Final Exam -- James Fox

Labor Law - Spring 1997



Instructions: This is an open book exam. You may use any written source (except another student's exam paper) you choose in answering the questions set forth below. The exam must be completed in this room or in the designated typing room. Statutory references are to the National Labor Relations Act (NLRA) unless otherwise indicated. There is a total of 110 points on the exam. The exam will be graded on a 100-point scale.



Part I - Fact Pattern Analysis

(60 points - One hour, 40 minutes)

Southern California Gas Company (Southern) is a California public utility that generates and sells natural gas to customers in Southern California. The Union represents a bargaining unit consisting of approximately 6000 of Southern's employees. Among the provisions of the collective bargaining agreement are the following:

Southern is a wholly-owned corporate subsidiary of Pacific Enterprises (Pacific). Pacific's stock is traded on the open market. Southern has for many years maintained an Employee Retirement Savings Plan (Plan). Under the Plan, which was organized under Section 401(k) of the Internal Revenue Code, both bargaining unit and non-bargaining unit employees are permitted to purchase and hold shares of Pacific stock on a tax-deferred basis. Southern makes matching contributions to employee accounts in the form of Pacific stock.

A number of Pacific's shareholders filed a shareholder derivative lawsuit in a California state court. The suit alleged in substance that Pacific's Board of Directors and its current and former members had engaged in various forms of misconduct to the detriment of the corporation. As a remedy, the suit sought to recoup losses to Pacific's treasury allegedly suffered as a consequence of the misconduct. Shortly thereafter, the Union filed a virtually identical lawsuit against Pacific on behalf of the bargaining unit employees that it represents and who hold Pacific stock through the Plan. The state court consolidated the shareholders' and the Union's lawsuits.

After substantial discovery, the attorneys for the shareholders and the defendants submitted a proposed settlement to the state court. Under the settlement, the defendants agreed to pay damages to Pacific's treasury in the amount of $4 million. The plaintiffs' attorneys were to be awarded fees in the amount of $8 million. The Union immediately objected to the proposed settlement on the ground that the proposed damages were insufficient and the attorneys fees were excessive. The state court set a one-month period for additional objections to be filed before considering whether to approve the proposed settlement.

Smith is a Southern employee who has taken a leave of absence to act as a paid organizer for the Union. During the objections period concerning the lawsuit described above, the Union instructed Smith to ask employees who were Pacific shareholders under the Plan to sign a petition objecting to the proposed settlement. The Union's intent was to submit the petition to the state court in further support of its objections to the proposed settlement.

Smith began soliciting bargaining unit employees at one of Southern's natural gas production facilities. He asked Union members to sign the petition, and asked non-members to both join the Union and sign the petition.

One of Southern's supervisors observed Smith conducting his activities. The supervisor instructed Smith to stop soliciting employees to join the Union and threatened him with discharge if he continued. Smith responded that he was on legitimate union business and had a right under the NLRA to solicit employees to join. Smith continued soliciting signatures for the petition and requesting that non-members join the Union. When the supervisor again observed Smith doing so, he terminated Smith's employment.

Smith then filed a charge with the National Labor Relations Board alleging that his discharge violated Section 8(a)(1) of the NLRA.



1. On what basis would you expect Southern to argue that Smith was not engaged in "concerted activity"? On what basis would you expect Smith to argue that he was? (10 points)

2. On what basis would you expect Southern to argue that Smith had not engaged in activity for "mutual aid or protection"? On what basis would you expect Smith to argue that he had? (10 points)

3. Assume that Smith is able to establish a prima facie case that his discharge violated Section 8(a)(1) of the NLRA. On what basis would you expect Southern to argue that his charge should nonetheless be dismissed? (10 points)

4. After his termination and while his case was still pending before the National Labor Relations Board, Smith continued going to Southern's facilities, and continued soliciting employees to sign the petition and join the Union. Southern responded by filing a state court action seeking an injunction prohibiting Smith from trespassing on its property. On what basis would you expect Smith to move for dismissal of the suit? How would you expect Southern to respond? (10 points)

