By Ronald Miller, J.D.

As proprietor of Los Angeles International Airport (LAX), the City of Los Angeles could require businesses at the airport to accept a contractual condition imposing a “labor peace agreement” in licensing agreements for service providers, ruled a divided Ninth Circuit panel. A trade association representing service providers at LAX had standing to challenge the city’s actions, the appeals court determined. Nevertheless, because the city was acting as a market participant, and there was no indication that Congress intended to preempt actions taken by state and local governments in this capacity, the Ninth Circuit affirmed the district court’s dismissal of the complaint. Judge Tallman filed a separate opinion concurring in part and dissenting in part (Airline Service Providers Association v. Los Angeles World Airports, August 23, 2017, Friedland, M.).

Airlines operating out of LAX hire third-party businesses to refuel and load planes, take luggage and tickets, help disabled passengers, and similar services. The city licenses those service providers using a contract that imposes certain conditions. One condition, section 25, requires service providers to enter a labor peace agreement with any employee organization that requests one. If such an agreement is not finalized within 60 days, then the dispute must be submitted to mediation and if mediation is unsuccessful, to binding arbitration. Any labor peace agreement that results from this process must include provisions prohibiting picketing, boycotting, work stoppage, or any other economic interference.

Two trade associations with members that operate at LAX brought suit challenging section 25. The trade associations argued that, because the city operates LAX, the contractual conditions in LAX’s standard licensing agreement are effectively municipal regulations. They further contended that section 25 was preempted by the NLRA, the RLA, and the Airline Deregulation Act (ADA). The district court dismissed the complaint.

Standing. The Ninth Circuit concluded that one of the trade associations, the Airline Service Providers Association (ASPA), had standing to pursue all of its claims. An association like the ASPA had standing if (1) its individual members would have standing in their own right, (2) the interests at stake in the litigation are germane to the organization’s purpose, and (3) the case may be litigated without participation by individual members of the association. To have standing in their own right, an association’s members must have “suffered an injury in fact,” that injury must be “fairly traceable to the challenged conduct of the defendant,” and the injury must be “likely to be redressed by a decision in their favor.”

The appeals court found that the ASPA had alleged a sufficient injury in fact. It alleged that its members would be forced into unwanted negotiations that must terminate in either an agreement or arbitral award. The Ninth Circuit has recognized that “the economic costs of complying with a licensing scheme can be sufficient for standing.” Here, ASPA members will at least have to devote resources, to participate in negotiations, mediation, and possibly binding arbitration over a labor peace agreement which they would not otherwise be required to discuss. Moreover, the time spent in negotiations was itself a concrete injury.

Further, the ASPA has shown a sufficient “line of causation” between the city’s actions and this injury. The city has made section 25 a mandatory component of its standard licensing contract for service providers at LAX, and that provision will force service providers to spend time negotiating a labor peace agreement. Finally, the remedies ASPA sought would redress the harm alleged. Because the ASPA’s individual members would have standing in their own right, the first prong of the test for associational standing was satisfied.

The second and third prongs were satisfied as well. The ASPA asserted that it had an organizational interest “in the consistent enforcement of unitary federal regulation of airline industry labor relations.” As to the third prong, the parties have identified no reason that individual ASPA members must participate individually in this case. Accordingly, ASPA met all the requirements for associational standing.

Preemption. The appeals court next turned to ASPA’s preemption arguments. When a state or local government buys services or manages property as a private party would, the courts presume that its actions are not subject to preemption. Only if a statute evinces an intent to preempt proprietary actions by a state or local government is the presumption overcome. Here, the Ninth Circuit found that the city was acting as a market participant, and not a regulator, when it adopted section 25. And, because nothing in the NLRA, RLA, or ADA showed that Congress meant to preempt states and local governments from actions taken while participating in markets in a nonregulatory capacity, the appeals court concluded that section 25 was not preempted by those federal statutes.

In deciding whether a state or local government is acting as a market participant or as a regulator, the court applies the two-prong test articulated in Cardinal Towing & Auto Repair, Inc. v. City of Bedford. Here, the city satisfied both prongs of the Cardinal Towing test. First, the city was attempting to avoid disruption of its business, and so was acting as a market participant under the first prong of the test. Moreover, its actions independently qualified as market participation under Cardinal Towing’s second prong. That is, the decision to adopt section 25 was narrowly tied to a “specific proprietary problem”—service disruptions at LAX. Thus, the city satisfied the second prong. Consequently, the appeals court found the city was a market participant when it added section 25 to the LAX licensing contract.

