Car Dealership Denied High Court Review of NLRB Decision Ordering Union Bargaining

By: Petra Person

An Illinois federal court held that a closed Chrysler car dealership must pay six unionized mechanics previously missed pension and welfare benefits, after the dealership tried to move the employees to another location.[1]  The federal judge determined that the dealer violated the Employment Retirement Income Security Act (“ERISA”).[2]  The disgruntled mechanics, who were union members of the Automobile Mechanics Industry Welfare and Pension Funds of the International Association of Machinists and Aerospace Workers AFL-CIO, Local 701, sought $575,000 including unpaid pension benefits, welfare payments, interest, damages and attorneys’ fees.[3]

The judge ruled that the participation agreements for the workers’ welfare and pension funds were still valid, and subsequently, the dealership violated ERISA standards.  “The employer admits that it has not made welfare and pension contributions to the trustees on behalf of the union mechanics since October 2010,” the judge said. “Therefore, the court finds Dodge of Naperville and Burke Automotive Group in violation of section 515 of ERISA.”[4]

This matter stems from Chrysler Corp.’s bankruptcy proceedings, which required the owner of the Chrysler dealership to consolidate his holdings and to close the dealership in question.[5]  Specifically, Ed Burke owned two Illinois car dealerships: Burke Automotive Group Inc., which carried out business as Naperville Jeep Dodge in Lisle, Ill., and Dodge of Naperville in Naperville, Ill.[6]  As of June 2009, the Lisle dealership employed fourteen non-union mechanics, in contrast to the Naperville dealership which employed six unionized mechanics.[7]  The union had represented employees at the Naperville dealership for twenty years.

When the Chrysler Group filed for bankruptcy in 2009, a group of trustees formed to oversee the pension and welfare benefits of union members, who were in a division of the AFL-CIO.[8]  The Naperville dealership shut its doors after bankruptcy was entered, and offered employment to the six union mechanics at the other Burke Automotive Group location, provided the mechanics surrendered their union membership.[9]  This gave rise to the union’s cause to file a complaint with the NLRB, asserting that Burke Automotive Group had violated the National Labor Relations Act by moving the six mechanics to the new location without opportunity to remain unionized.[10]  The dealership argued that the unionized mechanics were prohibited from continuing their union membership in the Lisle dealership because they now made up a minority of the relevant bargaining unit, and in furtherance of a single community of interest.[11]  The NLRB ruled the dealership had violated the NLRA by failing to bargain with the union over the move’s effects until after the relocated mechanics began working at the new facility.[12]

[1] Melissa Daniels, Closed Chrysler Dealership Owed Unpaid Employee Benefits, Law360 (Nov. 17, 2016), http://www.law360.com/articles/863863/closed-chrysler-dealership-owes-unpaid-employee-benefits.

[2] Id.

[3] Id.

[4] Id.

[5] Kevin McGowan, Car Dealer Denied High Court Review of NLRB Ruling, BNA (Mar. 22, 2016), http://www.bna.com/car-dealer-denied-n57982068819/.

[6] High Court Refuses to Review Decision Ordering Dealership To Bargain With Union, (Apr. 7, 2016), http://www.lexislegalnews.com/articles/7398/high-court-refuses-to-review-decision-ordering-dealership-to-bargain-with-union.

[7] Id.

[8] Id.

[9] Id.

[10] Kevin McGowan, Car Dealer Denied High Court Review of NLRB Ruling, BNA (Mar. 22, 2016), http://www.bna.com/car-dealer-denied-n57982068819/.

[11] Kali Hays, Ill. Car Dealer Brings Union Recognition Suit To High Court, Law360 (Jan. 15, 2016), http://www.law360.com/articles/747471/ill-car-dealer-brings-union-recognition-suit-to-high-court.

[12] Kevin McGowan, Car Dealer Denied High Court Review of NLRB Ruling, BNA (Mar. 22, 2016), http://www.bna.com/car-dealer-denied-n57982068819/.

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