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Jerry Mulhall was an employee of Hollywood Greyhound Track, Inc., operating as Mardi Gras Gaming (“Mardi Gras” or the “Company”), in Hallandale Beach, Florida.  Mardi Gras’ workforce was non-union—and that is how Mulhall wanted it to stay.  A vehement opponent of unionization, Mulhall filed suit to block enforcement of a Memorandum of Agreement (“MOA”) entered into by his employer and UNITE HERE which, according to Mulhall, would illegally thrust unionized status upon the employees. 

Under the MOA, which Mulhall characterized as “illegal and collusive,” UNITE agreed to financially support a casino gaming ballot initiative desired by Mardi Gras, and, if recognized as the exclusive bargaining agent for Mardi Gras’ employees, to refrain from picketing, boycotting, striking or undertaking “other economic activity” against the Company.  In exchange, Mardi Gras agreed to help UNITE organize the Company’s employees.  Specifically, Mardi Gras promised to:  (1) provide UNITE with complete employee rosters and home addresses; (2) allow UNITE to use Company property—including non-public areas—for organizing activities; (3) refrain from any anti-union speech or conduct; (4) waive its right to an NLRB-monitored secret ballot election and, instead, allow an informal “card check;” and (5) promise not to file unfair labor practice charges against UNITE for violating employees’ rights during the organizational campaign.

UNITE abided by the MOA and provided more than $100,000 toward the gaming-related ballot initiative favored by Mardi Gras.  When UNITE later demanded the promised assistance from the Company in organizing the workforce, Mardi Gras refused, claiming that the MOA was illegal, based on the advice of its new legal counsel. 

UNITE and Mardi Gras arbitrated the enforceability of the MOA, and an arbitrator ruled for UNITE.  At the same time, Mulhall filed an injunction action in federal court, claiming that the MOA was unlawful under Section 302 of the LMRA, which makes it illegal for an employer to deliver, or for a union to receive, any “thing of value.”  Essentially, the statute prohibits employer payments to any representative of its employees, with certain limited exceptions.  As the Court observed, one of the goals of Section 302 is to protect employees from the collusive effects of unions and employers attempting to “buy” labor peace. 

In holding that Mulhall had legal standing to bring such an action, the Eleventh Circuit found that Mulhall satisfied all three elements:  (1) he has suffered or imminently will suffer an injury-in-fact; (2) that his injury stems from the defendant’s conduct; and (3) that a favorable judgment is likely to redress the injury.  With regard to the “injury” prong, the Court held that Mulhall showed that he had a “legally cognizable interest” that was imminently at risk of being invaded:  his freedom of association under the First Amendment.  In other words, Mulhall had the right not to associate with a union, and the MOA substantially jeopardized that right.  Therefore, he faced imminent injury:  being forced to unionize against his will. 

The Court also found that the second and third prongs required to establish standing were satisfied because the potential injury was “fairly traceable” to Mardi Gras’ and UNITE’s conduct, and a favorable judgment—enjoining enforceability of the MOA—would eliminate the risk of forced unionization.  In finding that Mulhall had standing and could proceed with his legal action, the Court was clear to point out that it was not ruling on the merits.  Instead, in the Court’s words, “we say only that it is enough to allow him to get his ticket stamped for admission to the federal court.”      

Mulhall raises a host of interesting questions about the degree to which employers and unions can agree on the conditions that will govern an organizing campaign.  The lesson is that, while granting concessions like neutrality and card check probably do not violate § 302 (if for no other reason than the NLRA allows an employer to voluntarily agree to recognize a union on cards), agreeing to do things such as accept the union’s financial support in unrelated business endeavors in exchange for card check and neutrality raises significant § 302 concerns.  Therefore, employers should carefully consider such proposals and seek legal advice before going forward.

The LMRDA requires employers on an annual basis to report fees paid to labor consultants who engage in activities designed to persuade employees not to unionize (commonly referred to as “persuader activities”).  Similarly, any labor consultant who engages in persuader activities also must file an annual report indicating the amount and source of any compensation received for such activities.  The DOL has interpreted these reporting obligations to apply to persuader activities of attorneys as well as labor consultants.

The LMRDA’s reporting requirements have long been of concern to consultants, attorneys, and employers insofar as they require disclosure of otherwise confidential professional relationships and use of private funds for such activities.

Section 433(c) of the LMRDA provides an exception for advice work.  To the extent the work performed by a management attorney or a labor consultant is limited to advice directed to the employer and its supervisors, as opposed to persuader activities directed to employees, the advice exception is a “safe harbor” from LMRDA reporting requirements. 

In its December 7 announcement, the DOL indicated that its new proposed rule will narrow the scope of the advice exception.  According to the DOL, “a narrower construction would better allow for the employer and consultant reporting intended by the LMRDA.”  Although currently the DOL has provided no further details as to how exactly it intends to narrow the advice exception, there is little doubt that the new proposed rule will require employers and labor consultants to report information about relationships and expenditures that currently would be deemed confidential.

If the new proposed regulation proceeds in the direction indicated by the DOL, it should draw strong criticism from employers, labor consultants, and attorneys.  This would be yet another step in the rapid march toward increased oversight and regulation of employers in order to create a more favorable climate for unions.  The DOL acknowledged that it expects a negative response from employers and stated that it plans to hold a public meeting to discuss the new regulations.  Once published in the Federal Register, the new rule will be subject to a mandatory public review and comment period, in which all those concerned about the DOL’s actions will have an opportunity to express their thoughts.