Last week’s Boston Globe has a story about the recent dismissal of a criminal case against two Boston city officials for their involvement with an alleged union extortion scheme designed to pressure non-union businesses to give work to members of the local Teamsters Union.  (The reporters were kind enough to seek my comments for the article.)  The case in Boston is notable because its outcome diverges from similar cases brought in Philadelphia and New York, which resulted in convictions.

A.  Background on the Hobbs Act.

Federal indictments under the Hobbs Act, 18 U.S.C. Section 1951, for actions taken to “entice” non-union contractors and developers to hire union members is a subject matter that I have written about on this blog.  The reason for my interest is not only because I represent a number of merit shop contractors and developers (as well as union contractors) but because of several recent high profile cases indicting union officials for extorting contractors and developers into hiring union members.  Those in Philadelphia are aware of the indictments involving Ironworkers Local 401, which involved its use of “goon squads” and other tactics to obtain work for its members and signatory contractors.  That indictment ultimately lead to the conviction of several Ironworkers, including its President.  That case came on the heals of a similar case involving the Operating Engineers.

The Hobbs Act makes it a federal crime to extort or attempt to extort a business or individual engaged in interstate commerce.  However, the common understanding of extortion differs from the technical meaning of extortion found in the Hobbs Act.  Under the Hobbs Act “the term “extortion” means the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.”  (The reason for my highlighting of these terms will become clear in a minute.)

For years, because of a U.S. Supreme Court Case U.S. v. Enmons, the prevailing view was the unions and their officials were immune from liability under the Hobbs Act.  In Enmons, the Supreme Court explained that a Hobbs Act violation involves two things: (1) actual threatened force, violence, or fear (means) and (2) the obtainment of property of another (ends).  So, the means and the ends must be illegitimate before a Hobbs Act violation can occur.  The Court in Enmons reasoned that the property that was allegedly extorted was higher wages for union members and since the union had a legitimate claim to those wages it could not extorted “the property of another.”  The Court made clear that the union’s means “force, violence, and fear” could still be prosecuted under state law, but for a federal law to be broken the both elements would need to be met.

Subsequent decisions, including decisions in the Ironworkers and Operating Engineers cases, walked back the seemingly broad breadth of the holding in Enmons.  Several courts noted that Enmons should be limited to its facts.  Those being where a union was engaged in an active strike against an employer with whom it had an existing collective bargaining relationship.  Compared to a situation, such as with the Ironworkers and Operating Engineers, where there was no such relationship between the unions and the victims.

Now, as I discuss in the Boston Globe, the federal court’s decision to dismiss the indictments against the two Boston officials and the previous ruling by the 1st Circuit Federal Appeals Court could make it harder for federal prosecutors to indict union officials or it could just further clarify the contours of the Hobbs Act intersection with federal labor law.

B.  The Boston Teamsters Case: The Ends and the Means.

In United States v. Burhoe (1st Cir., 2017), the president of the local Teamsters union and an associate were indicted for extorting non-union businesses into employing Teamsters on projects.  After a six-week trial, the jury found them guilty, under the Hobbs Act and related federal charges.  The defendants appealed their convictions under the Hobbs Act and the 1st Circuit Court of Appeals overturned their convictions reasoning that their conduct in pressuring non-union firms to employ Teamsters did not rise to extortion under the Hobbs Act.

The Court reasoned that under the Hobbs Act both the ends and the means of the extortion must be unlawful.  Thus, as in Enmons, to be guilty under the Hobbs Act the defendant must have no legitimate claim to the property obtained and his means of obtaining it must also be wrongful.  The Court noted that threats of violence or physical harm are almost always a wrongful means under the Hobbs Act.  The Court also said threats of economic harm could be wrongful.  It becomes wrongful when the defendant has no legitimate right to the property sought.

The Court then examined the indictment as it related to the non-union firms.  The indictment alleged that the defendants extorted wages for imposed, superfluous, and unwanted labor through the threat of economic harm and physical harm to the company and others.  The Court then examined the underlying cases of extortion.  While in each case the union officials were aggressive and blunt and threatened a picket line, the Court noted that no bodily harm or property damage was threatened or occurred.

