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.

Last summer, my pro bono representation of a group of University of Pennsylvania graduate students caused a bit of a brou-hah-hah among the SWJ‘s leading the unionization of Penn’s graduate schools.  (It also garnered me the most gracious complement ever from the American Federation for Teachers, who sent out a mass email calling me a “destructive force.”  I cannot thank the AFT enough for that comment it has been great for marketing.)

Late yesterday, it was learned that the AFT had withdrawn its petition to organize the graduate students at Penn.  News comes on the heals of similar actions at Boston College and Yale.  As much as I would like to think it was because of my “destructive force” abilities as a lawyer, alas, I had nothing to do with it.  The withdraws are a strategic attempt by the unions to prevent the National Labor Relations Board from overturning the Obama-era Columbia University decision that granted graduate students the right to organize.  By withdrawing the petitions, the unions hope to prevent an appeal which would offer the NLRB the opportunity to overturn Columbia University.  The unions appear to be content to play the long game and hope the current Republican majority make up of the Board changes in five years in which case they could continue unionization efforts of graduate students using the intact Columbia University precedent.  It is an interesting tactic and we will see how it plays out.  Of course, the NLRB can still its little used rule making authority to sua sponte overturn Columbia U.

During a recent review of the NLRB dockets, I came across an interesting filing.  The Sheet Metal Contractors Association (SMCA), who is the multi-employer association that bargains with Sheet Metal Workers Local 19.  Local 19 has apparently filed an unfair labor practice charge against it.  The docket is scant on precise details but it appears to be an issue over SMCA refusal to bargain with Local 19’s .  Many collective bargaining agreements expire this year.  If Local 19’s is one of them it would likely expire on April 30.  The union’s charge could indicate problems between Local 19 and the SMCA over the terms of a new agreement.  If an agreement cannot be reached by that date, it could mean Local 19 will strike, which would impact several projects in Philadelphia.  This is worth keeping an eye on.

The strategy to avoid union salts is rather simple.  But, simplicity does not mean easy.  The process requires discipline.  A salt is a paid union organizer that attempts to gain employment with a non-union employer for the purpose of either (a) organizing the employers workforce or (b) bringing a costly unfair labor practice charge for discriminatory hiring practices.

A “covert salt” is someone who conceals his union affiliation in order to gain employment with a non-union employer for the purpose of starting a union organizing campaign.  Actually, conceal is an understatement.  Covert salts actively lie to gain employment with a non-union employer.  Covert salts apply for jobs under false names, social security numbers, and use bogus resumes.

An “overt salt” is someone who proudly announces his union affiliation for the opposite reason.  He hopes you do not hire him because of his union affiliation.  The National Labor Relations Act prohibits employers from refusing to hire someone because of his or her union affiliation or sympathizes.  Unions count on novice employers to make the mistake of believing that they can refuse to hire a union member if they are a non-union employer.  Even if the person applying for the job stated purpose is to organize your company, you cannot refuse to hire them on that basis.  If the National Labor Relations Board determines that you discriminated against an individual based on his union affiliation, it can order you to hire the individual and worse order you to pay the individual (who is also being compensated handsomely by the union) the salary you would have paid him if you had hired him.

Believe it or not, the Supreme Court has declared the practice of salting legal.

However, while the deck is certainly stacked in favor of the unions, employers can still avoid union salts.  But again, it takes discipline.  Why is discipline so important in avoiding union salts? Because the steps you take to avoid union salts must be uniformly applied.  Otherwise, a practice deployed only against a suspected salt will be evidence of your intent to discriminate.

  1. Show no animus towards unions.

First and foremost, if a overt salt applies for a job position and they are remotely qualified, you should interview him.  However, the person conducting the interview cannot show any animosity towards the union whatsoever.  A good initial interviewer would be someone that has the personality of drywall.  Union salts are trained professionals.  The will attempt to bait the interviewer into making a comment that proves your company has an animus towards organized labor.  The person performing the initial interview should be trained to keep it boring as heck.  Ask basic questions about employment history, skill level, desire salary, ect.  Any questions posed to the interviewer about unions should be met with a blank stare or vague reply.  By simply granting the covert salt an interview, you have significantly undercut the unions ability to bring a unfair labor practice charge against you.

