Hotel Labor & Employment - UNITE-Here Goes Too Far
Class action suit by employees for invasion of privacy provides critical limits on union organizing activities
It has now been several years since UNITE-HERE targeted the hospitality industry with its organizing efforts. Their tactics have been extremely aggressive. At a macro level, the unions have poured resources into political campaigns across the country and are not shy about calling in favors from those they help elect. And of course, in 2006, we saw the fruits of a huge effort to time union contract expirations to hit at the same time in order to maximize leverage (see my earlier postings about the union campaign). At a micro level, the unions have also stepped up their pressure-buying 5 or 6 shares of stock and playing havoc with public companies (for example, trying to sabotage the CNL public offering), creating web sites to "educate" investors about target companies (with abusive and damaging stories about bad management, poor investment returns) and to generally embarrass and financially harm employers and their management. Fortunately, for employers, there have recently been significant wins in the ongoing struggle (such as the Oakwood Healthcare case) and one of those deserves mention today.
The Cintas Battle - Same union we see in the hotel industry
Cintas is not a hotel company, but its four year battle with UNITE-HERE and the benefits of the latest victory apply equally to all employers. Some background may be helpful.
Cintas is a publicly held company traded on the NASDAQ under the symbol CTAS. It provides uniforms, laundry and promotional products for about 700,000 businesses, including hotels. If UNITE-HERE succeeded in its attempts to unionize the Pennsylvania plant, it would be an inroad for unionization of Cintas remaining 27,000 workers at 350 plants in the U.S. and Canada. So Cintas encouraged its employees who wanted to sue, even paying for their lawyers.
And yes, the union trying to organize Cintas is the same UNITE-HERE that is so prominent and active in the hospitality trades. It is actually a combination of UNITE (formerly the Union of Needletrades, Industrial and Textile Employees) and HERE (Hotel Employees and Restaurant Employees) which merged in July 2004.
Organizing efforts violate employee rights to privacy
The latest win came last month in a Pennsylvania court, where U.S. District Judge Stewart Dalzell ruled that UNITE-HERE violated federal privacy laws by writing down license plates from cars parked on the lot of a Cintas Corp. plant in Emmanus, Penn. The union's intent was to track down the addresses of the car owners to try to contact them at home - outside their employer's reach - in the hopes of organizing them. But some of the employees - and their relatives who owned the cars - didn't like being bothered at home in the name of a union drive, creating a case that hotel owners everywhere should note.
As Jane M. Von Bergen, staff writer for the Philadelphia Inquirer, explained in her October 29 story, UNITE-HERE organizers began visiting homes of Cintas employees in early 2004. Elizabeth "Penny" Pichler, a 65-year old receptionist, recalled a Feb. 2004 visit, and being disturbed that a stranger knew where she worked and her home address. Her complaint turned into a class action lawsuit by about 1,000 workers filed in mid-2005 against the union in federal court.
On August 30, 2006, Judge Dalzell ruled in favor of the plaintiffs that UNITE-HERE had violated the Driver's Privacy Protection act of 1994, a federal law that with few exceptions bars the release of personal information from driving records. He did not assess punitive damages, and didn't fine the union's top leader-this time. But he ordered the union to pay $2,500 to each of the Cintas employees who brought the original lawsuit. The total statutory damages could range from $2.5 million to $5 million for an estimated 1,000 to 2,100 Cintas workers in the class.
Now the plaintiffs can open the union's files in court discovery!
The earlier ruling was significant, potentially exposing union executives and the union to significant damages. We will talk about that more below, but then the other shoe dropped on the union.
The latest development occurred last Thursday. October 26, when the plaintiffs' lawyers, still being paid by Cintas, filed motions to unseal closed documents from the case. The union objected, arguing that the implications of releasing the closed documents would have implications far beyond this case.
Indeed it would. The information could be used to reveal details of UNITE-HERE's future unionizing efforts, giving all sides advance warning. It might make the union be somewhat less aggressive going forward, at least in the short term. And it would probably hurt UNITE's four-year old effort to unionize Cintas. At the time the suit was filed last year, UNITE-HERE leaders had vowed to pressure Cintas managers to agree to recognize it as employees' "exclusive" (monopoly) bargaining agent on the sole evidence of signed union "authorization" cards that union organizers could collect at employees' homes. (See prior postings on neutrality agreements.)
What is the significance of this latest ruling? It is big!
Why is the Cintas battle important to the hospitality industry? Here are a few items that come to mind:
- Class action suits for invasion of privacy by employees against the overbearing union are OK even when paid for by employers
- The privacy law referenced in this case is federal law that will apply anywhere in the US.
- Union executives should be prepared to be fined for their abusive tactics, and punitive damages are something to watch for in the future
- Unions are subject to discovery, and they may have a lot of embarrassing material in their records showing how the union planted trouble makers in the employer to stir up trouble just for the purpose of filing unfair labor practice claims
The results of the Cintas case do not provide a panacea, but this case provides important tools for capable legal counsel for employers when attacked by UNITE-HERE or other unions in their aggressive campaigns. For more tips on how to handle UNITE-HERE unionizing efforts, contact my colleague, Marta Fernandez.
But the Cintas developments are also significant for their class action defense implications. My partner, Michael Hassen, is one of the leading experts in the country on this subject and has a class action blog devoted entirely to this subject.
Marta Fernandez is a senior member of the Global Hospitality Group(R) and a partner in the Firm's Labor & Employment Group. A management labor lawyer with more than 20 years' experience, Marta specializes in representing hospitality industry clients in all aspects of labor and employment, including labor-management relations such as union prevention, collective bargaining for single as well as multi-employer bargaining units, neutrality agreements and defense of unfair labor practice charges before the NLRB; implementation of preventative management strategies, such as executive training, arbitration enforcement and policies and procedures; defense of administrative and litigation claims, such as employee claims of sexual harassment and discrimination. For more information please contact Marta Fernandez at 310.201.3534 or [email protected].
Michael J. Hassen is a partner at Jeffer, Mangels, Butler & Marmaro LLP. For 20 years, the focus of his practice has emphasized business litigation, primarily on behalf of corporate clients, in areas such as class actions, unfair competition/unfair business practices (under section 17200 and common law), theft of trade secrets, raiding of corporate employees, interference with prospective economic advantage, libel and more.
Mr. Hassen has defended corporations successfully against numerous class actions, and often consults on class actions pending outside California. He has substantial experience representing lenders in all facets of lender litigation, ranging from class actions and unfair business practices based on alleged "predatory" lending, RESPA violations, TILA violations and Fair Debt Collection Practices Act violations, to claims alleging elder abuse or challenging the validity or priority of liens. Contact Michael Hassen at 415.398.8080 or [email protected].
Jim and his team are more than "just" great hotel lawyers. They are also hospitality consultants and business advisors. They are deal makers. They can help find the right operator or capital provider. They know who to call and how to reach them. They are a major gateway of hotel finance, facilitating the flow of capital with their legal skill, hospitality industry knowledge and ability to find the right "fit" for all parts of the capital stack. Because they are part of the very fabric of the hotel industry, they are able to help clients identify key business goals, assemble the right team, strategize the approach to optimize value and then get the deal done.
Jim is the author of the . He can be reached at +1 310.201.3526 or [email protected] .
