Thursday, December 17, 2009

Cintas’ most recent challenge to union corporate campaign falls short

I suppose Cintas Corp figured it was worth a shot, but a novel defense strategy attempted by the uniform and laundry giant in the face of unfair labor practice charges ultimately proved unsuccessful. Earlier this week, the Eighth Circuit enforced an NLRB order finding Cintas committed several violations of the National Labor Relations Act. The appeals court, like the Board below, rejected Cintas’ contention that, essentially, it was entitled to interfere and/or retaliate against employees who engaged in prounion activities because UNITE HERE has been waging an aggressive corporate campaign against the company.

The NLRB General Counsel filed a complaint against Cintas, alleging a series of garden-variety unfair labor practice charges. In a hearing before an administrative law judge, Cintas conceded its antiunion animus. It asserted in its defense, however, that UNITE HERE was carrying out an unlawful nationwide corporate campaign against the company and that the unfair labor practice charges were filed for illegitimate purposes related to this campaign; thus, any employee activity in support of the union is not protected under the Act. The union’s corporate campaign was unprotected activity, Cintas reasoned, because it involved “coercive and disloyal tactics” that were intended to force the employer into a neutrality and card-check agreement.

However, the ALJ excluded as irrelevant the evidence Cintas sought to introduce regarding the union’s corporate campaign. Whether individual employee activity was protected was to be determined based on the employees’ own conduct and motives, the ALJ reasoned, not on unrelated corporate campaign activity by the national union. To have imputed the union’s conduct to individual employees without proof of specific knowledge “would have perverted common law principles of agency and run contrary to the purposes of the Act,” he wrote. The two-member NLRB adopted this position, and held the ALJ did not abuse his discretion by refusing to admit the evidence about the corporate campaign.

The Eighth Circuit affirmed and enforced the Board’s order. As the appeals court wrote, “We have been unable to find a reported case in which an employer has sought to use a union’s national campaign as a defense to unfair labor practice charges involving individual employee activity, and Cintas has not cited any.”

“The proper venue for Cintas to raise its allegations about the national campaign by UNITE HERE would be through unfair labor charges against the union itself,” the appeals court added.

An ongoing counterattack. The defense posture before the NLRB was not Cintas’ first challenge to UNITE HERE’s ongoing corporate campaign, launched in 2003 as part of an aggressive nationwide effort to organize Cintas workers. The company has responded with a litigation counter-offensive against the hotel, restaurant and textile workers union. Perhaps no employer has fought back so forcefully against organized labor’s corporate campaign strategy. Cintas’ efforts thus far have met with varied success.

“For the last five years, UNITE HERE and other labor organizations have carried on a campaign of negative, untrue and unlawful attacks against Cintas in an effort to extort concessions from the company,” Cintas alleged in a 2008 press release announcing the filing of a lawsuit in the Southern District of New York. (The 2008 suit consolidated an ongoing defamation suit filed by the company in an Ohio state court in 2004.) Cintas alleged violations of the federal and state Racketeer Influenced and Corrupt Organizations (RICO) statutes, claiming the unions engaged in extortion, interference with existing and prospective business relationships and deliberate attacks in order to artificially depress the value of Cintas stock, among other unlawful conduct. The state suit also alleged UNITE HERE violated Cintas’ trademark rights, including “improper use of Cintas’ trade name and trademark in various websites designed to further the unions’ extortion and reputation-destruction campaign.” (The union had created a Web site, "," featuring negative information about the uniform company, with a link to the union's Web site and a disclaimer stating its origins and purposes.)

A district court dismissed the RICO complaints. The union’s efforts to secure a neutrality agreement did not rise to the level of criminal extortion, the court found, noting that “courts have held uniformly that such an agreement provides benefits to both an employer and a union.” Further, “Cintas does not have a right to operate free from any criticism, organized or otherwise,” the court wrote. The court dismissed the trademark claims as well; given the content of the Web site and its obvious disdain for Cintas, it was unlikely that customers would be confused about the relationship between the parties. In an unpublished ruling issued last week, the Second Circuit affirmed dismissal.

DPPA claim succeeds. While Cintas was not technically a party to the litigation, a lawsuit brought by Cintas workers, filed by the law firm that represents Cintas in labor matters, and publicly hailed by the company, managed to strike a blow against UNITE HERE—and to thwart a key tactic used by labor unions to communicate with workers in their organizing campaigns.

During its organizing drive, UNITE HERE employed a tactic known as “tagging” in an effort to locate employees’ names and home addresses so the union could approach the workers outside the workplace. The union copied the license plate numbers of vehicles in Cintas’ employee parking lots and then used the numbers to obtain names and addresses of their registered owners from databases containing state motor vehicle records. A group of Cintas employees filed a class action suit, alleging the union violated the federal Drivers Privacy Protection Act (DPPA), which forbids “knowingly disclos[ing] or otherwise mak[ing] available to any person or entity: personal information... about any individual obtained by the department [of motor vehicles] in connection with a motor vehicle record.” 18 U.S.C. § 2721(a).

A district court held the union violated the federal privacy statute, granting summary judgment to the plaintiffs and awarding $5 million in damages to Cintas employees. The Third Circuit gloat.

Not just Cintas. Other employers have filed suits against labor unions alleging corporate campaign tactics have violated the law. Sutter Health, a Northern California hospital corporation, successfully sued UNITE HERE in 2006 when a jury found the union defamed the hospitals during an organizing drive. The union was ordered to pay over $17 million in damages. And Smithfield Foods is the plaintiff in ongoing litigation against the UFCW and other union defendants in a federal district court in Virginia. The company alleges RICO and state law claims, contending the defendants’ corporate campaigns damaged Smithfield’s corporate reputation and that it lost profits and stock value as a result. The defendants sought to dismiss the RICO action, claiming the extensive list of corporate campaign-related conduct alleged by the company in its complaint was merely coercive activity and not extortion. The lawsuit survived the motion to dismiss, however, and the litigation is ongoing.

No doubt the litigation counter-offensives represent an ongoing challenge for unions. On the other hand, they are a grudging nod by employers to organized labor’s success in organizing workers through such nontraditional means.

No comments:

Post a Comment