Winston & Strawn LLP: Labor News March 2008

In This Issue

The Hilton Los Angeles North/Glendale voluntarily recognized UNITE HERE as bargaining representative for 180 hotel workers as a result of a card-check agreement. The NLRB regional office sent Dana notices to be posted at the hotel for 45 days, informing the employees that they can file a decertification or rival petition with a thirty percent showing of support.

In response to a card signing/voluntary recognition campaign initiated by UNITE HERE and the Teamsters against Cintas Corp., the Company has sued UNITE HERE, the Teamsters and the Change to Win Foundation in the Southern District of New York alleging RICO violations, trademark infringement, tortious and deceptive trade practices under the Lanham Act, extortion, forgery, defamation and unfair competition. Cintas alleges that UNITE HERE and the IBT conspired to extort from Cintas voluntary recognition and that they conspired to inflicting economic harm on Cintas unless they agreed to voluntarily recognize the unions.

Local 30 of the International Union of Operating Engineers filed a petition with the NLRB for an election involving 262 maintenance workers at Foxwoods Resort Casino in Mashantucket, Conn. The Regional Director has dismissed the Mashantucket Pequot Tribal Nation's objection that the Board lacks jurisdiction over the casino because it is a sovereign tribal nation.

Campaign communications issued by the California Nurses Association/National Nurses Organizing Committee on the eve of a scheduled March 11 privately conducted representation election caused Catholic Healthcare Partners (CHP) and the Service Employees International Union District 1199 (SEIU) to postpone the elections set to determine whether 7,700 of CHP's employees wanted SEIU representation. CHP and the SEIU had agreed privately to certain pre-balloting ground rules strictly regulating the campaign. The California Nurses Association/National Nurses Organizing Committee, which were not party to the CHP/SEIU arrangement, claimed that the SEIU and CHP had an "under-the-table" deal that compromised workers' rights in establishing the election. CHP and SEUI denied any quid pro quo arrangement, but they were concerned enough about the charges to put off the vote for now.

The International Association of Machinists applied to the Ontario Labor Relations Board for certification of a bargaining unit of 3,100 production and skilled trades workers at Toyota's Cambridge, Ontario vehicle assembly plant. The union must demonstrate that it has the support of 40 percent of the unit employees to obtain an immediate certification election under Canadian law. Toyota said that it plans to challenge the application and will request that the results of the election be sealed pending legal review of the union's purported showing of support.

The Westin Los Angeles Airport hotel agreed to recognize UNITE HERE of a 220 person bargaining unit pursuant to a card check.

Employees at Johnson Controls Interiors LLC's plant in Cottondale, Ala. voted against unionization by the United Auto Workers.

Employees at Rite Aid Corp.'s Southern California distribution facility elected Local 26 of the International Longshore and Warehouse Union as their union, concluding a two-year organizing campaign.

The American Federation of State, County and Municipal Employees, which is attempting to organize attorneys in the office of the Minnesota Attorney General, claimed that Assistant Attorney General Amy Lawler was placed on indefinite administrative leave in retaliation for her union-organizing efforts after she criticized office procedures to the media. The office claims that Lawler was suspended for failing to tell the Minnesota Board of Professional Responsibility about any possible ethics violations. Attorneys in the office began campaigning for union representation for over a year, but have been unsuccessful to date.

Two dozen organizations comprising the "Community-Labor-Environmental-Action Network" announced plans to organize car wash workers in Los Angeles. The coalition includes community, environment and labor groups, including the Steelworkers and the AFL-CIO.

The California Nurses Association began a ten-day strike against Sutter Health hospitals in the San Francisco Bay area and a one-day strike against Fremont-Rideout Health Group facilities on March 21. This is the third such strike against Sutter in the last five months. The CNA represents 4,000 registered nurses at eight Sutter facilities. The union has been in negotiations with Sutter since Spring 2007.

Locals 624 and 2149 of the United Auto Workers ratified a four-year contract with Magna International Inc. covering 2,500 workers at Magna's subsidiary New Process Gear, Inc. in Syracuse, N.Y. Most workers have the option to 'flow back' to employment at Chrysler LLC, formerly a joint venturer with Magna in NPG. Those workers who remain at NPG will receive a $87,500 lump sum 'legacy transition payment' to help offset wage cuts of $9 per hour. The new contract also allows workers to choose between health care policies, one in which NPG pays all premiums and another in which the workers contribute 14 percent of the premiums.