Defendants challenge to the conviction hinged on whether the trial court properly instructed the jury on extortion.  Defendants argued that the trial court should have instructed the jury that the labor was superfluous, unwanted, and fictitious.  In other words, the wages extorted (the ends) would have to be in return for no show jobs.  The Court reasoned that if the union members actually worked, there could be no Hobbs Act violation, at least when the pressure was limited to threats of picketing.  The Court held that picketing to pressure an employer to hire union members was protected under the National Labor Relations Act (this is not correct but it was not a central issue in the case).  Thus, the Court reasoned anytime a union set up a picket line to protest non-union work it could result in a Hobbs Act violation if the employer ultimately caved to the union’s demands.

C.  The Ironworkers and Operating Engineers Cases.

In contrast, the federal courts in the Dougherty and Larson cases reached different conclusions regarding the intersection of the Hobbs Act and the National Labor Relations Act.  These cases are also in contrast in two ways.  First, in both cases, the union’s means was threats of and actual violence and property damage (in the Doughtery case the Ironworkers were alleged to have burnt down a Quaker meeting house).  Second, neither court held that the wages extracted had to be for fictitious or no-show services for their to be a Hobbs Act violation.

The Larson case goes further and shows the divergence on the issue of a legitimate claim to property.  In Larson, members of the Operating Engineers were indicted under the Hobbs Act – and related federal criminal statutes, including RICO.  The indictment alleged that the union members sought to obtain wages and other property interests from non-union firms using the means of actual violence, sabotage of property, and threats.

The defendants moved to dismiss the indictment under Enmons arguing since the ends were legitimate the means were irrelevant.  The magistrate judge recommended dismissal of the indictment based on Enmons.  But, the district judge disagreed.

In contrast to the Burhoe ruling, in Larson the trial judge rejected the argument that flipping non-union jobs to union jobs was a legitimate union objective.  The trial judge succinctly framed the issue in labor union extortion cases stating:

 If the union acts in furtherance of a legitimate labor objective, the use of force or violence incident to the pursuit of that objective is not subject to Hobbs Act liability (although it might be subject to prosecution under other provisions). However, if a union’s objective is not legitimate, Enmons will not protect it from prosecution under the Hobbs Act.

As the Court explained, “[i]n a legitimate strike situation, the union has a lawful platform on which to seek higher wages and better terms for its members. However, when a union pursues agreements with new employers through primary tactics of violence, threats, and intimidation, it does not have a lawful platform on which to claim the property of the employer. The use of such tactics is therefore “wrongful” under the Hobbs Act.

D.  Do the means matter?

Burhoe’s ultimate conclusion that a union official does not commit extortion simply by threatening a picket line is not the problem.  In fact, that conclusion is probably correct.  The problem for prosecutors at least in the 1st Circuit is that it concluded that the wages extorted must be for fictitious work, at least in part. In Burhoe, the Court stated “It follows that the district court erred in instructing the jury that it could find extortion where the defendants sought to obtain “imposed, unwanted, superfluous or imposed, unwanted, and fictitious work” by using “fear of economic loss,” which encompasses picketing protected under the NLRA.”  The Court continued by explaining “the disjunctive construction impermissible relieved the government from having to prove that the work was “fictitious” and thus could have allowed the jury to find a violation merely because the union sought to turn around nonunion jobs to maintain the prevailing wage through such a threatened picket, and the employer did not want to use the union workers to perform the work.”

On one hand it could be said that under Burhoe is limited to its facts.  Thus, when the means are limited to threats of and actual “peaceful” picketing, then the government must show that the ends were for no-show work.  In other words, contrary to Enmons, the means do matter.  Larson may actually shed some light on this when it held that when a union is attempting to obtain work for its members it “may [not] use an unlimited array of coercive tactics to secure such an agreement with an employer.”

