Secondary Boycotts

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Jan Von Bergen at the Philadelphia Inquirer reported that work on Comcast’s new tower came to a halt this morning when striking members of Local 542 picketed the Comcast tower project and other union trades refused to cross the picket line.  However, this show of solidarity (during the afternoon on the Friday before the Fourth of July) is unlikely to last past the long weekend.  Why?  Because any conduct by Local 542 aimed at encouraging a work stoppage by other union members is illegal and the companies that employ the sympathetic union members are in breach of contract if they do not work on Tuesday.

Continue Reading The Comcast Project is Not Likely to Be Shut Down Too Long

In early September a Texas jury awarded a janitorial $5.3 million against the local chapter of the SEIU.  The janitorial firm claimed that the SEIU damaged its reputation and caused it damages when it spread false, defamatory, and disparaging stories about the firm.  Specifically, the janitorial firm claimed that the SEIU told the janitorial firms customer and potential customers that the firm “systematically failed to pay its employees for all hours worked, instructed janitors to work off the clock and had fired, threatened or refused to hire janitors who supported joining a union.”  According to Law360.com, the union did this with “fliers, handbills, letters, emails, newsletters, speeches and postings on its website accused [the firm] of violating wage-and-hour and other labor laws.”

The SEIU’s apparently tactics are hardly unique. Union campaigns that use fliers, handbills, letters, emails, newletters, ect. to pressure third-parties from doing business with a targeted employer are hardly unique.  In fact, they are quite common place in Philadelphia and its surrounding suburbs, particularly with the building trades unions.  Most of the business owners of the company’s that are the target of the campaign are frustrated – to say the least – with the truthfulness of the statements contained in the union’s literature.  For example, many unions claim a non-union employers pays substandard wages or wages less than what the union pays.  However, the union has no way of know whether that is truthful or not and the many firms offer packages that are better than the union rate.

Could a suit similar to the one brought in Texas be successful in Pennsylvania?  Yes.  In the Texas case, the SEIU was sued for defamation.  Pennsylvania recognizes the tort of defamation.  In the commercial context, defamation concerning a business is referred to as “commercial disparagement.”  A plaintiff in a commercial disparaging case needs to prove the following elements: (1) the statement is false, (2) the publisher either intends the publication to cause pecuniary loss or reasonably should recognize that publication will result in pecuniary loss, (3) a loss does in fact result, (4) the publisher either knows that the statement is false or acts in reckless disregard of its truth or falsity, an (5) no privilege attaches to the statement.

In many of the union campaigns that we see, the first three elements can usually be found.  The fourth could probably be proved through discovery, unless the plaintiff’s customer outright terminates their contract, in which case the company would have other remedies against the union.  The challenge would be element 5.

A conditional privilege attaches to a commercially disparaging statement when the statement involves some interest of the person who publishes it, some interest of the person to whom it is published or some other third person, or a recognized interest of the public.  KBT Corp. v. Ceridian Corp., 966 F. Supp. 369, 374 (E.D. Pa. 1997).  However, this privileged is lost when it is abused by “publication that is the result of malice, i.e. ‘a wrongful act done intentionally or without excuse or generated from reckless or wanton disregard of another’s rights.'”
There are no know reported cases in Pennsylvania involving a case against a trade union for commercial disparagement.  This might be because of the previous difficulty plaintiff had in proven the fifth element of the claim. However, as the Texas case showed, in the digital age proving that element is getting easier. In the Texas case, the plaintiff obtained emails showing that the intent of the union was to put the janitorial firm out of business and bragging about when the firm in fact lost business.  If a plaintiff can find emails like that, it makes it very hard for the defendant to claim that it was not acting in a manner done with the intent to harm the business.

As I have blogged about before, one of the most powerful weapons contractors and owners have in combating illegal secondary activity by unions is Section 303 of the Labor Management Relations Act.  Section 303 authorizes a party to bring in action in federal court for monetary damages against a labor union who has caused harm because of illegal labor practices.

