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Second Circuit Backs NLRB: Facebook “Like” May Be Protected Concerted Activity Under Section 7 of the NLRA

Published on: March 9, 2016 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Section 7 of the National Labor Relations Act guarantees that “employees shall have the right to self-organization, to form, join, or assist labor organizations….and to engage in other concerted activities for the purpose of…..mutual aid or protection….”. The National Labor Relations Board (the “NLRB” or “Board”) has increasingly expanded the protections accorded to employee electronic communications under Section 7, even when electronic communication on social media includes disparaging and obscene comments about the employer. When social media posts touch upon the subject of employee wages, discipline or other terms and conditions of employment, these exchanges may constitute “concerted activity” protected by the NLRA.

Recently, the United States Court of Appeals for the Second Circuit upheld the NLRB’s decision in Triple Play Sports Bar and Grille (Triple Play) (2014), that the termination of two employees supporting a former employee’s obscenity-laced Facebook post disparaging Triple Play’s management was protected speech. While many employers believe that public disparagement and obscenities are a legitimate basis for termination, this decision illustrates the risks facing employers who take action against employees who increasingly resort to social media to complain about work-related matters.

Facts: LaFrance, a former employee of Triple Play, posted an update on her Facebook page criticizing Triple Play’s failure to properly complete tax withholding paperwork, causing her to owe the state money. The post stated “maybe someone should do the owners of Triple Play a favor and buy it from them. They can’t even do the tax paperwork correctly!!! Now I OWE money…Wtf???” Spinella, a cook at Triple Play, clicked the “Like” button accompanying LaFrance’s post. Sanzone, a waitress at Triple Play, posted “I owe too. Such an asshole.” Several customers of Triple Play viewed the Facebook activity and Triple Play was eventually notified of the Facebook activity and in turn terminated the employees.

NLRB Decision Allows Employees to Record Workplace Conversations

Published on: March 9, 2016 | by Sergio D. Simões

With the advance of mobile technologies, employers are faced with the growing probability that employees are utilizing these devices to record conversations or other conditions in the workplace. Currently, approximately 38 states, including New York and New Jersey, have laws which permit a party to surreptitiously record a conversation if one party to the conversation has given permission to be recorded while other states including Pennsylvania, Connecticut, and Florida, require all parties involved in the recording to consent. These laws do not, however, touch upon an employer’s ability to regulate recordings in the workplace, and employers have generally assumed they were free to enact policies prohibiting or limiting recordings by employees. However, in a recent decision the National Labor Relations Board (the “NLRB” or “Board”) held that it is a violation of Section 7 of the National Labor Relations Act (the “Act”) for an employer to maintain a policy that restricts or prohibits employees from recording conversations with management without prior management approval. Section 7 gives employees the right to freely discuss terms and conditions of employment and to act in concert with one another for their mutual aid and protection.

The decision, Whole Foods Market, Inc. and United Food and Commercial Workers, Local 919, et al, arose out of a policy in Whole Foods Market’s General Information Guide prohibiting employees from recording “phone calls, images, and company meetings with any recording device…” unless prior approval was received from management, or unless all parties to the conversation consented to the recording. Whole Foods’ no-recording policy was aimed at eliminating the “chilling effect” on the free expression of views that would otherwise arise if employees believed or suspected that they were being recorded on a device.

The NLRB took the opposite view, concluding that policies prohibiting employees from recording in the workplace without prior approval by management violate the Act because that policy has a “chilling effect” on the employee’s rights to engage in protected concerted activity under the NLRA. According to the NLRB, protected conduct that might be negatively affected by prohibitions on recording include, for example, recording of images of protected picketing, documenting unsafe workplace equipment or hazardous working conditions, documenting and publicizing discussions about terms and conditions of employment (such as a meeting to discuss potential discipline), documenting inconsistent application of employer rules, or documenting evidence for later use in judicial or administrative actions. The NLRB determined that photography and recording in the workplace is an “essential element” in preserving and vindicating labor rights under the Act. Whole Foods was thus ordered to withdraw its policy and post notice of its violation.

OSHA Broadens List of Employers Who Must Post Summaries of Work-Related Fatalities and Injuries

Published on: March 9, 2016 | by Sergio D. Simões

Recent changes to OSHA’s posting requirements have narrowed the list of employers required to report the occurrence of significant injuries in the workplace. Among the list of newly covered industries that were once previously exempt from posting requirements are tire stores and service centers; automobile dealers; bakeries; beer, wine, and liquor stores; specialty food stores; lessors of real estate and activities related to real estate;, certain professional, scientific, and technical services; ambulatory health care services; performing arts companies; certain event promotors; amusement and recreational industries; and specialty food services, among other industries.

OSHA’s posting requirements mandate that covered employers post summaries of serious workplace injuries and illnesses using OSHA’s Form 3300A between February 1, 2016 and April 30, 2016. Form 3300A informs employees and others of the number of fatalities, injuries, poisoning, skin, and respiratory disorders and conditions, hearing loss instances, and other illnesses and conditions experienced by the employees at the workplace. The form must be posted in a common, visible area where notices are generally posted each year.

