Staudt v. Glastron, Inc

• Court: Court of Appeals for the Fifth Circuit
• Decided: August 23, 1996
• Docket: 95-50801
• Status: Published

Opinion

United States Court of Appeals,

Fifth Circuit.

No. 95-50801.

Alvin STAUDT, on Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant,

v.

GLASTRON, INC., Defendant-Appellee.

Aug. 22, 1996.

Appeal from the United States District Court for the Western District of Texas.

Before GARWOOD, DAVIS and DeMOSS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Alvin Staudt appeals the district court's order dismissing as time-barred his suit under the

Worker Adjustment and Retraining Notification Act (WARN), 29 U.S.C. § 2101 et seq. (1988). We

reverse.

I.

This case enjoys a long procedural history. Appellant filed suit on December 14, 1992. He

alleged that Glastron, Inc. (Glastron), his former employer, had violated WARN in November and

December of 1990 by laying off some 250 workers at its New Braunfels, Texas plant without giving

them proper notice. Glastron moved to dismiss the complaint as untimely filed. Congress did not

include a limitations period in WARN. The company, however, argued that the National Labor

Relation Act (NLRA) was the most analogous st atute and that its six-month statute of limitations

should apply. See 29 U.S.C. § 160(b) (1988). The district court agreed. It granted Glastron's

motion to dismiss, and we affirmed. Halkias v. General Dynamics Corp., 31 F.3d 224 (5th

Cir.1994). We then took the case en banc and vacated the panel opinion. Shortly thereafter, the

Supreme Court rejected an argument that the NLRA limitations period applies to WARN claims.

North Star Steel Co. v. Thomas, --- U.S. ----, 115 S.Ct. 1927, 132 L.Ed.2d 27 (1995). It held that

courts must borrow the "most closely analogous" state limitations period unless it would "frustrate

1 and interfere with the implementation of national policies, or be at odds with the purpose or operation

of federal substantive law." Id. at ---- - ----, 115 S.Ct. at 1930-33. The Court considered

Pennsylvania statutes ranging from two to six years in length and concluded that none would frustrate

WARN's purpose. Id. at ----, ----, 115 S.Ct. at 1931, 1933. It did not, however, decide which cause

of action qualified as WARN's closest Pennsylvania analog. In response to North Star, we vacated

the order dismissing Staudt's suit as time-barred and remanded the case to the di strict court for

reconsideration. Halkias v. General Dynamics Corp., 56 F.3d 27 (5th Cir.1995) (en banc ).

On remand, the district court considered various Texas limitations periods. It rejected

Staudt's argument that a WARN action is contractual in nature and that the four-year period

applicable to Texas contract actions should apply. See Tex.Civ.Prac. & Rem.Code Ann. § 16.004

(Vernon 1986). The district court likewise declined to borrow the two-year tort limitations period

or the four-year residual limitations statute. See Tex.Civ.Prac. & Rem.Code Ann. §§ 16.003(a),

16.051 (Vernon 1986). The district court concluded that the cause of action created by the Texas

Payment of Wages Act (Wage Act) was the most analogous to a WARN claim. See Tex.Lab.Code

Ann. § 61.051 (Vernon 1996). After determining that the Wage Act's six-month period neither

frustrated nor interfered with WARN's purpose, the court borrowed it and dismissed Staudt's claim

as untimely. Staudt then filed this appeal.

II.

Adopting a state limitations period for WARN actions requires that we first "characterize the

essence" of a WARN action and then determine which state action is closest to it. Wilson v. Garcia,

471 U.S. 261, 268, 105 S.Ct. 1938, 1942-43, 85 L.Ed.2d 254 (1985). We therefore begin by

considering the statute itself. WARN provides, in relevant part:

An 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—

(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 ... and the chief elected official of the unit of local government within which such closing or layoff is to occur.

2 ....

