LIR 863 Richard N. Block. Spring, 2010

MID-TERM TAKE-HOME EXAM

DIRECTIONS: This is a take-home assignment. It is due on Wednesday, March 3, 2010 at 6:10 PM. In doing this assignment, you may consult your textbook, assigned cases downloaded from websites, statutory supplement, overheads, and any notes or briefs you have prepared. 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. The assignment should be no more that four double-spaced pages, if typed, or six sheets, written on every other line, if handwritten. In writing your answer, there is no need to repeat the facts; you may assume I know them. The exam may be submitted in hard copy or via e-mail attachment to [email protected]. If you choose to submit the exam by e-mail attachment, please use the following text in the “Subject” line: “LIR 863 Mid-Term Exam Submission – your last name.” This will permit me to distinguish your mid-term from the many other e-mail messages I receive and will reduce the chance that your electronically submitted mid-term will be mistakenly deleted or misfiled.

Expensive Foods operates a chain of 8 grocery stores in Michigan, six in the Detroit metropolitan area, one store in Lansing, and one in Grand Rapids. The stores are served by a warehouse in Brighton, Michigan. Each store sells gourmet grocery items, organic produce, hand cut meats, fish, poultry and various recipes (lamb sausages, chicken cordon bleu, etc.) prepared in the butcher shop, cheeses, breads, and a range of prepared foods and salads. Each store also has a small snack bar where it sells pricey sandwiches, soups, and other such foods.

Expensive opened its first store in 1992 and has been expanding ever since. The most recent store was opened in Lansing in 2005. In 2006, Expensive employed approximately 800 full-time and part-time hourly employees in its retail stores (roughly 100 employees per retail store) and

30 hourly full- and part-time employees in the warehouse. The Company also employed approximately 100 supervisors and management personnel.

1 Expensive’s business strategy had always been to sell high quality foods at premium prices with a high level of customer service while keeping the cost of labor low. This was accomplished by instituting wage levels that were 75% of the wages paid at unionized stores in the local area, and offering relatively low benefits, such as a health insurance plan that was less generous than those of its competitors (it provided “catastrophic” coverage only for hospital stays, but no coverage for prescription drugs or outpatient visits to a physician), and no retirement plan.

By early 2007, some of the employees at the Lansing store had became aware of the wages and benefits at the unionized grocery stores in the area through friends who were working at those stores. Some Expensive Lansing employees contacted the Support for Labor Organizing

Plan (SLOP), the Union that represented employees at Expensive’s competitors. SLOP was interested in organizing these employees because they were concerned that the perceived success of Expensive’s “low wage, low benefit” strategy would encourage the other stores to ask for concessions.

In March, 2007, SLOP organizer Susan Sandwich formed an organizing committee consisting of employees Louise Lettuce, William Worker, and Mike Meat. They began to discuss unionization with other employees, explaining to them the difference in wages and benefits between Expensive and the other stores. They also asked them to sign authorization cards. By April 1, 2007, with the secret work of the “in-house” organizing committee, SLOP had received signed authorization from 25 employees.

By this time, however, the Company had learned about the organizing campaign, as some employees who were not interested in the Union but had been approached by pro-union

2 employees had informed their supervisors. As a result, starting in early April, employees began to wear small buttons bearing the slogan “I M 4 SLOP.”

The Company, meanwhile, believing that a successful union organizing campaign could jeopardize its well considered strategy, began to respond to the SLOP efforts. On April 16, SLOP posted a new “appearance policy” near the time clock. The policy stated, that, in order to present a dignified and uniform corporate image to its customers, Expensive was prohibiting the wearing of any buttons and or insignia on the Company-issued shirts and blouses employees had always been required to wear. The policy was applied to all eight retail stores. It was not applied to employees who worked in the warehouse and had no public contact.

On April 19, Lettuce was performing duties as a customer service worker behind the snack bar counter in Lansing. She was supervised by Deborah Donut. Lettuce had worn a union button at all times prior to the prohibition and made no secret of her support. During the course of Lettuce’s employment Lettuce and Donut had several conversations during which they discussed the Union, as well as Lettuce’s personal problems. On occasion, Donut asked Lettuce why she was in favor of a union and why she thought a union was necessary. At one point,

Donut observed to Lettuce that perhaps one of the reasons the Union appealed to Lettuce was the fact that it gave her a new group of friends. Donut then suggested that for her “own good,” she

“might want to find some other new friends.”