Late last year the Second Circuit Court of Appeals, which covers appeals from federal courts in New York, Connecticut, and Vermont, affirmed a $650,000 jury award in favor of a commercial sign subcontractor and against Sheet Metal Workers Local 137.  In that case, plaintiff was a commercial sign manufacturer and installer who entered into a contract with a prime contractor to Wells Fargo bank for the installation of new signs at locations throughout the New York Metropolitan area.  Accordingly to the complaint, plaintiff was not a signatory to Local 137 collective bargaining agreement.  Soon thereafter, Local 137 began threatening Wells Fargo because it was permitting the non-union sign company to work on the bank’s projects.  Local 137 engaged in classic illegal secondary activity, such as, displaying inflatable rats at Well Fargo locations, picketing Wells Fargo locations, disrupting deliveries to Wells Fargo, and causing Wells Fargo bad publicity.  Accordingly to the complaint, Local 137’s action eventually led to Wells Fargo insisting that the plaintiff be replaced with a sign company that was signed with Local 137 and plaintiff was replaced on the Wells Fargo projects.

Plaintiff sued Local 137 under Section 303 claiming that it was terminated by Wells Fargo because of Local 137’s secondary activity that violated Section 8(b) of the NLRA.  Section 8(b) prohibits a union from  threatening, coercing, or restraining a business in order to cause that business from doing business with another business.  The jury agreed with the plaintiff and awarded plaintiff $650,000 in damages.

Interestingly, based on the allegation in the complaint, Local 137 actions may not have garnered much attention from the NLRB on an unfair labor practice charge.  Especially in recent years, the NLRB has taken a restrictive view on what constitutes illegal secondary activity under Section 8(b).  Conversely, judges and juries have taken a more expansive view of what constitutes an illegal secondary activity and have not hesitated in awarding significant judgments against unions that violate Section 8(b).

Federal Courts continue to be a friendly venue for victims of illegal union actions.  Recently in Waugh Chapel South, LLC v. UFCW Local 27, the Fourth Circuit Court of Appeals joined a growing number of Federal Courts in affirming the right to recover damages against a union for illegal secondary activity.

In that case, Waugh Chapel South, a real estate developer, sued the UFCW under the Section 303 of the Labor Management Relations Act.  As we have written about previously, Section 303 provides a cause of action for victims of “unfair labor practices” as defined by the National Labor Relations Act .  In its complaint, the developer alleged that the UFCW orchestrated fourteen separate sham legal challenges against its commercial real estate project in order to force it to terminate their relationship with  Wegmans, non-unionized supermarket.  The developer, rightfully, alleged that the UFCW was engaging in an illicit “secondary boycott” under § 158(b)(4)(ii)(B) of the NLRA.

According to the opinion, the UFCW activities began in December 2006 when union leadership “set[ ] its sights on Wegmans” to mount an antagonistic campaign. According to the developer, a union executive threatened that if Wegmans did not unionize, “we will fight every project you develop where Wegmans is a tenant.”  The UFCW then directed and funded a barrage of legal challenges to the projects’ development.   None of the challenges were brought directly by the UFCW.  Rather the union funded various legal challenges by plaintiffs, who often lacked standing to challenge the development.  All but one of these cases was dismissed.

The district court granted the UFCW motion to dismiss and the Fourth Circuit overturned it.  The Fourth Circuit held that the UFCW’s “shaw” litigation could amount to illegal secondary activity under the NLRA.  Accordingly, the Fourth Circuit revived the developer’s lawsuit.

The Waugh Chapel case shows that federal courts are not willing to tolerate illegal union shenanigans.  For anyone suffering from illegal secondary activity at the hands of union, a federal action under Section 303 of the LMRA is worth consideration.

 

 

 

When unions picket a construction site to warn about a non-union contractor’s destruction of area wage and labor standards, the First Amendment does not give them unlimited protection for their actions.   Philadelphia Magazine’s Property blog has a story about an ongoing labor dispute between Philadelphia trade unions and an apartment developer that brings to the fore the intersection between free speech and unfair labor practices.

According to the story, IBEW Local 98 is protesting outside an apartment complex in Germantown.  (This particular protest is part of an ongoing feud between the developers and organized labor.)  The Union has posted signs urging people not to rent an apartment in the complex and, according to the story, the Union recently upped the ante by videotaping would be residents entering and exiting the complex.  (There is no mention of what exactly the Union intends to do with the videos.)

