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Private Litigation Addressing Corporate Campaign Activity

According to Ray Rogers, who is generally recognized as the "father" of corporate campaigns, a corporate campaign against a company "[h]as a beginning at point A and an end at point Z. Point Z is the total defeat or annihilation of your adversary." In between, of course, comes litigation.

This paper summarizes cases in which labor unions or management have brought legal challenges to the other's position in a campaign other than based on the National Labor Relations Act. Particular emphasis is given in Part III to antitrust and RICO claims, which have been used with some recurrence in such disputes. Part III identifies the success or failure on certain key issues in those lawsuits. The paper concludes by offering some observations for future litigation.


The first widely publicized corporate campaign was initiated in the mid-1970s by the Amalgamated Clothing and Textile Workers Union against the J.P. Stevens company. The origin of corporate campaigns is generally traced back to that effort, which was orchestrated by Ray Rogers. Since then, unions have waged corporate campaigns against perhaps 100 companies. Typically, the unions bring lawsuits as part of such campaigns, or else indirectly support such campaigns by providing funding, counsel, or otherwise instigating employees to come forward as claimants or witnesses.

The types of suits brought by labor in such campaigns are as varied as the subjects of the campaigns themselves, although there is a recurrence of complaints claiming violations of federal and state wage-and-hour laws, ERISA, and workplace safety laws, as well as lawsuits pursuing shareholder initiatives. Management's responses, in the form of counterclaims and independent actions, are equally varied.

Interestingly, there is very little recognition in the case law of the existence of corporate campaigns, and even less discussion of what constitutes a "corporate campaign." The only published decision that has attempted a definition of corporate campaigns is the D.C. Circuit's opinion earlier this year in Food Lion, Inc. v. United Food & Commercial Workers Union, 103 F.3d 1007 (D.C. Cir. 1997), which did not address the merits of any claims, but instead addressed some third-party discovery disputes. In examining those disputes, the court of appeals gave the following definition:

[T]he term "corporate campaign" is not a term of art. ... What is clear is that the term encompasses a wide and indefinite range of legal and potentially illegal tactics used by unions to exert pressure on an employer. These tactics may include, but are not limited to, litigation, political appeals, requests that regulatory agencies investigate and pursue employer violations of state or federal law, and negative publicity campaigns aimed at reducing the employer's goodwill with employees, investors, or the general public. Id. at 1014 n.9.

More recently, the same court issued an opinion arising out of the campaign against Diamond Walnut Growers waged by the International Brotherhood of Teamsters and Local 601 of the Cannery Workers, Processors, Warehousemen and Helpers. Diamond Walnut Growers, Inc. v. NLRB, 113 F.3d 1259 (D.C. Cir. 1997) (en banc). The case did not involve a challenge to the union's campaign. Instead, the case addressed the union's unfair labor practice charges arising out of the company's allegedly discriminatory refusal to place returning strikers in jobs for which they were qualified. The majority agreed that the company was substantially justified in its treatment of one of the workers, who wanted to return to her job as a quality control inspector, because of the company's concern that her loyalty to the union might cause her to allow defective food products to be packaged, thus fueling the union's campaign allegations about "tainted" food. An earlier case by the same court supported a company's discharge of disloyal employees who participate in a union's campaign insofar as it involves an attack on the quality of the company's products. George A. Hormel and Co. v. NLRB, 962 F.2d 1061 (D.C. Cir. 1992).

Although the majority did not discuss the case in terms of a "corporate campaign," Judge Wald did so in her opinion dissenting from the majority's result on that worker's charge. Judge Wald was joined by Judges Edwards, Rogers and Tatel. The dissent is notable because it demonstrates judicial awareness of corporate campaigns: "[L]abor battles are increasingly fought not on the picket line but in the arena of public opinion, through boycotts, corporate campaigns and other appeals." Id. at 1278. The dissent also reveals that there is judicial sympathy for corporate campaigns, at least by certain members of the bench. At some length, the dissent advances labor's rationale for corporate campaigns, relying on several labor-side law review articles. Id. at 1278-79. The case bitterly divided the court, however. The majority criticized Judge Wald for succumbing to the union's "propaganda." Id. at 1268.

There are very few other decisions referring to union corporate campaigns. A computerized search for the term "corporate campaign" on LEXIS and WESTLAW identifies only five additional cases. The earliest case mentioning the term was a dispute between the UFCW international leadership and local leadership over Local P-9's unauthorized continuation of a corporate campaign against George A. Hormel and Company. Hansen v. Wynn, 636 F. Supp. 907 (D. Minn. 1986), aff'd, 814 F.2d 547 (8th Cir. 1987). The case did not involve a challenge to corporate campaigns, but is noteworthy because the union parties on both sides acknowledged that such campaigns exist. Other than the D.C. Circuit cases discussed above, the most recent decision using the term addressed the merits of management's RICO challenge to a corporate campaign, although not much can be discerned from the opinion itself. Bayou Steel Corp. v. United Steelworkers of America, 1996 WL 76344, 151 L.R.R.M. (BNA) 2252 (D. Del. Jan. 11, 1996) (discussed at Part III.H below). Other decisions refer to the term "corporate campaign" simply as background to the dispute addressed by the court. Fleishut v. Avondale Indus., Inc., 148 L.R.R.M. 2685 n.10 (E.D. La. 1995) (New Orleans Metal Trades Council was conducting an extensive campaign to unionize Avondale's employees; to fend off an NLRB injunction, Avondale pointed out that union had been engaging in aggressive corporate campaign involving "Safety Committees" and a proxy challenge); Food Lion, Inc. v. Capital Cities/ABC, Inc., 887 F. Supp. 811, 814 (M.D.N.C. 1995) (discussing Food Lion's allegation that UFCW worked with ABC News to develop a negative broadcast on "PrimeTime Live" as part of corporate campaign); Food Lion, Inc. v. United Food & Commercial Workers Int'l Union, 143 L.R.R.M. (BNA) 2978 (D.S.C. July 21, 1993) (discussing Food Lion's allegation that UFCW committed state tort of abuse of process through its involvement in ERISA action and other litigation in furtherance of corporate campaign).

