The National Labor Relations Board, the main federal labor law enforcement agency, has hobbled McDonald's Corp.'s effort to defend itself in the board's labor law violation case against it.
In a 2-1 vote Thursday, the board ruled that McDonald's would not be allowed to subpoena evidence to buttress its claim that it was merely protecting its company brand against a coordinated public relations campaign by organized labor to tarnish the company's image.
McDonald's had sought the ability to subpoena documents from the Service Employees International Union and its public relations firm, BerlinRosen, among others, to prove that the PR campaign was not a true labor organizing effort and therefore the company's actions didn't violate any worker's protections.
SEIU was the main funder and organizer behind a series of protests at McDonald's restaurants during which the alleged labor violations occurred. The union spent $23 million on the effort in 2014 alone, according to Labor Department filings. Though the union presented the protests as events driven by McDonald's employees, relatively few workers participated in them.
NLRB Chairman Mark Gaston Pearce and board member Kent Hirozawa, both Democratic appointees, ruled Thursday that that defense was "not relevant" to the charges against the corporation, which involve whether it was a joint employer with its individual franchises. Their decision prompted a lengthy, furious dissent from the board's lone Republican member, Philip Miscimarra, who compared it to a murder suspect being barred from arguing that he acted in self-defense.
"It is not appropriate at this juncture to determine whether the 'brand protection' defense has merit. McDonald's has a right to pursue this defense to the extent it has a good-faith relation to matters raised in the complaint," Miscimarra said.
McDonald's was first charged as a "joint employer" in 2014 in connection with 61 complaints of unfair labor practices at 31 of its franchise restaurants, meaning that it was equally liable for any violations. The move was highly unusual because the corporation did not own the franchisees, which were all private businesses that merely rented out the company's brand. Previously, the board had charged businesses as joint employers only when they had direct, day-to-day control over the other company's workers.
The case, which officially began in a Chicago court last week, has attracted major attention by business groups, since if McDonald's is found responsible it could vastly expand legal liability for any company that franchises its brand or maintains any tangential relationship with a separate corporation. The Chamber of Commerce has argued the labor board's move could result in major corporations withdrawing from franchising altogether.
Labor groups have cheered the board's move, arguing that corporations have been using the previous "joint employer" standard to skirt liability even when they have effective control over their franchisees' labor practices. An expanded joint employer standard also would make labor organizing vastly easier by letting unions target the corporate parent instead of organizing franchisees piecemeal, as they must do now.
McDonald's has contended that the actions cited by the board as proof that it was a joint employer were merely the company reacting to the SEIU campaign. It has argued that since that campaign was not specifically about organizing McDonald's workers — neither SEIU nor any other union have filed a single organizing petition at any restaurant — it was justified in telling its restaurants how to respond. The labor board has long held that franchisers' actions to protect their brands do not make them joint employers.
Labor board General Counsel Richard Griffin, a former top lawyer for the International Union of Operating Engineers, said at an American Bar Association forum last year that the SEIU-driven campaign was the "sole reason" why the agency is involved in the McDonald's case.
The administrative law judge in the case rejected McDonald's subpoena request, and Pearce and Hirozawa upheld that ruling Thursday. "We agree with the judge that evidence of SEIU's and the other charging parties' motives regarding their campaign is not relevant" to the charges against McDonald's, they said.
In a dissent about six times as long as the majority's ruling, Miscimarra tore into his fellow board members' decision, noting that they effectively made it impossible for McDonald's to even present its defense. He noted that Griffin has specifically argued that McDonald's became a joint employer because it coordinated its franchisees' conduct in response to SEIU's campaign and that this went "beyond protecting the brand."
"The judge revoked all McDonald's subpoena requests that would bear on McDonald's efforts to prove that any direction or control it exercised was not as (the NLRB general counsel argued) a 'response to the employees' activities' or to any employee 'organizing campaign' but was, instead, in response to a centralized assault on the McDonald's brand, directed and controlled by the SEIU and other groups," Miscimarra said.
"Second, the judge's orders are also objectionable because, as noted above, the primary reason given by the judge for rejecting McDonald's 'brand protection' argument is the fact that the general counsel disagrees with it."
McDonald's has faced other tough hurdles in defending itself against the charges. The board has previously decided that it will rule on the joint employer issue prior to addressing the underlying complaints of unfair labor practices at the individual restaurants. Thus, McDonald's could be ruled a joint employer even if those individual complaints fall apart in court.