5. Assume that the Union neglected to timely file a grievance under the collective bargaining agreement, and that for this reason the Union could not seek Smith's reinstatement through the grievance and arbitration procedure of the agreement. Smith then filed a suit in state court alleging that Southern breached the agreement. On what basis would you expect Southern to move to dismiss Smith's lawsuit? (10 points)

6. Assume that a number of Southern's employees walked off the job in order to show support for and solidarity with Smith. Identify any options Southern has in response to the walkout. Is injunctive relief an option? If so, in what forum would Southern seek that relief? (10 points)



Part II - The Underlying Theory

(40 points - One hour)

1. In Bernhard-Altman (casebook p. 211), the United States Supreme Court held that an employer violated Section (8)(a)(1) and (2) of the NLRA when it voluntarily recognized a union that did not in fact have majority support. The Court reached this conclusion despite the facts that the employer had a good faith belief that the union had majority support when it extended recognition, and that the union had in fact acquired majority support by the time the employer and the union entered into a collective bargaining agreement. In Auciello Iron Works, Inc. v. NLRB, ___ U.S. ___, 116 S.Ct. 1754 (1996), the Court held that an employer violated Section 8(a)(1) and (5) when it repudiated a collective bargaining agreement with the incumbent union. The Court reached this conclusion despite the facts that during the intervening period between the employer's proposal for a new agreement and the union's acceptance of that proposal, the employer acquired information that gave rise to a good faith belief that the incumbent union had lost the support of a majority of the employer's employees. Identify the two competing policy objectives present in Bernhard-Altman and Auciello and explain whether the cases are consistent or inconsistent with each other. (10 points)

2. In Katz (casebook p. 402), the Supreme Court held that an employer violated Section 8(a)(1) and (5) of the NLRA when it unilaterally changed certain terms or conditions of employment at a time when those matters were under negotiation for a new collective bargaining agreement. In explaining its decision, the Court suggested, consistent with long-standing National Labor Relations Board decisions, that the result might well have been different if the employer and the union had negotiated to impasse concerning those terms or conditions of employment prior to unilateral implementation. What is the theoretical basis for forbidding an employer from unilaterally changing terms or conditions of employment prior to impasse but permitting such action following impasse? (10 points)

3. Justices Brennan and Black appear to have adopted quite different approaches to statutory interpretation. Identify and briefly explain their respective approaches. What are the strongest arguments that can be advanced for and against each approach? (10 points)

4. The First Amendment to the United States Constitution provides in part that "Congress shall make no law . . . abridging the freedom of speech . . . ." Prior to its decision in R.A.V. v. City of St. Paul, 505 U.S. 377 (1992), the Supreme Court had consistently adopted a "categorical" approach to identifying speech that did not qualify for protection under the First Amendment. Identify and briefly explain the theoretical underpinnings of the "freedom of speech" clause. On what basis has the Court justified exclusion of these "categories" of speech from the prohibition on laws abridging freedom of speech? (10 points)

5. In Budd Manufacturing (casebook p. 221), the Third Circuit Court of Appeals said that "If ever a workman deserved summary discharge, it was [Weigand]." The Court nonetheless affirmed the Board's conclusion that Weigand was discharged in violation of Section 8(a)(3) of the NLRA. Can an employer ever discharge a known union activist without violating Section 8(a)(3)? (10 points)



Part III - Extra Credit

(10 points - 15 minutes)

Circle the one correct answer for each question below on this exam sheet. Each question is worth two points.

1. At common law, the intentional infliction of economic harm was considered to be tortious, and therefore actionable, unless it was "justified" by:



2. Which of the following rules would be presumptively unlawful under the NLRA?



3. Which of the following is false?



4. Sandwich King sells sandwiches exclusively. Approximately 10 percent of its sales are for Spam sandwiches. All of the Spam is made by Hormel. The Union is on strike against Hormel. Which of the following is false?



5. According to a recent edition of "The Rodent" newsletter, a Houston lawyer sent a client a bill that included a $165 charge for "ground transportation." A subsequent audit determined that the charge was for: