Mediators seek peace amid labor wars

February 2013

When Arthur J. Boylan received the assignment to mediate the NFL's 2011 lockout, he said his fellow judges felt pity for him.

On top of his workload as chief magistrate judge of the Federal District of Minnesota, he now faced what many viewed as a mission impossible: Helping NFL Commissioner Roger Goodell and the NFL Players Association (NFLPA) Executive Director DeMaurice Smith reach a deal to end the NFL lockout.

One mediator already failed at the task. And in separate litigation concerning the legality of the lockout, the NFLPA revealed that owners anticipated a possible two-year suspension.

"I had some fellow judges come up to me after I got the assignment and they expressed some sympathy because I had all this work to do," Boylan said. "And I thought to myself, 'Are you crazy?' This is a career case that I'm just going to love to tackle."

After 115 days and 26 meetings, Boylan did just that. The warring factions signed a new collective bargaining agreement on Aug. 4, 2011, canceling only one game — a Chicago Bears-St. Louis Rams preseason matchup.

"This was such a crazy litigation and crazy negotiations because we had so many topics and so many things going on in different rooms, to use a football metaphor it was just like being a quarterback," Boylan said.

Most people don't think of mediators as the star of negotiations the way they view NFL quarterbacks as leaders of their teams. News reports describing labor negotiations typically only mention a mediator's presence.

But behind the scenes, mediators such as Boylan play a vital role in helping employers and employees break heated, often deadlocked, negotiations.

Understanding what they do and how they do it makes sense in a post-recession environment where mediators become increasingly common figures in news reports: Five work stoppages involving 1,000 or more employees occurred in the U.S. in 2009, the Bureau of Labor Statistics reported. The number of "major work stoppages" rose to 11 in 2010; 19 in 2011; and 18 as of November 2012.

Those numbers may not surprise many Chicagoans.

In 2012, the city endured the seven-day Chicago Teachers Union strike; the Chicago Symphony Orchestra's musicians took to the picket lines, canceling one performance; and hockey fans nearly missed an entire Blackhawks season due to the NHL lockout. Nine suburban school districts went on strike or filed paperwork to do so as of December.

At the same time, mediators find themselves dealing with more contentious issues. Changes to pensions and health benefits impact almost every negotiation. Employees can see those changes as an attempt to break promises. Employers view them as necessary to stay competitive or in business.

"Pretty much every place where there are pensions or an employer provides health care, one, if not both, of those will be an issue," said Thomas Summers, director of mediation services for the Chicago area office of the Federal Mediation and Conciliation Service (FMCS). It provides taxpayer-funded mediators for public sector and private sector labor negotiations, such as the NFL and NHL lockouts.

"Our general suggestion when it deals with health care is to get early involvement of a mediator and sharing of information (between both sides) … because it's going to be a very big issue," Summers said.

The anatomy of a mediator

When Boylan first met with Goodell and Smith, the two were at war.

They couldn't agree on how to split up the league's $9 billion in revenue, what to do about retirees' pensions and health-care benefits and a host of other issues that included a proposal for an 18-game season.

Despite the contentious negotiations, Boylan said his first meeting with Goodell and Smith included little business. Instead, he tried to forge a bond over dinner.

"I really thought that it was important that these two big decision-makers have a personal relationship," Boylan said. "Because if we're going to cut a deal … it had to be a kind of deal where these guys had some trust between themselves. And if a deal was going to be successful it could never be built on mistrust."

Post-negotiation, late-night dinners and cocktails with owners and players helped build that trust, he said. The players and owners also held faith in each other to keep their negotiations secret. They shared confidential details about the labor talks — such as what hotel they would stay at and where the negotiations would occur — at the last minute, Boylan said.

While sharing drinks and secrets helped build trust between the owners and players, Boylan said making his own bonds with them proved vital as their mediator.

Boylan attempted to gain their trust through a laid-back style: Rolled-up shirtsleeves, first-name greetings and self-deprecating jokes about things like his inability to brew a strong cup of coffee.

