The Third Circuit issued a noteworthy split 2-1 decision last month, finding that a company’s claim under the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) against several Unions failed, where the Unions’ tactics as part of a corporate campaign and its “extortion through fear of economic loss” directed at the company is committed to achieve a legitimate union objective.  See Care One Mgmt., LLC v. United Healthcare Workers East, No. 19-3693 (3d Cir. 2021).  The Court also found that the alleged acts of vandalism and sabotage could not be attributed to the Unions, and thus the Company’s RICO claims could not survive summary judgment.

Factual and Procedural History

Five Unions engaged in a “corporate campaign” against Care One Management LLC and related companies (collectively, the “Company”), seeking to pressure the Company to recognize the Unions for collective bargaining purposes and, according to the Unions, to provide better wages and working conditions to Company employees. The Company described this campaign as a “campaign of intimidation, interference, threats, deceptive trade practices, abuse of process, vandalism, and other illegal and extortionate conduct.”

As background, a “corporate campaign” is a multi-faceted and typically long-running attack by a union or unions against a company in order to pressure the company to accede to the union’s bargaining demands.  Corporate campaigns routinely involve conduct by the unions directed towards harming the company’s reputation and damaging its media, political, and/or business relationships, as well as extensive litigation filings.

Here, the acrimonious relationship between the Unions and the Company involved, among other things:

  • Unfair labor practice charges filed by the Unions against the Company related to petitions for election the Unions filed, and allegedly discriminatory terminations by the Company toward several employees.
  • On the eve of the parties’ collective bargaining negotiations, certain of the Company’s facilities were vandalized and sabotaged – e.g., patient identifying information was mixed up, medical records were altered, equipment damaged or hidden, and laundry equipment vandalized. An investigation commenced by the State’s Attorney, but it did not yield any suspects or charges.  The only evidence tying the conduct to the Unions were plans to inspire workers to “become angry about their working conditions” and to resort to “more militant” levels of activity”—but nothing more specific.  After the vandalism occurred, the Unions sent out communications denying that they had anything to do with the conduct.
  • The Unions also launched a public campaign attacking the Company’s labor and business practices, through print and radio ads and billboards. The Unions indicated that they subjected their attacks to fact checking, but the Company disagreed.
  • The Unions also lobbied government officials to investigate the Company’s billing practices, and engaged in public demonstrations against the Company.

The Company filed suit against the Unions in federal court, claiming they had engaged in actions that amounted to a pattern of racketeering in violation of RICO.  RICO imposes criminal and civil liability for those who engage in certain “prohibited activities.”  While RICO claims are typically reserved to combat organized crime, employers have filed RICO claims against unions in response to aggressive corporate campaigns, where the conduct involves a “pattern of racketeering activities.” A “racketeering activity” includes “any act or threat involving…extortion…which is chargeable under State law and punishable by imprisonment for more than one year.”  For an act to be a predicate offense under state law, the conduct must be “generally classified as extortionate.”

Specifically, the Company asserted that the Unions had engaged in the “extortionate actions” of (i) fear of economic loss, and (ii) sabotage / vandalism.

On summary judgment, the District Court granted the Unions’ motion and dismissed the complaint as a matter of law. The District Court concluded that the Unions’ conduct directed toward “economic loss” did not reach the level of “extortionate” to state a viable claim under RICO.  Central to the District Court’s holding was that it used the federal Hobbs Act definition of “wrongfulness” in concluding that the Unions were not guilty of extortion under state law.  The District Court also found that the alleged sabotage and vandalism could not be attributed to the Unions.

The Third Circuit’s Decision Affirming the District Court

After review, the Third Circuit affirmed the District Court’s decision.  Importantly, at the outset, the Third Circuit noted that the “generic” definition of extortion used by the District Court (defined as “obtaining something of value from another with his consent induced by the wrongful use of force, fear, or threats”) was substantially similar to the definition of “extortion” applied by courts interpreting the federal Hobbs Act, and thus the Court looked to cases under the Hobbs Act for guidance.