Presumption not rebutted. Finally, the appeals court turned to consider whether Congress intended the NLRA, RLA, or ADA to preempt actions taken by states and local governments in their capacity as market participants. In Boston Harbor, the Supreme Court held that the NLRA does not preempt state or local government actions taken as a market participant, so the ASPA’s NLRA preemption theory failed. Likewise, as for preemption under the RLA. Finally, the appeals court determined that Congress did not intend the ADA to upset proprietary conduct like that at issue here. Thus, the ASPA failed to rebut the presumption that preemption applies only to regulatory conduct.

Partial concurrence and partial dissent. Judge Tallman agreed with the majority that the ASPA had standing to assert its claims. But he disagreed with the majority’s conclusion that the complaint failed to state a plausible claim that the city enacted section 25 as a regulatory measure rather than a proprietary one. He wrote that the complaint sufficiently alleged that section 25 was an overly broad and facially suspect regulation of labor relations that contravened the delicate congressional balancing of national labor relations policy affecting key facilities of interstate commerce.

By Pamela Wolf, J.D.

At a June 14 hearing hosted by the House Subcommittee on Health, Employment, Labor, and Pensions, invited witnesses mulled over a triad of legislative proposals that proponents contend would restore balance to federal labor policies. While most of the invited witnesses supported the legislation, one witness saw the bills as not a reflection of sound policy, or an attempt at consistent application of rules, but rather as “a naked political assault on labor unions.”

Legislation under consideration. The bills that comprise the package of legislative reforms under scrutiny at the hearing are the following:

The Workforce Democracy and Fairness Act (H.R. 2776), which would purportedly ensure that workers have the opportunity to make an informed decision in union elections by addressing the NLRB’s “ambush election” rule and micro-union scheme.
The Employee Privacy Protection Act (H.R. 2775), which would, according to sponsors, “roll back extreme and partisan NLRB policies put in place under the Obama administration that jeopardize the privacy of workers and their families.”
The Employee Rights Act (H.R. 2723), which sponsors say would “modernize the union election process, require periodic union re-certification elections, and give workers more control over how their union dues are spent.”

Obama-era NLRB. “Over the last eight years, the board launched an activist agenda aimed at tilting the balance of power toward powerful special interests,” Chairman Tim Walberg (R-Mich.) said. “Unfortunately, it came at the expense of the hardworking men and women who keep our economy moving. Decision after decision by the NLRB restricted the rights of workers and employers … It’s long past time to put an end to these misguided policies.”

Card check representation. In her written testimony, Karen Cox, a worker from Illinois, recounted how she was forced into a union without a choice: “I thought at least we had time to educate ourselves and have a fair vote. But then I came into work one day and was told that the union was in and we were not going to have an election. The company had recognized them through a process called ‘card check.’ This bypasses a secret ballot election, eliminating employees’ rights to make a real choice for or against a union. I had never heard of this before, and it angered me. To me, it was un-American, and many of my coworkers agreed.”

“That’s why I support the Employee Rights Act, which guarantees a secret ballot vote,” Cox said. “I want to ensure that other employees don’t find themselves in the situation my coworkers and I were in—stuck with a union we didn’t have a chance to vote for and that is difficult if not impossible to remove from the workplace.”

“Ambush election” rule. Speaking on behalf of the Society for Human Resource Management, Nancy McKeague, vice president of the Michigan Health & Hospital Association, raised concerns over the NLRB’s “ambush election” rule, which opponents see as giving workers less time to consider the pros and cons of joining a union and forces employers to hand over their employees’ private information to union organizers.

“Unless employers have adequate time to prepare their educational materials and to share this information with their employees, employees will not have adequate time to learn the employer’s perspective on the impact of collective bargaining on the workplace,” McKeague said. She added that the “requirement to provide so much confidential information about an employer’s employees constitutes an invasion of privacy for employees” and “goes against everything that HR professionals have been trained to do.”

McKeague urged passage of the Workforce Democracy and Fairness Act to “restore the balance between the rights of employees, employers, and labor organizations” and the Employee Privacy Protection Act to “[provide] employees the privacy they desire in the 21st century workplace.”

Slowing down the process. McGuireWoods labor attorney Seth Borden spoke in support of the Workforce Democracy and Fairness Act, including its requirement that there be a period of at least 35 days between the filing of a union election petition and the holding of the election. “[The] rights of employees to seek union representation and the equal rights of employees to refrain from such representation must be properly balanced … [The bill] goes a long way to restoring the appropriate balance between all interests involved.”