    2.  Keep accurate records of ALL interviews.

The point is critical.  Why?  Because if the union files an unfair labor practice charge against your firm, you will be given an opportunity to convince the NLRB investigating office that the charge is meritless. If the agent agrees, no complaint will be filed.

It is important to keep records of all interviews not just interviews of overt salts because you need to be able to show uniform application of the interview process.  Employers may even consider the bold step on audio or video recording interviews.  However, before doing this you should confirm what your individual state law is on audio and video recording.  Some states require consent for the person being recorded.  (Stating that you record all interviews could be enough to scare away salts.)

It is also important to keep records of subsequent interaction with the overt salt.  Typical overt salts do not actually want to work for your firm.  Instead, they exist solely to trigger an unfair labor practice charge against you based on your alleged discrimination against them.  Knowing this, you can use some reverse psychology by actually offering the overt salt a job.  Usually, the overt salt offered a position will not call your office back.  However, that will not deter the union from filing an unfair labor practice charge anyway. But, armed with records that you attempted to contact the salt and the boring interview where you showed no emotion concerning unions, it becomes almost impossible for the union to have a valid salting charge.

3. Follow up with references.

For those not bold enough to offer the salt a job, then employment must be denied on some neutral basis.  Salts often fabricate resumes and employment history.  Therefore, you need to call each reference and alleged former employer and ask about the salt.  Of course, when performing this task, do not forget about step 2.  Make sure to keep records of your contact with former employers.  Also, this policy must be implemented with ALL applicants.  You cannot simply chose to call former employers of suspected union salts.  If the union salt’s references do not pan out or do not reply to your inquires (both highly likely) you can legally deny the salt employment because of your neutral policy of employing only those with positive feedback from former employers.  Again discipline is key, the policy has to be applied consistently and with every applicant.

 4.   Institute a dishonesty policy.

For those without the ability to conduct adequate reference checks on each applicant, a dishonesty policy provides another avenue to prevent the employment of a covert salt that lies.  This policy should be in writing and state that false information supplied to the employer on an application is grounds for immediate termination.  It should be disclosed to the applicant at the time of the interview.  I recommend having the applicant sign an acknowledgment of the policy.  However, it does not end with simply having a policy.  Remember the rule of uniformity.  The policy cannot only be invoked against overt salts.  Anyone who provides knowingly false information on an application has to be terminated and you need to be able to establish that you have terminated other based on this policy.

There are only a few of the steps you can take to prevent union salts from causing havoc.  Of course, I am not going to give away all of my countermeasures in this blog post.  But these are start.

 

A recent New York Times article about the unionization of digital media companies like Vox, (the now defunct) Gawker, and Thrillist provides important lessons for companies concerned about unionization, not just those in the digital media niche.

Employers should pay attention to the demographics of these firms.  Their employees are young and college educated.  Given those demographics, the move towards unionization is not surprising.  A Pew Poll found that at least 55% of so called millennials are receptive to unions. If one employee’s comments from the article are any indication, the employees have taken the union bait hook, line, and sinker.  The employee is quoted as saying she supported the union because it will bring “transparency on pay, having a decent pay scale that allows a ladder of sustainability where you can support yourself on such an income, and having due process and a guarantee of severance in the case of layoffs.”  The article also notes that the employees at these firms sounded a common (yet false) refrain when it comes to unionization – the belief that it would lead to better wages, benefits, and job stability.

Notice how the employee described what the union could offer.  Words like “transparency,” and “sustainability,” are the buzz words of a generation and show up in any marketing effort tailored towards millennials.  Union organizers know that the generally held ideals of this generation present fertile ground for their message.  As your workforce skews younger, how do you counteract an organizing message to a ground that is predisposed to receive it favorably?  By simply telling the truth.  The union cannot delivery on what they are promising.  There is no easier place to start then the claim that unionization will lead to job security and better wages.

   1. Job stability and security.

I have no idea why these employees think that having a collective bargaining agreement will make it less likely that they will be laid off.  If anyone knows of a CBA, that prohibits layoffs send it to me.  Sure, there are certain agreements that contain grievance provisions that an employee can invoke if they believe they have be wrongfully terminated, but in the interim they are still laid off.  Ditto with the guarantee of severance upon layoffs.

