Winston & Strawn LLP: Labor News September 2008

In This Issue

Employees at Thomas Built Buses, Inc.'s High Point, N.C. facility voted 770 to 377 in favor of continued representation by United Auto Workers Local 5287, defeating a decertification petition filed Aug. 8.

The All China Federation of Trade Unions, China's government-affiliated labor union, is currently organizing employees of 80 percent of large foreign firms. Under Chinese labor law, unionized workers must be consulted on "all major decisions," a provision that is not clearly defined but could allow employees to delay or block corporate transactions.

To promote more cooperative union-management relations, building and construction trade unions in western New York state stopped displaying a 12-foot-tall inflatable gray rat on picket lines and at union demonstrations, union leaders announced on Sept. 14. The rat was punctured and recently destroyed during a rally recently in Buffalo, N.Y.

[Top]

Members of the International Association of Machinists went on strike Sept. 6 against Boeing after mediated negotiations aimed at reaching a new labor contract covering 26,500 employees failed. The company's authority to outsource work was a key issue.

Service workers represented by the Service Employees International Union Local 1877 returned to work at Los Angeles International Airport Aug. 29, less than 24 hours after beginning a strike because of alleged civil rights abuses and a failure to bargain in good faith. The workers returned after Los Angeles Mayor Antonio Villaraigosa (D) urged the union and airline-service contract companies to return to the bargaining table for a three-week cooling off period. The union and the companies have been in negotiations since early July to reach an agreement covering 2,500 workers.

Members of the National Labor Relations Board Union who work for the board's Denver office distributed leaflets outside the hotel where NLRB General Counsel Ronald Meisburg spoke the same day at an ABA conference on labor and employment law. The leaflets alleged that the NLRB was violating the Federal Service Labor-Management Relations Act by refusing to bargain with the union.

Approximately 630 Teamsters' members struck Oak Harbor Freight Lines, Inc. on Sept. 22. The parties have been negotiating a new contract since August 2007 to replace the agreement that expired Oct. 31, 2007.

After members of the International Association of Machinists Local 735 rejected a three-year contract proposal with Vought Aircraft covering its Nashville, Tenn. plant, the union initiated a strike on Sept. 28. Bargaining broke down over proposed changes to the company's pension plan.

[Top]

Members of the United Steelworkers approved a new four-year contract with U.S. Steel on Sept. 9, covering 16,000 workers at 14 locations. The agreement provides a $6,000 cash signing bonus, an immediate $1 per hour wage increase with 4% increases in subsequent years, profit sharing, improved pensions, and reduced health care premiums for retirees. The agreement also requires U.S. Steel to invest in its domestic operations.

The United Steelworkers reached a tentative four-year contract with ArcelorMittal USA, covering 14,000 workers at 14 facilities in eight states. The Steelworkers also reached a tentative agreement with Cleveland-Cliffs Inc., which will cover 2,300 workers in Minnesota and Michigan. Both agreements follow the pattern set by the Steelworkers Agreement with U.S. Steel.

The Air Line Pilots Association and American Eagle Airlines reached a tentative agreement on an interim amendment to their 16-year contract, which covers 2,800 pilots. The amendment improves work rules and quality-of-life programs, but does not include concessions nor wage increases.

Members of the Carpenters Industrial Council ratified a new four-year contract with Boise-Cascade LCC, covering 950 workers in the Western states. The agreement provides a 9.5% wage increase over term, increased employer 401(k) contributions, an increase in pension benefits and an increase in contributions to health and welfare benefit trusts.

The UAW ratified a new three-year collective bargaining agreement with Blue Cross Blue Shield of Michigan, which will cover 2,700 workers employed throughout the state. The contract provides employees with a $2,500 signing bonus, a 9% increase in wages over the contract term, an increased pension benefit, and an extra week of vacation for use during anniversary years for those reaching, 30, 35, and 40 years of service. The agreement also provides a two-tier wage and benefit scale and eliminates retiree health care benefits for employees hired after Jan. 1, 2009.

Members of the Communications Workers of America and the International Brotherhood of Electrical Workers ratified a new three-year labor contract with Verizon Communications Inc., covering 65,000 employees at Verizon facilities in the Northeast and Mid-Atlantic states. The new agreement increases wages 10.5% over term, continues employer-paid health benefits, increases pensions, creates 2,500 new union jobs, caps Verizon's contribution to the cost of retiree health care beginning in 2012 and shifts retiree health care for new hires to a defined-contribution formula.

