The Rise of the Corporate Campaign - Transcripts

Panel One: The Core Elements of the Union-Backed Corporate Campaign, Litigation and Regulatory Strategies
Friday, March 10, 2000


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 Performance

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 (Chicago Office)

MR. CLIFFORD (Dick) OVIATT, Partner at McGuire, Woods, Battle & Booth; former member of the National Labor Relations Board (1989 to 1992)


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 corporate campaign.


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 Harvard.

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 Takeover Reform."

We are honored and pleased to have you too. We'll have a spirited discussion.

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 for decades.

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 the workforce.

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 area certainly.

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 from that.

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 flavor.

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 drive.

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 contract negotiations.@

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 an employer.

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 prepared observations.

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 for themselves.

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 anywhere around.

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 it out.

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 so.

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, forever.

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 today.

MR. IRVING: I call to your attention a couple of interesting legal developments.

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 was dismissed.

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 the proposal?

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 these campaigns.

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 the litigation.

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 information out.

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 permissible.

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 Johnson’s 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 --


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: 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 the objective.

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, right?

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 attacked.

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.




2003 The Federalist Society