive decisions of the district court on issues of federal law.1 We hold that under 29 U.S.C. S 2104(a)(1)(A) tip income is included within the definition of "back pay" to which employees are entitled, and that employees who can prove that they would have worked on a holiday are entitled to back pay at the rate they would have been paid for that holiday. Further, we hold that under S 2104(a)(2)(B) payments made to nonunion employees on the condition that they not quit before the date of the closure are not "voluntary and unconditional payment[s]" that Sands may deduct from its WARN Act damages, and that payments made to union employees pursuant to a bargained-for Memorandum of Agreement are also non-deductible "voluntary and unconditional payment[s]."
We reverse one procedural decision. We hold that the district court erred in denying class certification to the would-be class of nonunion employees.
* On May 15, 1996, Sands informed its employees that it would close its hotel casino on June 30, 1996. By providing only 45 days notice of the termination, rather than the 60 days required by the WARN Act, Sands became liable to each employee for "back pay" for the remaining 15-day period. See 29 U.S.C. SS 2102 2104.
In a June 4, 1996 letter, Sands offered severance pay to some nonunion employees who would lose their jobs because of the closure. Under the terms of the letter, Sands would pay more than the WARN Act required to nonunion employees with more than five years service, subject to the condition that they remain at work until the actual closure. The letter did not offer anything to union employees because severance pay is a mandatory subject of bargaining. See Kirkwood Fabricators, Inc., v. NLRB,
On June 30, 1996, Sands closed its hotel casino. On July 18, Sands paid its former employees what it deemed to be their WARN Act damages. In calculating damages, Sands compensated employees for working days rather than calendar days that fell within the 15-day period. Sands did not include in its calculations the tips the employees would have earned during the 15-day period of inadequate notice. Sands also did not include double time pay for those employees who would have worked on the July 4th holiday, even though employees working on that day would have been paid that additional amount. Sands paid both union and nonunion employees with more than five years service the severance promised in the June 4th letter and the MOA. Although Sands did not normally provide prorated vacation pay for nonunion employees who quit or were discharged prior to their service anniversary, it made prorated payments to those employees.
The Union, on behalf of its members, and individual plaintiffs, on behalf of a would-be class of nonunion employees, sued Sands for damages under the WARN Act.
II
The WARN Act provides that employers within the scope of the Act "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." 29 U.S.C. S 2102(a). Employers who violate the Act by failing to provide timely noticeshall be liable to each aggrieved employee . . . 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 . . . .
29 U.S.C. S 2104(a)(1) (emphasis added).
When construing statutory language, we look first to its plain meaning. See Sacramento Reg'l County Sanitation Dist. v. Reilly,
In an earlier case brought under the WARN Act, we wrote that "[t]he term back pay has traditionally been understood to mean a sum equal to what [workers] normally would have earned had the violation not occurred." Burns v. Stone Forest Indus. Inc.,
As used in other federal statutes,"back pay" consistently includes tips. See, e.g., NLRB v. Lee Hotel Corp.,
As used in other federal statutes,"back pay" also includes holiday and overtime pay. See, e.g., Nichols v. Frank,
Sands contends that the term back pay is not used in its normal sense in the WARN Act. It argues that WARN Act damages are a penalty designed to deter future violations, rather than the traditional labor relations make-whole remedy designed to compensate employees for their losses, and that "back pay" under the WARN Act therefore includes neither tips nor holiday pay that an employee would have received if he or she had worked during the period of a WARN Act violation.
* Sands urges us not to look to other federal statutes but to other provisions of the WARN Act. Under 29 U.S.C. S 2104(a)(1)(A)(i) and (A)(ii), the Act establishes a floor for damages, using either an average rate of compensation for thelast three years or a final regular rate of compensation, whichever is higher. Sands argues from subsections (A)(i) and (A)(ii) that "back pay" under the Act is not the amount the employee actually would have earned during the period of violation. We disagree. The Act states that an employer is liable for back pay at a rate not less than the higher of the calculations specified in subsections (A)(i) and (A)(ii). These subsections do not define "back pay"; rather, they establish a floor for WARN Act damages, thereby preventing employers from lowering wages shortly before closure in order to diminish their WARN Act liability.
