Saturday, September 16, 2006
In a development related to the recent post on delay preventing a Gissel bargaining order, General Counsel Meisburg just released a memorandum setting forth his intent to expedite the NLRB's attempts to enforce its election decisions. The General Counsel notes that the chance of employers voluntarily complying with the Board's finding of a technical 8(a)(5) unfair labor practice (meaning that the employer unlawfully refused to bargain because of a failed challenge to an election) is "extremely small." Therefore, technical 8(a)(5) cases will be sent to the Appellate Court Branch for enforcement within 7 days, rather than the usual 30 days. Where appropriate, the Appellate Court Branch is encouraged to seek expedited review in the courts of appeal or, in "exceptionally strong cases," the branch should file a motion for summary enforcement.
Needless to say, I'm very supportive of the General Counsel's action. It obviously cannot directly speed up the Board's decisionmaking, although one can hope that it could help light a fire Board-side. At a minimum, expediting enforcement decreases somewhat employers' ability to delay in these cases.
Hat Tip: Jason Walta
Northwest Airlines Corp. flight
attendants can't strike over pay cuts, ruled U.S. District Judge Victor Marrero yesterday.
Northwest has used its bankruptcy filing to reject its bargaining agreement with the flight attendants. When Northwest unilaterally imposed its own "agreement," the flight attendants rejected it (twice) and threatened to strike. Northwest requested an injunction prohibiting the strike, but the bankruptcy judge ruled he didn't have the legal authority to block the strike. However, in a 104-page opinion, Judge Marrero ruled that union hasn't yet "sufficiently exerted every reasonable effort to settle the parties' dispute" as required under the Railway Labor Act.
For more, see this article by Tom Becker and Mary Schlangenstein in the Chicago Tribune.
Finish Line required its employees to sign an arbitration agreement that contained a forum selection clause and required that arbitration occur in Indianapolis, where the company is headquartered. A discharged employee who had worked at a Finish Line store in Austin, Texas sued and argued that he could not travel to Indianapolis to arbitrate both because his multiple sclerosis made it difficult to travel physicaly and because his unemployment made it dfficult financially. The U.S. District Court for the Western District of Texas agreed, findng that enforcing the forum selection clause would effectively deprive the employee of his day in court. The court therefore severed the forum selection clause but otherwise enforced the arbitration agreement.
The case is Dominguez v. Finish Line, Inc., 439 F. Supp.2d 688 (W.D. Tex. 2006).
- Matt Zwolinski (photo above), Sweatshops, Choice, and Exploitation (97).
- Ian Malcolm Ramsay, Andrew Barnes, Tanya Josev, Jarrod Lenne, Shelley D. Marshall, Richard Mitchell, & Cameron Rider, Employee Share Ownership Plans: Evaluating the Role of Tax and Other Factors Using Two Case Studies (69).
- Kirsten Anderson & Ian Malcolm Ramsay, From the Picket Line to the Board Room: Union Shareholder Activism (60).
- Sanford M. Jacoby (photo above), Convergence by Design: The Case of CalPERS in Japan (31).
- John H. Langbein, Trust Law as Regulatory Law: The Unum/Provident Scandal and Judicial Review of Benefit Denials Under ERISA (189).
- Cary Coglianese (left) & Michael L. Michael (right), After the Scandals: Changing Relationships in Corporate Governance (133).
- Vidhi Chhaochharia & Yaniv Grinstein, CEO Compensation and Board Oversight (86).
- Ian Malcolm Ramsay et al., Employee Share Ownership Plans: Evaluating the Role of Tax and Other Factors Using Two Case Studies (69).
- Richard L. Kaplan, Means-Testing Medicare: Retiree Pain for Little Governmental Gain (61).
Friday, September 15, 2006
A little over a month ago, we wrote about an important cash balance plan conversion decision by the Seventh Circuit in the Cooper case, which found that most such conversions, as long as the plan terms are neutral, are not age discriminatory.
Word now comes that the Seventh Circuit has denied rehearing en banc in the case. Althouugh the plaintiffs have indicated that they will now file a petition for certiorari with the Supreme Court, I would be surprised if the petition were granted since there does not presently exist a sufficient cirucit split and, at least prospectively, the issue has been statutorily settled with the enactment of the Pension Protection Act of 2006 (PPA). Nevertheless, there is some chance as there are still many converted cash balance plans operating in the pre-PPA world which have adversely impacted older employees and retirees.
