William B. Gould IV is the Charles A. Beardsley Professor of Law, Emeritus, at Stanford Law School.

In its Preamble, the National Labor Relations Act (NLRA) declares the public policy of the United States to be that of “encouraging the practice and procedure of collective bargaining and . . . protecting the exercise by workers of full freedom of associations, self-organization, and designation of representatives of their own choosing, for the purpose of negotiating the terms and conditions of heir employment or other mutual aid or protection.”

The preferred method of realizing these objectives is secret ballot box elections conducted by the National Labor Relations Board (NLRB) so as to determine employee choice for a union by a majority.  In recent years, in response to delay and ineffectiveness of NLRB procedures, unions have sought recognition from employers as exclusive bargaining representatives through reliance upon so-called neutrality agreements, which can provide for recognition based upon union authorization cards, NLRB or private elections, and procedures which both prohibit employers’ anti-union campaigns and enhance the union’s ability to carry its message to employees.

The question on which the Justices granted certiorari in Unite Here Local 355 v. Mulhall is whether such neutrality agreements are prohibited at least in some circumstances by Section 302 of the NLRA, which makes it a crime “for any employer . . . to pay, lend, or deliver, or agree to pay, lend, or deliver any money or other thing of value . . . to any labor organization, or officer or employees of a labor organization, that represents or seeks to represent the employer’s employees.”  Similarly, the statute makes it a crime for a labor union “to request, demand, receive, or accept, or agree to receive or accept, any payment, loan, or delivery of any money or other thing of value prohibited” by the statute.

I. Background

This case arose out of the efforts by Local 355 to represent employees of Mardi Gras Gaming (Mardi Gras) and an agreement between the union and the employer in which Mardi Gras agreed to recognize the union as exclusive bargaining representative based upon a card-check procedure – through which a third party could determine whether the union possessed majority support – rather than a secret ballot box election conducted by the NLRB.  Part of the agreement – over which the third party also acted as an arbitrator – gave the union access to the premises of Mardi Gras during non-working time and access to lists of employee names and addresses so that it could contact and recruit such workers; it also imposed upon the employer an obligation to remain neutral on the question of unionization.  Strikes, picketing, and “other economic activity” by the union were prohibited, and the parties agreed to arbitrate any disputes arising out of the agreement.  The agreement was to take effect when slot machines were installed at Mardi Gras, and the union agreed to expend “monetary and other resources” to support a ballot proposition campaign aimed at installing slot machines at other gaming facilities.  The agreement was triggered by the passage of the ballot proposition.  But subsequently, Mardi Gras refused to provide an updated employee list and fired several union supporters.  The union sought arbitration on the employee lists and the firings and filed unfair labor practice charges with the NLRB – charges that the NLRB sustained.

Martin Mulhall, a Mardi Gras employee opposed to the union, filed suit in federal district court seeking injunctive and declaratory relief against the enforcement of the agreement.  He contended that the agreement would “deliver” a “thing of value” to the union in violation of Section 302 of the NLRA.  The federal district court dismissed the complaint for failure to state a violation of Section 302, relying upon decisions from two courts of appeals and holding that “the assistance promised in the [agreement] does not constitute a thing of value” within the meaning of the statute.  The court stated that “the purpose behind Congress’s enactment of § 302 was to prevent corruption of and extortion by union officers.  Since there was no “indication” of corruption or bribery of union officials in this case the complaint was dismissed.

The U.S. Court of Appeals for the Eleventh Circuit reversed and remanded, holding that “organizing assistance can be a thing of value that, if demanded or given as payment, could constitute a violation of [Section 302].”  Without considering whether a “thing of value” must have “monetary value,” the court concluded that the term itself includes both “tangibles and intangibles.”  While the court conceded that employers and unions could establish ground rules for organizing campaigns, it held that the assistance here could constitute “payment” and remanded, over Judge Restani’s dissent, to the district court for the purpose of determining why the parties had agreed to cooperate with one another.

II. The briefing

The position of both the United States Solicitor General (SG) and the unions is that Section 302 does not preclude a request for or negotiation of a neutrality agreement or, indeed, recognition itself without an NLRB-conducted election.  The argument is that the statute presupposes agreements providing for both recognition and a recognition process outside an election by mandating the latter only where the employer has declined a union request for recognition.   Specifically, Section 9(c) of the NLRA states that an NLRB-conducted election is triggered by a petition which alleges that a substantial number of employees wish to be represented for collective bargaining and “that their employer declines to recognize their representative.”  Therefore, runs the argument, the statute contemplates another avenue through which to address recognition disputes by providing for an election only when the employer “declines” to use it.  The briefs point out that the Supreme Court has relied upon this statutory language and taken this position more than once, most prominently in NLRB v. Gissel, in which the Court specifically upheld the propriety of union authorization cards as a basis for testing union majority support amongst employees.

