“Don’t waste time mourning. Organize.”
— IWW activist Joe Hill, to IWW leader “Big Bill” Haywood, upon Hill’s imminent execution, 1915

Introduction: Putting Yourself In The Labor Movement’s Shoes

Let’s do a thought experiment. You are in charge of one of the major labor unions in the United States. You have had some important successes in the first two years of the Obama administration, but now you are facing a declining roster, a Republican Congress that will prevent radical systemic reform in your favor anytime soon, and a stagnating economy at best or another recession at worst, further threatening your membership rolls and dues base. In the long term, these developments even ultimately threaten your survival as a viable organization. In fact, if you are the average union, your membership has continued to slide over the last five years, despite the focus on organizing provided by Change To Win and a much more favorable political environment.

You are interested in rapid expansion, if only as a matter of survival, given my thought experiment. Fortunately, you have a number of options. But, many of these are unlikely to be helpful in spurring rapid growth, or maintaining membership numbers in a time of significant job losses and little new hiring. You can count on the current National Labor Relations Board to overrule significant portions of Bush-era precedent, and make it incrementally easier for you to campaign and organize (such as the National Mediation board has done with the Railway Labor Act), including perhaps administratively cutting back the time for election processing. You can attempt to obtain some very modest legislative reform of the National Labor Relations Act, perhaps modeled on the Costco/Whole Foods/Starbucks “compromise” on the “Employee Free Choice Act.” You can hope the Obama administration or local political authorities can act by executive fiat to make organizing easier, such as with President Obama’s executive orders. You can plan for the 2012 elections. You can keep executing the same organizing strategy that you have been in the past.

But none of these options will help your union in the short run. Even if the board issues precedent or attempts rulemaking to help your union or even goes so far as to implement parts of EFCA into the law, an employer can still refuse to recognize an election result based on, e.g., the board acting outside of its authority or acting to change precedent without a reasoned explanation. That delay, before the employer is ordered to recognize your union and bargain, could take years. Unless some major political event changes the fundamental landscape of labor law in the next two years, the chance for any national pro-union legislative reform appears dead, even a “compromise” measure. Although there have been certain industry successes for unions due to executive action (e.g., federal government contract successors and public works contractors; home health care workers in Illinois), there have not been widespread attempts to translate massive government intervention in the economy into massive facilitation of union organizing. Waiting for the 2012 elections means that nothing happens until 2013, and you do not have that long. Hoping that the same organizing strategy used before — which has not stopped a declining roster — will now suddenly work seems foolish at best.

In other words, you need to find a strategy where the employer does not stand in the way of your efforts, and perhaps even helps your union organize the workforce, within the bounds of the law. That is the only broadly applicable approach that can add new members to your union in the space of a few months rather than years.

What possible approach would that be? Of course, as you the reader know, it is the corporate campaign. Corporate campaigns have been classically described as “top down organizing,” and, in times of economic urgency, they are especially appealing. First, because unions are under threat of losing members, and second, unlike in flush times, employers that are existing on the margins of this frazzled economy cannot afford a serious fight with a union that could threaten the employer’s market share or survival. Given these circumstances, any rational union leader will have to examine whether or not his or her union should begin or increase its commitment to a corporate campaign.

Every union is different, and there will be many that do not increase their involvement in corporate campaigns. But, as illustrated above, there are enormous incentives for most unions to implement them as part of a growth or survival strategy. This brief analysis examines some of the recently afforded or expanded tools that a union would most likely utilize to put immediate pressure on your operations in order to organize you or another employer.

Depressing Consumer Demand With Flimsy Or Baseless Public Accusations

Traditionally, the courts have been fairly lenient on unions’ call for a consumer boycott. See DeBartolo Corp. v. Florida Gulf Coast Bldg. Trades Council, 485 US 568 (1988). In corporate campaigns, such a boycott is an effective strategy against a target employer in two ways. First, the union may target the consumers of a secondary employer, in order to make that employer cease doing business with the target, unless the union gets the card check/neutrality language or other organizing advantages that it wants from the target. Second and more directly, the union may simply directly attack the customer base of the target to get the target to acquiesce in the union’s organizing demands. Turning consumers away from any employer can have severe consequences in a flat economy.

However, employers have traditionally possessed the rights to fight back with litigation in the most egregious circumstances. They have a range of potential claims against over-the-top union tactics, including defamation/trade libel, misappropriation of trade secrets, interference with economic relations or prospective economic relations, breach of contract, and unfair business practices. Unfortunately, new court authority poses additional problems for employers and correspondingly gives unions more leverage in this arena. In Sutter Health v. UNITE-HERE, 186 Cal. App. 4th 1193, 113 Cal. Rptr. 3d 132 (July 21, 2010), UNITE-HERE was extremely interested in organizing Angelica Linen and viewed Angelica’s major customer, the Sutter Health hospital system, as a prime point of leverage. After Sutter refused to switch linen services, UNITE-HERE launched an aggressive postcard assault on the quality of Sutter Health’s linen service, insinuating that newborn babies were at risk because of Sutter’s negligence in properly cleaning and re-using linens.

