                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-31-2007

Wirth v. Telcordia Tech Inc
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-1404




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Recommended Citation
"Wirth v. Telcordia Tech Inc" (2007). 2007 Decisions. Paper 674.
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                                                              NOT PRECEDENTIAL




                  IN THE UNITED STATES COURT OF APPEALS
                           FOR THE THIRD CIRCUIT


                                    NO. 06-1404


                      DAVID WIRTH; ELAINE M. LONDINO;
                      CHERYL L. MILLS; MARION RADEER,
                                                 Appellants

                                           v.

                     TELCORDIA TECHNOLOGIES, INC.;
               SCIENCE APPLICATIONS INTERNATIONAL CORP.




                   On Appeal From the United States District Court
                             for the District of New Jersey
                        (D.C. Civil Action No. 03-cv-01929)
                    District Judge: Hon. Joseph A. Greenway, Jr.




                                Argued April 20, 2007

                     BEFORE: McKEE, AMBRO, Circuit Judges,
                        and MICHEL,* Chief Circuit Judge.

                                 (Filed: July 31, 2007)




   *
    The Honorable Paul R. Michel, Chief Judge of the United States Court of Appeals for
the Federal Circuit, sitting by designation.
Steven D. Cahn (Argued)
Cahn & Parra
1015 New Durham Road
Edison, NJ 08817
 Attorney for Appellants

Francis X. Dee (Argued)
McElroy, Deutsch, Mulvaney & Carpenter
100 Mulberry Street
Three Gateway Center
Newark, NJ 07102

David J. Reilly
McElroy, Deutsch, Mulvaney & Carpenter
1300 Mount Kemble Avenue
P.O. Box 2075
Morristown, NJ 07962
 Attorneys for Appellees




                               OPINION OF THE COURT




MICHEL, Chief Circuit Judge:


       Plaintiffs appeal from a grant of summary judgment in favor of defendants Telcordia

Technologies, Inc., and Science Applications International Corporation (collectively

“Telcordia”) in a case involving the Worker Adjustment and Retraining Notification Act, 29

U.S.C. §§ 2101 et seq. (“WARN Act”). Telcordia’s motion for summary judgment was

based on Release Agreements signed by each of the plaintiffs, although the plaintiffs allege

they were obtained through equitable fraud. The District Court, in granting summary

                                             2
judgment, held that the plaintiffs failed to establish equitable fraud as a matter of law and

thus the Release Agreements were binding. The District Court had jurisdiction under 29

U.S.C. § 2104(a)(5) and 28 U.S.C. § 1331, and this Court has jurisdiction under 28 U.S.C.

§ 1291. For the reasons set forth in this opinion, we will affirm the District Court’s grant of

summary judgment.

                                               I

       The cause of action at issue here stems from the WARN Act, which provides, in

relevant part: “An employer shall not order a plant closing or mass layoff until the end of

a 60-day period after the employer serves written notice of such an order [to the affected

employee(s)].” 29 U.S.C. § 2102(a). The relevant definition of “mass layoff” under the

statute is a layoff of at least 500 employees at any single site of employment in any single

90-day period. 29 U.S.C. § 2102(d); see 29 U.S.C. § 2101(a)(3).

       Plaintiffs are former employees of Telcordia. In 2001, Telcordia operated several

facilities in New Jersey. In the town of Piscataway, New Jersey, Telcordia operated facilities

located in six buildings, each with a different address. Three of these buildings were

adjacent to each other on the same street, Corporate Place, and Telcordia considered them

a single facility. Two of the other buildings were also located very close to each other on the

same street, Knightsbridge Road, and were also considered by Telcordia to be a single

facility. The last remaining facility was located on Hoes Lane, and Telcordia considered it

separate from the others. As such, Telcordia reported labor figures for these facilities as



                                              3
three separate sites of employment. Certain business units of Telcordia had employees across

all three Piscataway sites, shared resources across all three sites, and shared some

administrative structure among them.

