“It’s unusual for the National Labor Relations Act to be this effective in terms of getting money to people,” said Hartford, Conn., plaintiffs’ employment lawyer Thomas W. Meiklejohn, who brokered a record settlement on behalf of former Allied Signal employees.
More than 500 defense workers at the former Allied Signal engine plant in Stratford, Conn., earlier this month took home the largest National Labor Relations Board settlement in New England history — a total of $17.6 million in severance benefits.
Under the agreement, which upheld a cherished labor law principle, the workers’ individual pension and severance increases will range from about $2,000 for new hires up to $56,000 for veteran workers.
Thomas W. Meiklejohn, of Hartford’s Adler, Livingston, Pulda, Meiklejohn & Kelly, represented the United Auto Workers union in litigation and negotiations. He called upon the so-called Katz doctrine, set out by the U.S. Supreme Court 40 years ago, which maintains the basic benefits of a labor contract until new contract negotiations reach an impasse.
But Edward Bosik, vice president of labor relations for Allied’s successor company, Honeywell Inc., contended the workers could have had virtually the same settlement five years earlier.
The case began in 1996, when Allied Signal announced it was closing the Stratford plant, a longtime source of engines for Army tanks and aircraft. Allied merged with Honeywell, Inc., the following year. It contended the employees couldn’t claim the severance from the expired contract.
After an appeal to the U.S. Court of Appeals for the D.C. Circuit, the workers were deemed entitled to their severance package on the basis of NLRB v. Katz, a 1962 U.S. Supreme Court precedent. Since the circuit court ruling was handed down in June 2000, a separate issue has kept the case in negotiations until it settled on Oct. 3.
Originally, about 50 workers had chosen to retire early when they got news of the plant’s closing. However, Meiklejohn said, if those workers had known they “could have gotten an extra $30,000 to $50,000 for waiting for a layoff slip, they would have waited.
“More than half of them retired in June, when the company said they were doing away with the severance benefits. The company ultimately agreed to pay the severance benefits to all those people,” he said, adding, “It’s a great settlement — more than 100 percent.”
LABOR LAW STRENGTH
The remedies available under the National Labor Relations Act (NLRA) are often less powerful than those available to nonunion workers with constitutional claims, Meiklejohn said. But in this case, unionized workers had a clear-cut legal advantage.
“It’s unusual for the National Labor Relations Act to be this effective in terms of getting money to people,” said Meiklejohn, whose practice includes individuals’ employment cases, which can be costly to employers. “If somebody gets fired because of their race, religion or disability, in addition to having to make the employee whole and pay benefits, the employer faces liability for compensatory and punitive damages.” Under age discrimination law, employers face additional liability for liquidated damages, he added.
Conversely, under the NLRA, there’s no such threat. “The only remedy for illegal discharge is actual lost wages and benefits,” Meiklejohn noted. “In many instances it’s worth it for the employer to fire the person, because by the time he’s reinstated, by the time a decision comes down, the employer’s achieved the objective, which is to intimidate the employees into not supporting the union.”
As a business decision, he said, companies sometimes “decide that it’s worth it to ignore the law and take action without negotiation with the union, because the benefits of ignoring the law will exceed the cost.”
But Honeywell negotiator Bosik and in-house lawyer Jane Greenman contended the union could have settled on favorable terms years earlier. “Instead, they chose to litigate,” Greenman said, adding that it delayed payments by years.
Union lawyer Meiklejohn argued that the law protected the workers’ severance benefits only because the UAW was willing to wage its six-year battle. The union paid him hourly, and no legal fees or costs will diminish the award. “The workers will get every penny,” he said.
There has been a steady trend of nonunion companies cutting all types of benefits at will, he noted. “If they do the paperwork properly, they can get away with it,” Meiklejohn maintained.
In the case of Allied Signal, the existence of the Katz doctrine required the company to honor the severance terms of the expired contract. And in subsequent negotiations, Honeywell-Allied agreed to a settlement generous enough to ensure continued litigation.
The NLRB was represented by Hartford-based field attorneys Thomas E. Quigley and Jonathan B. Kreisberg, while Honeywell-Allied retained Morgan, Lewis & Bockius attorney Charles O’Connor, of its Washington, D.C., office, and Phillip Allen Lacovara, of Mayer, Brown, Rowe & Maw in New York.