Winston & Strawn LLP: Labor News October 2007

In This Issue

The Michigan Nurses Association filed a petition with the National Labor Relations Board (NLRB) for a union representation election for nurses at Detroit’s Harper Hutzel Hospital. Approximately 800 nurses work at the hospital.

The Transport Workers Union filed a petition with the National Mediation Board seeking an election to become the bargaining agent for 8,000 fleet service workers at Continental Airlines. This is the third time in as many years that TWU has attempted to organize this group of unrepresented Continental workers. The union fell roughly 300 votes short of the required majority in July 2005 and October 2006. The fleet service workers at Continental are the only major group not represented by a union at the Houston-based airline.

Child care workers in Maine voted overwhelmingly for representation by the Service Employees International Union (SEIU). Child care workers in Maryland voted last month for representation by SEIU, and child care providers in Pennsylvania are scheduled to vote on SEIU soon.

At-home child care providers in New York City voted in favor of representation by the United Federation of Teachers, an affiliate of the American Federation of Teachers, making the UFT the exclusive representative for the city’s 28,000 child care providers. Earlier in May, Gov. Eliot Spitzer signed an executive order granting child care workers who receive state or local funding the right to organize.

Registered nurses at nine Appalachian Regional Healthcare Hospitals in eastern Kentucky and southern West Virginia went on strike October 1, after rejecting ARH’s final contract offer four days earlier. Registered nurses took up pickets minutes after their two-year contract expired at midnight September 30. This is the second strike by ARH staff this year.

San Francisco security guards represented by SEIU Local 24/7 ended a two-day strike and returned to work while negotiations continue between the union and the private security companies that employ them. Roughly 75 security officers struck 20 buildings in the city’s financial district, claiming “intimidation, harassment, and speech rights violations.”

Members of the National Labor Relations Board Union (NLRBU) picketed outside a conference where NLRB Chairman Robert J. Battista was delivering a keynote address in Chicago on October 4. The NLRB employees union is protesting NLRB General Counsel Ronald Meisburg's decision not to bargain with the NLRBU until after judicial review of an earlier Federal Labor Relations Authority decision certifying a bargaining unit combining employees that report to him with those that work for the Board.

The California Nurses Association began a two-day strike on October 10 against 15 northern California hospitals following unsuccessful negotiations over health and retirement benefits and nurse-to-patient staffing ratios. The CNA wanted contract language incorporating state-mandated staffing levels. Upon returning to work October 12, the represented workers found they were locked out at five hospitals. Hospital representatives said they signed contracts of two to five days with temporary staffing services for replacement nurses.

Union members at five Los Angeles-area hotels have voted by a wide margin to authorize UNITE HERE Local 11 to call a strike if negotiations for new contracts are not successful. The five hotels employ about 800 union-represented workers. Workers at more than a dozen Los Angeles area hotels have within the past year ratified contracts that include wage increases of $2.30 per hour over a three-year period for non-tipped employees, maintenance of employer-paid family health insurance, and changes to the housekeeper load.

United Auto Workers struck International Truck and Engine Corp. locations employing 4,000 union members in six states, claiming that the employer has committed unfair labor practices during collective bargaining. Employees had been working on an hour-by hour contract extension after the original contract expired October 1.

UPS reached a tentative five-year national labor agreement with the International Brotherhood of Teamsters (IBT) on September 30 to be ratified in early December. The agreement covers approximately 240,000 full- and part-time package employees, and would increase wages by approximately $9 per hour over five years. As part of the agreement, UPS extricated itself from the Teamsters’ Central States Pension Fund by making a pre-tax payment of $6.1 billion to the Fund. The Teamsters union gained new opportunities to organize up to 15,000 nonunion employees of UPS Freight. Simultaneous with this announcement, the Teamsters announced they had reached a tentative agreement with 125 UPS Freight employees in Indianapolis.

Interstate Bakeries Corp. reached a tentative agreement with Bakery, Confectionery and Tobacco Workers on September 28 regarding contract modifications aimed at helping the company emerge from Chapter 11 bankruptcy. Interstate Bakeries Corp. has still been unable to reach an agreement on contract modifications with its other large union, IBT, which represents about 10,000 Interstate Bakeries employees.

Members of UNITE HERE affiliates Culinary Workers Local 226 and Bartenders Union Local 165 ratified a five-year contract with the Las Vegas Hilton Hotel. The agreement, covering 1,800 workers, provides a $3.47 increase in wage, pension, and health benefits over the term of the agreement. The new contract expires May 31, 2012.

