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1. I am the Senior vice President of Personnel and Labour Relations for McDonald's Corporation.
2. I joined McDonald's in 1974 as a Labour Relations Attorney, having already obtained a law degree from Boston College Law School and passed the State Bar Exam in Massachusetts. I am also admitted to the State Bar of Ohio. In 1978 I was appointed Assistant Vice President and in 1981 I was placed in charge of the Personnel and Labour Relations Department. In 1987 I was appointed Senior-Vice President.
3. As Head of Personnel and Labour Relations I have overall responsibility for personnel matters in the USA and my department also provides a consulting service for all McDonald's personnel departments throughout the world. Consequently I have direct general knowledge of the personnel policies of McDonald's throughout the world.
4. I have read the leaflet 'What's Wrong with McDonald's' and also the pleadings in this action and from my own personal knowledge can comment on many of the allegations made in the Particulars of Justification and Fair Comment insofar as they relate to personnel matters.
5. It is alleged that our workers do badly in terms of pay and conditions. This is untrue. It is also inaccurate to say that there is no minimum wage and we can pay our employees what we like. In the USA there is a minimum wage which is regulated by the Federal Government. It requires the payment of a minimum of $4.25 per hour. The average wage we pay to crew is approximately $5.11 per hour. Staff are never paid below the minimum wage under any circumstances. In addition there are twice yearly salary reviews and an employee can get anything from a 10-30 cents increase each time. In addition to our pay rates all full time hourly and salaried managers benefit from a Basic Dependent Life Insurance Scheme, Healthcare Plan and Dental Plan after only one month of employment. All staff who work at least 1,000 hours during any year qualify for profit sharing and eligible store managers and staff employees are entitled to receive stock options. McDonald's also operates an educational assistance and student loan scheme for eligible employees. We regard the legal requirement as a minimum standard and all our practices are designed to go beyond what is legally required. An example of this is with regard to the Child labour laws. Under these children aged below 16 are prohibited from working later than 9 o'clock in the summer months. Our policy requires that such employees cannot work after 8.45 during that period. We have a very good relationship with the Department of Labour and about two years ago, when they carried out an audit on the whole quick service food industry the results were highly favourable for McDonald's Corporation.
6. It is also incorrect to say that our workers work long shifts in hot smelly, noisy environments. We are flexible employers and the shifts which an employee works will be no longer than he/she indicates or he/she wishes to work. In the USA it is extremely rare for an employee to work a shift longer than 8 hours and the average shift worked is between 4-5 hours. I would agree with Sid Nicholson's comments in his statement which I have read regarding heat, smell and noise within our restaurants.
7. The chances of promotion at McDonald's are certainly not minimal. The present President of McDonald's USA started working for McDonald's as a Trainee Manager, as did many of the present senior management. McDonald's provide a unique opportunity for advancement by giving extensive training to assist our employees in developing a wide variety of skills. In particular staff are trained to accept responsibilities and to interact with customers. All staff are encouraged to move upwards within the company and the results of this policy can be seen by the fact that over 50% of the operations management in the USA started work for McDonald's as a crew member.
8. McDonald's employees are highly trained. We have spent millions of dollars throughout the world on crew training and have adopted a modular training programme. Every station within a restaurant has been broken down and is covered by state of the art training videos and manuals. Employees progress through a development program that may include self-study, basic operations and management classes, intermediate operations and regional equipment classes. Upon completion, assistant managers are eligible to attend the two week advanced operations course for managers and franschisees at Hamburger University. McDonald's have a Hamburger University in England, Japan and in the USA. The other countries in which McDonald's operates also send their staff to one of the Hamburger Universities to complete their training and often any lecture will be translated into 1 or 2 different languages such is the variety of nationalities present. McDonald's also provides training for the employees of its franchisees.
9. McDonald's approach to training has been recognised by numerous bodies in the USA and we have received many awards, including awards for employing disabled people and for bringing seniors back into the workforce. In 1981 we established the McJobs program to assist mentally and physically handicapped individuals to develop their skills and confidence by training with a manager for about eight weeks before graduating to a crew position. In 1991 we received an award from the President's Committee on Mental Retardation for our commitment to the McJobs program. Through the McMasters program we recruit, train and retrain people aged 55 and over. These employees receive a 4 week training programme under the guidance of a job coach before graduating and jolting the team. In recognition of our commitment to hiring senior citizens in 1991 McDonald's was awarded the Business and Ageing Leadership Award.
