Further Thoughts on the Implications of the Mulhall Dismissal

Published December 11th, 2013 -  - 12.11.133

In my quick reaction to yesterday’s dismissal in Mulhall, I wrote that “as long as CA11’s decision stands, the specter of expensive and difficult litigation will hover over neutrality/bargaining agreements in many circuits, and will indeed chill the making of those agreements.”  With more time and a day’s reflection, I now want to be more precise about the implications of the dismissal.

First, it is important to remember what the court below in the Eleventh Circuit held.  It did not hold that bargaining agreements are per se illegal under §302 of the Labor Management Relations Act (LMRA), 29 U.S.C. §186.  More specifically, it did not hold that organizing assistance by an employer to a labor union in an organizing agreement was always (or even usually) a “thing of value” under §302.   The court emphasized that it was “too broad to hold that all neutrality and cooperation agreements are exempt from the prohibitions in § 302,” and it added that “[e]mployers and unions may set ground rules for an organizing campaign, even if the employer and union benefit from the agreement.”  However, the court went on to say that “innocuous ground rules can become illegal payments if used as valuable consideration in a scheme to corrupt a union or to extort a benefit from an employer,” and it remanded to the district court to “determine the reason why Unite and Mardi Gras agreed to cooperate with one another.”  Unless and until the Eleventh Circuit reviews the district court’s decision on remand, therefore, neutrality/bargaining agreements can be challenged not on a per se basis, but rather on the somewhat diffuse ground that the agreement constitutes (as the Eleventh Circuit put it) an “improper payment” that is part of a scheme to corrupt a union or extort a benefit from an employer.  In Alabama, Florida, and Georgia, therefore, neutrality/bargaining agreements can be challenged under Section 302 for corruption on the facts.  To that extent, in these states, extant agreements are at risk and future agreements will be chilled by the litigation risk.

Second, in the Third and Fourth Circuits, which appear to have rejected the notion that items bargained for in neutrality/bargaining agreements can be “things of value” that violate Section 302, the Mulhall dismissal should have no effect.  Neutrality/bargaining agreements on those circuits do not appear to be challengeable under Section 302, and thus are not at the moment at threat or chilled.  (It is conceivable that the precedents in these circuits would permit an as applied challenge to a particular allegedly corrupt neutrality/bargaining agreement, but such a challenge would, I think, face long odds under those circuits’ precedents.)

Third, in the remaining circuits, neutrality/bargaining agreements are open to challenge, either narrowly under the Eleventh’s Circuit’s “improper payment” standard, or more broadly on the ground that such agreements per se violate Section 302, as Respondent in Mulhall argued in the Supreme Court.  I doubt any court will accept the latter argument, but the Eleventh Circuit’s holding, while unclear and not well explained, is not implausible (for reasons I have explained here.)  I expect that we will see Section 302 litigation in these circuits by the National Right to Work Legal Defense Foundation and similar groups, and to the extent that such litigation appears or is anticipated, neutrality/bargaining agreements will run litigation risk and to the extent of the perceived risk be unattractive.

Fourth, I think that the question whether Section 302 creates a private right of action will now be heavily litigated in all Section 302 cases.  Here is what Justice Breyer said on the issue:

I believe we should also ask for further briefing on a third question: the question whether §302 authorizes a private right of action. I recognize that the Court said, long ago and in passing, that §302(e) “permit[s] private litigants to obtain injunctions” for violations of §302.  Sinclair Refining Co. v. Atkinson, 370 U. S. 195, 205 (1962), overruled in part on other grounds, Boys Markets, Inc. v. Retail Clerks, 398 U. S. 235, 237–238 (1970).  But, in light of the Court’s more restrictive views on private rights of action in recent decades, see, e.g., Alexander v. Sandoval, 532 U. S. 275, 286–287 (2001), the legal status of Sinclair Refining’s dictum is uncertain. And if §302 in fact does not provide a right of action to private parties like Mulhall, then courts will not need to reach difficult questions about the scope of §302, as happened in this case, unless the Federal Government decides to prosecute such cases rather than limit its attention to cases that clearly fall within the statute’s core antibribery purpose.

I think this is exactly right. Section 302 was not meant to be enforced by a private right of action, courts would not infer such private rights of action under modern Supreme Court jurisprudence, and all of the difficulties of making Section 302’s antibribery purposes fit with its broadly worded text could be ameliorated if Section 302 were enforced not by private parties but rather by the government with the check of prosecutorial discretion contemplated by Section 302.  Here is what I wrote on this issue in August:

Private Right of Action.  Section 302 is a criminal statute.  Sections 302 (a) and (b) make unlawful certain employer practices, Section 302(c) lists exceptions, and Section 302(d) prescribes “penalties for violations.”  How then, is plaintiff  Mulhall bringing a civil suit under Section 302, seeking injunctive relief?  The statutory basis is Section (e), which confers “jurisdiction” on federal district courts “to restrain violations of this section.”  In the context of a statute that is otherwise criminal, this provision appears to confer on the government the authority to seek injunctions in addition to penalties.  One indication to the contrary is that Section 302(e) provides for injunctive relief “without regard to” statutes (15 U.S.C. §17 and 29 U.S.C. §52) that prohibits private parties from seeking injunctive relief in labor contexts.  I doubt that this indirect indicator of legislative intent would, in any other context, satisfy the Supreme Court’s modern insistence (in cases like Sandoval) on something close to a clear congressional statement for the existence of both a private right of action and a private remedy.  (This is especially so since the “without regard to” statutes appear to be a basis for governmental injunctions in the labor context as well.)

It is true that Supreme Court in its 1962 decision Sinclair Refining, relying in part on the “without regard to” language,” stated in dicta that Section 302(e) allowed “private litigants to obtain injunctions in order to protect the integrity of employees’ collective bargaining representatives in carrying out their responsibilities.”  And lower courts have relied on Sinclair Refining’s dicta ever since in allowing private parties to seek injunctions under Section 302(e).  But Sandoval pooh-poohed the “ancien regime” that casually recognized private causes of action, even (the Court said explicitly) with regard to statutes enacted (as Section 302 was) under this now-rejected casual attitude toward implying private rights.  The Sinclair Refining dicta thus should not control in the Supreme Court.  Nor, if other recent cases involving a plain statement rule are any guide, should decades-long lower court understandings about the meaning of Section 302(e) stand in the way of its proper interpretation under modern principles of construction.  In short, the Court has a messy and potentially embarrassing private right of action issue on its hand should it wish to affirm.  (By the way, the private right of action issue was one the District Court likely would have addressed on remand from the Eleventh Circuit’s decision, which underscores the imprudence of granting certiorari in a case in an interlocutory posture.)

It appears that the first court that will get a crack at this argument is the district court on remand in Mulhall.

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