Winston & Strawn LLP: Labor News January 2008

In This Issue

Fleet Service workers at Continental Airlines rejected representation by the Transport Workers Union (TWU) for the third time in as many years. Forty-six percent of eligible employees voted for union representation, which was similar to votes in 2005 and 2006 in which 46 percent and 45.5 percent of eligible employees voted for union representation. Continental’s fleet service workers are the only major non-union employee group at Continental Airlines.

The International Brotherhood of Teamsters is seeking recognition as the collective bargaining agent at seven of UPS Freight’s New England trucking terminals under terms of a card-check agreement reached with UPS Freight last year. Per the terms of the agreement, the union forwarded signed authorization cards from more than half of the New England unit to an independent arbitrator. If the arbitrator validates the authorizations cards, UPS will immediately recognize the Teamsters as the bargaining agent of the 315 workers located at three trucking facilities in Massachusetts, and one terminal each in the states of Connecticut, Rhode Island, New Hampshire, and Maine. Similar organizing efforts at UPS Freight terminals in California, Michigan, Minnesota, Kentucky, New York, Georgia, Minnesota, Wisconsin and the company’s large Memphis terminal, have led the Teamsters to claim that it is half way to its goal of organizing half of the company’s 12,600 eligible workers by mid-year 2008 through card checks.

The Change to Win labor federation (CTW) is supporting the Teamsters effort to replace the Aircraft Mechanics Fraternal Association as the union representing United Airlines’ active and furloughed mechanics. During its winter meetings in Chicago, CTW approved a resolution pledging support for the Teamsters in their effort to win representation rights for the 9,300 United Airlines mechanics.

The percentage of unionized American workers increased slightly in 2007 to 12.1 percent, up from 12.0 percent in 2006. Union membership rose by 311,000 members to a total of 15.7 million. Only 7.5 percent of private sector employees are unionized, up from 7.4 percent in 2006. In the public sector, local government workers had a unionization rate of 41.8 percent, down from 41.9 percent in 2006. Federal government workers had a unionization rate of 26.8 percent, down from 28.4 percent in 2006. The largest increase in private sector union membership occurred in health services, which added 142,000 members. The highest rate of unionization in the private sector was in the transportation and utility industries with a membership rate of 22.1 percent in 2007, a decrease from 23.2 percent in 2006. Nearly half of the country’s union members live in six states: California, New York, Illinois, Michigan, Pennsylvania, and New Jersey.

Teamsters Local 170 announced January 29 that it was withdrawing from a National Labor Relations Board (NLRB) election scheduled to be conducted among FedEx Home Delivery’s eighteen workers in Northborough, Mass. on February 1. The Teamsters pledged to seek a NLRB election at a later date.

Flight attendants at Compass Airlines, a subsidiary of Northwest Airlines, rejected representation by the Association of Flight Attendants with only 16 of 46 eligible voters participating in the election. Though all 16 votes in the election were cast in favor of representation, the total fell far short of a majority of eligible voters, as required under the Railway Labor Act.

A report released January 7 questioned the operational integrity of United Airlines in light of simmering labor unrest among its pilots. The Soleil Securities Group report downgraded UAL Corp. shares, United Airline ’s corporate parent, from a “Buy” to a “Hold” and noted the labor issues with United pilots could “significantly cloud the earning outlook” for the company. According to the report there is a wide-scale “work-to-book” labor action underway among United pilots represent by the Air Line Pilots Association (ALPA). According to the report, this “work-to-book” campaign played a major role in the airline’s December 2007 operations problems in which over 2,000 flights were cancelled and hundreds more delayed. The report also notes that some unhappy pilots have resorted to more drastic measures such as causing flight cancellations for dubious reasons and burning more fuel than is required for safe operations. At the heart of the dispute between United and its pilots is the company’s November 2007 decision to pay down its debt by $350 million and seek an additional $500 million from lenders to direct at shareholder initiatives. The pilots, and their union, argue that United should direct of a portion of this “found money” to the wages and benefits of its employees.

Pinnacle Airlines, Inc. filed suit against the Air Lines Pilots Association alleging the union has engaged in bad-faith bargaining in contract negotiations with Pinnacle that began in 2005. The suit seeks an injunction forcing the union to stop negotiating in bad faith. Pinnacle is a feeder airline for Northwest Airlines and Delta Air Lines in the United States and Canada.

