Friday 27 May 2016

Santa Rosa snippet

Before last year's AGM, National Express sent a report to shareholders attempting to rebut criticisms of the company made by two MPs in a report by the Trade Union Group of MPs. Notably this included a full-throated defence of the company's choice to refuse to accept the election result in Santa Rosa.

Here are a couple of extracts (my highlights):
  1. National Express has challenged the election process in Santa Rosa. The “technicality” referred to in the Trade Union Group’s report was the removal of the ballot box from the voting booth and it being taken outside to a car. We believe we have no other choice but to challenge the election process when we believe such a significant violation occurs... we believe such a fundamental breach of electoral practice cannot go un-challenged. 
Now compare that with what that US Court of Appeals said, some relevant extracts:
Petitioner’s second objection borders on frivolous... 
The Regional Director found that Petitioner [the company] did not allege that any unauthorized ballots were cast. Nor was there evidence that the Board Agent’s conduct in any way affected the election’s outcome. Petitioner does not dispute these findings...  
An objecting party is not entitled to a hearing merely by imagining fanciful acts of misconduct that find no support in the evidence. Rather, an objecting party must offer concrete evidence that is sufficient to give reasonable cause for concern and thus justify a hearing... In this case, Petitioner points to nothing in the record to support a claim that the Board Agent engaged in any conduct that might have tainted the election proceeding... 

So National Express told its shareholders that there had been a "significant violation" and "fundamental breach of electoral practice" in Santa Rosa. Yet the NLRB found and the Court of Appeals agreed that the company presented no evidence to show anything had happened to justify overturning the election. The company in turn did not challenge this (!) but argued that it should have been allowed a hearing anyway, because of what could have happened, even though it could not show anything did happen (because it didn't!).
And this farce has been defended by the board at the past two AGMs at least.

Wednesday 18 May 2016

National Express hits the buffers in Santa Rosa

Last week, I went to my fourth National Express AGM, and the second since I joined the ITF. I have to say this is a company that I view with increasing exasperation and I know colleagues both within the labour movement and the responsible investment field feel the same way.

I want to focus in on one case because I think it is is illustrative of the problem. In February 2013 Durham School Services workers in Santa Rosa, Florida voted in election covering a little over 200 people for representation by the Teamsters. The result was about 60:40 in the union's favour so not even close (this isn't "hanging chad" territory). Yet more than 3 years later the company still refuses to bargain with the union.

The company has thrown up various legal objections with relation to the election result in 2013. Despite having lost at every stage the company continues to appeal, most recently to the US Court of Appeals in March. During this process it has used two law firms, and obviously has expended company funds in three years' worth of legal fees.

The company's defence of its record in general is that in any business there will be one or two bad cases, but this isn't indicative of the company as a whole. In the Santa Rosa case in particular there are a couple of points that board members repeat over and over -
  • We have offered to the union to re-run the election
  • The way the ballot box was handled during this election is an important point of principle
I think both of these points have pretty large flaws.

To take the first one, the National Labor Relations Board (NLRB) certified the election result as valid. It has reviewed the company's objections and rejected them. Why on earth should the union agree to re-run an election that the government agency responsible for labour law says was valid and which was won by a clear majority? The question should be why, if the company really does "respect" workers' right to form a union, doesn't it simply accept the clear result of the election? It could have done this at any point in the last three years, but has chosen instead to drag the case through the legal system.

The second point is more interesting. Anyone who attended last year' AGM would have felt that there was a very serious issue with the ballot box. I know some people were left under the impression that a union member had moved (or even stolen) the ballot box. At last week's AGM it was again suggested that the primary reason for continuing to contest the election result related to the ballot box.

Again, this is challengeable. First up, it's important to make clear that the company's objections relating to the ballot box are aimed at the conduct of the NLRB agent who ran the election, not the union or its members.

