2002-7 | Management Memos | Ballard Rosenberg Golper & Savitt, LLP - BRGSLaw.Com

A. ?Divided Court Holds That Undocumented Aliens Are Not Entitled to Backpay

Against the Bush administration's wishes, the Supreme Court has refused to enforce a National Labor Relations Board decision, holding instead that undocumented aliens are not entitled to receive backpay after being terminated in violation of the NLRA.? Hoffman Plastic Compounds v. NLRB, No. 00-1595, 2002 DAR 3304 (3/28/02 B Opinion filed 3/27/02).⁽¹⁾

Hoffman Plastics hired Jose Castro in 1988.? Castro was an undocumented alien unable to lawfully work in the United States.? Castro used borrowed documents in order to obtain a social security card and a California identification card, which he then used in applying for work.? In 1989, Hoffman terminated Castro in the midst of a union organizing campaign.? Several years later, the NLRB found that Hoffman illegally terminated Castro because of his union activities and ordered that Hoffman reinstate him and pay backpay.? During a subsequent hearing to determine the amount of backpay, Castro admitted he had never been legally authorized to work in the U.S. and that he had used fraudulent documents in order to obtain his employment at Hoffman.? Based on these facts, an NLRB Administrative Law Judge refused to award backpay or order reinstatement.? The NLRB reversed the backpay holding, finding that nothing in federal immigration policy precluded such an award.? The NLRB also reviewed the Immigration Reform and Control Act of 1986 (AIRCA@) and determined that providing backpay would be the best way to further federal immigration policy as codified in IRCA.? The D.C. Circuit enforced the Board'ss order.? On similar facts, the Second and Ninth Circuits had refused to enforce NLRB orders awarding backpay to undocumented aliens, while the Seventh Circuit had agreed with the D.C. Circuit.

The Supreme Court reversed and denied enforcement of the NLRB'ss order.? The Court noted that Castro obtained his employment illegally and that it has consistently refused to enforce NLRB orders awarding backpay to employees guilty of illegal conduct in connection with their employment.? Further, the Court also noted that it has consistently refused to defer to the NLR'ss analysis of federal policies unrelated to the NLRA and held that NLRB remedies may sometimes have to yield to other federal policies.

The key decision relied upon by the Court was Southern Steamships v. NLRB, 316 U.S. 31 (1942), where the Court had refused to enforce an NLRB order awarding backpay and reinstatement to employees who engaged in shipboard conduct that may have been legal under the NLRA, but constituted a mutiny under federal maritime law.? In that case, the Court had not deferred to the NLRB'ss analysis of maritime law, and held that traditional NLRA remedies would have to yield to maritime policy.? Accordingly, it refused to award the employees a remedy for engaging in illegal activity.

Here, the Court disagreed with the NLRB'ss analysis of federal immigration policy and held that IRCA specifically prohibits the exact activity engaged in by Castro B using improper documentation to obtain employment in the United States.? Thus, allowing the NLRB to award Castro backpay would infringe upon IRCA and condone other IRCA violations.

The Court also noted its previous decision in Sure-Tan v. NLRB, 467 U.S. 833 (1984), which held that backpay should only be awarded to aliens Alawfully entitled to be present and employed in the United States.@? The Court declined to hold that Hoffman was controlled by Sure-Tan.? However, in response to the NLR'ss argument that Sure-Tan only means that aliens who subsequently left the United States and cannot lawfully reenter are precluded from receiving backpay, the Court noted the Board'ss argument was based on Aisolated sentences@ that were, at best, Apersuasive dicta.

In dissent, Justice Breyer disagreed with the majority's characterization of federal immigration policy because IRCA is silent on how an IRCA violation is to effect the enforcement of other federal laws.? The dissent expressed concern that employers now have a green light to violate the NLRA without having to pay a monetary price.

