Hunton Employment & Labor Perspectives

The Eleventh Circuit recently ruled that an employee had standing to seek an injunction against his employer and a labor union over alleged violations of the Labor Management Relations Act (“LMRA”) in the union organizing context.  In Mulhall v. UNITE HERE Local 355, Hollywood Greyhound Track, Inc., d.b.a. Mardi Gras Gaming, (No. 09-12683, September 10, 2010), the Eleventh Circuit reversed the lower court’s dismissal of the case, overruling its decision that the employee lacked a cognizable injury, and remanded the case for further proceedings.

Jerry Mulhall was an employee of Hollywood Greyhound Track, Inc., operating as Mardi Gras Gaming (“Mardi Gras” or the “Company”), in Hallandale Beach, Florida.  Mardi Gras’ workforce was non-union—and that is how Mulhall wanted it to stay.  A vehement opponent of unionization, Mulhall filed suit to block enforcement of a Memorandum of Agreement (“MOA”) entered into by his employer and UNITE HERE which, according to Mulhall, would illegally thrust unionized status upon the employees.

Under the MOA, which Mulhall characterized as “illegal and collusive,” UNITE agreed to financially support a casino gaming ballot initiative desired by Mardi Gras, and, if recognized as the exclusive bargaining agent for Mardi Gras’ employees, to refrain from picketing, boycotting, striking or undertaking “other economic activity” against the Company.  In exchange, Mardi Gras agreed to help UNITE organize the Company’s employees.  Specifically, Mardi Gras promised to:  (1) provide UNITE with complete employee rosters and home addresses; (2) allow UNITE to use Company property—including non-public areas—for organizing activities; (3) refrain from any anti-union speech or conduct; (4) waive its right to an NLRB-monitored secret ballot election and, instead, allow an informal “card check;” and (5) promise not to file unfair labor practice charges against UNITE for violating employees’ rights during the organizational campaign.

UNITE abided by the MOA and provided more than $100,000 toward the gaming-related ballot initiative favored by Mardi Gras.  When UNITE later demanded the promised assistance from the Company in organizing the workforce, Mardi Gras refused, claiming that the MOA was illegal, based on the advice of its new legal counsel.

UNITE and Mardi Gras arbitrated the enforceability of the MOA, and an arbitrator ruled for UNITE.  At the same time, Mulhall filed an injunction action in federal court, claiming that the MOA was unlawful under Section 302 of the LMRA, which makes it illegal for an employer to deliver, or for a union to receive, any “thing of value.”  Essentially, the statute prohibits employer payments to any representative of its employees, with certain limited exceptions.  As the Court observed, one of the goals of Section 302 is to protect employees from the collusive effects of unions and employers attempting to “buy” labor peace.

In holding that Mulhall had legal standing to bring such an action, the Eleventh Circuit found that Mulhall satisfied all three elements:  (1) he has suffered or imminently will suffer an injury-in-fact; (2) that his injury stems from the defendant’s conduct; and (3) that a favorable judgment is likely to redress the injury.  With regard to the “injury” prong, the Court held that Mulhall showed that he had a “legally cognizable interest” that was imminently at risk of being invaded:  his freedom of association under the First Amendment.  In other words, Mulhall had the right not to associate with a union, and the MOA substantially jeopardized that right.  Therefore, he faced imminent injury:  being forced to unionize against his will.

The Court also found that the second and third prongs required to establish standing were satisfied because the potential injury was “fairly traceable” to Mardi Gras’ and UNITE’s conduct, and a favorable judgment—enjoining enforceability of the MOA—would eliminate the risk of forced unionization.  In finding that Mulhall had standing and could proceed with his legal action, the Court was clear to point out that it was not ruling on the merits.  Instead, in the Court’s words, “we say only that it is enough to allow him to get his ticket stamped for admission to the federal court.”

Mulhall raises a host of interesting questions about the degree to which employers and unions can agree on the conditions that will govern an organizing campaign.  The lesson is that, while granting concessions like neutrality and card check probably do not violate § 302 (if for no other reason than the NLRA allows an employer to voluntarily agree to recognize a union on cards), agreeing to do things such as accept the union’s financial support in unrelated business endeavors in exchange for card check and neutrality raises significant § 302 concerns.  Therefore, employers should carefully consider such proposals and seek legal advice before going forward.