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In an unfortunate but not unexpected ruling, the California Supreme Court yesterday sided with the United Farm Workers of America (“UFW”) and the Agricultural Labor Relations Board (“ALRB” or “Board”) against one of the largest fruit farms in the nation.  In Gerawan Farming, Inc. v. ALRB, the Court reversed a lower court ruling and held that a 2002 amendment to the Agricultural Labor Relations Act (“ALRA”) that forces agricultural employers to mediate with unions and  imposes binding collective bargaining agreements (“CBA”) if the parties are unable to reach a deal is constitutional.  To add insult to injury, the Court also held that an employer may not argue an “abandonment defense” to a “mandatory mediation and conciliation” (“MMC”) request, even where the union failed to contact the employer for almost twenty years.

The Supreme Court’s decision was the latest in a long and contentious war between the UFW and Gerawan. The UFW originally won the right to represent Gerawan workers in 1992, and after initial contracts talks did not lead anywhere, the UFW went dark for almost two decades.  The UFW reemerged in 2012 demanding to negotiate on behalf of workers. After more than 10 unsuccessful bargaining sessions, the UFW invoked the MMC process.  Gerawan opposed the MMC request, claiming the UFW had failed to meet certain statutory prerequisites and had abandoned its status as the bargaining representative.

Under the MMC mechanism, a union and an employer are required to participate in mediation to try and hammer out a CBA.  If the mediation is unsuccessful, the law gives the mediator the authority to set the terms of the CBA, including wages, hours, and other conditions of employment. In this case, after several mediation sessions failed to result in a contract, the mediator held several hearings and submitted a report to the Board, resolving the remaining disputed contract terms.  Gerawan objected to the report, and the Board remanded six provisions back to the mediator for further proceedings.  The parties reached an agreement on those remanded provisions; the mediator issued a second report, which took effect as the Board’s final order, thereby imposing a contract between the parties.    Gerawan objected to and appealed the final order.

The appellate court sided with Gerawan and held that the law providing for MMC was unconstitutional, as it violated due process and equal protection principles and improperly delegated legislative authority to the Board.  Gerawan argued, and the Appellate Court agreed, that the MMC law does not clearly state the standards that the forced contracts are supposed to achieve, for example, raising workers’ wages or improving working conditions. Gerawan also successfully argued that the MMC law allows mediators too great of discretion in determining the proper terms of a contract, which may result in arbitrary and inconsistent CBAs in relation to comparable employers.

The California Supreme Court disagreed, stating that the MMC law does not violate equal protection laws as the Legislature had a “rational basis” for enacting the MMC law. The Court said that the MMC law accomplished the legislative intent of facilitating CBAs by empowering mediators to make individualized determinations regarding the terms of CBAs based on the specific circumstances of the employer and its workers. Further, the Court ruled that it is not enough to show that some hypothetical applications of the MMC law might result in arbitrary treatment; rather, Gerawan was required to show that the MMC law violates equal protection in a “great majority of cases,” which it said Gerawan had not argued in its appeal.

The Court also ruled that the MMC law did not improperly delegate legislative authority. An unconstitutional delegation of authority occurs only when a legislative body (1) leaves the resolution of fundamental policy issues to others or (2) fails to provide adequate direction for the implementation of that policy. First, the Court ruled that the Legislature made a fundamental policy determination that the MMC was necessary based on evidence showing the ALRA was failing to promote the adoption of CBA’s by agricultural employers, as demonstrated by the fact that as of 2002, employers had not agreed to a contract in about 60 percent of the cases where a labor union had been certified. Second, the Court noted that MMC law provided a list of nonexclusive factors for the mediator to consider when developing an agreement.  The Court said this was “adequate direction” and no specific formula was required.  Additionally, the Court held that the MMC law’s two-tiered system – administrative review by the Board, followed by judicial review by the Courts of Appeal – constituted sufficient procedural safeguards to protect against abuse.

Lastly, the Court ruled that employers may not avoid the MMC mechanism by arguing that the union has abandoned its representative status.  The Court disagreed with Gerawan and the appellate court’s argument that the abandonment defense protects the workers’ right to choose.  The Court made clear that the power to decertify unions is reserved for the employees and unions alone and allowing employers to raise an abandonment defense would frustrate that standard.

COUNSEL TO MANAGEMENT:

Gerawan’s attorney, Ron Barsamian, has stated that the Company intends to appeal to the United States Supreme Court to review the decision. Barring a successful appeal to the United States Supreme Court, the MMC amendments to the ALRA are now undisputedly the law of California. Employers with unions, even absentee unions, should expect those unions to be more active in the coming year now that a CBA between the union and employer is all but guaranteed regardless of past inactivity under the MMC law.  If you have any questions about the union election process or bargaining process, or what this decision means for your Company, please contact the experts at The Saqui Law Group.

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