mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 1 of 13 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK

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1 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 1 of 13 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re : : Chapter 11 WESTINGHOUSE ELECTRIC : Case No (MEW) COMPANY, LLC, et al., : : Debtors. : Elton Massey, et al., : on behalf of themselves and all : others similarly situated, : Plaintiffs, : Adv. Pro. No (MEW) v. : Westinghouse Electric Company, LLC, : et al., : Defendants. : Kent Gladden, et al., : on behalf of themselves and all : others similarly situated, : Plaintiffs, : Adv. Pro. No (MEW) v. : Westinghouse Electric Company, LLC, : et al., : Defendants. : THE MASSEY PLAINTIFFS MEMORANDUM OF LAW IN OPPOSITION TO THE GLADDEN PLAINTIFFS MOTION FOR CLASS CERTIFICATION AND OTHER RELIEF 1 1 As used herein, the Massey Plaintiffs refers collectively to plaintiffs, Elton Massey, Kirt Hurlburt, Patricia Adams, John Jennings, Johnnie Hall, and Katrina Baker, in the action captioned Massey, et al. v. Westinghouse Electric Company, LLC, Adv. No (MEW) (the Massey Action ). The term the Gladden Plaintiffs refers collectively to the named plaintiffs in two actions captioned Gladden et al. v. Westinghouse Electric Company, LLC, Adv. Pro. No (MEW), and Fleetwood et al. v. WECTEC LLC et al., Adv. Pro. No (MEW) (the Fleetwood Action ), which have been consolidated and are collectively referred to herein as the Gladden Action. PHIL v.1

2 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 2 of 13 TABLE OF CONTENTS I. THE COURT SHOULD NOT DISMISS THE MASSEY ACTION...1 A. The First-Filed Rule is Inapplicable...1 B. Even if Applicable, the First-Filed Rule Favors the Massey Plaintiffs...3 C. In Exercising Its Discretion to Administer its Docket, the Court Should not Dismiss the Massey Action...4 II. CONCLUSION...8 PHIL v.1 i

3 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 3 of 13 CASES TABLE OF AUTHORITIES Page(s) Adam v. Jacobs, 950 F.2d 89 (2d Cir. 1991)...2 In re Barney s, Inc., 206 B.R. 336 (Bank. S.D.N.Y. 1997)...6 BuddyUSA, Inc. v. Recording Indus. Ass n of Am., Inc., No , 21 Fed. Appx. 52 (2d Cir. Oct. 11, 2001)...1 Butler, et al. v. Fluor Corp., et al., No. 0:17-cv JMC (D.S.C. 2017) Employers Ins. of Wausau v. Fox Ent. Grp., Inc., 522 F.3d 271 (2d Cir. 2008) Federman v. ITT Ed. Servs., Inc., Bankr. Case No First City Nat l Bank and Trust Co. v. Simmons, 878 F.2d 76 (2d Cir. 1989) Howard v. Klynveld Peat Marwick Goerdeler, 977 F. Supp. 654 (S.D.N.Y. 1997)...2 James v. AT&T Corp., 334 F. Supp.2d 410 (S.D.N.Y. 2010)...6 Kytel Int l Grp., Inc. v. Rent A Ctr., No , 43 Fed. Appx. 420 (2d Cir. Aug. 5, 2002)...2 Massey, et al. v. Westinghouse Electric Company, LLC, Adv. No (MEW)... Passim In re MF Global Holdings, Ltd., 464 B.R. 619 (Bankr. S.D.N.Y. 2012) Morency v. Village of Lynbrook, 1 F. Supp.3d 58, 63 (E.D.N.Y. 2014)...6 Naula v. Rite Aid of NY, No. 08 Civ , 2010 WL (S.D.N.Y. Mar. 23, 2010)...2 PHIL v.1 ii

4 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 4 of 13 Pennington v. Fluor Corp., No. 0:17-cv JMC (D.S.C. 2017)...5 Quinn v. Walgreen Co., 958 F. Supp.2d 533 (S.D.N.Y. 2013)...2 Regions Bank v. Wieder & Mastroianni P.C., 170 F. Supp.2d 436 (S.D.N.Y. 2001)...2 Rivera v. Bowen, 664 F. Supp. 708 (S.D.N.Y. 1987)...6 Schnabel v. Ramsey Quantitative Sys., Inc., 322 F. Supp.2d 505 (S.D.N.Y. 2004)...2 Serlin v. Arthur Anderson & Co., 3 F.3d 221 (7th Cir. 1993)...2 Singleton v. Alevo Manufacturing, Inc. (In re Alevo Manfacturing, Inc.), Bankr. Case. No (Bankr. M.D.N.C.) In re TransCare Corp., 552 B.R. 69 (Bankr. S.D.N.Y. 2016)...6 PHIL v.1 iii

