Friday, March 10, 2000
Panel One: The Core Elements of the Union-Backed Corporate Campaign,
Litigation and Regulatory Strategies
MR. JOHN IRVING,
Moderator; Kirkland & Ellis (Washington, D.C.); former member,
National Labor Relations Board
PROFESSOR RICHARD FREEMAN,
Professor of Economics at Harvard University; Faculty Co-Chair of
the Harvard University Trade Union Program; Director of the Labor
Studies Program at the National Bureau of Economic Research; and
Co-Director of the London School of Economics Center for Economic
MR. BART NAYLOR,
consultant on capital research and strategy information; former
(1993-99) Director, Teamsters' AFL-CIO Office of Corporate Affairs
MR. CHRIS GANGEMI,
Partner and Head of Labor and Employment Relations Department, Winston-Strawn
MR. CLIFFORD (Dick) OVIATT,
Partner at McGuire, Woods, Battle & Booth; former member
of the National Labor Relations Board (1989 to 1992)
P R O C E E D I N G S
MR. IRVING: I would like to welcome everybody
this morning. I won't ask you to show your hands as to whether you
are planning a corporate campaign or whether you are victim of a
MR. IRVING: I think what I will do is introduce our All Star panel.
We are going to start off with Professor Richard Freeman. I don't
know quite exactly how to introduce him -- as an economist,
as a Ph.D., as a professor, lecturer, author -- all of the
above -- Dartmouth College, Harvard Ph.D. in 1969. He holds
the Herbert Asherman Chair in Economics at Harvard University. He
is currently serving as the Faculty Co-Chair of the Harvard University
Trade Union Program.
He is also the Director of the Labor Studies Program at the National
Bureau of Economic Research, Co-Director of the London School of
Economics Center for Economic Performance, and a visiting professor
at the London School of Economics. He was a member of the Secretary
of Labor's Commission on "The Future of Worker-Management Relations."
We are very pleased and honored to have you here, Doctor. I think
I will use a different title each time I refer to you -- to
cover them all.
We have Bart Naylor, who is a consultant on capital research and
strategy information. From 1993 to May of 1999 he directed the Teamsters'
AFL-CIO Office of Corporate Affairs, working with pension funds
and individual investors on corporate reform initiatives.
He has his M.B.A. from Golden State University and a B.A. from
He is the author of some 150 pension fund resolutions at corporations
and he is the author of numerous publications which indicate his
neutrality -- "America's Least Valuable Directors,"
"Runaway Executive Pay at Union Pacific," "Big Pay
at the Big Three," "The Bull in the Glass House --
the Case for Reform at Merrill Lynch," "UPS Stealth Campaign
Against Worker Health," and "The Senate Report on Corporate
We are honored and pleased to have you too. We'll have a spirited
We have Chris Gangemi from Winston-Strawn. He is a partner, and
head of the Labor section in Winston-Strawn's office in Chicago.
A graduate of Villanova, and Villanova Law, Mr. Gangemi represents
employers in all aspects of labor and employment law and litigation.
His clients include Caterpillar. He is the author of such publications
as "The Inside Game Tactics -- Understanding Work To Rule
and Other Labor Union In-Plant Campaign Strategiespublished by the
Labor Policy Association, and "The Corporate Campaign at Caterpillar,"
which was in the Journal of Labor Research.
Last but not least, or penultimately, we have Clifford (Dick) Oviatt,
who I think most of you know. He is a partner at McGuire, Woods,
Battle & Booth. He is truly one of the old -- that's wrong.
He is truly one of the most experienced management war horses. Dick
holds degrees from Wesleyan University and Cornell Law, was a member
of the National Labor Relations Board from 1989 to 1992, has spent45
years in the practice, as a battle-tested author and a good friend.
I am John Irving. I am with Kirkland & Ellis here in the Washington
Office. I did a stint or two at the NLRB myself some years back
but I have only been an outside observer since 1979.
In recent years, hard times have fallen on the labor movement in
terms of attracting a larger segment of the workforce and that I
think is due to a variety of factors. I can't really put and I don't
think the labor movement can put its finger on any particular thing --
good times and a more conservative Congress, less likelihood of
legislative change that would benefit organized labor, more educated
employers who pay more attention to their workforces and who know
how to fend off organizing campaigns lawfully.
There are certain court decisions that have worked to organized
labor's disadvantage -- the Beck decision in particular. There
have been internal problems with certain of the member unions, such
as the Restaurant Workers, and the Laborers. There's been bad publicity,
costly strikes and a general reluctance to strike among employees.
There is international competition and changes in the nature of
the workforce -- just to name a few.
As a result, there have been many new tactics that have been adopted
by the new leadership of the AFL-CIO and its constituent unions,
including political activities, neutrality agreements, in-plant
strategies, harnessing up the Executive Branch through issuance
of favorable regulations and even Executive Orders from the President,
and corporate campaigns.
Nevertheless, organized labor's fortunes have not really improved
much. Union membership as a percentage of the private sector non-agricultural,
non-farm workforce has fallen every year since 1985, from 14.6 percent
to 9.4 percent in 1999. Even union membership among Government employees
has increased only slightly, from 35.8 in 1985to 37.3 percent of
Government workers. This new tactic actually is not so new, the
tactic of corporate campaigns of one type or another has been around
A corporate campaign is a collection of strategies and activities,
an array of weaponry designed by unions to pressure employers to
accede to union demands. They can be bargaining demands. They can
be organizational demands. They can be political demands and so
forth. These different tactics are put together or used singly pressure
employers short of an actual strike, because employees these days
are less inclined to strike.
We will start off with Professor Freeman, then we will have discussions
among the panel members and then take questions from the audience.