That trust becomes mandatory considering what mediators try to do: Encourage both sides to share with the mediator an absolute bottom-line position on the points of negotiation. The mediator will not share that information with the other side. Armed with the parties' true feelings (or at least close to it), the mediator can determine the possibility of a deal and what it might look like.

Then, through a series of negotiating tactics such as "supposals" (for instance, asking, "If they do this, will you do that?") or "caucuses" (small group negotiations in a separate room) they begin to coax each side toward a deal.

And while some judges view mediation as an unwanted burden, Boylan called it his favorite part of the job.

"This morning I started at 8 in the morning, and a lot of times I've been here as late as 11:30 p.m.," he said. "And it's satisfying when you think you have an impossible case to settle and at some time in the negotiation, you get a breakthrough and it settles. You get a rush."

The NFL and NFLPA's 10-year deal gave the players at minimum a 47 percent share of all the league's revenue. Under the old agreement, owners took an initial $1 billion in revenue for themselves and players took about a 60 percent share of the rest. In the negotiations, owners initially sought to take an additional $1 billion in revenue before sharing any money with the players.

The owners agreed to make their first contributions to the players' retirement funds as part of the agreement. And it allotted $620 million — 51 percent paid by the owners — to a health fund for retired players over the course of the deal.

"I think I'm a pretty good mediator," Boylan said. "I have a good reputation for having some success. But I always say I never settled a case. I say I help people settle a case. All I can do is help you settle a case."

A strike's opening stanza

While it may not have gathered headlines the way the NFL lockout did, the strike by musicians at the Chicago Symphony Orchestra (CSO) last year provided a good example of both the changing employee-relations landscape and how a mediator can help resolve a work stoppage.

Pearson, Jeffrey and Gittler
(From left to right) Marilyn Pearson of DLA Piper, Thomas Jeffery of Federal Mediation and Conciliation Service and Marvin Gittler of Asher, Gittler and D'Alba last year negotiated an end to a one-day musicians' strike at the Chicago Symphony Orchestra.
Photo by Lisa Predko.

CSO management and the union for the orchestra's musicians met for the first time last July at the Ravinia concert venue. They needed to agree on a new contract to replace their previous five-year deal, set to expire in September.

CSO musicians, represented by the Chicago Federation of Musicians (CFM) union, called a strike about two months later, on Sept. 22.

"It's a risky thing to do," said Gary Matts, president of the CFM. "And it's not something that labor unions take to doing lightly. We've seen extended strikes in our industry. In Detroit, there was a devastating strike to both the orchestra, the reputation of the orchestra, management and the musicians. That's the other side of a strike. It does damage."

Deborah Rutter, president of the Chicago Symphony Orchestra Association, declined to answer questions for this story.

The recent labor strife in orchestras represents a battle over how much any organizational belt-tightening will come at musicians' expense.

The Detroit Symphony Orchestra strike that Matts referenced lasted about six months — from October 2010 to April 2011. It started after a contract offer tried to cut musician pay about 30 percent.

The CSO strike, by comparison, lasted only a day and canceled one performance at the Chicago Symphony Center. It followed a contract offer that the CSO considered relatively strong at the time, given that turmoil similar to what happened in Detroit occurred at symphonies across the country.

In the CSO's last contract offer before the strike, musicians stood to receive 4 percent raises over the three-year term of the contract: From a minimum base weekly salary of $2,795 in the first year to $2,835 and $2,910 in years two and three, respectively, a CSO release says.

The offer proved a far cry from the musicians' last contract. That deal boosted wages 23 percent over five years to a minimum annual salary of $144,820, a September 2012 CSO release says.

Proposed changes to health-care and pension contributions also caused tension.

The CSO wanted musicians to contribute at least 5 percent of what their contract at the time called for to cover health-care costs, which the CSO said amounted to it spending $18,000 a year a musician.

"The Federation of Musicians Union has been a proud and strong union and they negotiated very good contracts," said Marilyn Pearson, a DLA Piper partner who negotiated on behalf of management in the CSO strike.

