Another Avenue for Countering Corporate Campaigns: Unions May Be Held Liable for a Pattern of Harassing Litigation

In a decision that highlights a potential avenue for employers to counter unions’ corporate campaign efforts, the United States Court of Appeals for the Fourth Circuit held that a union’s harassing litigation in furtherance of its organizing efforts can be actionable under the National Labor Relations Act. In Waugh Chapel South, LLC v. United Food and Commercial Workers Union Local 27, 2013 WL 4505288 (4th Cir. Aug. 26, 2013), the court held that Waugh Chapel South LLC and related entities (collectively “WCS”) adequately alleged that the United Food and Commercial Workers Union Local 27’s (“Union”) pattern of harassing litigation against WCS’s commercial real estate projects in furtherance of the Union’s organizing activity against another entity constituted an unlawful secondary boycott.

The Union allegedly is engaged in a corporate campaign to organize employees of Wegmans, a non-union supermarket. Such a campaign is premised on a union’s ability to exploit the employer’s vulnerabilities in an attempt to cause the employer to agree to remain silent as the union organizes its employees and to recognize the union once a majority of relevant employees signs union authorization cards – dispensing with the need for a secret-ballot election.

WCS’s complaint alleged that the Union attempted to achieve its organizational goals with Wegman’s by pressuring WCS to cease its plans to lease retail space to Wegmans. More specifically, the complaint alleged that, after threatening to “fight every project where Wegmans is a tenant,” the Union engaged in a pattern of harassing litigation that included directing and/or funding 14 separate legal challenges to two of WCS’s projects that involved Wegmans as a future tenant. The challenges mostly related to the grant of building permits and changes to applicable zoning requirements. Of the 14 challenges, one was arguably successful and the other 13 were either dismissed, rendered moot or withdrawn by the Union.

In general, the use of coercive activity to pressure an entity to cease doing business with another entity with whom a union has a dispute is considered to be an unlawful secondary boycott under the National Labor Relations Act. The Union, however, moved to dismiss WCS’ complaint on the grounds that it had a constitutionally protected First Amendment right to petition the courts. It asserted that its litigation activity was insulated from legal challenges pursuant to the Noerr-Pennington doctrine that immunizes entities from any liability that may otherwise result from the exercise of the right to petition the courts.

The court held that it could not grant the Union’s motion to dismiss because a genuine issue of fact existed as to whether the Union’s alleged pattern of litigation violated the NLRA’s prohibition on secondary boycotts. The Court recognized that there is an exception to the Noerr-Pennington doctrine for sham litigation, which is defined as “a pattern of baseless, repetitive claims … which leads the fact finder to conclude that the administrative and judicial processes have been abused.” The court then held that the alleged facts, including that the Union won only one of its 14 legal actions and withdrew 10 of them under suspicious circumstances, created questions of fact as to whether “the pattern of litigation alleged in WCS’s complaint derived from ‘a policy of starting legal proceedings without regard to the merits and for the purpose of’ waging a secondary boycott.”

This decision provides companies with another avenue for countering unions’ corporate campaign efforts that involve potentially sham litigation. Companies often attempt to thwart corporate campaigns by reacting defensively but the use of offensive weapons, such as offensive litigation, can provide more effective relief from a corporate campaign. For example, real estate developers who face harassing litigation by a union targeting a potential tenant often cannot weather union-caused construction delays and increased costs. Nor can many developers afford to exclude potential revenue-generating tenants subject to union campaigns (e.g. Wegmans, Walmart, etc.) from projects. Companies in other industries face similar dilemmas when confronted with a corporate campaign, whether against the company itself, a client or another entity with which it is doing business.

Causing a union to face potential liability can be a valuable part of a strategic plan for countering a union’s corporate campaign. Such litigation is not without risk, however, as a company’s lawsuit against a union could be deemed retaliatory in certain circumstances. Accordingly, a comprehensive strategic plan for dealing with a union campaign should be developed in consultation with counsel, but offensive litigation against the union can, and should, be part of the analysis.