Gulf Coast marine services and shipbuilding company loses appeal over mass layoff

NEW ORLEANS – A marine services and shipbuilding company lost an appeal at the U.S. Court of Appeals for the Fifth Circuit concerning a mass layoff of its employees between July and September of 2009.

Philip A. Davis and Byron Day originally filed suit against their former employer, Signal International Texas, alleging that between July and September of 2009 the company laid off 159 full-time workers from two facilities in Orange, Texas without prior written notice.

The appeal involves the Worker Adjustment and Retraining Notification Act (“WARN Act”), which requires that employers provide notice within 60 days in advance of any mass layoff at any single site of employment.

Signal appealed the original decision based on two grounds: first, that there was an alleged error in the district court’s conclusion that Signal’s two facilities in Orange, Texas constituted a single site of employment; and second, that the district court used an erroneous “snapshot” date to determine the original employment levels.

Signal asserted that there were two separate facilities in Orange, Texas, one for fabrication, and the other for administration. The truth of this assertion the appeals court called “a mixed question of fact and law.”

The appeals court was unconvinced by the argument that the two sites had different operational purposes, as they were not stand-alone, independent operations, but rather both worked toward the production and supply of platforms, rigs and vessels. In addition, the two facilities were very close geographically, and employees housed in the administration annex regularly carried out activities in the fabrication yard and vice versa.

Signal went on to assert that the district court erred in its decision because it used an improper “snapshot” date to determine employment levels. The district court chose July 24, 2009—the day of the first alleged firing—as a snapshot date. Signal asserted that under the WARN Act, the snapshot date should be the date when the first notice is required to be given—i.e. 60 days prior to the first layoff—in this case, May 25, 2009. Initially, no evidence was available of Signal’s workforce levels on this date, but two years after the start of the investigation, Signal presented purportedly “new” evidence of its employment levels at that time.

The district court noted that even using Signal’s purported employment numbers for May 25, the company would be able to show only that there was a 32.5 percent layoff—a mere 0.5 percent shy of the minimum percentage required to constitute a mass layoff under the WARN Act. The court stated, “obviously you’re reaching and pulling for every possible number here” and disregarded the purportedly new evidence.

The appeals court affirmed the district court’s decision on both of these grounds. Judges involved in the decision were Thomas Morrow Reavley, Jennifer Elrod and James E. Graves.

Case no. 12-41262.