NAACP Chairman Julian Bond and Teamsters General President James P. Hoffa called on officials of Major League Baseball (MLB) to intervene in a contract dispute between the Teamsters and New Era Cap Co., which manufactures headwear for professional baseball players. Bond and Hoffa accuse New Era of race and sex discrimination at its Mobile, Ala distribution center. The employees at this facility voted for Teamsters representation in July 2007 but the union has been unable to negotiate a first contact covering the estimated 110 workers at the site. According to a NAACP report on the New Era matter, New Era generates an estimated $250 to $300 million dollars in revenue from its exclusive licensing agreement with Major League Baseball and with similar agreement with the National Basketball Association, National Hockey League, and college sports programs. Though the company produces most of its 30 million caps outside the United States, the company has four manufacturing plants located in the United States. Employees at the Buffalo, N.Y. plant are represented by the Communications Workers of America, while employees at two other Alabama plants are non-union.

Local 32BJ of the Service Employees International Union reached four-year, tentative, collective bargaining agreements covering 18,000 commercial building cleaning services workers in the Northeast. These agreements complete negotiations for all but one cleaning services contract covering approximately 50,000 employees. The tentative agreements with employer associations of building owners, operators, and cleaning contractors covers 4,000 workers in Westchester County, N.Y., and Fairfield, Conn.; 7,000 workers in New Jersey; 4,500 workers in Washington, D.C.; 700 workers in Baltimore, MD, and 1,500 workers in Montgomery County, MD.

SEIU Local 615 ratified a five-year agreement with the Maintenance Contractors of New England. The agreement covers 10,000 janitors cleaning buildings in Massachusetts, New Hampshire, and Rhode Island. Over the contract term, wages for janitors in Boston would increase 23 percent, and wages of janitors in the Boston and Providence, R.I. suburbs would increase 25 percent. The contract also would provide full employer-paid health insurance for individuals and add 7.5 hours per weeks for thousand of part-time janitors.

On January 18, Amtrak and its unions agreed to largely follow the recommendations of the Presidential Emergency Board (“PEB”), thereby averting a possible strike. Under the agreement, workers will receive retroactive pay raises totaling 35.2 percent over the life of the ten-year agreement stretching, retroactively, from January 1, 2000 to December 31, 2009. Additionally, under the agreement there are no cessions on work rules, and workers would begin paying a portion of their health care premiums.

On January 4, part-time and adjunct faculty members, represented by Service Employees International Union Local 500 ratified by an 8-to-1 margin a first contract with George Washington University. The 30-month contract calls for increases in faculty salary per course and raises the salary of regular part-time faculty who receive annual salaries in exchange for performing administrative duties.

Leaders of the Association of Flight Attendants, the International Association of Machinists, the Transport Workers Union, and the Association of Professional Flight Attendants met for a three day conference to discuss collective bargaining strategy for the 86,000 flight attendants they represent. Union officials hope to coordinate efforts among the various unions and coordinate bargaining strategy for upcoming negotiations with the major airlines.

The Writers Guild of America (WGA) reached an agreement with United Artists Films (UA), allowing WGA members to work for UA while continuing their strike against other major studios, including MGM, a UA shareholder.

Leaders of dozens of Teamsters locals on January 8 approved the terms of a tentative five-year National Master Freight Agreement and supplemental agreements covering a total of 50,000 truck drivers around the country. The current contract expires on March 31.

Major collective bargaining agreements reached in Canada during November 2007 saw an average base-rate wage increase of 4.3 percent according to Human Resources and Social Development Canada. The 4.3 percent increase was larger than October’s 3.4 percent average increase but less than the 4.7 percent increase reported in September. Wage increases between January and November 2007 averaged 3.3 percent, greater than the 2.5 percent increase for the entire 2006 year. Wage increases on private sector contracts reached during November 2007 averaged 4.5 percent while public sector contracts saw an averaged wage increase of 3.3 percent.

Collective bargaining data complied by BNA through January 28 showed that the average first-year wage increase was 4.0 percent, an increase from 3.2 percent for the same period in 2007. The median first-year increase for settlements was 3.5 percent, an increase from 3 percent in 2007. The weighted average increase was 5.0 percent, as compared to 1.5 percent for 2007. When construction and state and local government contract were excluded, the all-settlements average increased by 4.3 percent as compared to 3.1 in 2007; the median was 4 percent as compared to 2.8 percent; and the weighted average was 5.3 percent as compared to 1.5 percent.