International Association of Machinists members ratified three separate three-year contracts covering 4,900 workers at eight Lockheed Martin Corp. facilities on March 2. The new contracts provide for a $2,000 ratification bonus, an across-the-board wage increase of 4 percent in the first year followed by 3 percent increases in the second and third years, continued quarterly cost-of-living adjustments and a $100 increase to the annual cost-of-living supplement paid each December. The contract also provides future retirees with $77 in pension benefits per month per year of service, up from $66, an increased employer match to the 401(k) retirement plan and an increase in the amount of unmatched contributions by employees. The contract calls for Lockheed to continue paying 87 percent of the premiums for health insurance, and to increase contribution toward medical plans for future retirees by 12 percent.

Human Resources and Social Development Canada reported that major collective bargaining agreements in Canada reached during January included an average increase to base wages of 3.3 percent, compared with a 3.4 percent average increase in December, a 4.0 percent average increase in November, and a 3.3 percent average increase for 2007 as a whole.

After reaching a tentative agreement on January 18 and following eight years of negotiation, members of eight rail unions representing approximately 7,500 Amtrak workers ratified separate but identical collective bargaining agreements on Mar. 10. The employees had worked under the terms of the previous contract since 2000. Tentative agreement was reached after a Presidential Emergency Board investigated the dispute and determined that back pay to the employees was appropriate and that work rule changes were not. The contracts provide for retroactive pay increases, with total wage increases of 35.2 percent over the ten-year life of the agreements, which become amendable on December 31, 2009.

The California Nurses Association settled a tentative three-year contract covering more than 10,000 nurses at 10 University of California medical centers. The tentative agreement includes a 6 percent across-the-board pay increase in the first year, with additional increases to be negotiated for the second and third years. The agreement also continues existing pension and retiree benefits, prohibits mandatory shift rotation, and includes a provision that new technology will not replace the role of registered nurses in the delivery of care.

United Auto Workers Local 2069 ratified a three-year contract with Volvo, which covers 2,600 workers at Volvo's plant in New River Valley, Va. and settles a strike that began on February 1. The contract provides for a $2,000 lump sum payout and 2 percent wage increases in the second and third years of the agreement, as well as increased vision and hearing benefits and protected recall rights.

Service Employees International Union Local 32BJ and the Bronx Realty Advisory Board settled a three-year agreement covering 4,000 New York City residential building service workers. The agreement provides for a flat $20 per week wage increase in each year of the agreement, increases monthly pension credits by almost $8 per month beginning in the third year of the agreement, gives workers access to the same full range of training classes as comparable workers in Manhattan, and anticipates improved legal benefits.

Collective bargaining data compiled by BNA through March 24 for all settlements showed that the average first-year wage increase was 3.2 percent, compared with 3.5 percent in the comparable period of 2007. The median first-year wage increase for contracts reported to date in 2008 was 3.0 percent, the same increase as in 2008, and the weighted average was 3.6 percent, compared with 1.9 percent.

The Teamsters approved a 64-month agreement with UPS Freight covering 9,600 drivers and dockworkers. The agreement provides for general wage increases for "city drivers" of $4.65 per hour over the life of the contract, and similar increases for "road drivers" and dockworkers. Canadian Auto Workers President Buzz Hargrove decried the sweeping wage concessions accepted by the United Auto Workers in the last round of negotiations with Detroit's Big Three auto makers, and vowed to take a hard line against such concessions in negotiating a new contract to cover the CAW's 45,000 auto workers with the auto makers this fall.

The IAM and US Airways reached agreement on a consolidated labor contract covering all 3,300 mechanics who previously had been working under separate IAM contracts negotiated prior the US Airways/America West merger. The agreement provides for an immediate wage increase of at least 10 percent, and an additional 3 percent in 2009, 2010, and 2011. The agreement also provides license premium increases, improved overtime rates, new shift premiums and participation in the IAM's national multi-employer defined benefit pension plan. Ratification is pending.

The National Mediation Board authorized a certification election to determine whether flight attendants at Delta Air Lines want representation by the Association of Flight Attendants-CWA. The AFA-CWA filed an election petition on February 14 claiming to have signed authorization cards from a solid majority of Delta's 13,000 flight attendants. In 2002, the AFA-CWA unsuccessfully sought certification of these same flight attendants.

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A federal judge denied the Sheet Metal Workers Local 2's motion for summary judgment in a case alleging that the union's referral policies had a disparate impact on African-American members. The policy in question allowed union members to seek work directly from employers and allowed employers to choose between members on the out-of-work list, rather than following a strict "first-in-first-out" hiring hall system. (Franklin v. Sheet Metal Workers Int'l Ass'n Local Union No. 2, W.D. Mo., No. 06-004-CV-W-GAF).