Chrysler LLC and officials of the United Auto Workers (UAW) reached agreement on a new collective bargaining agreement ending a six-hour strike at most of Chrysler’s U.S. plants. Members of the UAW ratified the four-year agreement in balloting concluded October 27. The contract covers about 45,000 active workers, in addition to more than 55,000 retirees and 23,000 surviving spouses. A typical worker will see “economic gains” of $10,235 more than the contract’s four-year term. Each worker will receive a $3,000 signing bonus and lump-sum payments each year in place of general wage increases. Newly hired “non-core” workers will receive wages at a lower scale than those currently employed at the company. Unlike General Motors, Chrysler did not provide guarantees to invest in new products at specific plants or commit to investments beyond the four-year term of the contract.

The UAW ratified its four-year collective bargaining agreement with GM on October 10. The new contract covers 73,000 employees and also provides annual lump-sum bonuses in lieu of wage increase and introduces lower wages for newly hired workers in non-core jobs. Workers will receive a $3,000 signing bonus, 3 percent lump-sum payments in the second and fourth years of the contract, and a 4 percent lump sum in the third year. GM will contribute more than $35 billion to secure long-term health care for retirees. Employee job security is provided through GM’s commitment to build specific vehicles at 16 UAW-represented assembly plants during the four-year term.

Year to date, the all-settlements average first-year wage increase is 3.7 percent, compared with 3.3 percent reported in the first three quarters of 2006. Second- and third-year average increases reported in the first three quarters of 2007 were each 3.3 percent, the same as reported in 2006.

Major collective bargaining agreements reached in Canada during August produced base-rate wage increases averaging 3.3 percent, smaller than the 3.8 percent average in July, according to Human Resources and Social Development Canada. The August report brought the year-to-date average wage increase from collective agreements to 3.1 percent, up from the 2.5 percent for 2006 as a whole, 2.3 percent in 2005, and 1.8 percent in 2004.

Wage increases for 2,300 building service workers in Philadelphia represented by SEIU Local 32BJ total approximately 15 percent over the four-year term of a tentative contract with the city’s largest building owners and cleaning contractors. The proposed contract would eliminate the $80 monthly premium for family health benefits and would increase the employer pension contribution by 18 cents an hour. Wage increases would be 3.7 percent in the first year, 3.5 percent in each of the next two years, and 4 percent in the final year. The contract would expire Oct. 15, 2011.

As part of a settlement of two lawsuits brought by member pilots, the Air Line Pilots Associations approved amendments to its collective bargaining policies regarding “scope” clauses that restrict various units of pilots to flying certain types of aircraft. (Ford v. Air Line Pilots Ass’n Int’l, E.D.N.Y., No. 01cv2800, settlement announced 10/25/07; Cooksey v. Air Line Pilots Ass’n Int’l, E.D.N.Y., No. 03cv2514, settlement announced 10/25/07). The plaintiffs alleged that the Air Line Pilots Association negotiated bargaining contract terms with Delta that gave advantages to Delta’s mainline pilots over the express service pilots.

The NLRB ruled 3-2 that employees hired on an at-will basis may be found to be permanent replacements for striking employees. (Jones Plastic & Eng’g Co., 351 N.L.R.B. No. 11 (2007)). In so holding, the Board overruled a 1997 NLRB decision in Target Rock Corp., 324 N.L.R.B. 373 (1997) “to the extent that it suggests that at-will employment is inconsistent with or detracts from an otherwise valid showing of permanent replacement status.”

In a sweeping change to the recognition bar doctrine, the NLRB modified the recognition bar rules for card-based recognitions. The NLRB ruled 3-2 that employees have 45 days after receiving notice that their employer has recognized a union based on a card check majority to file a petition for a decertification election or to support an election petition by a rival union. (Dana Corp., 351 N.L.R.B. No. 28 (2007)). Furthermore, a collective bargaining agreement executed on or after the date of recognition will not bar a decertification or rival union petition unless the employees receive notice of the recognition and 45 days have passed without a valid petition being filed. The Board held that these new rules will apply only prospectively.

The NLRB ruled 2-1 that an employer’s obligation to recognize and bargain with an incumbent union following a union merger or affiliation continues unless the changes resulting from the merger or affiliation are so significant as to alter the identity of the bargaining representative. (The Raymond F. Kravis Ctr. for the Performing Arts, 351 N.L.R.B. No. 19 (2007)). Traditionally, the Board has required that union members be afforded due process safeguards including the opportunity to vote on mergers and affiliations. The Board abandoned this requirement and reversed prior case law holding that an employer is not relieved of its bargaining obligations merely because the union merger or affiliation was accomplished without due process safeguards. In a separate ruling, a three-member panel applied the Board’s new rule and held that the lack of a membership vote on a union merger did not relieve Allied Mechanical Services of its obligation to recognize and bargain with Plumbers and Pipefitters Local 357. (Allied Mech. Servs., 351 N.L.R.B. No. 5 (2007)).

