LAW 382
Spring, 2004Richard Block
TAKE-HOME MID-TERM
DIRECTIONS: This is a take-home assignment. It must be submitted to the registrar’s office by 8:45 AM on Wednesday, March 3, 2004. Submission may be in person or by e-mail attachment to . In doing this assignment, you may consult your textbook, "SBS" supplement, statutory supplement, overheads, material on the website, and any notes or briefs which you have prepared, either by yourself or in groups. There is no reason to consult any material beyond that required in class (i.e. additional cases not in the class material, law review articles, etc.). No credit will be given for citing such materials. In answering the questions, you should consider all possible issues, even if your decision on one issue may technically render a decision on other issues unnecessary. It is unnecessary to repeat the facts in your answer unless citing the facts is necessary to support your argument. The assignment should be no more than five double-spaced pages (12-point font, 1 inch margins, top, bottom, left, right), if typed, or seven sheets, written on every other line, if handwritten. Please keep a copy for yourself, in the event that your paper is misplaced or your e-mail is not received by the registrar’s office.
The Price-E Drug Company, an Ohio corporation, owns and operates a chain of 34 retail drugstores in northern Kentucky, southeast Indiana, and southwestern Ohio. The stores are serviced by a company-owned central warehouse and distribution center located in Dayton, Ohio. There is no history of collective bargaining for employees involved at the Dayton warehouse and distribution facility, which opened in 1980.
Through late 2002, the Dayton warehousing and distribution operation employed 35 full-time and part-time hourly employees, the employee complement at the Dayton operation since early 1995, although in the past two years, the complement had shifted to part-time to a small extent. The hourly employee complement consisted of five clerical personnel, 23 stock processing personnel who worked inside the warehouse, 6 truck drivers who delivered merchandise, and one transportation coordinator. All full-time employees also received the same benefit package that included health insurance.
The clerical personnel were primarily responsible for all clerical-type functions, e.g., processing orders, billing, payroll, accounting, inventory monitoring via a computerized inventory control system, etc. The stock processing personnel were responsible for filling orders from the stores by removing product from the shelves and bundling the product based on the content of the orders.
The drivers were responsible for delivering the filled orders to the stores according to predetermined routes that were designed to minimize the amount of time the trucks ran empty. They were also responsible for moving merchandise from one store to another if the receiving store was along their designated route. Otherwise, the merchandise would be brought back to the warehouse, to be bundled with another order for the receiving store.
The transportation coordinator, who was paid $1.50 per hour more than the next highest paid hourly employee (a truck driver), had a variety of duties associated with the transportation of goods. The coordinator’s duties included driving a truck when a truck driver was ill, was on vacation, or was otherwise unable to drive. Although the routes of the six drivers varied little from week to week, if there were any special instructions, such as an early delivery, the transportation coordinator would relay the instructions to the driver, and would provide advice to the driver on alternative routes. The transportation coordinator’s duties also involved directing warehouse personnel in the proper loading of a truck, if necessary. (Trucks were generally loaded in reverse order of deliveries, so that the driver could easily access the goods to be delivered at each store.) Although the employees scheduled long vacations through the distribution manager (the transportation coordinator’s supervisor), some of the employees asked for and received single days off through the coordinator, and some asked the transportation manager. The transportation coordinator has never hired or discharged any employee.
The coordinator was also responsible for day-to-day liaison with the truck lessor. (Price-E leased all trucks from a leasing company.) The coordinator also performed very minor repairs on the trucks (changing light bulbs, fuses, windshield wiper blades), so that the trucks need not be returned to the lessor for these small repairs, with the consequent loss of production associated with the exchange of vehicles. The coordinator was also authorized to order parts for his repairs.
In late 2001, because of store expansion and new technology, Price-E decided to update its computer system, a project for which it hired an outside computer contractor. The company determined that it needed to hire extra employees while the computer upgrade was taking place, because, at any one time, four or five hourly employees would be assigned to work with the computer contractor. Thus, in November, 2001, Price-E contracted with CheapWorkers, Inc. to hire five additional employees through CheapWorkers.
The CheapWorkers employees were told by CheapWorkers that their assignment to Price-E was temporary, and that they would likely be terminated when the computer updating project was completed by March 30, 2002, but that they would be given two weeks notice prior to the end of their assignment at Price-E. They would work with the regular employees and be subject to Price-E supervision. Their wage rate, established by CheapWorkers, was approximately $3.00 per hour less than the lowest wage at Price-E. As they worked for CheapWorkers, and CheapWorkers provided no benefits to employees, they would receive no benefits. The employees received their paychecks from CheapWorkers. Price-E paid CheapWorkers the cost of the hourly wage paid by CheapWorkers plus 12%.
