Today’s Labor Updates:
Cash-Poor Venezuela Weighs Sale of Citgo
Summary of NLRB Decisions for Week of July 21 – 25, 2014
Canada :“Take me out to the ball game”: Too sick to work, but able to play softball? Strike two!
Cash-Poor Venezuela Weighs Sale of Citgo
Petroleos de Venezuela Also Considers a Sale of Its Stake in a Refinery Run With Exxon Mobil
By Ezequiel Minaya, Alison Sider and Dana Cimilluca
July 30, 2014 8:34 p.m. ET
Venezuela, strapped for cash at home and staring down costly litigation overseas, is considering a deal for its U.S.-based refinery company Citgo Petroleum Corp. as well as a stake in a refinery run with Exxon Mobil Corp. , according to a Citgo document and people familiar with the matter.
People close to Petroleos de Venezuela SA, or PdVSA, say the state-run oil giant is in the early stages of considering a deal for Houston-based Citgo, which operates three refineries. It is separately shopping its 50% stake in the Chalmette refinery in Louisiana, a process that is further advanced, they said.
A July 15 bond prospectus for Citgo states that PdVSA “is currently seeking to monetize its ownership interest in us.” A spokesman for PdVSA said he had no information on any potential asset sales. Exxon also declined to comment.
PdVSA, the principal source of hard currency in Venezuela, is seeking to bolster the country’s stumbling economy, redirect more oil exports from the U.S. to its top creditor China and get some protection from the seizure of foreign assets as settlements in disputes before the World Bank draw near, analysts said.
But any potential deal might easily get snagged on issues like price, they warned. Venezuela has periodically mulled unloading Citgo over the years, but faced the same struggle it is confronted with now: the difficulty of finding a buyer and getting enough in return to justify the move.
Anthony Szabo, a former PdVSA executive who maintains ties with the investment community and among intermediaries who work with Venezuela’s government, said that three offers by unknown prospective buyers had been made to PdVSA.
Some analysts estimate that the most PdVSA stands to make from a sale of Citgo is between $8 and $10 billion. Companies like Marathon Petroleum Corp. and Valero Energy Corp. would face antitrust headwinds, while the majors in Europe and the U.S. are hesitant to deal with Venezuela’s anti-West government.
Oppenheimer & Co. analyst Fadel Gheit said several companies might be interested in some of Citgo’s assets, but few would be willing to take on the whole company. Citgo’s refineries include facilities in Lake Charles, La., Corpus Christi, Texas and Lemont, Ill. with a combined processing capacity of about 760,000 barrels a day.
“I just doubt any company would want to buy a million barrels of capacity,” he said.
There are about 5,600 independently owned and operated Citgo-branded retail outlets that won’t be a part of any sale. PdVSA completed its purchase of Citgo from Southland Corp. in 1990.
Cowen & Co. analyst Sam Margolin said Citgo’s midstream assets—dock space, pipelines, and storage terminals—might be highly sought after. Many midstream companies are structured as master limited partnerships, and some refiners have launched partnerships of their own in recent years. That corporate structure can make raising money for large acquisitions an easier task.
Any consideration to sell Citgo comes from Venezuela’s cash crunch as well as concern over upcoming rulings by the World Bank’s International Centre for Settlement of Investment Disputes, or ICSID, that could result in liens on Citgo assets.
“They’re going to lose the arbitration hearings,” said Mr. Szabo, president of Stone Bond Technologies in Houston. “They’ll lose, so these assets can be frozen.”
ConocoPhillips and Exxon Mobil both entered arbitration requests before the ICSID in response to the Venezuelan government’s 2007 nationalization of projects in the oil-rich Orinoco region. Estimates of potential settlements against Venezuela vary but experts say the socialist country will likely be ordered to compensate the U.S. companies a total of $10 billion.
“Venezuela is looking under couch cushions for coins because they need money,” said Russ Dallen, head of Caracas Capital Markets. “The Exxon and ConocoPhillips judgments are coming any day now and the easiest place to enforce those judgments will be the United States.”
Soon after Venezuela President Nicolas Maduro was elected to office last year, the country of 29 million residents began to endure a strangling scarcity of dollars, which has created widespread shortages in an economy that depends on imports for just about everything other than oil.
Critics of the government say the scarcity comes from high inflation and an overvalued currency, but the government blames the opposition and outside forces for trying to sabotage the economy.
Venezuela has turned to China for loans totaling more than $50 billion in mostly oil-for-credit swaps, but has been stretched thin as PdVSA output sags.