However, on the other hand, if Burhoe is limited to its facts, then the Court’s analysis does not make any sense because if the ends are legitimate property then, as Enmons holds, the means to obtain it, while potential violating other laws, does not violate the Hobbs Act.  So, it would not matter if the means were peaceful picketing or a threat to break the legs of an owner of a non-union firm.  Therefore, under Burhoe’s reasoning any conduct, including property damage or physical harm, that results in a non-union employer agreeing to hire union members is not punishable under the Hobbs Act.  As in Enmons, the violence to property and body may be punishable under state law, but the conduct does not violate the Hobbs Act.

Ultimately, this seemingly inherent contradiction in Enmons must be resolved by Congress or the Supreme Court.  Before then, case law suggest the means do matter.  Threatened an actual violence to person or property is going to be grounds to indict under the Hobbs Act, while aggressive behavior and threats of a picket line may prove more challenging.

The Pennsylvania Superior Court gave general contractors and non-union real estate developers a early Christmas gift and a bit of positive news going into the New Year in a recent decision that upheld (for the most part) a trial court’s preliminary injunction enjoining labor unions from engaging in mass picketing and gate blocking of a construction site.

In Turner Construction v. Plumbers Local 690 (the case name contains a hyperlink that will take you to a copy of the opinion), the Pennsylvania Superior Court was asked to consider whether a preliminary injunction that prohibited picketing within twenty-five feet of the entrance to a construction site and limited the number of picketers to five was overly broad.  In short, the Superior Court held that the twenty-five feet restriction was a reasonable condition to prevent the picketers from blocking ingress and egress to the site.  However, the Court held that the restriction that limited the number of picketers to five was an unreasonable restriction on the picketer’s First Amendment rights.

The case is important for general contractors using both union and non-union subcontractors and real estate developers for two reasons. First, it reaffirms when a trial court may issue an injunction against a labor union’s picketing activity.  Second, it provides guidance on how far a trial court may go in restricting a union’s picketing.

An abbreviated version of the facts is as follows.  Turner was the general contractor on a project owned by Children’s Hospital of Philadelphia that was being built in Montgomery County.  Turner subcontracted with both union and non-union subcontractors.  However, its plumbing subcontractor was a non-union firm.  Members of Plumbers Local 690 began picketing the site to “protest” the horror of a non-union firm performing work on the project.  One day the Plumbers held a rally at the site which blocked anyone from entering the project, prevented deliveries, erected the ubiquitous inflatable rat, and trespassed onto the project. The local police were called and responded. (However, they did not do much concerning activity that would have landed you or me in jail.)  Turner immediately filed a complaint with the Montgomery County Court of Common Pleas seeking an injunction preventing such activity.  As usually, the union had no defense to its clearly illegal activity and agreed to a stipulated preliminary injunction.  That injunction prohibited picketing within 25 feet of the project’s entrance and limited the Plumbers to five total picketers.

Typically, the Plumbers ignored the court’s injunction.  Then, the Plumbers held a “rally” with two other unions, the Sprinkler Fitters and Insulators.  The rally had over 180 participants.  The 180 participants blocked the project’s entrances and prevented deliveries.  The participants even struck a festive tone and erected a tent with a cooler and food right in front of the entrance (Note: I have noticed that the refreshment tent is a picketing trend.  The coffee tends to be very good and the pretzels fresh.  Also, why not replace the rat with a band?)   The local police and Montgomery Sheriff’s Department were called to intervene but they would not dampen the revelers’ mood and the project ground to a halt.

Thereafter, Turner moved to amend its complaint to include the two unions who participated in the rally and sought a preliminary injunction against them as well. After a hearing on the matter, the trial court entered an injunction against the the Sprinkler Fitters and Insulators unions.  That injunction extended the original injunction to those unions.  In doing so, it limited the total number of picketers from all three unions to 5 (or as the Superior Court expressed 1.66 picketers per union).   The unions appealed.