Hat Tip: Debra Davis
Sam Bagenstos (Wash U.) over at the Disability Law Blog has an insightful critique of an ADA decision just handed down by the Sixth Circuit:
[T]he Sixth Circuit issued its decision in EEOC v. Watkins Motor Lines, Inc. The EEOC had brought suit on behalf of a worker who claimed he had been fired because of his morbid obesity (he weighed up to 450 pounds). The Sixth Circuit held that the worker did not have a "disability" for purposes of the ADA, because he did not show that his obesity had a "physiological cause" and therefore qualified as a "physiological disorder." Although the EEOC had shown that the worker's weight was more than 100% greater than the norm (sufficient for a diagnosis of morbid obesity under the traditional definition), they failed to show that the weight was "the result of a physiological condition."
Like Sam, I believe the Court provides a confused analysis about the meaning of a physiological disorder. Sam's proposed definition makes a lot more sense: "[M]orbid obesity that meets clinical criteria should always be an 'impairment' -- which doesn't mean it will always be a 'disability,' as the plaintiff will still have to show actual or perceived substantial limitation of a major life activity."
If you are a professor at an AALS-affiliated
school, and are not yet on our mailing list, please feel free to send me
information about your recent professional news and accomplishments here. Today, I already sent the following email to members of the AALS
Section on Employment Discrimination Law.
Dear Members of the AALS Section on Employment Discrimination Law:
I am the Chair-Elect of the Section this year, and our Newsletter Committee is in the process of writing the annual Section newsletter. We would love to hear what you have been up to during the past year, so that we can share your news with the rest of the Section. In particular, please let us know the following:
1. Professional accomplishments, including new articles, books, or casebooks that you have published on employment discrimination law topics.
2. Professional news, including moves to a new school, new hires, or faculty openings in employment discrimination law or related areas.
3. Upcoming conferences or calls for papers on topics related to employment discrimination law.
4. Any teaching tips or ideas that you would like to share regarding your employment discrimination classes (e.g., creative methods for getting students to take the problem of employment discrimination seriously, useful supplemental materials that you’ve used, etc.).
5. Any other news that may be of interest to our
Please email all responses to Paul Secunda at email@example.com by October 16th, and we will include your information in the fall newsletter. Please also feel free to share this email with other professors who would like to become involved in our Section’s activities. We look forward to hearing from everyone.
Paul M. Secunda, Chair-Elect
University of Mississippi School of Law
A Louisville radio station manager won a $195,700 arbitration
claim for wrongful discharge. The radio station appealed. On appeal, the
manager argued he should receive not only the amount of the award, but also
interest on that award beginning on the date the arbitrator issued the award.
The U.S. District Court for the Eastern District of Kentucky held that state
law applied to the issue, and that because the arbitrator’s award amounted to
liquidated damages, the manager was entitled to post-arbitration,
The case is Bradley v. Louisville Communications, L.L.C., No. 3:05CV-734-J, 2006 WL 2620183 (9/11/06) (Westlaw password required).
Thursday, September 14, 2006
We reported recently that the City of Chicago had ratcheted up the pressure on Wal-Mart and other big box retailers by passing a city ordinance, which would have "require[d] large chain store retailers with more than $1 billion in annual sales and at least 90,000 square feet to pay wages of at least $10 an hour plus $3 in benefits by 2010." We wondered then whether ERISA would preempt such a law.
For the time being, we no longer need occupy ourselves with ERISA preemption, as Mayor Richard Daley has now vetoed that bill, saying:
I understand and share a desire to ensure that everyone who works in the City of Chicago earns a decent wage. But I do not believe that this ordinance, well intentioned as it may be, would achieve that end. Rather, I believe it would drive jobs and businesses from our city, penalizing neighborhoods that need additional economic activity the most. In light of this, I believe it is my duty to veto this ordinance.
Stay tuned as there still may be a City Council veto.
1. Believing salaried employees are automatically exempt from overtime;
2. Misclassifying assistant managers;
3. Automatic deductions for meal breaks;
4. Not paying for overtime that has not been approved in advance;
5. Allowing employees to “waive” their rights under the FLSA.
Michael also makes a good point that if you are from a state with separate state laws on wages and hours (like California), it is also important to make sure you are separately in compliance with those requirements as well.
Let's just say that this is not the type of ombudsman that most employers would want for their organizations:
A police video apparently caught the city's ombudsman scratching the rear of a city councilman's sport-utility vehicle with a key after the councilman took his parking space.
Police had a camera on Councilman Bob King's Nissan Murano because his car had been keyed previously. They released the tape Tuesday in response to Freedom of Information Act requests.
The tape shows King's car parked in city ombudsman James Bell's parking spot, marked "Ombudsman." Bell can be seen parked beside the empty car and then walking behind it, apparently dragging a key across it.