10. A large number of McDonald's employees are under 21 years of age. This is the nature of a large part time workforce where the majority of transactions occur at the weekend. In the USA approximately 50% are over 21 whilst In Germany the majority of employees are over 21. McDonald's does not exploit disadvantaged groups. We are an equal opportunity employer which takes positive steps to attract minorities, women, disabled and older people to develop their potential without regard to race, sex, religion, ethnic, educational or cultural background. We recently were featured in Hispanic Magazine as one of the top 100 companies in the USA providing opportunities for Hispanics. Our commitment to the Hispanic community in areas of recruitment, hiring, scholarships and grants were particularly noted. McDonald's was also recognised by Black Enterprise Magazine as one of the 25 best places for African-Americans to work. In 1990 McDonald's received an Award from the Black Collegian Magazine in recognition of our commitment to recruit college graduates for entry level jobs. The training McDonald's offers to its employees is very similar throughout the world but is customised to take account of the cultural and legal differences in each country.
11. Each franchisee throughout the world has a field consultant, who is a McDonald's employee, assigned to provide consulting and business advice to the franchisee to help them introduce and maintain good people policies. The franchisees set their own employment practices but if any problems arise then the field consultant will suggest to the franchisee that he requests someone from the Personnel Department to come to the restaurant and provide additional consulting advice. In general franchisees welcome the consulting advice they receive and elect to follow that advice.
12. In addition to the field consultants I have a team of eight highly experienced personnel consultants who provide a consulting service to all McDonald's managers and franchisees outside the U.S. throughout the world. The other function of this team is to assist managers and franchisees to have the best possible employment practices throughout the world and ensure compliance with local laws. It is untrue to say that we do not allow our employees to belong to unions. Our employees are free to belong to a union if they wish, however none of McDonald's employees in the USA have presently chosen to be represented by a union. In the past McDonald's have had collective bargaining agreements with unions.
13. The question of union representation is governed by the National Labour Relations Act which states that when 30% of the employees in any unit being either a single store or stores, depending on the circumstances, show an interest in having union representation then the union can petition the National Labour Relations Board which if it considers there is sufficient interest will then organise an election within the store. This is strictly between the employees, the Union and the National Labour Relations Board; McDonald's does not interfere. If we were ever found to have interfered in any way in an election then we would be guilty of unfair labour practices. As far as I am aware since I have been employed, McDonald's has never been found guilty of unfair labour practices. If the result of the election is that a simple majority within the store are in favour of union representation than that store will automatically be allowed union representation. Thus our employees have the choice whether or not to have union representation.
14. Turning to the specific allegations made by the Defendants in the Particulars of Justification and Fair Comment, the Further and Better particulars of the Particulars of Justification and Fair Comment dated the 31st July 1992, which I shall refer to as "F&BP 1", and the Further and Better Particulars of the Further and Better Particulars of Justification and Fair Comment dated 11th March 1993, which I shall refer to as "F&BP 2", I have personal knowledge of a number of these and, dealing with each in turn, would make the following comments
i. The defendants state that in 1989, the official minimum wage in Philadelphia was $3.70 per hour and McDonald's paid $3.70-$4.00 per hour. In 1989 the official minimum wage in Philadelphia was $3.70 per hour. The average starting wage paid by McDonald's was $3.96-$4.13 per hour and the average hourly rate, as opposed to the starting rate, was significantly higher than that.
ii. On page 8 of F&BP 2 at paragraph {c) the Defendants state that in Philadelphia in 1989, in response to a community campaign over wage rates at McDonald's, we prepared an anti union strategy in case employees began to join. What in fact occurred was that in 1989 an organisation known as the Philadelphia Unemployment Project (PUP) published a study comparing conditions in Suburban and Inner City fast food restaurants in Philadelphia. This study contained a survey of the wages paid in the City and Suburban areas of Philadelphia which concluded that Inner City workers were paid $1.00 per hour less than workers in the Suburbs doing the same job. While the study had covered a number of fast food restaurants, PUP focused on McDonald's and launched a media campaign designed to publicise this alleged discrepancy. As part of this campaign PUP called for a City wide boycott of all McDonald's restaurants and picketed some McDonald 'sstores .