Worker worked at the Lansing store as a carryout and front-end employee. He was also a known union supporter, who had worn a union button at the store. In May, Supervisor Barbara

Bagg asked several of the front-end employees if they had any questions about the union. When she asked Worker, he replied in the affirmative, and they engaged in a 10-minute discussion about the union. Worker testified that he began the conversation by telling Bagg that he was in

3 favor of the Union and that she would not change his mind by talking to him about it. During the course of the conversation, Worker asked several questions Bagg could not answer. She later brought Executive Senior Vice President and Director of Operations Phil Phood and Store

Manager Olivia Overseer to the front end of the store and asked Worker in their presence whether he had any questions to address to them. He said he had none. Phood then said that

Expensive did not believe that an outside organization was right for its employees and he certainly hoped that Worker would see it that way as well.

The Company conducts twice-yearly employee evaluations. During the course of his evaluation, supervisor Peter Pie asked employee Hector Reen if he had any complaints. Reen replied that he had the same ones he had every year, specifically, lack of a retirement plan, wages that were below union scale, and inadequate health benefits. Pie then stated that although there was nothing that could be done about the wage differential during the Union's organizing campaign, when the “union business” was over, the Company could do something. He also said that he hoped that this answered any question Reen might have about the need for a union.

On May 12, Sandwich came into the store to have lunch. She was wearing a SLOP button and a SLOP baseball cap. When she went to the counter to order her meal, Lettuce greeted her with a friendly “hello” and had a short conversation with her, although other customers were waiting in line at the time. Donut noticed this and pointed out to Lettuce that there were customers in line. Lettuce then took Sandwich’s order.

When Sandwich came to pick up her order, she and Lettuce had another brief conversation, after which Sandwich sat down to eat her lunch. Lettuce then handed two other customers their orders. Later that afternoon, Donut approached Lettuce and informed her that the store director had received a complaint from a customer regarding the service Lettuce had

4 provided. The customer had complained that her bowl of soup was cold because Lettuce had not served her promptly as “the server was too busy socializing with a woman in a baseball cap.”

Donut then suspended Lettuce for two days for “inadequate customer service” and “negligence.”

When Lettuce asked why she was being disciplined, Donut reminded her that she had told her to get a new set of friends, as her “union friends” were affecting her job performance and could affect her employment.

As a result of Meat’s organizing efforts, all the employees in the meat department were in favor of the Union. In February, one of the regular meat cutters requested and was granted a transfer to another store. Supervisor Larry Lambchop declined to replace the transferred employee, resulting in roughly 40 hours of overtime divided among the remaining five employees in the meat department, which resulted in an average of 7-8 hours per week of overtime for each remaining employee. On May 1, Lambchop announced that the overtime was too expensive for Expensive, and it was reducing the hours of the meat department and rearranging work schedules so that it would no longer be required to pay overtime for the meat department. Thus, after June 1, no employee in the meat department received any overtime, resulting in a decline in weekly earnings of 20-25%.

Every year since 2000, Expensive had considered the possibility of discontinuing purchasing health insurance from an outside carrier and, instead, providing health insurance coverage for its employees though a self-insurance fund administered by an insurance company.1

It believed by doing so, it could provide improved benefits for the employees at a cost equal to what it would spend with an outside carrier. During the period 2000-06, however, the only

1 When insurance is purchased through a company, the risk pool consists of all customers of the insurance company. When an organization self-insures, the risk pool is limited to the employees of the Company and their dependents, if covered. Large organizations often find it less expensive than otherwise to self-insure for health insurance because insurance companies are often of the view that the employee population of a single organization is healthier, on average, than the general population, resulting in few expected claims and low premiums to the purchaser of insurance.

