Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—S.D.N.Y.: McDonald’s franchisees must comply with NLRB subpoena requests, (Nov 17, 2015)
Law Firms Mentioned:Brody & Associates, LLC
Organizations Mentioned:14 East 47th Street, LLC | 1531 Fulton Street, LLC | 18884 Food Corp. | 840 Atlantic Avenue, LLC | AJD, Inc. | Bruce C. LP | John C. Food Corp. | Lewis Foods of 42nd Street, LLC | McConner Street Holdings, LLC | McDonald's | Mic-Eastchester, LLC | National Labor Relations Board
By Greg Hammond, J.D.
Ten McDonald’s franchisees were ordered to comply with National Labor Relations Board (NLRB) subpoena requests after failing to meet multiple deadlines. In granting the NLRB’s request to enforce the subpoenas, the federal district court in New York City determined: (1) the NLRB’s investigation will be conducted pursuant to a legitimate purpose; (2) the court could defer to the NLRB’s appraisal of relevancy; (3) the material sought is not already in the NLRB’s possession; (4) the NLRB has complied with the appropriate administrative steps to make its request to enforce; and (5) the franchisees failed to demonstrate that the subpoenas were improper or that compliance would be unduly burdensome (NLRB v. AJD, Inc., November 12, 2015, Keenan, J.).
The NLRB issued a number of complaints against McDonald’s and various franchisees, alleging that McDonald’s is a joint-employer with each of the franchisees and that the defendants are jointly liable for labor violations that occurred at the franchisees’ restaurants. Ten franchisees were served with subpoenas duces tecum in February 2015, and deadlines to produce were subsequently set. However, after the franchisees purportedly failed to provide the requested documents, the NLRB requested that an order be entered, requiring the franchisee respondents to comply.
Prima facie case for enforcement. The court first determined that the NLRB established a prima facie case for enforcement of the subpoenas because: (1) the NLRB’s investigation into defendants’ purported violations of labor laws is a legitimate investigative purpose within the scope of the NLRB’s authority; (2) the court was required to defer to the NLRB’s appraisal of relevancy, since the NLRB demonstrated a reasonable connection between its inquiry into the existence of a joint-employer relationship between McDonald’s and the franchisees, on the one hand, and its investigation of unfair labor practices at the franchisees’ restaurants, on the other hand; (3) the NLRB met its burden of demonstrating the requested documents are not already in its possession; and (4) the NLRB complied with the required administrative steps in making its request to enforce the subpoenas.
Subpoenas not unduly burdensome. The burden consequently shifted to the franchisees to demonstrate that the subpoenas were improper or that compliance would be unduly burdensome. The court concluded, however, that there was no specific evidence that compliance would place an undue burden on the defendants; allegations that the subpoenas were overbroad were undermined by the franchisees’ failure to take advantage of multiple NLRB offers to stipulate to duplicative documents; claims that the subpoenas were improper were contradicted by NLRA regulations; the franchisees’ alleged “ongoing efforts to comply” were rejected because the majority of the document requests remained unanswered; and arguments that the NLRB comes before the court with unclean hands were deemed “disingenuous at best.” The NLRB’s request to enforce the subpoenas was therefore granted.
Attorneys: Alejandro Ortiz, NLRB. Robert Brody (Brody & Associates, LLC) for Respondents.
Companies: AJD, Inc.; 1531 Fulton Street, LLC; Bruce C. LP; 840 Atlantic Avenue, LLC; Lewis Foods of 42nd Street, LLC; John C. Food Corp.; McConner Street Holdings, LLC; 14 East 47th Street, LLC; 18884 Food Corp.; Mic-Eastchester, LLC
Cases: FranchisingDistribution NewYorkNews