5 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 5 of 13 The Massey Plaintiffs respectfully submit this Response to the Gladden Plaintiffs Motion for Class Certification and Related Relief (the Gladden Motion ) and, for the reasons set forth below and in the Massey Plaintiffs Motion for Class Certification and Related Relief (the Massey Motion ), request that this Court grant the Massey Motion by, among other things, certifying the class defined in the Massey Motion, appointing Klehr Harrison Harvey Branzburg LLP ( Klehr Harrison ), Gaffney Lewis & Edwards ( Gaffney Lewis ) and Yarborough Applegate LLC ( Yarborough Applegate ) (collectively, Proposed Class Counsel ) as Class Counsel, and dismissing or staying the Gladden Action or, in the alternative, consolidating it with the Massey Action and thereby deny the Gladden Motion to dismiss the Massey Action and to appoint Gladden Counsel 2 as sole Class Counsel. I. THE COURT SHOULD NOT DISMISS THE MASSEY ACTION Hoping for a bright-line rule that he/she who wins the race to the courthouse shall be entitled to proceed in lieu of all other well-founded complaints, the Gladden Plaintiffs erroneously argue that this Court should apply the first-filed rule to dismiss the Massey Action. In so doing, however, the Gladden Plaintiffs cite only to cases that clearly show that the firstfiled rule is inapplicable here and to cases that, in fact, do not even apply the rule. See ECF No. 20, at Each point will be addressed in turn below. A. The First-Filed Rule is Inapplicable The overwhelming weight of authority in the Second Circuit shows that the first-filed rule applies only to duplicative cases that are pending in different courts, not in the same court as here. See, e.g., BuddyUSA, Inc. v. Recording Indus. Ass n of Am., Inc., No , 21 Fed. Appx. 52, (2d Cir. Oct. 11, 2001); Employers Ins. of Wausau v. Fox Ent. Grp., Inc., Gladden Counsel refers to Outten & Golden, Lankenau & Miller and the Gardner Firm, PC. PHIL v.1

6 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 6 of 13 F.3d 271, 274 (2d Cir. 2008) (applying the first-filed rule to determine the appropriate forum); see also Kytel Int l Grp., Inc. v. Rent A Ctr., No , 43 Fed. Appx. 420, 422 (2d Cir. Aug. 5, 2002) (describing the first-filed rule as a change of venue principle. ); accord Quinn v. Walgreen Co., 958 F. Supp.2d 533, 537 (S.D.N.Y. 2013); Schnabel v. Ramsey Quantitative Sys., Inc., 322 F. Supp.2d 505, (S.D.N.Y. 2004) (describing the first-filed rule as applying [w]here two courts have concurrent jurisdiction over an action involving the same parties and issues ) (emphasis added); Regions Bank v. Wieder & Mastroianni P.C., 170 F. Supp.2d 436, 439 (S.D.N.Y. 2001). Even the two Second Circuit cases the Gladden Plaintiffs cite that actually apply the first-filed rule - First City Nat l Bank and Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989)( First City ), and Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991)( Adam ), in fact concerned duplicative actions pending in different courts. Further, while the Gladden Plaintiffs cite to two Southern District of New York cases wherein the court seemed to apply the first-filed rule to duplicative actions in the same court, a close reading of these decisions shows that the trial courts erred in doing so. Revealingly, in Howard v. Klynveld Peat Marwick Goerdeler, 977 F. Supp. 654, 664 (S.D.N.Y. 1997), the court justified its application of the rule there by citing only to First City and Serlin v. Arthur Anderson & Co., 3 F.3d 221, 224 (7 th Cir. 1993), neither of which applied the rule to actions filed in the same court. Similarly, in the unreported decision Naula v. Rite Aid of NY, No. 08 Civ , 2010 WL , at *3 (S.D.N.Y. Mar. 23, 2010), the court purportedly applied the first-filed rule to cases in the same court but cited, as support therefore, only the inapposite cases First City and Adam. 3 3 The Naula court also cited to Colorado River Water Conservative Dist. of U.S., 424 U.S. 800, 817 (1976), but this case is inapplicable because it involves a different doctrine all together from the first-filed rule, called the Colorado River doctrine. The Colorado River doctrine applies only when there are parallel federal and state suits. Id. PHIL v.1 2

7 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 7 of 13 What is more, lest there be any doubt that Outten & Golden (one of the firms comprising Gladden Counsel) ( O&G ) knows that the first-filed rule does not apply here, O&G has argued vociferously against the application of the rule when it would have been to its detriment. In Bill Heard Chevrolet, O&G argued the following: The first file rule is inapplicable where, as here, separate complaints are filed in the same court.... If this Court were to do what Debtors demand, to hear the firstfiled case and dismiss the later-filed case, this Court would be not be applying the first-to-file rule. It would be a rule that Debtors have invented out of thin air. By definition, the first-filed rule concerns cases brought in different courts. Debtors propose a new rule, that the first to file within a single court gets heard and later cases are dismissed. This proposal has been unanimously rejected by the Courts. Debtors, in short, urge this court to do what no court has ever done, impose the ultimate, most drastic sanction possible -- dismissal of an action - based on an imaginary rule. See O&G brief in Opposition to Debtor s Motion to Dismiss Adversary Proceeding, at pp. 6-8 (internal citations omitted), a copy of which is attached hereto as Exhibit A. In this respect, O&G was correct. Given the foregoing, the Court should refuse to apply the first-filed rule because both the Massey Action and the Gladden Action are pending before the same court. B. Even if Applicable, the First-Filed Rule Favors the Massey Plaintiffs Even if this Court were to apply the first-filed rule here, the Second Circuit has made it clear that the Court must consider whether special circumstances exist that would justify giving priority to the second-filed action. First City, 878 F.2d at 79. Those special circumstances exist here. Specifically, over 420 individuals have directly retained Proposed Class Counsel to represent them, which Proposed Class Counsel believes is far more than have retained Gladden PHIL v.1 3

