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In nation’s longest-running labor dispute, hotel fights city hall and wins

October 12th, 2009  |  Lisa Milam-Perez

>Municipalities and elected officials frequently inject themselves into local labor disputes, often to the benefit of unions, who focused much of their advocacy efforts on state and local government in the face of a largely hostile environment at the federal level during the Bush years. Employers have responded by challenging such labor-friendly local impulses on federal preemption grounds, citing the National Labor Relations Act to fend off legislative initiatives closer to home that could prove more advantageous to workers than federal law.

In recent weeks, Chicago’s Congress Plaza Hotel—the site of the longest-running strike in the nation—achieved two solid wins in its ongoing labor dispute with Unite Here, the hotel workers’ union, as the NLRA and preemption concerns foiled the union’s efforts to make some inroads in the battle by way of local politics.

Denial of permit on union’s behalf. On September 28, a federal district court in Illinois, in 520 S. Michigan Ave v Fioretti, held the city of Chicago was vicariously liable for a violation of the NLRA by Robert Fioretti, an alderman who refused to issue a permit to the hotel to operate a sidewalk café. The record showed that Fioretti, who had unseated an incumbent in part with union support, made statements both in public and in meetings with union officials suggesting his approval of the operating permit hinged on the hotel’s settling the labor dispute.

The record was devoid of the alderman’s reasons for opposing the permit. However, the court cited Fioretti’s “staunchly pro-Union position,” and noted that he had kept the union president apprised of the status of the hotel’s application and displayed great concern about how the union reacted to his actions on the permit. Based on these facts, the court found Fioretti had impermissibly inserted himself into the collective bargaining process, in violation of the Act. “Fioretti is fully committed to supporting the Union in its strike against the Hotel, which he is entitled to do,” the court wrote. “He cannot, however, use his control over the permit process, the existence of which he so forcefully proclaimed at [a] Union rally, to pressure the Hotel to end the strike.”

Moreover, given its complete delegation of policymaking authority over permit applications to its aldermen, the city was deemed liable, too. The court enjoined the city and the alderman from further interference in the hotel’s negotiations with the union, noting that without injunctive relief, “the Hotel’s positions in the labor dispute and the marketplace will continue to erode.”

No on “right to know.” A union-backed “right to know” ordinance, which would require Chicago hotels to notify guests at the time they book hotel rooms if the hotel is affected by a work stoppage, failed to pass the Chicago City Council last week, with aldermen voting by a narrow margin on October 7 to send the measure back to the council’s finance committee for possible revisions.

Unite Here Local 1 lobbied for the ordinance in hopes of gaining some leverage in ongoing negotiations with the city’s unionized hotels. Contracts expired on August 31 for some 6,000 workers at 30 downtown hotels run by several national hotel chains, and contract negotiations are ongoing but remain far from settled. A strike threat would obviously carry more weight (and a lockout would be fraught with greater danger) if hotels were compelled to notify potential guests of a work stoppage.

Still, the Congress Hotel no doubt was a key target of the right-to-know measure. Workers have been picketing the hotel for six years; according to Local 1, more than 1,000 customers have complained about the hotel since the strike began. The proposed ordinance would provide a cause of action against a hotel by guests who were not properly notified of a strike or lockout involving at least 20 employees lasting 15 days or more. Chicago hotels would have to alert guests of the work stoppage before they make reservations, over the phone and in all printed and electronic communications. And notice would have to be made through third parties such as travel agents and online travel reservation websites as well.

Unite Here had campaigned for the ordinance in 2005, but the measure lost by five votes, in part due to concerns over whether the NLRA preempted such legislation. In its most recent round, the proposed ordinance won the backing of the finance committee in August by a 16-3 vote, but it could not get past a deadlocked full city council, at least for now. The Congress Hotel has indicated it will file a lawsuit to challenge the ordinance if it passes.

If the hotel’s recent victories are any measure, employers that are embroiled in labor disputes in union-friendly municipalities increasingly will find they can fight city hall—much to labor’s chagrin.


Real world is in the eye of the age-bias beholder

October 9th, 2009  |  Pamela Wolf

>Testimony heard by the Senate Judiciary Committee on October 7 reveals striking differences as to the “real world” impact of the sharply divided Supreme Court’s decision in Gross v FBL Fin Servs Inc. The Court held that a plaintiff claiming disparate treatment under the Age Discrimination in Employment Act (ADEA) must establish by preponderance of evidence that age was the “but for” cause of the adverse employment action challenged, not just one motivating factor.

This is a tougher standard to meet than that permitted under a “mixed-motive” theory that is applied in cases brought under Title VII of the Civil Rights Act of 1964 for other types of discrimination. In a Title VII “mixed-motive” case, when a plaintiff has produced evidence that a protected category, such as race, sex or religion, was one motivating factor in an employer’s adverse-employment decision, the burden of persuasion shifts to the employer to show that it would have taken the same action regardless of the protected factor. The Court in Gross foreclosed this mixed-motive route to proving bias in ADEA cases.

