Labor Relations Update

Ronald Meisburg is a Partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations and Strategic Planning & Corporate Due Diligence Groups, resident in the Washington, D.C. office.

Before joining Proskauer, Ronald served as General Counsel of the National Labor Relations Board for four and one half years and as a Board Member for one year. He is one of only four people to have served as both a Board Member and as the General Counsel, and the only person to have received Presidential nominations for both offices.

Prior to serving at the NLRB, Ronald was a management labor lawyer from 1980 through 2003. In private practice, he has advised management clients with respect to issues arising under federal labor and employment law and collective bargaining agreements; served as labor counsel in complex business transactions; assisted clients in collective bargaining and in grievance and arbitration cases; and represented clients in matters pending before federal labor and employment agencies, and in federal trial and appellate court litigation.

Prior to entering private practice, Ronald spent six years as a litigator in the Office of the Solicitor, U.S. Department of Labor, in Washington, D.C., in the Division of Employee Benefits and the Division of Mine Safety and Health. At the Department he received a number of recognitions and awards, including being a member of the litigation team that won the Secretary of Labor's Distinguished Achievement Award in 1978.

Ronald has served in various leadership roles, including President of the Energy and Mineral Law Foundation, and has taught business law as an award winning Adjunct Professor at the University of Maryland’s Smith School of Business. Ronald resides in Arlington, VA.

In a decision affirming the National Labor Relations Board, the U.S. Court of Appeals for the District of Columbia Circuit has ruled that employees of a contractor working for a contract restaurant operator located in another employer’s hotel/casino, have a right to pass out handbills inside the hotel/casino at the entrance to the restaurant.  NewYork-New York, LLC d/b/a New York-New York Hotel and Casino v. NLRB, Case No. 11-1098 (April 17, 2012). 

The case involved a restaurant operated by a contractor and located inside the hotel/casino.  The restaurant contractor’s employees desired to pass out handbills to other restaurant employees and customers of the restaurant at its entrance, publicizing their efforts to organize a union at the restaurant. The hotel/casino barred them from doing so.  The restaurant entrance was located inside the hotel/casino, and the hotel/casino argued that it had the right to bar non-employees from entering its property to engage in union handbilling.

In its decision below, 356 NLRB No. 119 (March 25, 2011), the Board had said it was addressing only the “narrow” situation where “a property owner seeks to exclude, from nonworking areas open to the public, the off-duty employees of a contractor who are regularly employed on the property in work integral to the owner’s business, who seek to engage in organizational handbilling directed at potential customers of the employer and the property owner.” (Emphasis added.)

The Board held that a property owner may prohibit off-duty employees of a subcontractor from engaging in handbilling to customers only where (i) it can demonstrate that activity of the subcontractor’s employees “significantly interferes” with the owner’s use of the property; or (ii) there is another legitimate business reason to justify the exclusion.  “The need to maintain production and discipline” (as defined by the Board’s case law) are “legitimate business reasons.”  Here, because the hotel/casino could demonstrate neither, its barring of access to the contractor’s employees was deemed a violation of the National Labor Relations Act.

In affirming the Board’s decision, the court held that “the governing statute and Supreme Court precedent grant the Board discretion over how to treat employees of onsite contractors for these purposes.”  Slip op. at 6.  The court also rejected the hotel/casino’s argument that its actions were justified because the targets of the handbilling were not just fellow employees but customers of the restaurant, and that the area adjacent to the restaurant entrance was a “working area” where handbilling could be banned.  Slip op. at 7-8.  As to both matters, the court held the Board was acting well within its authority.

The Board’s decision, which we originally reported on here, is of a piece with other recent Board decisions broadening the rights of employees to engage in protected concerted activity, with or without a union.

In one of its last rulings before Member Becker’s recess appointment ended, the National Labor Relations Board (“NLRB”) has held that individual agreements between an employer and an employee covered by the National Labor Relations Act (“NLRA”), which require the arbitration of employment-related claims arising under other federal and state statutes, but do not allow class actions, are illegal.  D.R. Horton, Inc., 357 NLRB No. 184 (January 3, 2012).  

