Grouping of oil rigs across two states not WARN Act single site of employment
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Friday, August 4, 2017

Grouping of oil rigs across two states not WARN Act single site of employment

By Matt Pavich, J.D.

A grouping of oil rigs spread across 75,000 square miles over two states was not a single site of employment for purposes of WARN Act liability, ruled the Fifth Circuit. Each site had less than 50 employees. Accordingly, the appeals court agreed with the district court that the employee had not presented evidence to create a genuine dispute of material fact that any drilling rigs that together suffered employment losses sufficient to trigger the WARN Act were in a reasonable geographic proximity. Thus, the district court correctly entered summary judgment in favor of the employer on this issue (Meadows v. Latshaw Drilling Company, August 1, 2017, Owen, P.).

The company contracted with operators who drilled oil wells on lands owned by the operators. Crews would work 12-hour days over a 14-day shift and would receive assignments from a rig manager. The rigs were overseen by drilling superintendants who would each oversee roughly five rigs for the company and who would often visit more than one rig in a given day. The employees would, on occasion, start one shift at a given rig and be transferred to a different rig during the shift. They would not, however, ever report to more than one supervisor. If a rig needed a new part, the company would obtain it from a third-party vendor, although it could, if time was of the essence, obtain the part from a different rig. The company’s corporate office was in Oklahoma and it had three yards containing equipment and stored rigs in Oklahoma and Texas.

When oil prices fell, the company, without giving advanced written notice, laid off approximately 398 workers. The employee filed a class action under the WARN Act, alleging that the rigs constituted a single site of employment. Before the court ruled on certification, the employer moved for summary judgment, contending that each rig, yard, and office were separate sites of employment and that because each had fewer than 50 employees, the WARN Act did not apply. The district court granted the employer’s motion.

Site of employment. The Fifth Circuit affirmed the lower court’s ruling. It noted that although the WARN Act does not define “single site of employment,” the DOL’s regulations state that separate sites may be a single site of employment if they are in “reasonable” geographic proximity, are used for the same purpose, and share the same equipment and staff. Although the employee offered an affidavit that a drilling superintendent frequently visited multiple sites in the same day, he failed to provide key details. Specifically, he merely alleged that an unspecified number of sites were spread across an unspecified distance in an area encompassing approximately 75,000 square feet. Additionally, he failed to point to any grouping of sites in which the company laid off more than 50 workers. Although he did allege that a single drilling superintendant managed multiple sites, that allegation alone was not sufficient.

The employee argued that he was unable to obtain information regarding the geographic proximity of the sites, because the employer offered “evasive” answers to his interrogatories. However, the court noted that even if this were true, the employee could have moved for additional discovery, but failed to do so. Thus, the court found that the worker failed to present any issue of material fact regarding the geographic proximity of the sites.

Procedural issue. The employee also argued that the district court erred in reaching a decision on the merits of the single site argument because the employer failed to raise the issue in its motion. The appeals court rejected that argument, finding that the employer’s summary judgment briefing cited statutory definitions of plant closings and mass layoffs and stated that both depended on the meaning of “single site of employment.” Thus, the employee had notice that he needed to provide all evidence regarding the sites of employment.

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