    2.   Unionization does not lead to better wages and benefits.

Unionization will lead to a pay raise is a tried and true organizers tactic.  The truth is that unionization can result in better, worse, or the same wages and benefits. A successful union vote guarantees only one thing – negotiating.  It does not result in the employer signing a CBA.  Employees erroneously think that their current wage and benefit package is the floor from which these negotiations begin.  This is false.  The truth is that at the bargaining table the parties are working from a clean slate.  Those negotiations can lead to wages and benefits that are better, worse, or the same as what employees currently have.  Furthermore, during negotiations, wages and benefits frozen.

Millennials have been exposed to anti-free market drivel since grad school.  So, employers cannot wait until a petition for election is being circulated to start telling their employees the truth.

 

Businesses engage customers and clients online more than ever.  Now, your online strategy needs to include a plan to combat union organizing.  Unions have been ahead of the game on using social media and the internet to support their organizing campaigns.  One of the reasons for that was the cost involved with the campaign.  However, even small employers now have available to them powerful tools in the form of social media like Facebook, LinkedIn, and Twitter and micro-websites, that are either free or cost very little.

Employees are Demanding It.

While doing my share of labor work, I do quite of bit (and enjoy) trial work.  I have seen how the frequency of life being conducted online and the use of smartphones and tablets has effected juries.  Juries now demand some sort of visual interaction with the case. An attorney that uses technology (it could be as simple as a power point) to demonstrate her case to a jury not only is more engaging but appears better squared away than her adversary relying on paper documents, legal pads, and poster boards.

Moreover, while strictly prohibited, does anyone really think some jurors are not going home at night and googling the lawyers, the parties, and the issues in the case?  Sure, the Judge rightfully warns jurors against the use of the internet to research anything about the case during trial – and that includes when they are home – that is like telling someone not to think about a polar bear sitting on the beach drinking a pina colada.  Jurors – as many lawyers forget – are people.  (No, I am not advocating setting up an online strategy for potential jurors who may google your case against the Judge’s instructions.)

Winning a union election (or any election) is like a jury trial.  Its about persuasion.  Your employees that will decide whether you become a unionized workplace are no different than jurors or voters in a political election. Your side must engage and persuade.  Given the depth and breadth of political campaigns’ use of the internet and social media, which are just an uber-sophisticated version of a union organizing campaigns, it is surprising that more employers do not utilize the power of these vehicles to win an election.  Can you imagine a modern political candidate conducting an election without the use of some online strategy?

Furthermore, employees are likely fact checking everything use say about the unionization effort during a captive audience meeting by going online.  Employees are now doing their own independent research on the information both sides present to them.  However, unlike jurors, they are not prohibited from doing so.  In fact, employers that have the right social media and online tools in place should be encouraging employees to do so.  Therein lies the tremendous opportunity for employers.

Captive Audience Meetings are Not Enough.

The old school approach to opposing a union organizing effort was fairly predicable.  Employers would hold captive audience meetings, hope their employees paid attention, and discuss some aspect of the union that they think would cause an employee to vote No.  Following the presentation, some employers would give the employee some literature to review on the topic.  Employers would often use hokey handouts and play much maligned videos.

Captive audience meetings still play a role.  However, their effectiveness is placed on steroids when combined with an online and social media strategy.  At the conclusion of the meeting, employer should encourage employees to go online to learn more.  Employees can convey an exponentially more amount of information using this combined approach.  Employees can digest this information on their time and when they are ready to pay attention to it.

Employers need to remember the facts are on your side.  The trick is getting the facts to employees.

What does the approach look like?

First, employers need to engage all of their employees on social media and provide them with the same information they are providing in the captive audience meetings.  Nearly every employee is on some social media platform. Furthermore, they are not just using social media daily but several times daily.  Social media is 100% free and it provides the employer the opportunity to personally engage with the employee and provide him or her with specific information they feel is important.  If an employer does nothing else it should be to set up sites on Facebook, Linkedin, and Twitter to engage employees.  Of course, employers can’t just set it and forget it, they still must ENGAGE.