The International Brotherhood of Teamsters and the National Automobile Transporters Labor Division, a group of major auto transport companies, reached a tentative three-year Sept. 19 agreement covering 9,500 truck drivers, mechanics, and office workers. The agreement addresses union members concerns after they rejected a tentative agreement by ballot election in August, despite a unanimous endorsement by local union leaders. No details about the agreement were released, and no date has been set for review of the contract.

UAW Local 2488 and Mitsubishi Motors North American announced that they reached a tentative agreement covering Mitsubishi's 1,250 employees at the Normal, Ill. plant. The previous agreement expired Aug. 28. The parties did not disclose any contract terms, pending a ratification vote by union members.

Collective bargaining data for all settlements through Sept. 22 showed the average first-year wage increase was 3.7 percent, the same increase as that reported in the comparable period of 2007. The median first-year increase for settlements reported to date in 2008 was 3.3 percent, compared with 2.8 percent in 2007, and the weighted average was 3.5 percent, compared with 2.8 percent for the comparable period in 2007.

[Top]

On Aug. 29, a federal district judge granted the NLRB's request for an injunction requiring Massey Energy Co. and one of its subsidiaries to employ 85 miners on an interim basis while the board investigated whether Massey denied employment to the miners because they were previously represented by the United Mine Workers and thereby committed an unfair labor practice. An NLRB administrative law judge previously concluded that Massey's decision not to hire these employees violated the NLRA. However, the district court denied the board's request for an interim order requiring Massey to recognize and bargain with the union, finding that even in the absence of such an injunction, the court could still issue an effective remedial order. (Muffley v. Massey Energy Co.).

The Third Circuit on Sept. 10 held that the district court properly granted summary judgment to employees of Cintas Corp. who claimed that UNITE HERE violated the federal Driver's Privacy Protection Act but improperly denied the employees punitive damages. The employees claimed that the union violated their privacy rights by accessing their motor vehicle records in connection with a campaign to unionize Cintas. The Third Circuit held that the district court improperly denied plaintiffs' claim for punitive damages without any analysis under summary judgment standards, and remanded the case with instructions for the district court to proceed with a jury trial on the issue of punitive damages if it determined that the summary judgment was inappropriate. (Pichler v. UNITE).

The Seventh Circuit on Sept. 15 affirmed an NLRB decision that held that Jones Plastic & Engineering Co. did not violate the NLRA when it refused to reinstate workers returning from an economic strike because Jones had hired permanent replacements during the course of that strike. The Seventh Circuit agreed with the board that an "at-will employment" provision on forms signed by the replacements did not convert them into temporary replacements in the face of a clear understanding by the employer and replacements that their employment was permanent. (United Steelworks Union v. NLRB).

On Sept. 17, the NLRB ruled that an election petition by Teamsters Local 294 to cover employees at WeCare Transportation LLC's terminal in Canaan, N.Y. must also include drivers at the company's terminal in Weedsport, N.Y., 194 miles away. The board overruled the regional director's decision approving the Canaan-only unit, holding that WeCare had rebutted the presumption that the single-facility unit was appropriate by showing that daily operations and labor relations were centrally controlled, that the drivers at the two terminals have similar skills, functions, and working conditions, and that the two terminals were functionally integrated. As Local 294 indicated that it was unwilling to proceed to an election covering both facilities, the board dismissed the election petition. (WeCare Transport LLC).

On Sept. 25, the NLRB held that Teamsters Local 523 and Interstate Bakeries Corp. violated the NLRA by endtailing the seniority of a sales representative following the merger of two bargaining units, neither of which had previously included him. The board overturned an administrative law judge's decision, which held that placing the employee at the bottom of the seniority list did not violate the NLRA. (Interstate Bakeries Corp.).

An arbitrator awarded a roofing contractor $9.4 million in damages, concluding that the leadership of the Chicago Regional Council of Carpenters orchestrated a vendetta against the contractor because he objected to the union's wage schemes. The arbitrator concluded that the union required the contractor to pay a higher hourly rate, while allowing all other contractors to compensate carpenters on a piecework basis, in violation of the "Most Favored Nations" provisions in the collective bargaining agreement. (In re Prate Installations Inc.).

On Sept. 12, NLRB General Counsel Ronald Meisburg spoke at a conference of the ABA's Section of Labor and Employment Law. Meisburg discussed a variety of topics, including the authority of the two-member board to issue decisions; the recent Supreme Court decision declaring that a California law prohibiting employers from using state money to assist or deter union organizing was preempted by the NLRA; a memo issued by his office in July describing guidelines for analyzing unfair labor practice charges involving discipline of employees who engage in political advocacy; and a forthcoming guidance memo from his office that would discuss the board's recent decision in St. George Warehouse, which held that once an employer in a back-pay hearing shows that illegally fired employees had access to other job opportunities, the general counsel must prove that the employees took reasonable steps to find other employment.