The Hobbs Act is a federal law prohibiting extortion or robbery by wrongful use of force or fear.  The U.S. Supreme Court carved out a “claim-of-right defense” under Hobbs for a union pursuing legitimate labor objectives (such as better pay and working conditions), even if the union’s means for seeking this objective are violent or destructiveSee United States v. Enmons, 410 U.S. 396, 398 (1973).  The Third Circuit rejected the interpretation that Enmons is narrowly limited to strike violence, and reasonably extends to all labor strife.  Moreover, until now, the “claim-of-right” defense under Hobbs had generally not been applied by a federal court to a union’s conduct purportedly in violation of RICO.  Given the Third Circuit’s decision to look to Hobbs Act cases for guidance, the Court easily found that the allegedly extortionate conduct constituting economic loss did not constitute “wrongful” “extortionate” conduct, as the Unions did not even engage in violent or destructive conduct.  Accordingly, the Third Circuit held that the Unions did not violate RICO.

As to the second grounds of extortion, the Court held that the Company did not present sufficient evidence that the Unions— rather than simply union members or employees—were sufficiently connected to the alleged vandalism of the facilities.  The Company alleged that given the timing, a jury could infer that the vandalism was conducted by Union members.  The Court held that this was insufficient under the Norris LaGuardia Act, which requires Union “authorization” and “clear proof of actual participation in, or actual authorization of, such acts, or of ratification of such acts after actual knowledge thereof.”  No such evidence was presented against the Unions, and the Company’s second claim for extortion through sabotage under RICO failed as a matter of law.

The Dissent

The dissent argued, among other things, that the narrow “claim-of-right” defense for labor organizations under the Hobbs Act should not apply to RICO claims.  The dissent asserted that the “linguistic parsing in Enmons is…not obviously applicable,” as the “wording chosen by states to outlaw extortion does not necessarily track the wording of the Hobbs Act.”  Since a RICO claim requires the violation of a predicate state law, and here, the Unions violated several state laws’ extortion provisions based on their conduct, the dissent concluded that the Company established a prima facie claim under RICO.


The Third Circuit appears to be the first Court of Appeals to issue such an expansive rejection of a company’s RICO claim in the context of a corporate campaign based on the “claim-of-right” defense under the Hobbs Act.  This decision appears to create new law in applying a RICO claim to a Union’s aggressive corporate campaign tactics, and could serve as a useful defense for unions in other jurisdictions and/or create a potential split among the Circuits that may need to be resolved by the Supreme Court.

Although there are not many recent Circuit Court decisions addressing RICO claims in the context of a corporate campaign, the principle upon which the Third Circuit’s ruling was based—that a union may use coercive labor actions to attain legitimate objectives—has been discussed by many Circuit Courts, including the Fifth Circuit and the Eighth Circuit.  In a somewhat analogous situation to a corporate campaign, where a labor organization’s extortionate conduct at issue included nonviolent “threats of slowdowns” and violence, the Second Circuit upheld a jury instruction that the Hobbs Act “does not apply to labor disputes in which workers seek to obtain lawful and legitimate labor objectives” and stated the use of violence does not violate Hobbs.  See United States v. Mulder273 F.3d 91, 104 (2d Cir. 2001).  Only time will tell whether other Circuits adopt this principle in the context of RICO claims, which is an important counter-attack for Employers in response to aggressive and illegal Union corporate campaign tactics.

We will continue to monitor this case and whether the Company intends to petition the Supreme Court, and we will track the impact of this development in subsequent decisions.  We will keep you posted!



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Photo of Paul Salvatore Paul Salvatore

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

Paul negotiates major collective bargaining agreements…

Paul Salvatore provides strategic labor and employment law advice to companies, boards of directors/trustees, senior executives and general counsel in such areas as labor-management relations, litigation, alternative dispute resolution, international labor and employment issues, and corporate transactions.

