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Meadows v. Latshaw Drilling Company, L.L.C.

United States Court of Appeals, Fifth Circuit

August 1, 2017

JOHNNY L. MEADOWS, On Behalf of Himself and All Others Similarly Situated, Plaintiff-Appellant,
v.
LATSHAW DRILLING COMPANY, L.L.C., Defendant-Appellee.

         Appeal from the United States District Court for the Northern District of Texas

          Before REAVLEY, OWEN, and SOUTHWICK, Circuit Judges.

          PRISCILLA R. OWEN, Circuit Judge:

         Latshaw Drilling Co., LLC (Latshaw) terminated the employment of Johnny L. Meadows, who worked on one of its drilling rigs, and 397 other employees when a decrease in oil prices depressed demand for its services. Meadows filed suit on behalf of himself and others similarly situated, alleging that Latshaw, in violation of the Worker Adjustment and Retraining Notification Act of 1988 (WARN Act), conducted a plant closing or mass layoff without providing advanced notice. Meadows moved for class certification, and Latshaw moved for summary judgment. Before ruling on Meadows's class certification motion, the district court granted Latshaw's motion for summary judgment. Meadows has appealed. We affirm.

         I

         Latshaw conducts its business by contracting with third parties, known as operators, to drill wells on lands the operators have leased. Once Latshaw forms a contract with an operator, Latshaw "assembles a crew and a [drilling] rig" and moves the drilling rig to the project's location at the operator's expense. Members of a crew work during one of two twelve-hour shifts. The crew "work[s], eat[s], sleep[s], and live[s] at the [drilling] rig" for a fourteen day "hitch, " and then a second crew replaces the first crew for the following fourteen days. The first and second crews alternate in this pattern until the project is completed. The crews travel to the drilling rig from their homes, sometimes over great distances, in their own vehicles.

         Generally, each shift consists of a driller, a derrickhand, a motorhand, and two floorhands. A rig manager oversees both shifts and "is responsible for all facets of the rig operation, including daily operating costs, profit[s], losses, [and] rig assets including inventory, supplies, safety, and personnel." Daily assignments come from the rig manager and the operator's representative, who oversees the drilling project on the operator's behalf. The operator's goals, the weather, the soil conditions, and the geology of the drilling location dictate how a drilling operation is conducted.

         A crew may remain with the same drilling rig once the project has completed, moving with it to a new project's location or performing maintenance on their drilling rig at the "yard" where it is stored or, as the parties refer to it, "stacked." Each drilling rig typically has twenty-two workers assigned to it at a time, although at times, a drilling rig has had as many as twenty-eight workers assigned. A drilling superintendent, working out of his or her vehicle, oversees approximately five drilling rigs for Latshaw, "frequently visit[ing] more than one drilling rig in a day."

         However, as Latshaw's Operations Manager averred,

[e]mployees often move around from well to well, shift to shift, and from hitch to hitch. It is also not uncommon for an employee to start one hitch at a particular [drilling] rig[, ] and in the middle of that hitch be transferred over to another [drilling] rig where their particular expertise is needed.

         The Operations Manager clarified that by "not uncommon, " he means "that it is 'known' to occur." He also clarified that "[i]f a rig is stacked in the middle of a hitch, employees can be transferred to a new [drilling] [r]ig if work is available, " but, he stated, "[a]t no time does an employee work for more than one [drilling] [r]ig or report to more than one supervisor." Meadows has declared, however, that he has "personally observed [his] co-workers at Latshaw change drilling rig assignments on a regular basis."

         Generally, if a drilling rig needs a part, the part is ordered from a third-party vendor and charged to the drilling rig. However, if a third-party vendor cannot provide the part in time, a spare of that part can be obtained from another of Latshaw's drilling rigs. According to Meadows, "equipment was . . . regularly shared amongst Latshaw's different drilling rigs." In the event that a part for a drilling rig was obtained from another drilling rig, the Latshaw accounting department would charge the cost of the part to the second drilling rig.

         Latshaw's corporate office is in Tulsa, Oklahoma, and it has three yards, which contain extra equipment and stored drilling rigs, located, respectively, in Stillwater, Oklahoma; Broken Arrow, Oklahoma; and Midland, Texas. "Rig employees are not assigned to, do not report to, and do not work out of the Tulsa [corporate] office." The corporate office, each yard, and each rig are "cost centers."