More importantly, the ballot box issue was just one of several objections raised by the company and and pushed by the two law firms that have fought this case on its behalf over the three years since the workers voted for the union. For example, the company also objected that the NLRB should not have run the election in the first place because the Board itself was inquorate. This argument was an important part of its legal position until as late as February this year, when it was dropped as the point was knocked back in a case involving a different company. Separately the company objected to the use of a photo of an employee on an election leaflet. This was even though the employee had signed a form giving the union consent to use it.

In practice, if you look at the company's legal submission to the Court of Appeals last year (this is using law firm Constagy Brooks Smith, which incidentally advertises "union avoidance campaigns" as part of their services), even then the weight put on the ballot box issue was far less than the flyer. Count the pages dedicated to each point for yourself, See Reply Brief to Court of Appeals here.

And if you want to see how much weight is attached to the ballot box issue this year I would recommend listening to the audio of the hearing in front of the Court of Appeals in March 2016 (at this point Durham is represented by a second law firm, Seyfarth Shaw). You can find it at the link below and click on the audio file next to Durham School Services LP v. NLRB.

The words "ballot box" are never spoken. If this really was the killer issue in Santa Rosa as the board has suggested then I'm surprised that the law firm they are paying to fight the election result didn't even mention it in the short window of time available with the Court of Appeals. (In reality the company's main argument against the NLRB seems to be a process point, but leaning heavily on the flyer issue)

In light of all this I really struggle to accept the board's presentation of Santa Rosa as being all about the ballot box, though it no doubt sounds better in public than arguing about quorums. It's also troubling that people apparently don't really know what is being argued in this case after three years, and it being raised publicly at AGMs. In addition, as should be pretty clear, the company's fire has been overwhelmingly aimed in this case at the NLRB itself, not union members or the Teamsters. This makes the company's "offer" to the union to re-run the election even more ludicrous.

You don't have to just take my word for it. Yesterday National Express/Durham lost at the Court of Appeals. In the decision (I have a copy if anyone is interested) the argument relating to the ballot box is completely demolished, and is described as bordering on frivolous. It concludes there was "nothing in the record to support a claim that the Board Agent engaged in any conduct that might have tainted the election proceeding" and that the company "raised no reasonable concerns regarding the propriety of the election". The company, in other words, got spanked on this point.

I hope the company learns from this, though experience to date makes me sceptical. More importantly I hope that the workers in Santa Rosa get justice, and the union representation they clearly voted for over three years ago.

Friday 13 May 2016

Ladbrokes: at it again

Last week Ladbrokes saw a 42% vote against its rem report. This was in response to a termination payment, and the company in turn issued a very solemn statement as part of its AGM results acknowledging the vote.
The Board notes the vote in respect of the Directors 'Remuneration Report. Ladbrokes understands the concerns expressed by some shareholders towards the termination arrangement with Ian Bull.  The Board is very aware of shareholder observations and these will play a key part in the Board's thinking as remuneration is considered for the business going forward and the potential merger with Coral.
Much like last year, when it.... errr... issued a very solemn statement in its AGM results in response to... errr.... a large vote against its remuneration report over... errr.... termination arrangements.
The Board notes the vote in respect of the Directors Remuneration Report. Ladbrokes has spoken with several shareholders about the termination arrangements for Richard Glynn where his contract required that any settlement had to be determined in line with UK damages principles.  The Remuneration Committee confirms that contracts of this type are not appropriate and termination arrangements for the current executive team, including Jim Mullen who was appointed CEO on 1 April 2015, are determined on payment in lieu of notice (PILON) principles in line with best practice.  The Remuneration Committee further notes that Jim Mullen was appointed on a lower salary and shorter notice period than the previous CEO.
I suppose it's an improvement of sorts. Although the underlying behaviour is the same, the company is now making solemn statements. This compares to 2011, when it... err... issued a statement in response to.... errr.... a large vote against the rem report, which said, basically, "whatevs"
We have noted the disquiet expressed by some of our shareholders and have recorded it for future reference.