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II.? UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

A. Mandatory Arbitration Agreements Are Permissible If the Employee Is Offered the Opportunity to Opt-out of the Agreement

On remand from the U.S. Supreme Court following its decision in Circuit City v. Adams, the Ninth Circuit held that an employee's agreement to participate in his employer'ss mandatory arbitration plan was valid because the employee was offered the opportunity to opt-out of the arbitration plan.? Circuit City v. Ahmed, 98-55896, 2002 DAR 3166 (3/25/02 B Opinion issued 3/22/02).⁽²⁾Ahmed began working for Circuit City in March 1995.? The following month, Circuit City instituted a binding arbitration program for its employees.? Ahmed received the program information, which included an opt-out form.? If Ahmed chose not to participate in the arbitration plan, he had to submit the opt-out form within 30 days.? No adverse employment action would be taken if he chose to opt-out of the arbitration plan.? However, Ahmed never submitted the form.

The Court held Ahmed'ss case differs from Adams= in that Ahmed was given an opportunity to opt-out, while Adams was not.? The Court found that a mandatory arbitration agreement is unenforceable if it is both procedurally and substantively unconscionable as a matter of law.? Adams= agreement was held to be procedurally unconscionable because it was a contract of adhesion because he had no choice but to accept it or lose his job.? In contrast, Ahmed's agreement to arbitrate is not one of adhesion because he had the ability to opt-out, with no adverse consequences.? Accordingly, Ahmed'ss agreement is not procedurally unconscionable and is thus valid.? Because it found the agreement to be procedurally proper, the Court did not reach the question of whether the agreement was substantively unconscionable.

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B. Non-Union Member Bargaining Unit Employees Have to Pay for Collective-Bargaining Expenses Despite Contrary Supreme Court Precedent

An en banc Ninth Circuit reversed the decision of a prior panel and held that financial core members must pay for the union's collective-bargaining expenses, even though Supreme Court precedent decided under an analogous statute holds the opposite.? UFCW v. NLRB, 99-71317, 2002 DAR 3213 (3/26/02 B Decision issued 3/25/02).⁽³⁾

Several employees working at grocers covered by collective-bargaining agreements with the United Food and Commercial Workers filed a charge with the NLRB alleging the Union violated the NLRA by making them pay for its collective-bargaining expenses.? The employees were non-members who paid core fees pursuant to CWA v. Beck, 487 U.S. 735 (1988) (which held that under the NLRA, non-members have no obligation to support union activities Abeyond those germane to collective bargaining, contract administration and grievance adjustment@).? The NLR'ss General Counsel issued a complaint against the Union, alleging this practice violated the NLRA.? The Board dismissed the complaint.? The Board reviewed the Supreme Court'ss decision in Ellis v. Brotherhood of Railway Clerks, 466 U.S. 435 (1984), holding that non-member employees did not have to pay for organizing costs.? However, the Board held that Ellis analyzed 's2, Eleventh of the Railway Labor Act, not the NLRA.? Accordingly, the Board found it was not bound by Ellis and held that non-members could be required to pay for organizing costs because it found a positive relationship in the grocery industry between the unionization of employees and higher wages.? Because of this relationship, non-members benefit from organization of other employers and can be required to help pay for it.

In May 2001, a Ninth Circuit panel reversed the Board, holding that Ellis controls, as the Supreme Court in Beck held that 's2, Eleventh of the Railway Labor Act and section 8(a)(3) of the NLRA (the section at issue in this case) were Ain all material respects identical.

Afterwards, the Ninth Circuit agreed to hear the case en banc and reversed its prior decision.? The Court determined that the previous panel had Aover read@ Ellis.? The Court found that substantial differences exist between the RLA and the NLRA, especially given that the NLRA is interpreted primarily by an administrative agency with particular expertise (the NLRB), while the RLA is the responsibility of the courts, not an administrative agency.? Because of this, the NLRB could use its particular expertise to properly determine that organizing expenses should be treated differently under the NLRA than the RLA, especially given the specific evidence showing the correlation between organizing activities and higher wages in the grocery industry.? This correlation makes the organizing Agermane to collective bargaining@ and thus a chargeable expense under Beck.