Local 98 claims that their protest is a legitimate exercise of their constitutionally protected right to free speech (or as we say in Philly, your right to “hoot ‘n halla’”).  This is generally correct.  The First Amendment does give a labor union – or anyone else – the right to protest a condition that they find objectionable.  So long as the protests remain – for the most part – peaceful and there is no destruction of property or blocking of entrances, there is little an owner can do to stop the protest, save for regulating the location of the protest through a two gate system.  However, because the National Labor Relations Act also regulates a labor union’s activities the matter is not simply one of free speech.

The NLRA is a body of federal law that regulates the relationship between management and labor, whether union or not.  Section 8 of the NLRA deals with labor unions and prohibits a labor union from engaging in a “secondary boycott.”  A secondary boycott is an attempt by a labor union to pressure a neutral employer from doing business with a firm that is the subject of a labor dispute.  Under the NLRA, secondary boycotts are unlawful.

Secondary boycotts have particular significance in the construction industry because the owner of a construction site that is the subject of a union protest is usually a neutral employer, who is not in charge of directly hiring members of a trade union, rather it is the contractors the owner employs that have that power.

In the matter involving the apartment developer, while Local 98 has the right to protest those contractors employed by the developer, protesting the apartment developer could be an illegal secondary boycott.  Local 98’s protest is aimed at persuading people from renting from the developer rather than publicizing a labor dispute with an electrical contractor because, as far as we know, the apartment developer is not an electrical contractor and, therefore, not capable of directly employing Local 98 members.

A few years ago, the National Labor Relations Board, the administrative agency charged with resolving disputes under the NLRA, awarded trade unions a major victory in outlining how far they could go in protesting a neutral employer before their actions become an illegal secondary boycott. In a series of cases decided in 2010, the Board ruled that displaying stationary banners declaring “shame” on a neutral employer for contracting with a merit shop contractor was not a secondary boycott and was protected speech. In 2011, in a separate case, the Board ruled that the same rationale applied to the ubiquitous inflatable rats used by unions to protest merit shop contractors.

But those decisions are not the end of the story.  Under Section 303 of the Labor Management Relations Act anyone injured by an unfair labor practice can sue in federal court to recover damages.  Federal Courts tend to take a different view of secondary boycotts and are not bound by the Board’s decisions.

For example, in U.S. Info. Sys., Inc. v. Int’l Bhd. of Elec. Workers Local Union No. 164, AFL-CIO, 500 F. App’x 198, 200 (3d Cir. 2012), the Third Circuit upheld a summary judgment award in favor of a subcontractor and against Local 98’s counterpart in New Jersey, Local 164, under Section 303.  In that case, Local 164 protested a construction site where a subcontractor, who did not employ Local 164 members, was working.  As a result of the protests, the subcontractor was terminated and replaced with a subcontractor, who did employ Local 164 members.  The terminated subcontractor then brought a claim for damages against Local 164 under Section 303.  The District Court found in favor of the subcontractor finding that the intent of Local 164’s protest was to force the neutral employer to award the contract to an employer who employed Local 164’s members and awarded it $180,000 in damages.  The Union appealled and the Third Circuit affirmed.

If the apartment developer can show that people were actually persuaded from not renting from it, then it could sue Local 98 for damages.  Thus, the irony is that if the Local 98’s protest is successful and people chose not to rent from the developer, they could be liable for damages.

 

Yesterday, I talked about how the Carpenters’ Union has been sending letters to neutral employers threaten to picket a job site if a merit shop contractor were permitted to perform work on that site.  I received multiple inquiries asking what a contractor can do if they are the target of such a letter.  The most common approach is to file a claim with the NLRB against the union claiming that the union has engaged in an unfair labor practice.  However, this is probably a waste of time.  The better approach is to bring a claim directly against the union in federal court under Section 303 of the Labor Management Relations Act.

Under the NLRA, anyone who believes they have been harmed by a unfair labor practice can bring a charge with the NLRB.  After the charge is made, the NLRB has a duty to investigate the charge.  If the investigation finds that the charges have merit, the NLRB will issue a complaint against the party who allegedly violated the NLRA.  And, a hearing will be held in front of an Administrative Law Judge.  One way of looking at the NLRB is that it acts as a special Attorney General (or District Attorney) who deals will onlywith  alleged violations of the federal labor law.

