Combating Recognition By Extortion: Employer Responses To Union Corporate Campaigns

Monday, March 1, 2004 - 01:00

Losing the battle for the hearts and minds of American workers, organized labor has turned increasingly to "corporate campaigns" to replenish its shrinking ranks of paying members. Through the use of various coercive devices, these campaigns are designed to compel (Herb Northrup of Harvard calls it "extort"1) employers to permit what is essentially "top down" organizing, denying employees the right under the National Labor Relations Act to a secret ballot election.

The technique was first used successfully by the Amalgamated Clothing and Textile Workers Union in the mid seventies against JP Stevens. Today, corporate campaigns are being used by the SEIU in its "justice for janitors" campaign and the UFCWU and other unions targeting such employers as WalMart. In another form, the Communications and Culinary unions, among others, have been successful at bargaining tables to get neutrality and other agreements designed to avoid representation elections supervised by the National Labor Relations Board (NLRB). Corporate campaigns present difficult legal and practical issues for employers and their lawyers, which is one reason why they have been so successful.

Corporate campaigns can be separated into several categories:

• Workplace pressures, including "working to rule," demonstrations, multiple grievances and other devices (including handbilling in front of private homes or other non-work places, such as high school athletic events) calculated to embarrass supervisors and managers and/or interfere with production.

• External approaches to business partners, including vendors, sources of traditional financing, market makers and institutional investors, outside board members and customers to enlist their assistance (usually motivated by fear) to put pressure on the employer to give into the union's recognition /organizing demands.

• Combinations with community activist groups to advocate for and organize consumer boycotts of products or services.

• Negative publicity campaigns, seeking to place the company in a bad light, often using rent-a-celebrities or other prominent persons.

• Stockholder suits and other disruptive actions with stockholders and during stockholder events, casting the company and its managers in a bad light.

• Filing of multiple contests or complaints with regulatory or enforcement agencies, particularly those having to do with health and safety, payment of wages, environment, zoning, unfair labor practices and securities for the purpose of interfering with the operation of the business, sapping the organization of its focus or resources or demonstrating the employer's irresponsibility and callousness toward and unfairness to workers or the community at large.

Corporate campaigns, along with other particularly troublesome organizing techniques such as stripping and salting, have at their core threatening the viability of the organization or the employment security of managers. The price demanded for stopping the activity is the company's agreement to recognize the union as the representative of the company's employees without a secret ballot election or an agreement to be neutral to or, in some cases, supportive of the union's efforts to organize the company's employees. In some cases, this agreement includes the employer's handing over the home addresses and telephone numbers of all of its employees and providing access, not only to the worksite, but also to the company's internal communications systems, such as emails. As noted above, corporate campaigns are really not about winning over the hearts and minds of employees, as contemplated by the NLRA. Rather, they are calculated to achieve top-down organizing or, at least, a one-sided forum in which there is no dissenting or opposing point of view presented to the employees and no opportunity for the employees to express their opinions in a secret, non-coercive atmosphere.

Over the years, employers have attempted many different kinds of self-help and legal actions to combat these organizing tactics, few of which have been entirely successful, including

• Discharging employees for disloyalty, release of confidential information, disparagement of the company or products, interference with production and other similar workplace infractions requires, at a minimum, that the employer leap high hurdles before the NLRB. With respect to disloyalty related charges, for example, the employer must demonstrate that the employee's activity or statement was malicious or knowingly false and was unrelated to a term or condition of employment. Interference with production, such as "working to rule" are extraordinarily difficult to prove and, even when proven, may not be viewed by the NLRB as unprotected by the NLRA.

• State law actions of defamation, trespass, trademark violations, tortuous interference, and abuse of process similarly must navigate through issues of preemption and free speech and, unless there is actual proof of malice, knowing falsehood or violence, are not likely to survive dispositive motions.2

• Federal court actions based on Section 303 of the NLRA, antitrust laws and RICO have been likewise of limited value, except in very factually narrow situations. Those situations, however, appear now to be broadening, at least as to those utilizing RICO.

