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No Longer Relegated to the Backburner: The NLRB is in for a Wild End to 2024

17 Sep 2024

ABSTRACT: With high profile cases and famous personalities, the NLRB is now at the center of litigation that will shape the landscape of labor law for decades.

Like John Travolta in Pulp Fiction, or Cher with her Believe album, or the Red Sox comeback from a 3-games-to-1 deficit against the Yankees, the National Labor Relations Board has experienced a remarkable return to relevance over the past few years. Few could have predicted that the NLRB would be thrust back into the spotlight, but some recent developments and upcoming events will either launch its importance into the stratosphere or rip it to shreds like an errant rocket.

SpaceX v. NLRB

Speaking of rockets, the saga between SpaceX and the NLRB continues in the Fifth Circuit. In 2022, employees of SpaceX published an open letter online, criticizing CEO Elon Musk for his comments and behavior related to his management of Twitter (now known as X). In the letter, the SpaceX employees said, among other things, that Musk’s behavior made it difficult for them to do their jobs, pointing in particular to a payment by SpaceX of $250,000 to settle a sexual harassment claim against Musk. SpaceX conducted an intensive investigation into who organized the open letter, and ultimately terminated eight employees, claiming that the employees induced signatures from co-workers through threats and intimidation. The fired employees filed an unfair labor practice charge with the NLRB in California. The Board determined that SpaceX violated the Act by interrogating its employees about protected concerted activity and retaliating against employees engaged in protected conduct.

In a case with potentially massive consequences for the Board, SpaceX filed suit against the NLRB, not in California federal court, but in the Southern District of Texas. SpaceX claims that even though all the operative events of the charge occurred in California, the presence of SpaceX employees in Texas confers jurisdiction on the federal courts in Texas. SpaceX has argued that a Board decision in California affects the working conditions of Texas employees, a legal theory that has led to a complicated jurisdictional dispute. The District Court declined jurisdiction over the dispute and transferred the case to California. But on appeal, the Fifth Circuit found that the jurisdiction was proper and ordered the District Court to request that the Central District of California transfer the case back to Texas, where it is now pending again.

Potentially even more important than the meaty jurisdictional issue is the multi-faceted challenge SpaceX has launched against the NLRB’s very existence. In its Petition for Declaratory and Injunctive Relief, SpaceX has argued that the Board’s composition violates Article II of the Constitution, which requires the President to have sufficient control over administrative law judges. That ALJs can only be terminated for cause by officers who themselves can only be terminated for cause, SpaceX argues, deprives the President of the oversight endowed by the Constitution. Moreover, SpaceX alleges, the fact that the NLRB exercises executive, legislative, and judicial powers all within one agency violates separation of powers and due process. Finally, the NLRB’s make whole remedies violate the Seventh Amendment right to trial by jury.

In short, SpaceX is asking the Courts for a radical reorganization of the NLRB. Is this challenge to the Board’s operations and structure something of a longshot? Perhaps. But if the requested relief is granted and affirmed by the Supreme Court, the Board would essentially cease to be able to function in any meaningful way.

UAW v. Musk and Trump

And speaking of famous billionaires opining on labor matters, the United Auto Workers recently filed an unfair labor practice against Elon Musk and Donald Trump for comments they made in a recent interview on Twitter (“X”). In their discussion, Trump suggested that Musk fire any employees suspected of forming a labor union. The next day, UAW filed the ULP charge, alleging that the statements infringe upon employee’s Section 7 rights to form and join the labor union of their choosing. The charge was light on details, but will no doubt follow the guidance of NLRB GC Jennifer Abruzzo, who has advocated for an expansive interpretation of the Act, where any language that would tend to chill union organizing infringes on employees’ Section 7 rights.

The Board is very likely to sympathize with that argument, but will the Courts agree? It seems logical that Musk’s comments might dissuade employees of his companies (Tesla, SpaceX, Twitter) from considering organizing, as may employees of the Trump Organization. But Trump’s comments carry the added difficulty (and no doubt fascinating First Amendment issues) of the fact that Trump participated in the interview as a candidate for President. Surely, a political candidate can offer an opinion on the Board, its enforcement priorities, and unions generally, but the Board has its work cut out for it dissecting the statements, context, and thorny legal issues involved.