In certain cases, bringing a claim with the NLRB can be effective.  First, its cheap.  The claimant does not have to pay for the NLRB investigation or prosecution of meritorious claims.  Second, it can be efficient.  NLRB investigations alone way lead to a settlement.  Or, if need be, the NLRB has the ability to drop the hammer and obtain injunctive relief when necessary.

However, bringing a claim with the NLRB has several drawbacks.  First, the NLRB has no ability to award an aggrieved contractor damages if it finds that it has been a victim of an unfair labor practice (the Board does have the ability to award back pay to an employee who is a victim of an unfair labor practice, however.)  Second, the NLRB is a political body and as we have often blogged about, the NLRB is apt to make decision based on politics rather than the law.  Finally, the person that hears the claims and appeals in NLRB unfair labor actions are usually experts on labor law.

Therefore, bringing a claim with the NLRB is best where a contractor or neutral employer wants to obtain some sort of remedial action against a union such as an injunction against a picketing.  However, the Board is not the best place seek relief from nuiansed violations of labor law such as banner, “ratting,” or being sent a threat to picket letter which have caused a contractor monetary damages, like losing a contract.

The better approach to seek relief for the more nuiansed labor law violations is to bring a claim against a union pursuant to Section 303 of the Labor Management Relations Act.  Under the Act, anyone injured by an unfair labor practice can sue in federal court to recover damages.  Therefore, if you are a contractor that suffers actual legal damages as a result of a union’s unfair labor practices you can bring a lawsuit in federal court against that union to recover those damages.  The best reason to bring a private cause of action against a union rather than a simple NLRB claim is the right to a jury trial.  The second best is the ability to recover money damages, which the NLRB cannot award a contractor.

Juries are not experts on labor law.  Juries are also more likely to be swayed by the equities of a case.  Moreover, juries are less likily to render a decision for political reasons, such as ruling aggressive union bannering or using large inflatable rats are protected forms of speech.  In fact, as public opinion has moved against organized labor, juries may be the considered contractor friendly.  Jury awards to contractors who bring privte causes of action under Section 303 are common and the damages awards are often staggering.

Certainly, private rights of action under Section 303, have their drawbacks as well.  Like any litigation, there are inherent risks.  First, a contractor will likely have to pay for the cost of litigation until a jury renders an award.  Indeed, unlike an NLRB claim a contractor will have to hire an attorney to pursue the case.   Second, juries are sometimes unpredictable and could easily award a contractor zero damages.  Finally, cases with adverse precedent could be dismissed before they even reach a jury.

The Courts are split on whether union letters threaten a strike if a non-union contractor is allowed to work on a job are unfair labor practices.  However, dispute the risks private rights of action under Section 303 are something to consider.

In the past year, the NLRB has issued a series of opinions which give a rather “liberal” interpretation of Section 8(b)(4)(B)’s prohibition on threatening, coercing, or restraining a neutral employer from doing business with someone.  Bannering, “Ratting,” and even infiltrating worksites impersonating federal immigration agents have all passed muster with the Board.  Apparently, bouyed by these decisions the Carpenters Union has taken its coercive and threaten tactics to the next level.  Recently, the Carpenters Union has been sending certified letters directly to neutral employers, who are the owners of construction projects, threatening the owner with picketing because of a “labor dispute” with a merit shop contractor working on the job site.    The letters name the contractor with whom the Carpenters allegedly maintain a “labor dispute.”  Moreover, the letters are being sent to employers who have no direct contract with the contractor that is involved with the “labor dispute.”  Usually, the contractor that the Carpenters are targeting are a subcontractor to the owner’s general contractor. 

As I have blogged about before, Section 8(b)(4)(B) of the NLRA prohibits a union “to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce . . . to cease doing business with any other person.”  Until this year, case law held that picketing a neutral employer violated Section 8(b)(4)(B) with the term “picketing” being fairly well defined.  However, beginning with United Brotherhood of Carpenters and Joiners of America, Local 1506 (Eliason & Knuth of Arizona, Inc.), 355 NLRB No. 159 (Aug. 27, 2010), the Board began gradually eroding the definition of picketing when it held that large stationary banners announcing a “labor dispute” at a neutral employers site where not tantamount to picketing but rather were protected forms of free speech.  In a later decision, the Board blessed the use of the familiar large inflatable rats to protest a “labor dispute” at a neutral employers job site on the same free speech grounds. 

