Teamsters allege cannabis store paid ‘sham’ union to avoid labor organizing

(Image by Laura Pashkevich and MQ-Illustrations/stock.adobe.com)

A major national labor union is jumping into a San Diego-area cannabis store’s legal challenge to California’s labor-friendly licensing requirement.

It’s the second time the International Brotherhood of Teamsters has requested to intervene in a lawsuit challenging the state’s labor peace agreement (LPA) requirement, but the union’s June 20 filing in U.S. District Court in Southern California also suggests more nefarious forces are at play.

These include a “pattern and practice of behavior” to evade state law as well an arrangement where marijuana companies pay to sign weak labor agreements with “sham” unions that have no intention of organizing workers or signing contracts, according to court filings.

A spokesperson for the state Department of Cannabis Control (DCC) said the agency had no comment on the litigation.

Labor-friendly law, fake unions

California law requires any cannabis business with 20 or more employees to sign an LPA with a “bona fide labor union” or risk losing its state license.

An LPA is a document in which a company agrees not to dissuade workers from organizing with a union.

In return, the union agrees not to interrupt business while recruiting workers to organize with the union and to pursue a contract, a process that can take years.

In California, a company that does not have a valid LPA in place by July 1 risks losing its license, according to state law.

As MJBizDaily has reported, some California businesses have signed LPAs with organizations later deemed to be sham unions by the state Agricultural Labor Relations Board (ALRB).

One such union identified as non-bona fide by the ALRB is ProTech Local 33.

ProTech Local 33 signed an LPA with La Mesa-based Ctrl Alt Destroy, a legal entity behind a marijuana store operating under the Embr brand, according to the Teamsters filing.

Cannabis industry implications

In April, attorneys for Ctrl Alt Destroy sued the DCC in federal court.

The lawsuit alleges the state’s LPA requirement violates both the U.S. Constitution’s free speech protections and supremacy clause as well as the National Labor Relations Act.

Other states such as Connecticut, New Jersey and New York also require labor peace agreements as part of licensing requirements.

At least one other company has challenged a state’s LPA requirement – Greenleaf Compassionate Care Center in Rhode Island.

That case, which also seeks cancellation of a collective bargaining agreement, is pending.

Ctrl Alt Destroy’s suit “is factually different,” the company’s San Diego-based attorney, Gina Austin, told MJBizDaily via email.

But both cases are potentially precedent setting and have industrywide implications.

In addition to Austin’s firm, Ctrl Alt Destroy is represented by San Francisco-based attorney Michael Pedhirney of Littler Mendelson, a prominent employer-side law firm retained by companies such as Apple in their efforts to squash unions.

Explosive counterclaim

But as the Teamsters pointed out in their June 20 filing, this is the second time those attorneys have sued the DCC seeking to have the LPA requirement declared unconstitutional.

The first lawsuit, filed in October by the same law firms on behalf of San Diego-headquartered Urban Therapies Manufacturing, was voluntarily dismissed after the Teamsters joined the suit.

“The only difference between the current and prior action appears to be that these law firms have found a new Plaintiff to champion their principal’s cause,” Teamsters attorneys wrote in their June 20 motion to intervene that included a counterclaim against Ctrl Alt Destroy.

In the counterclaim, the Teamsters are seeking damages from Ctrl Alt Destroy, citing the company’s “pattern and practice of behavior to circumvent” the LPA requirement.

Payment allegations

The Teamsters also claim that companies are paying sham unions to beat LPA requirements.

“Counterclaim Plaintiff has been informed and believes; and based on that information and belief alleges, that (ProTech) 33 received consideration in the form of the payment of monies and/or items of value in exchange for entering into an LPA and guaranteeing that no employee of CAD would be organized by (ProTech) 33,” the filing claims.

Austin, the plaintiff’s attorney, declined to comment directly on the allegations but called the Teamsters’ filing “just as unwarranted in this litigation as it was in the Urban Therapies litigation.”

U.S. District Judge Linda Lopez has yet to rule on the Teamsters’ request, according to the court docket.

Teamsters attorney Renee Sanchez said in a statement that the union is standing “shoulder to shoulder with the State of California to defend California’s statutes and regulations, which are designed to protect the rights of cannabis workers.”

In the meantime, it’s unclear whether Embr, the La Mesa marijuana store operated by Ctrl Alt Destroy, meets the current licensing requirement.

According to a state database, Ctrl Alt Destroy does not have an LPA on file.

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.