The First Circuit Court of Appeals upheld a jury award of $2,232,501 for sex discrimination and retaliation against a police union by finding that both Title VII of the Civil Rights Act of 1964 and the Massachusetts anti-discrimination statute cover retaliation claims against unions which cause harm both inside and outside of the workplace. (Dixon v. Int’l Bhd. of Police Officers, No. 06-1210, (1st Cir. Sept. 28, 2007)).

The NLRB ruled 3-2 that an employer’s reasonably based but unsuccessful lawsuit against a union did not violate the National Labor Relations Act (NLRA) even though it was brought to retaliate against the union. (BE&K Constr. Co., 351 N.L.R.B. No. 29 (2007)). The Board noted the Supreme Court’s ruling in Bill Johnson’s Restaurants Inc. v. NLRB, 461 U.S. 731 (1983) that an ongoing reasonably based lawsuit filed for a retaliatory motive cannot be enjoined as an unfair labor practice and held this reasoning to be applicable to both completed and ongoing lawsuits.

The NLRB ruled 3-2 that an applicant for employment must show a genuine interest in an employment relationship to be protected based on union affiliation or activity by the NLRA. (Toering Elec. Co., 351 N.L.R.B. No. 18 (2007)). The Board criticized the practice of salting and required the General Counsel to bear the burden of proving an applicant’s genuine interest in obtaining employment.

Two Las Vegas hotel/casinos did not violate federal labor law by unilaterally stopping payroll deductions for union dues after their bargaining contracts expired ruled the NLRB in a 3-2 decision. (Hacienda Hotel Inc. Gaming Corp. d/b/a Hacienda Resort Hotel & Casino, 351 N.L.R.B. No. 32 (2007)). Relying on specific language in the contract, the Board noted that the dues checkoff provision was explicitly tied to the duration of the contract and thus found that dues checkoff would not survive expiration of the contract.

In an effort to end litigation over claims that employers and unions have misled employees about the NLRB’s neutrality by circulating sample ballots that resemble official Board documents but endorse a particular election choice, the NLRB will change the wording on ballots used in representation elections. (Ryder Mem’l Hosp., 351 N.L.R.B. No. 26 (2007)). The Board will include clear disclaimer language on the ballot to eliminate the case-by-case analysis used previously. Where the new ballot is used with the added disclaimer language, the Board will decline to set aside elections based on a party’s distribution of an altered sample ballot. Alterations that do not include the disclaimer language will be considered “per se objectionable.”

The NLRB ruled 2-1 that Supervalu Inc. did not violate the NLRA by refusing the United Food and Commercial Workers’ request under an “additional stores” clause in two bargaining contracts to conduct card checks at three newly acquired grocery stores. (Supervalu Inc., 351 N.L.R.B. No. 41 (2007)). The Board held that Supervalu did not violate NLRA Section 8(a)(5) because the additional stores provision did not involve a mandatory subject of bargaining. The NLRB General Counsel failed to show that workers at the three additional stores would be included in an existing bargaining unit or that the additional stores provision addressed a concern that “vitally affects” the unit employees.

A divided NLRB ruled 3-2 that once a warehouse company produced evidence in a back-pay hearing that employees it fired had access to other job opportunities in the area, the NLRB General Counsel should have been required to produce evidence that the “discriminatees” took reasonable steps to secure employment. (St. George Warehouse, 351 N.L.R.B. No. 42 (2007)). “When a respondent raises a job search defense to its back-pay liability and produces evidence that there were substantially equivalent jobs in the relevant geographic area available for the discriminatee during the back-pay period, we will place on the General Counsel the burden of producing evidence concerning the discriminatee’s job search,” the board concluded.

On remand from a federal appeals court, the NLRB ruled 3-2 that 16 employees at a St. Louis brewery who were disciplined by Anheuser-Busch Inc. for misconduct observed by means of hidden surveillance cameras illegally installed without bargaining with their union were not entitled to reinstatement and back pay. (Anheuser-Busch Inc., 351 N.L.R.B No. 40 (2007)). The D.C. Circuit found that Section 10(c) of the NLRA does not “expressly address whether the Board shall or shall not deny make-whole relief where an employer would not have discovered its employees’ misconduct but-for its own unlawful action.” (Brewers and Maltsters, Local Union No. 6. v. NLRB, 414 F.3d 36 (D.C. Cir. 2005)). However, the Board found that the employees “each engaged in misconduct warranting the discipline” and the “meaning of the phrase ‘for cause’ does not include an inquiry into the source of the employer’s knowledge of the misconduct.”

The NLRB issued fewer decisions during fiscal year 2007, which ended September 30, than during the previous period, but continued to reduce its inventory of pending cases and resolved many of the “oldest and most difficult pending cases,” the agency announced. During fiscal year 2007, the board reduced its overall case inventory from 305 to 207.

