Last month, the Supreme Court heard oral argument in UNITE HERE Local 355 v. Mulhall, a case claiming that a neutrality agreement violated § 302 of the Labor-Management Relations Act, 29 U.S.C. § 186, the anti-union bribery statute which makes it a crime for an employer to give “money or other thing of value” to a union.  Yesterday, in a surprise move, the Court abruptly dismissed the closely watched case in a single line opinion stating that the appeal was “improvidently provided.”

 “And They’re Off!”

The case arose when an employee of Mardi Gras Gaming, a greyhound racetrack operator, challenged the neutrality agreement, which provided Local 355 with:

  • access to the employer’s premise to organize employees during non-work hours
  • a list of employees, their job classifications, departments and addresses
  • a promise to remain neutral to the unionization for employees

In turn, the union agreed to support a state ballot initiative promoting casino gambling that would benefit the employer.

On a motion to dismiss, the District Court found that organizing assistance could not be a § 302 violation relying on decisions from the Third and Fourth Circuits.  See Adcock v. Freightliner, LLC, 550 F.3d 369, 374 (4th Cir. 2008); Hotel Emps. & Rest. Emps. Union, Local 57 v. Sage Hospitality Res., LLC, 390 F.3d 206, 219 (3rd Cir. 2004).

The Eleventh Circuit, in reviewing the motion to dismiss decision, reversed and remanded:

[i]t is too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in § 302.  Employers and unions may set ground rules for an organizing campaign, even if the employer and union benefit from the agreement.  But, innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to corrupt a union or to extort a benefit from an employer.

Mulhall v. UNITE HERE Local 355, 667 F.3d 1211 (11th Cir. 2012).   Thus, given the procedural context where the court had to take the facts as pled and the pleadings stated that the union spent over $100,000 in support of the ballot initiative, the Circuit Court sent the case back for further proceedings on the intent and purpose of the neutrality agreement.

“They’re in the Final Turn…?”

Before the case went back to the District Court, Local 355 appealed and the Supreme Court granted review.  After full briefing and oral argument last month, Court-watchers were expecting a decision that would address the core question of whether neutrality agreements, which have become a key organizing tool for unions, particularly in the hospitality and service sectors, would remain lawful.

There was still concern, however, that any decision in this case alone would not have given clear guidance on the topic, given the unique procedural posture of a motion to dismiss, combined with the significant level of political support that the union was alleged to have provided the employer in exchange for the neutrality agreement.  For example, would a decision finding that the agreement in these circumstances was a “thing of value” have any relevance to (a) a neutrality agreement where no political support was provided, (b) one that is entered into to resolve a corporate campaign, or (c) an agreement that is simply included to address future locations contained in an overall collective bargaining agreement?

Left Chasing the Tail

All those questions are left entirely unanswered by the Court’s action today.  Moreover, it adds even more questions to the mix about whether a case like this can ever be heard.  Although the Court acted in a one-line decision, Justice Breyer issued a dissent making clear the Court’s action was taken because of concerns over whether the current case is moot, and, more importantly, whether the initial plaintiff had Article III standing to sue or could bring a private right of action under § 302.

None of these  issues were addressed and will not be considered until another case on the issue reaches the Court.  Indeed, like the greyhound chasing its own tail, the Supreme Court’s dismissal leads us right back to where we were, with two circuits upholding neutrality agreements while the Eleventh Circuit disagrees given the particular circumstances it was reviewing on a motion to dismiss.

In light of this split and given the criminal nature of §302, employers (particularly those operating in the Eleventh Circuit) must continue to evaluate the purpose and intent of any request for a neutrality agreement to ensure that entering into the agreement cannot be considered providing an unlawful “thing of value” in violation of §302.

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Photo of Michael Lebowich Michael Lebowich

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional…

Michael J. Lebowich is a partner in the Labor & Employment Law Department and co-head of the Labor-Management Relations Group. He represents and counsels employers on a wide range of labor and employment matters, with a particular interest in the field of traditional labor law.

Michael acts as the primary spokesperson in collective bargaining negotiations, regularly handles grievance arbitrations, assists clients in the labor implications of corporate transactions, and counsels clients on union organizing issues, strike preparation and day-to-day contract administration issues. He also has significant experience in representation and unfair labor practice matters before the National Labor Relations Board.

His broad employment law experience includes handling of race, national origin, gender and other discrimination matters in state and federal court. A significant amount of his practice is devoted to counseling clients regarding the application and practical impact of the full range of employment laws that affect our clients, including all local, state and federal employment discrimination statutes, the Fair Labor Standards Act, the Family and Medical Leave Act, and state labor laws.

Michael has substantial experience in a wide variety of industries, including entertainment, broadcasting, newspaper publishing and delivery, utilities and lodging. He represents such clients as The New York Times, BuzzFeed, ABC, the New York City Ballet, PPL, Pacific Gas & Electric, Host Hotels and Resorts, and The Broadway League (and many of its theater owner and producing members).  Michael also has significant public sector experience representing, among others, the City of New York and the Metropolitan Transportation Authority.

Michael is a frequent guest lecturer at Columbia Business School, the Cornell School of Hotel Administration, the New York University Tisch School for Hospitality, Tourism and Sports Management, and is an advisory board member of the Cornell Institute for Hospitality Labor and Employment Relations.