8 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 8 of 13 Counsel combined. Also, while it is undisputed that the Gladden Plaintiffs filed an adversary complaint before the Massey Plaintiffs filed an adversary complaint, the Gladden Plaintiffs complaints did not provide the detailed factual allegations the Massey complaint included and each did not sue some of the primary Westinghouse employers at the VC Summer Location. In particular, contrary to the Gladden Plaintiffs suggestion that the Massey Action merely mirrored the Gladden Action, see Gladden Motion at 6, it is notable that: (a) it was the Massey Plaintiffs, not the Gladden Plaintiffs, who first sued WECTEC Global and WECTEC Staffing; (b) it was the Massey Plaintiffs, not the Gladden Plaintiffs, who first sued both Westinghouse and WECTEC LLC in the same action; and (c) it was the Massey Plaintiffs, not the Gladden Plaintiffs, who filed the first detailed complaint containing numerous factual allegations supporting the single employer theory. Thus, even if this Court decides to apply the first-filed rule here to dismiss or stay an action, it should consider these special circumstances and dismiss or stay of the Gladden Action, not the Massey Action. C. In Exercising Its Discretion to Administer its Docket, the Court Should not Dismiss the Massey Action As the Massey Plaintiffs acknowledged in their Motion at 7 n.6 and 16-17, the Court does have the discretion pursuant to the general power to administer its docket, to dismiss, stay or consolidate an action that is duplicative of another federal action. Even so, the Court should decline to exercise this discretion to dismiss the Massey Action for all of the reasons expressed in the Massey Motion at 5-7, Among other things, dismissing or staying the Massey Action would be patently unfair to the over 420 individuals who have chosen Proposed Class Counsel to represent them. To be sure, although not binding on this Court, the Court should find the recent decision by the Honorable J. Michelle Childs in the related class action cases in South Carolina initiated by Proposed Class Counsel and O&G Butler, et al. v. Fluor Corp., et al., No. 0:17-cv- PHIL v.1 4

9 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 9 of JMC (D.S.C. 2017) ( Butler Action ) and Pennington v. Fluor Corp., No. 0:17-cv JMC (D.S.C. 2017), instructive. There, when faced with similar arguments regarding the firstfiled rule and whether the equities of the situation called for dismissing or staying the secondfiled Butler Action, the court ordered the actions to be consolidated for purposes of discovery and pretrial motions. The court held that consolidation in lieu of dismissal would sufficiently avoid duplicative litigation and conserve judicial resources. See Order dated February 16, 2018, attached hereto as Exhibit B. The result would be no different with a consolidation of the Gladden Action and the Massey Action. In addition, not only were the Massey Plaintiffs, in fact, the first to bring many of the overlapping substantive claims here, see Section I.B., supra, but also: it is important to note that the Proposed Class in the Massey Action is defined more broadly than the proposed class in the Gladden Action. Only the former includes those individuals nominally employed by Fluor and defines the pertinent plant closings and/or mass layoffs as those ordered collectively by all of the defendants in the Massey Action and not just by Westinghouse Electric Company, LLC; both the Massey complaint and the Gladden complaint assert a wage payment claim, in addition to a WARN claim; even Gladden Counsel has recognized in the Gladden Motion that Massey Counsel clearly is qualified to pursue the claims on behalf of the class. See Gladden Motion at 17; see also Massey Motion at and Exhibit A thereto discussing Proposed Class Counsel s qualifications; and PHIL v.1 5

10 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 10 of 13 there is no evidence that the Massey Action was filed by the same plaintiff for tactical purposes or to circumvent the rules pertaining to the amendment of complaints. Given these facts, the cases the Gladden Plaintiffs cite in their motion are materially distinguishable. See In re TransCare Corp., 552 B.R. 69, (Bankr. S.D.N.Y. 2016) (second complaint dismissed because, unlike first complaint, it asserted claims against an entity of unknown worth, failed to include a wage claim, and did not add any substantive allegations to the claims); James v. AT&T Corp., 334 F. Supp.2d 410, (S.D.N.Y. 2010) (dismissal because the second action was filed for tactical purposes to cure improper service or to avoid the statute of limitations); Morency v. Village of Lynbrook, 1 F. Supp.3d 58, 63 (E.D.N.Y. 2014) (second suit brought to circumvent rules pertaining to amendments to complaints); Rivera v. Bowen, 664 F. Supp. 708, (S.D.N.Y. 1987) (concerning an individual action and a class action, not two separately-filed class actions with numerous individual plaintiffs having retained the firm that filed the second action); In re Barney s, Inc., 206 B.R. 336, (Bank. S.D.N.Y. 1997) (staying district court case in favor of arbitration of claims); In re MF Global Holdings, Ltd., 464 B.R. 619, 625 (Bankr. S.D.N.Y. 2012) (dismissing later action given counsel s lack of experience in WARN cases). 4 4 Also, O&G s reliance on its appointment as interim class counsel in Federman v. ITT Ed. Servs., Inc., Bankr. Case No , Singleton v. Alevo Manufacturing, Inc. (In re Alevo Manfacturing, Inc.), Bankr. Case. No (Bankr. M.D.N.C.), and In re MF Global Holdings, Ltd., 464 B.R. 619, 625 (Bankr. S.D.N.Y. 2012), is misleading. Exh. D to Gladden Motion, 41, 46, 47. As an initial matter, because the Federman appointed O&G without an opinion, it provides little to no meaningful guidance to the Court. Concerning Alevo, the Court did not appoint O&G because it was best able to represent the putative class based on its experience. See Declaration of Charles A. Ercole ( Ercole Decl. ), which is attached hereto as Exhibit C, 3-5. To the contrary, Judge Catharine R. Aron actually said that it appeared that both firms were equally qualified, experienced, and successful in representing classes of WARN Act claimants, so she would have to look at other Rule 23 factors. She went on to say that she was basing her ruling on the fact that O&G filed first, that O&G had 50 plaintiffs while Klehr Harrison only had 11 plaintiffs (which is a factor that weighs far more heavily in Klehr Harrison s favor in the instant action), and that O&G had a plaintiff who could assert a Wage Act claim. See Exh. D to the Gladden Motion at Exh. 7 at pp Massey Counsel believes that Judge Aron erred in giving significant PHIL v.1 6