       The plaintiffs were employed by Telcordia in Piscataway until late 2001. Beginning

in early September 2001, Telcordia began a force reduction in its New Jersey-based

workforce. Plaintiffs Wirth, Londino and Radeer were laid off on October 19, 2001.

Plaintiff Mills was laid off on November 16, 2001. Each of them received a one-week notice

of termination and a packet of documents as their terminations were processed. This packet

contained benefits and other such information along with a Release Agreement in which the

terminated employee agreed to release Telcordia of all liability in exchange for the severance

package outlined in the packet. The employees were informed in a letter that failure to agree

to the Release Agreement would result in withdrawal of the severance package. All of the

plaintiffs signed and accepted the Release Agreement’s terms.

       During    the   force-reduction   process,   Telcordia   officials   made   numerous

communications to its employees regarding the layoffs. In response to questions from

Radeer, Carol Cole, then Telcordia’s human resources director, wrote a letter to him on

October 19, 2001 that stated, “we are very familiar with the WARN Act and if the

requirements of the WARN Act are triggered, the company will certainly comply with it,”

and that the company was “analyzing the Telcordia data on an ongoing basis to ensure the

company’s compliance.” Joint App. at 508. Radeer then posted this letter to a website,



                                              4
XTelcordia, maintained and controlled by former Telcordia employees. Cole’s department

also posted information (“FAQs”) on the Telcordia website that stated, “The current state of

the business requires that we separate employees from payroll as quickly as possible [thus

some employees will not receive a 60 day notice].” Joint App. at 510. Telcordia’s president,

Harold Smith, sent an e-mail to all Telcordia employees on October 22, 2001, explaining that

the company’s financial difficulties made it necessary to only offer one-week notices. Cole

also periodically reported layoff statistics to the New Jersey Department of Labor (“DOL”).

DOL posted layoff statistics on its website.

       Wirth, Londino and Radeer all testified that they reviewed and relied on the data

posted on DOL’s website in assessing whether to sign the Release Agreement. All three also

testified they reviewed and relied on the October 19, 2001 Cole letter, and Wirth also relied

on the FAQs posted on Telcordia’s website. Mills testified that she had relied on the

Telcordia FAQs and the October 22, 2001 Smith e-mail.

       Plaintiffs filed suit on April 28, 2003, alleging that Telcordia had violated the WARN

Act by terminating them with less than 60 days of notice. They alleged that Telcordia laid

off more than 500 employees, themselves included, over a 90-day span beginning in

September 2001, thus triggering the WARN Act’s 60-day notice requirement. Telcordia filed

for summary judgment, arguing that the Release Agreements signed by each and every

plaintiff barred their claims. In response, plaintiffs alleged that the Release Agreements were

unenforceable because they had been obtained through equitable fraud. The District Court



                                               5
held that no genuine issues of material fact had been established as to whether Telcordia

made material misrepresentations to the plaintiffs, that no such misrepresentations had been

made, that the Release Agreements were thus binding and enforceable, and that Telcordia

was entitled to summary judgment as a result. Plaintiffs then timely filed this appeal.

                                              II

       Our review of the District Court's summary judgment order is plenary, and we apply

the same test as the District Court. Hampton v. Borough of Tinton Falls Police Dep’t, 98

F.3d 107, 111-12 (3d Cir. 1996). Summary judgment may only be granted if there are no

genuine issues of material fact, and the movant is entitled to judgment as a matter of law.

Fed. R. Civ. P. 56(c); Gottshall v. Consol. Rail Corp., 56 F.3d 530, 533 (3d Cir. 1995). All

facts and reasonable inferences must be considered in the light most favorable to the non-

movant. Spain v. Gallegos, 26 F.3d 439, 446 (3d Cir. 1994).