29 U.S.C. § 2102(a). The exclusive remedy for violation of this provision is a civil action for

statutory damages and attorney's fees. 29 U.S.C. § 2104(a)(6), (b). Actions may be brought by

individual workers, their representatives, or government entities. E.g., 29 U.S.C. § 2104(a)(5).

WARN also grants individual plaintiffs standing to sue on behalf of "other persons similarly situated."

Id. Local governments can obtain up to $500 in damages for each day of an employer's violation.

29 U.S.C. § 2104(a)(3). Aggrieved employees are due "back pay for each day of violation" at their

regular rate of pay and "benefits under an employee benefit plan." 29 U.S.C. § 2104(a)(1). A court,

however, may reduce these damages under certain circumstances. For example, it may deduct from

a damage award any wages the employee earned during the violation period. 29 U.S.C. § 2104(a)(2).

It may also take into account an employer's reasonable, good faith belief that its actions did not

constitute a violation. 29 U.S.C. § 2104(a)(4). In short, WARN imposes a statutory duty on

businesses to notify workers of impending large-scale job losses and allows for limited damages "

"designed to penalize the wrongdoing employer, deter future violations, and facilitate simplified

damages proceedings.' " Carpenters Dist. Council v. Dillard Dept. Stores, 15 F.3d 1275, 1285 (5th

Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 933, 130 L.Ed.2d 879 (1995) (quoting S.Rep. No.

62, 100th Cong., 1st Sess. 24 (1987)).

We now turn to Texas law and the various causes of action the parties contend are most

analogous to WARN. Glastron argues that the Texas Payment of Wages Act (Wage Act),

Tex.Lab.Code Ann. § 61.001 et seq., is WARN's closest Texas analog. The Wage Act provides an

administrative remedy to employees for recovery of wages and benefits they are owed.

Tex.Lab.Code Ann. § 61.001(7). An employee files his complaint with a commission which

investigates and prosecutes the claim. Tex.Lab.Code Ann. §§ 61.001(1) & 61.002. The Wage Act,

moreover, authorizes the Texas Attorney General to seek injunctive relief against employers who

repeatedly violate its provisions. Tex.Lab.Code Ann. § 61.020. Glastron argues that WARN and

the Wage Act provide comparable remedies and share a similar concern for collective interests. For

3 this reason, Glastron asserts that the district court correctly applied the Wage Act's 180-day statute

of limitations to Staudt's claim. We disagree.

WARN and the Wage Act do afford claimants similar remedies. We need not decide,

however, whether the Wage Act represents the cause of action most analogous to WARN. The

Wage Act merely provides employees with an administrative alternative to a common law action on

a debt for wages due. The 180-day period limits the time within which an employee may file this

administrative claim. The employee, however, retains the independent right to sue for wages due

without exhausting his administrative remedies under the Wage Act. See Holmans v. Transource

Polymers, Inc., 914 S.W.2d 189, 191 (Tex.App.—Fort Worth 1995, writ filed). The Wage Act, in

other words, does not provide a limitations period for a judicial remedy. It is inappropriate, therefore,

to apply its 180-day period to a civil action filed under WARN.1

Glastron next asserts that an action for workers' co mpensation benefits is analogous to a

WARN action. The Texas Workers' Compensation Act requires an injured employee to assert his

claim within one year. Tex.Lab.Code Ann. § 409.003 (Vernon 1996). Like WARN, its scheme

ensures employees a continued source of income. The two statutes also share a simplified method

for calculation of damages. See Carpenters Dist. Council, 15 F.3d at 1285 (WARN); Texas

Workers' Compensation Comm'n v. Garcia, 893 S.W.2d 504, 521 (Tex.1995) ("[T]he Act ...

provides benefits to injured workers without the necessity of proving negligence and without regard

to the employer's potential defenses.").

