Labor board goes against employers - again

February 05, 2012

Chicago Daily Law Bulletin

Author(s): Frank J. Saibert

In campaign advertisements, Mitt Romney blasts the National Labor Relations Board (NLRB) for its apparent pro-union leadership. Three recent anti-employer decisions by the board will give the Republican presidential candidate more grist for the mill.

In Camelot Terrace, 357 NLRB No. 161 (Dec. 30, 2011), the board ruled 2-1 that two Illinois nursing homes charged with unfair labor practices must reimburse both the board and the union that filed the charges for attorney fees and expenses incurred in the prosecution of the charges. This remarkable result got obtained despite the fact that the National Labor Relations Act (NLRA) contains no fee-shifting provisions.

The nursing homes, both in Illinois, had common ownership. During 2007, the board certified the Service Employees International Union (SEIU) Local 4 as the bargaining representative for employees at the homes. Local 4 thereafter filed unfair labor practice charges with the board, alleging that the homes were not bargaining in good faith for initial labor contracts.

The nursing homes ultimately settled these charges, agreeing to bargain in good faith. The SEIU later claimed that the homes welshed on the deal by restricting the length of the bargaining sessions, withholding requested information about the bargaining unit and going around the union to deal directly with employees. The union further alleged that Camelot Terrace illegally fired an employee pursuant to an attendance policy that the home promulgated without union input.

A unanimous board found that the homes "blatantly circumvented the bargaining process and disregarded their statutory bargaining obligation … " In the board's view, the homes violated not just the act, but the prior settlement agreement for the initial unfair labor practice charges. The board ordered the homes to remedy their unlawful actions by compensating the SEIU for the expenses it incurred during the fruitless bargaining.

The board's two Democratic members, (one a former high-level SEIU attorney) went a big step further by then ordering the nursing homes to reimburse the SEIU and the NLRB for litigation expenses in the matter. While acknowledging that the "American Rule" requires litigants generally to fund their own litigation, these two noted that the U.S. Supreme Court has ruled that federal courts possess the "inherent authority" to sanction parties that abuse judicial proceedings.

The board's lone Republican member strongly dissented from the award of litigation costs, noting that the board is not an Article 3 court and, absent express statutory authority to do so, has no "inherent authority" to shift legal fees. Expect an appeal.

In a second gift to Big Labor, the board, again by a 2-1 vote, held that a Teamsters local union did not unlawfully interfere with a representative election by circulating a campaign flier that contained a voter's photograph without his consent. Enterprise Leasing Co.-Southeast LLC, 357 NLRB No. 159 (Dec. 29, 2011).

The election vote was close — the Teamsters won, 44 to 41. The employer objected to the results, claiming the Teamsters' use of the employee's photograph without his consent inhibited the employee from criticizing the union and misled other employees about the Teamsters' level of support in the run-up to the election. The board majority overruled the objection, claiming the flier contained no misrepresentations.

Again, the board's lone Republican member dissented. Noting that the board in Allegheny Ludlum Corp. , 333 NLRB 734 (2001) held that employers violate the act when they depict nonconsenting employees as supporting or opposing a union, the dissent found no justification for giving the Teamsters a pass. Wrote the dissent, "I can think of no valid justification for the board to apply different standards to a union's unauthorized use of an employee's image in campaign propaganda and my colleagues offer none." The board majority's double standard in this regard is as inexplicable as it is obvious.

Finally, in D.R. Horton, Inc., 357 NLRB No. 184 (Jan. 3, 2012), the board's two Democrats ruled that the act prohibits employers from having mandatory arbitration policies that waive employee rights to participate in class-action employment litigation. According to the board, such mandatory arbitration requirements interfere with the employees' statutorily protected right to engage in concerted activity for their mutual aid or protection.

D.R. Horton employed Michael Cuda as a superintendent. Upon his hire, he signed Horton's standard arbitration agreement, which stated that an arbitrator "may hear only employee's individual claims and does not have the authority to fashion a proceeding as a class or collective action or to award relief to a group or class of employees in one arbitration proceeding."

In 2008, Cuda notified Horton of his intent to initiate arbitration of Fair Labor Standards Act (FLSA) claims against Horton on a nationwide, class basis. Horton resisted, citing the arbitration contract's "no class claims" provision. Cuda turned to the board for relief.

In striking down the arbitration agreement, the board reminded that the Supreme Court long ago ruled that resorting to litigation to improve working conditions is an employee concerted activity protected by law, citing Eastex Inc. v. NLRB. 437 U.S. 556 (1978). The board reasoned that this logic applies to arbitration. Noting that it was not mandating class arbitration to protect employee rights under the NLRA, the board claimed its holding was limited to proscribing the employer practice of compelling "employees to waive their NLRA right to collectively pursue litigation of employment claims in all forums, arbitral and judicial."

D.R. Horton a very significant decision. If allowed to stand after appeal, it will dramatically shift the balance to court class-action employment litigation and away from the values of private arbitration embodied by the Federal Arbitration Act. It will be a boon to the plaintiff's employment bar and will give organized labor yet another arrow in its quiver. After all, what major union organizing drive or corporate campaign these days doesn't enlist some type of pubic collective litigation, under the FLSA or some other employment law, as a tactic?

Reprinted with permission from Chicago Daily Law Bulletin.

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