Broadening the search for reference to "campaigns" picks up additional cases. See, e.g., USS-POSCO Indus. v. Contra Costa Cty. Bldg. & Constr. Trades Council, AFL-CIO, 721 F. Supp. 239 (N.D. Cal. 1989) (addressing unfair labor practice charges brought by partnership and nonunion contractor arising out of "coordinated campaign" waged by five associations of labor unions and seven locals, including Steamfitters Local 342, IBEW Local 302, Plasterers and Cement Masons Local 825 and IBOB Local 549) (discussed below); J.P. Stevens & Co., Inc. v. Jackson, 99 L.R.R.M. (BNA) 2827, 85 Lab. Cases (CCH) ¶ 10,980 (N.D. Ga. July 26, 1978) (following "publicity campaign" by ACTWU, target company sued union and Atlanta mayor, who had issued executive order blacklisting company, for conspiring to deprive it of due process and equal protection rights).

The paucity of case law discussing corporate campaigns is probably explainable by several factors.

  • First, corporate campaigns are a relatively new phenomenon, at least when measured against the greater body of labor law.
  • Second, many challenges to corporate campaign tactics have been brought in the form of unfair labor practice charges at the NLRB, or else have been fought out before agencies vested with jurisdiction over the particular dispute at hand, such as the Wage and Hour Division of the federal Department of Labor or its state counterparts.
  • Third, as suggested above, corporate campaigns have been quite diverse, and the judicial focus generally has been directed to particularized issues within the campaigns. That is not to say that it is the judiciary's fault. Management often, if not usually, has brought legal challenges to such campaigns in a compartmentalized fashion, challenging particular aspects of a campaign without attacking various interconnected components of the campaign. This approach of ignoring the forest for the trees results, for example, in opinions that decide the particular dispute without giving recognition to the fact that the claim is only part of a much larger war between the parties.
  • Finally, although there has been some academic treatment of corporate campaigns from the perspective of economics and labor studies, there is a paucity of academic treatment of legal issues raised by corporate campaigns. This, combined with the lack of a body of accessible decisional law on corporate campaigns, has practically guaranteed slow growth of the law on this subject.

Many lawyers lack the time, resources, ingenuity and comfort with risk-taking to apply old legal theories to new types of problems. In other words, lawyers tend to copy tried-and-proven strategies used by other lawyers instead of developing new legal theories.

Despite these factors, there is a small body of decisions relating to corporate campaigns or legal disputes that are an outgrowth of such campaigns. Unless one is aware of the nature of the underlying dispute, however, the significance of particular rulings as a vehicle for challenging corporate campaign activity is not apparent. In reviewing this small but growing body of decisional law, two statutes stand out because of labor's and management's recurring resort to them: the Sherman Act and the RICO Act. Although there have been many different statutory and common-law challenges to corporate campaign activity, these two statutes have grown in use and perhaps will become the basis for some of the most interesting litigation involving corporate campaigns in the near future.


Labor has argued for a broad "preemption" of claims brought under RICO or the antitrust laws. Interestingly, however, it was labor that first resorted to antitrust and RICO claims against targeted companies. Management picked up on these theories in subsequent disputes. Perhaps in order to give more credence to the preemption argument, labor has refrained from prosecuting these theories in recent years.

A. Amalgamated Clothing and Textile Workers Union v. J.P. Stevens & Co., Inc.

In the course of the J.P. Stevens campaign, ACTWU brought claims against the company alleging violations of the Sherman Act and various federal civil rights laws. No. 77 Civ. 5444-CSH (S.D.N.Y.). Almost certainly, this was the first antitrust challenge made in the course of a corporate campaign. Indeed, Judge Haight began his opinion by noting that the union brought the case "in continuance and escalation of the prolonged struggle" with the company, further noting that the prior "battlefields" had been the NLRB and the courts asked to enforce NLRB rulings. 475 F. Supp. 482, 484 (S.D.N.Y. 1979).

ACTWU pleaded two causes of action for violation of Section 1 of the Sherman Act, one seeking damages and one seeking injunctive relief. ACTWU described itself as being in "the trade or business of an international union," and described its efforts to organize Stevens' non-supervisory employees and obtain collective bargaining agreements for them. The complaint alleged that Stevens and other textile manufacturers and processors opposed those efforts, and had engaged in combinations and conspiracies in restraint of trade. Specifically, Stevens was alleged to have combined with other manufacturers, national and local trade and industry associations, employer-supported groups of employees, non-textile employers in areas where Stevens operated, chambers of commerce in such areas, state and local development authorities in such areas, and local state government officials and agencies in such areas.

The court read the complaint as alleging seventeen categories of behavior that were supposedly undertaken by Stevens and its "co-conspirators":

  1. fixing or limiting wages and working conditions through agreements with competitors;
  2. discharging, harassing or discriminating against employees who supported ACTWU;
  3. violating national labor laws in connection with representational elections, such as through interrogation, surveillance, and harassment;
  4. "blacklisting" employees who supported ACTWU;
  5. inducing other employers to "blacklist" the same persons;
  6. discharging or refusing to hire relatives, friends and family members of employees who supported ACTWU;
  7. inducing other employers to do the same;
  8. inducing financial institutions, landlords, insurers, and other businesses to discriminate against such persons;
  9. inducing government officials to do so with respect to governmental relief and welfare benefits;
  10. working with chambers of commerce, development authorities and others to prevent the development of unionized industry;
  11. inducing the formation of an "Employees Educational Committee" to obstruct ACTWU's efforts;
  12. financing that Committee through appeals to competing employers;
  13. encouraging the formation of like committees at other employers;
  14. refusing to negotiate in good faith;
  15. closing or threatening to close plants where ACTWU was the bargaining representative or appeared that it would become such if elections were held;
  16. abusing the judicial and administrative process by frivolous and contemptuous resistance to the law; and
  17. inciting racial discord within the plants and communities, with the intent of intimidating black supporters of ACTWU.

