Labor Relations & Wages Hours Update August 2013

However, the First Amendment offers no protection when “petitioning activity ostensibly directed toward influencing governmental action, is a mere sham to cover an attempt” to violate federal law. When the purported sham litigation encompasses a series of legal proceedings rather than a single legal action, the appeals court concluded that the sham litigation standard of California Motor Transp Co v Trucking Unlimited should govern. Thus, the district court should conduct a holistic evaluation of whether “the administrative and judicial processes have been abused.”

Although the courts are a medium by which citizens may exercise their First Amendment right to petition their government, the act of petitioning those courts may not serve as the means to achieve illegal ends. Under this “sham litigation” exception to the Noerr-Pennington doctrine, the Fourth Circuit held that the developers’ pleadings were sufficient to show that the unions have abused their right to petition the courts beyond the point of constitutional protection.

In this instance, the Fourth Circuit concluded that the record presented a genuine issue of material fact as to whether the unions indiscriminately filed (or directed) a series of legal proceedings without regard to the merits and for the purpose of waging a secondary boycott. As a consequence, the appeals court vacated the district court ruling on this point and remanded the matter for a determination of whether the unions waged a secondary boycott in the manner alleged in the complaint.

The case number is 12-1429.

Attorneys: Ira Lee Oring (Fedder & Garten) for Waugh Chapel South, LLC. Michael Timothy Anderson (Murphy Anderson) for United Food and Commercial Workers Union Local 27. Sharon McNeilly Goodman (Slevin & Hart) for Mid-Atlantic Retail Food Industry Joint Labor Management Fund.

By Lorene D. Park, J.D.

Affirming judgment in favor of two employees who were laid off without notice in violation of the WARN Act, the Fifth Circuit found no error in the lower court’s finding that two Texas facilities were a single site of employment for purposes of determining that there had been a “mass layoff” (Davis v Signal International Texas GP, LLC, August 28, 2013, Reavley, T). While the general rule is that two locations are considered separate sites, this case fell under an exception for “truly unusual” circumstances because employees had been moved around after Hurricane Ike, though many regularly worked at both locations. The appeals court also found no error in the lower court’s selection of a “snapshot” date for purposes of determining employment levels.

From July to September 2009, Signal International, a marine services and shipbuilding company, terminated 159 full-time workers at two facilities in Texas. Two employees filed suit, alleging the terminations constituted a mass layoff under the WARN Act and that Signal violated the Act by failing to provide 60 days advance written notice as required.

The central issue before the district court was whether there had been a mass layoff. Concluding that Signal’s two facilities in Orange, Texas constituted a single site of employment under a regulatory exception for “truly unusual organizational situations,” the court measured workforce levels across the two facilities. It also found that a proper “snapshot” for measuring the workforce levels was July 24, the date of the first layoff included in the employee’s allegations. With that in mind, the court ruled that there had been a mass layoff during the 90-day period following July 24, 2009. It entered judgment against Signal and the company appealed. The Fifth Circuit affirmed.

Single site. Noting that the WARN Act does not define what constitutes a single site of employment, the Fifth Circuit looked to Department of Labor regulations for guidance. The general rule, stated the court, is that separate facilities are separate sites. However, there are exceptions. Under 20 CFR 639.3(i)(8), the term “single site of employment” may also apply to certain “truly unusual organizational situations.” Finding little authority on what constitutes such a “truly unusual” situation, the court nonetheless found that this case qualified.

Signal’s two facilities consisted of a fabrication facility covering 77 acres, called “the yard,” and an administrative office that was originally 35 miles away but was moved to Orange to consolidate support and have personnel closer to the shipyard. Administrative workers were housed in mobile office units at the periphery of the yard. The parties disputed whether the units were permanent but the administrative staff had been there for “longer than a few months.” Three months after the move, Hurricane Ike struck the Gulf Coast, causing severe damage to the yard.

Due to the hurricane damage, Signal moved most of its administrative employees a mile away to a two-story office complex called “the annex.” Many administrative workers stayed at the yard, however. At the time the employees were laid off, employees housed in the annex regularly carried out business in the yard and vice versa. Some had offices in both locations and it was undisputed that the general manager oversaw the day-to-day operations at both facilities.

Based upon these facts, and in particular on the regular sharing of staff between the annex and the yard, the appeals court found that the two facilities constituted a single operation that served the same operational purpose: the production and supply of platforms, rigs, and vessels. The court also pointed to the importance of geographic proximity, noting that while the facilities were noncontiguous, they were close enough to be essentially one site. For these reasons, the Signal facilities constituted a “truly unusual organizational situation” and were a single site of employment for purposes of the WARN Act.

“Snapshot” date. Under 20 CFR 639.5(a)(2), for purposes of determining whether there has been a mass layoff, the number of employees is to be measured on the date the first notice was required to be given. Signal argued that here the proper snapshot date would be May 25, 2009, 60 days before the first alleged layoff, and the district court erred by using July 24, 2009 instead.