On appeal, the Superior Court addressed the following issues:

1.  Did the union’s activities amount to a “seizure” under Pennsylvania’s Anti-Injunction Act?

2.  Was the injunction overly broad in violation of Pennsylvania’s Anti-Injunction Act?

Injunctions Under the Pennsylvania Anti-Injunction Act

Under Pennsylvania’s Anti-Injunction Act, courts are prohibited from issuing injunctions enjoining activities arising out of a labor dispute, unless one of the enumerated exceptions applies.  One exception is when a labor union “seizes” an employer’s plant.  Commonwealth Courts have repeatedly held that a seizure occurs when a labor union’s actions block lawful ingress and egress into a project.  Relying on a body of case law, the Superior Court ruled that the unions’ actions amounted to a seizure of the project thus excepting the matter out of Pennsylvania’s Anti-Injunction Act.  Given the well settled law in this area, this part of the Court’s decision was not a surprise.

However, the Court then clarified what is an apparent area of confusion.  It held that when obtaining an injunction against mass picketing that blocks access to a project, the court should apply general equity rules rather than the more stringent rules from an injunction set forth in the Anti-Injunction Act.

Moreover, and perhaps more importantly, the Superior Court held because the Anti-Injunction Act does not apply to mass picketing injunctions, the restrictions of when an injunction can apply listed in Section 206f also do not apply.

The Breadth of the Injunction

The Court then addressed whether the injunction’s prohibition on picketing within twenty five feet of a gate and limitation on the number of picketers unnecessarily impinged on the union’s free speech rights.  First Amendment considerations are always present when seeking to enjoin picketing.  Court’s must balance a party’s right to protest a grievance, albeit through unsavory and annoying means, with a party’s property and personal rights.  Thus, any injunction must be narrowly tailored to achieve the purpose of maintaining order.  As to the distance restriction, the Court held that it was narrowly tailored and reasonably necessary to prevent the unions from blocking access to the project.  However, as to the number of picketers, the Court held that it was overly broad and unnecessary restricted the union’s free speech rights.  The Court did not dissolve the injunction.  Rather, it remanded the case to the trial court to tailor a less restrictive number of picketers to achieve its goals.  The Court does not state the minimum number of picketers necessary to pass the restrictive test.

The Future of the Decision

While this decision is important, it may be short lived.  The unions have already asked the Superior Court to rehear the case, en banc, that means in front of all 9 Judges instead of 3.  If that request is denied or if the en banc panel reaches the same decisions as the 3 judge panel, then the unions will no doubt appeal it to the Pennsylvania Supreme Court.  That is where things get interesting.  This week 3 new justices will be sworn in to the Pennsylvania High Court which will tilt the balance of power on the Court 4-3 in favor of Democrat judges.  The 3 new Justices were heavily supported by organized labor in their election efforts.  What impact, if any, on an appeal of this case will have to be seen, but it cannot be ignored.

The Take Away (for now)

• Pennsylvania courts can issue injunctions prohibited picketing that blocks entry to a project.
• Pennsylvania courts can limit the scope and location of the picketing to achieve the goal of maintaining access to the project.
• Normal equity rules apply in deciding to issue a preliminary injunction enjoining mass picketing at project gates rather than the more restrictive test articulated in the Anti-Injunction Act.

 

On Friday 28 March 2014, I was quoted in the Philadelphia Business Journal’s article “Disunion in the house: The steep price we pay,” regarding the negative economic impact caused by the leaders of the Philadelphia Building Trades (Big Labor).  You can read the article here or download a pdf version here.

News of the indictment of 10 members of the Ironworkers Union, left many wondering “What took them so long?”  As any developer or merit shop contractor will tell you, the actions that the Ironworkers are alleged to have engaged in are not solely the purview of the Ironworkers.  Indeed threats, violence, and property destruction are the modus operandi for many trade unions trying to obtain work for their members.

Those cheering the news can thank the federal court for the Western District of New York for its decision in U.S. v. Larson, which was issued in September 2011.  The case also explains why federal prosecutors have for a long time been hesitated to indict members of organized labor for actions that would land anyone else in jail.  The case also could signal a wave of indictments against organized labor to come.