“By closing Citgo they would free up a lot of oil going to the United States and continue to service China,” said Thomas O’Donnell, a visiting Energy professor at the Freie University in Berlin and an expert on the Venezuelan oil industry. “But that is ultimately robbing Peter to pay Paul. They need to raise production.”
Argus Media earlier reported that PdVSA is weighing a sale of Citgo and the Chalmette refinery stake.
As for the refineries, Mr. Margolin said some existing independent refiners might want to take bigger positions on the U.S. Gulf Coast, where much of the output from shale formations is building up.
U.S. refineries that have changed hands in recent years have commanded lower prices than what PdVSA might be seeking.
Marathon last year agreed to pay about $2.4 billion for BP’s 475,000 barrel-a-day refinery in Texas City, Texas. And in 2013 BP sold its Carson refinery in Southern California to Tesoro Corp. in a deal valued at $2.4 billion.
At least one company has signaled that it is likely pass on Citgo’s refineries. During an earnings call Wednesday, Phillips 66 Chief Executive Greg Garland indicated the company probably isn’t interested in buying more refineries.
“I think we’ve consistently said we have better opportunities to invest in our midstream and chemicals business,” Mr. Garland said.
—Gillian Tan contributed to this article.
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com, Alison Sider at alison.sider@wsj.com and Dana Cimilluca at dana.cimilluca@wsj.com
Summary of NLRB Decisions for Week of July 21 – 25, 2014
The Summary of NLRB Decisions is provided for informational purposes only and is not intended to substitute for the opinions of the NLRB. Inquiries should be directed to the Office of Public Affairs at Publicinfo@nlrb.gov or 202‑273‑1991.
Summarized Board Decisions
United States Postal Service (01-CA-102755; 361 NLRB No. 6) Manchester, NH, July 21, 2014.
The Board unanimously adopted the Administrative Law Judge’s finding that the Respondent violated Section 8(a)(5) by stating, in response to a union information requests for lists of applicants to certain open positions, that such lists did not exist and the Respondent was not required to create such documents. The Board found that, if any unit employees had applied for the open positions, such information would be presumptively relevant to the Union’s status as bargaining agent, and the Respondent was required to, at a minimum, tell the Union if any unit employees had applied for the positions. Member Johnson included a personal footnote explaining why he found no basis to reverse the Judge’s credibility resolutions. Charge filed by Manchester Area Local 320, American Postal Workers Union, AFL-CIO. Administrative Law Judge Raymond P. Green issued his decision on April 8, 2014, and an erratum on April 22, 2014. Members Miscimarra, Johnson, and Schiffer participated.
***
Macy’s, Inc. (01-RC-091163; 361 NLRB No. 4) Saugus, MA, July 22, 2014.
The Board’s Decision on Review affirmed the Acting Regional Director’s Decision and Direction of Election. A Board majority consisting of Chairman Pearce and Members Hirozawa and Schiffer found that, under Specialty Healthcare & Rehabilitation Center of Mobile, 357 NLRB No. 83 (2011), enfd. sub nom. Kindred Nursing Centers East, LLC v. NLRB, 727 F.3d 552 (6th Cir. 2013), the petitioned-for unit of cosmetics and fragrances employees at the Employer’s Saugus retail department store constitutes an appropriate unit for bargaining. The Board majority first found that the cosmetics and fragrances employees are readily identifiable as a group, share a community of interest, and that any differences among these petitioned-for employees are insignificant compared to the strong evidence of a shared community of interest. Next, the Board majority found that the Employer had not established that the cosmetics and fragrances employees share an overwhelming community of interest with the other employees at the Saugus store. In so finding, the majority emphasized that (1) there is virtually no record evidence concerning the nonselling employees, and (2) although there are similarities between the cosmetics and fragrances employees and other selling employees, there are clear distinctions between the two groups. The Board majority went on to hold that, while relevant, prior precedent regarding petitioned-for units in retail department stores does not warrant a different result. It stated that although the Board has at times referred to a storewide unit as “presumptively appropriate” in the retail department store industry, it has always permitted less-than-storewide units, and the standard for deviating from a storewide unit closely resembles the Specialty Healthcare standard for unit determinations. The majority also declined to revisit or overrule Specialty Healthcare. Finally, the Board majority emphasized that it was not reaching the question of whether other subsets of selling employees at this, or any other, retail department store may also constitute appropriate units. Member Hirozawa filed a concurring opinion, in which he questioned his dissenting colleague’s interpretation of the statutory language relevant for unit determinations. Dissenting, Member Miscimarra would have found that any unit other than all salespeople storewide was not appropriate because (1) the cosmetics and fragrances employees are not sufficiently distinct from other selling employees to be an appropriate unit, and (2) a unit limited to cosmetics and fragrances employees is contrary to longstanding Board precedent involving units in the retail industry. Member Miscimarra also stated that he would not apply Specialty Healthcare to this or any other case as, in his view, Specialty Healthcare suffers from important shortcomings and is contrary to the Act. Petitioner—Local 1445, United Food and Commercial Workers Union. Chairman Pearce and Members Miscimarra, Hirozawa, and Schiffer participated. Member Johnson was recused from participating in this case, and he took no part in the consideration or disposition of it.