11 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 11 of 13 Despite the foregoing, Gladden Counsel has unfortunately taken the position that it will not partner with Klehr Harrison in this class action unless ordered by the Court to do so. Ercole Decl., Exh. C, 13. It has done so despite contending to the Court that it recognizes the concern of maximizing efficiency and minimizing costs. Gladden Motion at 26. Given the size and complexity of this litigation with thousands of putative Class Members and several defendants, as well as the fact that over 420 employees have retained Massey Counsel directly Gladden Counsel s refusal to work with Proposed Class Counsel is clearly not in the best interests of the Class and has not maximized efficiency and minimized costs. The plain fact is that Gladden Counsel has wasted this Court s time and delayed this litigation solely to benefit themselves and it should not be permitted. To be sure, the Court should disregard the disingenuous contention made by Gladden Counsel that consolidating the Gladden Action and the Massey Action will impose greater financial risk on the WARN Plaintiffs and the other creditors in the form of defense expenses weight to the timing of the filings because Klehr Harrison and O&G filed their clients respective complaints within 24 hours of each other. Also, if the court here considers the number of plaintiffs, this overwhelmingly weighs in favor of Klehr Harrison with over 420 plaintiffs. Third, both complaints here assert claims under the same statutes. Concerning MF Global, as explained in Ercole Dec., Exh. C, at 6-11, in that case, Klehr Harrison and the three firms comprising Gladden Counsel (all of whom were collectively called Thielmann Counsel by the court) each filed an action within the first 36 hours of the employee layoffs (with O&G being the last out of these three to file an action). Thielmann Counsel, having worked together previously in other cases, agreed to litigate the case together, and share any fees equally. Approximately 20 days later, a firm with no WARN Act experience filed an adversary complaint (the Greene Action ) and also moved for appointment as interim class counsel. MF Global, 464 B.R. at 622 and 624 n.5. Thielmann Counsel opposed the motion and cross-moved to be appointed collectively as interim class counsel. Id. at 621. In dismissing the Greene Action, the MF Global court did not rely at all on the order the complaints were filed. Rather, the primary basis for dismissing it was the lack of WARN Act experience on the part of the attorneys who filed it and on the collective adequacy of Thielmann Counsel. MF Global, 464 B.R. at 622 and 624 n.5. Also, during oral argument, Jack Raisner of O&G stated that Thielmann Counsel had operated seamlessly in prior cases and, for that reason, there was no need to appoint one single firm as class counsel. See ECF 19-4, 14. The Honorable Martin Glenn ultimately ruled that he desired to have a point of contact so he nominally appointed O&G as interim class counsel. 464 B.R. at (appointing O&G as interim class counsel to coordinate work with the other Thielmann Counsel to avoid duplication of effort and recognizing that each of the Thielmann Counsel firms had specific skills that would benefit the putative class ). As Mr. Raisner had represented to the court, the firms did operate seamlessly and interchangeably throughout the litigation, including on filings, pleadings, discovery, trial prep, and the like. Ultimately the firms were able to recover $5MM in WARN Act damages and $2.8MM in vacation pay for approximately 1150 former MF Global employees. ECF 19-4, 15. PHIL v.1 7

12 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 12 of 13 spent on litigating the WARN Claims. Gladden Motion at 26. First, the defense will be the same regardless because there will only be one WARN Act lawsuit to litigate either through consolidation or dismissal of one of the cases. Second, Gladden counsel knows that, when funds are distributed for WARN claims, the WARN attorneys (however many there are) receive a single contingent fee (split among the class counsel firms) and reimbursement of out-of-pocket costs (which are approved by the court as well). Third, Klehr Harrison has never sought expenses and costs from WARN plaintiffs in the rare instances when Klehr Harrison has not recovered WARN damages on behalf of the plaintiffs. Fourth, if Gladden Counsel genuinely were concerned about maximizing efficiency and minimizing costs, they would have agreed to consolidate the WARN actions and work cooperatively with Massey Counsel pursuant to an equal split Massey Counsel offered in December Ercole Decl., Exh. C, 12. II. CONCLUSION Given the foregoing, the Massey Plaintiffs respectfully request the Court to enter Orders: (i) granting the Massey Motion in its entirety; (ii) certifying the Class defined in the Massey Motion; (iii) appointing Proposed Class Counsel as Class Counsel, and Elton Massey, Kirt Hurlburt, Patricia Adams, John Jennings, Johnnie Hall, and Katrina Baker as Class Representatives; (iv) approving the form and manner notice of the Class Notice; and (v) granting such other relief as the Court deems necessary and appropriate. Respectfully submitted, /s/ Charles A. Ercole Raymond H. Lemisch, Esquire Charles A. Ercole, Esquire* Lee D. Moylan, Esquire* Klehr Harrison Harvey Branzburg LLP 1835 Market Street, Suite 1400 Philadelphia, PA Telephone: (215) PHIL v.1 8

13 mew Doc 33 Filed 03/15/18 Entered 03/15/18 15:07:25 Main Document Pg 13 of 13 GAFFNEY LEWIS & EDWARDS, LLC /s/ Amy L. Gaffney Amy L. Gaffney* Federal I.D. Number: 6316 Gaffney Lewis & Edwards, LLC 3700 Forest Drive, Suite 400 Columbia, SC (803) YARBOROUGH APPLEGATE LLC /s/ David Yarborough David B. Yarborough, Jr.* Federal I.D. Number: 7336 Christopher J. Bryant* Federal I.D. Number: East Bay Street Charleston, SC (843) *Admitted Pro Hac Vice Attorneys for the Massey Plaintiffs and the putative Class PHIL v.1 9

14 mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 1 of 32 EXHIBIT A PHIL v.1