There is another benefit that comes with social media engagement.  It can be used as a tool to gauge the strength of your opposition campaign.  Polling or interrogating employees on how they intend to vote in an upcoming union election is an unfair labor practice.  If severe enough it could cause an employer be directed to bargain with a union. So, you cannot conduct an online poll through social media of your employees thoughts on unionization.

However, social media can act as a sort of de facto poll.  All social media tools have some sort of mechanism whereby the reader can “like” a post or follow your site.  Social media tools also provide for a person to forward the post to his or her followers in the form of a re-tweet or re-post.  Social media users can also comment on your posts.  Likes, follows re-tweets, follows, and positive comments can provide an employer within invaluable data on the effectiveness of its campaign.

Second, employers need to set up a webpage that provides employees with information on all of the reasons why they should vote No.  The webpage should have links where employees can find additional information about the union that is seeking to organize them.  But website are expensive, right?  Wrong.  Several blog platforms (I recommend WordPress) are free.  An employer could probably start an effective website dedicated to providing employees with information about the union for less than $100 and have it up and running in a few hours.

Again the key for these tools to be extremely effective is engaging users and generating great content.  Therefore, employers need to dedicate someone to making sure employees are engaged through social media, that the right information is reaching these employees, and the webpage contents powerful content.

Beyond the Basics

Being present and engaging on social media and online are basic but effective.  Employers looking to invest a bit more time and more (but not that much more) money can consider the following.

  • Targeted Facebook ads.  If you give Facebook a list of users they will target ads to them.  I have seen this run as low $30 per month.
  • Text messages.  You can send your employees text messages with information about the campaign.  Although, I would find these extremely annoying.
  • Encourage employees to set up their own pages.  While employers are prohibited from providing employees assistance in opposing the campaign, employers are free to encourage employees that oppose unionization to set up there own social media pages on Facebook, Linkedin, and Twitter.

One final thing.  The importance of using social media to engage employees is only going to grow with millennials entering the workforce.  This generation was weened online.  I have no data to support it but if you have a large younger workforce and you are not engaging employees online I bet you will lose a election 100% of the time.

Also, employers need to be careful with engagement.  Providing employees with information is perfectly legal. However, if employers make certain comments to employees or what will happen if the employer becomes unionized, they could face an unfair labor practice charge. While the mediums have changed, the message needs to stay the same.

 

 

 

Some of the most viewed topics on this blog are those concerning double breasted company.  That is a two separate firms, commonly owned, one that is a signatory to a union and the other that is merit shop.

An issue frequently encountered with double breasted construction companies is an union arbitrator’s jurisdiction over the non-signatory firm.  The issue usually goes something like this.  A signatory employer’s collective bargaining agreement contains language prohibiting double breasting (which could be invalid).  The collective bargaining agreement also contains an arbitration provision requiring all disputes concerning a breach of the agreement (a grievance) be decided by an arbitrator in private arbitration.  The union files a demand for arbitration claiming that the union signatory has breached the collective bargaining agreement’s anti-dual shop provision.  The union names the non-union firm as a party to the arbitration based on its status as an alleged “single employer.”

What should the non-union firm do?  It should ignore the arbitration demand or file an action in federal court to obtain a court order prohibiting the arbitrator from taking any action against it.  The law in most – if not all – jurisdictions is that an arbitrator has no jurisdiction over a non-signatory firm.  If the union obtains an arbitration award against the non-union firm, the District Court will vacate that award if the non-union firm requests relief.  The general rule is that only a court can determine whether a non-signatory is bound by a collective bargaining agreement.  Moreover, some courts have held that a court must determine that the union and non-union entities are a single employer before that will happen.  Because a single employer finding is fact sensitive, that cannot be done without discovery.

The take away.  If you own a dual shop firm and receive a demand from the union to arbitrate, you need to review your collective bargaining agreement, be prepared to fight the union, and win.

 

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 a case that has been widely discussed on this blog, a United States federal district court Judge denied the Philadelphia Carpenters’ Union’s motion to dismiss a federal RICO case filed against it by the Pennsylvania Convention Center.  Judge Nitza I. Quiñones Alejandro issued the ruling on the Union’s motion.

Continue Reading District Court denies Carpenters Union Motion to Dismiss RICO case- What it Means

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.