An NLRB administrative law judge found that the UAW violated the NLRA by requiring nonmembers working at a union facility to renew annually their objection to paying dues for nonrepresentational union expenditures. (United Auto Workers (Colt's Mfg. Co.), NLRB ALJ, No. 34-CB-2631).

The U.S. Court of Appeals for the Seventh Circuit ruled that a provision in a collective bargaining agreement between Indiana Constructors Inc. and the Laborers' International Union prohibiting the contractor from subcontracting with firms that did not have a bargaining agreement with the union fell within the construction industry exception to the National Labor Relations Act's prohibition on "hot cargo" agreements and thus did not violate federal labor law or antitrust law. (United Rentals Highway Techs. Inc. v. Ind. Constructors Inc., 7th Cir., No. 06-4367).

The U.S. Court of Appeals for the Ninth Circuit affirmed a lower court's ruling and held that the Railway Labor Act does not require parties negotiating an initial collective bargaining agreement to maintain existing terms and conditions of employment, and North American Airlines did not violate the RLA when it made unilateral changes in the terms and conditions of pilots' employment during bargaining with the International Brotherhood of Teamsters over a first contract. In so doing, the court disagreed with the Eleventh Circuit's ruling to the contrary in UAW v. Transportes Aereos Mercantiles Pan Americandos S.A., 924 F.2d 1005 (11th Cir. 1991). (Int'l Bd. of Teamsters v. N. Am. Airlines, 9th Cir., No. 05-17436).

The Seventh Circuit enforced the NLRB's June 2007 Order that St. Margaret Mercy Healthcare Centers in Indiana violated the NLRA by applying its rule prohibiting distribution or solicitation in all patient-care areas to employee break rooms and discriminatorily enforcing the rule prohibiting solicitation at nurses' stations. The Court noted that the hospital's concerns over noise in patient areas could have been addressed by requiring nurses to close the break room door, and also noted that the hospital permitted solicitation for other purposes at nurses' stations, rejecting the hospital's argument that it could allow charitable solicitations and still prohibit union solicitations consistent with the NLRA. (St. Margaret Mercy Healthcare Ctrs. v. NLRB, 7th Cir., No. 07-2752).

A federal bankruptcy court granted Interstate Bakeries Corp.'s motion under Section 1113(c) of the bankruptcy code to reject its collective bargaining agreements with two locals of the Bakery, Confectionery, and Tobacco Workers because the court found that altering the existing labor contracts was necessary for IBC to cut costs and successfully emerge from bankruptcy proceedings. (In re Interstate Bakeries Corp., Bankr. W.D. Mo., No. 04-45814-JWV).

An NLRB administrative law judge sustained unfair labor practice charges and objections filed by the New York State Nurses Association in connection with a certification election covering registered nurses at Community Medical Center in Toms River, N.J., ruling that another election should be held. The ALJ cited the hospital's hiring of the union official responsible for organizing nurses as a labor relations consultant and its promotion of a program of "shared governance" as unlawful efforts by the hospital to interfere with the nurses' organizing efforts. (Community Md. Ctr., NLRB ALJ, Case 4-CA-34888).

The Second Circuit held that Stanadyne Automobile Corp. violated the NLRA by issuing a rule prohibiting "harassment" of co-workers after the United Auto Workers had filed an election petition, rejecting the NLRB's conclusion that the workers would not reasonably interpret the rule as restricting protected campaigning activities. The Second Circuit rejected the UAW's arguments to reverse other portions of the NLRB's Order ruling which held that Stanadyne did not commit unfair labor practices by telling its employees that UAW representation leads to plant closures, strikes, intimidation, sabotage and violence and by announcing an increase in pension benefits one week before the election. (United Auto Workers v. NLRB, 2d Cir., No 05-6026).

A federal judge granted the NLRB's petition for an injunction under Section 10(j) of the NLRA to reinstate two employees of Frye Electric Inc. who were terminated a day after openly discussing joining the International Brotherhood of Electrical Workers. (Lineback v. Frye Elec. Inc., S.D. Ind., No. 07-cv-984).

The U.S. Supreme Court will review a decision by the Ninth Circuit striking down an Idaho law that bars public sector employers from deducting a portion of union members' paychecks to fund union political efforts.

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The West Virginia House of Delegates passed legislation that would prohibit employers from holding captive audience meetings to promote an employer's position regarding politics or unions, and the bill now awaits action before the state Senate Judiciary Committee. The proposed law provides that employees who are punished for not participating in such meetings can sue for civil damages, including reinstatement, back pay, treble damages, and attorneys' fees and costs. New Jersey is currently the only state to have passed a law restricting employers ability to conduct captive audience meetings.

