Seventh Circuit Court of Appeals finds that Secondary Activity Amounted to Coercive Union Harassment and Trespass.

United States Court of Appeals for the Seventh Circuit court in Chicago, in 520S. Michigan Ave. Associates, Ltd. v. Unite Here Local 1, 13-1938, 2014 WL 3720253 (7th Cir. July 29, 2014), recently found that that  Unite Here Local 1, the “Union”, engaged in secondary activity that was coercive, threatening and harassing in its tactics to settle a long time strike against Congress Plaza Hotel, the “Hotel”, in Chicago. 

The Union began engaging in secondary activity—i.e., targeting organizations that had made arrangements to reserve large blocks of rooms or space at the Hotel, in the hopes that they would cancel their plans and thus pressure the Hotel to end the strike. The Union would send delegations, consisting of striking Hotel workers and Union staff in groups of between two and ten people, to the stores and offices of these potential Hotel patrons. Delegates were instructed to impress upon the decision-makers of these organizations, both orally and through written materials, the Union’s position in the strike and its disapproval of the target organization’s plans to use the Hotel.

The Hotel claims that the Union delegations crossed the line into unlawful secondary labor activity, in violation of 29 U.S.C. § 187(a) and 29 U.S.C. § 158(b)(4)(ii)(B). It claims that, instead of utilizing persuasion, the Union coerced the Hotel’s customers into cancelling their agreements to book rooms at the Congress.

The court held that some of the union's conduct was lawful.  However, in some cases, the court found that the union’s secondary activity moved beyond basic persuasion and engaged into unlawful and coercive tact’s by attempting to interfere with the hotel’s business operations.

The Court sought to answer the question whether the union's conduct was persuasive, (permissible by law) or coercive (illegal)?

The Law of Secondary Labor Activity

The Hotel alleges that the Union engaged in unfair labor practices prohibited under federal law. See 29 U.S.C. § 187. Specifically, the Union allegedly violated 29 U.S.C. §158(b)(4)(ii)(B), which bars certain labor activity against a secondary target. That provision is part of “Congress’ striking of the delicate balance between union freedom of expression and the ability of neutral employers, employees, and consumers to remain free from coerced participation in industrial strife.” NLRB v. Retail Store Emp. Union, Local 1001, 447 U.S. 607, 617–18 (1980) (Safeco) (Blackmun, J., concurring in part). The statute makes it unlawful for a union “to threaten, coerce, or restrain any person engaged in commerce” where “an object thereof is … forcing or requiring any person to cease … doing business with another person.” 29 U.S.C. §158(b)(4)(ii)(B). The statute explicitly states that this prohibition does not apply to “any primary strike or primary picketing.” Id. Section 158(b)(4) contains a proviso noting that the above section does not “prohibit publicity, other than picketing, for the purpose of truthfully advising the public … that a product or products are produced by an employer with whom the labor organization has a primary dispute.” In other words, striking against an employer engaged in a labor dispute with a union is acceptable, as is publicizing such a strike. But coercion against neutral parties is forbidden.

Some of the Union’s Behavior found to be in violation of the law:

While the court determined that, in most cases, the union acted within the confines of the law, the court also found the Union’s behavior toward ATI, IHA, and the Comic Expo as potentially illegal:

American Tango Institute (ATI):  The Hotel reasonably demonstrated that the Union coerced ATI into abandoning its business with the Hotel. There are two particularly objectionable aspects to the Union’s alleged conduct. First, even after ATI president Roldan had told the Union twice, once by phone and also in a heated, in-person meeting, that he was not persuaded to aid their cause, delegates apparently snuck into ATI’s offices unobserved and dropped literature in its offices on several occasions. President Netza Roldan testified that the Union was not given permission to enter the office, and would have had to circumvent an electronic lock in order to enter. The Union has not provided an innocent alternative explanation as to how its personnel entered ATI’s offices. Instead of accepting that their attempts at persuasion had failed, at least for the time being, the Union arguably trespassed multiple times.

Second, Roldan testified that the Union threatened to attend the tango festival in order to disrupt it. This testimony is corroborated by the fact that Union organizer Jessica Lawlor registered to attend the event. Moreover, Union delegates allegedly threatened to confront ATI affiliates “and go to their houses or companies.” Even if Roldan’s testimony on this point turns on his credibility, such determinations are appropriate only at trial. If his testimony is true, the Union’s threat could easily be deemed coercive.