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C. Federal Courts Cannot Enjoin Related State Actions

The Ninth Circuit has reversed a district court's order preventing an employer from seeking to enforce a non-compete agreement in another state.? Bennett v. Medtronic, No. 01-55966, 2002 DAR 3355 (3/28/02 B Decision issued 3/27/02).⁽⁴⁾

Plaintiffs were employed by Defendant's predecessor entity, Sofamor Danek, which is based in Tennessee.? Defendants, who reside in California, quit and went to work for NuVasive, a direct competitor of Medtronic based in San Diego.? While employed by Sofamor, plaintiffs signed non-compete agreements.? In March 2001, Medtronic sued NuVasive in Tennessee over NuVasive's hiring of Medtronic employees.? In 2000, the parties had settled a similar suit and agreed any further litigation would occur in the Tennessee state courts.

On the same day Medtronic filed suit in Tennessee, the Plaintiffs filed suit against Medtronic in California seeking to void the non-compete agreements.? Plaintiffs then sought and received a 30-day temporary restraining order precluding Medtronic from seeking to enforce the non-compete agreements anywhere but the Southern District of California.? Medtronic appealed, alleging the restraining order was improper.

The Court held that the TRO was really a temporary injunction as it did not meet the requirements of FRCP Rule 65, which provides that a TRO cannot extend for more than 10 days unless the court extends it for good cause or the party to whom the order is directed consents to its extension.? Here, since the TRO extended for 30 days, it was really a temporary injunction falling under the federal Anti-Injunction Act (28 U.S.C. 's 2283), which generally prohibits federal courts from enjoining state court proceedings.? Here, the Court found the actions to be Aintimately linked@ and held that the Anti-Injunction Act applied.

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D. A Collective-Bargaining Agreement's General No-Strike Clause Does Not Bar Sympathy Strikes.

The Ninth Circuit has determined that a collective-bargaining agreement'ss clause generally prohibiting strikes during the contract term does not prohibit sympathy strikes unless the employer can show the union Aclearly and unmistakably@ waived the right to hold a such a strike.? The Court's decision puts it at odds with the NLRB on the issue.? Children=s Hospital v. CNA, 00-15636, 2002 DAR 3177 (3/25/02 B Decision issued 3/22/02).⁽⁵⁾

The California Nurses Association represents nurses at Children's Hospital in Oakland.? In 1998, the union representing certain hospital technicians decided to go on strike.? CNA then notified the Hospital it would conduct a sympathy strike in support of the technicians.? The collective-bargaining agreement between CNA and the Hospital contains a Ano-strike@ clause providing that the nurses would not strike during the term of the contract.? The Ano-strike@ clause did not specifically mention sympathy strikes.? The Hospital then filed an action under 's301 of the Labor Management Relations Act seeking a declaration that the parties's collective-bargaining agreement prohibited sympathy strikes.

The Court held that a Union'ss waiver of rights must be Aclear and unmistakable.@? While NLRB precedent holds that a sympathy strike ban is presumed to be included in a general no-strike clause, unless the party opposing such inclusion can show otherwise, the Court chose not to adopt the NLRB'ss presumption.? Instead, the Court determined that the presumption should be against finding such a waiver unless the Hospital could show the Union had clearly waived its rights.? The Court then looked at the parties's bargaining history to find evidence of a clear waiver or lack thereof.? That history indicated that in 1987, the Hospital had proposed amending the general no-strike language to specifically include a prohibition on sympathy strikes.? The Union refused this proposal.? The Court also noted that in 1983, the CNA had also notified the Hospital it would engage in a sympathy strike.? While the strike never occurred, the Hospital also never raised a legal objection to the strike.? Accordingly, because of the 1983 and 1987 events, the Court found the Union had not clearly and unmistakably waived its right to hold a sympathy strike.