Paul negotiates major collective bargaining agreements in several industries, including real estate and construction. He represents the NYC real estate industry’s multi-employer organization, the Realty Advisory Board on Labor Relations (RAB), and its principal trade organization, the Real Estate Board of New York (REBNY). In 2022, he helped the RAB reach a new collective bargaining agreement with SEIU Local 32BJ, covering more than 30,000 residential building employees. Paul also represented the Cement League, a multiemployer group of NYC area superstructure contractors, in halting an illegal strike by the Carpenters Union and negotiating a significant new, more competitive, collective bargaining agreement. He previously negotiated, on behalf of The Related Companies with 18 New York City construction unions, a landmark project labor agreement (PLA) for Hudson Yards on Manhattan’s West Side, the largest private real estate development in U.S. history. In 2019, he assisted Related in resolving the very public labor disputes at Hudson Yards in time for its grand opening. He also represented REBNY in negotiating its 2019 landmark “Statement of Principles” with NYC’s construction unions. For his work in this sector, City & State magazine has named him one of the most powerful lawyers in New York.

Paul tries arbitrations and litigations, and argues appeals, arising from labor-management relationships. Paul argued and won before the U.S. Supreme Court 14 Penn Plaza LLC v. Pyett. In a 5-4 decision of importance to employers, the Court held a collective bargaining agreement that explicitly requires unionized employees to arbitrate employment discrimination claims is enforceable, modifying 35 years of labor law. In 2016, he argued and won NBC Universal Media, LLC v. NLRB, where the D.C. Circuit — rejecting the National Labor Relations Board’s (NLRB) analysis — found “the reasoning supporting the [NLRB’s] judgment … incomprehensible.” In 2017, Paul argued and won T-Mobile v. NLRB where the Fifth Circuit refused to enforce the NLRB’s ban on certain common sense employee handbook policy provisions, finding the NLRB’s analysis to be unreasonable.

Paul represents universities and colleges in their labor and employment relations, including in the currently active areas of graduate student and adjunct faculty union organizing. He represented Yale, Duke, Chicago, Washington University in St. Louis and other universities in their response to graduate student unionization after the NLRB’s controversial 2016 decision finding graduate teaching/research assistants to be employees under the labor law. He has negotiated innovative non-NLRB election agreements at Cornell and Brown Universities.

An honors graduate of Cornell’s School of Industrial and Labor Relations (ILR) and the Cornell Law School, Paul served eight years on Cornell’s Board of Trustees, including on its Executive Committee. Upon completion of his terms, he was elected Trustee Emeritus and Presidential Councilor. Paul presently serves as a Trustee Member of the Board of Fellows of Weill Cornell Medicine, as well as on the Law School and ILR Deans’ Advisory Councils. In 2002, ILR awarded him the Judge William B. Groat prize, the school’s highest honor.

At Proskauer, Paul was elected to its Executive Committee and served as co-chair of its global Labor & Employment Law Department, named by The American Lawyer and Chambers USA as one of the premier U.S. practices. He is widely recognized as a leading U.S. labor and employment lawyer in such publications as Chambers Global and USA (Band 1), and Legal 500 (“Hall of Fame”). The National Law Journal selected Paul as one of “The Decade’s Most Influential Lawyers” – one of only three in the labor and employment law field. His peers elected him to the College of Labor and Employment Lawyers.

Paul counsels business groups, including the U.S. Chamber of Commerce and its Litigation Center. An active speaker and writer on labor and employment law issues, his publications include “One Dozen Years of Pyett:  A Win for Unionized Workplace Dispute Resolution” in the American Bar Association Labor & Employment Law Journal, Volume 36, Number 2 at 257. He is an Adjunct Professor at the Cornell Law School.