The case involved D.R. Horton’s Mandatory Arbitration Agreement (“MAA”).  Under the MAA all employees were individually prohibited, as a condition of employment, from pursuing class or collective actions in any forum, judicial or arbitral. The Board held that this violated the employee’s right “to engage in  . . . concerted activities for . . . mutual aid or protection” under Section 7 of the NLRA, 29 U.S.C. § 157.  

The decision hinged on four principle factors.  First, the Board recognized that participating in a class action employment related suit is protected under Section 7 of the NLRA. 

Second, the Board held that the maintenance of the MAA is unlawful under the test set out in Lutheran Heritage Village-Livonia, 343 NLRB 646 (2004), because the MAA explicitly restricts activities protected by Section 7. 

Third, the Board cited Supreme Court cases – notably National Licorice Co. v. NLRB, 309 U.S. 350 (1940) and J.I. Case Co. v. NLRB, 321 U.S. 332 (1944) – for the proposition that individual employment contracts cannot waive rights guaranteed by the NLRA.  

Fourth, the Board cited the Norris-LaGuardia Act, 29 U.S.C. §101 et seq. ("N-LG Act"), public policy against interference with “concerted activities for the purpose of  . . . mutual aid or protection” (N-LG Act §102) and its provision that “any . . . undertaking or promise in conflict with [that] public policy . . . shall not be enforceable in any court of the United States” (N-LG Act §103).  This public policy informed the Board’s view that the MAA was illegal.  

Notably, the Board distinguished the ruling in 14 Penn Plaza LLC v. Pyett, 356 U.S. 247 (2009), in which a union, in a collective bargaining agreement, agreed to individual arbitration in lieu of judicial or arbitral class actions for covered employees.  The Board recognized it was well settled that a union may waive certain Section 7 rights of the employees it represents in exchange for concessions from the employer.   

The Board also averred that its decision did not bring the NLRA into conflict with the Federal Arbitration Act (“FAA”) as interpreted and applied in the U.S. Supreme Court’s holding in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991) and its progeny.  In Gilmer, the Supreme Court held that an individual arbitration agreement may not lawfully require that a party forgo substantive rights afforded by statute. 

Here, the Board held, its ruling was consistent with Gilmer and the FAA, because the MAA required employees to forego the NLRA Section 7 substantive right to engage in the concerted activity of filing a class action.  (The Board distinguished the right to file a class action from the right to maintain it under Rule 23 of the Federal Rules of Civil Procedure.)  The Board noted that if there were a conflict between the FAA and the NLRA, then the FAA would also conflict with the N-LG Act. In such a circumstance, the Board stated that the FAA would have to yield, because the N-LG Act was enacted seven years after the FAA, and Section 15 of the N-LG Act repealed all acts and parts of acts in conflict with the N-LG Act. 

Finally, the Board side stepped the Supreme Court’s recent decisions in AT&T Mobility v. Concepcion, 131 S.Ct. 1740 (2011) and Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S.Ct. 1758 (2010), distinguishing them principally because neither case involved employment agreements or a waiver of rights protected by the NLRA.  

Because Member Hayes was recused in this case there was no dissent.  

In the interests of full disclosure . . . .

I was the General Counsel who issued GC Memorandum 10-06 (June 16, 2010), which the Board specifically rejected in its decision.  In that memorandum I attempted to do what the Board claimed to be doing – i.e., strike the appropriate balance between the NLRA and the FAA.  The difference is, I paid more heed to the other federal, state and local statutes at issue, and thus I struck a very different balance. 

It is important to keep in mind that the claims at issue in these dispute resolution systems do not arise under the NLRA, but under other federal, state and local employment laws, such as Title VII or state human rights laws.  I began with the notion that it was not the Board's province to decide what was necessary to vindicate rights under those other federal and state employment law statutes.  The legislatures which enacted them and the officials who enforce them should do that.  

To that end, I felt that the Board as an institution should defer to the well established judicial procedures for determining whether an employer's employment dispute arbitration system was fair and allowed employees to vindicate their rights under those other statutes.  Courts routinely make these judgments and can decide whether or not class actions are necessary -- if they are not, then an employer's system should be allowed to stand; if so, then the employer would have to reform its system to account for that.  These challenges should be decided on a case by case basis by the courts, as they are now, and not by the decisional fiat of the NLRB.  