Best part of the whole story is the ombudsman's attorney explanation: "Bell's attorney, Bill Runyon, said Bell was steadying himself because he recently underwent surgery on his knee and that's how the scratches happened."
Yeah, and the President is a Democrat.
Hat Tip: Miriam Cherry
Wednesday, September 13, 2006
David Walker posted on SSRN today an essay entitled Some Observations on the Stock Option Backdating Scandal of 2006. One of his suggestions: consider replacing options with simplified long-term incentive programs that are less susceptible to manipulation, such as tying compensation to gains in yearly average share prices. Here's the abstract:
The corporate stock option backdating scandal has dominated business page headlines during the summer of 2006. The SEC is currently investigating more than seventy-five companies with respect to the timing and pricing of stock options granted during the boom years of the late 1990s and early 2000s, and the number of firms caught up in the scandal seems to increase every day. This essay contributes to our understanding of the backdating phenomenon by analyzing the economics of backdating and the characteristics of the firms under investigation. Its main points are the following: First, given the high volatilities of the stocks of the technology companies that dominate the list of firms under investigation and the fact that options granted to executives and employees typically may not be exercised for several years, press reports that focus on the size of the strike price “discounts” achieved by backdating significantly overstate the value of backdating. In some cases, reducing the strike price by a dollar per share by backdating increased the Black-Scholes value of the option by less than twenty cents per share. Second, completely unnoticed in the discussion so far is the fact that in many cases backdating dramatically reduced the apparent value of options. Because the size of executive stock option grants often is determined first by establishing the value to be delivered and then by calculating the number of shares to be covered by the option, reducing the apparent value of option shares may have substantially increased the size and true economic value of backdated executive option grants. Third, comparison of semiconductor firms under investigation for backdating with peer companies that are not suggests an association between backdating and the use of options in compensating non-executive employees. This essay considers several explanations for backdating non-executive options, including share limitations, minimizing apparent rank and file compensation, and cognitive biases. Finally, this essay argues that the backdating phenomenon is really not an accounting scandal. Backdating has accounting consequences, but it is unlikely to have been accounting driven.
Northwest Airlines imposed a 25% pay reduction on its technicians, inspectors, cleaners, and custodians. An ALJ ruled that was a constructive lock-out as to the cleaners and custodians, entitling them to unemployment benefits. The ALS also ruled, however, that the pay reduction was not a constructive lock-out as to the technicians and inspectors, since their base pay was higher. The Minnesota Cour of Appeals yesterday held that the pay reduction was a constructive lock-out as to all groups of employees, entitling all of them to benefits.
The case is Aircraft Mechanics Fraternal Association Members v. Northwest Airlines, Inc., 2006 WL 2599086 (Minn. App. 9/12/06) (Westlaw password required).
Alvin Lurie, Editor of the NYU Review of Employee Benefits and Executive Compensation, adjunct faculty member at NYU, and Assistant Commissioner of Internal Revenue (Employee Plans & Exempt Organizations) under ERISA, sends word of a recent opinion piece that he wrote for Barron's Magazine on August 28, 2006 (subscription required) discussing the far-reaching consequences of a revision by the FASB of the pension accounting rules. These rules are due to take effect this year.
Here's an abstract:
The year 2006 is proving to be the most momentous for pension plans since ERISA’s enactment 32 years ago, with the most drastic reform of retirement benefits since that earlier seminal law itself. Emerging in the shadow of that new law is a far-reaching revision by the FASB of the pension accounting rules to take effect this year, that could well overshadow the more widely discussed legislation.
Both initiatives focus particularly on funding of defined benefit plans, with the object of ensuring more certainty that pension promises will be fulfilled, the latter document especially intended to provide participants and other stakeholders with greater information about the financial health of plans. They will accomplish neither. What they are certain to achieve is the elimination of the fast shrinking population of traditional defined benefit plans. The FASB statement will reverse the long-standing FAS 87, principally by flushing information concerning pension underfunding out of the footnotes and onto the balance sheet proper, while changing the very way the pension liability is calculated for balance sheet purposes and drastically accelerating the recording of the liability.
Professionals have long agreed that funding and reporting is best done by filtering amounts onto the liabilities side of the balance sheet periodically, to avoid volatility from short-term economic factors, like interest, and future projected but not awarded wage increases. It has been estimated that, in the case of one prominent automaker, the change in accounting for pension and welfare benefits this year could increase the combined unfunded liabilities by a mere $68 billion, obviously with devastating impact on shareholders’ equity.
