ELLIS v. DHL EXPRESS (January 11, 2011)

In late 2008, DHL announced that it was discontinuing its domestic shipping business. Five of its Chicago facilities were sure to close. The union successfully negotiated severance agreements. One agreement was available to full-time drivers and provided 10 weeks severance. The other agreements provided only four weeks. The drivers had less than a week to make their decisions. Other employees had between two and six weeks. Workers who were already laid off at the time the severance package was negotiated were nevertheless eligible for the four-week agreement. Eventually, 506 DHL employees accepted a package, resigned, and signed a release. The employees who did not accept a severance package received no severance but did retain seniority and recall rights and, of course, did not release the company from any claims. John Ellis and Timothy Price, both DHL drivers, brought suit against DHL alleging a violation of the Worker Adjustment and Retraining Notification (WARN) Act. Judge Kennelly (N.D. Ill.) granted summary judgment to DHL. He concluded that the WARN Act did not apply because a) the layoffs did not constitute a "plant closing" under the Act because the five facilities were not a single site, b) the employment losses were less than the Act’s 33% trigger, and c) the employees who accepted severance packages did so voluntarily and are therefore not counted as involuntary separations under the Act. Ellis and Price appeal.

In their opinion, Seventh Circuit Judges Wood, Evans, and Tinder affirmed. The Court stated that the WARN Act requires covered employers to provide 60-days notice of a plant closing or mass layoff. The Act does not apply if fewer than 33% of full-time employees are affected. Since the plaintiffs concede that the 33% threshold would not be met if the 506 employees who accepted the severance packages are not considered "affected," the Court confined its review to that issue. Although the Act excludes "voluntary" departures from its definition of employment losses, it does not define "voluntary." The Secretary of Labor has clarified the term, a clarification to which the Court gives significant weight. The clarification states that incentive retirement programs should normally be considered voluntary if the employer has not created a hostile environment or otherwise improperly induced employees. The Court rejected plaintiffs' argument that the economic uncertainties and narrow window within which to make decisions made those decisions involuntary. The agreements were negotiated by the union for the benefit of the employees and they were written clearly. The record contains no evidence that the company put any improper pressure on any employees. The Court recognized the narrow decision window but concluded that it did not transform the decisions into involuntary ones. The Court also rejected the argument that employees who were already laid off at the time they accepted a severance package could not have resigned "voluntarily." Although they were not working, the Court noted that they gave up valuable seniority and recall rights when they signed their agreements. Finally, the Court affirmed the District Court's decision to sua sponte grant summary judgment to DHL's German parent. The claims against the parent were identical to the claims against DHL.