PROFESSOR FREEMAN: Why the corporate campaign
has come to such prominence nowadays is predictable. If you look
at the problems unions have in organizing people, the sense certainly
among union organizers and among a fair proportion of people who
are in campaigns is that the company is the major player. A company
that does not want to be unionized can bring great resources onto
Therefore, you can say, well, who should the union be trying to
pressure? The workforce -- if there is an organizing drive,
gets terribly contentious. Nobody likes it, neither the management
nor workers, and so nowadays the only people who get organized are
workers who absolutely despise their management because they have
been badly treated. You get very few people organized because not
that many managements are that poor.
So if management signs a neutrality clause -- promising not
to be involved in this activity -- then the union can go and try
to convince workers what it can do positively for its members. The
first point I want to make is that the corporate campaigns must
be seen in the perspective of the efforts to unionize in the country,
the great importance management has in that activity, and the extensive
resources that management has employed to keep unions out of workplaces.
So it is predictable that the unions would say we have not got the
strength and the workers don't have the strength to organize, and
so try to affect the person who has the strength, the employer.
This is unique to the United States. You get a little of this in
the United Kingdom, but it is really very much American; we have
the most contentious labor-management relations in the organizing
As was pointed out, we don't have very contentious things in terms
of strikes. We are not a particularly strike-prone country and strikes
have gone down dramatically. There are always one or two B
for example, the current Boeing strike by the engineers --
but those are rarities in this country.
Other countries don=t make a war at whether or not you become a
union member. Or, they offer workers something different, some form
of non-union worker representation. We fear company unions but they
have workers councils throughout Europe. It=s strange to Europeans
that here it is such a bitter thing.
From a social science point of view this is to be expected,
given what goes on in organizing campaigns and should not be divorced
The problem of corporate campaigns is much more complex and unions
have to be very very careful. Sam Gompers once said the worst thing
a union could ever do was to reduce the jobs of its members, and
obviously you can't be running around, if you are the union at Ford
Motor Company, saying don't buy Ford cars or trying to reduce the
efficiency of Ford. You find much less of that type of activity.
In the current Boeing strike, there is a bitter dispute with the
non-AFL-CIO union of professional engineers, but they are doing
almost nothing to try to hurt Boeing sales because that is their
own jobs. That would be stupid.
The next point I want to make is that the possibility for these
various corporate campaigns has widened incredibly. It is I think
going to get wider and wider.
The Internet has had a tremendous effect on the possibility of
fighting a corporation, and the corporation can do the same --
fighting a union, on a different plane. There is some argument in
the UK about whether or not they will privatize the air traffic
control and the weapon of the unions, who are opposed to the privatization,
is what you would consider a corporate campaign. They are calling
for people all around the world to send e-mails to the British ministers,
Labor Party, in protest of this, and we know there has been some
success in this kind of activity.
Here the Libertarian Society organized an e-mail campaign to stop
the FDIC from changing some banking regulations, which were presented
as an infringement on our freedoms. They managed to get the FDIC
to withdraw. An internal administrative thing was changed by this
nature of protest. That is a corporate campaign not organized by
trade unions but organized by a different group and it has the same
The Internet is extremely important when we think about how this
is going to grow.
People all around the world who will be wired in will be told something
and asked to send an e-mail, do whatever it is, and that is a real
concern and should be. It is an interesting and powerful tool.
Corporate campaigns have different flavors. There is the aspect
of using the capital market, and the ultimate corporate campaign
in that sense occurs when the Airline Pilots and Machinists of United
Airlines buy the company. With 401(k) plans and with various defined
contribution plans, this will increasingly become a weapon that
unions will have, as we move away from defined benefit plans to
defined contribution plans an aggressive Machinist fund can think
of social return. There is going to be much more capital strategy.
The last thing I want to talk about is alliances that are a part
of corporate campaigns. In the future will happen more often trying
to organize workers we will get the environmental people also up
in arms, the Sierra Club, wherever it happens to be. We=ll, find
out the company has some environmental lapses. There may be companies
in the Unites States that have no legal lapses on anything, but
I doubt it, and again with the Internet you just suddenly have incredible
opportunity to organize diverse groups of people to be part of your
As long as the companies play a big role in union organizing, as
long as it isn't so much a decision of the local workers, as long
as Harvard can go through 13 years staring off a union, we understand
what companies that are a lot tougher than Harvard can do, and so
when the decisions are being made by people high up in hierarchies,
not by a local group of workers, then the battleground necessarily
is going to shift towards those higher level things, and there are
a lot of weapons there that the unions are mustering. The Internet
is going to help them quite a bit because the transparency and the
flow of information can generate a lot of things. You don't need
too many people protesting your product to cause trouble and to
cause companies to back off from things. Thanks.
MR. IRVING: Thank you, Richard, and now we will go to Chris.
MR. GANGEMI: Good morning and greetings from the Land of Lincoln
or as it came to be known to organized labor, the war zone. There
were towns in Illinois in the mid-'90s where we had as many as three
corporate campaigns going on at one time. Some of you may have noted
Decatur, Illinois, where simultaneously the UAW had a campaign against
Caterpillar, the AIW when it still existed had a campaign against
A.E. Staley Company there, the Rubber Workers, now know as the Steel-workers
had a campaign against Bridgestone-Firestone, all going on at the
same time. Very disruptive for a small community like Decatur.
As you might expect, I have a different view on the nature and
the evils of corporate campaigns than perhaps some of the other
speakers. I want to give you a vignette that is a real case. I am
going to change the names because it was very quietly taken care
of, but it is a real case.