[Top]

The Fraternal Order of Police, which has 327,000 members, is endorsing Sen. John McCain (R-Ariz.) for president.

The 400,000-member International Association of Machinists endorsed Sen. Barack Obama (D-Ill.) for president. The IAM had previously endorsed Sen. Hillary Clinton (D-N.Y.) in August 2007 but endorsed Obama after Clinton urged the union to do so at the union's convention.

The California Correctional Peace Officers Association, a union representing state prison guards, launched a recall campaign against Gov. Arnold Schwarzenegger, citing his "lack of leadership" in moving the state legislature to approve a budget and in issuing an executive order that would cut state worker pay to the minimum wage if no budget was approved.

The National Federation of Federal Employees, which represents 100,000 federal employees, endorsed Obama for President.

[Top]

The Service Employees International Union announced that it is creating a commission on ethics and standards that will be charged with improving ethics guidelines. The announcement came in the wake of allegations of financial impropriety by several leaders of SEIU locals in California. The SEIU is investigating Annelle Grajeda, a newly elected vice president of the SEIU and president of Local 721 in Los Angeles; Tyrone Freeman, president of Local 6434, SEIU's largest local in California; and Rickman Jackson, president of Healthcare Michigan, for allegations relating to Jackson's time as chief of staff under Freeman at Local 6434.

Michael Annucci, a former shop steward and executive delegate of Carpenters and Joiners of America Local 157, was sentenced Sept. 12 by a federal judge to serve five years in prison and two years of supervised release. Annucci was convicted in February of fraud, embezzlement and other charges for omitting more than 22,000 hours worked by carpenters from his shop steward reports as part of a scheme to aid a contractor in avoiding paying contributions to union benefit funds. For his part in the scheme, Annucci was paid out on hundreds of unworked overtime hours and several unworked days.

A federal district judge on Sept. 16 sentenced Peter O. Strannemar, the former president of International Union of Operating Engineers Local 825, to 27 months in prison for tax evasion and conspiracy to demand and accept bribes from construction contractors. Strannemar admitted that he conspired with other union members to accept $112,000 from two contractors and intentionally concealed income on his 2003 tax return.

On Sept. 17, elected members of the executive board of United Healthcare Workers West, the third largest local of the SEIU, filed suit in the Northern District of California against the SEIU and its top officers. The suit alleges that the SEIU and its top officials violated the Labor-Management Reporting and Disclosure Act by engaging in a campaign of retaliation and intimidation aimed at chilling and undermining among union members' free speech. The suit was filed one week before a scheduled internal hearing in which the SEIU was to consider whether to place the local under trusteeship due to allegations of financial malpractice and fraud by local leaders. (Torres v. Service Employees Int'l Union).

Delegates to the International Association of Machinist's convention approved an $4.78 per capita monthly increase in union dues. The raise in dues will help prevent depletion of the union's general fund. The union has been running a deficit of about $5.5 million per year since 2000, although some of this amount has been offset by investment of strike and other funds.

A report by the Labor Department's Bureau of Labor Statistics reported that between 1995 and 2007, 31 mergers between unions took place, with most of them involving AFL-CIO affiliates. The report noted that this number represented the fewest mergers in any measured time period since the formation of the AFL-CIO in 1956.

NLRB Chairman Peter C. Schaumber and member Wilma B. Liebman discussed the operation of the two-member board at a conference sponsored by the ABA's Section of Labor and Employment Law on Sept. 12. Schaumber and Liebman noted that rendering decisions requires that they are in agreement, which they admitted being unable to do in 20 to 25 percent of the cases. They also stated that they agreed to decide all cases based on current board precedent and not to overturn any standing board precedent. While Schaumber and Liebman rely on Section 3(b) of the NLRA and a March 2003 opinion by the Justice Department's Office of Legal Counsel to support the legality of a two-member board, there are currently eight cases pending before the federal appeals courts challenging the legality of the arrangement.

[Top]

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:

Attorney advertising materials.

If you no longer wish to receive Labor News from Winston & Strawn LLP, please contact us at laborlist@winston.com or write us at Winston & Strawn LLP, Attention: Business Development Clerk, 35 West Wacker Drive, Chicago, IL 60601.

These materials have been prepared by Winston & Strawn LLP for informational purposes only and are not legal advice. Receipt of this information does not create an attorney-client relationship.

Along with this Briefing, a library of all the Winston & Strawn LLP Briefings published to date can be accessed by visiting the Publications Library section of Winston & Strawn LLP's website (www.winston.com).

Copyright © 2008