Photo of Joshua Fox Joshua Fox

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several…

Joshua S. Fox is a senior counsel in the Labor & Employment Law Department and a member of the Sports, Labor-Management Relations, Class and Collective Actions and Wage and Hour Groups.

As a member of the Sports Law Group, Josh has represented several Major League Baseball Clubs in all aspects of the salary arbitration process, including the Miami Marlins, Boston Red Sox, Los Angeles Dodgers, Kansas City Royals, San Francisco Giants, Tampa Bay Rays and Toronto Blue Jays. In particular, Josh successfully represented the Miami Marlins in their case against All-Star Catcher J.T. Realmuto, which was a significant club victory in salary arbitration. Josh also represents Major League Baseball and its clubs in ongoing litigation brought by current and former minor league players who allege minimum wage and overtime violations. Josh participated on the team that successfully defended Major League Baseball in a wage-and-hour lawsuit brought by a former volunteer for the 2013 All-Star FanFest, who alleged minimum wage violations under federal and state law. The lawsuit was dismissed by the federal district court, and was affirmed by the U.S. Court of Appeals for the Second Circuit.

Josh also has extensive experience representing professional sports leagues and teams in grievance arbitration proceedings, including playing a vital role in all aspects of the grievance challenging the suspension for use of performance-enhancing drugs of then-New York Yankees third baseman Alex Rodriguez. Josh also has counseled NHL Clubs and served on the trial teams for grievances alleging violations of the collective bargaining agreement, including cases involving use of performance-enhancing substances, domestic violence issues, and supplementary discipline for on-ice conduct. He has played a key role in representing professional sports leagues in all aspects of their collective bargaining negotiations with players and officials, including the Major League Baseball, National Hockey League, the National Football League, Major League Soccer, the Professional Referee Organization, and the National Basketball Association,.

In addition, Josh has extensive experience representing clients in the performing arts industry, including the New York City Ballet, New York City Opera, Big Apple Circus, among many others, in collective bargaining negotiations with performers and musicians, the administration of their collective bargaining agreements, and in grievance arbitrations.

Josh also represents a diverse range of clients, including real estate developers and contractors, pipe line contractors, hospitals, hotels, manufacturers and public employers, in collective bargaining, counseling on general employment matters and proceedings before the National Labor Relations Board, New York State Public Employment Relations Board and arbitrators.

Josh has also recently served as an adjunct professor at Cornell University’s School of Industrial Labor Relations for the past two years, teaching a course regarding Major League Baseball salary arbitration.

Prior to joining Proskauer, Josh worked for a year and a half at the National Hockey League, where he was involved in all labor and employment matters, including preparations for collective bargaining, grievance arbitration, contract drafting and reviewing and employment counseling. Josh also interned in the labor relations department of Major League Baseball and at Region 2 of the National Labor Relations Board. He was a member of the Brooklyn Law Review and the Appellate Moot Court Honor Society and served as president of the Brooklyn Entertainment and Sports Law Society.

Photo of Claudia Khoury-Yacoub Claudia Khoury-Yacoub

Claudia Khoury-Yacoub is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group and Employment Counseling & Training Group. She is currently on client secondment.

Claudia has assisted in litigation and investigation matters related to…

Claudia Khoury-Yacoub is an associate in the Labor & Employment Department and a member of the Employment Litigation & Arbitration Group and Employment Counseling & Training Group. She is currently on client secondment.

Claudia has assisted in litigation and investigation matters related to workplace harassment, discrimination and retaliation. In addition to her litigation practice, Claudia assists employers in counseling matters, developing policies and handbooks and preparing training programs for employees.

Claudia earned her J.D. from Harvard Law School. While at Harvard, Claudia worked as a student attorney in several clinical programs, assisting in trial preparation related to child abuse and human trafficking clams in the Child Advocacy Clinic, representing clients seeking asylum in the Harvard Immigration and Refugee Clinical Program and arguing motions before the Waltham District Court in the Criminal Prosecution Clinic.