Under OSHA’s reporting requirements, covered employers must report to OSHA all work-related fatalities within eight hours and all work-related inpatient hospitalizations, amputations, and all losses of an eye within 24 hours. Covered employers must post Form 3300A annually, even when no work-related injuries or illnesses occurred during that year.

Am I a Minority Shareholder?

Published on: February 26, 2016 | by David R. Pierce

New Jersey’s General Corporations law establishes an important statutory remedy for oppressed minority shareholders in a closely held corporation. It is critical to understanding your rights as a shareholder, however, to understand who is considered under the statute to be a minority shareholder. You may well think, I own 50% of the stock in my company so, I can’t possibly be a minority shareholder. Well, if that is what you think, then you are potentially shortchanging yourself.

An owner of 50% of closely held corporation’s stock can be considered a “minority shareholder” within the meaning of N.J.S.A. 14A:12-7(1)(c). Bonavita v. Corbo, 300 N.J.Super. 179, 188 (N.J.Super.Ch. 1996). Thus, even where a corporation is owned equally by two shareholders, a court may order an equitable remedy to a shareholder dispute upon proof that the “minority” shareholder has been oppressed, or the majority shareholder has acted fraudulently or illegally, mismanaged the corporation, or abused their authority. Depending upon the particular circumstances of the case, one court has even indicated that in appropriate circumstances the owner of 98% of stock in closely-held corporation could be considered a “minority” shareholder. The existence of voting agreements and other control restrictions may tilt the playing field in your favor.

National Labor Relations Board Continues to Invalidate Arbitration Agreements Containing Class Action Waivers, Bucking Federal Court Rulings

Published on: February 23, 2016 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

In its recent decision in Murphy Oil USA, Inc., the National Labor Relations Board (NLRB) reaffirmed its earlier decision in D.R. Horton, Inc., that requiring employees as a condition of employment to waive their right to bring class, collective or joint actions violate the National Labor Relations Act (NLRA). The NLRB’s ruling is at direct odds with a ruling from the Fifth Circuit Court of Appeals that overruled the D.R. Horton decision and held that class action waivers in arbitration agreements do not violate the NLRA, so long as employees retain the right to bring individual claims. The Second and Eighth Circuits have likewise rejected the NLRB’s reasoning in D.R. Horton.

Facts: Murphy Oil required all job applicants and current employees, as a condition of employment, to sign a “Binding Arbitration Agreement and Waiver of Jury Trial.” The Agreement provided that disputes related to employment shall be resolved by binding arbitration and that the parties “waive their right to commence or be a party to any group, class or collective action claim in arbitration or any other forum.” Sheila Hobson signed this Agreement when she applied for employment with Murphy Oil in 2008. Two years later, Hobson and three other employees filed a federal collective action against Murphy Oil alleging violations of the Fair Labor Standards Act (FLSA). In response, Murphy Oil filed a motion to compel the plaintiffs to arbitrate their claims on an individual basis. That motion was granted by the federal court and the action was stayed pending arbitration of the individual claims.

Subsequently, the NLRB General Counsel issuing a complaint alleging Murphy Oil violated Section 8(1)(a) of the NLRA by maintaining and enforcing a mandatory arbitration agreement prohibiting employees from engaging in protected, concerted activities.

In New Jersey, What is Shareholder Oppression?

Published on: February 13, 2016 | by David R. Pierce

New Jersey’s General Corporations law provides a statutory remedy for oppressed shareholders in a closely held corporation. N.J.S.A. 14A:12-7 that so long as a corporation has 25 or fewer shareholders, then any shareholder can bring an action in New Jersey Superior Court seeking dissolution of the corporation when “the directors or those in control have acted fraudulently or illegally, mismanaged the corporation or abused their authority as officers or directors or have acted oppressively or unfairly toward one or more shareholders in their capacities as shareholders, directors, officer or employees.”

Shareholder oppression is not the only circumstance under which such a lawsuit can be commenced, but the other bases for such a lawsuit are relatively straight forward. Thus, the definition of “shareholder oppression” requires some explanation as that term is interpreted by the courts.

As defined by New Jersey’s courts, shareholder oppression means conduct which “frustrates a minority shareholder’s reasonable expectations.” Brenner v. Berkowitz, 134 N.J. at 506. In determining whether a particular course of conduct has oppressed a minority shareholder, courts will examine the understanding of the parties concerning their roles in corporate affairs. Muellenberg v. Bikon Corporation, 143 N.J. 168, 178-9 (1996). When reviewing an oppression claim, the courts will consider even non-monetary expectations of the shareholder when determining whether a shareholder’s expectations are reasonable and whether the corporation or controlling shareholders or directors unreasonably thwarted them. One of the most common expectations of a shareholder in a closely held corporation is continuing employment by the corporation and the termination of a shareholder’s position as an employee frequently leads to shareholder oppression litigation.