Specifically, UNITE-HERE sent a postcard to approximately 11,000 women of childbearing age in the areas surrounding Sutter Health’s birthing centers. The front of the postcard showed a photograph of a newborn infant with the following: “Expecting? You may be bringing home more than your baby if you deliver at a Sutter Birthing Center.” The back of the postcard claimed that “your Sutter Birthing Center may not be taking [adequate] precautions. Angelica, the laundry service utilized by Sutter, does not ensure that ‘clean’ linens are free of blood, feces and harmful pathogens.” The bottom corner of the postcard read: “UNITE HERE is engaged in a labor dispute with Angelica Textile Services.” The appellate court was fully cognizant of the postcards’ context within a corporate campaign, finding that “[t]he postcards were intended to (1) dissuade people from using the hospitals because of the laundry company’s shortcomings, thus (2) put pressure on the hospitals to stop using the laundry company’s services, which would (3) persuade the laundry company to agree to the union’s demands in order to avoid the loss of the hospitals’ business.”

After receiving reports from concerned patients, Sutter Health and 13 of its affiliated hospitals filed suit against UNITE HERE in Placer County, California, alleging claims for defamation, intentional interference with prospective economic relations, trade libel and violation of California’s Unfair Business Practices Act. UNITE-HERE’s removal motion, based on NLRA preemption, failed and the parties litigated the case in state court through trial.

At trial, following extensive discovery, Sutter Health offered substantial evidence that the postcard was false, including expert testimony that there has been no reported case of infection transmission from laundered linen in the United States and that the precautions taken by Sutter Health hospitals to ensure linen cleanliness were reasonable, appropriate and in excess of the precautions mandated by law. Sutter Health also introduced evidence from experts demonstrating the damages caused to the Sutter Health hospitals from the defamatory postcard. After the close of evidence in the case, the jury returned a verdict that found UNITE-HERE liable to the plaintiffs for defamation and intentional interference with prospective economic relations and awarded over $17 million in compensatory damages, one of the largest verdicts of its kind.

After UNITE-HERE appealed, the California Court of Appeals reversed the judgment because the incorrect standard was applied concerning Sutter Health’s burden of proof. Specifically, the court held that the trial court “committed harmful error by refusing to instruct the jury that the hospitals had the burden of proving by clear and convincing evidence that the union made the defamatory publication with actual malice, i.e., with knowledge of its falsity or with reckless disregard of whether it was true or false.”

The court held that, as a matter of federal law, “this actual malice burden of proof applies to plaintiffs who seek state remedies for defamatory labor dispute publications, and that such publications include those directed at ‘secondary targets,’ i.e., companies using the services of a company that is engaged in a labor dispute with an employee union.” The appeals court found that the postcard publication in this case was such a labor dispute communication because the union used it to advance the union’s primary dispute with the laundry company by exerting pressure on the Sutter hospitals to stop using the laundry’s services if the labor dispute was not resolved.”

There were several sobering elements of the court’s opinion, in addition to the outcome. First, “reckless disregard” meant that the employer had to prove that the union itself essentially knew that its allegations were false. Specifically, the employer must prove that the union defendant had “a high degree of awareness” of the allegations’ “probable falsity.” Negligence or even gross negligence concerning the truth of the allegations is not enough to show liability. Second, the union’s failure to conduct a thorough and objective investigation, standing alone, does not prove actual malice under the standard. Thus, slipshod or even non-existent factual support for allegations are protected, at least where there is no other evidence that the union had a high degree of awareness that its allegations were untrue.

Although the interpretation of federal law here is suspect, unfortunately the Sutter Health opinion stands as a precedent giving unions the license to perform flimsy-at-best research in their corporate campaigns directed at both primary and secondary targets. Employers should take note that the pure litigation response to defamatory corporate campaign allegations may not deliver the benefit for the high cost of undertaking them. Sutter Health is petitioning the California Supreme Court for review of this case as of this writing.

Opening the Door for Physical Confrontation and Coercion of Customers: “Bannering Plus”

In Carpenters Local 1506 (Eliason & Knuth of Arizona), 355 NLRB No. 159 (September 22, 2010), the Obama board ruled, in a self-described “issue of first impression” that unions do not violate Section 8(b)(4)(ii)(B) of the NLRA when, at a secondary employer’s business, union agents display a large stationary banner announcing a “labor dispute” and seeking to elicit “shame on” the employer or persuade customers not to patronize the employer. Under the stipulated facts of this case, the union peaceably displayed banners bearing a message directed to the public. As the Administrative Law Judge and the board found, the banners were held stationary on a public sidewalk or right-of-way, no one patrolled or carried picket signs, and no one interfered with persons seeking to enter or exit from any workplace or business.

On those stipulated facts, the board held that the union’s conduct did not violate the Act. The board held that its decision was controlled by DeBartolo in that Section 8(b)(4)(ii)(B) should not be interpreted to apply to such bannering in order to avoid “present[ing] for judicial review the constitutionality as applied [of Section 8(b)(4)(ii)(B)] to the peaceful display of a stationary banner.” The board thus held that “the display of a stationary banner, like handbilling and even certain types of picketing, is noncoercive conduct falling outside the proscription in Section 8(b)(4)(ii)(B).”