15 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 1 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 2 of 32 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ALABAMA NORTHERN DIVISION In re: BILL HEARD ENTERPRISES, INC., et al. Debtors. EDWARD KRATZEL on behalf of himself and all others similarly situated, Case No JAC11 Chapter 11 (Debtors motion for joint administration pending) v. Plaintiff. Adv. Pro. No JAC BILL HEARD ENTERPRISES, INC., BILL HEARD CHEVROLET COMPANY, TOM JUMPER CHEVROLET, INC., BILL HEARD CHEVROLET, INC. - HUNTSVILLE, LANDMARK CHEVROLET, LTD., BILL HEARD CHEVROLET, LTD., BILL HEARD CHEVROLET CORPORATION NASHVILLE, BILL HEARD CHEVROLET CORPORATION - ORLANDO, BILL HEARD CHEVROLET, INC., - UNION CITY, BILL HEARD CHEVROLET AT TOWN CENTER, LLC., BILL HEARD CHEVROLET, INC. - COLLIERVILLE, BILL HEARD CHEVROLET, INC. SCOTTSDALE, BILL HEARD CHEVROLET, INC., - PLANT CITY, BILL HEARD CHEVROLET CORPORATION LAS VEGAS, BILL HEARD CHEVROLET CORPORATION N.W. LAS VEGAS, TWENTIETH CENTURY LAND CORP., ENTERPRISE AVIATION, INC., CENTURY LAND CORPORATION, CENTURY LAND COMPANY TENNESSEE, BILL HEARD MANAGEMENT, LLC, LANDMARK VEHICLE MGT., LLC, GEORGIA SERVICES GROUP, LLC and COLUMBUS TRANSPORTATION, LLC. PLAINTIFF S OPPOSITION TO DEBTORS MOTION TO DISMISS ADVERSARY PROCEEDING PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) Defendants.

16 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 2 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 3 of 32 Preliminary Statement The Debtors Bill Heard Enterprises Inc ( Heard ) and certain of its direct and indirect subsidiaries (collectively, the Debtors ), have moved to dismiss the instant adversary proceeding based on a misleading characterization of the law. Plaintiff has filed the instant adversary proceeding on his behalf and on behalf of the approximately 2,5000 other former employees of the Debtors seeking to recover 60 days wages and benefits under the Worker Adjustment and Retraining Notification Act, 29 USC 2101 et seq., (the WARN Act ). Plaintiff s claim arises as a result of Debtors termination of their entire workforce on or about September 24, 2008 with no advance written notice to their employees. Debtor move to dismiss Plaintiff s adversary on two separate grounds. First, Debtors assert, without citation to authority, that the first to file rule prohibits two adversaries with similar claims from proceeding in the same court before the same judge. Debtors representation of the applicability of this rule to these proceedings is fatally flawed. Not only have courts held that the rule does not apply when similar claims are brought in the same court, but the very rationale for the rule which Debtors conveniently neglected to mention exposes its utter lack of relevance here. There is no danger of inconsistent judgments, interference between courts, or duplicative litigation when the same court is presiding over and deciding all claims. In addition, Plaintiff has moved for class certification, and for appointment of class counsel under Fed. R. Civ. P. 23(g). If Plaintiffs Motion is granted, the possibility which Debtors fear - of defending against two separate suits vanishes. As Plaintiff s Motion has not been heard, Debtors first argument for dismissal is premature at best and groundless at worst. 2

17 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 3 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 4 of 32 Debtors second argument for dismissal is Debtors assertion that the estate, this Court, and all creditors would somehow be better served if Debtors were required to resolve approximately 2,500 employees WARN claims - seeking essentially the same relief - on a piecemeal fashion through individual proofs of claim, rather than in one neat consolidated class action. Debtors arguments in favor of the claims process are both factually and legally flawed. Numerous bankruptcy courts have dealt with the exact issue of the best means to resolve WARN claims and have overwhelmingly concluded that adversary proceedings are the proper vehicle because such claims seek equitable relief as set forth in Bankruptcy Rule 7001(7) and because adversary proceedings are far more efficient and economical than the individual claims process. Debtors attempt to counter this weight of precedent with two cases, one of which is a non- WARN case and clearly distinguishable, and the other which does not even address class actions and is under appeal, is futile. Debtors also oppose Plaintiff s claim that the 2005 Amendment to the Bankruptcy Code (11 U.S.C. 503(b)(1)(A)(ii) of the Bankruptcy Abuse and Consumer Protection Act of 2005 ( BAPCPA )) entitles the type of WARN damages sought here to administrative expense treatment. After analyzing the language of BAPCPA, Plaintiff submits that this Court will agree with the plain-meaning interpretation that experts have given to the words of Congress providing for such an allowance and will reject Debtors contentions. Similar to Debtors first to file argument, their motion to dismiss Plaintiff s request for administrative expense treatment for WARN damages and attorneys fees is premature as liability has not been resolved. Having presented this Court with no persuasive arguments or authority for any of their claims, Debtors motion seeking to dismiss Plaintiff s adversary complaint should be denied. 3

18 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 4 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 5 of 32 Overview of the WARN Act The Worker Adjustment and Retraining Notification Act 29 USC 2101 et seq., (the WARN Act ) provides protection to employees by requiring employers to provide written notification to employees 60 calendar days in advance of plant closings and mass layoffs. Advance written notice provides workers and their families time to adjust to the prospective loss of employment, to seek and obtain alternative jobs, and to seek retraining that will allow workers to successfully compete in the job market. WARN also provides for notice to dislocated worker units in each State so that dislocated worker assistance can be promptly provided. 20 CFR To accomplish its goals, the WARN Act bars employers with 100 or more employees from ordering a plant closing or a mass lay-off, each as defined in the Act, unless at least sixty-days advance written notice containing specified information is provided to each employee who will be terminated as part of, or as a reasonably foreseeable result of, a mass layoff or plant closure. 29 U.S.C. 2101(a)(1), 2102(a)(1). The notice must contain: 1. A statement as to whether the planned action is expected to be permanent or temporary and, if the entire plant is to be closed, a statement to that effect; 2. The expected date when the plant closing or mass layoff will commence and the expected date when the individual employee will be separated; 3. An indication whether or not bumping rights exist; and 4. The name and telephone number of a company official to contact for further information. 20 C.F.R Failure to give the required notice renders the employer liable to each affected employee for 60 days pay and benefits. If the employer gives its employees less than 60 days written 4