Sands also argues that the Act lacks a key feature of classic back pay provisions: an offset for other earnings received during the period for which back pay is owed. See, e.g., Phelps Dodge Corp. v. NLRB,
There are plausible reasons why Congress could choose not to include a provision that would make the WARN compensation provisions purely remedial, e.g., the desire to avoid placing a burden on a terminated employee to mitigate damages by taking any job offered, the desire to give a terminated employee a window of time to readjust without immediately having to search for a job, the desire for simplicity in the statutory scheme, etc.
Carpenters District Council of New Orleans v. Dillard Dep't Stores, Inc.,
B
We believe that the normal meaning of back pay is consistent with the overall purpose of the WARN Act. See United States v. Hanousek,
The conclusion that the WARN Act was intended to provide "workers . . . what they would have earned in the two-month notice period, were there no shutdown" led us to hold in Burns that workers should be compensated for work days in the violation period, not calendar days. Burns,
While some provisions of the Act are punitive in nature, the primary purpose of the Act is remedial. Among other things, we note that the Act waives a $500 per day penalty otherwise owed by the employer to the government if the employer pays laid-off employees their "back pay " under the WARN Act within three weeks of the ordered layoff. See 29 U.S.C. S 2104(a)(3). Congress was clearly concerned with ensuring an income stream, or, in the words of the governing regulation, with "provid[ing] protection to workers, their families and communities." 20 C.F.R. S 639.1(a). Indeed, the Senate report on the "Economic Dislocation and Worker Adjustment Assistance Act," from which WARN's provisions were ultimately severed and separately enacted, explicitly stated that the Act's purpose was to "assur[e ] the most rapid possible readjustment and retraining of displaced workers" and to "eas[e] the personal and financial difficulties for workers who must make these transitions." S. Rep. No. 100-62, at 3 (1987).
C
Because "back pay" under the WARN Act is a makewhole compensatory remedy, damages under the Act should compensate employees for the money they would have earned but for the premature closure in violation of the WARN Act. We therefore hold that Sands must pay its employees, as WARN Act damages, not only what Sands would have paid them directly but also what they would have received in tips. For the same reason, we also hold that Sands must pay employees who would have worked on July 4th the amount they would have earned on that day.
Individual employees must, of course, be able to prove the amount of tips they would have received. Similarly, they must be able to prove that they would have worked on July 4th. We are unable to determine on this record how difficult such proof will be, but we wish to make clear that both are matters to be proved rather than assumed.
III
The WARN Act allows an employer to reduce its liability under the Act by "any voluntary and unconditional payment by the employer to the employee that is not required by any legal obligation." 29 U.S.C. S 2104(a)(2)(B). Sands contends that this provision allows it to deduct the severance payments made to nonunion employees under the terms of its June 4th letter, and to its union employees under the terms of the July 3rd MOA. We agree with the district court that the payments were not voluntary and unconditional and that they are thus not deductible.
Sands' June 4th letter offered severance payments to nonunion employees with over five years experience, but only on the condition that the employees remain on the job until the hotel casino closed. The letter constituted an offer under Nevada law. See Las Vegas Hacienda, Inc. v. Gibson,
Sands could not unilaterally offer its union employees the terms of the severance pay it offered its nonunion employees. Rather, it was required to bargain with the Union over those terms. Sands and the Union concluded their MOA on July 3, 1996, three days after the hotel casino closed. Because the MOA was not signed until after the closure, the union employees necessarily did not provide consideration by remaining on the job through the closure. It does not follow, however, that there is no enforceable legal obligation. As the parties concede, the MOA is a legally binding collective bargaining agreement, even in the absence of conventional consideration. See Certified Corp. v. Hawaii Teamsters & Allied Workers, Local 996,
Sands also seeks to deduct, pursuant to 28 U.S.C. S 2104(a)(2)(B), payments to terminated nonunion employees for accrued vacation time. We agree with the district court that these payments should not have been deducted. Payment for accrued vacation time is commonly considered a form of deferred compensation. For example, "Courts have held . . . that vacation pay, provided upon fulfillment of specific work requirements, can constitute deferred compensation, due even after expiration of a collective bargaining agreement." Upshur Coals Corp. v. United Mine Workers of America, Dist. 31,
IV
Individual plaintiffs Harvey McCoy and Ron Byford appeal the district court's refusal to certify a class of between 162 and 215 nonunion employees under Federal Rule of Civil Procedure 23(b)(3). We conclude that the district court erred in denying class certification.
