By:  Ashley S. Kircher, Esq.

It is not unusual for  employees who are represented by a labor union nonetheless to file suit in state  court for employment claims, such as wrongful termination, discrimination and so forth.  In some limited cases these lawsuits can be subject to removal to federal court and preempted by federal labor law, which can be a useful tool in the right circumstances.  In a recent case, however, the United States Court of Appeals for the Seventh Circuit (covering Illinois, Indiana and Wisconsin)  restricted a bit further the cases in which preemption might apply in that Circuit and highlighted some of the risks of removal.

 On August 7th, the Seventh Circuit held in Crosby v. Cooper B-Line, Inc. (No. 13-1054) that Section 301 of the Labor Management Relations Act did not preempt an employee’s claim that he was wrongfully discharged in retaliation for seeking workers’ compensation benefits.  As a consequence, there was no federal subject-matter jurisdiction over the case.  The Seventh Circuit therefore reversed the district court’s grant of summary judgment in favor of the employer and remanded the case to state court.

The Underlying Facts

In June 2010, a portion of the plaintiff’s middle finger was amputated as he was trying to remove pieces of metal from an item at work called a “master bundle.”  The plaintiff had instructed a co-worker to kick the bundle in order to dislodge the pieces as he removed them.  The plaintiff filed a claim for benefits under the Illinois Workers’ Compensation Act, and he returned to work in September 2010. 

Upon the plaintiff’s return to work, the employer asked him to stop using the “kicking method.”  When the plaintiff refused, the employer suspended him for three days without pay.  The union filed a grievance on the plaintiff’s behalf.  Almost immediately after the plaintiff returned from his suspension, he was accused of violating another safety rule.  The employer convened a meeting with the plaintiff and the union to discuss the alleged safety violation. 

During the meeting, the employer informed the union that the plaintiff would be fired.  The union advised the plaintiff to ask the employer to label his discharge as a “permanent layoff with no recall rights” so that he could obtain unemployment benefits and a neutral job reference.  The plaintiff did so, and the employer accepted on the condition that the plaintiff agree to dismiss the suspension grievance.  The parties’ agreement was memorialized in a relatively barebones grievance settlement.  

The plaintiff later filed suit against the employer in Illinois state court, alleging that the employer had discharged him in retaliation for his seeking workers’ compensation benefits.  The employer removed the case to federal court, arguing that federal subject-matter jurisdiction existed because Section 301 of the LMRA preempted the plaintiff’s state law claim.  The parties completed discovery, and the employer moved for summary judgment.  The district court granted the motion, finding that the plaintiff’s retaliatory discharge claim failed on the merits.  On appeal to the Seventh Circuit, the plaintiff contended for the first time that the district court lacked subject-matter jurisdiction and asked that the case be remanded to state court.     

The Seventh Circuit’s Analysis

The Seventh Circuit first observed that objections to subject-matter jurisdiction are not subject to waiver and that the federal courts have an independent obligation at each stage of the proceedings to ensure that they have subject-matter jurisdiction over the dispute.  The court also explained that a state law claim is preempted by Section 301 of the LMRA only when it is “inextricably intertwined” with consideration of the terms of a collective bargaining agreement.  In other words, such a claim is only preempted when it requires interpretation of a CBA.   

The court then explained that to prevail on a retaliatory discharge claim, the plaintiff had to show that the company discharged or threatened to discharge him and that its motive for doing so was to interfere with his exercise of his workers’ compensation rights.  In the court’s opinion, the analysis of those elements did not require that the terms of the CBA or the grievance settlement be consulted.  The court observed that the grievance settlement said nothing about why the plaintiff was discharged and that it also did not contain any provision that would have prevented the plaintiff from filing a retaliatory discharge claim. 

Finding that without Section 301 preemption, there was no basis for federal subject-matter jurisdiction, the court concluded that the removal of the case to federal court had been improper.  The court therefore remanded the case to state court, expressing “no view on the underlying merits” of the case.

Concluding Thoughts

The Seventh Circuit’s decision is a cautionary tale both with respect to drafting grievance settlements and with respect to removing cases to federal court on the basis of Section 301.   In particular, wherever possible, the employer should include a settlement and release of the employee’s  individual claims as part of the grievance settlement in a discharge case.  Failing that, the employer should consider including language in the settlement agreement that will undercut a potential statutory  claim by the employee (such as a retaliation or discrimination claim), and will strengthen the argument for Section 301 preemption. This language will vary based on the facts, collective bargaining agreement, and circumstances.  Employers should always examine the possibility of removal and preemption in cases involving represented employees, but should also make sure that there is a solid basis for removal in order to avoid what occurred in this case and/or remand by the trial court following removal.