Borden observed that the Employee Privacy Protection Act would restore the seven-day time frame for “the careful compilation and transmittal of [voter contact] information directly to the National Labor Relations Board,” a procedure he said had “worked sufficiently for nearly fifty years.”

Anti-union reform. Guerino J. Calemine, III, General Counsel for the Communications Workers of America, had a different take on the package of reform bills. “Deceptively short, these bills are chock-full of malicious intent to render elections absurdly undemocratic, strip workers of rights, take control of unions away from union members, drain union treasuries, and otherwise destroy labor unions.”

Calemine laid out what the three bills would do in what he called “nine insidious steps,” among which were these:

Block voter access to union information: The Employee Protection Privacy Act and the Employee Rights Act would make it as difficult as possible for a worker to speak to a union organizer before a union certification election.
Stuff the ballot boxes with “no” votes: Contrary to current law, under the Employee Rights Act, all non-votes would be considered “no” votes, instead of not counting one way or the other.
Eliminate ways for workers to form a union and create new ways for employers to bust a union: The Employee Rights Act would bar employers from voluntarily recognizing unions based on majority support. The bill would also permit employers to manipulate the workforce through turnover, expansion, or other alteration, so that the change exceeds 50 percent of the initial bargaining unit size, triggering a decertification election. The decertification election could occur even if not a single employee wants it—it could be triggered entirely on the employer’s initiative.
Delay a union certification election when workers want one: While the Employee Rights Act’s employer-triggered election method requires an election within a maximum of 30 days of whenever the employer has changed the bargaining unit composition, whenever there is no CBA, under the Workforce Democracy Fairness Act, when workers trigger an election to win union representation, there is a minimum 35-day waiting period before an election can take place.
Play a gotcha game so employers have carte blanche to undermine elections: The Employee Rights Act would impose new penalties on unions found to have interfered with, restrained, or coerced employees in the exercise of their Section 7 rights, or rights to join or refrain from joining a union—liability for lost wages, union dues or fees collected unlawfully, and an unspecified additional amount in liquidated damages. NLRB statistical data for last year showed that 10 times more unfair labor practice charges were filed against employers than against unions, yet the Employee Rights Act would not provide for liquidated damages against employers.
Take control of unions from dues-paying members (so maybe they’ll stop paying dues): the Employee Rights Act would give non-members the same rights as members in voting on contract ratifications and strike authorizations—an entirely new level of free riding.

At the close of the hearing, Chairman Walberg reaffirmed the committee’s commitment to advancing positive reforms, saying, “These are all commonsense proposals that will protect the rights of workers and restore balance and fairness to the rules governing union elections.”

By Kathleen Kapusta, J.D.

Affirming the lower court’s refusal to enforce an EEOC administrative subpoena seeking information from an employer relating to an individual’s charge of disability and pregnancy discrimination, the Tenth Circuit found that while the disability request could have possibly uncovered pattern-or-practice evidence, the lower court did not abuse its discretion in finding the employer’s alleged ADA violation, without more, was insufficient to warrant an expanded investigation. Nor did the lower court abuse its discretion regarding the EEOC’s request related to pregnancy discrimination allegations given the agency’s “paltry explanation” of how it was relevant, the overbreadth of the request, and its burden of showing the subpoena’s relevancy to the charge (EEOC v. TriCore Reference Laboratories, February 27, 2017, Matheson, S.).

Shortly after the phlebotomist began working for TriCore, a medical reference laboratory, she requested accommodations for her rheumatoid arthritis, which was purportedly exacerbated by her pregnancy. After reviewing her doctor’s recommendations that she sit for 75 percent of her shift and avoid exposure to infectious diseases, TriCore determined that she could not safely perform her job. It offered her the opportunity to apply for other positions and when she did not, it terminated her.

After she filed a charge with the EEOC alleging disability and pregnancy discrimination, TriCore explained to the agency that it had provided her a reasonable accommodation by offering her the chance to apply for other positions. Viewing this response as suggesting an ADA violation, the EEOC informed TriCore that it was expanding its investigation, citing its compliance manual for authority. It then requested a complete list of employees who had requested an accommodation for disability (the disability request) and a complete list of employees who had been pregnant while employed at TriCore.

Subpoenaed. When TriCore refused to comply, the EEOC subpoenaed the information. TriCore refused to comply with the subpoena and the EEOC asked the district court to enforce it. Although the court found it to be a “close call,” it denied the EEOC’s request.