"But like any situation where the industry is changing from an employer's perspective, there needs to be changes to the union's contract in order to be sure the institution can continue to sustain itself."

Marvin Gittler, an attorney at Asher, Gittler & D'Alba, negotiated the CSO contract on behalf of the union.

"It is perceived by those on our side as being a combined effort on the behalf of the symphony operators … who have apparently taken the position that they want to spend less on musicians than let's just say the musicians feel their value is worth," Gittler said.

"And, of course, without the musicians the symphony operators are frankly meaningless. So, you've got this fight going on."

Harmony in a symphony strike

Tom Jeffery stood in the middle of the fight.

Jeffery works as a mediator at the FMCS, the governmental unit that provides mediators for public sector and private sector labor negotiations.

"There was definitely a time that the parties were not ready to meet each other in those areas," Jeffery said, noting that he cannot discuss details of negotiations.

"And then, shortly thereafter with the Chicago Symphony strike, there was a time when they were ready. And part of the mediator's role is to be very cognizant of when that time might be and to be there to facilitate that happening."

Gittler and Pearson agreed that Jeffery played a vital role in deciding when to bring their parties back to the negotiating table. He reached out to both sides the day after the strike went into effect and they brokered a deal shortly afterward.

"That was skillful, because sometimes when a union goes out on strike, the view is you let it sit for a while. They just walked out, so what's the point?" Pearson said.

"Both sides were savvy enough to know that the only way to get this resolved was to get together," Gittler said.

The negotiating group met at DLA Piper's Chicago office on Sept. 23, 2012 and hammered out a final three-year deal that included both salary raises and increases in health-care contributions from musicians.

Musicians received a 4.5 percent increase in salary over the three years of the contract, with weekly base minimums of $2,805, $2,840 and $2,910 each year, respectively. That represented a slight increase in each year from the CSO's last offer before the strike. The Chicago Tribune reported weekly health-care payments for musicians jumped from $15 a week to $25, $40 and $52 over the contract's three years.

Gittler and Pearson said Jeffery knew when to engage in negotiation; he kept the parties talking about the right issues; and he didn't commit error No. 1 for any mediator — spilling the beans on the other side's bottom-line positions.

"The key is to try and get to the point where there's some ability between the parties to share what their true interests are," Jeffery said.

"And that's an integral part of the mediation process, because there are times when they haven't even shared any of that with each other. And so any of the potential solutions up to that point don't really address their core interests. As the mediator, we have to understand at some point the core interest in order to make suggestions or guide the parties toward solving as much of those as possible."

Broken promises or a new reality?

Two sticking points in the CSO negotiations — health-care contributions and pensions — trip up contract talks with increasing frequency, lawyers and mediators said.

Those issues force negotiators to answer tough questions: Will employers be able to keep the promises they made to employees in the form of low health-care costs and fully funded pensions? Or should a post-2008 economy force a shift in employees' expectations?

"Unions have this pie-in-the-sky idea that they should continue to pay substantially less (for health care) than what their nonunion counterparts are paying," said Ross Friedman, a partner at Morgan, Lewis & Bockius, who represents management in labor contract negotiations and mediations.

"To me, a good mediator is somebody who's going to go to a union and say, 'Look, you may have been getting free health care for the past 20 years, and that may be what you're used to. But it isn't possible anymore.'"

To such requests for higher health-care contributions, Kevin Case, a labor-side lawyer from Case Arts Law, said unions typically respond: "Hell no. We're not paying any more for our premiums."

"And so it seems like a conflict that can't be resolved," Case said. "But if you dig beyond that, there are lots of ways to save money on health care and still not just take dollars straight out of the employees' pockets."

He pointed to trade-offs on other issues in the negotiation as an example, but said that "sometimes it's just really hard to get there."

To Javier Ramirez, an eight-year FMCS mediator, health-care costs and pension liabilities create uncertainty in labor negotiations.

Tossing aside ideology about who should bear the brunt of any belt-tightening, Ramirez said other questions that remain unanswered hamper labor deals: What will health-care costs look like after full implementation of health reform? How will Illinois deal with its unfunded pension costs?

