Sham Litigation Violates Secondary Boycott Provisions of NLRA

October 20, 2013 / ,

The takeaway from this case is pretty simple: a union that files 14 baseless lawsuits against a company developing a grocery store engages in sham litigation and violates the National Labor Relations Act’s law against pressuring a secondary (or neutral) employer to cease doing business with the primary employer because the union has a dispute with the primary employer.

The United Food and Commercial Workers Union (UFCW) tried and failed to repeatedly to organize the workers of Wegmans grocery store chain. So the union turned its efforts against Waugh Chapel South (WCS) the development company building shopping centers that would be anchored by new Wegmans stores. Stick with me on this post, it’s a bit long, but worth the read. Plus it hits close to home for me and several of my grocery and commercial construction / land developer clients.

In its complaint, WCS alleged that the union engaged in an illegal secondary boycott when it orchestrated fourteen separate legal challenges against their commercial real estate project in order to force WCS to terminate its relationship with Wemans, a non-unionized supermarket.

As many of you can relate to, a union executive threatened WCS that if Wegmans did not unionize, “we will fight every project you develop where Wegmans is a tenant.” The union then directed and funded a barrage of legal challenges at every stage of the projects’ development.

For example, a union representative petitioned City Council to revoke its decision to rezone the site from agricultural and residential to mixed-use commercial. WCS argued that the union representative lacked standing to make the challenge and on the day before the scheduled hearing, the union representative withdrew its petition and effectively ceded that he was not an aggrieved party. Other challenges included:

  • Appealing the Council’s decision to extend the time for WCS to post fees and bonds for the project;
  • Filing a lawsuit in state court to enjoin the Council’s approval of “Tax Increment Financing” (TIF) bonds, arguing that Council did not conduct the requisite hearing;
  • Filing a lawsuit against several companies associated with the development project alleging the project caused a nuisance;
  • Filing a state court petition to vacate the Department of Energy’s issuance of a mining permit to WCS; and
  • Appealed the grant of nine separate building and grading permits issued by the Council to WCS.

Ultimately, the plaintiffs above withdrew 10 of the 14 suits under suspicious circumstances, i.e. to avoid complying with subpoenas of financial records that would have revealed that the unions were directing and paying for the litigation. 

This case is good news for employers. This case expands the types of activity prohibited under the secondary boycott provisions of the NLRA to include sham litigation. Although the Noerr-Pennington doctrine safeguards the First Amendment right to petition the government for a redress of grievances, plaintiffs lose that right when their petitions are abusive, like here.

This case is not a complete win for companies, though.

Part of the court’s analysis was whether an entity (call the Fund) that is in cahoots with the UFCW and participated in the abusive filings was a labor organization and thus able to commit unfair labor practices. And the court determined that the Fund was not a labor organization despite classifying itself as a labor organization for tax purposes.

Why is this bad news? The Fund in this case is treated the same as a Worker Center – a non-union entity funded by labor unions but not subjected to same strict operating requirements and penalties as a labor union. If you are not familiar with Worker Centers, click the here. I am certain that more types of these entities exist or are being developed at this very moment to skirt labor laws and make like more difficult for non-union employers.

Matt Austin is a Columbus, Ohio employment lawyer who owns Austin Legal, LLC, a boutique law firm with offices in central and northeast Ohio that limits its representation to employers dealing with labor, employment, and OSHA matters. You can email Matt at Austin@LaborEmploymentOSHA.com or call him at 614.285.5342.