A company accused of lying about retirement benefits to stop workers from organizing can be sued in a class-action lawsuit, a federal judge ruled.
The decision came on April 7 after the defendant, the California-based grocery retailer Save Mart Supermarkets, asked the judge to dismiss the case, which experts are calling a creative use of labor law against union-busting.
The suit hinges on promises made by managers about retirement benefits to undercut the appeal of union membership to employees, a common tactic in campaigns against labor organizing. A ruling against Save Mart could haunt companies that have used similar tactics for decades.
“Unions need to address large companies’ anti-union tactics any way they can, especially given how weak our labor laws have become,” said Naomi Soldon, partner of the union-side labor law firm Soldon McCoy, which isn’t representing anyone in the dispute. Soldon told Truthout that the case takes a “novel approach” to fighting union-busters, and a decision in favor of the workers “should help organizing drives, in general, as it shows employees that they have rights,” which unions can help enforce.
U.S. District Judge William Orrick said the lawsuit against Save Mart may proceed based on allegations of “two misrepresentations” by the company; one stems from promises of nonunion retirement benefits “as good or better than those of their union counterparts,” the other pertains to managers having told employees to retire earlier than they should have to maximize benefits and income.
The benefits offers were made by Save Mart as part of a strategy to undermine organizers with the United Food and Commercial Workers (UFCW), lawyers for the plaintiffs allege.
Save Mart operates more than 200 grocery stores with more than 14,000 workers in California and Nevada under different retail brand names, including Lucky, FoodMaxx, Lucky California and Save Mart itself. The company was listed by Forbes last year as the 109th- largest private employer in the U.S. with some $5 billion in revenue. UFCW local chapters in California represent about 11,500 Save Mart workers.
For years, Save Mart did provide similar retirement benefits to nonunion workers, in dollar amounts. But the terms of benefits to union workers were binding, as per the collective bargaining agreement governing them, while nonunion retirees were compensated at the discretion of management.
In April 2022, shortly after Save Mart’s longtime owners sold the company to a private equity firm, Kingswood Capital Management LP, management took benefits away from nonunion retirees, many of whom had worked for Save Mart for decades. Thus emerged the class- action suit, which features four lead plaintiffs who spent a total of 146 years working for Save Mart companies.
“Put simply, Save Mart made false assurances about [its nonunion retirement plan] benefits as a means of suppressing union enrollment among Save Mart employees,” lawyers for the plaintiffs alleged. They estimated that their clients represent a class that could consist of thousands of workers who are owed “hundreds of millions of dollars.”
The plaintiffs’ complaint outlined how Save Mart, deceptively, touted the quality of its benefits as part of a relentless union-busting strategy orchestrated at the highest level of the corporate hierarchy. When the company opened a new store, for example, executives and high-ranking human resources employees would descend on the staff with generous promises to diminish the appeal of organizing, the filing alleged.
“In these meetings, the HR representative(s) and company executive were trained to communicate that employees should not pay dues to join the union, since the non-union benefits — including retirement benefits — would always be as good as or better than the benefits enjoyed by union employees,” the complaint stated.
Claims about benefits were also invoked by managers at these meetings to counter arguments made by “employees who were union members at their prior location [and] expressed concern about losing their union benefits,” according to the plaintiffs. Similar meetings were held at any store playing host to an organizing drive, if executives or HR got wind of the campaign.
“Internally, these meetings were referred to as ‘the roadshow’ or ‘kumbaya’ meetings because ‘the purpose was to foster harmony amongst the employees by reassuring them about their benefits and quelling any desires to give up those benefits’ by unionizing,” the complaint said. “The message worked: many Save Mart stores remained non-union.”
In a twist of irony, the complaint drew heavily on the testimony of HR executives who were, for years, foot soldiers in Save Mart’s union-busting campaigns. They themselves were “shocked” by the withdrawal of benefits after the Kingswood takeover, plaintiffs’ lawyers said, because they “had been communicating to employees for years that the Plan’s medical benefits were guaranteed for life” and “had themselves relied upon this lifetime guarantee” in deciding to give years of their life to Save Mart.
Meanwhile, the union employees that HR spent years attempting to curtail, didn’t have to consider the possibility of losing their benefits because they refused to take their former bosses’ word for it.
“Our members can rest assured they have the benefit of solid successor language which guarantees they will continue to enjoy the benefits of their Union memberships and labor contracts,” UFCW Local 8-Golden State said in a statement reacting to news of the takeover.
Most legal battles against union busters are waged by workers under the National Labor Relations Act (NLRA), the law that grants legal protections to workplace organizing. In recent months, for example, the law has been used by Starbucks workers to win their jobs back after they were fired for supporting union activity.
Worker advocates, however, have been attempting to strengthen the law for decades, arguing that it could do much more to punish tyrannical union-busting bosses. Democrats attempted to pass a major reform bill in 2021, the Protecting the Right to Organize Act, but fell a few Senate votes shy of sending the legislation to President Joe Biden’s desk.
One way the bill would have strengthened the NLRA: It would have allowed workers to sue companies for monetary damages if the firms violate their rights under the law. The Save Mart class action is being brought under the Employee Retirement Income Security Act (ERISA) of 1974, which established federal standards for employer-provided retirement and health care plans.
Eric Fink, associate professor of Elon University School of Law, echoed Soldon’s analysis, saying that there’s a high threshold under the NLRA for securing charges against union-busting managers who make deceptive claims about benefits, and the remedies are weak.
“Even if the bait-and-switch in this case could be the basis for an unfair labor practice charge, it would require proof that the employer was motivated by anti-union animus, which would be difficult,” he noted.
“More significantly, in contrast to the limited remedies available for [unfair labor practices], the potential remedies in an ERISA suit are substantial,” Fink added. “If this suit is successful, and if other employers anticipate the possibility of facing similar suits, the deterrent effect could be much greater than has been the case with [unfair labor practice] charges (which are not much of a deterrent at all).”
Bosses violate workers’ rights under the NLRA in 41.5 percent of union organizing campaigns, according to a study published in 2019 by the Economic Policy Institute.
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