Hunton Employment & Labor Perspectives

Last month, the Eleventh Circuit issued an important ruling in favor of an employee who is accusing his employer and UNITE HERE of violating the Labor Management Relations Act ("LMRA") by entering into an organizing rights agreement that includes employer neutrality and employee access features.  In Mulhall v. UNITE HERE Local 355, No. 11-10594 (11th Cir. January 18, 2012), the Court reversed a lower court decision dismissing Mulhall's lawsuit.  That court had held that Section 302 of the LMRA, which forbids employers from "pay[ing], lend[ing] or deliver[ing]" money or any other "thing of value" to a labor organization, could not be construed to outlaw voluntary agreements between employers and unions that set conditions for union organizing campaigns.

The Eleventh Circuit panel, "relying on . . . common sense," disagreed with the lower court's ruling, noting that it was apparent from the plain meaning of the statute that "organizing assistance" could indeed constitute a "thing of value" under Section 302 because an agreement involving "intangible services, privileges or concessions" can be "paid or operate as payment."  The Court noted that whether something can be "paid" within the meaning of Section 302 depends not on whether it has actual monetary value, but instead "on whether its performance fulfills an obligation."  The Court went on to opine that where an employer offers organizing assistance with the intention of improperly influencing a union, then the policy concerns underlying Section 302 -- the prevention of bribery and extortion during the union organizing process -- are implicated, and a violation of the statute may have occurred.  The Court remanded the case to the district court for a determination whether the facts alleged by Mulhall -- which included the allegation that his employer had offered the neutrality and access agreement to UNITE HERE in exchange for the union's financial support for a casino gaming ballot initiative sought by the employer -- would support a finding that the agreement violated Section 302.

The Court expressly acknowledged that its decision represents a departure from decisions reached by sister Circuits.  The Fourth Circuit had previously held that organizing assistance has no ascertainable value under Section 302 and therefore that an employee's civil RICO claim against his employer and union premised on violations of Section 302 (which is a RICO predicate act) could not go forward.  The Third Circuit similarly held that a neutrality agreement could not qualify as a "thing of value" under Section 302, regardless whether it benefitted the employer and the union, because it could not be paid, loaned or delivered.  The Mulhall Court chose not to accept the rationale articulated in those decisions.  Instead, it sided with the Second Circuit, which commented in a Section 302 case involving different facts that "[v]alue is usually set by the desire to have the 'thing' and depends upon the individual and the circumstances."  The Mulhall Court's ruling thus stands for the proposition that whether an intangible benefit like a neutrality agreement can have "value" under Section 302 depends on the facts of each case.

The Mulhall decision sets up an intriguing Circuit split on an issue of clear importance both to employers and unions.  The case already has attracted attention from the employer and organized labor communities, as both the Service Employees International Union and National Federation of Independent Business Small Business Legal Centers filed amicus briefs during the appeal process.  The decision also places employers in somewhat of a quandary...indeed, how should they feel about the Court's holding?  On one hand, Mulhall is problematic for employers who have already entered into organizing rights agreements with unions, as it might incentivize employees to seek injunctions attempting to block those agreements.  On the other hand, Mulhall allows employers who do not want to enter an organizing agreement to reject any union appeal to do so on the grounds that it would be unlawful.  Thus, if the Mulhall decision is appealed to the U.S. Supreme Court, the employer community will need to exercise a great deal of care and consideration in deciding what amicus position to take.  We will continue to follow this case closely and will update you if and when it progresses.