***
International Brotherhood of Teamsters, Local Union No. 89 (United Parcel Service, Inc.) (09-CB-011985 and 012018; 361 NLRB No. 5) Louisville, KY, July 23, 2014.
The Board found that the Respondent Union did not violate Section 8(b)(1)(A) by collecting or seeking continued payment of dues in the amount of Beck core fees from a former member whom it had lawfully expelled for disloyal misconduct, after the date of his expulsion; by failing to inform the former member that he had no dues obligation after his expulsion; or by threatening to sue the former member for unpaid dues in state court. The Board found that Johnson Controls World Services, 326 NLRB 8 (1998), the sole authority on which the General Counsel relied to argue that the former member had no post-expulsion dues obligation, went no farther than to bar the enforcement of a union-security clause by threat of discharge, and that that case was inapplicable here because the Union made no such threat. The Board also found no statutory basis for finding the Union’s actions unlawful under either the NLRA’s terms or its legislative history, finding that this interpretation of Section 8(a)(3)’s Proviso B was supported by the Supreme Court’s recognition, in Communications Workers of America v. Beck, 487 U.S. 735 (1988) and earlier cases, that the Taft-Hartley Act established a Congressional policy favoring the sharing among all represented employees of the cost of representation pursuant to a lawful union-security clause. Member Miscimarra, while agreeing that the Union’s actions were not unlawful here, expressed his view that a union should be required to give employees notice of their reduced Beck fee options when they are expelled, even if the union previously provided the notice required under California Saw & Knife Works, 320 NLRB 224 (1995), enfd. 133 F.3d 1012 (7th Cir. 1998), cert. denied 525 U.S. 813 (1998). The case was decided on a stipulated record. Charge filed by an individual. Chairman Pearce and Members Miscimarra and Hirozawa participated.
***
Unpublished Board Decisions in Representation and Unfair Labor Practice Cases
R Cases
New York University (02-RD-114816) New York, NY, July 22, 2014. Order denying Petitioner’s request for review of the Regional Director’s dismissal of its petition. The Regional Director found the petition to be barred by the current contract in place between the Intervenor, Local 810, Steel, Metals, Alloys, and Hardware Fabricators and Warehousemen, International Brotherhood of Teamsters, and the Employer, despite the Petitioner’s contention that the current contract should not be a bar because of alleged improprieties regarding the Union’s ratification process. Petitioner—an individual. Chairman Pearce and Members Miscimarra and Hirozawa participated.
Mount Sinai Hospital (02-RC-126994) New York, NY, July 23, 2014. No exceptions having been filed to the Regional Director’s overruling of the challenges to two ballots cast in an election held between May 27 and June 10, 2014, the Board directed the Regional Director to open and the challenged ballots, prepare a revised tally of ballots, and issue the appropriate certification. Petitioner—New York State Nurses Association.
Fairview Health Services (18-UD-125545) Bloomington, MN and Burnsville, MN, July 24, 2014. No exceptions having been filed to the Regional Director’s overruling of objections to an election held on June 12, 2014, the Board adopted the Regional Director’s findings and recommendations, and issued a Certification of Results of Election stating that a majority of the employees eligible to vote has not voted to withdraw the authority of SEIU Healthcare Minnesota to require, under its agreement with the Employer, that employees make certain payments to the Union in order to retain their jobs, in conformity with Section 8(a)(3). Petitioner—an individual.