The U.S. Labor Department Office of Labor-Management Standards proposed a rule that would require unions to file annual financial reports for trusts they have established for their members' benefit, including credit unions, strike funds, training funds, and pension and welfare plans. The rule replaces a similar rule that a federal judge struck down in July 2007 after concluding that the agency failed to provide adequate notice and opportunity for public comment.

The AFL-CIO Executive Council approved a budget incorporating a record $53.4 million to spend mobilizing members in conjunction with the general elections in November.

New Jersey Gov. Jon Corzine (D) issued an executive order recognizing CWA Locals 1037 and 1040 as the bargaining representative for New Jersey community care residential providers of services to developmentally disabled adults.

President Bush announced that he will name Peter Schaumber (R) as chairman of the National Labor Relations Board. Schaumber has been a Board member since December 2002; his second term expires in August 2010. Former Chairman Robert J. Battista (R) left his office when his term expired on December 15. President Bush nominated Battista, along with former member Dennis P. Walsh (D) and Phoenix management attorney Gerard Morales to fill vacancies on the Board on January 25, but it is unlikely that the Senate will confirm any of these nominations. The NLRB delegated decision-making authority to its remaining two members, while the nominations for the three remaining Board seats remain pending. In the interim, the two remaining members, a Republican and a Democrat, have agreed not to overturn any Board precedent.

The Colorado Senate passed legislation to prohibit 30,000 state employees from striking, and Gov. Bill Ritter (D) has indicated that he will sign the bill. California Gov. Arnold Schwarzenegger (R) vetoed a bill that would have allowed in-home child care workers to organize and bargain collectively with state agencies over reimbursement rates and licensing issues. Gov. Schwarzenegger vetoed a similar bill in October 2007.

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The Sixth Circuit upheld the convictions of Walter Mabry and Anthony Michael, two former officials of the Michigan Regional Council of Carpenters, who were convicted in 2006 of conspiring to use their union offices to obtain below-market labor rates for construction of Mabry's residence. Mabry, the former executive secretary-treasurer, was sentenced to two years in federal prison and a $50,000 fine, while Michael, the former president and executive director, received a sentence of 12 months and one day and a $3,000 fine, and neither can hold union office or serve as a union consultant for 13 years.

Brian McLaughlin, former business manager for the International Brotherhood of Electrical Workers Local 3 and former president of the New York City Central Labor Council pleaded guilty to one count of racketeering and one count of making false statements in a loan application in connection with a federal corruption prosecution. McLaughlin admitted to misappropriating $2.2 million in union and public funds, and faces a maximum of 20 years in prison on the racketeering count and 30 years in prison on the false statements count at sentencing on September 12.

The Department of Justice (DOJ) announced indictments of a two officials with Teamsters Local 743, updating a previous indictment of other union officials of Local 743 alleging fraud, embezzlement, and theft of union property in connection with a conspiracy to rig two union elections. The DOJ alleges that these defendants diverted official union ballots to friends and family members to rig a union election in 2005. After a Labor Department investigation, that election was voided and a new slate of officials were placed in office.

International Association of Machinists President R. Thomas Buffenbarger imposed a trusteeship on Local Lodge S6, one of the union's largest locals; suspended 10 local officials; and scheduled an April 14 hearing to determine whether to dissolve or extend the trusteeship. Buffenbarger cited financial mismanagement, use of union computers to view pornography, election irregularities, and a backlog of grievances as the reasons for the trusteeship. The suspended local president disputed the charges and questioned the timing of the trusteeship, which was announced two months before the expiration of the union's contract with Bath Iron Works in Maine, which covers 3,400 members of the local.

Effective May 1, Edward Smith, an official of the Laborers' International Union and former executive vice president of ULLICO, Inc., the union-owned insurance company, will become president of ULLICO.

The Governing Board of the Building and Construction Trades Department, AFL-CIO unanimously approved re-affiliation with the Laborers' International Union, nearly two years after LIUNA left the BCTD.

The Communications Workers of America, the International Federation of Professional and Technical Engineers, the United Auto Workers, and the United Steelworkers announced a strategic alliance in which the unions will pool their resources in seeking common legislative and political goals. The unions, with a combined membership in excess of 2 million employees, cited passage of the Employee Free Choice Act, health care reform, protecting jobs through favorable trade policies, and retirement security as their major aims.

The American Maritime Officers, an affiliate of the Seafarers' International Union, began a three-month mail-in election to fill five union positions pursuant to its agreement with the Labor Department to rerun a challenged 2006 election following allegations of election irregularities.

Membership in the United Auto Workers declined by 14 percent during 2007, and is at its lowest point in nearly 70 years, according to the union's annual report to the Labor Department.

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