The Service Employees International Union Security Officers United in Los Angeles Local 2006 reached a tentative agreement on a first contract with security contractor companies that would provide approximately 4,000 employees with health and wage benefits increases of 40 percent over the five-year term of the contract and establish a career ladder. The tentative master agreement comes after seven months of negotiations with five security companies—Universal Protection Services, ABM Security Services Inc., Securitas USA, Guard Systems, and Allied Barton Security Services—which provide roughly 80 percent of onsite security personnel in Los Angeles commercial buildings.

United Transportation Union and major U.S. freight railroads reached a tentative agreement for a new contract covering 46,000 freight rail workers and providing general wage increases of 17 percent over five years. The agreement reached with the National Carriers’ Conference Committee (NCCC), the national bargaining agent for more than 30 railroads, covers approximately one-third of the railroads’ union-represented workforce. With ratification of the agreement, the NCCC will have negotiated agreements covering 95 percent of unionized freight rail workers.

On December 27, 2007, the general counsel of the NLRB issued a guideline memorandum instructing its field personnel on how to handle a charge that the filing of a lawsuit constitutes an unfair labor practice. The guideline memorandum came is response to a recent 3-2 decision from the Board, BE&K Construction Co., 351 N.L.R.B. No. 29 (2007), which the General Counsel summarizes as holding “the filing and maintenance of a reasonably based lawsuit does not violate the [National Labor Relations] Act, regardless of whether the lawsuit is ongoing or completed, and regardless of the motive of the lawsuit.” Accordingly, the memorandum instructs NLRB personnel that when receiving such a charge concerning the filing of a lawsuit, the regional office “should initially investigate whether the suit is reasonably based.” If the lawsuit is found to be baseless, the regional office should “fully investigate the evidence that the suit was brought with a retaliatory motive.” In attempting to determine whether a retaliatory motive exists, the memorandum instructs regional personnel to look for evidence “that the baseless lawsuit itself attacked protected activity” or “motive showing a direct causal connection between the protected activity and the filing of the lawsuit.”

The CTW labor federation filed a rulemaking petition asking the NLRB to issue a rule recognizing that federal labor law requires an employer to collectively bargain with a union that represents a minority of employees if the employees are not represented by a union that has majority status. The CTW petition states that it “agrees with and adopts” the reasoning of the petition filed with the Board last August by the United Steel Workers, the International Brotherhood of Electrical Workers, the Communications Workers of America, the United Auto Workers, the International Association of Machinists, the California Nurses Association, and the Electrical, Radio, and Machine Workers of America.

The U.S. Court of Appeals for the D.C. Circuit affirmed a NLRB decision that undocumented workers at Agri Processor Company were employees under the National Labor Relations Act (NLRA), and thus, were allowed to unionize and be represented by the United Food and Commercial Workers Union (Agri Processor Co. Inc. v. NLRB, D.C. Cir., No. 06-1329). The workers in question voted to join the union, but Agri later discovered that they were unauthorized to work in the United States and did not consider them to be covered employees under the NLRA. Accordingly, Agri claimed the election was invalid and refused to bargain with the union.

The planned January 1 merger of the United Transportation Union (UTU) and the Sheet Metal Workers International Association will be delayed until February 13 under a temporary restraining order issued by a federal judge for the Northern District of Ohio. The restraining order extends the previous restraining order issued by the court in a suit brought by union members seeking to halt the planned merger alleging they received insufficient information. In their suit filed under the Labor Management Reporting and Disclosure Act, the union members allege the referendum was not well-publicized and a copy of the new constitution was not available to UTU members before the election. If the merger is implemented, the new 230,000 member union would be called the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART).

