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Baker v. Masco Builder Cabinet Group, Inc.

United States District Court, D. South Dakota, Western Division

December 14, 2012

Cody BAKER, et al., Plaintiffs,
v.
MASCO BUILDER CABINET GROUP, INC., d/b/a Merillat Industries, Defendant.

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John Stanton Dorsey, Rexford A. Hagg, Whiting Hagg Hagg Dorsey & Hagg, LLP, Rapid City, SD, for Plaintiffs.

Jane Wipf Pfeifle, Lynn, Jackson, Shultz & Lebrun, P.C., Rapid City, SD, Jacqueline E. Kalk, Joseph D. Weiner, Littler Mendelson, P.C., Minneapolis, MN, Kelly D. Reese, Littler Mendelson, P.C., Mobile, AL, for Defendant.

ORDER

JEFFREY L. VIKEN, District Judge.

NATURE OF THE CASE AND PROCEDURAL HISTORY

On March 9, 2009, Karen Strauss, the President of Masco Builder Cabinet Group (" MBCG" ), distributed a memo to the local employees of MBCG. (Dockets 117-1, p. 3 ¶ 11 & p. 9; 128, ¶ 24). The memo informed the employees the Rapid City, South Dakota, plant would be closing by the end of September 2009. Id. at p. 9. The memo also stated " [a]ll employees will be offered a severance package and we are identifying resources to assist them with their job search." Id. On the same day, two MBCG representatives met with the employees of the Rapid City plant and told them of the plant's closure. (Dockets 123, ¶ 9; 128, ¶¶ 16-19). The representatives informed employees of MBCG's plan to pay severance to each employee upon the closure of the plant. (Dockets 123, ¶¶ 9-12; 128, ¶¶ 16-19). The plan provided as follows:

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Hourly Employees
1. One week per years service (minimum two weeks)
2. Cobra one time payment equal to current coverage based on severance weeks
3. Will get severance if employee stays to closing (DATE) or, if by mutual agreement, released sooner
4. If employee leaves on their own prior to (DATE) then no severance
5. Due to economic conditions, job opportunities at other BCG facilities are limited, if any at all. If there appears to be a need, the Company will have discussions with those individuals who may be qualified. At this time there are no jobs identified.
Salary Employees
1. Two weeks per years service (minimum two weeks)
2. Cobra one time payment equal to current coverage based on severance weeks
3. Will get severance if employee stays to closing (DATE) or, if by mutual agreement, released sooner
4. If employee [sic] leave on their own prior to (DATE) then no severance
5. Other opportunities within BCG will be on an individual basis based on Company need and qualifications of current employee.

(Dockets 100-7, p. 2; 123, ¶ 11; 128, ¶ 22).

The announcement of the closure and severance was reported in the Rapid City Journal. (Dockets 123, ¶ 14; 128, ¶ 27). Unfortunately, the Rapid City Journal was mistaken in its reporting of MBCG's plan. Id. In response, MBCG, through its representative Tom Sollars, MBCG's Director of Labor Relations and Field Services, provided a written memorandum on March 19, 2009, which was presented to the employees. (Dockets 123, ¶ 11; 128, ¶ 28). The memo stated:

Since the announcement last week of the forthcoming closure of the Rapid City Particleboard Plant, a couple of issues have come to our attention. The first issue was a misquote in the Rapid City Journal that stated the Company intended to give employees severance that would be equal to one months [sic] salary for every year worked. In actuality, as stated in the employee meetings severance is to be one week of base pay for every year worked with a minimum of two weeks. This is consistent with all other plant closures [M]BCG has had to execute in recent years.
It has also been rumored that the Company will renege on the severance that has been announced. This is to inform you that this will absolutely not happen. We will pay severance as we have in all other plant closures in accordance with what has already been announced. If employees remain until released, they will receive the following: 1) one week of pay per years of service, minimum two weeks, and 2) a one time payment to help offset some of the Cobra premium costs.
As we get closer to the date of closing, we will meet with you again to answer questions you may have at that time.

(Docket 100-14, p. 3).

Ms. Strauss testified in her deposition that at the time of the announcement of the closure of the Rapid City plant, MBCG did not believe the Rapid City plant could be sold as an ongoing concern. (Docket 117-3, Transcript (" TR" ) p. 48, lns. 22-25). However, e-mails indicate there were potential buyers expressing interest at the time the announcements regarding closing and severance were made. (Dockets 100-11; 130-3). On June 25, 2009, MBCG posted a memorandum to employees that

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it was engaged in discussions with potential buyers. (Docket 117-9, TR p. 113, lns. 1-11 & p. 30).

On July 17, 2009, MBCG issued a notice of the closure of the Rapid City plant pursuant to the Worker Adjustment and Retraining Notification Act (" WARN Act" ) which required a 60-day notice be given to the Rapid City plant employees before closure. (Dockets 100-23; 117-32, TR p. 46, lns. 2-7; 123, ¶ 41; 128, ¶¶ 64-65).

On August 11, 2009, MBCG met with the Rapid City employees again. (Dockets 123, ¶ 47; 128, ¶ 69). At this meeting, the employees were informed the plant was being sold and the severance, as previously discussed in the March 9 meeting and the March 19 memorandum, would not be paid. (Dockets 123, ¶ 47; 128, ¶ 69). Rather, severance would only be offered to those employees who were not offered positions by the new owners. (Docket 128, ¶ 69).

On September 17, 2009, the plant was sold to Madera, LLC. (" Madera" ). (Docket 128, ¶ 73). As part of the purchase agreement, Madera agreed to " offer employment to each person employed by [MBCG] on the Closing Date, at salary/wage and benefit levels which are in the aggregate equivalent to such person as of the Closing Date[ ]" though it was understood that Madera could immediately furlough or terminate the employees. (Dockets 100-24, p. 8; 100-29). MBCG provided each employee with a check in an amount equivalent to two weeks pay as Madera anticipated the plant being closed for two weeks during the transition. (Docket 128, ¶¶ 76-77).

Without MBCG's knowledge, Madera immediately sold the plant to Countertops, Inc. Countertops was to employ 100 of the former MBCG employees. (Docket 116, ¶ 74). MBCG ceased operations on September 17, 2009. Its employees had no right to continued employment with either Madera or ...


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