       To prove equitable fraud, plaintiffs must demonstrate (1) a material misrepresentation

of a presently existing or past fact, (2) reasonable reliance on the misrepresentation, and (3)

injury resulting from the reliance. Mortellite v. Novartis Crop Protection, Inc., 460 F.3d 483,

492 (3d Cir. 2006) (citing Jewish Center of Sussex County v. Whale, 432 A.2d 521, 524 (N.J.

1981)). As distinguished from legal fraud, no scienter requirement exists; in other words,

there is no requirement that the alleged defrauding party intended or knew that the

misrepresentation was false. Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1182-83 (3d

Cir. 1993). Plaintiffs must prove the elements of equitable fraud by clear and convincing



                                              6
evidence.1 Id.

                                              A

       Plaintiffs allege that Telcordia made four material misrepresentations: (1) allegedly

inaccurate reporting of layoff numbers to DOL, which were ultimately posted to the DOL

website; (2) the October 19, 2001 Cole letter to Radeer; (3) the October 22, 2001 Smith

e-mail to all employees; and (4) the FAQs published on the company website. In order to be

misrepresentations, each of these communications must contain one or more false statements.

       As for the DOL layoff statistics, Telcordia reported layoff numbers via a series of five

letters from May 10 through December 10, 2001. These figures included layoffs from

September 2001 through January 2002 and from all of Telcordia’s New Jersey facilities.2

DOL then posted monthly "WARN Notices" on its website that purported to give aggregated

statewide layoff numbers; these WARN Notices were then allegedly relied on by the

plaintiffs in their assessment of whether Telcordia was complying with the WARN Act.

DOL posted four WARN Notices for the relevant period that list “layoff begin” dates of

September 4, October 11, and December 31, 2001, and January 31, 2002.

       The parties have several disputes regarding these disclosures, but none of them is a


   1
    Plaintiffs briefly argued in the alternative that the Release Agreements were also
invalid because they did not have an opportunity to negotiate the agreements and their
severance packages were contingent on their signing the agreements. Although this
argument was not really pressed by plaintiffs on appeal or before the District Court, we
examined the issue and conclude that this argument lacks sufficient merit.
   2
   In addition to the three Piscataway sites, Telcordia also listed sites in Redbank and
Morris Township, New Jersey.

                                              7
genuine issue of material fact.3 It is undisputed that the WARN Notices report aggregated

layoff figures for all of Telcordia’s New Jersey sites together, thus it is impossible to discern

how many layoffs are attributable to Piscataway or when exactly they took place. Further,

the documents and evidence in the record plainly show that the DOL website did not report

the same numbers disclosed to DOL by Telcordia. For example, Telcordia’s July 25, 2001

letter to DOL reported that 656 employees (473 in the three Piscataway sites) were to be laid

off prior to October 1, 2001. Joint App. at 499-500. The DOL website reported 185

September layoffs statewide, however, and only 215 between its September and October

WARN Notices. Joint App. at 656-57. Given such discrepancies, the DOL WARN Notices

cannot reasonably be said to be representations attributable to Telcordia since Telcordia had

no control over DOL or DOL’s website.4 The District Court thus did not err by holding that

the DOL Warn Notices do not constitute material misrepresentations by Telcordia.

       The portions of the October 19, 2001 Cole letter to Radeer that plaintiffs allege are

material misrepresentations amount to Telcordia’s promise to comply with the WARN Act

and its statement that it was analyzing the appropriate data to monitor that compliance. Thus



   3
    The parties dispute whether it was proper or lawful for Telcordia to report statistics
for its Piscataway facilities as three separate sites of employment rather than one. They
also dispute whether the figures reported by Telcordia were accurate and properly
counted as well as whether DOL accurately posted the figures Telcordia had reported.
These issues, while disputed, are irrelevant in this context.
   4
    We do not, however, express any view by this opinion as to whether communications
by an entity through an independent intermediary of this nature could under different
circumstances be attributable to the entity.