Both the Solicitor General and the unions state that the negotiation of such agreements is consistent with both the voluntary resolution of disputes promoting stability of labor-management relations as well as provision for enforcement of labor-management agreements promoted by the Supreme Court in the landmark Steelworkers Trilogy (Steelworkers v. American Manufacturing Co., United Steelworkers v. Warrior & Gulf Navigation Co., and Steelworkers v. Enterprise Wheel and Car Corp.) holdings and their progeny.  In this connection, the briefs highlight the fact that enforceable agreements commonly provide for valuable union institutional benefits like union hiring hall referral procedures, union security agreements which compel “membership” as a condition of employment, as well as wages and benefits to employees.   And the briefs also emphasize that provisions of the neutrality agreement before the Court contain both union access to private property and the provision of employee lists – which, under other circumstances, unions possess as statutory rights.  In this connection, the briefs note that the Supreme Court, in dicta, has said that employers may voluntarily grant that to which unions have no statutory right.

All briefs for the SG and the unions emphasize that no payment was provided here and that the focus of Section 302 is rooted in a prohibition against bribery, corruption, and the provision of benefits to union officials rather than employees.

The employer and employee briefs contend that Section 302 is applicable to neutrality agreements and that Congress, by establishing specific exceptions to the language, intended those exceptions to be exclusive.   Neutrality agreements are not listed.  In response to the argument that the benefits here contain no commercial market value and thus do not constitute value within the meaning of section 302, the employer points to judicial precedent applying that provision – to, for instance, agreements arising out of union pressure to employ non-qualified relatives of union officials.  This line of authority, contends the employer, covers intangible benefits analogous to neutrality agreements.

Fundamental to the plaintiffs’ argument is that employees are not involved in the negotiation of neutrality agreements and that they are therefore inconsistent with the NLRA policy promoting employee free choice.  These agreements, stresses the employer, are akin to the kind which are associated with bribery and corruption and previously condemned by Section 302.

III. Taking stock

The Supreme Court writes on a relatively blank slate.  Until the Eleventh  Circuit’s decision in this case, the appellate courts had supported the view that Section 302 does not apply to neutrality agreements.  A conclusion that Section 302 can prohibit organizing assistance seems to be contrary to extant Supreme Court authority and would make NLRB election procedures the exclusive (or near exclusive) method for resolving recognition disputes, a goal long pursued by members of Congress dissatisfied with the NLRB and the NLRA itself on the ground that both improperly favor unions.  Acceptance of employer arguments that the agreements of this kind are inappropriate inasmuch as they are a request for something of “value” would be inconsistent with the statutory tolerance of unions’ request, for instance, that employers engage in secondary boycotts – a tactic long held lawful by the Supreme Court.

The heart of the employer argument — i.e., demands for the negotiation of agreements which provide benefits to the union as an institution run afoul of Section 302 because employees are not involved in their negotiation – would turn the cart upon the horse.  Employees involved in organizational campaigns are by definition unorganized and often unlikely to be directly involved in recognition agreements.  Recognition agreements are designed, if the union is successful, to create a basis for their involvement. Still, this line of argument may appeal to some members of the Court who have stressed the point that employees, not unions, are protected by the NLRA and that therefore Section 302’s focus upon the impropriety of union official benefits at the expense of employees, has applicability to neutrality agreements.

But, a conclusion affirming the Eleventh Circuit would undercut and represent an inconsistency with numerous Supreme Court and NLRB decisions which mandate bargaining over union institutional concerns like hiring halls and union security agreements and would disrupt the long-recognized value of voluntary bargaining as a method to produce industrial stability as well as peace.  Second, by virtue of the above-noted problems with NLRB procedures, such a decision would impose a burden upon union organizing not contemplated by Congress and at variance with the public policy contained in the preamble encouraging “the practice and procedure of collective bargaining.”  Finally, because as a general matter neutrality agreements, such as the one in this case, invoke arbitration as a means to resolve recognition disputes, it will be interesting to see whether the Court, so solicitous of arbitration under the Federal Arbitration Act of 1925 as recently as this past Term, will factor in the promotion of arbitration in its decision.

Posted in Unite Here Local 355 v. Mulhall, Featured, Merits Cases

Recommended Citation: William Gould, Argument preview: Unite or disunite – another roadblock to union organizing and collective bargaining?, SCOTUSblog (Nov. 1, 2013, 10:45 AM), http://www.scotusblog.com/2013/11/argument-preview-unite-or-disunite-another-roadblock-to-union-organizing-and-collective-bargaining/