In order to determine whether PUP's claims were accurate we commissioned an international organisation of management consultants, Towers, Perrin, Forster and Crosby, together with Charles Perry, a Professor at the Wharton School of the University of Pennsylvania to conduct an independent survey. This survey showed that PUP's claim was inaccurate in that the average differential between starting wage rates for those restaurants in the City and Suburban areas included in PUP's survey was 11 cents and that the median starting wage in both City and Suburban restaurants was $4.00 per hour. Both Towers, Perrin, Forster nd Crosby and Charles Perry concluded that the average differential between the starting rates was statistically insignificant.
Information from this survey was released to the media, and we published a policy statement re-affirming our practice of offering fair, equitable and non discriminatory wages in every location following which support for the campaign gradually dwindled away and it eventually ceased.
iii. On page 7 of F&BP 1 at paragraph (d) the Defendants state that we sacked four employees for requesting union elections at our Grand Via restaurant in Madrid. It is true that McDonald's joint venture partner In Spain did dismiss four employees for being disruptive in the work environment. He did this without consulting McDonald's. As I subsequently learned, among other things, they had been distributing leaflets in the restaurant requesting that an election be held for an employee committee within the restaurant. The Madrid Labour Court did find that the dismissal had been unfair and ordered that the employees be re-instated.
Following the court decision I visited Madrid and told our joint venture partner that he could not dismiss employees for reasons such as those and that he should proceed at once with committee elections in the restaurants. These elections subsequently went ahead and within a short period each restaurant had an elected employee committee.
iv. On page 8 of F&B1 at paragraph (j) the Defendants allege that in Puerto Rico in the mid 1960's a dispute arose because McDonald's refused to recognise Trade Unions and this resulted in McDonald's branches being closed. This allegation is expanded in F&BP 2 on page 9 at paragraph (j). McDonald's first opened in Puerto Rico in the 1960's. Two individuals, Mr. Gibson and Mr. Goldstein had been granted a Master Licence giving them the right to develop Central America and the Caribbean. Initially the Puerto Rico stores were operated by Mr. Goldstein from Washington DC. He then sold his interest to Mr. Gibson in Puerto Rico to run the restaurants. Mr. Gibson entered into a collective bargaining agreement with the Gastronomical workers Union. Unfortunately Mr. Gibson's operational standards were very poor and this resulted in McDonald's terminating his franchise for Puerto Rico.
In around 1974 Mr. Gibson sold his terminated franchise to Don Miller who invested a large amount of money in the restaurants in an attempt to improve the operations. The agreement which Mr. Gibson had entered into with the union was close to expiring and same of Mr. Miller's employees no longer wanted to be represented by the Union. These employees sought to obtain a sufficient show of interest to hold a National Labour Relations Board election.
The Union reacted violently to this and commenced a campaign of picketing, which resulted in the restaurants being closed. Mr. Miller telephoned McDonald's Corporation to ask for assistance and it was only at this stage that we found out what had occurred. In response to his request, I went to Puerto Rico to discuss the problem with him. I told him that we would help him try to sort matters out if he would agree to certain conditions, such as moving to Puerto Rico himself to run the restaurants. He refused and I was told by Fred Turner, the Chairman of McDonald's Corporation, not to provide him with any assistance. Mr. Miller's stores remained closed and he eventually went bankrupt. McDonald's re-opened in Puerto Rice in 1980 and we have had no labour relations problems since then.
v. The Defendants, at paragraph (m) on page 8 of F&BP 1, expanded at paragraph (m) on page 9 of F&BP 2, refer to McDonald's hostility to a union campaign in Mexico In 1985. McDonald's first restaurant in Mexico was opened in December 1985. The operation in Mexico was set up with a joint venture partner and prior to opening the first restaurant I, together with other members of the Personnel Department went to Mexico to help set up the personnel practices and to ensure that they complied with Mexican law. Whilst preparing to open the first restaurant we were approached by two unions, KROC and C.T.N which wanted us to recognise them. We adopted our traditional view that it was up to the employees to decide whether or not they wanted the unions to represent them.
