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Supreme Court dismisses grant of cert in union neutrality agreement case as improvidently granted

December 11th, 2013  |  Lisa Milam-Perez

By Lisa Milam-Perez, J.D.

A case that could potentially have transformed the landscape for labor organizing has been dismissed by the Supreme Court as improvidently granted. At issue in UNITE HERE Local 355 v Mulhall (Dkt No 12-99) was whether a “neutrality agreement” between a labor union and an employer during an organizing drive is a “thing of value” and therefore illegal under Section 302 of the Labor-Management Relations Act. A Supreme Court affirmance of the Eleventh Circuit’s holding that neutrality agreements are unlawful under the statute’s antibribery provision would have drastically curtailed organized labor’s use of corporate campaigns (or “top down” organizing) as a favored strategy for growing its ranks. Justice Breyer dissented from the order of dismissal, joined by Justices Sotomayor and Kagan.

The issue before the High Court was significant. “The importance of neutrality agreements for union organizing cannot be overstated, attorneys J. Michael McGuire and Bryan M. O’Keefe, of the management firm Shawe Rosenthal, wrote in Employment Law Daily. “While the traditional ’secret ballot’ election was the preferred method of union organizing for much of the first 50 years of the NLRA, in the late 1980s and early 1990s labor unions shifted their focus to non-traditional means of organizing and obtaining voluntary recognition. After all, the secret ballot election process can be expensive and time-consuming; the union must first obtain signatures from at least 30 percent of employees to even trigger an election (and unions usually seek a much higher percentage before asking for a vote), followed by a usually acrimonious 42-day election period. Even if the union wins — and to this day unions win the majority of NLRB elections — litigation over various aspects of the election process can drag on for months or years. In the post-Reagan era, when unions were hemorrhaging money and members, this ‘bottom-up’ form of traditional organizing could not keep pace with labor’s continuing decline in membership.” Thus, organized labor turned to the “corporate campaign” model, seeking to secure an employer’s neutrality in the face of a union organizing drive, followed by a quicker “card-check” recognition.

So here’s the deal that troubled the employee-plaintiff—or, perhaps more accurately, the National Right to Work (NRTW) Legal Defense Foundation, which represented him: a casino entered into an agreement with UNITE HERE in which the employer agreed to remain neutral during the union’s organizing drive and also to provide access to the workers off-the-clock and turn over a list of their home addresses. The casino also agreed to card-check recognition, to refrain from filing unfair labor practices against the union, and to enter into arbitration if the parties failed to reach a bargaining agreement within 150 days. In exchange, the union would funnel $100,000 into a campaign for a local ballot initiative on casino gaming, and to refrain from striking if recognized as the employees’ bargaining representative. A divided Eleventh Circuit struck down the deal. While “employers and unions may set ground rules for an organizing campaign, even if the employer and union benefit from the agreement,” such ground rules can cross the line into a prohibited “thing of value,” the appeals court wrote.

The High Court heard oral argument in the case on November 13. As Justice Breyer noted, however, upon consideration of the briefs in the case and argument, it became apparent that the case may have been moot because the neutrality agreement at issue appears to have expired before the Eleventh Circuit issued its ruling; second, the sole plaintiff may have lacked standing. The dissent urged that the Court should simply request additional briefs on these two questions rather than dismiss the grant of certiorari. If in fact the federal courts lack jurisdiction, the appellate court’s decision should be vacated, Breyer argued, “thereby removing its precedential effect and leaving the merits question open to be resolved in a later case.”

Breyer also asserted that the Court should seek further briefing on yet another question: whether Sec. 302 authorizes a private right of action. “Long ago and in passing,” he noted, the Court held there is a private right to seek injunctions under Sec. 302(e), but “in light of the Court’s more restrictive views on private rights of action in recent decades,” this dictum stood on uncertain ground. If no private right of action exists, then courts will not need to resolve these difficult questions as to the scope of Sec. 302, “unless the Federal Government decides to prosecute such cases rather than limit its attention to cases that clearly fall within the statute’s core antibribery purpose.”

Federal courts — including the Third and Fourth Circuits — have consistently rejected the notion that neutrality agreements are a “thing of value” under Sec. 302. The Eleventh Circuit’s 2012 holding created a circuit split.

“Unless resolved,” Breyer continued, the split threatens to impede collective bargaining. “The Eleventh Circuit’s decision raises the specter that an employer or union official could be found guilty of a crime that carries a 5-year maximum sentence if the employer or union official is found to have made certain commonplace organizing assistance agreements with the intent to ‘corrupt’ or ‘extort.’ In my view, given the importance of the ques­tion presented to the collective-bargaining process, further briefing, rather than dismissal, is the better course of action.”

As of now, though, the circuit court’s holding stands. Celebrating the organization’s win in the wake of the Supreme Court’s order, NRTW president Mark Mix cautioned, “Union bosses and employers who use workers’ rights as a bargaining chip will now enter into these agreements at their own risk.” In the Eleventh Circuit, at least.

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