I got a call from a corporate partner of mine who got a call from
a small private investment bank in Chicago, which had gotten a call
from one of the companies, a chain of upscale restaurants, in which
the investment banker had a minority position. Out of the clear
blue, one of the unions in the paper industry had begun leafleting
the restaurants of this chain, and the leaflets had the logo of
the particular restaurant swatting fruit flies at the restaurant.
In another case, rotting meat was shown.
They were handing out these leaflets at restaurants around the
country, saying that the restaurant had been found to have violated
various local health codes. If you looked very carefully at the
bottom of the leaflet, you would find that these were past violations,
two to four years old. They went on to say in even smaller lettering
that this was not an indication that there was any current problem
with any of the restaurants; each leaflet said that it was offered
as a "public service" by this union.
The union had no relationship to the restaurants, had no relationship
to the company that owned the restaurants and had no relationship
to the investment bank. When the owners of the restaurant approached
the union and asked, AWhy are you leafleting us about old violations?@
they said in effect, "Talk to your investment bank."
So, the restaurant went to the investment bank and asked, AWhy
is this union leafleting us?@ The investment bank, contrary to the
expectations of the union, didn't know, so the investment bankers
had a meeting with the union at which they learned hat the union
was concerned about a small paper company in Tennessee which had
filed objections to an election that the union had won; these objections
were still pending and a hearing was about to occur.
The union said that if the company were to withdraw its objections,
withdraw from the hearing and enter into a "standard labor
contract" -- which was defined as having a dues check-off
clause -- that it would no longer be interested in the problems
of the restaurant in which the investment bank had a minority position.
The investment bankers explained that they had no control over
the paper company=s labor relations and declared it inappropriate
for the union to be trying to pressure the bank in this fashion.
The investment banker, perplexed, having never dealt with
a union before, came to me. I explained to them that they were in
the throes of a corporate campaign. There were a number of other
holdings of the investment bank. They were hit as well. I pointed
out to them that I thought that they had a valid charge that they
could file with the Labor Board for interference with Labor Board
proceedings. I explained that we might prove a claim for extortion,
as for civil conspiracy.
But you can guess what the investment bank did -- they didn't
want to get involved, so they had two choices. They could tell the
paper company to withdraw the objections or they could do what they
did. Because the company was failing already, they withdrew from
the board, tendered their shares to the management on a promissory
note, and walked away.
The company proceeded with its objections, while teetering on the
edge of bankruptcy. But white knight came by willing to deal with
the union regardless of the outcome of the election, and entered
into a 10-year labor agreement.
Now that is corporate campaigning at a very low level. It doesn't
make the headlines the way the Caterpillar case did. It doesn't
make the headlines the way Texas Air did. But it happens all the
time. It is the type of extortion that can occur when these corporate
campaign tactics are taken too far.
You know, the trouble with the term "corporate campaign"
is that it is very broad. It can involve a whole range of activities,
some of which are quite proper, some of which are quite as American
as apple pie. At one extreme, for a union to publicize the existence
of a labor dispute concerning employees of a corporate with which
they have a representational interest. Even the most obnoxious communication
about that dispute is fair game in our American labor-management
scene. Both sides in the labor dispute may publicize why they feel
their position is correct.
This is the cover page of the Sun Times, "Union Pickets Funeral."
You open it up and you see that the Teamsters picketed a funeral,
marching around the hearse as it came up to the religious ceremony,
chanting "We are union" or "We are Teamsters."
Obviously, the family of the deceased was very disturbed, but the
union said that the next time they would picket at the gravesite.
As you might guess, they didn't have a labor dispute with the corpse;
they had a labor dispute with the funeral home. As obnoxious and
as stupid as that sort of publicity is, that type of effort by a
union is quite proper.
Management does it too. Caterpillar Tractor was extremely aggressive
in the 1990s in communicating with the public concerning the labor
dispute between itself and the UAW. By all accounts Caterpillar
got the better of it.
The problem is on the other end of the spectrum, where a union
either does not have a right to represent and had not asserted a
right to represent the employees, or there is a labor dispute between
the company and the union but the subject of the campaign is not
the labor dispute, but rather some collateral matter that the union
has glommed onto as a way of putting pressure on management. The
problem with that type of conduct is that it has nothing to do with
the labor dispute.
The threat is if you play ball with me I won't reveal these problems
that you have, but if you don't play ball with me, I will reveal
these problems. That is very close to extortion to blackmail.
More importantly, it is the type of conduct that takes the labor
dispute outside of the merits and the economics of that labor dispute
and puts it in a whole new context, a whole new economic context
that has nothing to do with the pros and cons of the respective
economic positions of the parties.
The decision is urged to be made not because it makes sense to
the company or not because the union has the economic power to force
us to make these concessions, but because they know something that
we want to keep private.
If any of you think that seems okay for a union to do, I suggest
you put the shoe on the other foot. What would you think of a company
that approached a labor union and said, AWe know about certain incompetence
or misconduct in connection with the conduct of the union, and we
don't want to bring it to anybody's attention but we also want you
to realize that we don't like your position in our current labor
That sort of conduct would be improper; merely stating it evokes
that reaction. I don't see any difference when a union does it to
If you doubt me, you should take a look at a number of books out
on the subject -- "The SEIU Manual, "On Contract
Campaigns," "The Troublemakers' Handbook" and others.
The AFL-CIO even puts out one.
The SEIU Manual has a section on legal and regulatory pressure.
It refers to two different types of legal and regulatory pressure
points -- failure to treat the workers as required by law, and failure
to meet obligations to customers, clients, patients, stockholders,
the general public, etc. They say first, do your research. Get the
information, and then, second, approach the employer before you
disclose the information.