19 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 5 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 6 of 32 notice, the employer is liable for pay and benefits for the number of days notice was wrongfully not given. 29 U.S.C (a)(1). The WARN Act is a remedial statute and is to be broadly construed in favor of protection, and its defenses are to be narrowly construed. Local Union 7107 v. Clinchfield Coal Co, 124 F.3d 639, 640 (4 th Cir 1997); Bradley v. Sequoyah Fuels Corp, 847 F. Supp. 863, 867 (E.D. Okla. 1994). The employer has the burden of proving that the conditions for the exceptions [to 60 days notice] have been met. 20 C.F.R Procedural History On October 3, 2008, Plaintiff electronically filed his Class Action Adversary Proceeding Complaint on behalf of himself and the similarly situated former employees of Debtors for alleged violation of the WARN Act ( Plaintiff s Complaint ) (Proceeding No. 76). Plaintiff s Complaint was erroneously filed in the main case and so, on the following Monday, October 6, 2006, Plaintiff filed his Motion to Deem Complaint filed on October 3, 2008 (Doc. 6). Debtors counsel agreed to entry of Plaintiff s proposed Consent Order. 1 Also, on October 6, 2008, Plaintiff moved for class certification and for relief under Fed. R. Civ. P. 23(g) ( Plaintiff s Motion ) (Doc ). Resolution of class certification and appointment of interim class counsel is stayed pending a decision on the instant motion. (Doc. 21). The Court will hold a status conference on Plaintiff s Motion on November 24, (Doc. 22). On November 5, 2008, Debtors filed the instant motion which is set for hearing on November 24, Despite the consent of opposing counsel, the Court declined to enter the Consent Order correcting the filing date of Plaintiff s complaint absent the consent of counsel in the Kettell adversary. 5

20 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 6 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 7 of 32 ARGUMENT I. THE FIRST FILE RULE IS INAPPLICABLE WHERE, AS HERE, SEPARATE COMPLAINTS ARE FILED IN THE SAME COURT. Debtors urge this court to dismiss an action based on a concept that does not exist. If this Court were to do what Debtors demand, to hear the first-filed case and dismiss the laterfiled case, this Court would not be applying the first-to-file rule. It would be a rule that Debtors have invented out of thin air. By definition, the first-to-file rule concerns cases brought in different courts. See White v. Microsoft Corp., No WS-M, 2006 U.S. Dist. LEXIS 77010, at *8 (S.D. Ala. Apr. 3, 2006) ( the first-filed rule, provides that where two actions involving overlapping issues and parties are pending in two federal courts, a strong presumption favors the forum of the first-filed suit) (emphasis added) (citing Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005)); Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 603 (5th Cir. 1999) ( Under the first-to-file rule, when related cases are pending before two federal courts, the court in which the case was last filed may refuse to hear it if the issues raised by the cases substantially overlap ) (emphasis added); Mutual Serv. Casualty Ins. Co. v. Frit Indus., 805 F. Supp. 919, 923, n.5 (M.D. Ala. 1992) ( When two competing lawsuits are filed in different federal district courts, a first-filed rule usually applies ) (emphasis added), aff d 3 F.3d 442 (11th Cir. 1993). Debtors propose a new rule, that the first to file within a single court gets heard and later cases are dismissed. This proposal has been unanimously rejected by the Courts. The first-tofile rule does not apply when two similar cases have been filed in the same court as opposed to in two different courts. See Empagran S.A. v. F. Hoffman La Roche, Ltd., 2001 U.S. Dist. LEXIS 20910, 2001 WL , *7 (D.D.C. June 7, 2001), (holding the first-to-file rule did not apply because the claims were pending in two cases in one court rather than in two different 6

21 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 7 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 8 of 32 courts, therefore, consolidation rather than dismissal was appropriate), rev d on other grounds, 354 U.S. App. D.C. 257, 315 F.3d 338 (D.C. Cir. 2003) (citing Miller Brewing Co. v. Meal Co., Ltd., 177 F.R.D. 642, (E.D. Wis. 1998) (holding that when both cases are pending in the same district -- let alone the same judge -- consolidation is preferable ); Walton v. Eaton Corp., 563 F.2d 66, 71 (3d Cir. 1977) ( When a court learns that two possibly duplicative actions are pending on its docket, consolidation may well be the most administratively efficient procedure ); Amsouth Bank v. Dale, 386 F.3d 763, 791 n.8 (6th Cir. 2004) (the first-filed rule only applies to two cases filed in separate federal courts). The rule that Debtors seek, finds absolutely no support in the law. Debtors have done thorough, exhaustive research on the first to file rule in preparing its 12-page brief. They have found not a single case, treatise or article which recommends or treats as plausible the new proposition they create. Debtors have not merely sought the application of the first-to-file rule to single court cases. Rather, Debtors urge that the Court Must dismiss the second case. See Motion to Dismiss, 13. Not even the first-to-file rule requires this action application of the rule is decidedly discretionary. See White, 2006 U.S. Dist. LEXIS 77010, at *9 (citing Barnett v. Alabama, 171 F.Supp.2d 1292, 1296 (S.D. Ala. 2001) ( the rule is not meant to be rigid, mechanical, or inflexible, but is to be applied in a manner that best serves the interests of justice)). The court has broad discretion to deny application of the first-to-file rule. White, 2006 U.S. Dist. LEXIS 77010, at *9. Indeed, the first-to-file rule is not a rule. See Alltrade, Inc. v. Uniweld Prod., Inc., 946 F.2d 622, 628 (9th Cir. 1991) ( [t]he most basic aspect of the first-tofile rule is that it is discretionary ). 7

