Background: Soichiro Fukutake, owner of Berlitz’s parent company Benesse Corp. is on the Forbes list of the world’s billionaires. In 2009 Fukutake is ranked 17th (up 6 from 2008) in Japan with a net worth of $1.4 billion. Benesse Corp. net sales totaled ¥384 billion in fiscal 2007 (which ended March 31, 2008), an 8.4 percent increase over a year earlier; operating profits hit ¥34.9 billion, up 11.4 percent on fiscal 2006, according to the company’s Web site, which boasts of “the fifth consecutive year of record-breaking performance for the company. Benesse’s “Language Company” sector — dominated by flagship Berlitz — was running a loss back in fiscal 2004, accounts for some 16 percent of the parent company’s total sales and 18 percent of its profits. You can read more background on the cause of the strike here.
It has been 14 months since members of the Berlitz General Union Tokyo (Begunto) first downed chalk and launched rotating strikes against the language school Berlitz Japan.
The strike has grown into the longest and largest sustained strike by language teachers in Japan. While about 500 Nova teachers struck during that firm’s collapse in 2007, the action only lasted a day.
The dispute entered a new phase on Dec. 3 when, after nearly a year of strike action by union members, Berlitz Japan served notice they were suing the five teachers who serve as volunteer Begunto executives, as well as two officials of the National Union of General Workers (NUGW) Tokyo Nambu: President Yujiro Hiraga and Louis Carlet, the deputy general secretary and case officer for Begunto. The suit also names NUGW Tokyo Nambu and its Begunto branch as defendants.
Claiming the strike is illegal and that the union is trying to damage the company, Berlitz Japan is suing for ¥110 million in damages from each defendant.
“I first heard officially about the suit when a subpoena was delivered to my door in early December,” recalls Catherine Campbell, Begunto Vice President. “It was a shock to see myself and the others named individually as defendants.”
“The amount of money is so large that it didn’t seem real to me,” says Campbell. “It’s obvious that no English teacher has ¥110 million lying around, so I find it hard to believe that financial compensation is the real objective of their suit. The real objective is to intimidate and weaken the union.”
For Carlet, the suit also came as a surprise. “We were shocked because we make every effort to follow all Japan’s laws. We also felt frustrated that rather than concede the union’s strength and make meaningful concessions, Berlitz Japan has decided to spend a lot of money to sue us based on a frivolous claim that the strike is illegal.”
The company’s resort to the courts is unusual, explains Takashi Araki, a law professor at the University of Tokyo. “It’s not often that Japanese employers sue striking workers for illegal actions. An employer must bear the burden to prove the illegality of the strike, the amount of damages and causal relationship between the illegal strike and the damages. It’s not easy.”
On precedents for this kind of action, Timothy Langley, an American lawyer working in Tokyo, called the suits “very unusual,” adding, “but once again, it’s a tactic.” Langley predicted that like the vast majority of civil court cases in Japan, the Berlitz dispute would be settled out of court through negotiation.
The Begunto strike began on Dec. 13, 2007. Seeking the first across-the-board pay raise for Berlitz Japan teachers in 16 years, the union had a list of nine demands, including a 4.6-percent raise for all employees (teachers and staff), a one-time bonus equal to a month’s pay, and enrollment in Japan’s health insurance and pension system.
Inequalities between old and new teachers influenced the decision to strike. According to Begunto’s Web site, the number of lessons taught has increased from 30 per week for teachers hired in the early 1990s to 40 lessons a week for teachers hired after 2005, with no corresponding increase in the ¥250,000-a-month starting salary.
“The strike was an inevitable result of the new contracts introduced in 2005,” says Campbell. “Berlitz has had a history of slowly reducing conditions for new hires every once in a while, and up until now the changes have been small enough and incremental enough not to inspire a major backlash. This time they simply went too far, and created a pool of new hires working alongside teachers on older contracts who had obviously better conditions; teachers old and new felt the unfairness of this.”
The financial health of Benesse Corp., Berlitz Japan’s parent company, also influenced the timing of the strike. In their annual report for the financial year ending March 31, 2008, Benesse recorded their highest-ever earnings. Operating income grew 11.4 percent and Berlitz International Inc. achieved its best result since being bought by Benesse. Operating income for Benesse’s language company division rose 36 percent from the year before to ¥6.35 billion, in part due to higher revenues and profits at Berlitz International, which benefited from “an increase in the number of lessons taken worldwide, particularly in Japan and Germany,” according to the report.
Since the start of the strike, more than 100 English, Spanish, and French teachers have participated in spot strikes of almost 3,500 lessons. Carlet explained how the strikes work: “Nambu and Begunto notify management who will strike and from what time to what time. Sometimes they last only one lesson, other times several lessons.” During the strike, 32 of 46 Kanto-area schools have had teachers walk out.