Indeed, in spite of their dismal success record to date, lawsuits against unions engaged in or threatening activities calculated to be destructive to the business of the employer may hold more promise now than they have at any time in the last thirty years.

In 2002, the Supreme Court reworked the Labor Board's use of Bill Johnson's Restaurant3 in BE&K Construction Company4 and now employers can look more realistically at suing the responsible unions without fear that losing, by itself, will result in an order from the Labor Board to pay all of the union's legal expenses. Also, the settlement of Bayou Steel5 leaves open the viability of frontal attacks based on RICO and state extortion statutes.

Bill Johnson's Restaurants grew out of an organizing drive during which the employer fired the senior waitress, allegedly for leading an organizing effort. The union picketed the restaurant, urging a boycott, asserting that the manager was guilty of sexual harassment and claiming that the facility was unsanitary. The employer filed an action to enjoin the picketing on the basis, inter alia, that the statements were defamatory and that the picketers harassed customers. The union countered with a complaint that the suit was retaliatory for the exercise of rights protected by the NLRA. The NLRB agreed with the union and ordered the employer to withdraw the lawsuit. On appeal, the Supreme Court upheld the Board's action and, in the process, apparently established two rules: 1. where the Board seeks to enjoin an active unpreempted lawsuit, it must find that the suit was unfounded and that it was brought with a retaliatory intent, and 2. where the Board seeks to adjudicate rights after an unpreempted lawsuit was resolved against the employer, the Board need find only that the suit was brought for a retaliatory reason.

In the years following the decision in Bill Johnson's, the Board applied the rules almost mechanically. Where the lawsuit in question was preempted by federal law, the Board found that continuing the lawsuit was an automatic 8(a)(1) violation.6 Where the underlying lawsuit was not preempted and was still ongoing and the Board concluded that it was without merit and brought for a retaliatory reason, the Board directed the employer to withdraw it and to pay the legal fees and costs of the unions. Where the lawsuit had been resolved against the employer, the Board would take the resolution as a determination of lack of merit and move directly to a determination of the retaliatory intent issue. If a retaliatory intent was found, the Board ordered the employer to pay the fees and costs of the union.

The Board's application of the Bill Johnson's rules have become a substantial deterrent to employers who wish to obtain some protection against the predation of corporate campaigns by filing a lawsuit over what they perceive to be illegal conduct by the union. The specter of having to pay the legal fees and costs of the union in the event the lawsuit failed and the adverse publicity attendant to a Labor Board injunction meant, for most, that they should not even try the legal route.

However, in 2002, the Supreme Court considered how the Board had applied its Bill Johnson's rules in BE&K Construction Company and, the process, opened a crack of potential relief to targeted employers. BE&K had filed an antitrust lawsuit against several unions and their council because of their repeated oppositions to the company's toxic waste permits and their multiple lawsuits under the toxic waste ordinances. The Supreme Court first disposed of the "rule" pertaining to resolved lawsuits, saying that, since the underlying lawsuit in Bill Johnson's was ongoing at the time of the Board's action, anything which the Court had said about resolved lawsuits had been dicta. The Supreme Court then went on to hold that, so long as a litigant had a good faith belief that it's lawsuit had merit, the lawsuit could not be enjoined without violating the litigants right to petition under the Constitution. "As long as a plaintiff's purpose is to stop conduct he reasonably believes is illegal, petitioning is genuine both subjectively and objectively."7

As a result of this decision, employers may bring actions against corporate campaigning unions to stop what is reasonably believed to be illegal activity without fear that a loss of that lawsuit will automatically bring an assessment from the Board of the union's defense costs and fees.8