The computer upgrade project took more time than expected, however. It had not been completed by the end of August, 2002, and was not expected to be completed before December 31, 2002. The five CheapWorkers employees continued their employment with CheapWorkers and their assignment to Price-E. No official from Price-E ever spoke to the CheapWorkers employees about their employment status after they were hired by CheapWorkers and assigned to Price-E in November, 2001.
In early September, 2002, an organizing campaign began to develop because certain employees sensed that their grievances were being ignored, while their jobs and benefits slowly were being eroded. The employees had not had a general wage increase since January, 2001, and in January, 2002, the insurance policy that the covered the employees had initiated a $10 co-pay for physician visits and a $5 co-pay for prescriptions. The campaign opened in September when employee Mae A. Loxx contacted the Drug and Other Pharmaceutical (DOPE). In consequence, she and a coworker, Pete Pill, met on September 10 with DOPE representative Morris Goode at Loxx's home. Both signed DOPE authorization cards at that time.
A second meeting was held at Loxx’s home on September 17; it was attended by Loxx, Pill, and a third employee, Ty Lenol. Goode was also in attendance. Organizational literature incorporating blank authorization cards was given to the three employees for distribution to the other employees at the facility. The three employees were also given a web address where interested Price-E employees could print a card, sign it, and send it to DOPE.
Led by Loxx, Pill, and Lenol, the organizing campaign moved quickly. On September 25, Goode wrote Madeline (Maddy) Sinn, Price-E’s recently appointed president. On behalf of DOPE, Goode claimed majority representation among the hourly employees at the Dayton distribution/warehousing facility, and hence requested recognition and immediate negotiations, while offering to prove DOPE’s majority status through a third-party card check. On inquiry by Sinn, DOPE, by letter of September 29, clarified the identity of the employees sought, e.g. “all regular full-time and part-time hourly employees assigned to Price-E’s distribution/ warehousing facility in Dayton, Ohio.” Sinn responded that she could not believe that the employees in Dayton would wish to be in a union and that she would not comply with Goode’s request to recognize the union. The Union filed an election petition on October 4, 2002. The election was scheduled for December 4, 2002.
On October 9, during the afternoon, while on duty, the employees were summoned to a meeting with Sinn and Warehouse/Distribution Manager Vera Nice. The meeting was attended by all the employees except the drivers who were on the road. Sinn admitted that she lacked familiarity with conditions in the warehouse and that she just had been learned of the situation. She also said she had heard about the “cards” and that the whole thing made her "kind of sick." She indicated that it was upsetting that just two or three employees who were “union types” would make the decision for the entire warehouse.
Sinn then inquired as to employee complaints about the warehouse. Employees voiced concerns about the computer system that was being installed to automate manual procedures.
They referred to concern about possible layoffs because, with the new computer system, staffing levels would be high enough to service 50 stores, let alone the 35 that were serviced by the warehouse. They also complained about a ban that had been placed upon drinking coffee at work stations during working time, the failure to follow seniority in vacation scheduling and assignments, and a reduction in the morning and afternoon break periods from 15 minutes to 10 minutes. They also expressed concern that part-time help would replace full time help, pointing to four employees who had been regular part-time for about two years. They also discussed a loud buzzer that had been installed several years ago to mark the beginning and end of shifts and break periods, complaining that it sounded randomly, and was very noisy.
Sinn responded that most of their complaints seemed legitimate, but that nothing could be done for the employees at that time, as her “hands were tied by the law.” Sinn said then when the “union thing ended” (apparently referring to the representation election scheduled for December 4), they could get back to “solving problems instead of creating them.” She told them not to listen to "that dope from DOPE" (apparently referring to Goode).
Later that afternoon the buzzer sounded randomly once again. One of the employees, perhaps inspired by what was said at the meeting, cut the wires running from the buzzer to the loudspeakers. When the buzzer failed to sound at the close of the shift, a supervisor examined the problem, and noticed that the wires had been cut. When he went to tell Nice what had happened, Nice told him “don’t worry about it, and don’t hurry to fix it.”
Between November 11 and 13, Sinn and Nice held meetings with small groups of employees. The meetings were privately held, involving two to four employees. Management determined who would attend each session. Participation was mandatory and all meetings were held on working time. They were scheduled a week in advance on the assumption that they could be held at 30-minute intervals so that all employees could be accommodated in three days. The schedule could not be maintained, however, because the meetings ran from 45 minutes to one hour.
