6/24/08

Guide: Union organizers use malicious litigation

Explosion of RICO lawsuits v. unions in federal courts

Union corporate campaigns have faced increasing scrutiny, and growing opposition by the employers that are subjected to their tactics, as organized labor continues to deploy the strategy with considerable success. A corporate campaign is used to pressure employers into voluntarily recognizing a union without a traditional NLRB-conducted secret-ballot election. Litigation is one of the standard weapons in the union’s corporate campaign arsenal. Aspen Publisher’s Employer’s Guide to Union Organizing Campaigns describes how unions use the courts as part of a pressure campaign:

A corporate campaign will typically include use of litigation to create outside pressure against the company from key stakeholders, including regulatory agencies and the general public. During an organizing campaign, a union may initiate federal, state and local complaints of violations related to the following matters:

* labor laws
* health and safety
* community health
* environmental protection
* zoning and planning
* building departments
* health departments
* equal employment opportunity (discrimination/harassment)
* wages and hours of work
* whistle blowing
* industry specific issues

In addition to individual actions, a union may initiate or assist in bringing a class action lawsuit on behalf of workers targeted for organization subjecting the employer to potentially multi-million dollar liability, costs of defending the suit and potentially high-profile adverse media exposure. These class action suits are also intended to demonstrate what the union can do for employees, as well as how badly it can hurt employers, and are very well publicized.

CASE IN POINT. In June 2005, during its Houston, Texas, Justice for Janitors city-wide organizing campaign, the SEIU issued a press release advising that janitors in Houston, Texas, were eligible to join a “growing class action for unlawful pay practices that could involve thousands of workers and millions of dollars.” The suit, which was for unpaid overtime wages and improper workers' compensation insurance deductions, was brought with the SEIU's assistance on behalf of certain janitors who worked in Texas and Illinois.

The same press release boasted that earlier in the year, 2,000 janitors who cleaned California supermarkets had won $22.4 million in settlement of a class action lawsuit initiated by the SEIU involving subcontractors' overtime and minimum wage law violations. It also advised that a janitorial company had agreed in 2004 to pay $1.9 million in back wages to 775 employees following overtime wage violation charges referred to the Labor Department after investigation by the SEIU and a labor-management watchdog group. (SEIU Texas press release, June 15, 2005).

Note that the District of Columbia and Sixth Circuit Courts of Appeals have viewed union-sponsored lawsuits for back wages that are announced to employees during the critical period before a representation election as an impermissible conferring of benefits or gratuities in order to influence votes, Nestle Ice Cream Co v NLRB, (6thCir 1995) 46 F.3d 578, 129 LC ¶11,283; Freund Baking Co v NLRB, (DCCir 1999) 165 F.3d 928, 137LC ¶10,356. But a union's initiation of an unfair labor practice charge during this critical period is permissible since the purpose of the charge is to prevent an employer's unfair labor practice from inhibiting employees' rights to freely vote for or against union representation. Freund Baking Co, Id.

In some cases, lawsuits initiated or assisted by unions have little or no merit and serve primarily to advance an organizing campaign. In one case, UNITE HERE brought suit against a company under the Securities and Exchange Act, claiming the company issued a proxy statement that contained misleading statements and omissions about material facts related to two directors who were slated for reelection. The union sought an injunction forcing the company to make corrective disclosure quickly enough for shareholders' receipt and consideration prior to casting their votes at the company's annual meeting or, absent timely disclosure, rescheduling the annual meeting, declaring solicited proxies null and void, or invalidating the results of any vote or election utilizing the proxies.

Denying the union's motion for a preliminary injunction, the court wrote:

“It appears that the plaintiff had no genuine belief in the merits of its claims, but brought this lawsuit as part of its campaign to harass a corporation and gain leverage in a unionization struggle.”

The court further held that even if the union filed its suit out of concern for the best interests of the company or its shareholders, UNITE HERE had not shown that any of the disclosures it sought would be material to shareholders as they engaged in voting at the annual meeting.

In many cases, the union withdraws a lawsuit before any decision on the merits is reached because its organizing goals have been realized. Even when lawsuits have little or no merit, the legal actions may succeed in distracting the employer by forcing it to incur immense legal fees and expend large amounts of time defending the suit, and by damaging the company's reputation and threatening its business. (See the district court's conclusion in UNITE HERE v Cintas Corp, (SDNY 2006) 2006 US Dist LEXIS 75376.)

- From Aspen Publishers’ An Employer’s Guide to Union Organizing Campaigns, by Jackson Lewis. Excerpt from Ch. 9, “The Corporate Campaign: What to Expect.”

(hr.cch.com)

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