Non-picketing Secondary Activity Amounting to Coercive Union Harassment or Trespass is Prohibited: Seventh Circuit | Practical Law

Non-picketing Secondary Activity Amounting to Coercive Union Harassment or Trespass is Prohibited: Seventh Circuit | Practical Law

In 520 South Michigan Avenue Associates, Ltd. v. Unite Here Local 1, the US Court of Appeals for the Seventh Circuit reversed, in part, summary judgment for the union, holding that a union can violate Section 8(b)(4) of the National Labor Relations Act (NLRA) by unlawfully coercing a secondary employer to cease doing business with the employer against which it has a labor dispute if its non-picketing activity amounts to either or both harassment and repeated trespass. The court recognized a new form of unlawful secondary activity in the middle of the spectrum between statutorily prohibited secondary picketing and First Amendment-protected publicity activity, such as secondary handbilling. The case was remanded to the district court to determine whether the union's conduct was coercive and damaging to the employer in the primary labor dispute.

Non-picketing Secondary Activity Amounting to Coercive Union Harassment or Trespass is Prohibited: Seventh Circuit

by Practical Law Labor & Employment
Published on 06 Aug 2014 • USA (National/Federal)
In 520 South Michigan Avenue Associates, Ltd. v. Unite Here Local 1, the US Court of Appeals for the Seventh Circuit reversed, in part, summary judgment for the union, holding that a union can violate Section 8(b)(4) of the National Labor Relations Act (NLRA) by unlawfully coercing a secondary employer to cease doing business with the employer against which it has a labor dispute if its non-picketing activity amounts to either or both harassment and repeated trespass. The court recognized a new form of unlawful secondary activity in the middle of the spectrum between statutorily prohibited secondary picketing and First Amendment-protected publicity activity, such as secondary handbilling. The case was remanded to the district court to determine whether the union's conduct was coercive and damaging to the employer in the primary labor dispute.
On July 29, 2014, in 520 South Michigan Avenue Associates, Ltd. v. Unite Here Local 1, the US Court of Appeals for the Seventh Circuit reversed, in part, summary judgment for the union, holding that a union can violate Section 8(b)(4)(ii)(B) of the NLRA by unlawfully coercing a secondary employer to cease doing business with the employer against which it has a labor dispute if its non-picketing activity amounts to either or both harassment and repeated trespass (see 29 U.S.C. § 158(b)(4)(ii)(B)). The court recognized a new form of unlawful secondary activity in the middle of the spectrum between statutorily prohibited secondary picketing and First Amendment-protected publicity activity, such as secondary handbilling. The case was remanded to the district court to determine whether the union's conduct was coercive against secondary employers and damaging to the hotel. (13-1938, (7th Cir. July 29, 2014).)