The banner closest in proximity in these cases was the one posted at RA Tempe Restaurant. There, the banner measured 15-feet-long by 3-feet-high and was held by two or more union agents posted at the sidewalk curb approximately 15 feet from the front door and large windowed facade of the restaurant. The banner faced the street. Individuals going to the restaurant would be confronted by the sign and the union banner-bearers from the sidewalk across the street and from their cars as they drove by, just prior to parking. Individuals parking curbside adjacent to the banner would have to walk around or duck under the banner in order to enter the restaurant.

My emphasis above shows the breadth of this new allowance of union freedom to confront customers (and employees) without board intervention. Notably, where a union can place an extremely large banner 15 feet from a front door (the sole entry into the employer’s place of business), so that a significant number of customers have to “walk around or duck under” the banner, the potential for coercing customers with an obstacle likely predominates over the potential of convincing them with the strength of the union’s ideas. If we add to this the board’s allowance of union handbillers who may operate closer than 15 feet to the doorway, the potential for coercion is increased.

This open door for mischief is underscored by Eliason & Knuth’s companion case, United Brotherhood of Carpenters and Joiners of America, Local Union No. 1506 (Associated General Contractors of America), 355 NLRB No. 191 (September 22, 2010). There, the union positioned most of the banners at the “inside” edge of the sidewalk in the vicinity of the secondary employer’s premises, that is, with the sidewalk between the banner and the street. The sidewalk remained “clear”, just as in Eliason & Knuth, although obviously the banner and its bearers constricted it. The board found, “[w]hile positioning a banner on the inside edge of the sidewalk allows pedestrians to pass in front of the banner and, if they so choose, to read its message more easily than if it were placed on the outside edge, we do not find that this factual difference distinguishes the conduct here from that found lawful in Eliason.” That the bannerbearers could more easily interact with (and potentially harass) pedestrians attempting to enter the premises down the constricted sidewalk was not relevant to the board. The board noted that there was no evidence that the union recorded the identity of those who entered the site or attempted to interact with them. Thus, the board found the banner-holders could not have been perceived as threatening.

Invasion of Property – Special Allowance for Picketing

Although the following case comes out of fairly idiosyncratic California state labor law, it will be interesting to see if unions can protect and advance special legislation or judicially created rules giving them wide latitude to protest on private employer property. In Ralphs Grocery v. United Food and Commercial Workers Union (2010) 186 Cal. App. 4th 1078, review granted, 113 Cal. Rptr. 3d 88 (SC S185544) (September 29, 2010), the California Supreme Court will weigh in on a California appellate court decision which struck several of California’s union-protective statutes down on constitutional grounds, specifically the Moscone Act (Cal. Code Civ. Proc. § 527.3) and California’s “mini Norris LaGuardia Act” (Cal. Labor Code § 1138.1). There, the employer had obtained a reversal of the trial court’s denial of an injunction to prevent union picketing in the parking area and walkway in front of the employer’s grocery store. The California Supreme Court has granted review on the following issues: (1) did the lower appellate court err in concluding that the parking area and walkway in front of the entrance to plaintiff’s retail store, which is part of a larger shopping center, do not constitute a public forum under Robins v. Pruneyard Shopping Center (1979) 23 Cal. 3d 899 and its progeny?; and (2) do the Moscone Act and Labor Code section 1138.1, which limit the availability of injunctive relief in labor disputes, violate the First and Fourteenth Amendments of the US Constitution because they afford preferential treatment to speech concerning labor disputes over speech about other issues? The outcome of this case may embolden, or alternatively chill, union corporate campaign picketing activity in California and other states.

Say On Pay

One of the lesser-known elements of the sweeping Dodd-Frank Act aimed primarily at overhauling the nation’s banks is directing the Securities and Exchange Commission to write rules that could temper the compensation of executives across multiple industries. The statute directs the SEC to give institutional investors, starting in 2011, a vote on the pay packages of top executives at publicly owned US corporations. While the vote is nonbinding and corporations are thus not required to follow the wishes of shareholders, the provision is expected to have a transformative impact on the relationship between CEOs and institutional investors, in part, because of the embarrassment a company could experience if investors give its executive pay a strong negative vote.

For the nation's top chief executives, much is at stake. In 2009, the median total compensation for chief executives whose companies are in the Standard & Poor's 500 index was roughly $7.5 million, down from approximately $8.2 million in 2008, according to Equilar Inc., a Redwood City, Calif., executive compensation research firm. (Source: Wall Street Journal, August 26, 2010)

We can expect to see unions sponsor and play up these votes to influence corporate boards and executives as part of an overall corporate campaign strategy, just as they did in their (ultimately unsuccessful) campaign against Michael Dell at Dell, Inc. in July and August, 2010. Union pension funds did manage to convince holders of 25.1 per cent of shares voted at Dell’s annual 2010 meeting to withhold their support for Mr. Dell’s reappointment as a director, an unusually high vote of no confidence. (Source: Financial Times, August 18, 2010)