In a case recently decided by the U.S. Court of Appeals for the Eleventh Circuit (National Labor Relations Board v. Harman and Tyner Inc., d.b.a. Mardi Gras Casino, Hollywood Concessions, Inc., 2013 U.S. App. LEXIS 7555), the Court affirmed a District Court’s decision to reject the National Labor Relations Board’s (“NLRB”) petition to obtain temporary injunctive relief seeking to reinstate six discharged employees pending the outcome of an administrative hearing brought as a result of a NLRB Complaint brought against Mardi Gras.  This is one of a series of recent losses the NLRB has received from a number of courts in its strategy to aggressively prosecute employers, many of which are in the hospitality industry.

Mardi Gras operates a casino and greyhound racetrack in Florida. In the underlying administrative complaint against Mardi Gras, the NLRB alleged that the employer had unlawfully discharged certain employees during a union organizing campaign by UNITE HERE Local 355 (the “Union”) in violation of the National Labor Relations Act (the “Act”).  The Act prohibits employers from discriminating against employees for certain protected activities, including the right to engage in union organizing.

Section 10(j) of the Act gives the NLRB the power to petition the Federal District Court “for appropriate temporary relief” pending the outcome of the underlying administrative proceedings. In order to obtain temporary relief under this section of the Act, the NLRB must satisfy two conditions: (1) there is reasonable cause to believe that alleged unfair labor practices have occurred, and (2) the requested injunctive relief is just and proper.  Only the second condition was the subject of the appeal.  The Eleventh Circuit affirmed the District Court’s ruling because it found that the lower court did not abuse its discretion.  It is always important to focus on what the appellate court’s standard of review is in any appeal. In this type of case, it is whether the District Court abused its discretion which gives the lower court much leeway in reaching its decision.

This case is interesting for a variety of reasons, especially for the hospitality industry which has become a prime target of union organization.  While most employers demand that it not only be able to express its position about the need for a union at its place of business, they also demand that its employees be able to vote by secret ballot. Mardi Gras chose to enter into an agreement with the Union that it would take a “neutral approach to unionization” and that it would recognize the Union as the employee’s bargaining representative if a majority of employees signed union authorization cards rather than by secret ballot. In return, the Union agreed that it would not carry on its organizing activities in the casino’s public areas or during the employee’s work time. 

Interestingly, the Agreement was signed in 2004 and expired several years later on December 31, 2011. The Union did not mount a full campaign until the fall of 2011, most likely because they did not believe they had sufficient support until then. There is no explanation in the decision why duration of the Agreement was so long.

As of the date of the District Court’s ruling, the Union had only obtained 92 signatures, far short of a majority of 220 employees. In addition, almost all of the cards (84 of 92) were turned in prior to any of the discharges.  The employees were discharged, in the company’s view, because they “stormed the casino and caused a disruption” in public spaces and on work time. 

Over four months after the union filed charges alleging that the discharges were unlawful, the NLRB filed a petition in District Court seeking a temporary injunction pursuant to Section 10(j) to reinstate the employees pending the outcome of the administrative hearing.

The District Court denied the petition because the evidence did not meet the “ just and proper” standard required by 10(j). The Court of Appeals affirmed ruling that the District Court did not abuse its discretion in making its decision. The Court of Appeals based its decision on the following: (1) almost all of the union authorization cards were returned before the discharges occurred; (2) as of the date of the District Court’s ruling, the union’s campaign was far from successful, the number of card collected being far short of a majority; (3) the Union waited four months after it filed charges to seek temporary injunctive relief (although it found that the time delay was not dispositive, it was strong evidence against granting the relief sought); and (4) injunctive relief sought under this section of the Act is considered to be extraordinary and “sparingly employed” because it acts to short-circuit the administrative process.

There are a number of takeaways that Hospitality Employers can learn from this case:

  1. The NLRB and its General Counsel will continue to seek temporary relief of this kind in order to put more pressure on employers to settle or agree to an order concerning the underlying allegations.
  2. Employers must be careful to keep close attention to the timing and documenting of its business justification of any adverse action it takes against employees, especially if the action is in close proximity to protected activity such as a union organizing campaign. This is especially true since the NLRB, under the Obama administration, has become more aggressive in prosecuting cases to enforce the provisions of the Act.  It is also especially true at this time since unions have increased their efforts to unionize employers in certain industries including the hospitality industry which is so labor intensive.
  3. If employers are faced with a petition for temporary relief initiated by the NLRB, they must be aware of the wide discretion that the District Court has in granting such relief even though it is considered “extraordinary relief.”  They should consult with Labor counsel to respond in an effective way.  If employers lose at the District Court level, it will be very difficult to overturn its decision on appeal.