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‘What’s the endgame?’ No resolution projected as decades-long feud between Culinary and Station Casinos continues

Howard Stutz
Howard Stutz
EconomyGaming
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Union members in red shirts at a town hall event

A second-floor meeting hall in the aging downtown Las Vegas headquarters of Culinary Workers Local 226 has long attracted local, state and national candidates seeking support from the influential labor group’s membership.

Oftentimes, Station Casinos is a talking point.

In November 2019, Vice President Kamala Harris, then a California senator who was seeking the Democratic presidential nomination, told an employee from Palace Station she wouldn’t support a bill that would give Station Casinos parent company, Red Rock Resorts, a tax break. Harris noted she wrote a letter to CEO Frank Fertitta III, expressing that sentiment.

She also said the company should recognize the wishes of its workforce and sign a collective bargaining agreement with the unions for roughly 13,000 non-gaming hospitality and restaurant employees at 10 Southern Nevada properties.

“What they’ve been doing at Station Casinos is wrong. I applaud your leadership,” Harris told the union members.

The town hall-style meeting with Harris was duplicated by all the top tier Democratic presidential candidates seeking an endorsement from Culinary ahead of the February 2020 Nevada Presidential Caucus. Ultimately, the union did not make an endorsement.

But that action did not stop candidates, including Sens. Elizabeth Warren and Amy Klobuchar, and Transportation Secretary Pete Buttigieg, from standing with workers in front of Red Rock’s off-Strip Palms Casino Resort surrounded by the Culinary leadership and members, all of whom wore red t-shirts and sweatshirts emblazoned with union’s logo and slogans.

A month after Harris was there, another presidential candidate arrived at the union hall to deliver a similar message to workers. Said former Vice President Joe Biden, “Folks, I promise you one thing. If I end up being your president you will never ever, ever have in American history someone who is more pro-labor in The White House than Joe Biden.”

Culinary leaders hoped the statements delivered by the current President and Vice President landed in the offices of Red Rock Resorts and could ultimately lead to ending the long standing labor dispute that has origins going back to 1993, the year Bill Clinton moved into the White House and the Strip saw the mid-December opening of MGM Grand Las Vegas.

D. Taylor, whose organized labor career in Las Vegas and nationally has spanned four decades, said the hostilities actually heated up in earnest during 2008.

“Still, we’ve been back and forth for longer than 12 years,” said Taylor, the national president of UNITE HERE, the New York-based parent of Las Vegas’ Culinary Workers Local 226.

“Our union has a very weird sense of time,” said Taylor, who held several leadership roles with the Culinary before serving 10 years as secretary-treasurer, the local union’s top elected position. “Not many unions would still be at this for more than 12 years.”

The ultimate goal for the Culinary and its affiliated Bartenders Local 165 is to strike a contract with Station Casinos, Red Rock’s operating subsidiary.

That objective has been rejected by the gaming company, even after the union won six of seven secret-ballot elections administered by the National Labor Relations Board at Station Casinos properties between 2016 and 2019.

The Culinary appealed the results of the election it lost at Red Rock Resort, the company’s flagship casino in Summerlin. In July, a federal judge in Las Vegas ruled Station Casinos management interfered with the vote at Red Rock by a new incentives and benefits package for employees. The judge ordered the company to negotiate a union contract covering more than 1,350 non-gaming employees.

Red Rock Resorts representatives declined to comment other than to provide a statement to The Nevada Independent.

“As we have said previously, Station Casinos respectfully disagrees with the district court’s decision granting a temporary injunction and has appealed the ruling,” the company said. “The decision, which negates the clear vote of the Red Rock team members rejecting the Culinary Union, appears to have been based on a misunderstanding of the procedural background and, worse, appears to have accepted the argument that Red Rock team members and the Red Rock property should be punished because Station Casinos treated its team members too well.

“Station Casinos does not believe it is correct or consistent with the purpose and stated mission of the National Labor Relations Act to punish Station Casinos and its team members for providing best-in-class benefits to team members based on a dubious theory that doing so 'undermines' the union,” the company added.

D. Taylor, left, President of UNITE HERE, introduces Vice President Kamala Harris to a town hall meeting with Culinary Workers Union Local 226 in Las Vegas in November 2019 when she was a candidate for president. (Jeff Scheid/Nevada Independent)

Battle lines drawn

Since the July ruling, the long-smoldering dispute rekindled into a bonfire.

Legal proceedings involving Station Casinos and the Culinary Union are weaving their way through the NLRB’s administrative law court and the federal judicial system.

In April, the NLRB rejected union decertification efforts at Palace Station and Boulder Station in 2020, saying the company unlawfully encouraged employees to circulate and sign petitions seeking to end union representation.

As part of that case, an administrative law judge in August said CEO Frank Fertitta III and his brother, company Vice Chairman Lorenzo Fertitta, would have to answer questions about allegations that Station Casinos tried to “undercut labor organizing efforts.” The subpoenas were first reported by The Daily Beast and the company is also appealing the order.