The Larson case involves the indictment of members of the International Union of Operating Engineers under the RICO law, which is the same law used to indict the Ironworkers.  Like the indictment in the Ironworkers case, the indictment in that Operating Engineers case alleges that the Operating Engineers made threats, engaged in violence, and destroyed property in an effort to get merit-shop (non-union) contractors to sign a collective bargaining agreement with the union.

The defendants moved to dismiss the indictment arguing that under a under a controversial 1973 U.S. Supreme Court decision, U.S. v. Enmons, which stated that act of violence by a labor union did not violate federal law, if the acts were committed in furtherance of “a legitimate union objective.”  In Larson, the defendants argued that their ultimate objective, to get non-union contractors to sign collective bargaining agreements, was “a legitimate labor objective,” and, therefore, they were immune from prosecution under Enmons.

The Larson court rejected that argument and distinguished Enmons.  The Larson court pointed out that the union in Enmons was in a legitimate strike with the employer.  The Court pointed out that other courts had refused to extend Enmons to claims where a union uses the threat of violence to obtain a new collective bargaining agreement from an employer not previously a signatory to it. The Court also distinguished the special way federal labor laws treat construction industry employers from other industries.  In doing so, the Larson Court ripped away the veil of protection Enmons had afforded to labor unions and which enabled them to escape prosecution under the RICO laws.

It took the courts 41 years to limit the Supreme Court’s holding in Enmons, which answers the question of “what took so long?”  But in the wake of the Larson decision and in the wake of the Ironworkers indictment the question that organized labor should be asking is “who is next?”

 

 

With a high number of their members still out of work and an increased willingness of owners to build projects using non-union construction in traditional union dominated markets, trade unions have increased their picketing activity on projects using non-union labor.  Here is a list of frequently asked questions we receive from owners and contractors working at those projects.

1.  Can you get me an injunction against the union?

No.  Probably the most frequent request we receive from clients subjected to a picket line is asking for an injunction. Both federal and state law prohibit a court from issuing an injunction prohibiting peaceful picketing.  Plus, the First Amendment permits a union — or anyone else — from peaceful protesting the grievances.  (And, as much as I abhor the unions tactics, I am incredibly thankful that I live in a country that gives them the right to protest.)

he operative word here is is a “peaceful” protest.  The unions do not enjoy an unlimited right to picketing.  The unions cannot block entrances, engage in violence, or destruction of property.  Those activities can be controlled by the courts through injunction relief.

2.  Can you control the location of the picketing?

Yes.  Federal labor law prohibits a union from picketing an employer not subject to the labor dispute.  It is important to understand who the employer is.  Owners and general contractors who subcontract their work are not considered employers of the trade contractor being picketed by the union.

Because multiple employers — subcontractors – are working on a construction site, it is possible to control the location of the union picket line through the use of a tw0-gate or dual gate system.  Under federal law, if a dual gate system is properly established, a union must confine its picketing to the gate used by the contractor subject to the labor dispute.

For example, if the electricians union is picketing your project and you establish a two gate system, the electricians union must limit its picketing to the gate used by the electrical subcontractor.  If the union fails to honor the two gate system, you can bring an unfair labor charge with the National Labor Relations Board or sue the union in federal court.

However, the two gate system must be properly established and maintained for the charge to stand.

3. I do not employ anyone working on the construction project.  Can the unions picket me?

No.  Under federal law, it is illegal for a union to threat or coerce a neural employer from doing business with a contractor subject to a labor dispute.  Therefore, the unions can only picket the contractor that is employer workers in the trade that the union represents.  If unions are picketing you and you do not employ members of the union’s trade, you can bring an unfair labor practice charge against the union or sue the union in federal court.

4. Can I be terminated and replaced by a non-union contractor because of the picketing?

No.  If you are a subcontractor that has been terminated and replaced by a union contractor because of union picketing, you could be entitled to damages against the general contractor or the union.  Under Section 303 of the Labor Management Relations Act anyone injured by an unfair labor practice can sue in federal court to recover damages. Therefore, if the union pressured the party who you maintained a contract with to terminate you and replace you with a union contractor, you could sue the union in federal court for damages alleging that you were damaged by an unfair labor practice.