The J.P. Stevens Company argued that ACTWU lacked standing and that the battle should remain "in the halls of the NLRB." The court disposed of the first claim summarily: "While board chairmen and company presidents of the early years of this century might have had difficulty in thinking of labor union organizers as fellow businessmen, it is now well settled that: 'Unions are in the business of representing employees.'" 475 F. Supp. at 487 (quoting Tugboat, Inc. v. Mobile Towing Co., 534 F.2d 1172, 1176 (5th Cir. 1976)).

On the merits, however, Judge Haight agreed with the company. He distinguished Tugboat and similar cases, which had upheld antitrust claims brought by unions. In Tugboat, two towing companies, Tugboat and Mobile Towing, were competitors in the relevant market. The plaintiff union, Seafarers, was in a contest with another union–Masters, Mates, and Pilots–to represent the workers in the local industry. Seafarers alleged that Tugboat had conspired with Masters, Mates, and Pilots by unfairly obtaining labor costs far lower than those available to Mobile Towing, thus allowing Tugboat to run its competitor out of business. There was no such element in ACTWU's complaint against J.P. Stevens Company. Judge Haight found not only that the conduct "arguably" fell within the labor laws, indeed, a number of them virtually parrot statutory definitions of unfair labor practices. The antitrust laws do not furnish a remedy, since ACTWU's allegations, taken separately or in concert, do no more than complain of efforts to impede its activities as a union, entirely unaccompanied or uncomplicated by any element of monopolistic effect upon competition in the marketplace for goods or services. As such, the allegations do not rise to the level of an antitrust violation .... 475 F. Supp. at 490.

Pending appeal, ACTWU entered into a comprehensive settlement with the company. Accordingly, the court of appeals vacated the judgments of the district court and remanded for dismissal on grounds of mootness. 638 F.2d 7 (2d Cir. 1980).

B. Butchers' Union, Local No. 498 et al. v. SDC Investment, Inc.

For many years, the United Food and Commercial Workers Union waged a campaign against various animal slaughterhouses. Although there were many facets to the campaign(s), one involved a "turf war" over representation of industry employees. In 1983, the International, along with Locals 7 and 26, as well as the Butchers' Union Local No. 498, brought a RICO suit against various companies in the industry: SDC Investment, Inc.; Eastern Market Beef Processing Corporation; Denver Lamb Company; and Monfort, Inc. No. Civ. S-83-325 LKK (E.D. Cal.). The plaintiffs also sued various officers of the corporate defendants; two law firms, as well as their partners or employees, who had been legal counsel to SDC; and agents of the National Maritime Union ("NMU").

The plaintiffs were, or wanted to be, the bargaining representatives for the employees of the defendant corporations. When SDC began operation of a slaughterhouse in California, it recognized NMU as the bargaining representative, although previously Butchers' Union Local 498 had been party to a collective bargaining agreement with SDC. The plaintiff unions alleged that SDC paid NMU organizers with the purpose of preventing the Butchers' Union from organizing SDC's employees, and that this was part of a conspiracy by all the defendants to reduce labor costs, maximize profits, and enrich NMU and the law firm defendants. In some respects, the theories paralleled the antitrust claims made by ACTWU against the J.P. Stevens Company.

The plaintiff unions sued under three subsections of RICO, 18 U.S.C. §§ 1962(b), (c), and (d). They alleged that the payments to NMU's organizers were in violation of Section 302 of the Labor Management Relations Act, 29 U.S.C. § 186. The plaintiff unions also claimed that these same payments, being executed through use of the mail and wires, constituted mail and wire fraud predicate acts.

The defendants argued that the case was an attempt to litigate matters that were exclusively within the jurisdiction of the NLRB. Chief Judge Karlton disagreed with respect to the claims based on the LMRA, but agreed with respect to the mail and wire fraud predicate acts. 631 F. Supp. 1001, 1003 (E.D. Cal. 1986).

In analyzing the claim under the LMRA, the court noted that the fact that it was specifically referenced in RICO was "strong confirmation of [the] conclusion that the remedies provided were to be independent of each other." 631 F. Supp. at 1007 (quoting International Longshoremen's & Warehousemen's Union v. Juneau Spruce Corp., 342 U.S. 237, 243-44 (1952)). The court also looked to the legislative goal of Section 302 of preventing "sweetheart contacts," which suggested that it should not preempt a RICO claim, since both were concerned with selling labor peace to businesses. 631 F. Supp. at 1008. The court concluded that it would not be required to resolve labor law questions extraneous to the alleged violations of Section 302.

On the mail and wire fraud claims, however, Chief Judge Karlton found that the plaintiff unions were simply pleading an unfair labor practice. Applying a Garmon analysis, he found that the claim was arguably within the NLRB's jurisdiction, and thus it was preempted. Id. at 1010 (citing San Diego Building Trades Council v. Garmon, 359 U.S. 236, 245 (1959)). In addition, he determined that the only "fraud" was a deprivation of the plaintiff unions' rights under the federal labor law, and thus was preempted under Laborers Health & Welfare Trust Fund for Northern California v. Advanced Lightweight Concrete Co., 779 F.2d 497 (9th Cir. 1985), aff'd, 484 U.S. 539 (1988). See 631 F. Supp. at 1010-11.

