Obama Puts More Heat On Food Firm

Locked in a nasty battle with the Teamsters union, Chicago's largest privately owned company is coming under intense pressure from a pro-labor Obama administration.

Rosemont-based U.S. Foodservice Inc. faces a National Labor Relations Board complaint filed in the waning days of the Bush administration alleging more than a hundred instances of illegal union-busting tactics that the food-distributing giant used in narrowly defeating a Teamsters organizing drive in Phoenix last year. So far, the NLRB has rebuffed the company's settlement attempts, underscoring the seriousness of the charges.

Meanwhile, new rules put in place by President Barack Obama bar federal contractors — and their subcontractors — from billing the government for any costs of fighting union attempts to represent workers. The president also required federal vendors to post prominent displays in the workplace to inform workers of their labor rights. Those rules will apply to U.S. Foodservice, which last year got more than 1% of its $19.8 billion in sales from the federal government.

Congress is piling on, too. Democrats have cited U.S. Foodservice's campaign against the Teamsters in their drive for administration-supported legislation to eliminate secret ballots in union-organizing campaigns and require companies to recognize a union if a majority of employees sign cards supporting one. And recent questions raised by Rep. Patrick Murphy, D-Pa., about U.S. Foodservice's eligibility for federal contracts, "despite a long history of labor violations," triggered ongoing reviews by several units of the Labor Department and the NLRB, according to a Defense Logistics Agency spokesman.

With federal agencies breathing down its neck, the company says the unions have singled it out as the poster child for the so-called card-check bill, part of a two-year Teamsters campaign to expand beyond the 16% of U.S. Foodservice employees already in a union.

"Not only are they trying to make us an example for the Employee Free Choice Act, but they're trying to get the company to voluntarily provide card-check recognition" and remain neutral in union organizing drives, says David Esler, chief human resources officer at U.S. Foodservice, which employs more than 26,000.

The Teamsters say the company has brought trouble on itself. A union official says U.S. Foodservice was a typical tough-nosed labor opponent until it was acquired almost two years ago for $7.1 billion by two New York-based private-equity firms, Kohlberg Kravis Roberts & Co. and Clayton Dubilier & Rice Inc.

"Our experience since KKR has come in has been much worse," says Andy Banks, director of strategic campaigns for the Teamsters.

Following last year's showdown in Phoenix, the Teamsters filed unfair labor practice charges with the NLRB. The agency's investigation seemed to support the union's allegations. In a letter from the agency's regional office in Phoenix, an NLRB lawyer wrote that investigators uncovered "an overall scheme by (U.S. Foodservice) to 'weed out' pro-union employees." The letter says that not only were pro-union job applicants turned away, but "they were explicitly told that this was the case."

Mr. Esler says the company can't discuss the ongoing case. He says he hopes to settle, but the NLRB is seeking a rarely used legal remedy that would immediately install the union because the company's "threats of mass termination" and violation of a previous settlement had poisoned the well for another election. The matter will be heard by an administrative judge May 19.

Meanwhile, the Teamsters are pressing U.S. Foodservice beyond the bargaining table. In recent weeks, several hundred union members picketed the National Restaurant Assn.'s headquarters in Washington, D.C., criticizing the trade group for lobbying against the card-check bill on behalf of U.S. Foodservice. The Teamsters also have demonstrated at the firm's fast-food clients in the Northeast and passed out leaflets to patrons of those restaurants.

That may only be the beginning.

"We haven't reached the level of intensity we're going to see yet," the Teamsters' Mr. Banks says.

©2009 by Crain Communications Inc.