Kenneth Dolin Published in National Law Journal
"'Stella D'oro': Employer held to claim 'inability to pay'"

Seyfarth Shaw partner Kenneth Dolin had an article published in the National Law Journal on a National Labor Relations Board (NLRB) decision regarding Stella D'oro Biscuit Co. (Stella D'oro). The NLRB held that Stella D'oro "effectively" claimed inability to pay the costs of an expiring collective-bargaining agreement with a union, but it did not "expressly" plead an inability to pay, as it did not substantiate the claim by providing the union with required information.

According to NLRB, Stella D'oro provided statements to the union that would allow it to "effectively" claim inability to pay, linking Stella D'oro's need to cut labor costs with its survival, but Stella D'oro argued that the statements "only asserted an unwillingness to pay the union's demands," not that it couldn't pay to meet the demands.

Ken noted that the case serves as an example of how the NLRB has increased an employer's responsibility to provide financial proof when claiming "inability to pay" and has increased an "employer's burden of proof when asserting confidentiality." He suggests to employers that they can "avoid this obligation by not making statements that they are losing money in any context, but especially not in the context of linking their unprofitability to their inability to survive currently or during the life of the contract under negotiation."

Ken posits, "Perhaps the most significant issue in Stella D'oro for practitioners is whether there was a valid impasse," and, "Practitioners should recognize that even a hypertechnical refusal to provide information in the bargaining context can preclude the finding of a valid impasse and can result in an unfair-labor-practice strike with significant back-pay liability for any subsequent refusal to reinstate the strikers."