"Parties just are not sure on how to negotiate the unknown," Ramirez said. "And so both sides are equally concerned."

Negotiators may try to plan for that uncertainty by assuming the worst, but that comes at the other side's expense.

Instead of planning too far down the road, Ramirez said the duration of labor contracts began to shrink in recent years. Other contracts use "re-openers:" If pension or health-care costs increase, then the parties can renegotiate the contract, he said.

"Once everyone understands how these (health insurance) exchanges are going to work and what happens on the legislation front with the pensions, hopefully we'll have more of an understanding and then we can better deal with them," Ramirez said.

Discord in a teacher strike

By all accounts from those involved in the CSO negotiations, the mediator played his part successfully.

That did not occur in the version of mediation known as "fact-finding" that happened last summer between the Chicago Teachers Union (CTU) and Chicago Public Schools (CPS), said Robert E. Bloch, a partner at Dowd, Bloch & Bennett who negotiated on behalf of the teachers' union.

"In a sense, the fact-finder had an impossible task," he said. "It doesn't seem to me that the process could have resulted in a recommendation that both parties could accept."

Neither party accepted the proposal that fact-finder Edwin Benn came up with in July. The country's third-largest school district went on strike for seven days in September.

Under the fact-finding process, an independent middleman reviewed both contract offers and presented a deal that the union and school district could vote on. If both sides agreed; the deal went into effect. If either side disagreed; the deal got scrapped, which occurred when both sides voted it down.

The Illinois legislature created the process that preceded Chicago's teachers' first strike in 25 years when in April 2011 it passed the Performance Evaluation Reform Act (PERA).

In addition to the fact-finder, that law developed new ways to evaluate teachers in Illinois' public schools. It tied promotions and layoffs more directly to those evaluations.

Despite the fact-finder's report producing an offer to raise teachers' pay by about 15 percent, the union voted it down. In large part, Bloch said it did so because the legislation creating the fact-finder banned him from addressing noneconomic issues such as school day length and teacher evaluations.

"The union couldn't accept just pay raises and nothing else concerning all these other issues," Bloch said.

James C. Franczek Jr., a partner at Franczek Radelet who represented CPS in the negotiations, declined to comment on the negotiations.

In a letter responding to the fact-finding report, Joseph T. Moriarty, the labor relations officer at the Board of Education, wrote that it would result in 4,000 teacher layoffs and an "explosion" in class sizes.

Bloch said the parties negotiated "in spite of the fact-finding process." Still, the two sides eventually struck a deal.

Teachers kept the same "step -and-lane" promotion and wage structure that CPS wanted to do away with. The school year increased by 10 days and the contract allowed teacher evaluations for the first time based in part on student test scores.

"As a grand experiment in resolving labor contracts, fact-finding did not accomplish much for CPS and the teachers' union in its initial implementation," Bloch said.

More battles ahead?

Gittler, the union-side lawyer from the CSO negotiation, said rising health-care and pension costs harden the position employers take in negotiations.

"Early on, the likes of health care and pensions were giveaways," he said. "Now that's changed dramatically. And the symbolism of these things — the major difficulty with even mentioning that — is the simple proposition that the employer has not fulfilled its commitment to make pension contributions."

Pearson, who represented the CSO management, said asking employees to pay more in health-care costs and take smaller pay raises must happen for businesses to adjust to conditions post-2008.

"It's not that there isn't enormous respect for these musicians," she said. "These are institutions that are working to find the right balance in the 21st century."

Mediators and labor lawyers in this article won't address these specific cases again for some time. The NFL's contract covers eight to 10 years; CSO's runs for three; and Chicago's teachers' union goes for three to four.

But they will move on to other negotiations. Jeffery, who mediated the CSO deal, said he always keeps that in mind.

"That's why we try to make sure that the ongoing relationship isn't damaged," Jeffery said. "Because at the end of the contract negotiations, we will leave and it will be up to them to get along."