Tuesday, August 23, 2011

Response to Nocera on Boeing Complaint

Boeing SInce the initial uproar over the Boeing complaint, I've been sitting back and waiting for the hearing and ALJ recommended decision stage to wrap up.  But a recent column by the NY Times' Joe Nocera has prompted me to post something yet again.  When a columnist whose most recent notoriety was calling Tea Partiers "terrorists" writes a column that looks like it was written by Boeing, I just can't resist.  I won't comment on his positive descriptions of Boeing, which many in the labor field might take issue with, but instead focus on his erroneous description of the case and the NLRB.

Nocera starts by claiming that he is "mildly obsessed" over the issue.  I'd suggest that he make the obsession stronger, because it's apparent that he hasn't taken the time to read the complaint, read the NLRB's statements on the complaint, talk to anyone who knows the law, or even spent five minutes on the NLRB website to determine its basic structure and function.

Nocera at least said there was a "complaint" at issue rather than a decision, although he doesn't seem to understand the difference between the NLRB and the NLRB's General Counsel.  Indeed, he states that most of the Board's "top executives" were nominated by Obama, without recognizing that the GC is the only political appointee who has looked at this case.

Nocera also messes up the GC's proposed order.  The GC did not say that all the South Carolina jobs have to be moved back to Washington.  As the NLRB's press release clearly stated:  "To remedy the alleged unfair labor practices, the Acting General Counsel seeks an order that would require Boeing to maintain the second production line in Washington state. The complaint does not seek closure of the South Carolina facility, nor does it prohibit Boeing from assembling planes there."  That may seem like splitting hairs given the economics involved, but Nocera and others are wrong to say that the NLRB is trying to take jobs away from a certain area.  If Boeing wants to keep future work in SC, it can.  Besides, the reality is that if Boeing were to lose, the likely result would be to pay the Washington workers backpay (and maybe some frontpay) in lieu of moving the work.

This touches on a more general misconception that the NLRB is asserting some new, broad power to dictate work locations.  As anyone in this field knows, employers have a wide latitude to place work wherever they want, especially if it's new production or the shutting down of current work (anyone remember Wal-Mart stopping in-house butchering, "coincidentally" after the butchers voted for a union?  There were no NLRA violations resulting from that.).  One exception, however, is Section 8(a)(3), which essentially says that even normally lawful actions will be unlawful if made for the purpose of encouraging or discouraging union activity.  That is exactly what the GC is arguing that he has evidence of here. 

Now, it's often very difficult to prove discriminatory intent.  That's why 8(a)(3) cases often involve stupid comments by managers, such as the Boeing official here who tied the location decision to the union's past strikes (anyone know if that guy is still employed, because if he hadn't opened his mouth, there probably wouldn't have been a Boeing complaint).  One can interpret that statement in the overall context different ways, and I think there are still unanswered questions about exactly what was going on.  But that's why the NLRB holds hearings.  So here's a novel idea:  why don't we wait and see what evidence and testimony comes out of the hearing before making statements like "[i]t is a mind-boggling stretch to describe Boeing’s strategy as retaliation.'"  If Boeing really based its decision on past strike activity, retaliation is exactly what happened.  And, as Boeing well knows, this sort of retaliation has been clearly prohibited for decades, as it should be (for readers not well versed in labor law, think about what would happen in the future if employers were free to exert economic harm on workers who have shown a willingness to exercise their right to strike or other activities protected by law).

What we have in the Boeing case is not a novel interpretation of the law.  It's an argument about the facts, specifically the motivation of the employer.  Motivation is a very tricky thing to figure out and there will no doubt be different interpretations of the evidence on this question.  But the histrionics over the mere filing of a complaint (not to mention congressional attempts to influence the outcome of the subsequent decision)--before the hearing evidence has been released or any factual findings have been made--is completely unjustified here.

OK, for those of you who actually stuck with me this long, my rant is done.  At least for now . . . .

-JH

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Comments

"One exception, however, is Section 8(a)(3), which essentially says that even normally lawful actions will be unlawful if made for the purpose of encouraging or discouraging union activity."

This is why people hate lawyers. Unions are harmful to a companies bottom line, so "actions" taken to encourage or discourage union activity are practically endless. Could you shed some light on this?

Posted by: Simon | Aug 23, 2011 5:07:09 PM

What annoys me is the throng of pundits treating this as a policy issue and not a legal issue. I've seen dozens of commentators, who probably had never heard of the NLRB and certainly not the GC, voicing their opinion on whether Boeing should be allowed to select where to build its planes or whether the "administration" is wrong to halt the creation of new jobs (as if an executive order had been issued). Unfortunately, labor law is too nuanced for the pundits to understand, and I have not seen one who appears to have taken the time to learn.