“Station Casinos believes that the attempts to depose Frank Fertitta and Lorenzo Fertitta are just another chapter in the Culinary Union’s decades-long campaign of harassment of Station Casinos and its principals, this time with the willing assistance of Region 28 of the NLRB,” the company said. “To the extent that the Administrative Law Judge requires their testimony, they will of course appear.” 

During the 2021 Legislature, Red Rock opposed the passage of SB386, often referred to as the “Right to Return” bill, that guarantees the rights of gaming and tourism industry workers who were laid-off during the pandemic the right to return to their jobs.

Last year, after the state’s gaming industry reopened following a 78-day closure due to the pandemic, Red Rock kept four properties shuttered – the Fiesta properties in Henderson and North Las Vegas, Texas Station in North Las Vegas and the Palms. The casinos have remained closed for the past 16 months and the Palms is in the process of being sold to Southern California’s San Manuel Indian Tribe for $650 million.

Prior to the casino industry’s reopening, the company, which had been paying its 14,000-person workforce wages and benefits throughout the closure, said it was laying off 39 percent of its employees.

Gaming representatives and the Culinary Union struck a deal on the right to return legislation in which the Nevada Resort Association took a neutral position because of a split by its membership.

On the development side, Red Rock is moving forward on Durango Station, a long-planned hotel-casino project in southwest Las Vegas on a 71-acre site bordered by Durango Boulevard and the 215 Beltway. The Spring Valley Town Board approved the project on Sept. 4 and the Clark County Commission, meeting as the zoning board, is expected to consider the plans on Wednesday, although the matter could be delayed.

The Culinary questioned the proximity of the property to neighborhoods and an elementary school. The union also raised questions as to why the company would open a new resort when three of its casinos have remained closed since the shutdown order in March 2020.

“To approve another casino when three are still closed after a year is ludicrous,” Taylor said. 

Red Rock Resort, a Station Casinos property, is located in Summerlin. (Jeff Scheid/Nevada Independent)

The law supports collective bargaining

Updating case studies on the Station Casinos-Culinary dispute is a yearly task for legal experts, who believe the casino company will forever reject the union organizing efforts.

“What’s the endgame? One side gives up,” said Bill Werner, an associate professor at UNLV’s Harrah College of Hospitality and a former casino industry in-house counsel.

“For Station Casinos, the end game is the union goes away and their employees don’t want a union anymore,” Werner said. “I don’t see that happening because the Culinary is very good at maintaining its momentum.” Labor law scholars say they are not surprised the hostilities have dragged on for more than 20 years.

The Culinary took part in the nation’s longest-ever workers strike over a contract dispute – from Sept. 21, 1991, until Feb. 1, 1998 – at the Frontier Hotel on the Strip. Workers held out for six years, four months, and 10 days until the Elardi family sold the casino to billionaire businessman Phil Ruffin, who immediately signed a contract with the employees.

“One thing this union has shown is staying power,” said Ruben Garcia, a professor at UNLV’s Boyd School of Law. He said labor law doesn’t favor management nor the workers. The law supports the collective bargaining practice.

“The law favors a lot of processes and favors a lot of time,” Garcia said. “Legally, both sides are required to bargain in good faith. But the sides can also appeal. That is what is going on now.”

Garcia said Congress originally wrote the law to encourage collective bargaining and expand the process, but he noted the irony that it has taken more than 20 years to get a contract.

“It will be resolved when the appeals process is exhausted. But there isn’t any timetable,” Garcia said. Werner said the major problem with labor law is that a company is not legally obligated to agree to a contract.

“They can be charged with refusing to bargain, but there is nothing in the law that requires them to even make any concessions in the bargaining,” Werner said. “The union’s remedy is to file another charge with NLRB and get another order for them to bargain in good faith. They could just do this forever.”

Kate Bronfenbrenner, the director of labor education research at Cornell University’s School of Industrial and Labor Relations in New York, said the NLRB can’t force a contract, but could add financial penalties.

Bronfenbrenner, who has been following the Culinary-Station matter as a case study, said the company has “totally underestimated” the union.

“What surprises me is the company believed it could win in theory by using age-old anti-union strategies, which are not going to work with this case,” Bronfenbrenner said. “This union is more sophisticated, and it has both public relations and political power.”

Joe Biden
President Joe Biden, then a candidate for president, walks the Culinary Worker Union Local 226 picket line with Geoconda Arguello-Kline, Secretary-Treasurer in front of the Station Casinos-operated Palms on Tuesday, Feb. 18, 2020. (Jeff Scheid/The Nevada Independent)

Long dispute and unusual tactics

Informational picket lines have long been a Culinary Union tactic. On numerous occasions between 2012 and 2014, the target was Red Rock Resort, where the company’s corporate headquarters is located.

Oftentimes, union members would block entrances and streets, which resulted in Culinary leadership being led away in wrist restraints. (Las Vegas Metropolitan Police gave the protesters citations; they were not taken to jail.) One year, several Culinary workers held a weeklong hunger strike in front of Palace Station. During a late December rally at Red Rock, union members delivered a large Christmas stocking containing paper mâché coal.

The tactics have included union-led public information campaigns targeting Station Casinos’ business partners, vendors, entertainers and convention planners with “Travel Advisory” messages, warning of the pending labor dispute.