Lion Elastomers, LLC v. NLRB

Assuming the NLRB emerges unscathed from the pending SpaceX litigation, a recent decision from the Fifth Circuit seeks to curtail the Board’s whipsawing back and forth between Presidential administrations. In Lion Elastomers, LLC, v. NLRB, the Fifth Circuit held that the Board should not be permitted to change its litigation positions while an appeal is pending in one of the Circuit Courts of Appeal. In May 2020, the Board determined Lion Elastomers committed unfair labor practices by threatening, disciplining, and discharging an employee for engaging in protected activities. When determining whether a union member’s behavior was protected activity, the Board applied the four factors adopted in Atlantic Steel Co., which considered (1) the place of the discussion; (2) the subject matter of the discussion; (3) the nature of the employee’s outburst; and (4) whether the outburst was, in any way, provoked by an employer’s unfair labor practice. In June 2020, Lion Elastomers filed a petition for review of the Board’s Decision.

Only one month later and even before briefing of the Board’s decision, the Board issued General Motors LLC, which replaced the Atlantic Steel factors, to assess whether employees have been unlawfully discharged or discipled in connection with activity protected by Section 7 of the NLRA. Instead, the Board would apply the Wright Line burden-shifting framework which required an initial showing that (1) the employee engaged in Section 7 activity; (2) the employer knew of that activity; and (3) the employer had animus against the Section 7 activity, which must be proven to show a causal relationship between the discipline and Section 7 activity. The Wright Line standard generally makes it easier for employers to show the employee’s misconduct caused the discipline or discharge, not the protected activity. Additionally, General Motors ruled that the Board would apply Wright Line retroactively to all pending cases. The Court then granted the NLRB’s motion to remand, based on the Board’s decision in General Motors.

Then in May 2023, the Board issued a Supplemental Decision and Order that overruled General Motors and returned to earlier precedent, which included the analysis issued in Atlantic Steel. However, the Fifth Circuit instructed that its remand Order was “not an invitation for the Board to reconsider what legal standards should apply but rather an instruction to apply the legal standards in General Motors.” By overturning its own decision, the Board exceeded the scope of the remand. Even further, without giving Lion Elastomers the opportunity to present any argument under this new theory before any decision is made, the Board violated Lion Elastomers’ due process rights when it overturned General Motors.

The Court ultimately vacated the Board’s Supplemental Decision and Order and issued a remand for the Board to apply General Motors to the present case based on the presumption that the parties to an adjudication will be afforded a full opportunity to be heard before the Board makes any determination.

Key Takeaways

So now that NLRB may as well stand for “No Longer Relegated to the Backburner,” what should employers do?

First, keep in mind much union activity arises from dissatisfied employees who perceive that management is not responsive to their needs. In many cases, listening sessions, employee surveys, or just an overall review of safety measures, salary, benefits, and other working conditions can avert having employees turn to a union for outside assistance. After all, why pay union dues to improve conditions if things are going well? (One caveat: if an organizing campaign is underway, an employer may not promise to make improvements to the workplace if employees reject the union).

Second, front-line managers should be trained on how to respond to union organizing campaigns, including recognition that audio and video recording is easier than ever before. Any speech, interrogation, or off-hand remark could end up as an exhibit in a Board hearing. Keep in mind that unions regularly employ “salts” for the sole purpose of getting hired by a company to recruit members or uncover unfair labor practices.

Third, recognize when employees are engaged in protected concerted activity and avoid retaliatory actions. Any time an employee makes a complaint regarding working conditions, wages, or hours, employers should treat it as protected activity (unless it can be said with near certainty that the complaint is purely personal).

Finally, it helps take a holistic view of your company and its public image. There are innumerable social media accounts dedicated to trying to shame companies, to garner clicks. Media sensationalism can also play a role, where excerpts from ALJ and Board decisions being plastered across headlines without context or the employer’s point of view. For example, the social media/news aggregation site Reddit has been a hotbed of pro-union and anti-employer activity. The subreddit r/antiwork became famous for pointing out companies who were behaving badly, but the subreddit also has a “Win!” flair for posts when companies treat their employees well. Over 2.8 million users are subscribed, and countless more see stories across social media or through word of mouth about employers who are doing the right things.

