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US justices cast doubt on validity of union pact

WASHINGTON — The justices of the U.S. Supreme Court expressed doubt on Wednesday as to the legality of a commonly used type of labor negotiating pact, setting up the possibility of a high court ruling that could shake up workplace organization efforts.

The case Unite Here Local 355 v. Mulhall, No. 12-99, involves a challenge to a neutrality agreement between a union and a Florida casino the union sought to organize. Such agreements are increasingly common to set the ground rules during a unionization campaign.

In the agreement at issue, the casino promised to (1) give union representatives access to the casino’s premises, (2) give the union a list of the names, addresses and job classifications of the casino’s employees; and (3) remain neutral as to the unionization of employees. In return, the union agreed not to strike or undertake any other economic activity against the casino and to support a gaming ballot initiative.

An employee of the casino who was opposed to unionization efforts filed a complaint seeking to enjoin enforcement of the agreement, arguing that it violated §302 of the Labor Management Relations Act. That law, designed to prevent bribery and corruption, makes it a crime for an employer “to pay, lend, or deliver, any money or other thing of value . . . to any labor organization, or any officer or employee thereof, which represents, seeks to represent, or would admit to membership, any of the employees of such employer.”

A federal district court dismissed the complaint for failing to state a claim, finding that the company’s promises to the union in the contract did not constitute a “thing of value” under the statute.

But the 11th U.S. Circuit Court of Appeals reversed, holding that a jury could find that the casino’s promised assistance was a thing of value.

Declining to create a blanket exemption for neutrality agreements under §302, the court acknowledged that defining what qualifies as a “thing of value” will not always be an easy task.

“No calculating machine has yet been invented to make these determinations with certainty,” the court said. “In the meantime the courts must rely upon the less mechanical judgment and common sense which under the present system is, and of necessity must be, lodged in judges and juries.”

The ruling was in conflict with decisions from the 3rd and 4th Circuits, and the Supreme Court agreed to take up the case.

Defining ‘value’

At oral arguments, Richard McCracken, a partner in the San Francisco office of Davis, Cowell & Bowe LLP and the attorney for the union, pointed out that similar agreements have been used and enforced for decades.


“These agreements are prevalent in the hospitality industry,” McCracken said. “All of the major hotel companies have entered into these, and the major casino companies as well.”

But the justices spent most of the session suggesting that the cooperation promised by the casino could be considered valuable enough to trigger the statute’s prohibition.

“Suppose what the employer gave the union was a lease well below market rate on property for use as a union office,” Justice Samuel Alito Jr. hypothesized. “Would that qualify as a thing of value?”

“It would qualify,” McCracken said.

“So what’s the difference here?” Alito asked. “There’s the conveyance of a certain property right. Why doesn’t that constitute a thing of value?”

“Because the union really only had a right of access [to premises and information], not any exclusive possession of any property, and only for the very limited purpose of communicating with employees about their Section 7 rights,” McCracken replied.

Justice Antonin Scalia noted that the fact the union agreed not to strike and to support the ballot initiative — something the union ultimately spent $100,000 to do — suggests what it got in return was valuable.

“I mean, the union wouldn’t promise that for nothing,” Scalia said. “It would get something in exchange such as, as in this case, the right to go on the employer’s property to recruit union members or some other thing of value from the employer, right?”

McCracken said the language of the statute is very specific.

“They are desired by the union. That does not make them things of value that are paid, lent and delivered by employer,” McCracken said.

Deputy U.S. Solicitor General Michal Dreeben argued as amicus curiae in support of the union, warning the court not to read §302 as “a freestanding provision divorced from the central policy of the labor laws.”

Justice Anthony Kennedy didn’t seem convinced.

“I can see if there was a conspiracy to extort these benefits, that the government would take the position that there was a crime because there was a thing of value,” Kennedy said.

‘Massive hole in the statute’

William Messenger, staff attorney at the National Right to Work Legal Defense Foundation in Springfield, Va., argued on the employee’s behalf that agreements like the one at issue are used to get employers to negotiate away their federally-protected rights, such as the ability to petition for a secret election or file a complaint against the union with the National Labor Relations Board.

When Scalia asked whether the court could find a §302 exclusion for organizing activities, Messenger said it should not.

“An organizing exception to §302 would tear a massive hole in the statute,” Messenger said.

Justice Ruth Bader Ginsburg pointed out that neutrality contracts have been upheld and enforced under §301 of the statute. “So it would be odd to say that an agreement that is enforceable [under] §301 is criminal under 302.”

“The exact opposite is true,” Messenger said. “Section 301 gives courts jurisdiction to enforce any agreement between a labor organization and an employer. [Section] 302 makes it illegal for an employer to agree to deliver something of value to a union.”

“Have courts enforced agreements just like this one under §301?” Ginsburg asked.

“Many times,” Messenger said. “However, 302 was not raised in those cases. So would they have enforced the agreement if it was alleged that it violated 302? That, of course, is the question before this court.”

A decision is expected later this term.

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