Winston & Strawn LLP: Labor News November 2008

In This Issue

The union win rate in NLRB elections showed substantial improvement in the first half of 2008. The NLRB resolved the same number of representation elections in the first half of 2007 as it did in the first half of 2008, but the percentage of elections won by unions increased sharply from 58.5 percent in 2007 to 66.8 percent in 2008. In addition, the overall number of decertification elections for the first half of the year decreased from 183 in 2007 to 148 in 2008, while the percentage of such elections won by the union increased from 34.4 percent in 2007 to 48.6 percent in 2008. The AFL-CIO affiliated unions won a greater percentage of its elections (63.8 percent) than did the CTW-affiliated unions (58.6 percent).

On November 12, the JetBlue Pilots Association filed a petition with the National Mediation Board seeking an election to represent 2,000 JetBlue Airways pilots.

Production and maintenance employees at the JBS Swift & Co. meat processing plant in Hyrum, Utah voted 649-290 in favor of representation by the United Food and Commercial Workers Local 711. Prior to the election, the Hyrum plant was the only nonunion U.S. or Brazilian JBS facility.

The Allied Pilots Association filed an action seeking a declaratory judgment that the union is within its rights to persuade its members not to accept voluntary overtime as a means to preserve the jobs of fellow American Airlines pilots, arguing that this practice is part of the "status quo" of the parties' collective bargaining agreement. After American's announcement that it intends to furlough up to 200 pilots, the APA began a campaign asking its members not to pursue voluntary overtime, a practice that the APA claims it has used in the past without objection from the airline. American contends that the union's campaign violates the Railway Labor Act.

Members of the International Association of Machinists Local 735 at Vought Aircraft's Nashville, Tennessee plant remain on strike after a federal mediator concluded on November 12 that the parties were "just too far apart" to continue with negotiations. Local 735 has been on strike since its members rejected Vought's contract proposal on September 27, citing the Company's proposal to freeze the existing defined benefit pension plan for employees with less than 16 years of seniority and replace it with a 401(k) defined contribution plan. Vought reports that it is close to achieving pre-strike operating performance, with a temporary staff equal to approximately 90 percent of its normal plant staffing levels.

Based on collective bargaining data compiled through November 17, the 2008 all-settlements average first-year wage increase was 3.6 percent, the same average increase as that for the same period in 2007. Excluding construction and state and local government contracts, the all-settlements average was 3.6 percent, compared to 3.7 percent in 2007. Including lump sum payments in these wage calculations, the all-settlements average was 4 percent, compared with 4.1 percent in the comparable period of 2007.

On November 6, 2008 members of the Communications Workers of America approved a new four-year contract with Qwest Communications, which retroactively took effect on October 12. The contract provides a 3 percent wage increase each year, increases in base salary for sales employees who receive commissions, a 3 percent increase in pension bands, improved working conditions, and an increase in employee health care premiums for family coverage in each of the first three years. CWA represents about 20,000 Qwest workers in 13 states.

IBT members overwhelmingly approved a new five-year contract with Anheuser-Busch. The new five year contract provides for a 15 percent wage increase over the term of the contract, a $1,000 incentive bonus for ratifying the contract on the first vote, improved pensions, increased life insurance, and fully employer-funded health care premiums. It also includes a "good faith contractual commitment" by Anheuser-Busch to keep its 12 U.S. breweries open throughout the five-year term. The contract covers about 6,000 workers represented by 16 different IBT locals.

Members of United Steelworkers ratified a new four-year contract with Special Metals Corp. The contract, which is retroactive to August 1, 2008, increases wages by about 17 percent over term, while maintaining levels of employer-sponsored funding for health care premiums and voluntary employee beneficiary association retirement plan contributions. The new contract covers approximately 900 maintenance and production workers at Special Metals.

Members of the IBT recently approved an agreement with Interstate Bakeries Corp. that will modify more than 200 local collective bargaining agreements, covering some 9,500 workers. The agreement will reduce wages and the amount of employer-sponsored health care benefits for IBC employees, thus allowing bankrupt IBC to emerge from bankruptcy proceedings as a stand-alone company. In exchange for members' concessions, the agreement includes equity-sharing and profit-sharing plans for workers. In addition, the wage decreases will be phased out if the company meets preset earnings levels each year.