Difficult to pin down. Agreeing with the district court that the “EEOC’s real intent in requesting this [information was], in fact, difficult to pin down,” the Tenth Circuit noted that on appeal, the EEOC attempted to clarify its intent, pointing to two purposes: to determine whether TriCore had a pattern or practice of violating the ADA and whether it treated the employee less favorably than other comparable employees. Those purposes, said the court, corresponded to the two subpoena requests—with the disability request relating to the pattern-or-practice rationale and the pregnancy request relating to the comparator-evidence rationale.

Pattern or practice. The EEOC sought pattern-or-practice evidence through its request for information about other disabled employees who had asked for accommodations. Assuming the EEOC was correct that TriCore’s admission that it had allowed the employee to apply to vacant positions instead of reassigning her was tantamount to admitting an ADA violation, the district court nonetheless did not abuse its discretion in ruling that such an admission did not justify the EEOC’s expanded investigation into whether TriCore had a pattern or practice of violating other employees’ ADA rights, the appeals court stated. As in EEOC v. Burlington Northern Santa Fe Railroad, the EEOC’s disability request referenced only the individual charge and did not mention “any other charging party, an additional charge . . . or anything else” that might suggest the EEOC was investigating an additional charge that TriCore had a pattern or practice of discrimination. Nor could the EEOC rely on its letter informing TriCore of its intent to expand its investigation as the letter was not a “charge” of discrimination, which is required for the EEOC to seek information about alleged discrimination.

The EEOC also could not rely on its compliance manual, as it was not a statutory basis to expand its investigation and was not entitled to special deference. And while the EEOC quoted Burlington Northern to suggest it could expand an investigation if it “ascertains some violation warranting a broader investigation,” this passage, read in the context of the entire opinion, made clear that a single discriminatory act does not, by itself, warrant a broader pattern-or-practice investigation. Thus, said the appeals court, the district court did not abuse its discretion in determining the EEOC had not satisfied its burden to justify its expanded investigation.

Comparator evidence. Turning to the pregnancy request, the appeals court first found that the EEOC waived part of its comparator-evidence argument on appeal—the part relating to its disability request—as it limited its comparator-evidence argument to the pregnancy request in its opening brief on appeal. Thus the court considered the comparator-evidence rationale only as to the pregnancy request.

The district court determined the pregnancy request—which sought a list of TriCore employees who had been pregnant while employed there and information about whether they sought or were granted any accommodations—was not relevant because nonpregnant employees, not pregnant employees, would be relevant comparators. Unlike the district court, however, the appeals court determined that the pregnancy request may seek information that is potentially relevant to the employee’s charge. For instance, the court explained, evidence that other nondisabled, pregnant employees were granted accommodations may tend to prove that the employee was denied an accommodation on the basis of her disability. And possible evidence that TriCore accommodated nonpregnant employees, but not pregnant employees, might be relevant to show that a proffered reason for her termination was pretextual.

The problem for the EEOC, however, was that it did not present these relevance arguments in the district court and thus it failed to meet its burden of explaining how the pregnancy request would offer information relevant to the employee’s charge.

Even if it had provided this explanation, its request would nonetheless have been overbroad because it sought information having no apparent connection to the employee’s charge. “Unlike the disability request that is limited to other disabled employees who sought an accommodation, the pregnancy request seeks information about pregnant employees who never sought an accommodation,” the court explained, observing that in the district court, the EEOC did not proffer any reason to support how this evidence would support the employee’s charge beyond general assertions of relevancy.

In affirming the lower court, the appeals court noted that its decision should not preclude the EEOC from formulating a request for information to overcome the concerns discussed in the opinion.

By Ronald Miller, J.D.

Finding that two labor consultants unlawfully threatened employees with wage reductions should a union be elected as bargaining representative, threatened employees with futility regarding their rights to organize and bargain collectively, and interrogated employees about their union activities, the Fifth Circuit denied an employer’s petition for review of an NLRB order and granted the Board’s cross-application for enforcement. The court observed that the incidents occurred “shortly before an election;” the consultants were “charged with combatting the Union’s organizing campaign;” the conversations were not friendly or joking; and they were accompanied by threats referencing employees’ economic dependence on the employer (UNF West, Inc. v. NLRB, December 20, 2016, Stewart, C.).

Union election. In 2012, after the union conducted an organizing campaign, the Board conducted a representation election, which the union lost. Thereafter, the union filed objections based on alleged unfair labor practices and asked that the Board set aside the election results. Before an administrative law judge ruled on the matter, the union withdrew its objections and sought again to be elected as the employees’ representative. Meanwhile, the ALJ rendered his decision, which the Board adopted and the D.C. Circuit enforced. The Board set a new election date, but cancelled it due to fresh allegations of unfair labor practices by labor consultants acting on behalf of the employer.