C. United Food and Commercial Workers, Local 400 v. Marval Poultry Co.

Marval Poultry was another subject of a UFCW campaign, and likewise was the subject of a RICO claim. Civ. A. No. 84-0126-H (W.D. Va.). The context was different, however. In this case, Local 400 sued the employer, its attorneys, their law firm and others based on an alleged pattern of racketeering activity in connection with a decertification campaign. The union brought claims under LMRA Sections 301 and 302, RICO, and a state-law claim for tortious interference with the union's contractual and representational rights. The union alleged that Marval had solicited and compensated employees who assisted in the decertification campaign (although the NLRB Regional Director withdrew a complaint making similar allegations based on insufficiency of evidence). The RICO predicate acts were violations of Section 302 and the mail and wire fraud statutes.

The court rejected Marval's argument that the RICO claim was preempted. 708 F. Supp. 761 (W.D. Va. 1989). Judge Michael stated that "the Garmon preemption doctrine does not affect this court's jurisdiction over the plaintiff's RICO claim since RICO is an independent federal statute enacted by Congress to provide judicial remedies for specified wrongful conduct." Id. at 766. The court also affirmed its prior holding that the NLRB's primary jurisdiction over labor disputes "does not prevent this court from hearing the RICO claim." Id. (citing June 11, 1985 Order at 6 ("the NLRB maintains no jurisdiction over the Union's claims under [RICO]")). On the merits, however, Judge Michael dismissed the RICO claim, holding that the four-month decertification campaign was not long enough to satisfy the "continuity" prong of RICO's pattern requirement. Id. at 767.

D. Texas Air Corp. v. Air Line Pilots Association

After Texas Air Corp. acquired Eastern Air Lines, Inc., there was a prolonged dispute between management and Eastern's unions. Texas Air and Eastern brought suit against Eastern's two principal unions–the Air Line Pilots Association ("ALPA"), and the International Association of Machinists and Aerospace Workers ("IAM")–as well as IAM District 100, the Eastern Master Executive Council of ALPA, and certain individual members of ALPA. No. 88-0804 (S.D. Fla.).

The companies' complaint included three counts under federal RICO, essentially alleging that the unions had been using illegal tactics in a conspiracy to coerce Texas Air into having to sell Eastern to the unions. The first two counts (separately for Texas Air and Eastern) alleged a conspiracy under 18 U.S.C. § 1962(d) to take over the company in violation of Section 1962(b). The third count alleged that all of the defendants "associated in fact" to form an enterprise that was conducted through a pattern of racketeering, in violation of Section 1962(c). The predicate acts were violations of the federal wire and mail fraud statutes, the Hobbs Act, the Travel Act, and the Florida extortion statute. The complaint also raised claims under Florida's RICO statute, as well as state-law tort claims for disparagement, defamation, tortious interference with business, and inducement of breach of fiduciary duty.

The companies alleged five basic categories of illegal activity by the unions:

  1. defamation of the companies through contacts with the press and a campaign to publicize the unions' false view on safety problems at Eastern;
  2. institution of a sickout campaign to interrupt flight service;
  3. instigation of a work slowdown;
  4. direction of inaccurate information to Eastern's employees; and
  5. interference with Eastern's financial advisors.

The union defendants moved to dismiss on multiple grounds, including failure to state a claim and the First Amendment. The court denied the motion to dismiss (except as to certain individuals, who were dismissed under Fed. R. Civ. P. 9(b) with leave to replead). 113 Lab. Cas. (CCH) ¶ 11,776, RICO Bus. Disp. Guide 7331, 1989 U.S. Dist. LEXIS 11149, 1989 WL 146414 (S.D. Fla. July 14, 1989).

Judge Hoeveler devoted most of his consideration to whether the companies had adequately articulated the predicate acts. On the claims of mail and wire fraud, the companies alleged that the unions used the interstate mail and wires to deceive the public and the federal government into believing that Eastern was an unsafe airline and to deceive Eastern employees into believing that the companies were "bent on their destruction." Rejecting a "convergence" theory, the court held that a party injured by the acts of fraud could state a claim even though it was not the party deceived. 113 Lab. Cases at 27,652-53.

On the Hobbs Act claim, the companies claimed that the unions conspired to destroy them financially by interfering with their intangible property, viz., the ability to conduct their business and to solicit business from the public. The unions claimed that the Hobbs Act did not apply because the fear that they induced was not "wrongful," citing United States v. Enmons, 410 U.S. 396 (1973). They argued that Enmons was controlling because their ultimate ends–maintenance of high wages and job security through, if necessary, takeover of the companies–were legitimate labor objectives. Judge Hoeveler followed other courts that have limited Enmons to the use of violence. 113 Lab. Cases at 27,653-64. He further stated, however, that even if Enmons had a broader application, the unions were not immunized because their goal was not a "legitimate labor objective." 410 U.S. at 404. The objective of the campaign was to force Eastern's owners to relinquish ownership by interfering with its normal operations. In addition, "[t]he forced sale of a business is not a 'legitimate labor objective,'" because the unions had no lawful claim to the property and they sought to obtain the property not by bargaining for a "fair exchange," but rather by engaging in racketeering activities.

On the preemption issue, the court looked to whether there was an irreconcilable conflict between the RICO Act and the Railway Labor Act. Morton v. Mancari, 417 U.S. 535 (1974). Judge Hoeveler found that there was no such conflict:

Labor disputes should ordinarily be resolved under the RLA but it is not required that the act should be the exclusive remedy when another federal law also provides remedies. The developing RICO law recognizes that Congress did not intend to remove peaceful economic activities during labor disputes 'from the ambit of the exclusive jurisdiction of the labor law.' Butcher's Union, Local 498 v. S.D.C. Investment, Inc., 631 F. Supp. 1001, 1009 (E.D. Cal. 1986). However, the allegations in this complaint do not illustrate peaceful activities.