International Housewares Association (IHA):  According to the Hotel’s substantiated accusations, the Union made several unwanted appearances at IHA offices, and at one point IHA called the police. This finally convinced the delegation to leave, but another one came back later the same day. Union boycott coordinator Jessica Lawlor even testified that a delegate walked past security to shout “shame on you!” to IHA president Phil Brandl. IHA vice presidents Rampersad and Kurtis both testified that they were concerned that the Union would picket the IHA’s trade show and occupy busses running to it. Although they did not testify that a delegation explicitly threatened to do this, Union delegate Jennifer Blatz testified that the Union had boarded RSNA busses in order to leaflet people heading to a function.  These facts could persuade a reasonable fact-finder that the Union planned to do the same to IHA.

Even more support for the Hotel comes from the Union’s leafleting of Rick Bayless’s restaurant. The district court is correct that the leaflets’ content was literally true and protected speech. The fliers do not imply that his restaurants failed inspection, and they accurately quote from publicly available health reports. The Supreme Court has warned us to be wary of circumscribing protected speech in an effort to prevent unlawful labor activity. See DeBartolo Corp., 485 U.S. at 575–88.

The Hotel responds that the handbills did not reference the dispute between the Union and the Hotel, and therefore they had minimal communicative effect. One of the basic aims of the ban on secondary boycotting is to prevent labor disputes from spilling over into unrelated disputes, such as the quality of Rick Bayless’s restaurants. On balance, though, we agree with the Union that the act of passing out fliers with truthful content would not in itself constitute an unfair labor practice.

However, the district court overlooked the testimony of Jennifer Fite, the manager of the Frontera Grill, who stated that Union delegates handed out the leaflets inside the restaurant after they had made numerous failed attempts to see Bayless himself. This conduct could support an inference that the Union committed trespass and harassed him.

It is also important to point out that the Union’s visits to IHA’s exhibitors and Bayless’s restaurants in a sense constitute tertiary labor activity. That is, the Union allegedly visited the affiliates and the restaurants to pressure IHA to cease doing business with the Hotel.

The Union’s strategy essentially widened the labor dispute to include affiliates of customers of the Hotel. This is exactly the sort of scorched-earth strategy that Section 158(b)(4)(ii)(B) was designed to avoid. Neutrals with only the most distant connection to a struck employer must not be reduced to collateral damage in a bruising labor battle. Congress has decided that the damage to the economy caused by such a broadened conflict is unacceptable. 

Unions may inform third parties of their dispute with a primary employer in the hope that they will discontinue their business relationship with the union's primary target, they cannot pressure them to do so.

Reed Exhibitions/Chicago Comic and Entertainment Expo: A reasonable jury could conclude that the Union harassed Lance Fensterman during nine visits to different comic book stores. He testified that the Union delegates told him they would continue to follow him from store to store until he gave in to their demands. Although Fensterman observed that the delegates were polite, and the comic book stores were open to the public, the repetitive nature of these visits could reasonably be considered a form of harassment. We agree that union delegations may approach management and decision-makers at secondary businesses, but they can-not do so nine times, after they have already made their point. Such conduct arguably crosses the line between communication intended to persuade and picketing.

Conclusion:

The United States Court of Appeals for the Seventh Circuit reversed the district court’s decision in part, and remanded for a trial regarding whether certain of the defendant’s actions were coercive, whether any such coercive conduct damaged the Hotel, and if so, to what extent.

The Employer Takeaway:

The National Labor Relations Act expressly prohibits "secondary boycotts," which are generally understood as an effort by unions to coerce outside parties to "cease doing business" with the company with whom the union has its primary labor dispute.

The National Labor Relations Act contains a proviso stating that the ban on “secondary boycotts” does not “prohibit publicity, other than picketing, for the purpose of truthfully advising the public.  In other words, striking against a primary employer engaged in a labor dispute with a union is acceptable, as is publicizing such a strike. But coercion against neutral parties is strictly forbidden.

Tertiary Businesses cannot be a target of a dispute.  The law is designed to balance a union's interest in publicizing its labor dispute to the larger public against the danger of economic boycotts. The premise of the federal ban of "secondary boycotts" is that "neutral" or "secondary" employers, businesses that do business with the "primary" employer, should not be harmed by union pressure tactics. Consequently, while a union may inform tertiary parties of its dispute with the primary employer in the hope that they will discontinue its business relationship with the union's primary target, it cannot pressure them to do so.

With the proper information and specific details, employers have options that would allow them to respond to these tactics.

Follow the link to read the entire decision:  520S. Michigan Ave. Associates, Ltd. v. Unite Here Local 1, 13-1938, 2014 WL 3720253 (7th Cir. July 29, 2014)

Source:  UnitedStates Court of Appeals for the Seventh Circuit

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