Your approach might be something like this -- I am quoting
-- "We have documented x, y, and z violations. Normally we
would be willing to work directly with you to get these corrected
and without having to involve the outside agencies, the community
or the news media. Right now our members are so concerned that you
are not going to agree to the contract they may not be in a mood
to do that."
Well now, the message is implicit. It is play ball with us and
we will not go forward; don't play ball with us and we will go forward.
That is the danger in the corporate campaign. You see it every day
in numerous venues, just like that investment bank. Unfortunately,
most of them never see the light of day. That is the extent of my
MR. IRVING: Bart, do you want to take over from there?
MR. NAYLOR: Good morning. How many are management
attorneys here? How many are labor attorneys? Okay. As a labor activist,
you can imagine my interest in explaining just how this is all done,
so I have five minutes to kill here.
MR. NAYLOR: I would agree with Professor Freeman that labor-management
relations are born in conflict. Some of the questions that Mr. Gangemi
raises in terms of tactics have been put to me before; they prompted
me to think long and hard. I wrote a book called, "The Almighty
Dollar: Two Thousand Years of Christian Thinking about Business."
In other words, this situation that we have here with labor, management
conflict, with consumer conflict of Coke versus Pepsi, with litigation,
most of which is between corporations, makes you wonder is this
a good thing.
For example, the monastery, which was one of the first economic
models forbade private property and private profit. Lending, as
we all know, was proscribed by the Catholic Church for 1500 years.
Thomas Aquinas was the first person I could find that says we can
do this. The Catholic Church since 1700 has yet to tell us what
the rules on lending are, other than it is not completely proscribed.
If you were employed during the first thousand years, your situation
was probably one of slavery. Most people worked for themselves.
To the extent that you worked for somebody else, you were basically
in an ownership relationship.
I say all of this because the current models do not have a very
long history. When we are employed, we might look to our fathers
and mothers, for how they behaved as employees. We probably can't
look very well to our grandfathers because they probably weren't
employees; further on back they just weren't employees. They worked
The first company in America to have more than 500 employees was
McCormick Reaper, in 1870. Most people were farmers until after
the American Civil War, so just as some people would argue that
the black family today is weak because during slavery families were
busted-up by -- design, husband and wife or male and female were
sent to separate plantations -- that perhaps employment today is
so unstable or so subject to such charges as my legal colleague
has just made, because we don't have a very long history of how
it ought to be.
The corporation is a relatively young phenomenon as a model. The
first public company occurs about a thousand years ago, and again
as with slavery and lending it has some very dubious roots. The
business of that public company out of Genoa was piracy. They were
going to lend or at least invest in this guy's ship and his job
was to go out and loot other people's ships.
The business leaders of the 19th century did not really form corporations,
i.e., public companies. They formed trusts. They were all conspicuously
religious people. Rockefeller was not only a Baptist; he spent his
Sundays teaching Baptist Sunday School. J.P. Morgan was not only
Episcopalian; he went several days a week to an Episcopalian Church
to pray and listen to organ music. He collected Bishops' signatures
the way you and I might collect baseball cards. Andrew Carnegie
was troubled by the Presbyterian Church that his father was so much
a part of. He gave his $400 million to a very democratic foundation,
not to the symphony but to public libraries.
These titans of business, however troubled they were with terms
of labor certainly, were nevertheless rooted in Christian principle.
How many people can tell me the religion of Bill Gates? Warren Buffett?
They are both connected to the Presbyterian Church, but we don't
think of them as anything but business people.
The corporation has become so dominant in terms of our economy
that the rest of us are all stars or all planets that circle them
in orbit. What I have worked on is to try to unify these various
planets and say that we all are the same in relationship to the
corporation. These planets are customers, suppliers, shareholders,
regulators, people concerned with the environment, and employees.
At the Teamsters, we tried to preach that we are employees, certainly,
and we come to know the company as employees because we are there
every day. We know how the company works well. Some of us are proud
of our company and we know what is wrong with it. But when we go
home, we don't necessarily leave that company. We are also the consumers.
Teamsters deliver Coca-Cola and drink Coca-Cola. Teamsters are also
shareholders. Some of us are members of a faith community and Coca-Cola
has an exposure there as well. We breathe the air. We are participants
in the environment with Coca-Cola and every other company.
So what they call a corporate campaign is an application of common
cause with ourselves. Why must we sit as employees at a shareholder
meeting when we have invested in the company? Why can we not say
we would like to change the way the company operates?
When we try to do that, management responds by proposing a rulemaking
at the SEC that says if a union member puts in a shareholder resolution,
it should be automatically disqualified. They have tried two different
ways. One is if you are one year before or two years after or two
years before and one year after a contract negotiation. In other
words, we are second class shareholders if there is a contract negotiation
For better or for worse we in labor, we in the consumer movement,
we in the environmental movement, are unfortunately left with a
model of conflict that is such that we apparently cannot always
simply come to a meeting of minds. Instead, we have to contest for
an advantage. We don't even permit Coke and Pepsi to get in the
same room together and discuss their prices. They have to battle
The second point I would like to make is for you to understand
when you see a corporate campaign that it is simply an effort by
a labor union and an environmental group and a religious group to
show that their concerns, their conflicts with corporations are
not unrelated and that it is only understandable that they should
share their concerns. Thank you.
MR. OVIATT: One of the nice things about being
number four is being the clean-up hitter. I would like to talk about
this subject in terms of reality. When an employer is engaged in
a corporate campaign, he is besieged with personal attacks, corporate
disparagement across the board, and the avowed aim of an AFL-CIO
corporate campaign is to disparage that company so it can drive
the price of the stock down, impact the corporate viability, and
to hurt market share.