The NLRB ruled that an Indiana company did not interfere with the free choice of employees in a decertification elections when it told its workers who replaced striking union members that the International Union of Operating Engineers Local 150 wanted to force out all the replacement workers to reinstate replaced striking workers (Edw. C. Levy Co. d/b/a The Levy Co., 351 N.L.R.B. No. 85). After the expiration of the most recent contract and a breakdown in negotiations, the union struck. Levy continued operations with management staff and replacement workers. Levy eventually offered permanent positions to the replacement workers. As negotiations between the union and the company continued, the union consistently proposed full reinstatement of all replaced union workers with the replacement workers (now permanent employees) only entitled to fill positions not reclaimed by the striking union workers. An employee later filed a petition with the NLRB to decertify Local 150. In two plant safety meetings held after the filing of the decertification petition, Levy human resource officials told employees that the union was seeking to get rid of the replacements and let all the strikers reclaim their old jobs. The officials urged the employees to vote for decertification if they wanted to keep their jobs. In this case, the Board found that Levy simply explained to its employee the consequences of unionizing and that the substance of the union proposals were consistent with Levy’s description to its employees.

The NLRB has launched a two-year pilot program allowing video testimony in some representation case hearings. While the NLRB will continue its preference for in-person testimony, the pilot program will allow for Regional Directors to decide on a case-by-case basis whether there is “good cause” for using video testimony in pre-election and post-election hearings.

The U.S. Court of Appeals for the Ninth Circuit affirmed a 2-1 decision by the NLRB that two human resources managers for the Aladdin Hotel and Casino in Las Vegas did not violate the NLRA by interrupting employees asking co-workers to sign union authorization cards in the employee dining room (Local Joint Executive Bd. of Las Vegas v. NLRB, 9th Cir., No. 05-75515, 1/28/08). The union contended that the managers’ behavior constituted improper surveillance of union activity in violation of the NLRA. The Ninth Circuit, however, disagreed and found the NLRB’s three-part test, utilized to determine when surveillance becomes coercive, rational and consistent with the NLRA. On two separate occasions, human resources managers interrupted attempts by pro-union employees to obtain signed union authorization cards. In the first instance the vice-president of human resources told the solicited employees “I would like to make sure you have all of the facts before you sign that card.” She then went on to inform the employees that signing the authorization card would be “legal and binding,” it would authorization union deduction from their paychecks, and there was no guarantee that unionizing would lead to any change in health care benefits. On another occasion, the director of human resources interrupted an employee’s attempt to get his co-worker to sign a union authorization card and commented that the employee “shouldn’t be signing things that she wasn’t she about, because what she was signing was something like a contract and that [the pro-union employee] was probably promising something that [he] wasn’t going to be able to give her.” The NLRB held the managers’ actions legal because they occurred in a dining room frequented by all employees and because neither incident involved coercion. Moreover, the Board reasoned that the opinions expressed by the two HR managers were protected by Section 8(c) of the NLRA which protects employer communication which contain “no threat of reprisal or force or promise of benefit.”

Smithfield Food Inc. defeated a motion to dismiss its racketeering lawsuit against the United Food and Commercial Workers International Union. Smithfield alleges the union engaged in a “smear campaign” as part of its effort to organize the 4,650 employees at the company’s Tar Heel, N.C. plant. Smithfield claims the “smear campaign” included the dissemination of false information concerning unsafe working conditions and racial discrimination among other allegations. The company alleges the union’s campaign was aimed at damaging Smithfield’s reputation and finances with the ultimate goal of forcing the company to recognize the union.

President Bush announced that he will send the Senate the nominations of Robert J. Battista, Dennis P. Walsh, and Gerard Morales to serve as members of the NLRB. Battista served as chairman until his term ended on December 16, 2007. President Bush has indicated Battista will once again be designated as chairman should he be confirmed. The president is nominating Battista to serve the remainder of a term that ends on December 19, 2009. Walsh is nominated to serve a term the expires on August 27, 2008, and then a five-year term ending on August 27, 2013. Morales is nominated to serve a term that expires December 16, 2012.

UNITE HERE and the Plumbers and Pipefitters, with 460,000 and 340,000 members respectively, separately endorsed Senator Barack Obama for president. These endorsements came a day after Local 1107 of the Service Employees International Union, with 17,500 members statewide in Nevada, endorsed Obama in anticipation of the January 19 Nevada Caucuses.

The International Union of Painters and Allied Trades endorsed former Arkansas governor Mike Huckabee for the 2008 Republican presidential nomination.

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A federal judge sentenced Judy Thurman, the former treasurer of the Federal Independent Texas Union Local 900 in Fort Worth, to a 21-month prison sentence, followed by three years supervised release, for embezzling $164,268 in union funds (United States v. Thurman, N.D. Tex., No. 4:07-CR-047). Thurman must also make full restitution of $139,268 to the union and $25,000 to Ohio Casualty Insurance Co. of Hamilton, Ohio.

