NLRB Denies McDonald’s Appeal of Motion to Dismiss Joint Employer Claims

The National Labor Relations Board has issued an Order (PDF) denying a request for a special appeal filed by McDonald’, USA, LLC and its franchisees (collectively referred to as “McDonald’s” in the Board’s Order) and found that the Administrative Law Judge presiding in the unfair labor practice hearing did not err when she denied McDonald’s motion for a bill of particulars explaining the factual basis for the General Counsel’s claim that McDonald’s, USA, LLC and the named franchisees are joint employers.

The ALJ Had Denied McDonald’s Motion for a Bill of Particulars

McDonald’s had asked the ALJ, if she denied its request for a bill of particulars explaining the facts that the General Counsel intended to reply upon in support of its claim that the franchisor and its franchisees are joint employers, to strike the joint-employer allegations and dismiss the 2014 complaint.  McDonald’s had argued that without the information that it was requesting, and an explanation of what the General Counsel would rely upon in alleging a new standard for evaluating whether there was a joint employer relationship, it would be denied due process.

The Board Majority’s Ruling

In the short five-paragraph August 14, 2015 Order, Chairman Mark Pearce and Board Members Kent Hirozawa and Lauren McFerran found that Administrative Law Judge Lauren Esposito “conducted a well-reasoned analysis of the relevant authority and its application to the pleadings in this matter,” when she denied their motion for a bill of particulars or to dismiss.  The majority based its decision on its conclusion that “the consolidated complaint was sufficient to put McDonald’s on notice that the General Counsel is alleging joint employer status based on McDonald’s control over the labor relations practices of its franchisees.”

Members’ Miscimarra and Johnson’s Dissent

Board Members Philip A. Miscimarra and Harry I. Johnson, III did not agree with the majority and issued a far lengthier dissent, in which they argued that the denial of the request for permission to file a special appeal of the ALJ’s Order “presents an acute due process problem and is shortsighted in terms of prudently managing the Board’s resources and minimizing the burden placed on the parties.”

The dissent pointed out that although the complaint “is consistent with the Board’s current joint employer standard,” “the complaint language provides no notice regarding the new joint employer standard upon which the General Counsel intends to rely upon in the alternative, nor what facts the General Counsel believes will prove joint employer status under the alternative standard.”  Significantly, as the dissent noted, that “alternative theory may be the sole basis for finding that Respondent violated the Act” despite the utter lack of notice in the complaint regarding the underpinnings of that theory.

What This Means

Such a denial of due process, as the dissenters pointed out, means that if the Board ultimately, at the end of these lengthy, expensive and time consuming proceedings, finds that McDonald’s is a joint employer with its franchisees under the alternative theory, and that the Act was violated, “Respondent [McDonald’s] will have a plausible and potentially compelling argument that its due process rights have been violated – and the Board may find that it has expended substantial resources building and litigating a case on an unstable foundation.”