You know, I have been around, as John has indicated, some 500 years --
MR. OVIATT: What we used to have in the labor movement were people
who were problem solvers, people you could go and sit down and talk
to and solve problems.
Today the aim is to bury the other person. In a recent campaign,
the attacks have been racial, the attacks have been individual to
the corporate executives, their families, their personal lives,
all have been spread across the newspapers and other media.
They have handbilled the homes of the plant managers, the president,
the other executives. They have been to the churches, trying to
impact the selection and continuation of board members.
Is that the way we express our views in America? I don't think
The discussion I thought we were going to have today was how do
corporate campaigns impact on the regulatory scheme, and how they
would impact on the litigation that emanates from the these types
of campaigns. Now what does that emanate from these campaigns? Environmental,
clean air, OSHA, NLRB, civil litigation, Title VII -- you name
it -- we have had it, all of it. Well, I have had it. Others
in this room I know have had it.
I am not talking one of those pieces of litigation in one campaign
and then another piece in another campaign. I am talking about having
all of those pieces in one campaign or another campaign.
Now what happens? The attitude of management to try to reach an
accommodation of those pieces of litigation is so soured by the
personal attacks that is very, very difficult to get management
to even consider the possibility of settlement even if there was
some merit to the litigation. You go to a corporate chairman and
you say to him after he has been attacked at his home, had drive-bys
with six or seven automobiles tooting on a Saturday night with people
screaming, having had his neighbors circularized, you go to him
and you tell him you think it is a good idea and you recommend that
you settle the litigation with the union that is causing this particular
activity. I don't want to be there.
You know and I know that you don't do that. You try to work around
it, but it is very, very difficult. If the union selects a corporate
campaign and it targets you for a corporate campaign, they have
to understand that the relationship will be damaged dramatically,
I have heard this morning that one of the problems that we have
in America today is that the unions cannot sell their message to
the working person and therefore we should expect corporate campaigns.
Well, that says two things for me. The admission that they can't
sell the message is something. But how can they ever sell the message
if their aim is to impact on jobs? What they are doing in a corporate
campaign is trying to hurt the company's market share, and when
they hurt market share, they are hurting jobs.
I had a client who had a supplier in Europe. A European union went
to the supplier and said we will not handle any goods of yours if
you are going to deal with that company in America. In America that
would have been a secondary boycott. In Europe it isn't a secondary
boycott. The company was fearful of losing its relationship with
the union and its ability to produce. What did it do? It backed
away. It told the American customer "forget it." That
supply was necessary for this company to operate. It meant a loss
of jobs down the road.
Do I feel strongly about corporate campaigns? I feel very strongly.
I see that they do nothing for anybody. They may enhance the visibility
of a union or the union movement as a group of people who are out
there trying to create problems for their constituency, but I think
that is all it does. It does not help the constituency.
I go back to the days when Jimmy Hoffa=s approach at the bargaining
table was to tell you, AI want you to make as much money as you
can, because I want as much of it as I can get for my people.@ That
is the way the labor movement prospered, not the way it is acting
MR. IRVING: I call to your attention a couple of interesting legal
One is a case called BE&K Construction, 329 NLRB No.
68 (September 30, 1999), which is really interesting in two respects.
The corporate response sometimes to a corporate campaign is to file
various kinds of actions against the union and even against employees.
But there are certain risks. It is not simply tit for tat.
The lead case in that area is a case called Bill Johnson's Restaurants,
which was decided by the Supreme Court in 1983. It said that a lawsuit,
if it is done for retaliatory reasons, can violate the National
Labor Relations Act. It can be a violation of Section 8(a)(1) of
the National Labor Relations Act. The result could be that the employer
who was found to have violated 8(a)(1) in that circumstance could
have to reimburse the union=s litigation costs.
The NLRB discusses Bill Johnson's in this case called BE&K.
The position of the NLRB now is in effect that if the employer loses
the case the NLRB then says that the loss provides the necessary
evidence of retaliation to make out a Section 8(a)(1) violation
under Bill Johnson's. I think the NLRB is just dead wrong
on that. The court said that the loss of the case could be a factor,
but it doesn't say that it could be the only factor. The NLRB says
also that once you have lost the case against the union or against
the employees, the employer bears the burden of proving that it
was not retaliatory.
The second point about BE&K is that some time back in
1982 the General Counsel's Office of the Board actually issued a
complaint in a case against a union, a secondary boycott case, where
a union was pressuring a neutral employer, in that case Amax, because
the union had a dispute with a second employer with a primary employer.
TAC was the primary employer. The union was threatening to oppose
Amax, the neutral employer, before various Government agencies because
Amax was seeking environmental permits of one type or another and
unless Amax would promise not to use TAC as a contractor and there
was a secondary boycott charge filed in this case back in 1982.
The General Counsel's Office issued a complaint in that case finding
that that kind of threat by the union to resort to contrary testimony
against the neutral employer in front of Government agencies was
actually coercive within the meaning of 8(b)(4). That has been the
position of the General Counsel's Office at least until BE&K.
There is language in BE&K now that has caused the General
Counsel's Office to reverse that position. Now that they regard
it as free speech, I don't think we will see any other secondary
boycott complaints issued on that theory.
The other case that I think you might be interested in is a case
called Service Employees International Union, 329 NLRB No.
64. The union, Service Employees, carried its primary dispute to
the offices of a trade association of which the employer was a member
and also to the employer's lawyer's office, arguing that they were
all part of the same employer.
The NLRB said no, that law firms are advice givers and not the
employer, one with the employer for purposes of the secondary boycott
of 8(b)(4) and found that carrying the dispute to the law firm's
office was unlawful.