During these meeting, arguments were made against unionization, including publication of the salaries earned by DOPE officers (based on information DOPE was required by U.S. law to submit to the U.S. Department of Labor) and a comparison of Price-E benefits with those of other warehouses in Ohio. Sinn then explained that if there was a union, she would be required to negotiate, but she was not required to accept any union demand, and that the union could trade off existing benefits, creating the possibility that employees would not end up "where they started." Sinn added that negotiations sometimes lead to strikes, noting that a strike had caused a long shutdown at a local General Motors facility in 1998.
Sinn also pointed out at the meetings that a key to Price-E’s success had been its low cost warehousing and distribution system; indeed this was one of its competitive edges. The company simply could not afford to increase its warehousing and distribution costs and remain competitive. Moreover, with the threat of Mal-Mart and its huge distribution system, competition was only going to get stiffer. During the last year, Sinn said she had been approached by the nationwide chain Rong-Aid Drugs about a sale, but had been unwilling to sell because she and other management personnel could do better if Price-E remained independent. Higher costs in the distribution and warehousing end of the business, however, could make it sensible to sell. If Price-E was sold to Rong-Aid, it was reasonable to believe that Rong-Aid would close the Dayton warehouse and consolidate the functions there with its existing warehouse and distribution system.
The last meeting, on November 14, involved the three most active union proponents, Loxx, Pill, and Lenol. At the close of the meeting, Sinn and Nice excused Loxx and Pill, but asked Lenol, the most senior of the three, to stay on. She implored Lenol not to go to a union meeting scheduled for that evening, saying that she and Nice would know if he went to the meeting before he returned home.
When Lenol left the meeting with Sinn and Nice, he was upset and frightened. His face was pale, and he was shaking. When Pill asked him what was wrong, Lenol said “leave me alone.” He then went to his supervisor, Les S. Better and informed him that he was feeling ill, and had to go home for the day. When Better asked him what was wrong, Lenol said, “I’m sick,” clocked out, and left the warehouse. Better then told Nice that Lenol had left the warehouse without permission.
That evening Lenol went to the union meeting, and told others what Sinn and Nice had said. Goode told Lenol to write it down as soon as possible so that he would be able to testify accurately at any hearing.
The next day, November 15, when Lenol reported to work, Better asked Lenol to step into his office. Better then handed Lenol a letter informing him that he was discharged based on a long-standing but seldom-needed rule that “ an employee who leaves the facility during the shift without the permission of a supervisor shall be considered away without leave and shall be subject to discharge.” Lenol pointed out to Better that Better knew he was leaving because he was sick; that he had informed him before he left. Better responded that he never gave Lenol permission to leave. When Lenol complained that he had worked there for 15 years with a perfect record, Better said that “rules were rules” and that “his hands were tied.”
(A subsequent investigation by the union revealed that two employees had been discharged under the rule, one in 1989 and one in 1994; the only two occasions on which employees had left the facility during working hours without permission prior to the Lenol incident At the time of their discharge the employees had been with Price-E for 10 months, and 15 months, respectively. Both had demonstrated some attendance problems prior to the discharge.)
On November 22, 2002, three part-time employees of the five currently employed were upgraded to full-time. The reason for this upgrade, the company said in its weekly newsletter, was that these employees had been working at least 36 hours per week over the last four months and management preferred to upgrade them, rather than hire another part-time employee. This change in status to forty hours entitled them to benefits under Price-E’s compensation policies.
On November 26, 2002, DOPE filed unfair labor practice charges with the NLRB regional office in Cincinnati alleging that Price-E had violated Sections 8(a)(1), 8(a)(3), and 8(a)(5) of the National Labor Relations Act. On November 24, 2002, Price-E had officially filed an objection to the inclusion in the unit of the five CheapWorkers employees and the transportation coordinator. Price-E contended that the transportation coordinator was not covered by the National Labor Relations Act as he was a supervisor, and that the CheapWorkers employees did not share a “community of interest” with the regular employees. In addition, Price-E contended that the appropriate unit should be “all hourly employees of Price-E located in the Dayton, Ohio area, including the warehouse/distribution center and the two retail stores.” (The two retail stores in the Dayton area employed 20 full-time and 60 part-time employees.) With the filing of these charges and the unit objection, the Board postponed the election.
How should the NLRB rule on these charges? If any violations are found, what remedies should the NLRB direct?
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