On November 10, United Steelworkers members, represented by locals 1972, 971, and 1471, ratified a new six-year labor agreement with MeadWestvaco Corp. The new agreement provides a 10.5 percent increase in wages over term, an immediate lump-sum bonus of $3,000, a 2 percent wage increase, and an immediate increase in pension benefits. The agreement expires on October 31, 2013, and it covers 540 nonsupervisory production and maintenance workers at the company's paper mill in Mahrt, Alabama.

Canadian third quarter bargaining agreements produced an average base rate wage increase of 4 percent, up from the 2.4 percent average in the second quarter of 2008. The third quarter average is based on 65 agreements covering 139,640 employees, with an average duration of 41.5 months. Third-quarter private sector contracts included average wage increases of 2.8 percent, while public sector contracts produced increases averaging 4.4 percent.

The Society of Professional Engineering Employees ratified new agreements reached on November 14 with the Boeing Co. SPEEA represents 14,000 engineers and 7,000 technical workers at Boeing whose contracts expired on December 1, 2008. The new agreement provides annual wage increases of at least 2 percent for engineers and 2.5 percent for technical employees over the next four years, plus minimum promotional raises of 0.5 percent each year, and increased pension benefits.

According to BNA PLUS research, the all-settlements average wage increase deferred to 2009 under contracts negotiated in earlier years is 3.3 percent, the same as that reported for 2008. By sector, the highest average 2009 deferred increases are in construction and transportation, at 5.1 and 3.9 percent respectively. The lowest average deferred increase is 2.1 percent in paper, followed by 2.2 percent in printing. In addition to wage increases, benefits revisions deferred to 2009 will take effect in approximately 15 percent of the 1,443 settlements analyzed.

On October 31, a bankruptcy judge ruled in favor of Frontier Airlines on its Section 1113 motion, allowing it to terminate its current collective bargaining contract with the IBT Local 961. Although prior to filing the motion the parties had tentatively agreed to wage and benefits cuts of 14 percent, negotiations broke down over Frontier's plan to outsource aircraft maintenance work. Under the ruling, Frontier may only outsource aircraft maintenance as a last resort, after exhausting other options. Local 961, which represents about 430 mechanics, tool room employees, aircraft appearance agents, material specialists, and other employees, plans to appeal the decision. In re Frontier Airlines Holdings Inc., No. 08-11298 (Bankr. S.D.N.Y. Oct. 31, 2008).

A federal jury in San Francisco awarded $28.1 million in damages ($7.1 million compensatory and $21 million in punitive) to a class of more than 2,000 former NFL players, finding that the National Football League Players Association did not properly market the players' images or pay out licensing revenue. The case focused on the popular Madden series football video games, which generated approximately $35 million in licensing fees in 2008 alone. The players' claimed that only active players received royalties for the NFLPA's licensing deal on Madden, and that only 10 percent of retired players receive payments from the NFLPA's $750 million retail-licensing business. Parrish et al. v. Nat'l Football League Players Inc., No.07-CV-00943 (N.D. Ca. 2008).

A federal court in Illinois recently held that the Congress Plaza Hotel may pursue its claims that the City of Chicago and one of its alderman violated the National Labor Relations Act and deprived Congress Plaza of equal protection of the law by conditioning approval of building permits on the hotel settling its labor dispute with Local 1 of UNITE HERE. Members of Local 1, which includes approximately 130 housekeepers, restaurant workers, and bellmen at the hotel, walked off the job on June 15, 2003. The hotel alleged that the city alderman refused to issue or approve any renovation permits for the hotel until it settled the strike, and that issuance of a permit is impossible in Chicago without the alderman's approval. 520 S. Michigan Ave. Assocs. d/b/a Congress Plaza Hotel v. Fioretti, No. 07-C-4245 (N.D. Ill. Nov. 5, 2008).

The U.S. Supreme Court recently declined to review a decision by the NLRB holding that undocumented aliens qualify as employees within the meaning of the NLRA even if they were hired in violation of the Immigration Reform and Control Act. The case arose after Agriprocessors Inc. refused to bargain with Local 342, claiming that the local's certification election was invalid since 17 of the 21 individuals who voted were undocumented aliens. The NLRB ordered Agriprocessors to bargain with Local 342, relying on the NLRA's broad definition of employee, and the court of appeals affirmed. Agri Processor Co. v. NLRB, U.S., No. 08-21, cert. denied 11/17/08.