Chem RX Pharmacy Services, LLC (29-RC-114881 and 115184) Long Beach, NY, July 24, 2014. Order denying Intervenor United Food and Commercial Workers Union, Local 2013’s request for review of the Regional Director’s Second Supplemental Decision on Objections and Certifications of Representative on the grounds that it raised no substantial issues warranting review. In denying review, the Board noted that the Regional Director apparently applied a third-party conduct standard to the Intervenor’s Objection 3. See Westwood Horizons Hotel, 270 NLRB 802, 803 (1984). However, the Board concluded that even assuming the individuals involved in the alleged incidents were agents of the Petitioner, the Intervenor’s proffered evidence failed to make a prima facie showing under a party conduct standard that the alleged conduct reasonably tended to interfere with the employees’ free and uncoerced choice in the election. Avis Rent-a-Car System, 280 NLRB 580, 581 (1986). Petitioner – Chem RX Employees Union. Chairman Pearce and Members Miscimarra and Hirozawa participated.
C Cases
Salem Hospital Corp. a/k/a The Memorial Hospital of Salem County (04-CA-097635) Salem, NJ, July 23, 2014. Order denying the Respondent’s Motion for Reconsideration of the Board’s April 30, 2014 Decision and Order reported at 360 NLRB No. 95. Charge filed by Health Professionals and Allied Employees (HPAE). Chairman Pearce and Members Hirozawa and Schiffer participated.
Keyport Auto Body d/b/a Shamrock Stagecoach (22-CA-122665) Keansburg, NJ, July 23, 2014. The Board denied the Employer’s petition to revoke a subpoena duces tecum. The Board found that the subpoena sought information relevant to the matter under investigation and described with sufficient particularity the evidence sought. Further, the Board held that the Employer failed to establish any other legal basis for revoking the subpoena. The Board also denied the Employer’s request for a hearing on its petition to revoke, and it denied as premature the Employer’s request that its petition to revoke be made part of the official record in this case, without prejudice to the Employer renewing this request if these investigative proceedings progress to the stage where an official record is created. In addition, the Board noted that the Employer’s argument that the subpoena should be revoked because the unfair labor practice charge is barred by Sec. 10(b) is without merit, stating that issues regarding Sec. 10(b) are generally not considered in an investigative subpoena context. Charge filed by an individual. Chairman Pearce and Members Miscimarra and Hirozawa participated.
Sanderson Farms, Incorporated (15-CA-103890 and 109264) Hazelhurst, MS, July 23, 2014. The Board denied the Employer’s motion to revoke subpoena ad testificandum. The Board found that the subpoena seeks information relevant to the matters under investigation and describes with sufficient particularity the evidence sought and that the Employer failed to establish any other legal basis for revoking the subpoena. Charge filed by Laborers International Union of North America Local 893. Chairman Pearce and Members Miscimarra and Hirozawa participated.
Sanderson Farms, Incorporated (15-CA-089244, et al.) Collins, MS, July 23, 2014. The Board denied the Employer’s motion to revoke a subpoena duces tecum. The Board found that the subpoena seeks information relevant to the matters under investigation and describes with sufficient particularity the evidence sought and that the Employer failed to establish any other legal basis for revoking the subpoena. The Board directed the Regional Director to ensure that the Board’s Order is implemented in a manner consistent with the Health Insurance Portability and Accountability Act, the Americans with Disabilities Act, and the Genetic Information Nondiscrimination Act. Charges filed by an individual and Laborers International Union of North America Local 893. Chairman Pearce and Members Miscimarra and Hirozawa participated.
Autonation, Inc.; Costa Mesa Cars, Inc. d/b/a Autonation Honda Costa Mesa (21-CA-123072) Costa Mesa, CA, July 23, 2014. The Board denied the Employer’s petition to revoke a subpoena duces tecum. The Board found that the subpoena seeks information relevant to the matters under investigation and describes with sufficient particularity the evidence sought. The Board further found that the Employer failed to establish any other legal basis for revoking the subpoena. Charge filed by an individual. Chairman Pearce and Members Miscimarra and Schiffer participated.
New York State United Teachers (NYSUT) (03-CA-116945) Latham, NY, July 24, 2014. No exceptions having been filed to the Administrative Law Judge’s findings that the Respondent had engaged in certain unfair labor practices, the Board adopted the judge’s findings and conclusions, and ordered the Respondent to take the action set forth in the judge’s recommended Order. Charge filed by Professional Staff Association. Administrative Law Judge Michael A. Rosas issued his decision on July 24, 2014.
Golden Farm Brooklyn, Inc. d/b/a Golden Farm Grocery (29-CA-11235, et al.) Brooklyn, NY, July 25, 2014. No exceptions having been filed to the Administrative Law Judge’s findings that the Respondent had engaged in certain unfair labor practices, the Board adopted the judge’s findings and conclusions, and ordered the Respondent to take the action set forth in the judge’s recommended Order. Charge filed by Local 338, Retail, Wholesale and Department Store Union, United Food and Commercial Workers.