The article concludes with a call upon FASB (not likely to be heeded) to withdraw and reconsider its rule change in light of the new legislation, which does not appear to have entered into the accounting board’s deliberations.
Very interesting, provocative piece and Alvin makes a good point that the on-going deciphering of the Pension Protection Act of 2006 has forced this important change to pension accounting rules out of most people's minds. Perhaps, with this piece, no more.
Tuesday, September 12, 2006
In a recent decision, the NLRB refused to grant a Gissel affirmative bargaining order at a North Carolina Smithfield plant. After losing the 1999 election by 152-108, the union filed objections based on the employer's unlawful conduct. After agreeing with most of the ALJ's findings that Smithfield committed numerous unfair labor practices, the Board set aside the election. However, it rejected the ALJ's recommendation for a Gissel bargaining order.
Although the UFCW obtained authorization cards from a majority of employees, the case had been pending before the Board for five years. According to the Board, given its
long and unjustified delay in processing the case,'a Gissel bargaining order would likely be unenforceable. Accordingly, rather than possibly engender further litigation and delay over the propriety of a bargaining order, we decline to reach the question of whether a remedial bargaining order is appropriate here. Instead, we find that employee rights would be better served by proceeding directly to a second election.
Notable is the Board's reliance in its opinion that such an order would be "unenforceable," rather than improper. As reflected by the Board's citation to cases by the D.C. and Fourth Circuits, that opinion is no doubt correct. What is troubling is that the Board's delay has precluded a significant remedy against widespread employer unfair labor practices. Employees' concerns are, like here, generally cited as the reason that delay weighs against an affirmative bargaining order. Yet, employees are the ones bearing the brunt of the delay, as it has been over five years without them being able to vote in a fair election. Given that the courts--particularly the D.C. Circuit--are more than happy to use Board delay to knock down bargaining orders, the Board must be better about processing these types of cases in a timely matter.
Jean Sternlight (UNLV) (pictured left) wrote the ADR listserv to remind us that on January 26, 2007, the Saltman Center for Conflict Resolution at the UNLV Boyd School of Law, of which she is the director, will be sponsoring a major conference on arbitration in Las Vegas. Including 18 of the country's leading arbitration scholars, including our very own Rick Bales, this conference will focus on whether the Federal Arbitration Act ought to be revised.
To review the tentative program and to obtain information on registration, please see the Conference's web site.
If you have questions please contact Mary Sondheim at (702) 895-0490 or email her here.
The symposium will include sessions on the National Labor Relations Board’s Deferral Policy; Salting: Union Strategies v. Employee Hiring Policies; and an address by Ronald Meisburg (photo at left), general counsel of the NLRB. New this year will be two breakout sessions: the first on Representation Case Overview and the second on Unfair Labor Practice Charge Overviews.
For more information, contact Robin Dortenzio, (313) 577-3934.
This summary of the ABA 2006 Legal Technology Survey Report is courtesy of Carol Bredemeyer's Quick Tips email newsletter.
The 2006 ABA Legal Technology Resource Center Survey is just out, with some fascinating statistics.
With over 2500 lawyers responding to this year's survey, representing a broad spectrum of practice styles (solo, small, large, mega) and areas (litigation; estates, wills & trusts; real estate; corporate; commercial; and contracts); with more than half of the respondents having been in practice for 20 or more years, an astounding 93% of respondents report that they do their legal research online.
Forty-two percent tend to start their research projects using "fee-based resources" (the results don’t specify, but let’s assume this refers to Westlaw, LEXIS), 25% use a "legal-specific search engine" (probably Findlaw or something like it), and 24% use a general search engine (the Googlers!).
Eighty-seven percent --the highest percentage ever recorded in an ABA technology survey--report using free online sources in their research.
Despite that number, 83% report that they also use fee-based resources to conduct their research (and not just for case law or online Shepardizing; use of these databases for treatises and secondary materials has increased from 30% two years ago to 41% in this year's survey).
Of those who use the fee-based resources, over half (53%) report that they use Westlaw; 37% use LEXIS.
How many respondents reported that they regularly use print resources? While the 2003 survey indicated that number at 75%, in the 2006 survey, that number has dropped to 58%.
ABA members can download free PDFs of this report and other technology trend reports at www.abanet.org/tech/ltrc/survstat.html.
- Lucetta D. Pope (photo above), Recent Developments in Employment Law, 39 Ind. L. Rev. 925 (2006).
- Nan S. Ellis, Employer-Based Training Programs for TANF Recipients: A Public Policy Examination, 32 Fordham Urb. L.J. 589 (2005).