Federal prosecutors filed an amended civil racketeering suit against the International Longshoremen’s Association (ILA) (United States v. International Longshoremen’s Ass’n, E.D.N.Y., No. 05-CV-3212). The government alleges ILA union officials were influenced and controlled by the Genovese and Gambino organized crime families. The government is seeking removal of a number of high ranking union officials (including the permanent removal of President Emeritus John Bowers), the installation of a court-appointed officer(s) to run the union, and new elections for all positions on the ILA executive council.

A former worker representative at Volkswagen told a German court that prostitutes were used during trips made by labor leaders to the company’s locations worldwide and were paid for out of a special side-programs account handled at the management-board level. According to the representative, company officials approved the use of company funds for bonuses, trips, and prostitutes in exchange for favorable votes on labor policy.

A federal judge approved a $6.2 million settlement between 156 black and Hispanic sheet-metal workers and the New York chapter of the Sheet Metal Workers International Association for lost wages between 1984 and 1991. These workers were allegedly underpaid and overlooked in job recruitment. As part of the settlement, the union also agreed to improve its referral and monitoring system to ensure all workers have equal access to job opportunities.

The former president of Amalgamated Transit Union Local 1181 pled guilty to racketeering charges which accused him of extorting three owners of New York City school bus companies. Salvatore “Hot Dogs” Battaglia was charged with having mob ties and using his status as an union leader to collect payoffs. Battalgia was president of the union from 2002 until he stepped down in 2006 after his indictment. It is alleged that Local 1181 has mob ties with the Genovese crime family stretching back decades. Local 1181 represents approximately 15,000 city bus drivers and school bus escorts. Battalgia is the third Local 1181 official to be convicted in the case.

The Independent Review Board (IRB) announced that it has rejected, as inadequate, a decision by the Teamsters to suspend Local 714 Secretary-Treasure Robert Hogan from office for six months for Hogan’s failure to prevent contact between one of the local’s employees and Hogan’s father, William Hogan, a former union official who has been barred from any contact with the union. William Hogan was expelled from the union in 2001 on corruption charges and was designated by the IRB as a “prohibited person” which meant William Hogan was prohibited from any further contact with union members. Teamsters General President James P. Hoffa is under no obligation to increase Robert Hogan’s punishment, but if no further action is taken, the IRB is empowered to impose additional discipline subject to court review.

Anthony Ferrucci, the former president of Northeast Emergency Services Union, an independent union in Connecticut, was sentenced to one year of probation, the first six month of which he must spend confined to his home, and fined $2,000 after pleading guilty to four misdemeanor counts of filing false union report with the Labor Department in violation of the Labor Management Reporting and Disclosure Act. In addition to the fine, Ferrucci must make restitution to the union in the amount of $27,347. Ferrucci’s sentence comes after his son-in-law, Andrew Konspore, pled guilty to embezzling $91,605, while serving as union treasurer, and was sentenced to five months in prison and five months of home confinement.

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The 5,100 member Pennsylvania Association of Staff Nurses and Allied Professionals (PASNAP) and the California Nurse Association/National Nurses Organizing Committee (“CNA/NNOC”) announced that the PASNAP will affiliate with the CNA/NNOC. With the affiliation, CNA/NNOC will represent more than 80,000 registered nurses in all 50 states. The two unions have been working closely for nearly eight years. PASNAP was created in 2000 when nurses left the Pennsylvania State Education Association to form an independent union in alliance with the CNA, which provided financial assistance in getting the PASNAP started. Currently PASNAP spends approximately $500,000 annually in organizing efforts. According to PASNAP, about 20 percent of Pennsylvania registered nurses are organized with half of all organized registered nurses belonging to PASNAP.

The executive board of the Society of Professional Engineering Employees in Aerospace (SPEEA) named Ray Goforth its new executive director. Goforth will begin as director in early February 2008 and replaces Charles Bofferding who was dismissed after sixteen years of service. Goforth assumes his new title after previously serving as a union representative and strategic advisor at Local 17 of the International Federation of Professional and Technical Engineers, SPEEA’s parent union.

If you have questions about items that appeared in this bulletin, or would like to learn more about any of these topics, please contact William Miossi at (202) 282-5708 or (312) 558-6109, or one of the other Labor & Employment Relations partners listed here:

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