Wednesday, three employees of Volkswagen Group of America (VW) working at the company’s Chattanooga, TN plant filed suit against the German automaker and the United Auto Workers (UAW), alleging that a neutrality agreement brokered between VW and UAW violated Section 302 of the Labor Management Relations Act (LMRA).  Burton v. Auto Workers, E.D. Tenn., No. 14-cv-76Section 302 of the LMRA explicitly restricts employers from providing a "thing of value" to labor unions, and further prohibits labor unions from requesting or accepting "thing of value" unless it is specifically permitted by the LMRA. 

The instant case, filed by VW employees Michael Burton, Michael Jarvis, and David Reed, alleges that VW and the UAW entered into an Organizing Agreement (the Agreement) in late January of this year.  The Agreement at issue called for VW to assist the UAW with its unionization of VW’s employees.  The UAW, in exchange for VW’s assistance, agreed to certain concessions upon becoming the employees’ exclusive bargaining representative.  

Specifically, VW agreed that the UAW could hold employee meetings on company time wherein the UAW could solicit employee support for unionization.  VW further pledged to allow the UAW to make use of offices and other private areas at the Chattanooga Plant.  For its part, the UAW agreed that it would delegate many of its representational duties to a "works council."  Moreover, the union also agreed to a "no-strike" clause. 

Not surprisingly, UAW President Bob King has already come out with his own statement on the matter, referring to the employees’ lawsuit as "baseless."  King further opined that the Agreement between VW and the UAW was no different from any other neutrality agreements the UAW has negotiated in the past.   However, the legality of such neutrality agreements is not as clear-cut as King makes it out to be. 

The reader may recall that last November, the U.S. Supreme Court heard oral argument on the validity of similar neutrality agreements in Unite Here Local 355 v. Mulhall.  The Court was considering an appeal of an Eleventh Circuit court of appeals decision holding that "organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of Section 302 [of the LMRA]."  Labor law experts had expected the Court to delineate the parameters of "thing[s] of value" in its decision, particularly because the Eleventh Circuit’s ruling was contrary to holdings issued by the Third and Fourth Circuit, which had both held that neutrality agreements were not "things of value" prohibited by Section 302.

To the surprise of the labor-relations community, the Court did not rule substantively on the matter.  Instead, the case was dismissed as improvidently granted.  Thus, employers and unions were left with a Circuit split regarding the definition of "thing of value." 

Due to the uncertainty over whether neutrality agreements like the Agreement entered into between the UAW and VW violate the LMRA, it is difficult to make a prediction as to how the Eastern District of Tennessee will resolve this matter.  If the court follows the logic of the Third and Fourth Circuits, the case will likely be dismissed.  However, if the court is more persuaded by the Eleventh Circuit’s reasoning, the court could declare that the Agreement is void and unenforceable.  Such a ruling could have the effect of kicking the UAW out of VW’s Plant offices, and could further preclude the UAW from hosting further employee meetings. 

Following the Eleventh Circuit’s logic could also compel the Supreme Court to revisit the legality of neutrality agreements and the definition of a "thing of value," particularly because a decision invalidating the VW/UAW Agreement would solidify the current Circuit split on the matter.  We here at @LRToday have been following this issue closely and will make sure to keep you updated on this case every step of the way.