After a hearing, a second ALJ found the consultants’ conduct unlawful insofar as it involved coercive interrogation with and making threats of futility to two employees, and threatening a group of employees with the possibility of a reduction in wages, based on three separate incidents.

Interrogations. In the first incident, an employee attended a meeting at which a consultant was present. The employee was an open union supporter, although there was no evidence that this fact was known to the employer. After the meeting, the consultant approached the employee at his work station and inquired as to how he felt about the union. The employee replied, “Is this an interrogation? I’m working. Leave me alone. I’m working. Don’t interrupt me.” After the employee produced a document entitled “Employee Rights Under the National Labor Relations Act,” the consultant responded that “This document doesn’t work here, my brother.”

With regard to the second incident, the consultant allegedly approached another employee and asked “What about the Union?” “I have heard that the Union is making a lot of promises.” The employee responded suggesting that the consultants were “making false promises” and threatening employees. He also produced the employee rights document. The consultant admonished the employee that the document was “useless,” as “[t]he company ha[d] its own policies.”

Wage reduction threat. As to the third incident, the second employee was required to attend a slide presentation in the human resources department. Another consultant began the meeting by speaking ill of the union. After the employee questioned him about a rumor that the employer would reduce wages if the union won, the consultant responded that “If the Union won and they would represent [you] . . . the company could lower [your] wages, salaries . . . because the company pays [your] salaries.”

The Board adopted the law judge’s rulings. Thereafter, the employer petitioned for review of the Board decision finding that it engaged in unfair labor practices.

Threats to reduce wages. The ALJ found that the consultant’s statement that the employer could reduce employees’ wages because it pays those wages could be reasonably interpreted as conveying a threat that the employer would unilaterally reduce wages should the union win the election. The statement came before a slide presentation, and there was no mention of collective bargaining. On appeal, the Fifth Circuit rejected the employer’s contention that because the slide presentation described collective bargaining in an objective manner and disclaimed authority to make threats, it established that the consultant’s statements were made in the context of collective bargaining.

Here, the appeals court agreed with the Board and ALJ that the consultant’s statements constituted a threat to reduce wages in violation of Section 8(a)(1). The record showed that the context existing contemporaneously with or immediately prior to the consultant’s statements was devoid of reference to the give and take of collective bargaining. Moreover, the slide presentation did not address the earlier implication that the employer could unilaterally reduce wages. Any remedial statements must be specific in nature to the coercive conduct. In this case, the slide presentation failed to specifically address the earlier implication that the employer could unilaterally lower wages if the union carried the election. Accordingly, the court concluded that the ALJ’s holding was not in error.

Threats of futility. The ALJ also found that the consultant acted unlawful in relation to his assertion that the document regarding employee rights did not apply to the employer, and therefore that it was useless for employees to attempt to organize and join the union. On appeal, the employer argued that neither statement was accompanied by a threat of action to ensure futility, and so did not run afoul of Section 8(a)(1). The appeals court disagreed, finding that threats of futility include “remarks concerning the futility of electing a union,” or that communicate a message to “employees that selection of a union would be an ‘exercise in futility.’”

The Fifth Circuit reviewed the record for affirmative evidence that (1) remarks were made concerning the futility of exercising unionization rights and (2) those remarks were conjoined with a threat or implication the employer would act to ensure the futility of union organization. In this case, the court found evidence that the consultant’s statements constituted threats of futility. The consultant’s remark that “this document doesn’t work here” in reference to the employee rights document suggested that such rights were not enforceable by the employees. This statement thus communicated the futility of exercising these rights. Moreover, a consultant’s reminder of who pays an employee’s check constitutes a threat or implication that the employer could take some action to ensure the futility of unionization. The reference highlighted the employee’s economic dependence on the employer, and told the employee that the employer was in sole control of the achievements of unionization.

Coercive interrogation. Finally, the ALJ found that conversations between a consultant and two employees constituted coercive interrogations. Here, the employer objected that the law judge failed to apply all the factors identified in the Second Circuit’s decision in Bourne v. NLRB. The appeals court rejected the employer’s contention that some of those factors that were not applied would have weighed in its favor. Rather, the court found that Bourne factors are analytical guiding lights—not a mandate for formalistic analysis. There is no requirement that an ALJ apply all the factors to every situation. Thus, if there is no requirement to apply all factors, then a failure to apply them all cannot be legal error. Here, the Board’s discussion of facts relevant to the factors it did apply in this case met the Bourne requirement.