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On December 1, 2016, Parker Hannifin Corporation and CLARCOR Inc. announced that the companies have entered into a definitive agreement under which Parker will acquire CLARCOR for approximately $4.3 billion in cash, including the assumption of net debt. The transaction has been unanimously approved by the board of directors of each company. Upon closing of the transaction, expected to be completed by or during the first quarter of Parker’s fiscal year 2018, CLARCOR will be combined with Parker’s Filtration Group to form a leading and diverse global filtration business. Bass, Berry & Sims has served CLARCOR as primary corporate and securities counsel for 10 years and served as lead counsel on this transaction. Read more here.

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Securities Law Exchange BlogSecurities Law Exchange blog offers insight on the latest legal and regulatory developments affecting publicly traded companies. It focuses on a wide variety of topics including regulation and reporting updates, public company advisory topics, IPO readiness and exchange updates including IPO announcements, M&A trends and deal news.

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Labor Talk Blog: NLRB Rules "Contaminated-sandwich" Campaign is Protected Activity under the National Labor Relations Act

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September 3, 2014

Can sandwich shop employees be protected from discipline even though they suggest to the public that sandwiches may be contaminated by sick workers?

  • Yes, said the NLRB
  • The decision affirms a continuing trend of cases that are significantly pro-employee.

In early 2011, pro-Union employees of a Minnesota Jimmy John's franchisee took part in a campaign ostensibly designed to bring public awareness to their interest in receiving paid sick leave. The campaign used posters picturing two Jimmy John's sandwiches side by side, asking whether viewers could distinguish between the one prepared by a healthy Jimmy John's employee and the one prepared by a sick employee. The poster also stated Jimmy John's employees were not entitled to paid sick leave and could not call in sick – a reference to the franchisee's policy to penalize employees who called in sick without finding a replacement worker. Persons reading the poster were instructed to help workers win sick days by calling the owner at the number provided.

In response to the poster campaign – which included hanging posters on community bulletin boards in and around Jimmy John's stores – the franchisee terminated six employees and issued written warnings to three others for their involvement in the campaign. On August 21, 2014, a panel of the National Labor Relations Board (the Board) held 2-1 that the terminations and reprimands constituted unfair labor practices as defined in the National Labor Relations Act (NLRA) and ordered reinstatement of the terminated employees, with back pay, and the removal of the disciplinary actions.

At issue in the analysis was whether the poster campaign exceeded the protections of the NLRA for employee communications to third parties. To make that determination, the Board analyzed whether the campaign was: (1) unrelated to an ongoing labor dispute; (2) reckless or maliciously untrue; or (3) so disloyal as to lose the Act's protection. If the campaign met any of the three tests, the employees would lose the protections offered by the "mutual aid and protection" clause of Section 7 of the NLRA. Both the majority and the dissent agreed the campaign clearly related to the ongoing labor dispute regarding the provision of paid sick leave. They parted company regarding the veracity of the campaign's statements regarding the current sick leave policy and the motivation behind the campaign.

The dissent found the campaign violated the "reckless or maliciously untrue" test because it misled the public regarding the sick leave policy. The poster read, "SHOOT, WE CAN'T EVEN CALL IN SICK." Under the then-current sick leave policy, employees were disciplined if they called off a shift due to illness without finding a replacement worker. While admittedly a less than complete characterization of the policy, the majority held that the poster's statement reflected implementation of the sick leave policy and that reasonable readers would recognize the use of hyperbole in the poster.

The real point of contention between the majority and the dissent was the analysis of the disloyalty factor. To determine whether activity meets the disloyalty threshold, the Board considers whether the communications were made at a critical time in the initiation of the company's business or whether they were so disparaging that they could be seen as reasonably calculated to harm the company's reputation and reduce its income. In evaluating the "contaminated-sandwich" campaign, the nature of the campaign was at issue, not the timing.

The majority emphasized that addressing an issue that is prejudicial to the employer or that is highly sensitive is insufficient to trigger a finding of disloyalty. Employees' public criticism of their employer must be maliciously motivated to be found disloyal. The dissent relied upon board precedent in the food industry in support of his conclusion that intimating food may be contaminated was disloyal activity. But, the majority pointed out, the campaign did not state sandwiches were contaminated; it "suggest[ed] the realistic potential for illness resulting from the handling of food by workers who come to work while sick." And while the majority disagreed with the dissent that empirical evidence was necessary to support such a claim, it acknowledged that sufficient evidence exists to support the risk of such contamination both generally and with respect to the franchisee specifically. Moreover, the majority found no evidence the pro-union employees acted with the intent to harm the franchisee. Rather, the employees' actions were in support of their push for sick leave benefits and were the result of a desire to improve the terms and conditions of their employment.

After finding the poster campaign did not fall outside the protections of the NLRA, the Board ordered the reinstatement of the terminated employees, with back pay, and the removal of the written warnings from reprimanded employees. The franchisee also was ordered to refrain from removing the posters from bulletin boards open to other postings without restriction, such removal having been found to be an unfair labor practice.

Additionally, the NLRB panel considered actions of the franchisee's supervisors related to an anti-Union campaign Facebook page. The panel was unanimous in its finding the franchisee violated the Act through its supervisors' use and encouragement of disparaging, crude, and profane language on the Facebook page and the supervisors' encouragement of the disparagement of a pro-union employee on that same page.

Think twice:

Before disciplining employees for activities that appear inflammatory or disparaging, consider whether the activities could be construed as relating to an ongoing labor dispute. If so, contact counsel to discuss the potential ramifications of penalizing employees for participation and appropriate ways to limit the effect of the activities on business. And remember, the Board is looking carefully at social media postings in the context of union campaigns and employer discipline. Review your policies and practices and consider additional training for supervisors to avoid both improper disciplining of employees for postings and supervisors own missteps on the internet.

For more Labor and Employment information, visit www.BassBerryLaborTalk.com.


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