Municipal Government

32BJ and Renaissance Present Arguments in Federal Court

March 5, 2012
By Marc Bussanich, LaborPress City Reporter
It’s been an economic grueling process for 70 SEIU 32BJ members locked out of the Flatbush Gardens complex by their employer since November 2010. The workers, who packed a federal courtroom in Brooklyn on Thursday, March 1, were hoping to hear Judge Brian M. Cogan issue an injunction petitioned by the National Labor Relations Board so that they could get back to work. But after hearing testimony from the union’s and employer’s attorneys, the judge said he’ll make a decision after reviewing the day’s deliberations.

The deliberations began with the employer, Renaissance Equity Holdings, led by attorney Paul Clement and former President George W. Bush’s Solicitor General, challenging the NLRB’s petition for an injunction as invalid because President Barack Obama’s recent NLRB recess appointments were made when the U.S. Senate was in session and therefore needed the input of Congress to approve the appointments. (Consequently, President Obama said his NLRB recess appointments were in full compliance with Constitution-enumerated powers because, in fact, Congress was not in session.)  

The judge asked the Department of Justice and NLRB officials, if he were to issue an injunction, were they not concerned that the U.S. Court of Appeals for the Second Circuit might overrule the NLRB injunction based on the argument that President Obama did make the recess appointments illegally.

The NLRB official simply told the judge, “There’s no need to decide the constitutional [recess appointments] issue.”

After the deliberations on the constitutional issues surrounding the injunction, the judge then asked both the NLRB and 32BJ attorneys whether or not Renaissance had the means to pay its union workforce. Although Renaissance has claimed it is losing money, the judge said he couldn’t ascertain how much the company can afford to pay its workforce because he felt the union didn’t put too much effort into proving it, as well as telling Renaissance, “Why are you not moving heaven and earth to prove that you can’t afford to pay the wages.”   

(At one point, the judged directly asked a Renaissance lawyer, “How much money the company is losing?” The lawyer at first said he didn’t know, but then he turned to an unidentified Renaissance official, and responded, “A lot of money.”)

A 32BJ attorney explained to the judge that Renaissance was playing a cat and mouse game with the union during negotiations. Renaissance provided a financial summary of three years’ worth of operations during bargaining and claimed that it lost $6.9 million in 2009. But, according to the union attorney during oral arguments, while Renaissance was telling the union it was losing money, it was in fact using $4 million to refinance its Flatbush Gardens complex with New York Community Bank.

The judge then challenged the NLRB and union by asking, “If I grant the injunction, what is the guarantee that Renaissance will not file for Chapter 11 bankruptcy protection?”

The union’s attorney told the judge that the defendant wouldn’t do that because it would then have to open its books and records for every creditor and other interested parties to see and would likely be forced to pay back any money it took out of the estate to enrich themselves, such as the $28 million that the defendant distributed to shareholders.

The defendant’s lawyers emphasized that the union was not interested or motivated in giving relief on wages or reducing the number of workers at the apartment complex. But the union’s attorney told the judge the claim was categorically false as the union was willing to accept a pay freeze and a two-tier wage structure in order to continue the negotiations and persuade Renaissance to back off its egregious demands of a 30 percent wage cut.

Apparently, the recent Realty Advisory Board agreement the union reached on behalf of its commercial cleaners includes a most-favored nation clause (not uncommon with collective bargaining agreements) which states that if another similarly situated employer achieves better terms than the RAB, then the RAB and its members have to get the same terms because the RAB terms can’t be undercut.  

But there are certain exceptions to this arrangement, i.e., newly organized buildings or fiscally-distressed properties in bankruptcy. If an employer, however, doesn’t qualify for an exception, they have the option to seek a waiver with the RAB.

The wage freeze offer by the union, and its agreement for Renaissance to seek a waiver, which represented better terms for Renaissance than the RAB terms concluded in December 2011, seems to illustrate the lengths the union was willing to go to reach an agreement.

March 3, 2012

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