* We first address the standard under which we review the district court's decision. The district court initially denied, without explanation, McCoy and Byford's class certification motion on November 18, 1997. In response to a request by the parties, the district court issued an order on October 15, 1998, stating in its entirety:
The reasons for denying Plaintiffs' Motions for Class Certification in the Order of November 18, 1997, were as follows:
1. The Court concluded that Plaintiffs had failed to demonstrate the predominance of common questions of law and fact in accord with Rules 23(a)(2) and (b)(3) of the Federal Rules of Civil Procedure;
2. The Court concluded on the basis of the authorities and evidence presented by the parties that Plaintiffs failed to demonstrate that a class action afforded a superior format for the resolution of Plaintiffs' claims.
3. The Court found that because there was no basis for concluding that this was a "limited fund" case, there was no justification for class certification under Fed. R. Civ. P. 23(b)(1)(B).
4. Finally, the Court concluded that neither Plaintiffs McCoy nor Beyford had demonstrated that they were adequate class representatives in this particular case.
We ordinarily review a district court's class certification decision for abuse of discretion. See Knight v. Kenai Peninsula Borough Sch. Dist.,
It is clear that the district court's November 18, 1997, order did not satisfy the requirement of Clark, Gibson and Price. The more difficult question is whether the district court's October 15, 1998 order did so. The four operative sentences of the October 15 order paraphrase four provisions of Rule 23 and indicate the court's conclusion that those provisions were not satisfied. These sentences, however, do not explain why the court concluded that the provisions were not satisfied on the facts of this case. That is, in the words of Clark, the district court "made findings as to the provisions of the Rule," but made no findings as to "their application to the case."
B
Plaintiffs sought certification as a "damages " class action under Rule 23(b)(3) or, alternatively, as a "common fund" class action under Rule 23(b)(1). We agree with the district court that this action is unsuited for common fund certification. See Ortiz v. Fibreboard Corp.,
* Rule 23(a)(4) requires that "the representative parties [must] fairly and adequately protect the interests of the class." "Adequate representation `depends on the qualifications of counsel for the representatives, an absence of antagonism, a sharing of interests between representatives and absentees, and the unlikelihood that the suit is collusive.' " Crawford v. Honig,
Sands emphasizes that, at the outset of the litigation, McCoy declined to be a class representative. McCoy testified in his deposition that he initially declined to represent the class because he was unemployed and feared being blackballed by Nevada employers. Notwithstanding this fear, however, he contacted counsel, organized his co-workers, galvanized support for proceeding collectively, and spearheaded the meeting at which the initial class representative, Joseph Tortomas, volunteered to represent his fellow dealers. When Tortomas became unable to serve because of health problems, McCoy had found a job in another state and agreed to represent the class. We do not believe that the record supports a conclusion that McCoy is either unwilling or unable to serve as a class representative. The record indicates clearlythat he understands his duties and is currently willing and able to perform them. The Rule does not require more.
The competence of counsel seeking to represent a class is also an appropriate consideration under Rule 23(a)(4). See Crawford,
2
Rule 23(b)(3) requires that "questions of law or fact common to the members of the class predominate over any questions affecting only individual members." Fed. R. Civ. P. 23(b)(3).3 "The Rule 23(b)(3) predominance inquiry tests whether proposed classes are sufficiently cohesive to warrant adjudication by representation." Amchem Prods., Inc. v. Windsor,
In contrast to Rule 23(a)(2), Rule 23(b)(3) focuses on the relationship between the common and individual issues. When common questions present a significant aspect of the case and they can be resolved for all members of the class in a single adjudication, there is clear justification for handling the dispute on a representative rather than on an individual basis.