Glastron, however, glosses over significant distinctions between the two statutes. Unlike

1 The Supreme Court declined to apply a limitations period for filing an administrative claim to judicial actions brought under the federal civil rights statutes, 42 U.S.C. § 1981 et seq. Burnett v. Grattan, 468 U.S. 42, 50-52, 104 S.Ct. 2924, 2929-31, 82 L.Ed.2d 36 (1984). In Burnett, the Court reasoned that a person seeking a judicial remedy faces practical difficulties not confronted in administrative actions in which a commission investigates and prosecutes the complaint. Id. It therefore refused to borrow the six-month administrative limitations period for filing a claim with the Maryland Human Affairs Commission. Id. The Second Circuit relied in part on this reasoning for its decision to apply a state limitations period rather than borrowing from the NLRA or FLSA. United Paperworkers Int'l Union and its Local 340 v. Specialty Paperboard, Inc., 999 F.2d 51, 55, 57 n. 10 (2d Cir.1993); see also Siniscalchi v. Shop-Rite Supermarkets, Inc., 903 F.Supp. 182, 188 (D.Mass.1995).

4 WARN, the Workers' Compensation Act remunerates an injured employee for loss of earning

capacity rather than for loss of earnings. See Service Lloyds Ins. Co. v. Martin, 855 S.W.2d 816, 820

(Tex.App.—Dallas 1993, no writ) (paraphrasing Employers' Reinsurance Corp. v. Holland, 162 Tex.

394, 347 S.W.2d 605 (1961)). While WARN addresses the employee's purely economic injury,

physical injury is required to trigger workmen's compensation coverage. The workers' compensation

scheme, in fact, almost completely supplants the worker's common-law tort action against his

employer. See e.g., Texas Workers' Compensation Law, Release No. 10 § 2.01[3][a]-[b], at 2-12,

2-14 (Howard L. Nations & John C. Kilpatrick, eds. 1996). For all of these reasons we conclude that

an action for workers' compensation benefits is not analogous to WARN.2 We therefore decline

Glastron's invitation to borrow the Workers' Compensation Act's one-year limitations period.

We are left with two arguably applicable statutes of limitations—the two-year tort limitations

period and the four-year period which applies to contract claims and actions on debt.3 Tex.Civ.Prac.

& Rem.Code Ann. §§ 16.004, 16.003(a). A WARN action is not particularly analogous to either.

If we consider the predicate for liability under WARN, it is comparable to a tort claim in that both

require a "wrongful" act by the defendant. If we consider WARN's remedial goal and the damages

available under the statute, it is analogous to an action on a debt for wages owed. The worker can

recover what he would have earned had his employer provided him the requisite notice.

Most courts considering the issue have determined that a WARN claim is analogous to a

contract action. E.g., Aaron v. Brown Group, 80 F.3d 1220, 1225-26 (8th Cir.1996); Frymire v.

Ampex Corp., 61 F.3d 757, 764 (10th Cir.1995), cert. dismissed, --- U.S. ----, 116 S.Ct. 1588, 134

L.Ed.2d 685 (1996); United Paperworkers, 999 F.2d at 56. However, we need not determine

whether the same is true under Texas law. Staudt's claim is timely under both remaining limitations

2 But see United Paperworkers Int'l Union and Its Local 340 v. Specialty Paperboard, Inc., 999 F.2d 51, 56-57 (2d Cir.1993). 3 The Supreme Court has stated that residual limitations periods are usually not appropriate for borrowing. See Agency Holding Corp. v. Malley-Duff & Assoc., Inc., 483 U.S. 143, 152-53, 107 S.Ct. 2759, 2765, 97 L.Ed.2d 121, 131 (1987). We therefore do not consider the four-year Texas residual period. See Tex.Civ.Prac. & Rem.Code Ann. § 16.051.

5 periods. And neither would frustrate WARN's purpose. See North Star Steel, --- U.S. at ----, 115

S.Ct. at 1931, 132 L.Ed.2d at 33. Because Staudt's action is not barred even under the shorter

two-year statute, we conclude that the district court erred in dismissing his suit. We therefore reverse

the judgement of the district court and remand the case for further proceedings.

REVERSED and REMANDED.