D.C. Circuit skeptical of bid to nix McDonald's NLRB settlement

A McDonald's restaurant sign is seen in Swansea, McDonald's reopened all drive thru restaurants today, following the outbreak of the coronavirus disease (COVID-19), Swansea, Wales, Britain, June 2, 2020. REUTERS/Carl Recine
  • Judges skeptical that group met high bar to overturn settlement
  • Obama-era case was seen as test for expanding liability of franchisors
  • NLRB adopted business-friendly standard in 2020 rule

(Reuters) - A U.S. appeals court on Friday appeared poised to uphold McDonald's Corp's settlement of a major National Labor Relations Board case claiming the company helped its franchisees combat union organizing efforts.

Micah Wissinger, a lawyer for the union-backed Fast Food Workers Committee (FFWC), told a U.S. Court of Appeals for the D.C. Circuit panel that the 2019 settlement was improper because it did not resolve the key question of whether McDonald's could be held liable for the actions of its franchisees.

NLRB lawyer Joel Heller told the court that because the agency was at the time in the process of revisiting the test for whether companies are so-called "joint employers" of franchise workers, a ruling on the issue in McDonald's case was unnecessary.

But Wissinger said the NLRB's reasoning was flawed because any new standard would not have applied to the case, which was filed in 2014.

All three judges on the panel expressed doubts that the NLRB's approval of the deal over the objections of workers who brought the case was so unreasonable that it should be overruled.

"The court doesn't have to agree with what the agency said but it clearly acknowledged what its reasoning was," Circuit Judge Judith Rogers said. "What more did it have to do?"

The Obama-era case against McDonald's, one of the largest in the board's history, involved claims that franchise workers were fired or disciplined for participating in protests organized by the group Fight for $15. When the case was first filed it was seen as a major test of efforts to expand companies' liability for unlawful labor practices by their franchisees and contractors.

The board moved to settle the case after former President Donald Trump took office. The deal required McDonald's to pay between $20 and $50,000 to individual workers, but did not include a concession that the company was legally liable.

An administrative law judge rejected the settlement, saying it would not adequately protect workers, but the five-member board in 2019 disagreed.

Wissinger on Friday told the D.C. Circuit that longstanding NLRB precedent requires the board to uphold an ALJ's findings unless they are clearly wrong.

Circuit Judge Laurence Silberman countered that while the board defers to ALJs on witness credibility issues, "the board is not ever going to defer to an ALJ on a major policy question."

The panel also included Circuit Judge Neomi Rao.

The case is Fast Food Workers Committee v. NLRB, U.S. Court of Appeals for the D.C. Circuit, No. 20-1516.

For the Fast Food Workers Committee: Micah Wissinger of Levy Ratner

For McDonald's: Pratik Shah of Akin Gump Strauss Hauer & Feld

For the franchisees: Thomas O'Connell of Best Best & Krieger

For the NLRB: Joel Heller

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Dan Wiessner (@danwiessner) reports on labor and employment and immigration law, including litigation and policy making. He can be reached at daniel.wiessner@thomsonreuters.com.