113 Lab. Case. at 27,655. Interestingly, there was no issue of violence in SDC Investment, and the court there found the mail and wire fraud claims preempted not because the activity was peaceful but rather because the claimed "fraud" could not be defined without reference to labor law and was, in reality, simply an unfair labor practice.

Finally, Judge Hoeveler disposed of the unions' First Amendment argument. He observed that "false statements of fact do not enjoy constitutional protection" under the free speech clause (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 340 (1974)). 113 Lab. Cases at 27,655. He also rejected the unions' claims under the petition clause, since the constitutional protection accorded petitioning activity is no greater than that afforded to speech generally (citing McDonald v. Smith, 472 U.S. 479, 484-85 (1985)).

E. A & D Supermarkets, Inc. v. United Food and Commercial Workers, Local Union 880

In 1988, UFCW Local 880 initiated an aggressive campaign against various independent non-union retail grocery stores in northeast Ohio. The campaign included picketing and extensive use of mass media. Local 880 also entered into collective bargaining agreements with unionized supermarkets containing a "wage stabilization" clause. That clause permitted the unionized supermarkets to reduce the union employees' wages to the level paid by the non-unionized stores unless the union was picketing the non-unionized stores. The non-unionized stores brought an action against the union and its officers alleging various violations of the Sherman Act, the Ohio Monopolies Statute, and a claim for tortious interference with business relationships under Ohio law. No. C88-3551 (N.D. Ohio). Although the unionized stores were alleged co-conspirators, they were not joined in the action.

The union and its officers moved to dismiss, arguing that the Sherman Act claims were "preempted." Judge Batchelder disagreed. 732 F. Supp. 770 (N.D. Ohio 1989). First, she analyzed the statutory exemption found in Sections 6 and 20 of the Clayton Act, 15 U.S.C. § 17, 29 U.S.C. § 52, and the Norris-LaGuardia Act, 29 U.S.C. §§ 104, 105, and 113. She began by quoting from United States v. Hutcheson, 312 U.S. 219, 232 (1941) ("So long as a union acts in its self-interest and does not combine with non-labor groups, the licit and the illicit under § 20 are not to be distinguished by any judgment regarding the wisdom or unwisdom, the rightness or wrongness, the selfishness or unselfishness of the end of which the particular union activities are the means."). The court recognized decisions holding that, where a claim of conspiracy is based solely upon the existence of a collective bargaining agreement concerning subjects of mandatory bargaining, the statutory exemption remains available. 732 F. Supp. at 773. However, she applied the standards set forth in UMW v. Pennington, 381 U.S. 657 (1965), as recited by the court of appeals in Mid-America Regional Bargaining Ass'n v. Will Cty. Carpenters Dist. Council, 675 F.2d 881, 888-89 (7th Cir. 1982):

Under Pennington the plaintiff must allege five elements:

  1. that the union must have agreed to impose upon other employers terms agreed to by it and a "non-labor" entity;
  2. that the union activity must not be unilateral;
  3. that the union activity must be at the behest of or
  4. in combination with, a non-labor entity which occupies such a position in the competitive structure that it would directly benefit from the restraint; and
  5. that the union and non-labor groups share an anti-competitive concerted purpose. 732 F. Supp. at 773.

The court found that the plaintiffs had sufficiently alleged each of those elements to withstand dismissal.

The court then turned to the non-statutory exemption recognized in Connell Constr. Co., Inc. v. Plumbers and Steamfitters Local Union No. 100, 421 U.S. 616 (1975). 732 F. Supp. at 774-77. The court determined that the "wage stabilization" clause did not primarily affect the labor market so that it would fall within the exemption, but instead could be viewed as having a direct effect on the product market. The complaint alleged that the union did not intend to organize the plaintiffs' employees. Thus, the goal was simply to drive the non-union stores out of business irrespective of wage rates. Indeed, the complaint alleged that some of the non-union stores paid the same wages and benefits, undercutting the union's claim that it was engaged in area standards picketing. The alleged result was to protect the unionized competitors' market position, regardless of the source of the non-unionized stores' competitive advantage.

The union argued that any allegations relative to picketing of the plaintiffs' stores fell within the primary jurisdiction of the NLRB. The court rejected this argument, finding that any labor law questions would be collateral to the merits of the antitrust claims. Id. at 776-77 (quoting Connell, 421 U.S. at 626).

Interestingly, the antitrust suit was not enough to stave off the campaign's effects. Several of the food stores targeted by the campaign were out of business by the spring of 1990, including A & D Supermarkets. Two years later, the UFCW was still touting Local 880's campaign and other locals' "innovative long-term strategies" as "the types of approaches the UFCW must pursue if it wants to maintain union market share ...."

F. USS-POSCO Industries v. Contra Costa County Building & Construction Trades Council, AFL-CIO

USX Corporation and Pohang Iron and Steel formed a general partnership, named USS-POSCO Industries ("UPI") to modernize a steel facility in California. UPI awarded the modernization contract to BE & K Industries, a non-union contractor. Various local unions of the AFL-CIO and associations of labor unions (identified supra) engaged in a multi-faceted campaign against the project. The campaign included:

  1. advocating for the adoption and enforcement of a toxic waste ordinance that would impede the project;
  2. picketing and handbilling UPI's and BE & K's facilities;
  3. filing a state lawsuit alleging violations of California's health and safety code and, thus, seeking to enjoin conduct at the project site; and
  4. initiating collective bargaining grievances against one of BE & K's partners in a joint venture to perform the modernization.

The filing of the state lawsuit also caused the federal OSHA to investigate the project site.

UPI and BE & K filed a complaint alleging that these acts constituted an unfair labor practice, in violation of NLRA § 8(b)(4)(ii). No. C87-4829-DLJ (N.D. Cal.). The court granted summary judgment on the various claims, but permitted the plaintiffs to bring an antitrust claim. USS-POSCO Indus. v. Contra Costa Cty. Bldg. & Constr. Trades Council, AFL-CIO, 721 F. Supp. 239, 242 n.2 (N.D. Cal. 1989).