22 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 8 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 9 of 32 The first-to-file rule has a rationale, which Debtors conveniently do not mention. That rationale demonstrates that the rule has no application here. Application of the rule is improper in the present case and would not serve the purpose of the first-to-file rule. The purpose of the rule is to prevent interference between courts, to avert duplicative litigation, and to minimize the risk of inconsistent results. White, 2006 U.S. Dist. LEXIS 77010, at *8, n.6. The concern manifestly is to avoid the waste of duplication, to avoid rulings which may trench upon the authority of sister courts, and to avoid piecemeal resolution of issues that call for a uniform result. Id., (citing West Gulf Maritime Ass n v. ILA Deep Sea Local 24, South Atlantic and Gulf Coast Dist. of ILA, AFL-CIO, 751 F.2d 721, (5 th Cir. 1985) (citations omitted)). These concerns simply do not apply when the cases have been filed in the same court. Indeed, Debtors present no rationale or reasonable basis for their rule. They do not present any argument as to why a new rule should be created. Other than a single, conclusory non sequitur sentence that the reasoning of the first to file rule should apply here, Debtors do not bother to explain what reasoning supports their rule. See Motion to Dismiss, 11. Debtors, in short, urge this Court to do what no court has ever done, impose the ultimate, most drastic sanction possible the dismissal of an action based on an imaginary rule. An argument for an unreasonable position for which there is no basis in the law, is by definition frivolous. Even if it is not, it clearly can be given no credence especially considering the draconian result it would cause. II. AN ADVERSARY PROCEEDING COMPLAINT IS THE PROPER VEHICLE FOR PLAINTIFF S CLAIM. A. Plaintiff s Adversary Proceeding is Valid. Debtors assert that Plaintiff s adversary should be dismissed because it is duplicative of the claims process. Debtors then proceed to explain the very reason why the adversary is the 8

23 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 9 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 10 of 32 superior method of resolving not only Plaintiff s WARN claim, but the nearly identical claims of approximately 2,500 other former employees of the Debtors. As detailed below, not only does Plaintiff have a right to bring his claim as an adversary proceeding, but in so doing the considerable time spent by Debtors counsel fielding and responding to inquires regarding the claims process will be eliminated, as that role will be filled by Class Counsel without any added cost to the estate. B. The Adversary Proceeding Is Not Duplicative of the Claims Process. Debtors claim that the court s brief order denying class certification in In re First Magnus, Case No. 4:07-bk JMM, Adversary No. 4:07-ap JMM (Bankr.D.Ariz. Jan 10., 2008) (hereinafter First Magnus I ) is somehow instructive here, where Debtors are seeking dismissal of Plaintiff s complaint. Debtors state that the First Magnus Court denied class certification, where, as here, the former employees were filing proofs of claim that would be decided on the merits. Motion to Dismiss at p 8. This is untrue. The First Magnus I Court denied class certification under the mistaken belief that the Plaintiffs were pursuing claims to recover wages for time worked, not WARN. Given the wage claims were or would be scheduled and allowed, the Court reasoned that a class action was unnecessary. The First Magnus I Court s misunderstanding of the underlying claim, is but one reason why the decision in pending on appeal. Debtors also rely erroneously on the subsequent decision in First Magnus, also under appeal, in which the Court dismissed the adversary complaint of eight individuals (having been stripped of class allegations). The reasoning of that decision cannot possibly apply to a class action adversary complaint on behalf of 2,500 putative class members, where class certification has yet to be adjudicated. Case No. 4:07-bk JMM, Adversary No. 4:07-ap JMM (Bankr.D.Ariz. Feb. 6, 2008)(hereinafter First Magnus II ). In short, 9

24 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 10 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 11 of 32 Debtors do not cite to a single decision in which a WARN class action adversary complaint was dismissed at this stage of the proceedings. The only other authority Debtors rely upon for their contention that Plaintiff s Complaint should be dismissed as duplicative of the claims process is In re Conston, Inc., 181 B.R. 175 (Bankr. D. Del. 1995). Conston is totally inapposite to the instant case. In Conston, the trustee on behalf of the plaintiff, was seeking purely monetary relief and conceded that its adversary proceeding complaint sought to recover the exact same sum stated in its proof of claim. Id. at 176. Also, unlike the present case, the adversary complaint in Conston was not a class claim, and sought no equitable relief. Id. C. Class Actions Adversary Proceedings Are Not Duplicative of the Claims Process and Provide the More Efficient and Economical Means to Resolve WARN Act Claims. A class action is the superior method of resolving this dispute because many of the claims are quite small, making individual lawsuits impracticable. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 809 (1985). Rule 23 class claims are allowed in bankruptcy and given the efficiencies they provide, have been held particularly well-suited to WARN Act claims. It is well established that "[t]he principal function of Bankruptcy Law is to determine and implement in a single collective proceeding the entitlements of all concerned." American Reserve Corp., 840 F.2d 487, 489 (7 th Cir. 1988). It is equally clear that the "Congressional goal" underlying the present Bankruptcy Code was to provide "that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in bankruptcy court so as to permit the broadest possible relief in the bankruptcy court." In re Charter Company, 876 F.2d 866, 870 (11 th Cir. 1989). 10