Ten years ago, the Culinary failed in its attempt to disrupt UFC efforts to hold events in New York when the fighting organization was majority-owned by the Fertitta brothers.

In August, Station Casinos copied the union’s tactic when more than 100 managers at Palace Station and Boulder Station protested in front of the union’s offices on a Sunday afternoon, demanding the Culinary drop its NLRB challenge to reverse a union representation vote at the two properties in which employees rejected representation.

Bronfenbrenner said the Culinary has the support of the Democratic political establishment in Nevada and nationally. She said the company “isn’t playing around with a minor union. They shouldn’t underestimate this union and it’s a union that is not going away.”

The union’s activities haven’t slowed the growth of Red Rock Resorts, even as the company went through two-year Chapter 11 bankruptcy reorganization that was concluded in 2011. At the outset, the company had $6 billion in debt. The reorganization plan removed $4 billion of the debt and left the Fertitta family in control, but creditors took an ownership stake in the new company.

Two years later, Station Casinos went public on the NASDAQ as Red Rock Resorts, raising $531.4 million through an initial public offering. Station Casinos became the company’s operating subsidiary.

The Fertitta brothers are separately included on the Forbes Billionaires List, tied at No. 1,444 with each having a net worth of $2.7 billion. They control more than 40 percent of the casino company.

Santa Fe Station is seen on Monday, Sept. 13, 2021. (Jeff Scheid/Nevada Independent)

The beginnings were small

The genesis of the dispute came in 1993 when the Culinary and Bartenders organized employees at the Santa Fe, a small locals property on a triangular shaped parcel in northwest Las Vegas bordered by U.S. 95 and Rancho Road. But the union couldn’t land a collective bargaining agreement.

Seven years later, owner Paul Lowden sold the Santa Fe to Station Casinos for $205 million. 

Station Casinos announced plans to renovate and expand the renamed Santa Fe Station starting in 2001 and rejected the union’s effort to negotiate a collective bargaining agreement covering more than 700 employees. The company said the workforce had to re-apply for their jobs.

Prior to the 2007 bankruptcy filing, Station Casinos expanded in Southern Nevada, opening the $280 million Green Valley Ranch Resort in 2001, the $925 million Red Rock Resort in 2006 and the $662 million Aliante Station in 2007. The Fertitta family and private equity company Colony Capital took Station Casinos private in a highly leveraged $8.7 billion deal.

In recent weeks, Wall Street has given Red Rock Resorts high marks based on a resurging Las Vegas locals casino market, where gaming revenues are up more than 16 percent through July when compared with pre-pandemic 2019.

Wells Fargo gaming analyst Daniel Politzer, in launching coverage of the company last week, put a price target of $62 a share on Red Rock, 26 percent higher than last week’s share price.

"After a period of distractions and emerging from the pandemic with a streamlined cost structure, we see Red Rock reverting to the tried-and-true Station Casinos playbook: drive strong free cash flow, grow Las Vegas locals revenue at existing properties, and use its land bank to expand with the market and develop new casino properties,” Politzer wrote.

Largely ignored

Beyond the union and the company, there is little evidence that Station Casinos customers and the general public have much if any interest in the ongoing labor matter. One long-time gaming industry veteran called the dispute “white noise” and most observers have long since tuned out the distraction.

“To a large extent the investment community has been less focused on Red Rock Resorts’ labor union disputes,” Truist Securities gaming analyst Barry Jonas. “Red Rock is seen as offering above-market employee benefits, suggesting any disagreement is less about financial implications and perhaps more about control.”

Global Market Advisors partner Brendan Bussmann said the organizing effort has devolved into a dispute that has become deeply personal and there is “mutual disdain” on both sides of the debate.

“I do not think the average consumer or the investor cares about this long-standing battle,” Bussmann said. “Consumers will get annoyed if they have a hard time getting into a property. Investors could be hurt by some additional labor costs. But in the end, it is not going to change the (impression) of Red Rock Resorts from either point of view."

The focus is Station Casinos

Throughout the dispute, the Culinary negotiated collective bargaining agreements with Strip and downtown casinos in 2002, 2007, 2013 and 2018. The current contracts expire in 2023.

Taylor said the union hasn’t “ignored” other locals gaming companies as potential organizing targets. Red Rock Resorts is the largest locals gaming operator, which follows the union’s strategy, be it in organizing employees or dealing with contract negotiations.

“You go after the largest companies first and then the smaller companies,” Taylor said. “Station clearly has the most properties in the local market. When it comes to contracts, that’s why we deal with MGM (Resorts International) and Caesars (Entertainment) first. They are the biggest and have the most properties.”

Boyd Gaming, which operates 28 casinos in 10 states including four casinos in the Las Vegas locals market, has contracts with the Culinary at two downtown Las Vegas casinos – Fremont and Main Street Station – and with affiliated unions at IP Biloxi and Sam’s Town Tunica in Mississippi and Blue Chip in Indiana.

Labor experts noted it could be a matter of devoting union resources toward one target.

“Until there is success with Station Casinos, it is sort of useless to talk about other properties in the neighborhood market,” Taylor said. “They are the biggest.”

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