Campaign to Compel Employer Recognition of Union Could Violate RICO

This posting was written by William Zale.

An employer could pursue federal RICO claims on the theory that a union, a union local, and the operators of a negative publicity campaign engaged in a pattern of extortion to compel the employer to recognize the union as the exclusive bargaining representative for employees at a large pork processing plant, the federal district court in Richmond has ruled.

Predicate Acts, Pattern of Racketeering Activity

The employer stated predicate acts of extortion under state law by alleging that the defendants had interfered with the employer's business and third-party relationships to inflict financial losses and had threatened more of the same if the employer did not forgo its “property right” not to recognize the union as bargaining representative, the court determined. Until the union prevailed in a valid National Labor Relations Board certified election, the employer had the right not to recognize the union as bargaining representative.

The employer sufficiently asserted a pattern of racketeering activity by alleging that the defendants’ acts of extortion were related and continued for over 18 months, the court found. The conduct allegedly continued after the filing of the complaint when the defendants allegedly caused the employer to lose a marketing opportunity on the Oprah Winfrey show.

Conspiracy to Acquire Control

The employer stated a claim that the defendants conspired to violate RICO's Sec. 1962(b) prohibition against acquiring an interest in or control over an enterprise through a pattern of racketeering. The defendants unsuccessfully contended that, even if they succeeded in gaining the employer's “voluntary” recognition of the union, they would not gain an interest in or control of the employer. On the facts alleged, if the defendants were able to extort the employer's recognition of the union, the defendants would gain substantial control over the employer's business operations, according to the court.

Conduct of Union Enterprises

The employer stated a claim that the operators of the negative publicity campaign conducted the affairs of the union enterprises through a pattern of extortion in violation of RICO Sec. 1962(c). The employer also stated a Sec. 1962(d) claim of conspiracy to violate Sec. 1962(c).

The campaign included drafting allegedly false press releases and reports regarding workplace safety violations and denials of worker compensation claims, organizing protests at the sites of the employer's business partners and at shareholder meetings, and proposing municipal resolutions condemning the employer. The operators of the publicity campaign allegedly were not merely retained as professional advisors to the union. According to the complaint, they were significant, active, independent participants in the alleged misconduct, the court said.

Conspiracy to Use Ill-Gotten Income

In addition, the employer stated a claim that the defendants conspired to violate RICO's Sec. 1962(a) prohibition against using or investing in an enterprise income derived from a pattern of racketeering. The court said that an object of the alleged conspiracy was to use income to operate the union enterprises and to pay the salaries and fees of the defendant entities and individuals for the purpose of engaging in further negative publicity campaigns.

A Sec. 1962(d) claim of conspiracy to violate Sec. 1962(a) can be legally sufficient, in the court’s view, if an agreement to use or invest income derived from racketeering activity is alleged, even if there is no alleged actual use or investment of income.

The May 30, 2008 opinion in Smithfield Foods, Inc. v. United Food and Commercial Workers International Union, will be reported in CCH RICO Business Disputes Guide