Hanlon v. Chrysler Corp.,
Here, as in Hanlon, "[a] common nucleus of facts and potential legal remedies dominates this litigation. " Id. Members of the putative class were all terminated on the same day with the same inadequate notice. All would-be class members share a common interest in three issues we heard on appeal in this case: (1) whether "back pay" under the WARN Act includes tips; (2) whether Sands is entitled to deduct severance payments from its WARN Act liability; and (3) whether Sands' mid-July wage payments to nonunion employees were timely under Nevada law.4
Individualized issues are few, and most of them are likely to be relatively easy. For example, the damages for individual class members will entail a straightforward calculation of which days and how many hours they would haveworked, and how much they would have earned in tips. Because dealers' tips were counted and divided in the casino cashier's cage, Sands has detailed written records of the tips employees earned in the past. Because Sands required its dealers to pool tips, there is no variation in tip earnings based on individual performance. We recognize that there may be some variation among the individual employees, as well as some potential difficulty in proof, in demonstrating that they would have worked on July 4th. But given the number and importance of the common issues, we do not believe that this variation is enough to defeat predominance under Rule 23(b)(3).
3
A Rule 23(b)(3) class action must also be "superior to other available methods for the fair and efficient adjudication of the controversy." Rule 23(b)(3) provides a non-exhaustive list of factors to consider in determining superiority:
(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; [and] (D) the difficulties likely to be encountered in the management of a class action.
Id. The district court's order did not mention any of these factors. Our own analysis convinces us that none weighs against class certification.
This case involves multiple claims for relatively small individual sums. Counsel for the would-be class estimated that, under the most optimistic scenario, each class member would recover about $1,330. If plaintiffs cannot proceed as a class, some--perhaps most--will be unable to proceed as individuals because of the disparity between their litigation costs and what they hope to recover. "Class actions . . . may permit the plaintiffs to pool claims which would be uneconomical to litigate individually." Phillips Petroleum Co. v. Shutts,
Moreover, members of the would-be class appear to agreewith the choice to litigate as a class. Three would-be class members--Earl Hill, Earl Chew, and Candy Vasco-explicitly stated that they wished to be represented by McCoy and Byford. No would-be class member has expressed a desire to proceed independently. From the record before us, there appear to be no individual actions now pending, and no unusual obstacles that would make managing the class particularly difficult.
On the facts of this case, we conclude that the superiority requirement of Rule 23(b)(3) is easily satisfied.
C
We are unable on the present record to determine all issues relevant to class certification. For example, the parties disagreed in the district court over the precise definition of the class. Because the district court refused to certify the class at all, it did not resolve this disagreement. Further, it is possible that other class representatives, in addition to McCoy, might be necessary to represent the full range of interests among the class members. We leave these and other issues that might need further development to be addressed by the district court on remand.
V
For the foregoing reasons, we AFFIRM in part, REVERSE in part, and REMAND for further proceedings not inconsistent with this opinion. Costs on appeal shall be divided between defendant and the plaintiffs.
Notes:
Notes
However, we affirm in part and reverse in part the district court's substantive holdings on issues of state law, which we discuss in a separate unpublished memorandum disposition filed simultaneously with this opinion.
Because the adequacy-of-representation requirement is satisfied as long as one of the class representatives is an adequate class representative,we do not address the adequacy of Byford. See Grasty v. Amalgamated Clothing & Textile Workers Union,
The district court's order states that the class fails to satisfy the predominance requirement of Rule 23(a)(2) as well as that of Rule 23(b)(3). Rule 23(a)(2) requires only that there be common questions of law or fact. It has no predominance requirement. See Fed. R. Civ. P. 23(a)(2).
We address the third issue in our separate unpublished memorandum disposition.