What is the “real world” impact of the decision? Several witnesses testified during the Judiciary Committee’s hearing on Workplace Fairness: Has the Supreme Court Been Misinterpreting Laws Designed to Protect American Workers from Discrimination?

Jack Gross, the plaintiff who, at age 54 – after working for his employer for 32 years – was reassigned to a position he considered a demotion, was one of the witnesses who testified. Here’s part of the “real world” scenario he described:

I feel like my case has been hijacked by the [H]igh [C]ourt for the sole purpose of rewriting both the letter and the spirit of the ADEA. I am against activist judges, from either party, who use their personal ideology to misinterpret the law as intended. I am especially mortified when the only people (judges) who are immune from age discrimination vis-a-vis their lifetime appointments, can rewrite laws that are designed to protect people in the “real” world. (Emphasis added)

On the other had, referring to the potential choices facing the Supreme Court in Gross, attorney Michael W. Fox, a shareholder at Ogletree, Deakins, Nash, Smoak & Stewart, PC, characterized the choice ultimately made by the High Court as one that adopts “a more common sense rule, that in reality does little to alter the real world of age discrimination litigation.” (Emphasis added)

Does Gross change the age-bias landscape? As Jack Gross points out: “Headline after headline [has] proclaimed that it is now easier for employers to discriminate based on age, following the decision in my case.” And he’s not happy about being the person who set the wheels in motion. “I am not at all comfortable with having my name associated with a decision that is now causing pain to other employees in my age bracket simply because I took a stand seven years ago,” he said. “And, as expected, my employer is pushing for a new trial as quickly as possible to take advantage of the new court-made law before it can be corrected.”

That’s the “real world” litigation landscape for Jack Gross.

But the High Court’s decision may have a less than dramatic impact at trial. Fox pointed out that the burden-shifting framework used in mixed-motive cases is confusing for juries. “Lawyers representing plaintiffs rely much more on established pretext doctrines under McDonnell Douglas, rather than try for a mixed-motive analysis,” he observed. “In short, in many respects the dispute engendered by Gross is more academic than real world.” (Emphasis added)

Fox may be right about juries. Showing jurors that the reason given by an employer for an adverse employment action was really just a pretextual ruse to conceal age bias may be easier than relying on a mixed-motive theory that is conceptually difficult for jurors to understand and apply.

But what about the impact at the summary judgment stage of litigation? Employers defending against ADEA claims appear to have a better chance of obtaining summary judgment in their favor in the wake of Gross. Employers can prevail by showing there is no material fact question that the challenged adverse action was motivated by at least one legitimate, nonbiased reason – even when discrimination has been shown. In contrast, since plaintiffs will now be required to produce enough evidence to show that age was the only reason that motivated the action, they seem less likely to make it to trial.

Congressional action. Attorney Fox urged lawmakers to refrain from acting too swiftly. “Congressional action to reverse Gross, particularly without waiting to determine if in fact there is any real world impact would be short sighted [a]nd potentially provide a ‘cure’ with adverse consequences that would far outweigh the alleged evils being remedied,” he cautioned. (Emphasis added)

It seems unlikely that Congress will wait for news of any “real world” impact. The day before the Senate Judiciary hearing, Chairmen Tom Harkin (Iowa) of the Senate Health, Education, Labor and Pensions Committee, Patrick Leahy (Vt) of the Senate Judiciary Committee, and Congressman George Miller (Cal) of the House Education and Labor Committee introduced the Protecting Older Workers Against Discrimination Act with the goal of reversing the Gross decision and restoring civil rights protections for older workers.


Modernization of OFCCP requirements for federal construction contractors is an emerging concern

October 7th, 2009  |  Cynthia L. Hackerott

>After decades of virtual obscurity, the OFCCP compliance obligations of federal construction contractors are receiving renewed attention. Earlier this year, the OFCCP announced that it will place a special emphasis on the construction industry when implementing its initiative to conduct audits of federal contractors in receipt of Recovery Act funds (because the majority, estimated at roughly 80%, of Recovery Act contractors will be recipients of direct or federally assisted funds for construction projects).

This past July, during a presentation at the 27th Annual Industry Liaison Group National Conference in Atlanta, OFCCP expert John Fox (attorney and partner at Manatt, Phelps & Phillips in Palo Alto, California) noted that the OFCCP’s construction program “has not been updated or addressed in 30 years and now is in need of a top to bottom review.” In September, Congressman Pete Stark (D-CA) and Congresswoman Rosa L. DeLauro (D-CT) sent a letter co-signed by 24 of their colleagues urging Secretary of Labor Hilda Solis to re-evaluate the affirmative action goals for women with regard to federal construction contractors set by the OFCCP in the agency’s regulations implementing Executive Order 11246. According to a joint September 18, 2009 statement corresponding with the letter, the representatives believe the OFCCP should “modernize” its affirmative action goals “to reflect the realities of female participation in the construction industry today.” The representatives pointed out that the current 6.9% participation goal for women was based on data from the 1970 Census and has been left on “indefinite extension” status since 1980.