Posted by: Jeff | Aug 23, 2011 5:26:51 PM

I don't think that the fact that labor law is "nuanced" makes the opinions of pundits and the general public any less valuable, as you imply. Regardless of the intricacies of labor law, what is happening is clear for anyone to see. As Nocera says, the NLRB case here argues for a heretofore unseen expansion of the federal government into the business decisions of corporations, seemingly because an executive said something behind close doors. Have you ever thought that the public simply doesn't like the moral implications of labor law, regardless of how complicated it is?

Posted by: Simon | Aug 23, 2011 7:19:19 PM

What Simon said. The "nuances of labor law" is one reason why unions and complicit employers can still write contracts with forced-unionism clauses which require "membership" as a condition of employment, even though such requirements have been unlawful since 1947. To be sure, the Supreme Court has held that "by tracking the statutory language, the clause incorporates all of the refinements that have become associated with that language," Marquez v. Screen Actors Guild, 525 U.S. 33, 46 (1998), but that is little solace to employees who are lied to on a regular basis and are not issued copies of the relevant portions of the United States Reports with their copies of the monopoly bargaining agreement.

Posted by: James Young | Aug 23, 2011 8:29:07 PM

"Unfortunately, labor law is too nuanced for the pundits to understand, and I have not seen one who appears to have taken the time to learn."


I actually think this is one reason why this case may turn out to be a bad idea for the labor movement even if the IAM win. It isn't just most pundits who don't understand the ins and outs of the NLRA -- it's obviously the vast majority of Americans. And I think that if the NLRB decides that the NLRA prohibits companies from moving production to a new factory because they want to ensure the stability of production -- which is what Allbaugh said in the interview that's at the heart of this complaint -- I think most Americans are going to find that outcome ridiculous. And if the second production line is moved back to Puget Sound -- which is, in fact, what the general counsel is asking for, contrary to what Jeffrey suggests -- this will be seen as yet another example of unions protecting their own interests at the expense of other workers.

I'd also add that the general counsel's interpretation of the NLRA in this complaint is, shall we say, rather expansive. He equates the desire to avoid strikes in the future with retaliation against past strikes, which is a bit odd when you consider that no one who struck was fired or lost their job. And he says that the transfer of the production line, since it was driven by a past history of labor turmoil and driven by the desire to avoid future strikes, was "inherently destructive" of the right to organize. This seems tantamount to saying that once a factory is unionized, a company cannot move production away from it in order to ensure more stable production or to cut wage costs (since that, too, would obviously tend to "discourage" employees "from engaging in these or other union and/or protected, concerted activities). This seems like a remarkable assertion of government authority over ordinary business decisions, and one that I suspect will go over with the public like the proverbial lead balloon.

Posted by: K. Williams | Aug 23, 2011 8:53:18 PM

If people are mad at the law, there is a well-known fix - change it. The truth of the matter is that the opponents of various aspects of labor law have not been politically powerful enough to change them. Advocates for expansion of the protections of labor law (like me) have in turn not been powerful enough to advance their agenda. And none of this is new. In my opinion this "ossification" has been the legal situation since the late 1940s, when both Taft-Hartley and the Administrative Procedure Act were enacted. (The APA's role in the political dynamics of administrative law is something I'm going over with my admin class right now). But I think Jeff's rant mirror's my frustration with people who "hate the lawyers" without realizing what the law even says. There are aspects of property law, contract law, torts, workers compensation, and so forth, that I don't like at all. But I try to know what it is that I don't like so that I can a) critique somewhat intelligently and b) be in a position to espouse changes. I've known Jim Young for a long time and - as he will attest - I disagree with him on many (but not all) issues. But I've had the pleasure of being involved in matters in practice with him and think he is an excellent and deeply knowledgeable lawyer. He and I could have have any number of legal debates. What I'm concerned about is the activity outside of the rule of law, which I find to be reactionary and very dangerous.

Posted by: Michael C. Duff | Aug 24, 2011 6:31:53 AM

Everyone is entitled to their own opinion, but not their own facts. This is not about a "behind closed doors" comment by Boeing management - it was made publicly in a taped interview. And, Albaugh didn't say Boeing's decision was for the general purpose of ensuring "stability of production." He said publicly that Boeing was moving work because of past strikes and the prospect of future strikes. What is a General Counsel supposed to do when an executive makes those statements publicly (and then doubles down in future statements) ?