Once the restaurant was opened we were again approached by KROC, we told them that we would abide by any decision made by our employees and that they should initiate the election process, which they did. The process in Mexico is that a strike call date is set upon which, at a given time, union representatives come into the restaurant and ask the employees to cease work. If all employees cease work then that union is immediately recognised. If some of the employees do not want union representation then an election is subsequently held.
We informed the employees that representatives from KROC would be coming to the restaurant and told them that they could then chose whether or not they wanted to be represented by the union. On the day in question all our employees came to work, even those who were not scheduled to do so. At 6 o'clock the representatives from KROC turned up at the restaurant. They also brought with them around 200-300 men carrying baseball bats and clubs who surrounded the restaurant and prevented any customers from entering the restaurant. The representatives came into the restaurant and addressed the employees. The employees unanimously told the union that they did not want to be represented and continued to work. Scuffles then broke out and as it looked as if the situation was about to dramatically deteriorate we telephoned the police.
The union ensured that the restaurant remained closed and we were told that the only way to end the situation was by arranging for a formal election to be held. In the interim the employees sought a different union which they found more acceptable to them. This union filed an intervention In the proceedings and KROC withdrew its petition. We then entered into a collective bargaining agreement with this other union and there have since been no further labour disputes in Mexico.
vi. The Defendants in F&BP 1 at paragraph (p) on page 8 refer to McDonald's being hostile to a union recruitment drive in Chicago in January 1978 and being criticised by a Chicago Labour Court for unlawful retaliation methods. This allegation 1e expanded in F&BP 2 at paragraph (p) on page 10. The Defendants' version of what occurred is incorrect. What in fact happened was that the Motel and Restaurant Workers Union attempted to organise in a McDonald's restaurant owned by a franchisee, Lyon-Webber Management Company ("Lyon-Webber") on Wabash Avenue in Chicago. A petition was filed by the union for an election to be held in the restaurant. Lyon-Webber operated 8 McDonald's restaurants in the Chicago area and they argued that the employees of all 8 restaurants should be involved in the decision rather than just those in the Wabash Avenue restaurant. At a subsequent hearing the National Labour Relations Board decided that Lyon-Webber's argument was correct and they ordered the union to obtain a sufficient show of interest in all eight restaurants before an election could be held. The union were unable to do so and the National Labour Relations Board dismissed the union's petition for lack of a sufficient show of interest. During the procedure there were allegations by both Lyon-Webber and the union of minor Unfair Labour Practices, however these were resolved informally. There was no hearing before any labour court. The 'sweeteners' which the Defendants refer to are things which are normally provided to employees in McDonald's restaurants and were nothing to do with the union campaign.
In F&BP 1 paragraph (q) on page 8 the Defendants allege that McDonald's systematically undermined a union recruitment drive in Detroit in the lead up to a recognition vote. On page 11 of FBP 2 at paragraph (2) the Defendants expand on how McDonald's allegedly undermined the recruitment drive. There was an attempt by the Detroit Fast Food Workers Union to organise in all McDonald's stores in Detroit in 1980. The union had been formed by an organisation known as the Association of Community Organisations for Reform Now ("ACORN'). The union filed a petition in respect of three stores which were operated by a local franchisee, Ralph Kelly. A National Labour Relations Board election was held and Ralph Kelly won by a substantial majority. During the election procedure the union mounted a large publicity campaign and also filed numerous charges for unfair labour practices. Some of these charges were resolved informally when Ralph Kelly agreed to post notices in the restaurants governing the correct procedure of the election and the rest were dismissed by the National Labour Relations Board. It is correct that there was a celebrity visit to the restaurant prior to the election, however this was part of the McHappy Day which takes place every year in order to raise money for charity and the celebrity In question, Earl Campbell, an American football player, visited a number of stores in Detroit on that day. The McBingo referred, by the Defendants to is an incentive program which we had introduced for our employees which is tied into training and is something which occurs at most restaurants. It is true that a staff disco was held prior to the election during which the forthcoming election was discussed. In the US it is both legally permissable and normal practice for management to discuss a union election with its employees. This was one of the things which the union complained to the National Labour Relations Board about but which was dismissed by the Board. It is not correct to say that on the day of the election pay cheques were altered to give the impression that union recognition would lead to wage problems. What happened was that Ralph Kelly provided the employees with two cheques, one being for the amount of their wages, less the amount which they would have to pay to the union by way of subscription fees and the other for the amount of the subscription fees. This was perfectly legal and is done by employers during many elections in order to show employees the cost to them of unionisation.
