Yesterday the Supreme Court heard oral argument in UNITE HERE Local 355 v. Mulhall involving the issue of whether the Labor-Management Relation Act’s prohibition on employers from providing a union with any "thing of value" extends to the promises an employer makes in a neutrality agreement. Last year the Eleventh Circuit held that "organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of § 302." The Eleventh Circuit decision was contrary to decisions from the Third and Fourth Circuits holding that neutrality agreements and the promises typically included therein are not "payment" of "things of value" proscribed by § 302.

In Mulhall, the employer and a labor union entered into an agreement where the employer promised to:

(1) provide union representatives access to non-public work premises to organize employees during non-work hours; (2) provide the union a list of employees, their job classifications, departments, and addresses; and (3) remain neutral to the unionization of employees.

In return, the union provided substantial financial support (more than $100,000) to a ballot initiative favoring the employer and promised to refrain from picketing, boycotting, striking or undertaking other economic activity against the employer.

During yesterday’s argument counsel for UNITE HERE and the Deputy Solicitor General, representing the interests of the United States as amicus curiae, primarily stressed that there is a long history of unions and employers using similar neutrality agreements and that these types of agreements serve the "core objectives" of labor law: "freedom of contracts, organizing employees for collective bargaining, and labor peace."

Meanwhile, counsel for Mr. Mulhall and the National Right to Work Legal Defense Foundation asserted that "the only thing that an employer can promise a union or agree to provide to a union are things that are specifically authorized in other parts of the labor law," and that § 302 was specifically amended to apply to union organizing. As such, allowing:

an organizing exception to Section 302 would tear a massive hole in the statute. It’s difficult to think of anything that unions value more than an employer’s assistance with unionizing more employees into the union.

While it is often difficult to discern how the Court might rule based on the Court’s questions and comments, there were some possible hints suggesting how some justices view the case. For instance, Justice Breyer might be inclined to find generally that neutrality agreements are lawful as he summed up the union’s and the federal government’s arguments as follows:

As I understand the argument it goes back to like Jurisprudence 1. Can you have – the sign says no vehicles in the park. Okay? Does that apply to a Jeep used as a war memorial? Answer, no. That’s been the law since the twelfth century. You spilled blood in the streets of Bologna, a crime, but that’s not applicable to the barber.…

I think what they’re saying is that read this statute. You don’t have to get into a metaphysical argument about things of value; rather, those things which play a central role in the organizing campaign are things that are governed by the other parts of the [NLRA] and to throw them in [to the prohibition of § 302] is going to create a mess.

Lists, access, promises to stay neutral are central to many aspects of organizing campaigns, and [they are no more within the prohibition of § 302] than the Jeep on the pedestal is part of the no vehicles in the park.

Justices Kagan commented that she "would have thought that the premise and the policies of the labor laws are to encourage a wide variety of employer/employee agreements, both things that are listed in the labor laws."

Meanwhile, Justice Kennedy, while noting "there’s substantial force" to the union’s argument that neutrality agreements serve the core objectives of labor law, opined that "if there was a conspiracy to extort these benefits [in the neutrality agreement from the employer], that the government would take the position that there was a crime because there was a thing of value, a thing of property."

Perhaps the strongest clue given yesterday suggests that the decision might ultimately hinge on the $100,000 the union spent in support of the ballot initiative pursuant to the agreement. Justice Sotomayor, who pressed both sides, made the following observation during the union’s rebuttal argument:

If I understood the circuit below, it was suggesting, like the government, that an exchange of agreements for purposes of peaceful recognition, terms that were given for that purpose were legal, but that things for – that were not solely for recognition, had value outside of that, like money, would be wrong.

That 100,000 is troubling to me because I think what the circuit was saying is if the 100,000 bought the peaceful recognition provisions, then that’s corrupt, and that is outside the exemptions that the law provides. That’s how I read its decision.

Tell me why I’m wrong about that and tell me how I deal with that niggling problem I have about the $100,000, because it does feel like a bribe to the employer.

As we noted this past summer, how the Supreme Court decides this case will have serious ramifications for both employers and unions regarding how employees are unionized. If the Court’s decision does hinge on the $100,000 spent by the union, the decision might split the baby by holding that neutrality agreements setting forth only the ground rules for recognition are legal, but unlawful under § 302 if they include anything unassociated with the process for recognizing the union. As such, neutrality agreements would continue to be an important tool for unions, but might be harder for them to obtain given that unions would have less to offer employers. However, if the Supreme Court finds the agreement lawful despite the $100,000, unions might be emboldened and would likely increase their use of corporate campaigns to secure neutrality agreements.

On the other hand, if the Supreme Court specifically finds that union access, employee lists, and promises to stay neutral are each a "thing of value," then unions’ ability to engage in "top down" organizing by using corporate campaigns will be severely limited. While that will not spell the end of corporate campaigns, it will likely undermine their effectiveness and force unions to focus much more on traditional "grass roots" organizing strategies.

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