Finding no error in the lower court’s snapshot date, the appeals court noted that the district court relied on an example in the WARN Act preamble that was identical to the case at hand (involving rolling layoffs over a 90-day period) and applied deference to the agency’s interpretation of its own regulations. Further, the CFR section at issue expressly permits divergence from the “date the first notice is required” in “unusual circumstances” such as the date being “clearly unrepresentative” of ordinary employment levels. Here, there was no evidence on staffing levels for May 25 so that date was unrepresentative. In the appellate court’s view, the district court had “plenty of reasons” for using July 24 as the snapshot date, including that it was the “Day 1” date embraced in the WARN Act preamble and that the parties and the court had been relying on for over two years.

For these reasons, the district court did not err in concluding there was a mass layoff under the WARN Act.

The case number is 12-41262.

Attorneys: Bryan A. Terrell (Weller, Green, Toups & Terrell) for Philip A. Davis. David S. Bland (LeBlanc Bland) for Signal International Texas GP, LLC.

6th Cir.: NLRB did not abuse discretion in finding CNA-only bargaining unit to be appropriate

By Ronald Miller, J.D.

A nursing home operator was denied its petition to review the NLRB’s order that a bargaining unit composed of certified nursing assistants (CNAs) constituted an appropriate unit, ruled the Sixth Circuit (Kindred Nursing Centers East, LP dba Kindred Transitional Care and Rehabilitation - Mobile v NLRB, August 15, 2013, Martin, B). Where the Board explained why it adopted the approach that it did, it acted within its discretion in adopting a community-of-interest test based on some of its prior precedents. Consequently, the Board did not abuse its discretion in applying a version of its traditional community-of-interest test to find a CNA-only bargaining unit to be appropriate.

The employer operated a nursing facility with no history of collective bargaining. Employees at the facility were placed in one of eight separate departments: nursing, nutrition services, resident activity, maintenance, administration, medical records, central supply, and social services. The nursing department consisted of 53 CNAs, along with licensed practical nurses (LPNs) and Registered Nurses (RNs). LPNs supervised the CNAs and were in turn supervised by the RNs. The CNAs worked one of three eight-hour shifts and worked directly with up to 17 residents. Typically three to five CNAs were assigned to work on each nursing floor.

The union petitioned to represent a unit of 53 full-time and regular part-time CNAs. At proceedings before a hearing officer, the employer argued that the bargaining unit should be expanded to include the additional service and maintenance employees. Ultimately, an NLRB regional director found that the petitioned-for unit of CNAs constituted an appropriate unit in which to conduct an election. The union won the election, but the employer filed a timely request to review the regional director’s decision and the Board granted review.

When the employer refused to bargain, the union filed an unfair labor practice charge. The employer was found to have violated the NLRA. It petitioned for review of the Board’s determination that the bargaining unit of CNAs in this case was appropriate.

The Sixth Circuit first noted that it must uphold the Board’s bargaining unit determination “unless the employer establishes that it is arbitrary, unreasonable, or an abuse of discretion.” Further, it had to uphold the Board’s interpretation of the NLRA if it is reasonably defensible. On appeal, the employer did not argue that the Board abused its discretion in overruling Park Manor, rather it argued that the Board abused its discretion in the approach it adopted in Specialty Healthcare II for determining the appropriateness of bargaining units.

First, the appeals court addressed the employer’s argument that Specialty Healthcare II adopted a new approach and does not return to applying the traditional community-of-interest approach. Because of the wide discretion given to the Board under Sec. 9(b), judicial review of bargaining unit determinations is limited. In making a unit determination, the Board must select an appropriate bargaining unit, and it is not required to select the most appropriate unit. However, the Board does not exercise its authority aimlessly in defining a bargaining unit, but focuses on whether the employees share a community of interest. The community-of-interest test requires simply that groups of employees in the same bargaining unit share a community of interests sufficient to justify their mutual inclusion in a single bargaining unit.

The case numbers are 12-1027 and 12-1174.

Attorneys: Charles P. Roberts, III (Constangy, Brooks & Smith) for Kindred Nursing Centers East, LP. Robert J. Englehart for NLRB. Matthew J. Ginsburg, AFL-CIO Legal Department, for Intevenor.

7th Cir.: Non-union company bound to arbitration provisions of collective bargaining agreement under “single employer” doctrine

By Ronald Miller, J.D.

A district court did not err in finding that two tile installation companies, one union and one non-union, were a “single employer,” ruled the Seventh Circuit (Lippert Tile Co, Inc v International Union of Bricklayers and Allied Craftsmen, District Council of Wisconsin, August 1, 2013, Williams, A). The appeals court agreed that, for all practical purposes, the companies functioned as a single entity. While the distinction between the “union” and “non-union” companies was useful, the bottom line reason the new companies were created was to increase the employer’s share of the tile installation market by providing the same service at lower prices.