The Court of Common Pleas in the State of Ohio, Warren County, denied summary judgment to UNITE HERE in a defamation suit filed by Cintas Corp., alleging that the labor union published a false press release concerning a NLRB decision that led to a precipitous drop in the company’s stock price. The press release claimed that Cintas committed “widespread and major violations of law,” and listed UNITE HERE and the NLRB as sources of the report. Cintas alleges the union caused the press release to seem like it was issued by the NLRB in an effort to pressure the company to recognize UNITE HERE. Cintas originally filed suit in January 2004 and claimed the press release’s publication resulted in a dramatic drop in the company’s stock by as much as $300 million in twenty minutes.

An arbitrator ordered Yale-New Haven Hospital to pay $4.5 million to the Service Employees International Union for tampering with an election in violation of a fair election agreement. The $4.5 million award included reimbursement of $2.3 million for organizing expenses and $2.2 million, the amount the hospital allegedly paid a labor consulting firm in its campaign opposing the union’s organizing efforts.

Solicitor General Paul D. Clement urged the U.S. Supreme Court to review the Ninth Circuit’s decision in Chamber of Commerce v. Lockyer that a California law prohibiting employers from using state funds to assist or deter union organizing is not preempted by the NLRA . (463 F.3d 1076 (9th Cir. 2006)(en banc)). In his amicus brief, the solicitor general argued that the Ninth Circuit’s decision “departs significantly” from Supreme Court precedent on NLRA preemption and conflicts with the Second Circuit’s December 2006 decision that a similar New York law is preempted by the NLRA. (Healthcare Ass’n of N.Y. State Inc. v. Pataki, 471 F.3d 87 (2d Cir. 2006)).

The executive council of the American Federation of Teachers endorsed Sen. Hillary Clinton (D-N.Y.) for President on October 3.

SEIU decided not to endorse a Presidential candidate in the primaries and will instead allow its locals to make endorsements on a state-by-state basis. SEIU state councils in 10 states have endorsed Sen. John Edwards (D-N.C.) for president, while SEIU’s Illinois and Indiana state councils have endorsed Sen. Barak Obama (D.-Ill.) The state SEIU endorsements bring Edwards close to the 3 million mark in union support, according to his campaign.

Smithfield Foods filed a lawsuit alleging a “malicious” and “extortionate” pressure campaign by the United Food and Commercial Workers Union. The lawsuit alleges violations of the federal Racketeer Influenced and Corrupt Organizations Act as well as extortion violations under North Carolina and Virginia law. According to the lawsuit, the union and its representatives have attempted unsuccessfully to organize the hourly employees at its processing plant in Tar Heel, N.C. The lawsuit alleges that the union and its representatives abandoned the organizing efforts in favor of a pressure campaign aimed at driving Smithfield out of business unless the company agrees to recognize UFCW as the exclusive bargaining representative at the Tar Heel plant.

A month after the Justice Department leveled criminal charges against the IBT Local 743 President Richard Lopez and three union employees, a group of reform candidates has been elected to lead the Chicago-based union local. Richard Berg won the presidency of Local 743 on a reform slate running under the “743 New Leadership” banner. The Department of Labor conducted a second ballot count after outside counsel to Local 743 accused the election supervisor of misleading members as to when the official date of tallying would be. The Department of Labor tallied three dozen ballots that arrived after the official deadline and confirmed that Berg had won the election.

The U.S. Court of Appeals for the Eleventh Circuit affirmed the convictions and sentences of the former president of the National Federation of Public and Private Employees union, Walter J. Browne, and his sister, Patricia A. Devaney, a former administrative assistant at NFOPAPE. (United States v. Browne, 11th Cir., No. 01-06258-CR-JEM, 10/25/07). Browne and Devaney were indicted on counts of racketeering, violations of the Labor-Management Relations Act, and mail fraud charges for taking payments from companies that employed workers who could be represented by the union.

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The AFL-CIO filed a complaint with the International Labor Organization’s Committee on Freedom of Association alleging that the NLRB through its decisions over the years has engaged in a “systematic effort to deny workers’ rights in violation of international labor standards.” “Under [President] Bush, America’s labor board has so failed our nation’s workers that we must now turn to the world’s international watchdogs to monitor and intervene,” stated AFL-CIO President John J. Sweeney in a statement announcing the filing of the complaint.

DHL Express Inc., filed a lawsuit against the IBT, Local 25; Local 25 President Sean O’Brien and business agent Thomas Mari; and 10 John Does over an allegedly defamatory and factually incorrect leaflet that DHL says the union’s business agent passed out before a baseball game this month. The leaflet at issue depicts a haggard, elderly woman lying in bed. The caption under the picture reads, “DHL fired my son Chris for speaking out against injustice in the workplace … now I have to live in a shelter.” DHL has taken issue with the leaflet with a complaint containing two counts, one for defamation and one for unfair or deceptive practices under Massachusetts law.

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