In addition to the traditional Japanese labor-dispute staples, such as sound trucks and leaflet hand-outs, Berlitz’s striking teachers have also been taking advantage of what every hip industrial action requires nowadays: a Web site and YouTube videos.
“Internet technology has given us a chance to go almost head to head with the company, which has far greater financial and public relations resources to construct a positive self-image,” says Carlet. “We have used our site — www.berlitzuniontokyo.org — for general information and YouTube for visuals on our public appeals for support for the strike.”
Early in the strike the union made several concessions, reducing their list of demands down to two: a 4.6 percent base-pay raise for all teachers and staff and a bonus equal to one month’s salary. “If management makes a serious concession we will consider moving on our side even further than we have already,” says Carlet.
Management offered a raise of less than 1 percent at the end of September. Union members rejected that offer and, according to Carlet, “The union escalated their actions in October, including more strikes.” Begunto members also stepped up the number of leafleting sessions outside Berlitz schools and demonstrated in front of Berlitz’s Aoyama headquarters. “We also asked Benesse, Berlitz Japan’s parent company, to meet for talks. Berlitz began sending protests and threats of litigation soon after that.”
When reached by phone, Berlitz Japan representatives declined to comment on either the lawsuit or the strike.
The first court date for Berlitz Japan’s lawsuit on Jan. 26 proved anticlimactic. The more than 30 union members and supporters — as well as a contingent of Berlitz Japan managers — who came to the hearing at the Tokyo District Court didn’t have the chance to hear any legal arguments of substance.
The lawyers for Berlitz Japan failed to submit their written arguments for why the strike was illegal. They informed the judge that it would take until March to prepare because of the time required to translate documents between English and Japanese. Ken Yoshida, one of the lawyers for the teachers, expressed surprise that a language school would offer such an excuse for the delay.
Problems also arose because Berlitz Japan had failed to properly serve three of the defendants with notice of the lawsuit. The 20-minute hearing ended with the second court date scheduled for April 20. Addressing union members and supporters after the hearing, Yoshida said that the Berlitz lawyers were “obviously stalling” and wanted a protracted court fight.
The burden of proof for the case lies with Berlitz Japan, says professor Araki. “Since Japan’s Constitution and Labor Union Act guarantee the workers’ right to go on strike, employers cannot claim damages caused by legal strikes. Thus, generally speaking, it is an employer who must prove the illegality of the strike.”
However, unions must follow rules when striking. According to Hideyuki Morito, an attorney and Professor of Law at Sophia University, “There are four checkpoints as to propriety of the strike.” The striking union must be a qualified union under the Labor Union Act and the strike must be related to working conditions. The means of the strike must also be legal, so striking union members can’t occupy offices or interfere with operations. “In short, all they can do is not work ,” says Morito. Finally, unions must “try to bargain collectively with the employer before deciding to go on a strike and give a notice in advance when they will strike.”
Tadashi Hanami, professor emeritus at Sophia University, outlined what the company must prove to win. “The outcome of the court judgment depends almost entirely on whether the company can provide enough evidence to convince the judge that some of the union activities were maliciously carried out in order to intentionally cause undue damage, by disturbing normal running of day-by-day school business, thus exceeded the scope of legally protected bona fide collective actions as a kind of harassment.”
Begunto and NUGW Nambu launched their own legal challenge to Berlitz Japan, filing an unfair labor practices suit for violations of Trade Union Law on Nov. 17. The suit asked the Tokyo Labor Commission to investigate unfair labor practices by the company.
Union representatives argue that memos posted at all Berlitz Japan language schools in November that declared the strike illegal and letters sent to union members telling them to end the strike are illegal interference. “Since nothing about our strike was the slightest bit illegal, the memos and warning letters themselves are illegal interference in the strike,” says Carlet.
The unions’ suit also asks the Labor Commission to investigate Berlitz Japan’s refusal to meet the union’s pay demands and failure to provide any data on the company’s finances to the union. According to Carlet, “Management has a responsibility to explain to the union why it can’t meet our financial demands. It makes no such effort.”
As the company and the unions gear up for what could be a drawn-out fight, Campbell describes a surreal existence as the sued teachers wait for the lawsuits to wind through the legal system. “Now it just feels strange to be going to work as usual, teaching Berlitz lessons, while at the same time being accused of deliberately damaging the company.”
The next stage in the legal battle will be an open hearing at the Tokyo Labor Commission on Feb. 20 at 1:30 p.m.
Sources: Forbes Magazine and Japan Times