Michael GUIPPONE, Individually and on Behalf of all Others Similarly Situated, Plaintiff-Appellant,
BH S & B HOLDINGS LLC, BHY S & B HoldCo, LLC, Bay Harbour Management LC, Bay Harbour Master Ltd, BH S & B Inc., York Capital Management, L.P. and YSOF S & B Investor, LLC, Defendants-Appellees.
Argued: Nov. 15, 2012.
Jack A. Raisner, Outten & Golden, LLP (Rene S. Roupinian, on the brief), New York, N.Y., for Appellant Michael Guippone.
Owen Cyrulnik, Grais & Ellsworth LLP, New York, N.Y., for Defendant-Appellee BHY SBHoldCo LLC.
Justin S. Antonipillai, Arnold & Porter, LLP (Robert A. Stolworthy, Jr., on the brief), Washington D.C., for Defendants-Appellees YSOF S & B Investor LLC and York Capital Management, L.P.
Before: KEARSE, STRAUB, and POOLER, Circuit Judges.
POOLER, Circuit Judge.
Michael Guippone, individually and on behalf of all others similarly situated, appeals from decisions and orders of the United States District Court for the Southern District of New York (McMahon, J. ) dismissing his putative class action claim brought against defendants for alleged violations of the Worker Adjustment Retraining
and Notification Act (" WARN" ). We vacate the district court's grant of summary judgment to BHY S & B HoldCo, LLC (" HoldCo" ), entered December 15, 2011, because we find that there is a material question of fact as to whether HoldCo was a single employer with its closely held subsidiary within the meaning of WARN. We affirm the district court's dismissal of the complaint against the remaining defendants for failure to state a claim, entered May 18, 2010.
Unless otherwise indicated, the factual allegations are not in dispute. Guippone worked at Steve & Barry's, a chain of retail apparel stores owned and operated by Steve & Barry's Industries, Inc. (" S & B Industries" ). S & B Industries filed for protection from its creditors pursuant to Chapter 11 of the U.S. Bankruptcy Code in July 2008. One group of defendants in this action comprises investment firms Bay Harbour Management LC and its related entities Bay Harbour Master Ltd. and BH S & B Inc. (together, " Bay Harbour" ); and York Capital Management L.P. and YSOF S & B Investor LLC (together, " York Capital" or " York" ). Bay Harbour and York Capital created a series of interrelated entities to purchase and manage Steve & Barry's after it filed for bankruptcy protection. One of the entities, HoldCo, served as the holding company and sole managing member of another entity, BH S & B Holdings LLC (" Holdings" ). Holdings was funded with $70 million from Bay Harbour and York Capital, and an additional $125 million in financing from Ableco Finance LLC (" Ableco" ). Holdings employed Guippone and the putative class members.
In August 2008, with approval from the United States Bankruptcy Court for the Southern District of New York, Holdings bought Steve & Barry's assets. Holdings retained a number of Steve & Barry's employees, including plaintiff and the putative class members. Holdings lacked a board of directors of its own. Holdings' senior management consisted of Andy Todd, president, and Gary Sugarman, chief operating officer. The HoldCo board hired the accounting firm J.H. Cohn to act as Holdings' chief financial officer in September, and in October Hal Kahn was hired as Holdings' chief executive officer. Scott Sozio, a member of HoldCo's board and a member of Bay Harbour, served as Holdings' assistant secretary. Other HoldCo board members included: Luis Medeiros, a member of York; Doug Teitelbaum, a member of Bay Harbour; and Jamie Dinan, a member of York.
The parties dispute exactly when and why Holdings faced bankruptcy. Regardless, the record is clear that in mid-October of 2008, lender Ableco exercised its rights under its loan agreement and " swept" roughly $30 million from Holdings' account. On October 31, 2008, Medeiros wrote to Teitelbaum and Sozio that " [w]e strongly believe that in the best interests of York and other shareholders of Steve and Barry's we put in place a liquidating plan immediately." Holdings' financial situation continued to deteriorate rapidly. In early November, Ableco informed HoldCo's board that Ableco intended to call the remainder of its loan, then issued a notice of default. Kahn and Todd were replaced as Holdings' managers on November 7, 2008 by RAS Management Advisors, LLC. (" RAS" or " RAS Management" ). Sozio testified that the decision to hire RAS was made by the HoldCo board " to manage the wind-down."
On the same day Holdings hired RAS Management, the HoldCo Board discussed the possibility that Holdings may have to retain bankruptcy counsel, lay off workers,
and send affected workers WARN notices. On November 10, 2008, the HoldCo board passed a ...