vii In F&BP 2 at paragraph (f) on page 8 the Defendants state that McDonald's were hostile to the United Farm Workers and Commercial Union in or around 1983 and that despite a boycott of Tyson Foods by this Union McDonald's continued to place orders with Tyson and only ceased doing so when the Union subsequently extended their boycott to McDonald's. What in fact happened was as follows. The United Food and Commercial Workers International Union was the certified bargaining agent for the employees at Tyson's chicken processing plant in Arkansas, where Tyson produced Chicken McNuggets for McDonald's. Tyson and the Union were involved in a round of collective bargaining over terms and conditions of employment. In an attempt to put pressure on Tyson during the collective bargaining negotiations the Union prepared and distributed leaflets claiming that Tyson's Chicken McNuggets were produced under unsanitary conditions.
The Union started picketing McDonald's restaurants and distributed these leaflets in a number of cities in the USA urging people not to eat Chicken McNuggets. When this happened I visited Tyson's plant and inspected it myself. I discovered that there was no truth in the allegations which the Union were making and that in fact it was all part of an attempt by the Union to put pressure on Tyson in the collective bargaining negotiations.
We informed Tyson that if the leafleting and picketing of our stores did not cease we would have no choice but to cease doing business with Tyson. Following this a large number of Tyson's employees sent a petition to the Union demanding that it cease its leafleting of our restaurants. They then followed this up by commencing legal proceedings against the Union on the basis that the Union was not fairly representing its members and also suing for an injunction stopping the Union from circulating the leaflets.
During the legal proceedings the Court held that the allegations which the Union had been making about the unsanitary conditions at Tyson's factory were false, misleading and fraudulent and that the purpose of the circulation of the leaflets was to put pressure on Tyson to enter into the collective bargaining agreement with the Union. The Court also granted the Tyson's employees the injunction which they sought. Following this three McDonald's franchisees issued proceedings against the Union for libel which were settled when the Union agreed to pay a substantial sum in damages.
viii. If in F&BP 2 at paragraph 8 on page 9 the Defendants refer to a labour dispute between Freshco/Bruce Church Limited and the UFW which resulted in McDonald's ceasing to buy Freshco's products. What happened was that Bruce Church Limited were involved in a labour dispute with the United Farm Workers Union. The leader of the Union, Caesar Chavez, telephoned me and asked McDonald's to stop doing business with Bruce Church Limited in order to put pressure on them. When we said that we were not prepared to do this he threatened to picket McDonald's restaurants. We took the view that this would be an unlawful secondary picket and asked Bruce Church Limited to file a charge with the National Labour Relations Board in order for it to decide whether or not the pressure being exerted on McDonald's was legal. Bruce Church Limited refused to file a charge with the National Labour Relations Board and because of this refusal we ceased doing business with them.
1. I make this supplementary statement to address the seven amendments to the Defence in this action under the heading 'Employment Conditions' in which it is alleged that McDonald's were fined on account of violations of child labor laws at some of its restaurants in the USA. I deal with each allegation in turn:-
'(5) In Billings, Montana USA, in or around April 1995, 5 McDonald's stores (run by Kiercon Limited) were fined $7000 for child labour law violations involving 28 minors. The violations occurred between December 1992 and December 1994, and involved 14 and 15 yr olds illegally working more than three hours a day on school days and after 7 pm.
There are six McDonald's restaurants located in Billings, all of which are franchised. I have no knowledge of the alleged incident and we have no record of it (by which I mean, here and hereafter, that, following enquiries by members of my staff carried out at my request, I am able to say that there is no record of the incident in the possession of the First Plaintiff).
(6) In Fair Lawn, New Jersey, in or before December 1994, a McDonald's store was found in violation of the child labour laws in respect of a 14 year old, resulting in a fine of $900. Around the same time, at Trenton, New Jersey, a McDonald's store violated child labour laws in respect of 25 employees resulting in a fine of $10,200.'
a. There is one restaurant in Fair Lawn which is company owned. I have no knowledge of the alleged incident and we have no record of it.
b. There are four restaurants in Trenton, all of which are franchised. I have no knowledge of the alleged incident and we have no record of it.