The end of 2024 will be a wild ride for the NLRB and labor lawyers alike. This blog will continue to monitor and report on important updates in this fascinating area.

Meghan Kane to Serve as Panelist at HarrisMartin Midwest Asbestos Litigation Conference

13 Sep 2024

On September 27, Baker Sterchi Member Meghan Kane will serve as a panelist at the HarrisMartin Midwest Asbestos Litigation Conference in St. Louis, Missouri. The session, “Insolvency, Insurance Coverage and the Future of Asbestos Claims” will discuss asbestos claims handling, insurer obligations and coverage disputes, as well as the future landscape of asbestos claims.

Kane is a civil defense lawyer with a focus on product and premises liability, as well as toxic tort litigation. She serves as the vice chair of Illinois Defense Counsel’s Tort Law Committee and co-chair of Baker Sterchi's Toxic Tort Practice Group. Kane also serves as treasurer of the Madison County Bar Association and is licensed to practice in Illinois and Missouri.

HarrisMartin is a leading provider of litigation news and continuing education conferences for legal and insurance professionals. For more information or to register for the conference, click here.

Ruble and Silva to Mentor Law Students in Leadership Council on Legal Diversity Program

12 Sep 2024

Starting in fall 2024, Baker Sterchi Members Nicholas Ruble and Gregorio Silva will each mentor a first-year law student through the Leadership Council on Legal Diversity’s (LCLD) “Success in Law School” Mentoring Program. Over the next three years, they will meet with their mentees every two weeks to provide guidance throughout law school and beyond.

The LCLD program supports talented first-year law students from diverse backgrounds, helping them maximize their potential. Participation is open to attorneys from any LCLD member organization. LCLD, which includes over 400 chief legal officers and law firm managing partners, including Baker Sterchi Managing Member Scott Kreamer, is dedicated to advancing diversity, inclusion, mentoring and continuing education within the legal profession.

Ruble is a civil litigation defense attorney with extensive experience in employment, labor, business and personal injury law. He serves as co-chair of Baker Sterchi’s Employment & Labor Practice Group and is a member of the firm’s Diversity, Equity and Inclusion Committee. Based in Baker Sterchi’s Kansas City office, Ruble earned his law degree from the University of Missouri-Kansas City School of Law and is licensed to practice in Missouri and Kansas.

Silva, who co-chairs Baker Sterchi’s Financial Services Practice Group, has a diverse civil litigation practice defending the financial services, transportation and propane industries. A member of the LCLD Fellows Program, which offers intensive leadership training for diverse attorneys, Silva is also a member of the Hispanic National Bar Association and Baker Sterchi’s Diversity, Equity and Inclusion Committee. Also based in the firm’s Kansas City office, he earned his law degree from the University of Nevada, Las Vegas William S. Boyd School of Law and is admitted to practice in Missouri, Kansas, Alaska, Arizona, California and Nevada.

Missouri's New Commercial Financing Disclosure Law And Its Impact On Small Businesses And Lenders

12 Sep 2024

ABSTRACT: Missouri recently enacted a Commercial Financing Disclosure law which will go into effect either six months after the Missouri Division of Finance promulgates rules for the law or on February 28, 2025, if the Division of Finance doesn’t act. The law is part of a national trend of states passing laws that seek to protect small businesses by requiring lenders to disclose the costs of financial transactions and other pertinent figures. The law also regulates brokers that facilitate financial transactions by requiring them to disclose information about their business to the Missouri Division of Finance and obtain a surety bond. The law has broad definitions for covered loans and transactions, but also contains specific entities and transactions that are either applicable or exempt from the statute.

Scope

The new law applies to “commercial financing transactions” which are broadly defined in the statute and include commercial loans, accounts receivable purchase transactions, and commercial open-end credit plans. The law also applies to any transaction where the proceeds are either provided to a business or are intended to be used to carry on a business. How will a lender know at the time of the transaction it needs to do disclosures if the borrower just received the funds and can use them in any manner of his choosing going forward? The statute has an answer! A provider can rely on a written statement of intended purpose by a business or individual at the time of the transaction. In other words, the lender can just get the borrower to promise in writing the loaned funds will only be used for personal, family or household needs and thus not require disclosures. There are several transactions exempt from the statute’s requirements. Loans secured by real property, leases, purchase money obligations, certain healthcare factoring transactions and transactions exceeding $500,000 are exempt. Depository institutions and affiliates, lenders regulated under the Farm Credit Act, motor vehicle dealers, dealer rental companies, licensed money transmitters and any provider who originates five or fewer transactions in Missouri are exempt.