25 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 11 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 12 of 32 Courts have regularly held that the WARN Act is "particularly amenable to class litigation." Finnan v. L.F. Rothschild & Co., 726 F. Supp. 460, 465 (S.D.N.Y. 1989); See also, Grimmer v. Lord, Day & Lord, 937 F. Supp. 255 (S.D.N.Y. 1996) ("[T]he WARN Act provisions lend themselves to class action because they provide for limited recovery."); New Orleans Clerks and Checkers Union Local 1497 v. Ryan-Walsh, Inc., 1994 U.S.Dist. LEXIS 2403 (E.D. La. 1994)( the instant proceeding, a WARN action, falls squarely within the criteria for sanctioning a class. ). Thus, violations of the WARN Act have given rise to numerous class action cases and class certification is routinely granted. See, e.g., Pearson v. Component Technology Corp., 247 F.3d 471 (3 rd Cir. 2001) (former employees brought representative action on behalf of other employees against employer s secured creditor under the WARN Act); Jurcev v. Central Community Hospital, 7 F.3d 618 (7 th Cir. 1993) (employees who lost their jobs when hospital closed brought, on behalf of other former employees, an action against the hospital under the WARN Act); Jones v. Kayser-Roth Hosiery, 748 F. Supp (E.D. TN. 1990) (former employees brought action under the WARN Act on behalf of other employees); Bledsoe v. Emery Worldwide Airlines, 258 F. Supp. 2d 780 (S.D. Ohio 2003); Cashman v. Dolce International/Hartford, Inc., 225 F.R.D. 73 (D. Conn. 2004); Cruz v. Robert Abbey, Inc., 778 F. Supp. 605 (E.D.N.Y. 1991); Reyes v. Greater Texas Finishing Corp., 19 F. Supp. 2d 709 (W.D. Texas 1998). In bankruptcy court, at least five courts have permitted WARN Act adversary class actions complaints to go forward, whether or not the former employees filed individual proofs of claim. In re Protected Vehicles, Inc., 392 B.R. 633, 639 (Bankr. D.S.C. 2008); In re First NLC Financial Services, 2008 Bankr. LEXIS 2166 (Bankr S.D. Fla. August 11, 2008); In re 11

26 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 12 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 13 of 32 Quantegy, Inc, 343 B.R. 689, 693 (Bankr. M.D. Ala. 2006); In re Spring Ford Industries, Inc., 2004 Bankr. LEXIS 112 (Bankr. E.D. Pa. 2004); and Cain v. Inacom Corp., No. ADV , 2001 Bankr. LEXIS 1299 at *4-5 (Bankr. D. Del. Sept. 26, 2001). As the Eleventh Circuit found in In re Charter Company, 876 F.2d 866, 871 (11 th Cir. 1989), a class filing in bankruptcy court would increase the efficiency of the proceedings as opposed to individuals filing separate proofs of claim, even if the claims were ultimately consolidated. Id. at fn. 8. Although In re Charter was a securities case, its reasoning was found applicable to WARN cases in bankruptcy by the Court in In re First NLC Financial Services, 2008 Bankr. LEXIS 2166 (Bankr S.D. Fla. August 11, 2008). There, the debtor moved to dismiss the adversary class complaint on grounds that the class action will be costly and come at the expense of other creditors, with very little benefit, if any, going to dilatory claimants and Plaintiff s attorneys. Id. at *8. Rejecting these arguments, the Court found that the adversary proceeding has the potential to provide a less protracted and more efficient litigation framework than the claims process. Id. at *8-9. The In re First NLC Court agreed with the policy favoring class claims in bankruptcy set forth by the In re Charter Court, that WARN claimants are no less creditors under the Code than someone with a large, easily filed claim. Applying Rule 23 to filing procedures will bring all claims forward, as contemplated by the Bankruptcy Code. In re First NLC at *8-9, quoting In re Charter. As the Court in In re Charter stated: because the claims may be contingent or of uncertain value, potential claimants may not realize that they can recover, unless the efforts of a representative make them aware. 876 F.2d at 871. Thus, a WARN class representative such as Plaintiff Kratzel should be permitted to bring an opt-out class that will notify the claimants of 12

27 Case JAC Doc 27 Filed 11/20/08 Entered 11/20/08 15:39:43 Desc Main Document Page 13 of mew Doc 33-1 Filed 03/15/18 Entered 03/15/18 15:07:25 Exhibit A Pg 14 of 32 their WARN claims, because they are otherwise not likely to have realized they could recover WARN damages by filing a proof of claim. The only way to provide WARN notice, consistent with the Bankruptcy Code and Rule 7023, is through the class adversary complaint. Moreover, the In re Charter Court was concerned that the effort and cost of investigating and initiating a claim may be greater than many claimants' individual stake in the outcome, discouraging the prosecution of these claims absent a class action filing procedure. Id. That is a concern in bankruptcy claims processing, for just as the effort and cost to individuals of investigating and initiating claims on an individual basis is prodigious, so is the effort and cost to the estate and court of handling potentially hundreds of claims. The In re Charter Court quoted one commentator who concluded, "when claims are small, they are unlikely to receive the attention of an attorney on an individual basis but might very well receive such attention when aggregated." Id., citing Wohlmuth, The Class Action and Bankruptcy: Tracking the Evolution of a Legal Principle, 21 UCLA L.Rev. 577, 579 (1973). In claims processing, the putative class members here would probably not have the help of experienced WARN counsel to resolve their claims, as they would under this adversary. Importantly, the In re Charter Court held that the policy underlying Rule 23, which is not fulfilled absent class filing, is also consistent with the goals of the bankruptcy statute. Id. The Court found that the bankruptcy statute has the goal of facilitating creditor compensation. Id. Bankruptcy also seeks to achieve equitable distribution of the estate. Persons holding small claims, who absent class procedures might not prosecute them. Id. Given the benefits of a class complaint over normal individual claims processing, it cannot be said that the two vehicles are equal or duplicative of each other. 13