The U.S. Supreme Court has been asked to decide whether a neutrality agreement between a Florida greyhound track and a union improperly delivered a “thing of value” in violation of the Labor Management Relations Act.
Traditionally, when a union has sought to organize the employees of an employer and the employer decided it wanted to oppose the effort, the employer exercised its rights under Section 8(c) of the National Labor Relations Act to educate its employees about unionization. Sometimes, however, particularly in connection with a “corporate campaign,” an employer decides to relinquish its rights under Section 8(c) and, instead, to remain neutral about the union in its communications to its employees. Such a decision, of course, makes it much easier for a union to prevail in a subsequent National Labor Relations Board election, since employees then will decide how to vote (“no” – against unionization; “yes” – for unionization) based almost exclusively on information they receive from the union. Invariably, that information will paint the union and unionization in the best possible light. That could change if the U.S. Supreme Court grants certiorari and affirms the decision of the U.S. Court of Appeals for the Eleventh Circuit in Mulhall v. UNITE HERE Local 355, 667 F.3d 1211 (11th Cir. 2012), finding a neutrality agreement violated the Labor Management Relations Act.
The case arises out of an action filed by Martin Mulhall, an employee of Hollywood Greyhound Track Inc., d/b/a Mardi Gras Gaming, to enjoin an agreement between his employer and UNITE HERE Local 355 (“Union”). The agreement provided the Union access to non-public work areas of the employer’s property, confidential information about the employees, including their addresses, and a commitment by the employer to remain neutral in any union organizing efforts. The agreement also provided that the Union would support a local ballot initiative regarding casino gaming favored by the employer and, once recognized by the employer, would refrain from striking.
Mulhall asserted the agreement violated Section 302 of the Labor Management Relations Act because it improperly “delivered” or “paid” a “thing of value” to the Union. Section 302 makes it unlawful for an employer to “pay, lend or deliver any money or other thing of value to any labor organization…which seeks to represent… any of the employees of such employer.” 29 U.S.C. 186.
The U.S. District Court, Southern District of Florida, initially dismissed the action on the ground that Mulhall lacked standing to sue. After that decision was reversed by the Eleventh Circuit Court of Appeals and returned to the lower court, the District Court ruled that Mulhall had failed to state a claim for relief. The Eleventh Circuit again reversed, holding that “organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of Section 302.” By so holding, the Circuit Court declined to follow rulings of the Third and Fourth Circuit Courts of Appeals. The Third Circuit had held in Adcock v. Freightliner LLC, 550 F.3d 369, 374 (4th Cir. 2008), that organizing assistance was not a “thing of value.” The Fourth Circuit had held in Hotel Employees and Restaurant Employees Union, Local 57 v. Sage Hospitality Res., 390 F.3d 206, 219 (3d Cir. 2004), that organizing assistance did not qualify as a “payment, loan or delivery.”
In reaching its decision, the Eleventh Circuit Court noted that organizing assistance can be a “thing of value” and that a thing of value can be intangible, but that intangible organizing assistance cannot be loaned or delivered. The Court also stated with respect to neutrality agreements:
It is too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in Section 302. Employers and unions may set ground rules for an organizing campaign, even if the employer and the union benefit from the agreement. But innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to corrupt a union or extort a benefit from an employer.
The Union has petitioned for certiorari on whether organizing assistance can be a “thing of value.” Mulhall has cross-petitioned on whether intangible things can be “delivered.”
If the Supreme Court grants certiorari and rules against the Union (on the value issue, the delivery issue, or both), the effect on UNITE HERE and other unions that rely heavily on neutrality agreements as their preferred method of organizing could be dramatic. Indeed, such a ruling might compel them to return to traditional methods of organizing that are more expensive and less likely to be successful.