Divorce and Taxes: Tips for Those Contemplating Divorce

Published on: February 10, 2016 | by James McGlew, II

Tax season is now descending upon all of us and for individuals either planning to file for divorce, or those who are presently in the midst of divorce litigation, understanding how your current marital status can impact your tax liability is of significant importance. While each individual’s specific circumstances are unique, this article intends to provide general guidance to assist you in your decisions. By highlighting several areas where Divorce and Tax Law intersect you can make informed choices that will help to ensure that you’re not paying more than your fair share of taxes owed.

For individuals contemplating separation or divorce, tax planning prior to these events can often result in significant savings during the divorce process. Consulting a tax professional to discuss the pros and cons of filing joint or separate tax returns is always advisable for individuals who plan to divorce in the coming months. With respect to previous year’s tax filings, regardless of whether they were filed individually or jointly, gathering copies of these documents today will expedite the discovery phase of your divorce case and help to reduce your overall divorce costs.

Do you and your spouse own your own business? In situations where a business operates as a cash business it is important to collect and maintain information as to the businesses’ monthly income. This information will be important for the valuation and eventual equitable distribution of marital assets. Depending upon your particular circumstances, pre-planning and consultation with your attorney and accountant can often result not only in tax savings but ensuring your overall financial protection.

Examining Harassment Under New Jersey’s Prevention of Domestic Violence Act

Published on: February 3, 2016 | by Lindabury, McCormick, Estabrook & Cooper, P.C.

Examining Harassment Under the PDVA

When does ‘annoying’ or ‘alarming’ behavior warrant protection?

Nearly half of the 65,000 domestic violence complaints reported in New Jersey each year are based on claims of “harassment.” Our judicial system expends extensive time and effort, case by case, to determine which of those claims qualify as true domestic violence under the Prevention of Domestic Violence Act (PDVA). Given the volume of allegations made in the name of harassment, the courts have cautioned litigants against wasting resources and trivializing the plight of genuine victims by asserting frivolous harassment claims.

Remediation and Sale of Contaminated Industrial Site at Substantially Reduced Cost

Published on: January 21, 2016 | by David R. Pierce

Lindabury assisted an international industrial commodities supplier in all phases of the closure, cleanup and eventual sale of their environmentally contaminated Northern New Jersey industrial property. The property which was first devoted to industrial use in early 1930s, had been in heavy continual use for over 70 years until its closure in 2006.

Just prior to the plant’s closure our client was served with a Proposed Administrative Consent Order regarding its obligation to investigate and remediate environmental conditions at the property at an anticipated cost of approximately $15-20,000,000. The property’s soil and ground water were contaminated and the existence of buried containers and potential off-site contamination were determined to exist.

Due to the harsh stipulated penalties of the Proposed Administrative Consent Order our clients did not sign the Order. Instead, we partnered with our client and assisted them in working with leading environmental consultants and later an LSRP to investigate and remediate the site. The site remediation involved unique investigation and cleanup requirements which we helped manage in conjunction with an environmental consultant. We negotiated and prepared contracts with specialized remediation contractors, including a group expert in asbestos remediation and saw the cleanup to conclusion.

In Shareholder Oppression Cases, Expert Testimony on Company Valuation is Not Absolute

Published on: January 11, 2016 | by David R. Pierce

The New Jersey Appellate Division recently issued a ruling in a minority shareholder oppression case which reinforces the concept that the best way to resolve a minority shareholder oppression case is through settlement. The decision, Wisniewski v. Walsh, et al. (A-2650-13T3), is an unreported case but reaffirms that the finder of fact, whether it be jury or judge, is not bound by, or required to accept, the testimony of any expert and may, in fact, make its own determination of value, as long as it is based upon facts in the record.

Wisniewski v. Walsh is a case that has been in the courts for 20 years on a variety of legal issues. The issues in this particular ruling concerned whether a marketability or illiquidity discount had been imbedded in the valuation experts’ determination of the value of the company and, if not, what discount should be applied. On a prior appeal the Appellate Division had ruled that Norbert Walsh, the oppressing shareholder, was to be bought out and that a marketability discount should be applied to the value of his shares to reduce the purchase price and ensure that he, as the oppressing shareholder, did not receive a windfall by having the purchasing shareholders bear the full burden of the company’s illiquidity.

In this case the dueling experts had used different methods of valuation, one had used a discounted cash flow method of valuation while the other had used a market approach, and the trial court during the valuation aspect of the case had found the discounted cash flow approach more reliable and sound and adopted the first expert’s approach for valuation. The discounted cash flow approach involves estimating the company’s revenues over a period of time, normalizing its expenses and then discounting the resulting income stream to a present value at an appropriate rate. When determining the valuation, the trial judge accepted the first expert’s estimation of future revenues, but rejected his analysis of the company’s expenses, adopting instead the second expert’s approach to normalizing adjustments. The valuation trial judge then accepted the first expert’s discount rate of 12% for purposes of determining the present value of the resulting income stream.