In an important decision for employers and unions alike, the Third Circuit Court of Appeals, the federal appeals court with jurisdiction over Pennsylvania, New Jersey, Delaware, and the U.S. Virgin Islands, held that a union could be liable under the federal Racketeering Influenced and Corrupt Organizations (RICO) Act. The decision opens a new avenue for unionized employers to seek to address inappropriate conduct during labor disputes, and no doubt will influence the tactics of organized labor during such periods of conflict.
In Care One Mgmt. LLC v. United Healthcare Workers East, the court was asked to consider an employer’s appeal of the trial court’s decision denying its RICO Act claims against the United Healthcare Workers East SEIU 1199, New England Health Care Employees Union, and the Service Employees International Union. Although the RICO Act is a criminal statute, individuals and entities can also bring civil claims under RICO. Essentially, in such cases, the plaintiff must establish that the defendant is conducting a pattern of racketeering activity through certain criminal predicate acts. In Care One, the employer alleged that the unions engaged in a pattern of racketeering through mail and wire fraud as well as extortion.
Specifically, the employer alleged that, when negotiations for a new collective bargaining agreement failed, the unions called for a strike at various impacted facilities. The employer alleged that the evening before strike was to start, the facilities were vandalized by union members. The employer also alleged that the unions publicly attacked the employer and that such attacks were false and fraudulent. In addition, the employer alleged that the unions asked elected officials to initiate a government investigation into the employer’s labor and business practices.
The district court granted the union’s motion for summary judgment and dismissed the RICO claims. The district court concluded that there was not sufficient evidence to establish that the union had authorized or directed the alleged inappropriate and criminal conduct.
However, the Third Circuit disagreed and reversed. The Third Circuit found that there was at least enough evidence that a jury could find that the union’s members had committed the vandalism at the employer’s facilities and that the union had authorized such conduct given the timing of the incidents (the night before the strike). The court also found there was a question about whether the request for the government to investigate the employer was inappropriate and unlawful. The Third Circuit remanded the case for further proceedings.
There is no doubt that labor disputes can get ugly and, when they do, one side may be looking for a remedy. From the employer’s perspective, although Care One sets a high bar, the decision has certainly opened the door to another possible remedy to address a labor union’s conduct during a labor dispute. It is likely that unions will also take heed of the Care One decision when considering what conduct to employ during a labor dispute.