Thereafter, UPI dropped out of the suit, and BE & K filed a claim under the Sherman Act. BE & K alleged that the original goal of the defendant unions was to coerce UPI to award the general contract to a unionized contractor. After the contract was awarded to BE & K, the unions allegedly began a campaign to eliminate non-union construction in Northern California by making an example of the project. In addition to the activity described above, the unions filed automatic protests to BE & K's permits in order to cause gratuitous expense and delay; encouraged BE & K's subcontractors to protest nonexistent safety violations; and brought numerous grievances, arbitrations and enforcement proceedings against BE & K's partner. According to BE & K, the unions' purpose was not to organize BE & K's employees, but to cause such delay and expense that future project owners would hire only unionized help.

The unions advised the court that they intended to seek summary judgment on the basis of the statutory labor exemption. The district court ruled that, to survive the motion, BE & K would have to prove both a combination with non-labor groups and an illegitimate purpose for the combination. The court limited discovery to the first prong. The court then granted the unions summary judgment, since BE & K was unable to show a combination with non-labor groups.

The Ninth Circuit affirmed the district court's ruling on the first prong. 31 F.3d 800 (9th Cir. 1994). The court of appeals noted that, to constitute a "non-labor" group under Hutcheson, supra, the entity in question must operate in the same market as the plaintiff to a sufficient degree that it would be capable of committing an antitrust violation against the plaintiff, independent of the union's involvement. Id. at 806. This would include competitors, suppliers, purchasers, or even more remote entities such as private standard-setting organizations and state-licensed rating bureaus. The Ninth Circuit agreed that BE & K had failed to meet its burden of identifying any such group that had combined with the unions against it.

The Ninth Circuit found error, however, in the failure to allow BE & K discovery on the illegitimate purpose prong. The court of appeals noted that, under H.A. Artists & Assocs. v. Actors' Equity Ass'n, 451 U.S. 704 (1981), a union that combines only with other labor groups may still lose the statutory exemption under the second prong of Hutcheson. The Ninth Circuit then examined what it means for a union to pursue an illegitimate purpose:

In the broadest sense, everything a union does serves its self-interest. But Hutcheson requires that it act in pursuit of its legitimate self-interest. Whether the interest in question is legitimate depends on whether the ends to be achieved are among the traditional objectives of labor organizations. 31 F.3d at 808. The court observed that the traditional tactics used by the unions against BE & K–handbilling, picketing, and encouragement of work stoppages at the project site–were protected even if the unions did not seek to unionize BE & K, because unions are entitled to encourage use of unionized labor. The Ninth Circuit distinguished those tactics from the other aspects of the unions' campaign against BE & K:

More troublesome are certain other activities allegedly undertaken by the unions .... [W]e cannot say that pursuing legitimate labor goals through this kind of activity is per se exempted from the antitrust laws. ... The question here ... is whether the non-traditional means were appropriate–in other words whether the non-traditional means were not only lawful, but necessary because the goals could not be achieved through traditional tactics. Id. at 809.

On that question, the Ninth Circuit concluded that the district court erred by not allowing discovery.

Nonetheless, the Ninth Circuit affirmed the district court because the record developed to date demonstrated that the Noerr-Pennington doctrine protected the unions' activities:

The allegations in BE & K's complaint track the language of California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508 (1972) and, if proven, would be sufficient to overcome the unions' Noerr-Pennington defense. The record, as developed to date, however, forecloses any possibility that BE & K could substantiate its claim. As noted, the fact that a small number in the series of lawsuits turn out not to be frivolous will not be fatal to a claim under California Motor Transport; even a broken clock is right twice a day. Here, however, fifteen of the twenty-nine lawsuits alleged by BE & K as part of the pattern of filings "without regard to the merits" have proven successful. The fact that more than half of all the actions as to which we know the results turn out to have merit cannot be reconciled with the charge that the unions were filing lawsuits and other actions willy-nilly without regard to success. Given that the plaintiff has the burden in litigation, a batting average exceeding .500 cannot support BE & K's theory. BE & K therefore cannot sustain its burden of showing that the unions' conduct falls within the sham exception to the Noerr-Pennington doctrine. Id. at 811.

G. Tribune Co. v. Purcigliotti

Starting on October 25, 1990, and continuing for five months into 1991, there was a bitter strike against the Daily News by various unions. The strike was part of a larger corporate campaign for control of the company. On November 29, 1990, the publisher, New York News Inc., and its parent, the Tribune Company, brought a RICO action against the Newspaper and Mail Deliverers' Union of New York and Vicinity ("Drivers' Union"), the Allied Printing Trades Council of New York State, and 23 of their members and officers. Civil Action No. 90 Civ. 7669 (S.D.N.Y.). The suit was predicated on violation of the Hobbs Act, carried out by means of attempted murder, arson, extortion, assault, robbery and vandalism directed primarily against news vendors in violation of New York Penal Law. The plaintiffs alleged that the goal of the conspiracy was to coerce a settlement of the strike on terms that would have required employment of unnecessary and fictitious employees, or to coerce a sale to private investors controlled, in part, by the striking workers. In the latter respect, the suit paralleled Texas Air's claims against Eastern's unions.

The plaintiffs included three claims under RICO's subsections 1962(b), (c) and (d), and two claims under common-law sounding in tortious interference. The court never ruled on motions to dismiss. As a result of the sale of the paper to Robert Maxwell's Maxwell Newspapers, Inc. and a cessation of the strike, the court issued a suggestion of mootness on April 23, 1991. The plaintiffs took a voluntary dismissal on August 27, 1992.