Background

Unite Here Local 1 began a long-term strike against Congress Plaza Hotel in 2003. In 2008, the union began engaging in secondary activity, sending delegates to the stores and offices of hotel customers to assert the union's position regarding the strike and to emphasize to the secondary employers' decision-makers the union's disapproval of those organizations' plans to contract with the hotel. The hotel sought economic damages for allegedly unlawful secondary activity against its customers under Section 303 of the Labor Management Relations Act (LMRA) (29 U.S.C. § 187). In particular, it alleged that the union committed unfair labor practices (ULP) through its conduct towards the following nine potential hotel customers:
  • American Tango Institute (ATI). ATI contracted to host a tango festival at the hotel. The following events occurred:
    • the union sent a letter to ATI president, requesting that he cancel the contract. It continued to repeatedly contact the president via e-mail and telephone;
    • the union delegates contacted ATI's artistic director to voice opposition to the contract;
    • the union threatened to picket the festival and to visit affiliates at home or work to pressure them;
    • the union boycott coordinator registered to attend the festival, which ATI's president feared as an attempted disruption;
    • the union persisted on meeting with ATI's president at ATI's headquarters despite his stating that he did not want to communicate with the union;
    • union delegates entered ATI's electronically locked office to drop off literature on several occasions;
    • after a second meeting with ATI's president, where union delegates threatened to insert people into the festival to talk about the strike, the union continued to contact ATI;
    • ATI canceled its reservation and moved its festival to a smaller venue, after ATI's president felt harassed and pressed to do so; and
    • ATI lost $20,000 due to revised marketing materials and other costs, $40,000 in expected revenue due to decreased festival participation and a 60% drop in membership.
  • International Housewares Association (IHA). IHA contracted for room blocks for its annual trade show. The following events occurred:
    • the union phoned IHA's vice president to tell her not to book rooms at the hotel;
    • union delegates entered IHA's offices, threatening to picket the trade show, and said "shame on you" to IHA's president while he was in a business meeting;
    • on one occasion, a group of union delegates went to IHA's offices uninvited. They refused to leave until the police were called, and a smaller delegation returned later that day;
    • the union contacted and visited retailers, show attendees and board members, who felt harassed by the communication;
    • the union contacted celebrity chef Rick Bayless, who was to appear at the trade show, and distributed fliers outside of his restaurants, concerning the establishments' previous health code citations. The fliers contained accurate but incomplete information (such as that the restaurants passed their inspections) and did not refer to the union's labor dispute with Congress Plaza, instead only including a reference to the union's website. The manager of one of Bayless's restaurants testified that the union handed out fliers inside the eatery;
    • union delegates boarded Radiological Society of North America (RSNA) buses to distribute leaflets, walked into RSNA department meetings shouting an official's name and allegedly also visited IHA affiliates, including Macy's and Ace Hardware; and
    • after IHA canceled its pending hotel room block, the union boycott coordinator said she would not stop until IHA completely disassociated itself from the hotel because several individuals maintained hotel reservations.
  • Reed Exhibitions/Chicago Comic and Entertainment Expo (Reed). Reed reserved a room block for attendees of its Chicago Comic and Entertainment Expo. After Reed booked the rooms, the following events occurred:
    • the union picketed comic book stores affiliated with the Expo;
    • union delegates followed one of the Expo organizers to nine different comic book stores, confronting him at each stop, and indicated that they would follow him until he canceled Reed's hotel reservation;
    • union members appeared in at least one store carrying signs; and
    • Reed wrote to the hotel, cancelling its block reservation due to the strike and lack of expected guest room usage.
  • NeoCon/Merchandise Mart Properties (MMP). MMP reserved room blocks for a NeoCon trade show. After reserving the room block, the following events occurred:
    • union delegates visited NeoCon exhibitors with leaflets instructing them to contact MMP's president;
    • delegates met with exhibitors as well as the individual in charge of hotel reservations, without an appointment;
    • delegates may have inadvertently visited homes of some exhibitors;
    • a union official and MMP's president had a shouting match on the phone; and
    • MMP canceled its reservation.
  • America's Next Top Model (Top Model). Ansia Productions contracted with the hotel for an America's Next Top Model casting call. The following events occurred:
    • the union sent out e-mails requesting recipients to contact one of Top Model's corporate sponsors;
    • a union organizer urged e-mail recipients to continue calling one target despite the target's full voicemail box; and
    • Top Model canceled its arrangement with the hotel two days before the casting call.
  • WordCamp Chicago (WordCamp). WordCamp scheduled its bloggers conference at the hotel. The following events occurred:
    • the event's organizer received e-mails, Twitter messages and social media postings from union activists;
    • the union allegedly began e-mailing individuals on the conference's registrant and sponsor lists, threatening protests and bad publicity if the event was held as scheduled; and
    • WordCamp moved the conference location to avoid alleged harassing behavior and discomfort with the union pressure.
  • Midwest Clinic (Midwest). Midwest had contracted with the hotel since 1995 for housing and meeting space for its school band and orchestra director conference. The following occurred:
    • a union boycott coordinator spoke to the executive director on the phone and came to the office several times during one of the busiest times of year. The executive director stated that the boycott coordinator was not welcome;
    • the union contacted Midwest board members, directors and employees, sometimes at home;
    • the union sent three letters to the executive director requesting that Midwest stop its business with the hotel; and
    • Midwest canceled its arrangement with the hotel in 2009. The executive director could not positively identify a reason, but asserted that the union's activities might have been a concern, and that Midwest wondered whether it wanted to maintain a relationship with a hotel that had a strike occurring.
  • Chicago Film Festival. In 2005, Cinema/Chicago was offered 100 free room nights in exchange for advertising during the Chicago International Film Festival. After this offer, the following events occurred:
    • an umbrella group that included the union sent a letter to festival management that strikers might be outside the festival with leaflets and bullhorns;
    • letters were sent to expected attendees, Susan Sarandon and Roger Ebert; and
    • the festival canceled its reservations, based on the letter and concern for the festival, including opening night occurrences and potential embarrassment for the festival and attendees.
  • The National Center for Agricultural Utilization Research (AgLab). AgLab contracted to have an April 2005 animal gastrointestinal function conference at the hotel. Before the conference, the following events occurred:
    • in February 2005, the union sent AgLab a "cow-pie valentine," a heart-shaped candy box of cow manure, that AGLab's receptionist opened;
    • AgLab did not cancel its reservation, but alleged that less than 75% of the reserved rooms were rented. AgLab alleged this was due to the manure incident; and
    • AgLab sued the union in March 2010.
The union moved for summary judgment in the district court. The district court granted summary judgment to the union, finding that:
  • The hotel could not show that the union's behavior was more coercive than the lawful labor practices of handbilling or persuading businesses not to contract with the hotel.
  • The union's conduct regarding Top Model, the NeoCon Convention, WordCamp and Midwest were protected attempts to persuade their decision-makers not to contract with the hotel.
  • Another district court dismissed the AgLab claim as time-barred by the statute of limitations, since it was brought more than five years after the manure incident.
  • The hotel's evidence concerning the union's alleged coercion of ATI must be discounted because ATI's president voluntarily scheduled a second meeting with the union.
  • The hotel could not show that the union's entrance into IHA's offices was coercive or that IHA was coerced rather than lawfully persuaded to cancel its reservation even though it was of questionable legality, because of IHA's president's subsequent meeting with the union.
  • Handing out leaflets at Rick Bayless's restaurants and using bullhorns outside of the Chicago Film Festival were protected activity under the First Amendment.
The hotel appealed to the Seventh Circuit, asserting that the district court erred in concluding that the union's conduct towards the nine hotel customers was not coercive.