One other thing about Bill Johnson's: there are risks involved
even for the lawyers who file unsuccessful lawsuits on behalf of
employers. I know of one case in particular on the West Coast. A
lawyer advised an employer to file a RICO action against employees
who were engaged in certain unlawful and violent activity; the lawsuit
The Administrative Law Judge of the NLRB found that the instigation
of that lawsuit was a violation of '8(b)(1)(A) and by recommending
it, the lawyers in the case were engaged in unprotected, unlawful --
or at least unethical activity. The Administrative Law Judge of
the NLRB referred the case with respect to the lawyers to the California
bar, recommending disciplinary action. In terms of employer counter-strategies
there are a lot of considerations other than just being angry with
what the union is doing.
Do any of the panel members want to comment on anything that others
have said? Professor?
PROFESSOR FREEMAN: Yes. I will make one comment. So they might
want to think of telling your church that you are a bad guy? That
is what we do to our Presidential candidates and we are going to
see a lot more of that, so it may be something beyond this domain
of dispute that is going on in making all sorts of disputes more
cantankerous and nasty and personal.
SPEAKER: I find it very revealing that should there be a personal
attack a CEO would do something that is irrational.
In other words, if you have the experience as counsel of going
to a CEO and laying out the facts which say at the end "settle"
but that CEO because he suffered a slur, which was probably wrong
and done at 2 o'clock in the morning, but upset him, caused him
to reject this rational solution, can you imagine that it is possible
that there was a rational proposal advanced by the union in the
first place that, because the CEO is anti-union, led him to reject
So I find it revealing that the head of Aetna can call somebody
a weeping widow when she wins a jury verdict and that is okay, but
because a union member engages in guttural language and we are not
going to settle.
MR. GANGEMI: As one who probably went through
one of the more virulent personal campaigns against a chairman of
a corporation in connection with the Caterpillar case, as annoying
and as disruptive as that is, and as counter-productive as it is,
it really in my judgment is not the issue. I tend to agree with
Bart in that regard. If you look at Sol Insky's "Rules for
Radicals" he tells you you have got to personalize the dispute.
You have got to find a demon. You have got to identify an individual
and personalize the dispute with him. Look at what the union did
to Frank Lorenzo in the Texas Air dispute. They personalized the
dispute around him.
Look at what the UAW did to Archie McArdle when it took on International
Harvester in the mid-
'80s and when the UAW took on Caterpillar in the early '90s the
first thing the union officials did was to send Don Fites, the chairman
of Caterpillar, articles about the downfall of Archie McArdle in
order to make a not-too-subtle indication to him that they would
try to do that same to him and they did, and they did it by every
means possible, but as Don was a very sophisticated guy, when his
employees were walking around with "Permanently Replace Don
Fites" teeshirts, he said, AWhen the Board of Directors starts
wearing the teeshirts, then I will worry, but up until then I am
not going to worry.@
As counter-productive as all that is, I don't think it is the core
problem. The core problem is the use of litigation as a tool in
If you look down through the history of these things, you will
find every form of regulatory action, every form of litigation that
you can conceive of. Some of it relates to the terms and conditions
of employment, a lot of it doesn't relate to the terms and conditions
at all; it is the social tort litigation that you see coming down
the pike these days, whether you are talking about tobacco litigation,
gun litigation, lead paint litigation.
It is done in order to gain advantage in the litigation, to change
the minds and hearts of the jury pool, to put additional pressure
on the defendant to settle that litigation and pay big money in
I would submit to you that if you look at the litigation that arises
in conjunction with corporate campaigns by unions and by their surrogates,
because many times they will get front groups to file this litigation,
the goal is not the litigation. It is the publicity in and of itself.
To the extent that one is filing pieces of litigation that are
never going to see judgment, in order to generate adverse publicity
for that corporation, I think you are abusing the legal process
and creating problems that go beyond the personal offense of the
executives involved. You can destroy the reputation of a corporation
with enough news articles.
The great economic philosopher Warren Buffett said, AIf you lose
money for me, I will be very understanding; if you lose reputation
for me, I will be ruthless,@ because he understood the value of
reputation. The problem with this type of litigation that is filed
merely for publicity is that it subverts the organizing process
because it has no merit relative to those activities.
I would argue that the personal attacks slow the negotiation process
down dramatically, and in so doing it puts the company behind the
curve of modern day operations.
I was with a company on Tuesday and the Director of Operations
said to his people that things are moving so fast that "tomorrow"
is not a word that I want to hear. He said decisions have to be
made so fast to stay competitive in the world markets that we have
got to forget about tomorrow. We have got to do it today.
I wonder if Caterpillar and if Archie McArdle and others would
have settled these disputes more rapidly had there not been these
personal attacks. That is a question that I would leave with you.
We all expect that we can all be attacked. We all have been and
probably will be again, probably as soon as this meeting is over --
PROFESSOR FREEMAN: There is a lot of wasteful activity done in
labor-management disputes: big organizing campaigns cost unions
lots of money, cost workers lots of money, cost companies lots of
money. People spend lots of money on these things because they think
they are going to get an outcome in their favor, and we know that
what companies do is protected by free speech.
What is the solution if you think this is a very costly and painful
process? I would be interested to hear what kind of solutions you
have, because I can go through the records of a company that I am
having a dispute with and note EPA violations. That just is the
way it is -- so that is clear, a nasty thing but it's a fact.
You can't stop it. You can't say you are not allowed to put this
When I was on the commission it was very clear neither the unions
nor the management community was willing to budge towards, let's
say, less costly ways of dealing with the situation, and I think
it is much more fundamental in the organizing area than it is in
the other disputes, and a union that erroneously attacks its own
employer, they all know that that is -- they can't live without
their own employer.