By:  Ashley S. Kircher, Esq.

On Wednesday, a Pennsylvania appeals court found that 1,100 unionized Temple University Hospital employees were eligible for unemployment benefits during their month-long work stoppage in 2010.  See Temple Univ. Health Sys. v. Unemployment Comp. Bd. of Review, No. 1539 C.D. 2012 (Pa. Commw. Ct. June 4, 2013).  The three-judge panel reasoned that the work stoppage counted as a lockout, not a strike.

The dispute between the hospital and the employees centered around the hospital’s tuition reimbursement program.  A collective bargaining agreement (“CBA”) that was effective from October 1, 2003 through September 30, 2006 stated that full-time employees would be eligible for tuition reimbursement in accordance with the hospital’s policy.  In March 2006, before the expiration of that CBA, the hospital issued a revised tuition reimbursement policy that stated that the policy did not constitute an express or implied contract and that the hospital could modify, alter, delete, suspend, or discontinue the policy in its sole discretion with or without notice to employees.

The CBA for the period of October 1, 2006 through September 30, 2009 provided that full-time and part-time employees and dependents of full-time employees were eligible for tuition reimbursement in accordance with the hospital’s policy.  In March 2009, the hospital instituted a revised tuition reimbursement policy that restricted reimbursement to full-time employees only.  The union immediately filed an unfair labor practice charge with the Pennsylvania Labor Relations Board. 

In January 2010, the PLRB found that the hospital’s March 2009 change to the tuition reimbursement policy constituted an unfair labor practice, reasoning that even though the union did not grieve or file unfair labor practice charges regarding the hospital’s change to the policy in March 2006, it did not waive its right to negotiate employee tuition reimbursement, a mandatory subject of bargaining.  The PLRB rejected the hospital’s claim that it could unilaterally discontinue parts of the tuition reimbursement program, reasoning that the CBA’s statement that reimbursement shall be in accordance with the hospital’s policy meant only that the hospital had the right to determine how the reimbursement would be paid and when it would be paid, not that it had the right to eliminate the reimbursement altogether.  For the hospital to have the right to eliminate the reimbursement, the CBA itself would have had to contain the “sole discretion” language that the hospital added to the policy in 2006.

The PLRB directed the hospital to immediately reinstate the tuition reimbursements that were in effect before the March 2009 revision and to immediately make the adversely affected employees whole for the benefits they would have received under the former policy.  When the hospital failed to do so, the union gave notice of its intent to initiate a work stoppage.  The work stoppage began on March 31, 2010 and did not end until April 29, 2010, following a negotiated settlement.  The employees then filed claims for unemployment benefits for the period of the work stoppage.  When they were granted such benefits, the hospital appealed.  

The Pennsylvania appellate court determined that because the hospital had precipitated the work stoppage, the stoppage was a lockout rather than a strike and the employees were therefore eligible for unemployment benefits.  The court reasoned that the hotel unilaterally caused the disruption and was required to restore the status quo in order to avoid the lockout, and that the employees could properly condition their return to work on the restoration of the status quo.  

Although the case was decided under Pennsylvania law, the decision underscores the need for employers to, before they unilaterally change employment policies that are applicable to union-represented employees, determine whether such changes are a mandatory subject of bargaining.  The decision also highlights the need for employers to be aware that if a work stoppage is ruled a lockout rather than a strike, then the non-working employees will be eligible for unemployment benefits.

By Rachel L. Gradstein

California has enacted special labor laws that make it nearly impossible for employers to obtain injunctions against union trespass. This content-based favoritism for one form of speech raises constitutional questions, as federal courts have recognized. On December 27, 2012, however, in Ralphs Grocery Co. v. United Food & Commercial Workers Union Local 8, the California Supreme Court upheld these laws against constitutional challenge. In doing so our high court reversed a sensible 2010 decision by the Court of Appeal, which had struck down the laws on the basis that they, in giving unions the right to picket on privately owned walkways fronting retail store entrances, were unconstitutionally favoring labor speech over non-labor speech. 

The Facts

In 2007, UFCW unions pickets arranged themselves on a private walkway fronting the entrance of a Ralphs grocery store.  The pickets encouraged people to boycott Ralphs because its employees were not represented by a union.  In 2008, after unsuccessfully seeking the assistance of the local police, Ralphs sued the UFCW for an injunction against its trespass.  The UFCW’s defended itself by citing Moscone Act (Cal. Code Civ. Proc. § 527.3) and Labor Code section 1138.1.