Single employer doctrine. Lippert Tile owned a tile installation company that employed union workers. In 2004, in order to meet the demand by customers for cheaper non-union labor, the company created a new tile company, DeanAlan, solely to serve this market. In 2010, after the union discovered that DeanAlan had been created to perform non-union tile work in the same region, it filed a grievance under the collective bargaining agreement with a joint arbitration committee (JAC), seeking union benefits for the non-union tile installers working at the new company. After the JAC granted this relief, the employers petitioned to vacate the arbitration award, arguing that the new company should not be bound because it was not a party to the CBA. However, the district court granted enforcement of the arbitration award, finding that the new company could be treated one and the same with the old company for purposes of the CBA under the “single employer” doctrine. The companies appealed.

The Seventh Circuit agreed with the district court that Lippert Tile and DeanAlan constituted a single employer, noting that they were centrally operated by the same entity and so were one and the same for purposes of arbitrability under the CBA. DeanAlan rented trucks from and ordered its supplies through Lippert Tile, the Lippert Group provided administrative services for the two companies, maintained business records, processed payroll, handled billing and managed bank accounts for both companies. Additionally, the Lippert Group provided both companies with office and warehouse staff. But the companies had separate employees and customers, different corporate officers, separate bank accounts and separate lines of credit and insurance programs.

As an initial matter, the Seventh Circuit noted that it had limited jurisdiction in an appeal to challenge the district court’s enforcement of the JAC award under LMRA Sec. 301. Section 301 essentially limits the federal court’s jurisdiction to applying the terms of a CBA, so when a CBA provides for submission of contractual disputes to an arbitrator, the court is confined to ascertaining whether the party seeking arbitration is making a claim which on its fact is governed by the contract. Thus, the court was responsible only for the question of arbitrability.

For essentially the same reasons set forth by the district court, the Seventh Circuit concluded that the three companies were a “single employer” for purposes of enforcing the arbitration provisions of the CBA. With respect to day-to-day operations, the same entity, the Lippert Group, maintained business records, processed payroll, handled billing and managed bank accounts of both companies. Moreover, the Lippert Group made the critical decision of which company should bid on a particular project. While the companies did not share the same space, they were both housed in the same warehouse. Although they employed different installers and served different markets, they served the same geographic area and performed the exact same work. Thus, the appeals court found operations extensively interrelated.

Although Lippert Tile and DeanAlan technically had different corporate officers, because the same entity controlled the bidding process and administrative tasks for both companies, the “common management” factor weighed in favor of a single employer finding. Finally, the appeals court found that there was centralized control of labor relations because it was the owners’ decision in the first place to create a new company that would give room to a new, non-union labor system solely to serve the non-union market. Thus, under the “single employer” doctrine, the JAC had the power to decide whether the companies’ double-breasting practice violated the CBA and to issue a binding arbitral award. The judgment of the district court was affirmed.

The case number is 12-2658.

Attorneys: Thomas W. Scrivner (Michael Best & Friedrich) for Lippert Tile Co, Inc. Matthew Ruehl Robbins (Previant, Goldberg, Uelmen, Gratz, Miller & Brueggerman) for International Union of Bricklayers and Allied Craftsmen, District Council of Wisconsin.

7th Cir.: Employee’s state law retaliatory discharge claim not subject to complete preemption under LMRA Sec. 301

By Ronald Miller, J.D.

An employee’s state tort claim of retaliatory discharge for filing a workers’ compensation claim was not subject to complete preemption under LMRA Sec. 301, and so was remanded to state court, ruled the Seventh Circuit (Crosby v Cooper B-Line, Inc, August 7, 2013, Wood, D). The appeals court rejected the employer’s contention that the employee’s retaliatory discharge suit was a disguised Sec. 301 action that arose under federal law. Here, the court observed that none of the elements of the employee’s retaliatory discharge claim required an interpretation of the collective bargaining agreement governing the terms of his employment. Thus, removal of his claim from state court was improper.

The employer is a manufacturer of electrical components and tools, and the employee worked in one of its seven divisions. On July 28, 2010, he severed a portion of his middle finger as he was attempting to remove a piece of metal from a bundle. He had asked a coworker to kick the bundle in order to dislodge the pieces as he removed them. The company frowned on this procedure. Thereafter, the employee sought medical attention, and filed a medical and disability claim under the Illinois Workers’ Compensation Act.

The employee alleged that his firing had nothing to do with safety violations, but occurred as a result of his filing a workers’ compensation claim. In support of this theory, he pointed to the timing of his firing, the sudden appearance of new safety rules, emails exchanged between company personnel expressing a desire to fire him, and emails from the company’s HR manager stating that transferring him to a different part of the plant would result in a more costly workers’ compensation award. Thus, he filed suit in state court alleging that he was fired in retaliation for asserting a workers’ compensation claim. However, the employer removed the case to federal court on the basis that his retaliatory discharge claim was really a claim under a collective bargaining agreement and was necessarily covered by Sec. 301.

The district court granted the employer’s motion for summary judgment, finding that the employee’s retaliatory discharge claim failed on the merits. On appeal, the Seventh Circuit remanded the matter to the state court.