McDonald’s Case Raises More Ethics Issues for NLRB Republicans

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By Hassan A. Kanu (Bloomberg Law) and Josh Eidelson (Bloomberg)

The chairman of the federal labor board and one other Republican member appear to be ensnared in another fight over their ethical obligations, this time in a big case against fast-food multinational McDonald’s.

Worker advocacy groups conducting the “Fight for $15" campaign for higher wages and better working conditions requested Aug. 14 that National Labor Relations Board Chairman John Ring and Member William Emanuel sit out a case alleging that McDonald’s is a “joint employer” of its franchisees’ workers. The case also alleges that franchisees retaliated against workers who supported the campaign.

Fight for $15 leaders are arguing that federal ethics rules for presidential appointees should bar Ring and Emanuel from the case because they used to work at law firms Morgan Lewis and Littler Mendelson, respectively, and both firms entered agreements to help McDonald’s counter the campaign. The rules restrict presidential appointees from participating in matters involving family members and parties who have a relationship with their previous employer. Appointees also have to “avoid any actions creating the appearance” of bias.

Questions of ethics and the members’ potential conflicts of interest have dogged the NLRB since early this year, shortly after the first of President Donald Trump’s four appointees was confirmed. Sen. Elizabeth Warren (D-Mass.) has called for Emanuel’s resignation for violating ethics rules. Ring has pledged to undertake a “comprehensive” ethics review to restore “full confidence in the integrity of the Board and its recusal processes.” The latest recusal motion by Fight for $15 presents a novel set of facts and new argument for recusal and could be another roadblock for the chairman’s efforts.

The NLRB declined to comment.

“If you go back and look at the president’s ethics pledge, it says two things: one, that you cannot participate if you were personally involved—and of course neither Ring nor Emanuel were personally involved in the McDonald’s litigation, so the request fails on that point,” Roger King, a management-side attorney for the HR Policy Association, told Bloomberg Law Aug. 15. “It also goes on to say your former employer would have to have been involved in the case, which is also, of course, not the facts of this matter.”

The ethics obligations stem in part from the Trump White House’s ethics pledge—which means the issue of recusal obligations stretches across the federal government to all other presidential appointees.

“This goes well beyond the NLRB,” King said. “This is the ethics pledge of the president—and it’s quite similar to others, including” that of President Barack Obama’s White House. “It’s important to put an end to this sort of backdoor partisan attempt to prevent the NLRB from ruling in important cases.”

Warren backed Fight for $15’s request shortly after the motion was filed, saying Ring and Emanuel are incapable of giving workers a fair shake in this particular case because of their firms’ work with McDonald’s against the campaign.

Board Prosecutor Backs Settlement, Scolds Judge

Other obligations on appointees stem from federal law, including a requirement to avoid creating the “appearance” of impropriety. King said that standard hasn’t been applied “because it’s not practical, it’s simply political smoke.”

A joint employer finding in the case would mean that McDonald’s shares responsibility with the franchisees for legal violations against workers and would be obligated to come to the bargaining table if employees unionize.

The trial record establishes the role the two members’ former employers had in combating the unions’ campaign—"the very basis” for the board’s issuing the complaint in this case, the unions said. The Fight for $15 group filed the recusal request a day after McDonald’s moved to appeal an administrative judge’s rejection of its settlement offer.

The previous NLRB general counsel, a Democrat, had pushed to tag McDonald’s as a joint employer before current General Counsel Peter Robb reversed course.

Robb worked out the settlement with McDonald’s. Fight for $15 continuously opposed the settlement talks and the eventual offer.

The general counsel also filed his own motion Aug. 14 backing up McDonald’s effort to revisit the settlement and delivering a somewhat unusual rebuke of the administrative judge who rejected the offer.

Attorneys in Robb’s office urged the board members to approve the proposed settlement, saying Judge Lauren Esposito “acted arbitrarily,” “abused her discretion,” and “overstepped her role” in rejecting it.

Esposito gave insufficient credit to Robb’s “support of the settlements, given his unique position as advocate and enforcer of the public interests served,” attorneys in the general counsel’s office wrote.

The board general counsel’s positions are generally given special weight, although the judges are technically independent actors with the authority to exercise their own discretion.

Will White House Weigh In on Open Question?

McDonald’s retained Morgan Lewis to create a national training program for McDonald’s franchisees to respond to union organizing. The company also hired Littler Mendelson to operate a hotline for franchisees that provided free legal guidance in responding to the campaign.

“McDonald’s and the Trump administration are making a last-ditch effort to revive a settlement that was already rejected as legally indefensible by a career administrative law judge who heard testimony and evidence for 150 days of trial,” Mary Joyce Carlson, counsel for the Fight for $15, said in an email. Carlson noted that the trial proved that McDonald’s surveilled and fired workers who went on strike with Fight for $15.

But management attorneys say the unions are misinterpreting the ethics obligations and politicizing the issue.

“The fact that there was once some advice and counsel to McDonald’s by Littler and Morgan Lewis is insufficient to establish an actual conflict or even the appearance of a bona fide conflict,” Peter Finch, a management-side attorney at Davis Wright Tremaine, told Bloomberg Law in reference to Emanuel’s and Ring’s former firms. “There’s no direct or predictable benefit for either official or their former firms.”

King added that the union’s focus on the portion of the rules that forbid appointees from creating even the “appearance” of a conflict is misguided and impractical.

The questions about conflicts of interest have been “lingering and in need of attention going back to first part of this year when Member Emanuel’s issues arose,” he said. “It’s critical that the White House Office of Legal Counsel weigh in on this matter.”

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