5 policies available with coverage for office visits and prescription coverage were those that cost more than the current policy; therefore, each year Expensive decided that no changes would be made. In mid-2007, Expensive again asked the broker that had sold Expensive its fire and casualty insurance to investigate this possibility and to provide it with quotations detailing the cost of a self-insurance plan and whether it would be possible to increase benefits through self- insurance without an increase in cost. In October, 2007, the broker had found another insurance company that had “run the numbers” and that, through self-insurance, could provide the current catastrophic coverage plus coverage for physician visits with a $20 co-pay2 for an extra $20 per month per employee. On December 15, 2007, Expensive announced that the new plan would go into effect on January 1, 2008 for all employees at its eight stores and the warehouse (the old policy expired on December 31, 2007) and that this new benefit would be adopted at no cost to the employees.

Since 1995, Expensive had sponsored an annual company picnic on the last Saturday in

June. Expensive provided all refreshments, and charged only a nominal fee to cover the cost of food. Employees were permitted to invite to the picnic immediate family members or up to three non-family guests. The purchase of a ticket in advance was required so that Expensive would know the amount of food needed. For the June, 2007 picnic, employees Penny Pepper and

Shelia Shellfish turned in the names of certain union representatives as their guests. On the day of the picnic, those representatives discussed unionization with several employees, but made no attempt to obtain signatures on authorization cards. The activity of the union representatives came to the attention of Expensive management, who politely informed them that they were no longer welcome at the picnic, asking them to leave. When Pepper protested, claiming the

2 A “co-pay” is the amount the covered employee pays for each visit to a physician. The insurance company pays the amount of the physician charge not covered by the co-pay.

6 organizers were her friends and pointing out that the Company had never before refused admission to any guests, she was informed that the picnic was a private social function sponsored by the Company, and it had the right to exclude whomever it wished. When Pepper began to protest further, she was also asked to leave the picnic. When she refused, saying that as an employee she had a right to be there with the other employees, she was discharged for insubordination and conduct unbecoming an employee. Both of these were offenses that, pursuant to the employee handbook, warranted discipline up to and including discharge.

On the morning of July 1, Sandwich came to the office of Overseer. Before Overseer could ask her to leave, Sandwich informed her that the Union had signed authorization cards from 55 of the 100 hourly employees in the Lansing store, and requested immediate recognition of SLOP as their bargaining agent. Overseer said that she didn’t believe that most of her loyal employees would ever sign cards for a union unless they were coerced or bribed. She then directed Sandwich to leave or she would call the police. On the afternoon of July 1, Sandwich drove to the NLRB resident office in Grand Rapids and submitted the cards for an election in a bargaining unit consisting of “all hourly employees at the Lansing, Michigan store operated by

Expensive Foods, Inc.”

On July 2, off-duty Expensive employees began to picket on the public sidewalks adjacent to the parking lot driveway of the Lansing store. The picket signs stated that Expensive paid substandard wages and benefits, resulting in reduced incomes in the community. The signs encouraged customers to express their dissatisfaction with this situation to the store director.

This picketing continued on an intermittent basis for the next three weeks.

On July 15, after being informed of the representation petition, Expensive objected to the inclusion in the bargaining unit of 10 employees classified as “lead cashiers.” Employees in this

7 classification were responsible for monitoring the length of checkout lines, addressing any problems with the computerized scanners and other equipment, and providing support for any cashier that needed it. The lead cashiers had the authority to reassign employees from shelf- stocking duties to the checkout lane, as needed, to help with bagging groceries in order to expedite service, and to assign them off the checkout lane with a return to their shelf stocking duties. They also had the authority to sign themselves in as cashiers, if needed. The regularly scheduled cashiers were assigned by the checkout supervisor. Opening additional cash registers was the also the responsibility of the checkout supervisor.

On July 20, SLOP filed unfair labor practice charges alleging that Expensive had violated

Sections 8(a)(1), 8(a)(3), and 8(a)(5) of the NLRA. On July 25, Expensive filed unfair labor practice charges against SLOP alleging that SLOP had violated Section 8(b)(7) of the NLRA.

On December 20, SLOP filed another unfair labor practice charge alleging a violation of Section

8(a)(1) of the NLRA. How should the NLRB rule on these charges and the unit objection? If any violations are found, what remedies should be ordered?

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