BE&K Construction Company has special significance to those who may wish to use an action like that filed by Bayou Steel. Bayou Steel endured a nearly four year corporate campaign that involved complaints to multiple regulatory agencies, involvement of numerous politicians, threats to banks and corporate directors and adverse public relations. Seeking relief, Bayou Steel countered with a RICO action, asserting that the conduct of the union was in violation of the state's extortion laws. Following discovery and just prior to the date on which Bayou Steel's Response to the Steelworkers' Motion for Summary Judgment was due, the case was settled with a confidential agreement (October 29, 1997). Bayou Steel fervently believed that the union had engaged in illegal activity and clearly the lawsuit would not have been filed but for the union's desire to represent the employees. How the case would have been decided is, of course, unknown. However, we can speculate that, if brought today, after BE&K, the employer may not have settled or the union may have given up its activities.

At a minimum, employers should be reassessing any prior rejections of the use of creative legal actions to stop or retard corporate campaigns. The Supreme Court has assured that the Constitutional right of petition applies in this arena, as well as in all others, in spite of the best efforts of the Labor Board.

Further, employers should not sell short the value of positive publicity, such as that which is being used effectively by WalMart. Where the public, investors, vendors and regulators have a good image of the company as an employer, the union and its advocates can be neutralized as strident, shrill and motivated by things other than the welfare of the employees.

Finally, there is no substitute for internal employee policies and programs which are designed specifically to create a workforce which is resistant to any approach by a union organizer. In spite of some recent statements by some AFL-CIO officers that they are going to go after larger, more sophisticated employers, unions continue to seek the most vulnerable. They are, after all, businesses which need to be somewhat conscious of their returns on investments. Having employee systems and supervisory training programs focused on how to provide employees with the kinds of things which make unions most attractive but without the adversarialism and cost remains the best way to stay off the union's radar screen.

Once you become a target, however, a strategy which includes legal actions on varied and broad fronts no longer should be excluded from consideration because of the risk of a mechanical assessment of all of the costs of all parties if the action turns out to be unsuccessful, no matter in how much good faith the matter was initially brought. The process of resistance, alone, may be sufficient to get the organizers to move on to other prey or modify their conduct.

1 Northrup, Herbert R. and Steen, Charles H., “Union ‘Corporate Campaigns’ as Blackmail: The RICO Battle at Bayou Steel,” 22 Harv. J. L. & Pub. Pol’y 771.
2 See Edward J. DeBartolol Corp. v. Florida Gulf Coast Building and Construction Trades Council, 485 U.S.568 (1988); see also Linn v. Plant Guard Workers Local 113, 383 U.S. 53 (1966) and its progeny.
3 461 U.S. 731 (1983)
4 122 S. Ct. 2390 (2002)
5 Bayou Steel Corp. v. United Steelworkers of America, No. 95-496-RRM, 1996 WL 76344 (D.Del., October 10, 1998). See also”Union ‘Corporate Campaigns’ as Blackmail: The RICO Battle at Bayou Steel,” Herbert R. Northrup and Charles H. Steen, 22 Harv. J.L. & Pub. Pol’y 771, 1999.
6 Loehmann’s Plaza, 305 NLRB 663 (1991); See also Weiss Mkts., 325 NLRB 871 (1998); Farm Fresh, 326 NLRB 997 (1998).
7 BE&K Constr. Co., 122 S.Ct. at 2401
8 See as cautionary Allied Mechanical Services, Inc., 2003 N.L.R.B.LEXIS 301 (June 10, 2003) and Children’s Hospital Medical Center of Norther California, 2003 N.L.R.B. LEXIS 646 (Sept. 30, 2003).

James R. Redeker is Vice Chairman of WolfBlock, Chairman of the Employment Services Practice Group, and a member of the firm's Executive Committee. He represents both organized and unorganized companies in their personnel and labor relations. Mr. Redeker has served as special counsel to some of the nation's largest companies to assist in solving unusual and difficult personnel and culture change issues.

Please email the author at jredeker@wolfblock.com with questions about this article.