Pennington v. Fluor Corp.

19 F.4th 589

Harry PENNINGTON, III; Timothy Lorentz, on behalf of themselves and all others similarly situated, Plaintiffs – Appellants,

v.FLUOR CORPORATION ; Fluor Enterprises, Inc.; Scana Corporation ; Fluor Daniel Maintenance Services, Inc. ; South Carolina Electric & Gas Company, Defendants – Appellees.

Associated Builders and Contractors, Inc.; Associated General Contractors of America, Inc. ; South Carolina Chamber of Commerce; Chamber of Commerce of the United States of America, Amici Supporting Appellees.

Lawrence Butler; Lakeisha Darwish; Jimi Che Sutton, Plaintiffs – Appellants,

v.Fluor Corporation ; Fluor Enterprises, Inc., Defendants – Appellees.

Associated Builders and Contractors, Inc.; Associated General Contractors of America, Inc. ; South Carolina Chamber of Commerce; Chamber of Commerce of the United States of America, Amici Supporting Appellees.

No. 21-1141

No. 21-1143

United States Court of Appeals, Fourth Circuit.

Argued: October 27, 2021

Decided: November 30, 2021

ARGUED: Jack A. Raisner, RAISNER ROUPINIAN LLP, New York, New York, Charles Anthony Ercole, KLEHR HARRISON HARVEY BRANZBURG LLP, Philadelphia, Pennsylvania, for Appellants. Charles Theodore Speth II, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Columbia, South Carolina, for SCANA Appellees; John Hagood Tighe, FISHER & PHILLIPS, LLP, Columbia, South Carolina, for Fluor Appellees. ON BRIEF: René S Roupinian, Isaac Raisner, RAISNER ROUPINIAN LLP, New York, New York; Lee D. Moylan, Rona J. Rosen, Glenn Weiner, KLEHR HARRISON HARVEY BRANZBURG LLP, Philadelphia, Pennsylvania; Amy L. Gaffney, GAFFNEYLEWIS LLC, Columbia, South Carolina; David B. Yarborough, Jr., Reynolds Blankenship, YARBOROUGH APPLEGATE, LLC, Charleston, South Carolina, for Appellants. D. Michael Henthorne, Christopher R. Thomas, James R. Silvers, Piper R. Byzet, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C., Columbia, South Carolina, for SCANA Appellees. David R. Kresser, Matthew R. Korn, FISHER & PHILLIPS LLP, Columbia, South Carolina, for Fluor Appellees. Stephanie E. Lewis, William R. Gignilliat, Allison Chalmers Hawkins, JACKSON LEWIS P.C., Greenville, South Carolina, for Amici South Carolina Chamber of Commerce and the Chamber of Commerce of the United States of America. Tara S. Morrissey, Stephanie A. Maloney, UNITED STATES CHAMBER LITIGATION CENTER, Washington, D.C., for Amicus Chamber of Commerce of the United States of America. Maurice Baskin, Washington, D.C., Bill Foster, LITTLER MENDELSON, P.C., Greenville, South Carolina, for Amicus Associated Builders and Contractors, Inc. Gregory R. Begg, Michael J.P. Schewe, PECKAR & ABRAMSON, P.C., River Edge, New Jersey, for Amicus Associated General Contractors of America, Inc.

Before WILKINSON, NIEMEYER, and MOTZ, Circuit Judges.

Affirmed by published opinion. Judge Wilkinson wrote the opinion, in which Judge Niemeyer and Judge Motz joined.

WILKINSON, Circuit Judge:

In 2017, SCANA, an electric and natural gas public utility, halted construction at the V.C. Summer Nuclear Station in South Carolina. As a result, Westinghouse Electric Company (WEC), a contractor with SCANA, laid off its employees working at the project, as did Fluor, a subcontractor hired by WEC. Employees of both WEC and Fluor then sued SCANA and Fluor, alleging that the companies had failed to give notice of the plant closure and layoffs as required under the Worker Adjustment and Retraining Notification (WARN) Act. The district court granted summary judgment to both defendants, holding that SCANA was not required to give notice to the employees of contractors working on-site, and that Fluor had complied with the WARN Act. For the following reasons, we affirm.

I.

A.

In 2008, SCANA, along with Santee Cooper, a state-owned electric and water utility, set out to build a nuclear power plant. The project, two nuclear reactors at the V.C. Summer Nuclear Station in central South Carolina, was an ambitious one. Along with an unrelated nuclear reactor in Georgia, V.C. Summer "represent[ed] the first new generation of nuclear power plant construction in the United States in 30 years." J.A. 380. To build the project, the two utilities entered into an agreement with WEC, which was tasked with designing and manufacturing the reactors.