It was my view that the only guarantee of a class action under the NLRA in these circumstances should be for the purpose of bringing a challenge to an employers system, not for vindicating underlying employment claims.  I felt this was the proper balance and so stated in GC Memorandum 10-06, and it was on this basis that the complaint in this case was first issued.  As this case and others like it are litigated through the federal court system, I hope this balancing test, or something much like it, emerges from the process.

It remains to be seen how this will ultimately play out.  I think this issue will likely require the Supreme Court to once again step in and resolve a conflict involving the terms of an arbitration agreement and the requirements of federal law, this time under the FAA, the NLRA, and the N-LG Act – as well as the myriad other federal, state and local statutes involved.  In the meantime, the many employers who have these types of agreements have had the legal rug pulled out from beneath them, and are once again exposed to the possibility of class action law suits over employment claims.

The period for filing comments has now expired both for the NLRB’s proposed election regulations (killing the message by drastically shortening the time frame within which an employer may communicate with its employees between a union election petition and the secret ballot election), and the Department of Labor’s amendments to the persuader regulations (killing the messenger by imposing draconian reporting rules intefering with the attorney client privilege and the ability to obtain legal advice on a range of union related issues).  It is now anticipated that both sets of regulations will be promulgated in the next few months.

The legal ability of the NLRB to issue the final regulations, however, is open to question.  Currently, the Board has three members:  Chairman Mark Pearce, Member Craig Becker and Member Brian Hayes.  The NLRB has long maintained a custom and practice of not changing existing law or overruling case precedent without three members voting to do so.  Because the proposed regulations would dramatically overhaul existing agency election practices and would overrule a number of existing case law precedents related to the conduct of elections, it appears that they would require three votes under the Board's long maintained custom and practice.  However, given Board Member Brian Hayes’ dissent when the proposed election rules were first announced, it is likely that the NLRB now has only two  members – Chairman Mark Pearce and Member Craig Becker – who will vote to issue the regulations.  Chairman Wilma Liebman, who would likely have been the third vote to do so, left the Board at the expiration of her term on August 27. 

Further complicating the picture is that Member Becker’s term will end when this session of Congress adjourns at the end of 2011 or in early 2012, bringing the membership of the Board down to only two members.  Because the Board may not function with only two members, as the Supreme Court decided in New Process Steel, L.P. v. NLRB, 560 U.S. __, 130 S. Ct. 2635 (2010), this would leave the Board unable to act on any cases or the regulations.  Faced with this prospect, the question is whether, while the Board still has three members, Chairman Pearce and Member Becker would – in violation of the NLRB’s long held practice – issue the final election regulations before the Board drops to two members, despite having only two votes to do so.  If so, it could become an issue in any post-regulation review proceedings. 

The NLRB General Counsel's Office has issued a memorandum ordering regional directors to send to the Division of Advice all cases involving information requests related to relocations and other business decisions analyzed under Dubuque Packing Co., 303 NLRB 286 (1981).  The Acting General Counsel is looking for a case or cases to send to the Board so it can consider whether to change an employer’s obligation to provide information to the union regarding business relocation decisions.  This memo comes on the heels of Chairman Liebman’s concurrence in Embarq Corp., 356 NLRB No. 125 (2011), where she expressed her concern with the current state of the law under the Dubuque Packing test and suggested an alternative approach to handling union information requests.  

In her concurring opinion in Embarq, Chairman Liebman stated that she felt there is an anomaly in the Dubuque Packing analysis because it does not “compel the production of information at the time when it is sought [by the union] . . . .”  The Chairman suggests that a better approach would be for the company advise the union whether the relocation plan “turns on labor costs.”  If it does, then the employer would be obligated to provide the union with information regarding labor costs and “advise” whether it believes the union “could make concessions that could change [the employer’s] decision.”  This would, in the Chairman’s view, eliminate “after-the-fact” assessments based on “guesswork” which is unhelpful to either party.  She indicated that she would be willing to revisit Dubuque Packing in a later appropriate case. 