Required Disclosures

The disclosures required under the new Missouri law are relatively straightforward and attempt to highlight the overall costs of certain loans and financial transactions relative to the benefits to the business. Specifically, the total amount of funds provided, the total amount of funds disbursed, the total of payments to the provider, the total dollar cost of the commercial financing transaction, the manner, frequency, and amount of each payment and whether there are any costs or discounts associated with prepayment must be disclosed before or at the time to the business. There is no form notice provided by the statute. The law takes effect either six months after the Division of Finance promulgates rules or on February 28, 2025, if the Division of Finance does not intend to promulgate rules.

Brokers

Brokers facilitating commercial financing transactions in Missouri now must register with the Division of Finance and maintain a $10,000 surety bond under the new law. The registration requires the broker to disclose certain business information along with any felony convictions of principals. It also requires payment of registration and renewal fees.

Thoughts

This law seems to target certain financial transactions and institutions commonly used by small businesses for their borrowing needs. A common theme of these financial transactions is that the terms of the contracts related to costs, interest and payments can be hidden, unclear or confusing to small businesses. There is the old adage that a transaction involving two businesses is one involving two sophisticated entities that should have freedom of contract without regulatory interference. Missouri, and other states, appear to be taking a different approach. We will monitor for promulgation of rules by the Division of Finance and, if that happens, the New Missouri Commercial Financing Disclosure Law Blog Part II is coming your way!

Laura Beasley and Greg Odom to Present at IDC Class Action Seminar

11 Sep 2024

On September 20, Baker Sterchi Members Laura Beasley and Greg Odom will present at the Illinois Defense Counsel (IDC) ABCs of Class Action Litigation Seminar in St. Louis, Missouri.

Beasley will co-present “Navigating the PFAS Landscape: Science, Applications, and Legalities” which will explore the history, chemical properties, environmental persistence and health effects of PFAS, as well as their industrial uses, regulatory landscape and the EPA's action plans. Odom’s presentation, titled “From BIPA to GIPA: Another Four-Letter Word in Illinois Class Action Litigation,” will focus on GIPA’s key provisions, the troubling similarities between GIPA and BIPA, GIPA litigation trends and considerations for companies regarding GIPA litigation.

Beasley is an experienced trial lawyer with a practice focused on civil defense litigation. She is a past president of the IDC and currently serves on its Diversity & Inclusion Committee. She also holds board positions with the East St. Louis and St. Clair County Bar Associations, as well as with the DRI State and Local Defense Organization. Odom is an experienced trial attorney with a practice focused on defending clients in mass toxic torts and commercial litigation in state and federal courts across Illinois and Missouri. He holds positions as a member of the IDC Board of Directors and the Toxic Torts Committee and serves as an author and editor for the Survey of Law. Both are located in the firm’s Belleville office.

For more information or to register for the seminar, click here.

Baker Sterchi Attorneys Recognized by Washington Super Lawyers 2024

11 Sep 2024

Washington Super Lawyers 2024 has named Members Robert Christie and Megan Coluccio to its list of Super Lawyers and attorney John Barry to its list of Rising Stars. Christie and Barry are recognized in civil litigation defense and Coluccio in civil rights. All three practice in the firm's Seattle office.

Christie is an experienced trial lawyer whose practice focuses on civil defense litigation. He serves on the Lawyers for Civil Justice Board of Directors and co-chairs the firm’s Law Enforcement & Civil Rights Defense practice group. He received his law degree from Seattle University School of Law and is admitted to practice in Washington, Oregon, Idaho and before the United States Supreme Court.

Coluccio is a trial lawyer concentrating on complex civil rights, professional negligence and municipal liability cases. She is vice chair of the Federation of Defense & Corporate Counsel’s Civil Rights & Public Entity Liability Committee and co-chairs the firm’s Law Enforcement & Civil Rights Defense practice group. She received her law degree from Seattle University School of Law and is admitted to practice in Washington and Oregon.