This should be thought of in the context of how to reduce the level
of conflict in the entire organizing area. If you are a corporate
lawyer you want to reduce the nasty parts of the corporate campaigns
and if you are a union lawyer you want to reduce the nasty things
that go on in the organizing campaign where the corporation has
great power and authority over the members. So I need positive ideas
as to how one could change the nature of the whole operation.
SPEAKER: Let me respond to that.
MR. IRVING: Go ahead.
SPEAKER: Look, the National Labor Relations Act gives the union
a procedure. File a petition, have an election and determine whether
or not it has an appropriate role vis-a-vis those employees.
The National Labor Relations Act gives the employer a right of
free speech during that campaign. If the employees do select that
union as their representative the NLRA puts considerable restraints
upon the employer and prohibits it to undermine that majority status
once it has been established.
The fact of the matter is that trying to gain leverage over the
employer by some collateral means in order to force it not to exercise
its statutory right of free speech is improper.
A lot of times the union is leafleting a client. They don't represent
the employees of the client. They want to. They want the company to
sign a neutrality agreement so that they can organize that client.
They don't have enough cards. They haven't asked for an election,
so the company filed an RM petition, to resolve the question about
whether or not the union represents these employees.
Well, under the Labor Board procedures the union of course just
said, well we are not interested in doing that. We do not claim
to represent the employees. We are just exercising our rights of
free speech to publicize about this company.
The point is that there are procedures available for a union to
represent employees. Trying to force the employer in this country
not to exercise its rights under the law by some collateral pressure
doesn't strike me as an appropriate methodology.
SPEAKER: But there is no way you are going to outlaw my right to
say that this company has a violation of law, make it known on the
World Wide Web, tell all my friends about it. If I know that this
company violated the following EPA regulations, violated the following
OSHA regulations, I don't see how you conceivably could stop me
from bringing that out, embarrassing that company.
I mean you are going to say, well, you are allowed to do it unless
you have another dispute with the company and then you are going
to forbid me to do it? That will never work. If you want a real
solution, it seems to me, I am not sure how you put a lid on it.
SPEAKER: I think what we are talking about is whether some of these
tactics are bad judgment, whether they are counter-productive, whether
they slow things down, are they a good idea, which is one whole
set of considerations. The other side of that coin is that they
SPEAKER: There are existing causes of action which can be brought
for this type of conduct.
I think you raise a very true and realistic problem, which is where
are the lines of demarcation between legitimate exercises of free
speech and what amounts to extortion. There are a number of different
torts that have been brought by employers in these areas, defamation,
disparagement of property, tortious interference with business relations,
inducement to breach contract, common law fraud.
There are a number of different RICO actions that can be brought,
alleging an attempt to take over the employer by predicate acts
arising to the level of racketeering activity. There are state RICO
actions that can be brought. There are common law conspiracy and
unfair competition actions that can be brought.
The problem is that it is not an even playing field in this regard.
John alluded to it: A union can file any lawsuit it wants to
against an employer without regard to its merit. It can get a front
organization to file a lawsuit against a company and fund that without
regard to its merit.
But if an employer files a lawsuit against a union it will be confronted
with the Bill Johnsons Labor Board charge that you
are doing so for retaliatory reasons. That is particularly problematic
for an employer because RICO for example is a statute that the exact
configuration and limits of its scope and application are far from
clear, particularly in an organized labor situation, and so an employer
and his attorney have a difficult judgment to make in whether to
pursue these actions. If it is found that the action is without
merit, the Labor Board is going to run in and find you to have engaged
in retaliatory conduct, simply on the basis that the case was without
merit and the retaliatory intent is presumed.
MR. IRVING: Just in that regard, I don't think there is any case
that says that Bill Johnson's, is not equally applicable
to unions. I think unions are very careful because if they just
go willy-nilly and file a lawsuit, that is potentially a Bill
Johnson's violation by the union.
We have a few minutes to take some questions from the floor. We
have a microphone in the back. As you ask your question, take the
microphone, if you would.
AUDIENCE PARTICIPANT: John, the only difficulty with the premise
that you just posed is that, as I understand it, unions are entitled
to have an anti-company motive lawfully. In fact, I once had a union
leader tell me in a situation which we were trying to do an ESOP,
he said, well, we are just comfortable with that and we don't have
anybody to be against, that our employees own a part of the company --
MR. IRVING: So whether the retaliation requirement applies --
AUDIENCE PARTICIPANT: Yes.
MR. IRVING: Well, I think that it takes some creative lawyering
but I think there are some opportunities there. Thanks, Ed.
How about other comments or -- yes?
AUDIENCE PARTICIPANT: I think it was said that the Boeing workers
are not part of the AFL-CIO and that is not correct.
MR. IRVING: Which workers?
AUDIENCE PARTICIPANT: The Boeing workers.
PROFESSOR FREEMAN: The engineers?
AUDIENCE PARTICIPANT: My mistake. I'm sorry. Thank you.
AUDIENCE PARTICIPANT: John, I am wondering if there's any study
done on the cost effectiveness on the part of these union corporate
campaigns. Do they feel they are getting the bang for their buck,
they are accomplishing what they are designed to set out to do?
It seems to me they have had sort of a mixed track record.
MR. IRVING: I think there is a mixed track record, and Chris probably
knows more about this than others because of all the ups and the
downs of the Caterpillar dispute where, as we all know, Caterpillar
went on producing at least most of its product and did pretty well
during the strikes against it.
I am not sure ultimately how that balanced out.