The EEO and affirmative action obligations of federal contractors and subcontractors who hold construction contracts differ in significant ways from that of supply and service contractors. Covered federal construction contractors must comply with Executive Order 11246, Section 503 of the Rehabilitation Act, and the Vietnam Era Veterans’ Readjustment Assistance Act (VEVRAA), while federally assisted construction contractors must comply with Executive Order 11246 only.

In order to take into account the fluid and temporary nature of the construction workforce, the OFCCP does not require construction contractors to develop written affirmative action programs (which is a requirement for covered supply and service contractors). Instead, the OFCCP has established utilization goals based on civilian labor force participation rates, and has outlined in its regulations (at 41 CFR Section 60-4.3(a) ) 16 good-faith steps that construction contractors must take in order to increase the utilization of minorities and women in the skilled trades. (Note that the goals are not a requirement for quotas, which are specifically prohibited by law.) However, the OFCCP’s regulations on construction contractors obligations have not been updated since 1980, and, likewise, the utilization goals have not been updated for decades.

Thus, updating the equal employment opportunity and affirmative action requirements to reflect the current landscape pertaining to federal construction contractors should be one of many new developments coming from the OFCCP now that Patricia A. Shiu has taken the helm as Director.


Congress legislates against gang rape

October 7th, 2009  |  Matt Pavich

>Updating an earlier blog, Sen. Al Franken (D-MN) proposed an amendment to the 2010 Defense Appropriations bill that would withhold defense contracts from companies like KBR “if they restrict their employees from taking workplace sexual assault, battery and discrimination cases to court.”

This amendment was a clear response to the legal strategy adopted by Halliburton Co, which attempted to claim that sexual assault is related to the employment of its workers. The Fifth Circuit recently rejected that argument in Jones v Halliburton, 5th Circuit, Sepember 15, 2009, ruling that tort claims stemming from a gang rape of a former Halliburton employee were not subject to the binding arbitration clause, utilized by the company, that mandates arbitration of all claims “related to employment.”

Franken said: “The constitution gives everybody the right to due process of law … And today, defense contractors are using fine print in their contracts to deny women like Jamie Leigh Jones their day in court. … The victims of rape and discrimination deserve their day in court.”

The amendment passed 68-30. Of the 40 Republicans in the Senate, 10 voted for the Franken amendment, including all four women in the Senate GOP. Jeff Sessions (R-AL) argued against it, putting the interests of corporate behemoths over individual employees, calling the amendment a political attack against Halliburton. From this perspective, it seems like a political attack against gang rape and a political stand in favor of giving employees their just day in court.


Supreme Court: 2009-10 term begins

October 5th, 2009  |  David Stephanides

>The Supreme Court opens its October 2009-10 term today, with rookie Justice Sonia Sotomayor on the bench and several labor and employment cases on the docket. First up: Mohawk Industries Inc v Carpenter (Dkt No 08-678). The Court will consider whether a party may immediately appeal a discovery order to disclose materials that are purportedly covered by the attorney-client privilege, in the case of an employee who was discharged when he refused to recant claims that the employer hired illegal aliens. The employee sought to compel information related to his interview with Mohawk’s outside counsel during an internal investigation into a separate RICO class action, as well as information related to the decision to discharge him. The district court ordered Mohawk to provide the information, concluding the company had waived attorney-client privilege when it put the attorney’s actions “in issue” in its response. The Eleventh Circuit dismissed Mohawk’s interlocutory appeal on the discovery ruling for lack of jurisdiction.

On Wednesday, October 7, the Court hears oral argument in Union Pacific Railroad v B’hood of Locomotive Engineers (Dkt No 08-604). The High Court will consider the scope of federal court review of arbitration rulings under the Railway Labor Act—specifically, whether courts can set aside NRAB arbitration awards based on alleged due process violations. In the ruling below, 156 LC ¶11,053 (2008), the Seventh Circuit held the NRAB violated a union’s due process rights when it created a new rule governing the submission of evidence.

Rounding out the docket. The Supreme Court has several other key labor and employment cases on its docket for the coming term (oral argument has not been scheduled):

  • Conkright v Frommert (Dkt No 08-810), an ERISA case in which the court will consider whether a court should give deference to a plan administrator on the availability of remedies under a covered plan, and the amount of discretion a district court has in calculating remedies based on its reasonable interpretation of the plan.
  • Granite Rock Co v Int’l B’hood of Teamsters (Dkt No 08-1214), an LMRA, Section 301 case regarding federal court jurisdiction over the question of whether a collective bargaining agreement had been formed. In the decision below, the Ninth Circuit (156 LC ¶11,110) held the question of contract formation was one for an arbitrator, unless there is a separate challenge to the arbitration provision in an underlying contract that is separate and distinct from a challenge to the contract itself.
  • Lewis v City of Chicago (Dkt No 08-974). Turning once again to employment discrimination matters involving tests used to hire and promote firefighters, the Supreme Court granted certiorari in this case last week to address when the statute of limitations period begins where employers adopt an employment practice that discriminates against African Americans in violation of Title VII’s disparate impact provision.