That was not the end of the matter, however. The plaintiffs brought a new RICO action in 1993 based on different conduct that took place at the end of the campaign. No. 93 Civ. 7222 (LAP) (S.D.N.Y.). This time, the company sued three unions: the Drivers' Union, the New York Newspaper Printing Pressmen's Union No. 2 ("Pressmen's Union"), and the New York Mailers' Union No. 6–Printing Publishing and Media Workers Sector of the Communication Workers of America ("Mailers' Union"). The company also sued: an attorney, his law firm, a medical doctor, and 585 union members and employees of the Daily News.

According to the complaint, the three unions wanted to "get even" with the Tribune and the New York News, which by then had been sold. Thus, the unions instigated the filing and prosecution of false worker's compensation claims with a state board. The individual defendants were primarily workers who claimed hearing loss arising from their period of employment by the New York News, with the first day of the strike being their alleged last date of exposure to harmful noise, as required under state law to render the New York News liable. The unions directed the workers to file hearing loss claims, whether they had a valid claim or not. The unions contacted former workers, instructed them to file a claim as part of a fictitious "class action," and directed the workers to retain the law firm defendant and the lawyer defendant, who was principally responsible for the claims. The claims prepared by his firm were baseless and included fabricated allegations as to hearing loss and exposure dates; the attorney also falsely claimed at a hearing that employees wore hearing protectors when the new owner took over the Daily News. The law firm was compensated on a contingency basis, and therefore its compensation depended upon the success of the fraudulent scheme. The unions checked with the lawyer on occasion to ensure that his firm was filing the claims. The unions acted as the clients to whom the lawyer ultimately reported in matters affecting the filing, prosecution, and resolution of the claims. Lacking knowledge of this scheme, the company relied to its detriment on the fraud by settling around 200 of the claims. When it discovered the scheme, it brought the new suit.

The company claimed violations of RICO's subsections 1962(c) and (d), predicated upon acts of mail fraud under 18 U.S.C. § 1341. (In furthering the scheme described above, the unions had "caused" thousands of mailings–ten different types–by the other defendants over a three-year period.) The company also included state-law claims for fraud, unjust enrichment, and negligent misrepresentation.

The defendants moved to dismiss on numerous theories, including abstention and various pleading grounds. The court denied the motions in nearly all respects. 869 F. Supp. 1076 (S.D.N.Y. 1994). On the claim for Burford abstention, Burford v. Sun Oil Co., 319 U.S. 315 (1943), the defendants, as well as the Attorney General of the State of New York as intervenor on behalf of the state workers' compensation board, argued that the RICO action would disrupt the state workers' compensation scheme. Judge Preska rejected that argument:

[W]hile the intervenor and defendants cast this action in terms of employees' alleged fraud upon the Workers' Compensation Board–something that could be addressed ably by the Board itself–the Amended Complaint paints a more complex picture. Accepting the allegations as true as required, this action involves a massive fraudulent scheme perpetrated against plaintiffs by almost 600 employees working in concert with a law firm, a doctor and three unions. Thus, on the other side of the equation from defendants' and the intervenor's concerns about creating an exception to exclusivity is the responsibility of a federal court to hear cases, such as these RICO claims, that are within its federal question jurisdiction. 869 F. Supp. at 1086.

Among other things, the defendants also argued that the filing and prosecution of claims is "protected conduct and therefore cannot constitute predicate acts under RICO." Id. at 1094. The company pointed out that it was not suing for the filing and prosecution of the claims themselves, but rather for the acts of mail fraud related thereto. Judge Preska therefore rejected the defendants' argument, noting that "Defendants offer no support for their proposition that a federal mail fraud violation in the context of a workers' compensation proceeding is protected activity and not actionable in federal court." Id. The court allowed the company to seek recovery of not only any settlement proceeds paid to the workers before the fraudulent scheme was discovered, but also the company's legal costs in defense of the claims. Id. at 1100.

On an interlocutory appeal, the Second Circuit affirmed Judge Preska's abstention ruling. Tribune Co. v. Abiola, 66 F.3d 12 (2d Cir. 1995). Of note, the court of appeals rejected an argument that the company could avail itself of the right to re-open the previously resolved workers' compensation claims on grounds of fraud. The panel noted that any review provided by the state agency would not be comparable to that afforded by the federal court, inasmuch as the defendants could not be made parties before the state agency, workers who had already settled could not be required to return any moneys already paid, the RICO claims could not be adjudicated before the state agency, and the agency could not award treble damages. Id. at 17. In conclusion, the court of appeals described the company's case as "garden-variety claims for money damages including their claims for treble damages under RICO, 18 U.S.C. § 1962, that present no danger of interfering with any proceeding or order of the New York State Workers' Compensation Board." Id.

H. Bayou Steel Corp. v. United Steelworkers of America

Bayou Steel is a publicly traded company. Together with its wholly-owned subsidiary, Bayou Steel Corp., it owns and operates steel minimills in Louisiana and Tennessee, as well as other facilities in three other states. For six years, starting in February 1987, Bayou Steel's workers at its Louisiana minimill were represented by the United Steelworkers of America, International, AFL-CIO-CLC ("Steelworkers"). Before expiration of the agreement, it engaged in extensive negotiations with the union for a new agreement, but those efforts failed. The union went out on strike in March 1993. Bayou Steel alleges that the union never had any real intention of reaching a new contract and that, instead, it sought to take control of the company's direction and policies, or in the alternative destroy the company. In August 1993, the union announced that it–together with the Industrial Union Department of the AFL-CIO ("IUD")–was launching a "corporate campaign" against Bayou Steel, to be patterned after the Steelworkers' earlier campaign against Ravenswood Aluminum Corp. According to Bayou Steel, the purpose of the campaign was to oust management and take control of the company's direction and policies regarding corporate governance, finance, investor relations, growth, worker safety, the environment, and its policies toward and relationship with state and federal regulatory agencies.