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CALIFORNIA COURT OF APPEAL

A. California Does Not Recognize a Common Law Action for Sexual Harassment

The California Court of Appeal, Fourth District Division 3, recently held in a case of first impression that California's common law does not provide an action for sexual harassment.? Instead, sexual harassment is solely a creature of statute.? Medix Ambulance Service, Inc. v. Superior Ct., No. G029042, 2002 DAR 3377 (3/29/02 B Decision issued 3/27/02.⁽⁶⁾

Plaintiff Collado brought an action against Medix and her supervisors (Joanna Dimas, Michael Dimas, and Eric Saline) alleging sexual harassment in violation of the Fair Employment and Housing Act and sexual harassment in violation of public policy.? Defendants demurred, arguing among other things that Plaintiff failed to name the Dimases in her FEHA complaint.? The Superior Court for Orange County, Judge Michael Brenner presiding, denied the demurrer the day before the hearing was scheduled by posting a notice on the internet.? Defendants contacted the Judge's clerk to request a hearing anyway; the clerk refused.? Defendants then took a writ of mandamus because of the lack of oral argument.The Court granted the petition, holding that the Code of Civil Procedure required the lower court to have a hearing if one of the parties requested a hearing.

The Court then turned to the merits of the demurrer and held the lower court erred in overruling it.? The Court held that Plaintiff had not yet exhausted her administrative remedies against the Dimases because she did not name them in her FEHA complaint.? In response to Plaintiff's argument that she did not need to name them because they are alter egos of Medix, the Court held that no precedent supported such a theory B they had to be named.? Finally, the Court held that California does not recognize a common law cause of action for sexual harassment; instead, it is solely a creation of statute.

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B. Employees Must Exhaust an Employer's Internal Administrative Remedies as Well as FEHA Remedies Before Filing Suit

The California Court of Appeal, Second District Division Three, held that a city employee must exhaust city provided administrative remedies in addition to those provided by the Fair Employment and Housing Act before filing suit.? This decision is admittedly at odds with existing Court of Appeal precedent.? Schifardo v. City of Los Angeles, No. B142999, 2002 DAR 3447 (4/2/02 B Decision issued 3/29/02).⁽⁷⁾

Plaintiff Schifardo was terminated by the City of Los Angeles, whereupon he filed suit for disability discrimination after receiving a right to sue letter from the Department of Fair Employment and Housing.? However, Plaintiff never followed the administrative procedures set forth in the Los Angeles City Charter for employees who suffer an adverse employment action.? The City'ss demurrer, which was sustained without leave to amend.

The Court held that an employee must exhaust all available administrative remedies, including the City'ss internal remedies, before filing suit.? The Court recognized that its result is contrary to Watson v. Department of Rehabilitation, 212 Cal.App.3d 1271 (1989) and Ruiz v. Department of Corrections, 77 Cal.App.4th 891 (2000), both of which held that a state employee could choose between pursuing a FEHA remedy and a civil service remedy, rather than pursue both.? However, both of those cases were decided before the California Supreme Court'ss decision in Johnson v. City of Loma Linda, 24 Cal.4th 61 (2000), which rejected an analogous argument and held that FEHA remedies are meant to supplement an employer'ss internal remedies, not supplant them.? Accordingly, the Court found the Plaintiff was required to exhaust any internal administrative remedy, as well as FEHA unless he can show that prejudice or undue burden would result from having to pursue both.

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1. Opinion by Rehnquist with O'sConnor, Kennedy, Scalia, and Thomas.? Dissent by Breyer with Stevens, Souter, and Ginsburg.

2. Opinion by Nelson with Fletcher and Brunetti.

3. Opinion by Reinhardt with Schroeder, Pregerson, Kozinski, Nelson, Tashima Thomas, Silverman, Wardlaw, Fletcher, and Fisher.

4. Opinion by McKeown with Schroeder and Cudahy.

5. Opinion by Reinhardt with Hawkins and Rawlinson.

6. Opinion by Rylaarsdam with O'sLeary & Moore.

7. Opinion by Kitching with Croskey and Aldrich.