I'm a management-side labor lawyer. I've studied, practiced and taught labor law for 15 years. I still don't understand every facet of the subject matter, which is why it is so maddening to see op-ed commentators making assertions (with such certainty) about what labor law is and what it prohibits. Then their readers spread those misconceptions as fact. It is fine, and actually productive, to have a debate about the scope of the NLRA. If people want to challenge the wisdom of a law guaranteeing the right to strike and the restrictions imposed on management to protect that right, then I'm game. But let's not kid ourselves here. What Nocera and some of the commenters on this blog are doing is attacking the NLRBGC for filing a complaint to enforce laws they think are immoral, outdated or just unwise. What Issa is doing with his committee is far worse. He is interfering with an adjudicatory process, at its earliest stages, on political and not legal grounds.

If people think the law is wrong, then take action to change the law. Don't attack the NLRB GC for enforcing the law. Jeffrey Hirsch and I probably disagree on a lot of substantive labor law issues, but I agree with him completely on this one.

Posted by: Jeff | Aug 24, 2011 7:14:05 AM

"But I think Jeff's rant mirror's my frustration with people who 'hate the lawyers' without realizing what the law even says."

In defense of the haters, I'm a lawyer (though with no training in labor law), and I've had a very hard time understanding the retaliation rule.

Employers (in my possibly-mistaken understanding) are allowed to do things that make economic sense, even if they disadvantage unionized employees. But employers are not allowed to "retaliate" against unionized employees. I can't figure out how those rules interact. If an employer decision makes economic sense for the employer (i.e., lowers costs, reduces the risk of strikes), can it still be illegal retaliation? If so, what's the test to distinguish between OK economic decisions and forbidden retaliation?

Posted by: matth | Aug 24, 2011 8:11:53 AM

MattH: The retaliation provision works by focusing on employer intent. As you noted, employers can generally do things in their economic interest. But a limit to that is if they do the same thing with an intent of harming (or helping) union activity. The reason is that not having such a rule would gut employees' labor rights. For instance, employees have a right to strike. But that right would mean nothing if employers were allowed to retaliate against strikes in every instance where they can argue that there was also an economic rationale for doing so.

Posted by: Jeff Hirsch | Aug 24, 2011 8:41:23 AM

Thanks for the reply!

Boeing is allowed to make decisions with the intent of avoiding costs, but not with the intent of retaliating against union activity. But Boeing sees the costs as resulting from union activity.

How could Boeing be motivated by high costs without also being motivated by the union activity that caused the high costs? If Boeing can say, "We chose SC because WA has high costs," why can't it say, "We chose SC because WA has high costs because there are lots of strikes in WA," or, "We chose SC because of the strikes in WA."?

Posted by: matth | Aug 24, 2011 9:25:24 AM

That the continuum matth identifies in the questions he asks --- which, as I understand it, reflect the differences between permissible employer speech and speech constituting an unfair labor practice, though on this subject I'm not as "deeply knowledgeable" as Professor Duff gives me credit for ;-) --- is one reason why labor law is so problematic, both for practitioners and the general public. In essence, and to a large degree, it proscribes frank discussion and economic evaluations. Inscrutability serves no one, and labor law is certainly inscrutable.

Posted by: James Young | Aug 24, 2011 10:23:05 AM

As James notes, Matt's last post touches on the tough balance in these, like many, NLRA cases: an employer's business autonomy v. employees' labor rights. I would disagree with James on the way that balance comes out generally (it seems to me to be tilted pretty far towards business autonomy), but that's definitely an area where reasonable minds can differ.

As for Matt's hypo, the key is still the employer's motivation. If the Board finds that Boeing was concerned more with the economics, even if those economics involves the costs of unionization and work stoppages, that's usually OK under the NLRA. It's when there is a finding that Boeing intended to harm employees' willingness to engage in strikes and other union activity that it becomes illegal (although Boeing would be off the hook if, as they argue in their response to the complaint, they would have placed the work in SC even if such improper intent didn't exist). Again, intent is really hard to determine and will be a major focus of this case. The GC is using several statements by Boeing officials--no doubt put in context of the parties' overall labor relations--to argue that the bad motive is there. Boeing is arguing that it's just economics. The one thing I'm confident about predicting is that both sides will still have room to argue on that point no matter what the ALJ or Board decides.

One final point: the one area that might be viewed as novel from a legal basis is the GC's assertion that Boeing's actions are "inherently destructive." That's a confusing bit of labor law, but is basically a theory that some actions are so obviously wrong that the Board will presume bad intent unless the employer can show otherwise. The Board has been very reluctant to use that theory, save for a few well-established scenarios (e.g., giving any worker who worked during a strike "superseniority" that would be last after the strike). So I wouldn't be surprise to see even the Democratic Board members reject that theory. But it's not a necessary part of the GC's case.