According to the company, the campaign was waged by violence, threats of violence, destruction of property, extortion, mail and wire fraud, and securities fraud. The union allegedly threatened particular managers and swore out false criminal charges against them. The union hired a private "independent auditor" to write misleading environmental reports which, when mailed to various federal and state agencies, caused them to investigate the company. Such reports were also disseminated to potential investors and mortgage lenders. The union disparaged the company's CEO and directors. The union also created a "Bayou Steel Shareholder Committee" and used it to bring derivative litigation and to disseminate fraudulent shareholder communications. Finally, the union used false statements to interfere with the company's issuance of new stock for purposes of acquiring its Tennessee minimill.

The company brought suit against the Steelworkers, Steelworkers Local 9121, and the IUD, alleging violations of RICO's subsections 1962(c) and (d). Civ. No. 95-496-RRM (D. Del.). The predicate acts were the Hobbs Act, the Travel Act, mail and wire fraud, and extortion under Louisiana law. The complaint also included a claim for violation of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. Finally, the complaint included common-law claims for interference with business and civil conspiracy.

The defendants moved to dismiss on numerous grounds. In addition to general pleading arguments, the defendants argued that their conduct was protected by the First Amendment. They also argued that all of the conduct was undertaken to provide economic pressure in support of a strike, and thus did not constitute a Hobbs Act violation under United States v. Enmons, supra. The court upheld the RICO and pendent state-law claims without discussion. Bayou Steel Corp. v. United Steelworkers of America, 1996 WL 76344, 151 L.R.R.M. (BNA) 2252 (D. Del. Jan. 11, 1996). The court dismissed the securities claims, however, since Bayou Steel did not plead reliance on any misrepresentations, and in any event any alleged misrepresentations were not made "in connection with the purchase or sale of a security," as required by Section 10(b) and Rule 10b-5.

I. Teamsters Local 372 v. Detroit Newspaper Agency

In July 1995, six unions went on strike against the Detroit Newspaper Agency ("DNA"), which publishes the Detroit Free Press and News. These unions were Teamsters Local 372; Detroit Mailers Union Local 2040; Newspaper Guild of Detroit Local 22; Graphics Communications International Union ("GCIU") Local 289; GCIU Local 13N; and Detroit Typographical Union 18, Communications Workers of America.

In October 1995, the unions brought an action against the DNA, its private security firms, and the City of Sterling Heights and certain of its agents. Civil Action No. 95-40474 (E.D. Mich.). The claims were grounded in 42 U.S.C. § 1983 and the Michigan Constitution. The unions claimed that the defendants had conspired to violate their rights under the NLRA, as well as their First Amendment and other constitutional rights. Specifically, the unions complained that in retaliation for their picketing, peaceable assembly and other strike activity, the defendants harassed their members, conducted unlawful searches and seizures, unlawfully arrested their members and sympathizers, failed to protect them, and failed to investigate law-breaking by the defendants' employees.

The following month, DNA filed a counterclaim under RICO's subsections 1962(c) and (d). The first count alleged that the unions engaged in extortion and physical and verbal threats of extortion directed at DNA's vendors and employees; robbery resulting from theft of newspapers; arson and bombing of news racks and DNA property and vehicles located thereupon. The second count alleged conspiracy and aiding and abetting.

The unions moved to dismiss on numerous grounds. The court upheld sixteen alleged acts of extortion, three alleged acts of robbery, and twenty-five alleged acts of arson. Teamsters Local 372 v. Detroit Newspapers, 956 F. Supp. 753 (E.D. Mich. 1997).

Judge Gadola began with a preemption analysis under Garmon, supra, and SDC Investment, supra. Id. at 759-62. Looking at the underlying conduct complained of, the court determined that the alleged arson, robbery, vandalism and assault were only of peripheral concern of the labor laws, and were unlawful without reference to labor law. However, the court dismissed verbal assaults that were simply "garden-variety" labor dispute conduct. Id. at 761.

The court next addressed the unions' claims that their conduct was protected under the First Amendment guarantees of free speech and association. Id. at 762. Judge Gadola quickly concluded that any flyers that were disseminated to encourage extortion, arson, robbery and vandalism were "not merely protected speech," and could be evidence of the conspiracy.

The court also considered various other pleading arguments raised by the unions. Of interest, Judge Gadola agreed with the unions that Enmons, supra, barred any Hobbs Act claim predicated on the union's use of violence. However, the court agreed with prior authority holding that extortion claims grounded in state law are not similarly barred by Enmons. Id. at 763-64.


It is an understatement, of course, to say that labor and management differ on the proper legal responses (if any) to corporate campaign activity. Whereas labor early on championed the use of antitrust and RICO theories, it no longer does so. Thus, at the same time that labor has become increasingly aggressive and creative in its corporate campaigns, it has sought to prevent management from brandishing two of the most powerful shields against them. What labor once hoped to reap from these statutes, it now views as simply fodder for Bill Johnson's charges. Bill Johnson's Restaurants, Inc. v. NLRB , 461 U.S. 731 (1983).

The courts are slowly becoming aware of what corporate campaigns are. On balance, management's legal challenges to them have been well received. As the number of corporate targets grows, and as the tactics in such campaigns increase in variety, management will be required to bring further litigation where necessary in the best interests of the company. That litigation will be as varied as the tactics used by labor, and thus no one legal theory will suffice for all purposes. As new cases are brought to the courts for consideration, however, it is important that management not lose sight of the "big picture," which is the same picture on labor's drawing board. Rather than cabining the dispute–either by challenging only small portions of the campaign, or by making ad hoc challenges in various jurisdictions–consideration should be given to an overall legal theory regarding the campaign. Depending upon the facts, the Sherman Act and/or the RICO Act may provide the best framework for that theory.

*article courtesy of Michael Mueller of Akin, Gump, Strauss, Hauer & Feld, LLP.

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