***
Appellate Court Decisions
No Appellate Court Decisions involving Board Decisions to report.
***
Administrative Law Judge Decisions
Acuity Specialty Products, Inc. d/b/a Zep, Inc. (32-CA-075221 and 102838; JD(NY)-30-14) Los Gatos, CA. Administrative Law Judge Mindy E. Landow issued her decision on July 21, 2014. Charges filed by individuals.
Michigan State Employees Association (MSEA) d/b/a American Federation of State County 5 Mi Loc Michigan State Employees Association, AFSCME, AFL-CIO (07-CA-103202; JD-42-14) Lansing, MI. Administrative Law Judge Michael A. Rosas issued his decision on July 23, 2014. Charges filed by an individual and Central Office Staff Association.
Mercedes-Benz U.S. International, Inc. (MBUSI) (10-CA-112406, et al.; JD(ATL)-22-14) Vance, AL. Administrative Law Judge Keltner W. Locke issued his decision on July 24, 2014. Charges filed by an individual and International Union, United Automobile, Aerospace & Agricultural Implement Workers of America.
Alternative Living, Inc. d/b/a New Passages Behavioral Health and Rehabilitation Services (07-CA-099976; JD-43-14) Pontiac, MI. Administrative Law Judge Mark Carissimi issued his decision on July 25, 2014. Charge filed by Local 517 M, Service Employees International Union (SEIU).
Cellco Partnership d/b/a Verizon Wireless (21-CA-075867, et al.; JD(ATL)-24-14) Basking Ridge, NJ and Irvine, CA. Administrative Law Judge William Nelson Cates issued his decision on July 25, 2014. Charges filed by Communications Workers of America District 9, AFL-CIO; Communications Workers of America, AFL-CIO.
Lansing-Louisiana, LLC (15-CA-117585; JD(ATL)-23-14) Delhi, LA. Administrative Law Judge Robert A. Ringler issued his decision on July 25, 2014. Charge filed by an individual.
***
Canada :“Take me out to the ball game”: Too sick to work, but able to play softball? Strike two!
Stewart McKelvey Sean Kelly
July 18 2014
You may recall our blog last year, “Take me out to the ball game”: Too sick to work, but able to play softball? that dealt with a telecommunications employee alleging he was too sick to work, but was then observed playing in a slow-pitch softball tournament on the same day he called in sick. When confronted about his absence, the grievor maintained that he had a severe case of diarrhea that he could manage at the softball field, but not at customers’ houses. He further maintained that he did not play softball, but when confronted, he changed his story to confirm that he had been pitching only, not batting. The Arbitrator determined that while his behaviour was deserving of discipline, his termination should be suspended with a one-month suspension.
We reported on the Alberta Court of Queen’s Bench decision that allowed Telus’ application for judicial review of the Arbitrator’s finding. In a rare decision, that Court set aside the Arbitrator’s award and upheld the discipline on the basis that the Arbitrator’s award did not fall within a range of reasonable, possible or acceptable outcomes in its reasoning or ultimate result.
The Union appealed to the Alberta Court of Appeal who recently dismissed the appeal, though for different reasons. The Majority held that the arbitrator’s process did not meet the reasonableness standard as the Arbitrator focused unreasonably on the employer’s failure to lead evidence that the grievor was not truly sick. They further stressed that an assessment of all the evidence was required to consider the credibility of the grievor. The Majority recognized that not all illnesses preventing an employee from attending work require total incapacity for all activities; however, the finding that an employee can be too sick to attend work, but well enough to play softball was not a reasonable interpretation of sick leave provisions.
While concurring in the result, the Minority found that the appeal should have been dismissed entirely on the basis of the grievor’s lack of credibility. Although arbitrators are entitled to substantial deference, in this case, the grievor lied repeatedly including during the hearing.
What this Means for Employers:
Like the Court of Queen’s Bench decision, this is a good case for employers. Although substituting a specific penalty is a rare step, the Court of Appeal decision affirms that termination was the only possible outcome and that the decision of the Arbitrator was unreasonable. Further, this case demonstrates the seriousness of violations of sick-time policies and that abuse of sick-leave provisions will not be tolerated. Although the facts of this case are particularly egregious and unique, employers can expect this case to be relied upon where sick leave violations are at issue. While not all illnesses preventing an employee from work leave an employee to be bed-ridden, abuse of sick leave ought to be taken very seriously.