(7) In Sioux Falls, (believed to be the South Dakota city), in or around 1992/3, the US Labor Department fined the McDonald's Corporation for child labour violations involving 179 minors at 5 local stores.'
There are five restaurants in Sioux Falls, all of which are franchised. I have no knowledge of the alleged incident and we have no record of it.
(8) McDonald's at 3534 Delaware Avenue, Kenmore, New York State, in or before November 1992, failed to obtain employment certificates from three minors, resulting in a $750 fine.'
There is one Restaurant in Kenmore, which is franchised. I have no knowledge of the alleged incident and we have no record of it.
9) McDonald's at 324 W. Norberry [sic] St, Lancaster, California, in or before July 1992 was responsible for the violation of child labour hours regulations in respect of two minors. This resulted in a $1,200 fine.'
There is no McDonald's restaurant at 324 W. Norberry Street, Lancaster. There are three restaurants at other sites in Lancaster, all of which are franchised. I have no knowledge of the alleged incident and we have no record of it
(10) In Santa Clara/Santa Cruz/Bay Area, California, in or before June 1992 the US Department of Labor found that a McDonald's store was in breach of child labour laws, resulting in a fine.'
There are four McDonald's restaurants in Santa Clara, two of which are franchised and two of which are company owned. There is one restaurant in Santa Cruz, which is franchised. I have no knowledge of the alleged incidents and we have no records of them.
I have read the computer extract of the newspaper article on which this allegation is based, from which it is apparent that the allegation relates to Santa Clara and Santa Cruz counties specifically and not to the Bay Area generally (the Bay Area is a very large area around San Francisco in which there are 161 McDonald's restaurants, both franchised and company-owned). I have therefore confined my response on this allegation to Santa Clara and Santa Cruz.
(11) McDonald's in North Kingstown, Rhode Island, in or around March to June 1990, was found to be employing 14 and 15 year old workers during improper hours in breach of child labour laws. This resulted in a fine from the US Dept. of Labor.'
There is one franchised restaurant in North Kingstown.
I have no knowledge of the alleged incident and we have no record of it.
1. I make this supplementary statement in response to the further allegations concerning McDonald's employment practices contained in the Amended Particulars of Justification and Fair Comment served on the 27th July 1993.
2. Exploitation of Women and Black People
I stated in my first statement, McDonald's does not exploit disadvantaged groups and is an equal opportunities/affirmative action employer. It is McDonald's basic philosophy that the work force of our restaurants should reflect the make up of the population, and has been since at least the early 1970's. As Robert Beavers has described in his statement, a copy of which I have read, we do this by monitoring national demographic figures, actively recruiting and promoting women and minorities, and devoting considerable resources to building a climate which fosters diversity.
3. In our various regional offices throughout the USA there are Human Resources officers who have a primary responsibility for the positive recruitment of minorities and I attach at "SS 1" copies of some sample advertisements McDonald's has run aimed at recruiting minorities. The U.S. Government periodically audits McDonald's compliance with Equal Opportunities laws, as they do with other large companies, and they have always found that we are in full compliance. In 1989 approximately 44% of our crew members were either black, Hispanic, Asian or native American Indian, the remainder being white. The present figures are almost identical. In 1989 34% of our salaried management were black, Hispanic, Asian or native American Indian while the present figure is just under 36%.
Turnover
4. In 1989 the figure for our salaried management turnover was 35.5%. For crew it was 189%. The present figures are 26.5% and 149% respectively. I do not consider that any of these figures are unacceptably high considering the nature of our work force which, as Lynn Meade has explained in her statement, a copy of which I have read, is made up of many young people from school or college working part time and the way in which we calculate our turnover which tends to exaggerate the figures.
Low Pay
5. As I stated in my first statement our staff are never paid below the minimum wage in any circumstances. I attach at "SS 2" a summary taken from our computer which confirms this and indeed shows that our staff are paid well in excess of the minimum wage.
| date signed: |
June 1, 1993
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| supplementary statement signed: |
January 6, 1994
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| 2nd supplementary statement signed: |
January 14, 94
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| status: |
Appeared in court
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transcripts of court appearances:
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