Barry focuses his practice on municipal defense, personal injury and professional liability defense. He currently serves as the young lawyer representative for the Washington State Chapter of the Federal Bar Association. He earned his law degree from the University of Washington School of Law and is admitted to practice in Washington.

Super Lawyers recognizes attorneys who have achieved a high degree of peer recognition and professional achievement. The annual selection process is multi-phased and includes independent research, and peer nominations and evaluations. No more than 5 percent of attorneys in each state are selected.

Rising Stars honors top up-and-coming attorneys who are 40 years old or younger or who have been practicing for 10 years or less. Only 2.5 percent of attorneys in each state are recognized.

Baker Sterchi Sponsors Cristo Rey High School Corporate Work Study Program Student

10 Sep 2024

Baker Sterchi is pleased to announce our sponsorship of a student in the 2024-2025 Cristo Rey High School Corporate Work Study Program. Our sponsored student, Nayeli, is based in our Kansas City Crown Center office, where she works as a legal administrative clerk for four days each month throughout the school year.

Cristo Rey High School is dedicated to preparing culturally diverse, ambitious students with financial need for college and careers. Their work study program connects high school students with companies in the Kansas City area, helping to defray the cost of their education and providing invaluable real-world work experience.

Illinois BIPA Reform Reduces Potential Liability for Collecting or Sharing Biometric Data

10 Sep 2024

ABSTRACT: Illinois’ biometric privacy reform will significantly reduce a company’s potential liability for collecting or sharing an individual’s fingerprint and other biometric data without informed consent. Effective immediately, private entities that collect or disclose the same biometric identifier from the same person with the same collection methods commits only one violation and the individual is entitled to just one recovery of statutory damages.

With the Illinois Governor’s signature on Senate Bill 2979, amendments to the Biometric Information Privacy Act, known as “BIPA” (740 ILCS 14/1, et seq.), offer companies protections which will significantly reduce a company’s potential liability for collecting and sharing an individual’s biometric data without informed consent. BIPA is amended to say that private entities that collect or disclose the same biometric identifier from the same person using the same collection method commits only one violation of the law, entitling the individual to just one recovery of statutory damages, regardless of the number of times that biometric information is shared. 740 ILCS 14/20. The amendment presents what can be considered “guard rails” on what might otherwise be significant liability for a business.

The amendment also redefines and significantly expands “written release” to include electronic signatures, which is now defined to include “an electronic sound, symbol, or process attached to or logically associated with a record and executed or adopted by a person with the intent to sign the record.” 740 ILCS 14/10.

The amendment is largely a response to the Illinois Supreme Court’s interpretation of a pre-amendment BIPA claim against White Castle. In Cothron v. White Castle Sys., 2023 IL 128004, the court found each unlawful fingerprint scan or disclosure constituted a new BIPA claim but that damages awards for each violation remained discretionary, noting that “there is no language in the Act suggesting legislative intent to authorize a damages award that would result in the financial destruction of a business.” Cothron at ¶ 42. White Castle had argued that only the first illegal biometric scan or disclosure was actionable under the Act because the alternative would expose even the smallest of companies to potentially disastrous statutory damages even when the claimants were unable to point to any actual damages from each alleged violation.

Illinois enacted BIPA in 2008, and it was considered a pioneering law for the protection of consumers and employees from misuse of biometric data, including face recognition, fingerprints, voice recognition, retinal scans, and other types of personal identifying information. BIPA, however, had come under fire by companies hit with large (and sometimes disastrous) fines due to its previous provisions allowing for fines for each violation of the act, even when the violation involved the same biometric data from the same person using the same collection method.

The area of BIPA litigation in Illinois remains dynamic, and Baker Sterchi remains committed to following and reporting upon this important and developing area of the law.

Receptionist, Kansas City

10 Sep 2024

Our Kansas City office has an opportunity for a friendly and energetic receptionist. View the job description here.

Stewart Bogart Joins Baker Sterchi in Kansas City

09 Sep 2024

Stewart Bogart has joined Baker Sterchi’s Kansas City office as a senior attorney. He has extensive experience representing both large and small businesses in the construction, trucking, finance and insurance industries.

Bogart earned his law degree from the University of Kansas School of Law and holds an undergraduate degree from the University of Oregon. He is admitted to practice in Missouri and Kansas.