Acting General Counsel, unsurprisingly, did not let any grass grow under his feet on this one.  In the memorandum to the field, Associate General Counsel Richard Siegel – speaking for the Acting General Counsel – said:  “The General Counsel wishes to examine the concerns raised by Chairman Liebman in Embarq, and determine whether to propose a new standard in cases involving these kinds of information requests.  That determination will be made based upon a case-by-case review of submissions to the Division of Advice.” 

As discussed in a previous blog post on Chairman Liebman’s concurrence, her proposed alternative approach to information requests would be a significant departure from the current state of the law.  Such a change by the Board might improve the process in some cases, but it could also significantly burden decision making in situations where a union simply seeks to delay a relocation, even if there is no genuine ability or desire to make needed concessions in bargaining.     

Of course, this effort at the Board is only at the case-identification stage, so any change in the law must await further developments.

A California federal district court granted temporary injunctive relief, requiring the purchaser of a bankrupt hospital to temporarily recognize and bargain with the union that represented nurses employed by the hospital’s seller, pending the outcome of a National Labor Relations Board (“NLRB”) hearing.  

After a bankruptcy court granted the seller’s motion to reject the collective bargaining agreement it had with the California Nurses Association (“CNA”), the purchaser, Avanti Health System, LLC (“Avanti”), recruited and hired employees from the hospital.  

Under the National Labor Relations Act (“Act”), a successor employer has a duty to bargain when there is a “substantial continuity of identity in the business enterprise.”  Generally, “substantial continuity” is established when the new employer conducts essentially the same business as the former employer and hires a majority of its workforce from the union represented bargaining unit of the predecessor employer. 

Avanti refused to bargain with the CNA, maintaining that it was not a successor employer because it did not hire a majority of its nurses from the bargaining unit of the predecessor’s represented nurses. CNA then filed an unfair labor practice charge with the NLRB.  

The NLRB Regional Director conducted an investigation and issued a complaint, alleging that Avanti had indeed hired a majority of its workforce from the predecessor’s represented bargaining unit, and therefore has a duty to bargain with the union.  

One might wonder how a dispute could arise over a simple arithmetic calculation like the majority issue here.  In this case there are two reasons.  First, Avanti maintains that some of its hires are supervisors, and that could affect the majority calculation since supervisors are not “employees” within the meaning of the Act. 

Second, disputes about majority calculation frequently depend on when the “snapshot” of the new employer’s workforce is taken.  Board law dictates that the relevant time is when the new employer has hired a representative compliment of employees.  Here, the parties dispute when a representative compliment was achieved.  Obviously, differences on that issue can lead to disputes about the majority calculation. 

In addition to filing a complaint before the NLRB, the regional director filed a petition for an injunction under section 10(j) of the Act with the United States District Court for the Central District of California, seeking an interim order requiring Avanti to bargain with CNA pending disposition of the unfair labor practice complaint by the NLRB. 

In applying the Supreme Court’s standard, the district court granted the regional director’s petition because, according to the court, the regional director had established: 

• a likelihood of success on the merits;
• a likelihood of irreparable harm in the absence of preliminary relief;
• the balance of equities tipped in the regional director’s favor; and
• an injunction was in the public interest.   

In determining the likelihood of success on the merits, the court had to consider conflicting evidence as to whether Avanti really employed a majority of the seller’s nurses.  The court noted its intent to give “considerable deference” to the Board on such a petition.  In doing so, the court deferred to the regional director’s methodology in determining whether CNA nurses established a majority of the hospital’s current nursing staff.  

The court also reasoned that withdrawal of representation before the final decision could result in irreparable harm, while the hardships respondents claimed as a result of injunctive relief were minimal because it was “not compelled to do anything except bargain in good faith.”  

This situation presented by this case is not unusual.  Frequently employers who acquire assets where the seller's employees were represented by a union are subject to successorship claims.  But employers should take note of the court’s willingness to defer to the Regional Director's determinations on such issues as majority status and representative compliment of employees, as well as the NLRB's willingness to seek and the court's willingness to grant an injunction, requiring an employer to engage in collective bargaining as part of an interim remedy, even when the employer disputes its successor status.