                                               8
these can only be a misrepresentations if (1) Telcordia did not intend to comply with the

WARN Act or knew it did not comply, or (2) it was not monitoring its layoff data for WARN

Act compliance. Plaintiffs focus on the former and do not argue the latter; in fact, they argue

the opposite in alleging that Telcordia consciously manipulated the layoff data for the

purpose of dodging the WARN Act’s requirements. But as the District Court noted, there

is no evidence of any such purpose or plan.5 Plaintiffs argue that Telcordia’s choice to

designate Piscataway as three separate sites of employment for WARN Act purposes was a

deliberate attempt to circumvent the WARN Act. But there is no evidence that supports this

accusation.6 The only evidence in the record is testimony indicating that Telcordia chose this

site designation scheme because it was already in use for reporting affirmative action data

to the Office of Federal Contract Compliance Programs. While that choice may have been

legally incorrect, the evidence does not reasonably support an inference that Telcordia did


   5
    Plaintiffs argue that the District Court’s analysis of Telcordia’s intent constitutes
reversible error because it imposed a scienter requirement improper to their equitable
fraud defense. However, the District Court makes clear that its analysis was directed
instead to determining whether Telcordia’s statement of its intent to comply with the
WARN Act in the October 19, 2001 Cole letter was true or false, i.e., whether it was a
misrepresentation.
   6
     It is well settled that a genuine issue of material fact cannot be raised by mere
argument or allegations unsupported by more than a scintilla of evidence. Coolspring
Stone Supply, Inc. v. Am. States Life Ins. Co., 10 F.3d 144, 148 (3d Cir. 1993). Plaintiffs
cite testimony by Cole in which she admitted that she had not personally reviewed the
WARN Act nor was she personally familiar with its requirements as to how sites of
employment are to be designated. Given the importance of the WARN Act, a person in
Cole’s position ideally should be more knowledgeable about its precepts. But this Cole
testimony alone is insufficient to establish a triable issue as to whether the letter’s
statement of Telcordia’s diligence regarding the WARN Act was false.

                                              9
not intend to comply with the WARN Act as it promised to in the October 19, 2001 Cole

letter.

          Regarding the Smith e-mail and website FAQs, they merely state Telcordia’s business

rationale for reducing notice times. There is no evidence that suggests that Telcordia’s

financial difficulties were fabricated or were not the motivation for the shorter notice times,

as those documents claim. Thus there is no issue of fact as to whether these documents

contain misrepresentations; they simply do not.

                                               B

          Plaintiffs also failed to sufficiently prove or even raise a triable issue on actual

reliance as to the DOL WARN Notices. Three of the four plaintiffs testified that they relied

on the DOL disclosures, but all three signed their Release Agreements by October 19, 2001.7

As such, they could at most have relied on the September and October WARN Notices. Even

assuming that they were misrepresentations of Telcordia, these two WARN Notices could

not have sufficiently informed Wirth, Londino, or Radeer about Telcordia’s WARN Act

compliance. The WARN Act is triggered when at least 500 employees have been laid off in

a 90-day period. The September and October WARN Notices only indicated that fewer than

500 employees had been fired in just two months, well short of 90 days. Wirth, Londino,

and Radeer thus could not yet have known whether Telcordia would exceed the 500




   7
    Wirth, Londino, and Radeer claim that they relied on the DOL WARN Notices. Mills
only claims that she relied on the Smith e-mail and the FAQs.

                                               10
employee threshold in the month following their signing of their Release Agreements.

Therefore Wirth, Londino, and Radeer could not have relied on these two WARN Notices

to judge whether Telcordia was violating the WARN Act before they signed their Release

Agreements.

                                               III

       Because plaintiffs failed to provide evidence sufficient to raise any genuine issues of

material fact, and because plaintiffs failed to establish a triable issue as to whether Telcordia

obtained their signed Release Agreements by equitable fraud, the District Court correctly

found that Telcordia was entitled to summary judgment. As such, we will affirm its

judgment.




                                               11