MR. GANGEMI: The problem with defining how they fared is how do
you define success. I mean when they brought Eastern to bankruptcy,
is that success? It is always in the eye of the beholder.
However, there is a study that I would refer you to by --
I don't remember the first name -- the last name is Jarley,
J-a-r-l-e-y -- at the University of Iowa. He or perhaps she,
I don't know, purported to undertake to study 28 corporate campaigns
from the late '80s and early '90s, broke them down into three types --
one, corporate campaigns in connection with organizational activity;
two, corporate campaigns in connection with a strike; and three,
corporate campaigns undertaken in lieu of a strike.
As I recall, of the 28 by whatever criteria Professor Jarley utilized,
he concluded or she concluded that five -- that eight of the
28 had positive what would be called successful results. In the
rest of the cases, they were not successful in terms of achieving
I hasten to add, you know, as I said before, it is difficult to
define what the objective is sometimes.
MR. IRVING: And even though the objective may not be achieved,
you know, obviously not achieved in that particular dispute, that
doesn't mean that it doesn't have an impact somewhere else so that
some other employers on the threshold of getting involved in something
like that, it takes that into account, regardless of whether it
was successful with the first employer or not.
Also, it is one thing to get lawyer advice when you anticipate
you may be the victim of a corporate campaign, but I think most
employers today that have any kind of concerns about that at all
also get professional public relations help.
I can think of one example back with the UPS strike where it seemed
to me that UPS was caught completely off-guard by the union. The
Teamsters immediately accused UPS of being unfair and taking advantage
of part-time workers. UPS is the one organization that really didn't
take advantage of part-time workers and gave them benefits and so
on, but UPS was not ready to take on that challenge. For two weeks
or so it was out there and I think the public had a pretty dim view
of UPS as a result. The union was geared up on the public relations
front and the company was not.
AUDIENCE PARTICIPANT: John and Chris in particular, you talked
a little bit about BE&K and RICO. I'm thrilled to hear
the discussion of RICO today, but my concern is there seems to be
a lot of apprehension about the use of the lawsuit arising out of
a corporate campaign and I would guess in any situation under BE&K.
Has this changed your all's opinions concerning advising employers
whether or not to seek legal recourse in actions arising out of
labor disputes? Is BE&K really that serious, do you think,
or is its opinion significantly different from Bill Johnson's?
MR. IRVING: I think BE&K is serious but I think BE&K
is wrong. It hasn't been tested. I think when it finally gets to
court that is not what the Supreme Court was saying at all. The
real question is what kind of reasonable cause did the plaintiff
have going into the lawsuit. Witnesses change their minds or are
unavailable; some invoke complex areas of law. I did not think that
that is what the Supreme Court was talking about in Bill Johnson.
It will take a long time for that all to shake out and in the meantime
every time one of those suits gets filed against the union or against
employees, the NLRB is sitting in the wings waiting to see how it
comes out. The union may get a favorable judge throws out the injunction
request concerning strike violence or something like that and NLRB
is waiting; charges are filed and you lost the lawsuit so you must
prove that it wasn't retaliatory. I mean it is serious.
MR. GANGEMI: But by the same token I would answer your question
that you have to look at the case much more carefully than you did
originally when you get ready to file. I am not afraid to file.
We have had a couple of those and it worked successfully, so I don't
think -- it is certainly an area of great concern, but certainly
one that you should not avoid the possibility of litigation.
Quite honestly, when you get into one of these corporate campaigns
you have got to use every tool you can. The remedy, at least, John,
if I have missed something the remedy is payment of attorney's fees,
MR. IRVING: The union attorney's fees and costs.
MR. GANGEMI: And costs.
MR. IRVING: And in some situations employees have lost their jobs
because alleged conduct turns out not to have occurred or you have
to make the involved employees whole as well.
MR. GANGEMI: That would be an 8(a)(3) though.
MR. IRVING: Right.
MR. NAYLOR: You inspire me. I assume you advise your management
client that you have to use every tool you have.
I heard my other colleague here say that there are only certain
appropriate venues in which you should bring your criticism, that
complaining about a two year old violation is simply not appropriate.
You ask management to use every tool but labor should confine itself
simply to grievances over the workplace.
Let me just end with a very brief sermon. I helped design the UPS
strike and so it is interesting that you assert as a matter of fact
that UPS is a good model of part-time employment and that somehow
we won the public relations battle with sleight-of-hand and skill
and skillful deployment of press releases here and there, and that
UPS despite its $25 billion cash reserve, etc., despite its use
of a public relations department, was simply caught unprepared.
Well, I would like you to just step aside or step on the other
side just a little bit to imagine that maybe there, underneath there,
is a real live case of management abuse, that it is not simply the
wily union activists that somehow are planting something there,
but there is something there beneath this what I would call a comprehensive
campaign that should be considered and that when you advise management
on how to deal with unions you might even ask them to reflect a
little bit on the underlying critique that is sometimes proffered,
that there might actually be substance and not simply manipulation.
MR. IRVING: Bart, I was mainly focusing on what seems to be the
unpreparedness of UPS to get its story out. They just didn't seem
to be prepared to immediately get that story out when they were
MR. NAYLOR: So we are less bad than the others I suppose is --
MR. IRVING: No, my only point is that you were more prepared. That's
all. That is the only point I am trying to make and I just think
it is a serious problem for employers going into that kind of dispute
who are not prepared. Most employers who are going into that kind
of dispute should not only have the assistance of attorneys but
also have professional outside public relations capability.
I would like very much to thank all of the panel members for an
interesting discussion and for our audience, and I hope you will
be staying on for the second segment of the program.
Thank you very much.