Court Report

Plant closure plan halted for violation of collective bargaining agreement; Title VII trumps patient’s request for white health care providers; more.

Oct 1, 2010

October coverPlant Closure Plan Halted for Violation Of Collective Bargaining Agreement

District Lodge 26, International Association of Machinists & Aerospace Workers, AFL-CIO v. United Technologies Corp., 2nd Cir., No. 10-0702-cv (July 8, 2010).

In affirming a district court’s permanent injunction prohibiting the closure of two company facilities, the 2nd U.S. Circuit Court of Appeals held that the closure plans—projected to yield millions in annual savings for the company—violated its collective bargaining agreement with the union.

Professional Pointer: Business leaders should be cognizant of contractual obligations limiting discretion that is otherwise almost unfettered. Limitations may arise from collective bargaining agreements as well as other business-related contracts.

This case was brought by District Lodge 26 of the International Association of Machinists and Aerospace Workers, AFL-CIO, against United Technologies Corp.’s Pratt & Whitney Division after negotiations fell through with respect to proposed closures of two airplane engine overhaul and repair facilities in Connecticut.

The collective bargaining agreement between the parties required Pratt to "make every reasonable effort to preserve" work performed by members of the union. District Lodge 26 alleged that the agreement had been violated. A key aspect of the definition of "every reasonable effort" included assigning "extra value" in Pratt’s decision-making to choices that would preserve work.

During the past three years, Pratt has developed restructuring plans that contemplated the closure of the two facilities. In 2008, Pratt officials foresaw that the national economic downturn and merger of Delta Airlines and Northwest Airlines would financially impact its operations. The supervisor of one facility in Cheshire, Conn., considered alternatives to closure but failed to assign extra monetary value to workforce preservation in comparing options. In presenting the closure plan to Pratt’s parent company, Pratt did not assign this required extra monetary value to workforce preservation.

Pratt’s actions with respect to the closure of the other facility, known as the Connecticut Airfoils Repair Operations, were similarly flawed, according to the district court. Although the closure was estimated to yield approximately $20 million in annual recurring savings—measured in terms of earnings before interest and taxes—the decision-makers failed to assign extra value to alternatives that would preserve bargaining unit work.

The trial revealed that Pratt’s estimated savings failed to reflect that its joint venture partners would be the beneficiaries of a good portion of the savings and that it would not actually realize the full value of the projections. Moreover, the state of Connecticut offered Pratt assistance valued at $20 million in savings per year for five years to keep the jobs in question in Connecticut, and state officials had discussed providing another $10 million to $12 million across five years. However, Pratt officials did not engage in further discussions with the state representatives.

Following a bench trial, the U.S. District Court for Connecticut concluded that Pratt’s announced plans to close the two Connecticut facilities and move the work out of state violated its currently-in-force collective bargaining agreement. The court halted the company’s closure plans during the remaining term of the collective bargaining agreement.

The appeals court found no error in the district court’s application of the fact-intensive inquiry bargained for by the parties in the collective bargaining agreement and in its determination that Pratt failed to pursue the goal of preserving bargaining unit work in good faith. The 2nd Circuit noted that a business surrenders the ability to act with its own business judgment when it voluntarily enters into an agreement. Pratt could not insulate its business decision regarding the facility closures in light of the requirements of the collective bargaining agreement.

By Angela H. France, an attorney with PCT Law Group PLLC, a law firm that provides legal services to businesses in Northern Virginia and the District of Columbia.

Title VII Trumps Patient’s Request for White Health Care Providers

Chaney v. Plainfield Healthcare Center, 7th Cir., No 09-3661 (July 20, 2010).

The 7th U.S. Circuit Court of Appeals reversed and remanded a district court’s granting of summary judgment, finding that reliance on a patient’s right to choose a health care provider did not override an employer’s obligations under Title VII of the Civil Rights Act of 1964 to provide a workplace free from discrimination.

Professional Pointer: Promptly responding to specific acts of discrimination may be insufficient where race-based policies or practices are present in the workplace.

Plainfield Healthcare Center, a nursing home facility in Indiana, established a rule that forbade black certified nursing assistants from providing services to residents who requested white-only care. One nursing assistant, the recently hired Brenda Chaney, received these instructions, being told that "no black" assistants should enter a particular resident’s room or provide care to her, and was offended by what she felt was a discriminatory practice.

Chaney also reported being subject to racially charged statements from other employees. Chaney complained of this treatment to the unit supervisor. The harassment from fellow employees did eventually stop. However, the workplace rule forbidding black nursing assistants from treating certain residents remained in place.

After approximately three months of employment with Plainfield, Chaney was fired. She was told that another employee alleged that Chaney had used profanity in front of a resident, and that, for this reason, her employment was being terminated. Chaney brought an action against Plainfield in district court, alleging that:

  • The policy of acquiescence to the racial preferences of residents was illegal.
  • Plainfield allowed a hostile work environment toward its black employees to exist.
  • Race was a motivating factor in her termination.

The district court granted summary judgment in favor of Plainfield. The court held the policy forbidding black nursing assistants from caring for certain residents to be reasonable, as Plainfield had a good-faith belief that not permitting residents to choose their health care provider was a violation of state and federal law.

The 7th Circuit reversed. The appeals court had no difficulty finding that a hostile environment existed at Plainfield and did not find sufficient mitigation in Plainfield’s response. The court concluded that Plainfield’s maintenance of its race-specific care policy engendered and promoted this hostile environment, providing a daily reminder of limitations placed on its black employees. There were also sufficient issues presented regarding Chaney’s termination to prevent summary judgment.

The court further found that catering to the racial preferences of residents is an insufficient justification for otherwise violating Title VII protections against disparate treatment.  

By Daniel F. Carey, director of human resources and employment counsel of O&G Industries Inc., and a member of SHRM’s Ethics Special Expertise Panel.

No Liability from Non-Decision-Maker’s Information

Poer v. Astrue, 7th Cir., No. 09-3473 (May 27, 2010).

The 7th U.S. Circuit Court of Appeals affirmed summary judgment against the retaliation claim of a federal Social Security Administration employee not promoted to a supervising attorney position some two years after testifying in a race case against an individual who, though not a decision-maker, provided information to decision-makers.

Professional Pointer: Decision-makers should always conduct independent assessments to avoid the possibility of “cat’s paw” influence from other players with discriminatory motives.

The court held that although the individual gave the decision-makers false information about the location of the other two applicants for the supervising attorney position, the correct information would not have changed the outcome. The individual against whom the plaintiff previously had testified told decision-makers that the other two candidates lived outside the region, meaning that selecting them could call for paying moving expenses that could not be paid due to a budget freeze.

The decision-makers, who knew nothing of the prior testimony, determined not to fill the position "by default" by giving it to the plaintiff simply because he was the only applicant who did not require moving expenses.

The plaintiff claimed retaliation, and the district court granted summary judgment for the employer. The court of appeals affirmed, reasoning that the correct information—that the other two candidates, though within the region, lived out of town and still would require moving expenses if selected—would not have affected the outcome. 

By John J. Coleman III, an attorney with the Birmingham, Ala., office of Burr & Forman.


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