A federal judge in Illinois granted United Airline's motion for a preliminary injunction against the Air Line Pilots Association on November 17, finding that ALPA's conduct, which included sick leave abuse and other slowdown tactics implemented after United announced plans to reduce its fleet and furlough pilots, violated the Railway Labor Act. According to the judge, a July 2008 sick-out by United pilots, which ALPA failed to sincerely discourage, caused approximately 329 flight cancellations over less than 10 days, affecting more than 30,000 United customers. United said it plans to seek a permanent injunction as well. United Air Lines Inc. v. Air Line Pilots Assoc. Int'l et al., No. 08-CV-04317 (N.D. Ill. 2008).

CVS Pharmacy Inc. filed a complaint and motion for a temporary restraining order on November 17 accusing the union coalition Change to Win of misappropriating CVS' trade secrets by posting contracts between CVS and government agencies on its Web site. A federal judge in Virginia dismissed the complaint that same day citing lack of personal jurisdiction over the defendant. CVS Pharmacy Inc. et al. v. Change to Win, No. 08-1199 (E.D.Va. 2008).

The New York State Court of Appeal held on November 24 that a nuisance claim brought by the managing agent of the Empire State Building, Helmsley-Spear Inc., against the Service Employees International Union Local 32B-32J is not preempted by the NLRA. The decision relates to a dispute which arose in 2005, when the SEIU and the AFL-CIO began handing out leaflets and banging on a plastic drum in an effort to unionize the building's security staff. In an attempt to stop the SEIU from drumming on its property, Helmsley-Spear filed a public nuisance suit, which, according to the ruling, the state courts have jurisdiction to adjudicate. Helmsley-Spear Inc. et al. v. Fishman et al., No. 164 (N.Y. 2008).

An administrative law judge with the NLRB ruled that CNN America Inc. engaged in "widespread and egregious misconduct" in violation of federal labor law. According to the ALJ, CNN violated the NLRA by limiting the number of National Association of Broadcast Employees members it hired, changing the terms and conditions of employment without first bargaining with the union, and telling workers that membership in a union disqualified them from employment with CNN. The ALJ recommended that CNN be ordered to reinstate 113 workers and to pay lost wages and benefits to 323 workers for losses caused by illegal discrimination and/or unilateral changes. CNN Am. Inc., No. 5-CA-31828 (Nov. 19, 2008).

On November 4, Missouri voters approved Proposition B, the Quality Home Care Act. The Act allows home health care workers who work under a Missouri state program to gain union representation if 10 percent of those workers favor a union representation election. The measure was approved by a vote of 75.2 percent and takes effect January 31, 2009. It will apply to approximately 8,000 home health care workers who provide services under the state Medicaid program.

Voters in Colorado approved Amendment 54 on November 4, a constitutional amendment that will bar campaign contributions by labor organizations that represent state or local government employees. This anti-union measure was approved by a narrow margin, with 51 percent of voters in favor and 48 percent against. Another anti-union ballot measure, Amendment 47, was defeated by Colorado voters. Amendment 47 included a right-to-work measure that would have prohibited requiring an employee to pay union dues or fees as a condition of employment.

According to the AFL-CIO, union voter mobilization efforts played a critical role in the election of President-elect Barack Obama. Together with Working America, AFL-CIO reached out to more than 13 million union voters in 24 battleground states. In battleground states, some 84 percent of union members heard from their union because of volunteer efforts. The share of union vote in the 2008 presidential election was 21 percent of all voters, with approximately 67 percent of those voters casting their ballots for Obama.

Change to Win mobilized thousands of union members in support of the recent election of President-elect Barack Obama. The union has since redirected its attention to pressing its legislative agenda in the first 100 days of the new Congress, including passage of the Employee Free Choice Act. This legislation would amend the NLRA giving workers additional options for forming a union, stricter penalties for unfair labor practices by employers, and other provisions attractive to organized labor.

Oregon voters rejected two ballot initiatives on November 4, Measures 60 and 64 that were opposed by organized labor. Measure 60 called for a merit-based system of pay and job security for public school teachers, but was defeated with 60 percent of voters against it. Measure 64, if passed, would have precluded public sector unions that receive funds through payroll deductions from using a portion of such funds to support candidates or lobby elected officials.

Francis Biagiotti, manager in charge of payroll at Massport, was convicted October 10 on charges of fraud in the procurement of government services, false entry in corporate books, and conspiracy to commit larceny over $250. Biagiotti was sentenced on October 23 to one year's probation and a $2,500 fine. His conviction was the 20th and final conviction related to widespread payroll and benefits fraud by union leaders and members of the International Longshoremen's Association at Conley Terminal in the Port of Boston.

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