Posted by: Jeff Hirsch | Aug 24, 2011 11:18:25 AM

My 2 cents. It comes down to intent, and in criminal law everything is about intent (generally). Intent can be the difference between 8 months time served and probation verses 15 to life.

Why folks can't get it is beyond me. But that is only part of the picture. I have read many, many commentaries by journalists and pundits referring to Becker as the head of the NLRB. There is the commingling of the GC and Members, and other things. It comes down to whether or not these critics believe they are correct or know they are wrong, but do not care - - there is an agenda to push.

Posted by: Per Son | Aug 24, 2011 11:21:24 AM

Jeff, thanks again for the informative replies.

Posted by: matth | Aug 24, 2011 12:21:32 PM

Jeff,

This is a very helpful post. I'm still honestly uncertain about what I think here, though. I wonder if you could explain what you think the right answer would be in the following hypothetical situations:

1. I decide to start an aircraft manufacturing company. I decide that I will minimize my chance of facing disruptive strikes if I locate my facilities in a "right to work" state. So I set up my production lines in South Carolina. Violation? (I assume not, because there's nobody for me to retaliate against yet.)

2. I run an aircraft manufacturing company in a highly unionized, non-"right to work" state. In my production lines in that state, I have experienced periodic strikes in the past. I decide to start making space-age vacuum cleaners as well. To avoid the disruptive strikes I have experienced in my aircraft production lines, I decide to set up my vacuum cleaner production lines in South Carolina. Violation?

3. I run an aircraft manufacturing company that has a number of production lines in a number of states, both those that have "right to work" laws and those that don't. I decide to open a new production line for a new plane we are building. Because I have experienced disruptive strikes in my plants in non-"right to work" states but not in my plants in "right to work" states, I decide to open the new line in South Carolina to avoid them. Violation? Does it matter whether, when my company has expanded its production, it has done so by opening a new line in a new location, rather than by expanding our existing facilities?

4. Same hypo as #3, but I decide to produce more of a plane I am currently building, and I decide to do so in South Carolina to avoid strikes. Violation?

5. My aircraft company currently produces planes only in highly unionized, non-"right to work" states, and we have experienced a number of strikes. To avoid those strikes, when we decide to produce more planes we decide to produce them in South Carolina, though we don't move any existing production lines. Violation? (This seems like the facts of the Boeing case according to the Acting GC's complaint.)

6. My aircraft company currently produces planes only in highly unionized, non-"right to work" states, and we have experienced a number of strikes. To avoid those strikes, we decide to close our existing plants and reopen in South Carolina. Violation? (Clearly yes, correct?)

What do you think?

Thanks!

Sam Bagenstos

Posted by: Sam Bagenstos | Aug 24, 2011 4:50:49 PM

Thanks Sam. Those are all good hypos and highlight why people are concerned with what they've heard about the Boeing case. Before I dive in, I should note that 99 times out of a 100 (actually probably far more), the employer is fine in all of these situations. That's because, as I explain below, if the employer is really motivated by economics, it's acting lawfully (with the exception of a possible 8(a)(1) problem, which I note at the end of this comment).

I'm going to give the worst possible response to all of your hypos (including #6): it depends. The reason is that the one fact your hypos don't contain is whether the employer intended to discourage union activity by its employees. You've stated an intent in some hypos to avoid disruptions caused by strikes, which by itself isn't a violation. But what the GC has to prove to get an 8(a)(3) is that the employer is trying to discourage its employees from engaging in strikes (and even then, the employer can still win by proving that it would have made the same decision absent the discriminatory intent--it's a true affirmative defense, rather than limited liability like under Title VII's mixed-motive analysis). For all of your hypos, if such an intent exists, there's a violation; if the intent isn't there, there's no violation.

In the Boeing case, the GC is trying to prove intent two different ways. First is the inherently destructive analysis that I mentioned before. Second is a classic use of direct and indirect evidence; the company statements are the most important part of that, but I've got to believe that the history of Boeing's labor relations is going to come in too. You, of course, know far better than me all the difficulties in proving an employer's intent, but that's what the 8(a)(3) analysis turns on. In fact, here's a quote from the GC's complaint:

"Respondent engaged in the conduct described above in paragraph 7(a) [establishing the production line in SC] because the Unit employees assisted and/or supported the Union by, inter alia, engaging in the protected, concerted activity of lawful strikes and to discourage these and/or other employees from engaging in these or other union and/or protected, concerted activities."

Regarding #3 & #4, it doesn't usually matter if you're deciding where to locate new work, but it does matter if you're moving work currently being done at a different location. That's the classic "runaway shop" situation, which has a separate analysis under the Dubuque Packing decision.