          Preceding this litigation, Latshaw had thirty-nine drilling rigs, which it had used in project locations spread across Texas, New Mexico, Oklahoma, Arkansas, and Kansas. As oil prices began to drop, fewer operators requested Latshaw's services. Latshaw started stacking its drilling rigs-ultimately stacking twenty-nine of its thirty-nine drilling rigs-and, without advanced written notice, began laying off its employees. Over approximately six months, Latshaw laid off 398 employees, including Meadows.

         Meadows filed suit on behalf of himself and others similarly situated, claiming that Latshaw violated the WARN Act[1] by ordering a mass layoff or plant closing at a single site of employment without sixty days' written notice. He alleged four alternative theories for the composition of the "single site of employment" requirement: (1) Latshaw's "drilling rigs are collectively a single site of employment as they operate in a limited geographic area, are used for the same purpose of facilitating the drilling of wells, and share the same employees and equipment amongst the various drilling rigs, " (2) the "Tulsa Headquarters constituted a single site of employment, " (3) Latshaw's employees "worked at a single site(s) of employment in connection with a truly unusual organizational situation, " or (4) "each drilling rig operating at/from/through [the] relevant single site of employment for [Meadows] and the Class Members constitutes/constituted an operational unit within such single site of employment." Meadows moved for class certification.

         Before the court had ruled on class certification, Latshaw moved for summary judgment, asserting that "each Latshaw [drilling] rig, each yard, and the Latshaw Drilling corporate office were separate sites of employment . . . that . . . may not be treated collectively as one single site of employment under the WARN Act." Because these sites each had less than fifty employees, Latshaw claimed that "neither a 'plant closing' nor a 'mass layoff' could have occurred." The district court granted Latshaw's motion, concluding that Meadows had failed to raise a genuine dispute of material fact as to whether there had been an employment loss for at least fifty people within the requisite period at a single site of employment. In so doing, the district court addressed what Meadows considers distinct theories of liability that, he argues, Latshaw had not addressed in its summary judgment motion. Meadows appeals.

         II

         The WARN Act requires that before an employer with 100 or more fulltime employees orders a "plant closing"[2] or "mass layoff, "[3] the employer must provide sixty days' written notice to "each affected employee" and certain state officials.[4] A plant closing occurs when an employer permanently or temporarily closes "a single site of employment, or one or more facilities or operating units within a single site of employment, " resulting in an employment loss for at least fifty employees over a thirty-day period.[5] A mass layoff occurs when an employer reduces its work force at a "single site of employment" during a thirty-day period by at least fifty employees, an amount which must also constitute at least thirty-three percent of its workforce at that single site of employment.[6] If two or more groups of employees (each less than fifty employees) at a single site of employment experience employment loss aggregating to fifty or more employees within any ninety-day period, then, subject to limited exception, a plant closing or mass layoff has occurred.[7] An employer that fails to provide the required notice "is liable for back pay, lost benefits, civil penalties, and attorney['s] fees."[8]

         Although the WARN Act does not define a "single site of employment, " the Department of Labor (DOL) has provided regulatory guidance. The general rule is that "separate facilities are separate sites."[9] A "narrow" exception to this general rule is that "geographically separate sites" with "an inextricable operational connection"-that is, separate sites that "are used for the same purpose and share the same staff and equipment"-can constitute a single site of employment.[10] As this court has noted, "two plants across town will rarely be considered a single site."[11]

         The regulations provide more specific definitions of a "single site of employment." 20 C.F.R. § 639.3(i)(3) states that "[s]eparate buildings or areas which are not directly connected or in immediate proximity may be considered a single site of employment if they are in reasonable geographic proximity, used for the same purpose, and share the same staff and equipment." For example, "an employer who manages a number of warehouses in an area but who regularly shifts or rotates the same employees from one building to another" operates a single site of employment even though the buildings are not connected or immediately proximate.[12] Conversely, 20 C.F.R. § 639.3(i)(4) states that "[n]on-contiguous sites in the same geographic area which do not share the same staff or operational purpose should not be considered a single site."[13] As a result, "assembly plants which are located on opposite sides of a town and which are managed by a single employer are separate sites if they employ different workers."[14]

         The regulations also clarify, in 20 C.F.R. § 639.3(i)(6), that "workers whose primary duties require travel from point to point, who are outstationed, or whose primary duties involve work outside any of the employer's regular employment sites (e.g., railroad workers, bus drivers, salespersons)" are covered under the WARN Act.[15] For these types of employees, the relevant single site of employment is "the single site of employment to which they are assigned as their home base, from which their work is assigned, or to which they report."[16] Finally, 20 C.F.R. ยง 639.3(i)(8) clarifies that "[t]he term 'single site of employment' may also apply to truly unusual organizational situations" if the other regulatory definitions ...


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