The Statutes

The Moscone Act aims to promote worker rights to the collective bargaining process and to reduce judicial interference in labor disputes, by providing that certain labor-dispute activities cannot be enjoined.  The protected activities include “peaceful picketing or patrolling involving any labor dispute.”  Section 1138.1, meanwhile, applies where the Moscone Act does not, prohibiting injunctions unless the victim of picketing overcomes various onerous procedural hurdles.  These two statutes work together to insulate union activity from the state trespass laws that apply to people generally.

Procedural Posture

The trial court held the Moscone Act to be unconstitutional as impermissible content discrimination, but upheld Section 1138.1 and found that Ralphs had failed to satisfy its  requirements of 1138.1. The court thus denied the request for an injunction. 

The Court of Appeal reversed. The Court of Appeal first rejected the UFCW’s argument that a private entrance to a retail store was a public forum afforded protection under the California Constitution—as “’the entrance area and apron’ of the store ‘were not designed and presented to the public as public meeting places.’” Therefore, Ralphs could regulate speech on its property.  The Court of Appeal then struck down both the Moscone Act and Section 1138.1, because they give speech regarding labor disputes greater protection than speech involving other subjects and thus are unconstitutional under the free-speech guarantee of the First Amendment and the equal- protection guarantee of the Fourteenth Amendment .

The Supreme Court Ruling

The California Supreme Court agreed with the Court of Appeal that the privately owned walkway fronting the Ralphs customer entrance was not a public forum giving pickets free-speech protections under the California Constitution.  The Supreme Court relied on the Robins v. Pruneyard decision, which held that the public forum portion of a privately owned shopping center is limited to those common areas designed to facilitate and encourage congregation and socialization.

The Supreme Court then declared that although the UFCW could not invoke constitutional protections to justify its picketing, the UFCW could invoke the statutory protections provided by the Moscone Act and Section 1138.1.  In this analysis, the Supreme Court reviewed its earlier decisions on both the legality of peaceful picketing on private walkways as a matter of labor law and the perceived lack of necessity for judicial interference to protect an employer’ property rights.

Finally, the Supreme Court upheld both labor laws in question, concluding that the Court of Appeal had relied on inapplicable precedent involving laws that restricted speech in public forums.  The Supreme Court reasoned that neither the Moscone Act nor Section 1138.1 abridges speech—as invalidating them would not remove any restrictions on speech—and the speech in question took place on privately owned sidewalks.

The Supreme Court acknowledged that content-based speech regulation can be permissible if enacted for legitimate concerns unrelated to disagreement with the message.  Here, the labor laws allowing picketing on private sidewalks are “justified by the state’s interest in promoting collective bargaining to resolve labor disputes, the recognition that union picketing is a component of the collective bargaining process, and the understanding that the area outside the entrance of the targeted business is ‘the most effective point of persuasion.’”

For support, the Supreme Court cited other laws protecting labor-related speech in the context of economic regulations, and U.S. Supreme Court decisions that “support the proposition that labor-related speech may be treated differently than speech on other topics.”

Separate Opinions

The six-justice majority opinion was authored by Justice Kennard, while Justice Chin both concurred and dissented.  There were also two separate concurring opinions.

Chief Justice Cantil-Sakauye, concurring, relied on the portion of the Moscone Act that proscribes unlawful conduct—such as breach of the peace, disorderly conduct, and blocking of ingress and egress—to stress that the Moscone Act and Section 1138.1 do not protect union conduct that involves violence or aims to harm businesses by using tactics that go beyond “persuasion of patrons to labor’s position.”  She stated that the laws do not protect the use of signs larger than necessary or activity that occurs inside the premises.  The Chief Justice also emphasized that because the Moscone Act is to be construed with the purpose of limiting judicial interference, intervention of law enforcement will be necessary to address unlawful conduct.

In a separate opinion, Justice Liu agreed with the Chief Justice’s view that law enforcement officials may have to intervene in the event of unlawful union conduct, but disagreed with some of her examples regarding conduct that might not be protected.

The dissent by Justice Chin noted problems with the majority’s constitutional analysis, and noted that the California Supreme Court was setting itself on a collision course with the federal courts.

What Ralphs Means For Employers

Unless overruled by the U.S. Supreme Court, the Ralphs decision means that it is nearly impossible for California employers to obtain injunctions against union trespassers on their private property, unless the union pickets engage in unlawful activity, such as blocking ingress and egress, or violence.  The ruling does acknowledge, however, that employers can obtain law enforcement intervention and injunctions where unions engage in what the court has defined as unlawful activity.  Employers seeking injunctions for unlawful activity, however, still must satisfy the procedural hurdles established by Section 1138.1.