I should note as well that the GC also brought an 8(a)(1) complaint based on some of the comments. This is the Gissel prediction v. threat analysis, which doesn't need a motive finding (although it can help if the employer is found to have a bad motive). In general 8(a)(1) makes unlawful even good faith employer actions that tend to threaten or coerce employees' exercise of their labor rights. However, it bumps up against employer's free speech right under Section 8(c). The balance has been a test that seeks to differentiate mere objective predictions by an employer (which are legal) versus threatening statements (which are explicitly not protected by 8(c) and are illegal. These are tough cases to decide, so it could really go either way.

Posted by: Jeff Hirsch | Aug 24, 2011 6:01:52 PM

Thanks, Jeff. This is even more helpful. But to get to the nut of your answer, it all comes down to what "intended to discourage union activity by its employees" means, doesn't it? Does the GC have to show that Boeing wanted employees who think about striking in the future to have the Dreamliner example on their mind? Or something else? I read you as agreeing that Boeing would not be liable if it moved the production line to South Carolina simply because it thought the workforce there would be more docile. Am I right about that? Yes, this will in the end all depend on the facts, there's always the same-decision defense, etc., but I'm still having trouble pinning down the legal theory precisely.

Posted by: Sam Bagenstos | Aug 24, 2011 6:27:25 PM

Yep, you've pretty much got it. Boeing will be fine if it's found that it merely prefers to locate in an area where it believes that employees won't strike or engage in other protected activity as much as another area. That's because there's no proof that it intends make its Washington employees feel threatened the next time they contemplate a strike. But if it is found that Boeing is trying to discourage its employees from striking by placing the cloud of Dreamliner over their heads, then that's an 8(a)(3) violation. This isn't necessarily the most satisfying distinction given the realities involved, but it's largely mandated by the language of Section 8(a)(3) and the need to strike some balance between allowing employers to made corporate decisions and ensuring that employees actually have an opportunity to exercise their rights. But, as I've noted, the vast majority of decisions of this nature never have problems under the NLRA. It's usually when someone from the employer says more than they should (or, perhaps, is more honest than the employer would like them to be).

Posted by: Jeff Hirsch | Aug 24, 2011 7:19:08 PM

Cynthia Estlund foreshadowed the confusion voiced by commentators here in a 1993 law review article, "Economic Rationality and Union Avoidance: Misunderstanding the National Labor Relations Act," 71 Tex.L.Rev. 921 (1993). She pointed out that, of course, most anti-union discrimination by employers is economically rational. As a result, it undermines enforcement of the Act to allow employers to defend capital allocation decisions by saying that the decisions are motivated by economic considerations rather than anti-union ideology. The premise of the NLRA is that while unionization may reduce profits of individual corporations, the overall effect on the economy is positive because it increases the purchasing power of wage earners. Unfortunately, now the governments of almost half the states are committed to a philosophy that actively seeks to drive down wages. For instance, the economic development websites of the right-to-shirk states almost uniformly encourage businesses to locate there because wages are low. Thus, while the Boeing case is not about the right-to-shirk laws, it does highlight the tension between the philosophy that underlies those laws and the policies embodied in the NLRA.

Posted by: Andrew Strom | Aug 25, 2011 8:03:22 AM

How would a responsible employer be able to mitigate risk? I mean, say an employer has suffered losses due to lawful strikes. It doesn't want to be at as great a risk to labor unrest, so it opens facilities in other locations, so that the stike prone facilities are a lesser percentage of the business, and thus will not cripple the employer. This reduction in the power of the union is clearly to the detriment of the union, and may even be 'common knowledge'. So this be prohibited? Or not? Why would it be retaliation, as no current employees have lost their jobs, lost pay, benefits or seniority? They have simply lost some 'power' to cripple the employer. Why is that a protected right?

Given the cost to open a new facility, it seems odd to conclude that economics of the move were not a primary consideration. Most companies don't throw billions of dollars in efforts without some serious cost / benefit analysis.

Posted by: Kristian Holvoet | Sep 1, 2011 9:44:24 AM

I realize that this case is using Boeing executives' statements to prove intent, but at the end of the day it seems that this law is punishing Boeing for speech since the new plant can easily be justified on economic grounds. Given SCOTUS's recent appreciation for the 1st amendment as applied to commercial speech, I can see the current court striking down this law as chilling speech if it ever gets there. In fact, this court may even strike down significant parts of the NLRA if it gets a chance (which i would personally applaud).

Posted by: jt | Sep 1, 2011 9:52:46 AM

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