Eight years later, the project was substantially over budget and behind schedule. WEC needed a new subcontractor to manage construction at the site and turned to Fluor, hoping in part that the new construction company could turn the project around. Instead, a bad situation became worse. According to the plaintiffs, Fluor soon conducted an analysis that concluded the project would run a further $6 billion over budget and would take another three years to complete. Furthermore, WEC would be liable for those costs, since it had agreed to build the project for a fixed price. In March 2017, WEC filed for Chapter 11 bankruptcy.

Under an interim agreement between SCANA and WEC, WEC would continue to perform work at the site, while SCANA would make payments to Fluor directly on behalf of WEC. As things stood in the summer of 2017, therefore, SCANA, WEC, and Fluor all continued to work at the plant. SCANA held the license from the Nuclear Regulatory Commission and was required to oversee the project and ensure that the work conformed with the terms of the license. But pursuant to its agreement with SCANA, WEC was solely responsible for the means and methods that it employed. Fluor meanwhile, under the terms of its own agreement with WEC, managed the actual construction on the site. Fluor had no direct contractual relationship with SCANA, aside from the payments made under the interim agreement.

On July 7, 2017, this house of cards finally collapsed when Santee Cooper informed SCANA that it intended to discontinue funding its portion of the project. SCANA could not continue the project on its own and on July 31, after Santee Cooper's board formally voted to suspend funding, SCANA abruptly stopped all construction at the site. It is undisputed that SCANA alone ordered the plant's closure and gave neither Fluor nor WEC any advance notice. SCANA for its part states that there was no closure to announce until Santee Cooper's board actually voted and that SCANA had in fact spent much of July looking for other partners to replace Santee Cooper. Moreover, any advance notice of the project's closure could violate insider trading laws and would jeopardize ongoing efforts by SCANA and Santee Cooper to recover a contractual guarantee from WEC's parent company, Toshiba. When the site closed, Fluor and WEC laid off a total of approximately 4,000 workers employed at the project.

B.

Following the plant closure, employees at WEC and Fluor filed a class action complaint against SCANA and Fluor in federal district court, contending that the two companies had violated their obligations under the WARN Act.

That statute was "adopted in response to the extensive worker dislocation that occurred in the 1970s and 1980s." Hotel Emps. & Rest. Emps. Int'l Union Local 54 v. Elsinore Shore Assocs. , 173 F.3d 175, 182 (3d Cir. 1999). In many cases, businesses shut down or laid off workers after giving them little or no notice, a practice that the WARN Act was designed to eliminate. See Marisa Anne Pagnattaro, The Perils of Control: Affiliated Liability Under the WARN Act , 41 Am. Bus. L.J. 313, 318 (2004) (citing H.R. Rep. No. 100-285, at 11 (1987)). The "overarching aim" of the statute is "to provide advance notice of worker dislocations to affected workers, unions, and governments." Richard W. McHugh, Fair Warning or Foul? An Analysis of the Worker Adjustment and Retraining Notification (WARN) Act in Practice , 14 Berkeley J. Emp. & Lab. L. 1, 4 (1993).

The WARN Act achieves this goal primarily through a provision that requires covered employers to give sixty days of written notice before ordering a plant closing or a mass layoff. See 29 U.S.C. § 2102(a). The employer must give this notice to each "affected employee," or to their union representative, as well as to the state and the unit of local government where the closing or layoff occurs. See id. An employer who runs afoul of the statute is liable to each aggrieved employee for back pay during the period of the violation, as well as civil penalties of $500 per day to the local government involved. See id. § 2104(a)(1)–(3).

C.

As the case progressed, SCANA and Fluor moved for summary judgment. SCANA argued that it was not liable under the WARN Act since it had not employed any of the plaintiffs, all of whom worked for either WEC or Fluor. And Fluor argued that it could not reasonably have foreseen SCANA's sudden closure of the plant and that it therefore was relieved of liability under a statutory exception for unforeseeable business circumstances. See 29 U.S.C. § 2102(b)(2)(A).

The district court agreed, granting summary judgment to both SCANA and Fluor in a thorough and thoughtful opinion. See Butler v. Fluor Corp. , 511 F. Supp. 3d 688 (D.S.C. 2021). The court first held that SCANA was not an "employer" of the plaintiffs under a multi-factor test enumerated by the Department of Labor. See id. at 698 (citing 20 C.F.R. § 639.3(a)(2) ). The court noted, for instance, that SCANA had no ownership interest in WEC or Fluor, nor did it share any common directors or officers with those companies. Id. at 700. Likewise, the companies were "wholly independent and unaffiliated" and there was no evidence in the record that SCANA had integrated its personnel policies with those of WEC or Fluor. Id. at 707–11. And on one important factor, the "de facto exercise of control," the court reviewed the record extensively, see id. at 700–07, and concluded that SCANA had not exerted greater control over Fluor or WEC than "would be expected between an independent contractor and a principal client, particularly in a highly regulated industry," id. at 707. Accordingly, the district court held that SCANA had not been required to give notice to the...