Outcome

The Seventh Circuit reversed the district court's order granting the union summary judgment, and remanded the case for a trial to determine:
  • Whether the union's alleged actions were coercive.
  • To what extent the union's conduct damaged the hotel.
The Seventh Circuit:
  • Noted that:
  • Held that, as a matter of first impression, a union may be liable under 29 U.S.C. 158(b)(4)(ii)(B) for unlawfully coercing a secondary organization to stop doing business with a struck employer if its behavior amounts to trespass or harassment. While this conduct does not create a physical barrier between a business and its customers, it can still disrupt the business.
  • Held that to defeat summary judgment, the hotel must create a reasonable dispute of fact, by providing evidence that:
    • the union used coercion with the intent to force a neutral entity not to do business with the hotel. This element requires showing that the neutral organization's decision-makers felt the only choice was to comply with the union's demands and the decision was objectively reasonable (an ordinary person in the decision-maker's situation would have felt coerced by the union);
    • the neutral entity stopped or reduced its business with the hotel;
    • the decision was caused by the union's coercive conduct; and
    • the hotel suffered damages by the neutral entity's decision.
  • Found that:
    • the union's activity here was neither prohibited coercive picketing nor lawful persuasive handbilling. The court must determine whether the union's activity lies on the prohibited or protected part of the spectrum between those types of activities;
    • prohibiting the union's alleged conduct here would limit free speech only incidentally, while serving a significant government interest of labor peace;
    • First Amendment interests were not threatened here because the hotel's complaint addressed only the union's conduct, not the content of its message; and
    • while the Supreme Court has spoken of a right to distribute literature to one who is willing to receive it, such liberties would not be significantly chilled by a ruling in the instant case that the union harassed an audience that was unwilling or captive.
  • Affirmed summary judgment for the union on the hotel's Aglab-related claims because:
    • the hotel could not prove that it suffered damages, since AgLab did not cancel its room block;
    • the hotel has not provided evidence that a 75% fulfilment of room reservations is below normal, nor that anyone stayed at an alternate hotel due to the manure incident; and
    • the manure valentine implicates concerns about the union's symbolic speech.
  • Affirmed summary judgment for the union on the hotel's Chicago Film Festival-related claims because:
    • no reasonable jury would conclude that the union's threat of using bullhorns and leaflets was coercive;
    • the hotel presented no evidence that the bullhorn would violate the law by exceeding permissible noise levels;
    • the hotel presented no evidence that the union would have actually disrupted the film festival, as its members planned to be outside the theater which housed the festival and opening gala;
    • the festival's decision-maker could not affirmatively state that the union coerced her organization, indicating that the decision to change venues was made to avoid embarrassment and bad publicity; and
    • the court must be wary of infringing on First Amendment free speech, and bullhorns and leaflets are classic free speech instruments.
  • Affirmed summary judgment for the union on the hotel's Midwest-related claims because:
    • the union did not trespass on Midwest property or picket outside;
    • the hotel presented no evidence that union delegates remained on Midwest's premises after being asked to leave or that delegates ever actually entered Midwest; and
    • Midwest's decision-makers appeared to be persuaded rather than coerced to cancel its arrangement with the hotel, given the executive director's testimony that leadership was hesitant to use a hotel combatting a strike.
  • Affirmed summary judgment for the union on the hotel's MMP-related claims because:
    • the union's conduct consisted of communication, rather than physical trespass or persistent harassment; and
    • distributing fliers urging people to call MMP's president is protected speech, and is even less assertive than the protected activity of distributing handbills.
  • Affirmed summary judgment for the union on the hotel's WordCamp-related claims because:
    • the union asserted its message by social media and e-mail, which was protected speech about matters of public concern;
    • social media postings are passive and non-coercive, posing little risk to unwilling or captive listeners; and
    • there was no evidence that these communications by the union did more than attempt to persuade individuals.
  • Affirmed summary judgment for the union on the hotel's Top Model-related claims because:
    • the union used only phone calls and e-mails to persuade a Top Model sponsor; and
    • a target's full voicemail box is not something that would likely lead the sponsors to cancel their contract.
  • Reversed summary judgment for the union on the hotel's ATI-related claims because:
    • although ATI's president informed the union twice that he was not persuaded by its cause, delegates snuck into ATI's office to drop off literature. This required surpassing an electronic lock;
    • ATI's president testified that the union threatened to attend and disrupt ATI's tango festival. The union's boycott coordinator even registered to attend the event;
    • the frequency of the union's phone calls to ATI's president may indicate an attempt to harass him rather than communicate;
    • the union persisted in contacting ATI's president despite a contentious meeting in which he considered calling the police;
    • one can conclude that ATI's president was intimidated into attending a second meeting with the union;
    • ATI suffered significant economic losses and membership support, and it might be inferred that ATI had no choice but to accede to the union's pressure. A reasonable inference may be drawn that the last-minute change of venue and accompanying losses resulted from the pressure and harassment felt by ATI; and
    • questions of fact exist about whether a reasonable person would have made the same decision as ATI's president.
  • Reversed summary judgment for the union on the hotel's IHA-related claims because:
    • a union delegation returned to IHA's offices on the same day that the police were called to address an earlier visit from union delegates;
    • the union's boarding of RSNA buses to distribute leaflets could persuade a fact-finder that the union might do the same on IHA buses;
    • the union advised IHA's vice president that it would not stop its conduct as long as IHA had a contract with the hotel;
    • one can conclude that IHA's president met with the union to surrender or request a stop to the coercion, which could explain why the meeting was held in the basement rather than the president's office;
    • based on conduct such as walking RSNA's halls yelling the name of an official, a reasonable juror might conclude that the delegates were instructed to trespass, disrupt and harass;
    • a union delegate testified that a delegation was sent to Macy's and was threatened with arrest;
    • despite the fact that the union's distribution of flyers containing truthful information about Rick Bayless's restaurant is not an ULP, a restaurant manager's testimony that leaflets were handed out inside the restaurant could support an inference of trespass and harassment;
    • the union's visits to Bayless's restaurants and IHA's exhibitors may constitute tertiary activity towards entities whose links to the hotel are extremely attenuated, which 29 U.S.C. 158(b)(4)(ii)(B) is designed to avoid; and
    • the hotel should have the right to prove at trial that the union's conduct threatened substantial loss or ruin to IHA.
  • Reversed summary judgment for the union on the hotel's Reed-related claims because:
    • a reasonable juror may conclude that union delegates following and confronting an Expo organizer to nine different comic book stores and indicating that they would follow him until he canceled Reed's reservation is harassment. While approaching secondary business managers is permitted, doing so nine times may cross the line from persuasion to picketing;
    • internal e-mails between Expo decision-makers indicated an intent to drop the contract because of the union's activities;
    • union members' visiting the comic book stores with signs may constitute tertiary activity towards entities whose links to the hotel are extremely attenuated; and
    • the theory of whether the delegations' presence in the stores carrying signs was a threat of substantial economic loss to the Expo or a minor annoyance should be pursued at trial.

Practical Implications

The Seventh Circuit recognized a form of unlawful secondary activity that falls between:
  • Protected persuasive union activity such as persuading secondary employers through handbilling.
  • Statutorily prohibited secondary picketing activity.
This decision should be useful for business entities seeking redress for unions' coercive secondary activities that do not fall obviously within the definition of prohibited secondary picketing activity. Businesses, especially in the Seventh Circuit, can use this case to frame LMRA Section 303 causes of action where unions have:
  • Targeted organizations' employees rather than their customers, who might be persuaded.
  • Threatened or harassed personnel inside their places of business.
  • Engaged in repeated, sustained trespassory or harassing acts.
  • Shown that their intent is to harm secondary businesses rather than persuade secondary decision-makers to join their cause.