Case law is split on wheather the specific act of sending letters to employers threaten pickets is a violation of Section 8(b)(4)(B).  However, unlike with banner and inflatable rats, the Unions cannot cloak its otherwise coercive activities with First Amendment free speech protection.  Any free speech protection for the letters is diminished because it is a private communication being sent directly to the neutral employer rather than an announcement being made to the whole community.  Therefore, the Carpenter’s Unions letters appear to squarely violate Section 8(b)(4)(B). 

I am not aware of any targeted contractors taking action against the Carpenters for the letters.  However, because there is less of a free speech issue with the letters than there is with bannering and rats, it would be interesting to see how the Board would rule if a targeted contractor did bring an unfair labor practice claim against the Carpenters with the Board.  It will also be interesting to see if any of the employers cede to the Union’s demands causing the targeted contractor to lose out on the job.  And, if so, whether the targeted contractor brings an action against the union for damages.  If we learn of any such claims or Board decisions on this matter, I will be sure to blog about it. 

The Concrete Union strike in New York and subsequent walk off on the World Trade Center Memorial and Madison Square Garden projects  made minor fanfare this week.    What many do not realize is that the Concrete Union was the signatory to a project labor agreement (“PLA”) covering these project which is supposed to prevent strikes, walkouts, and labor stoppages.  As Crain’s New York Business reported:

“Workers are not supposed to strike at sites where developers and unions inked project labor agreements, but an industry source said concrete workers did not show up Monday for their jobs at the new Weill Cornell Medical Center research building on East 69th Street, a project that does have such an agreement. The source said a request for an arbitration hearing was made to the Building and Construction Trades Council.”

Unions sell PLA’s to private developers and government bodies as a way to prevent strikes and walkouts and to assure overall labor “peace.”  However, the situation in New York draws into question whether Unions can continue to make this selling point.

The strikes in New York also unmask the true intentions of Unions when promoting  the use of PLA’s.  While Unions claim PLA’s prevent strikes and walkouts, clearly this is not the case.  The ABC has a great post about repeated violations of the No Work Stoppage/No Strike clauses in PLA’s by unions throughout the country. Apparently, Labor does not deny that these No Strike Clauses are being repeatedly violated.  Moreover, the collective bargaining agreement between a local union and a signatory contractor likely already prevents strikes and walkouts.  Thus, what the Unions are really saying when they pitch PLA’s as a way to guarantee labor “peace” is that the job will be free from unlawful secondary picketing, threats of violence, and other shenanigans Unions pull to get their way.  In other words, PLA’s are a veiled form of extortion.  And, on government funding projects, what do the taxpayers get in return for extracted labor “peace?”  Typically, projects that cost more and take longer to complete.

What is even troubling about Union violations of a PLA is that owners are apparently powerless to stop the violation.  The Norris–La Guardia Act Anti-Injunction Act, which, as those that followed the NFL lockout will recall, prohibits a court from issuing an injunction that interferes with a labor strike and, thus, ordering workers striking in violation of a PLA back to work.  Moreover, even if the Act did not apply, it is doubtful – indeed the standard is very high – that a Court would issue an injunction forcing someone to return to work.

Conversely,  if a contractor violates a PLA by not hiring employees through the hall the consequences are severe.  Potentially, a contractor could be required to pay contributions to the local union’s benefit funds for the non-union employees that worked on the job, whether those employees were actually union members or not.  Because those contributions are based on the  the number of hours each employee worked on the job, the financial liability can quickly add up to significant amounts.  Furthermore, the officers of the offending firm face personal liability to the Union Funds for these contributions.

Hopefully, this recent dust up over PLA’s will continue to erode public support for them.  If Unions do not honor PLA’s what is their purpose?

 

 

Crain’s New York Business is reporting that New York construction unions agreed to cut wages of members working on the massive residential Gotham West project located on Manhattan’s far West Side by 20%.

The gradual erosion of union influence on Manhattan construction projects is a theme we have been following because it indicates a larger national trend.  It also begs the question: can the unions that agreed to the wage cuts now protest that merit based contractors are not paying wages according to area standards?