The United States Supreme Court may soon decide whether organized labor will be forced to abandon the neutrality agreement as an organizing tool. Granting review in UNITE HERE Local 355 v. Mulhall; Hollywood Greyhound Track Inc. d/b/a Mardi Gras Gaming, 667 F.3d 1211 (11th Cir. 2012), cert. granted, No. 12-99 (June 24, 2013), the Court framed the issue for consideration as follows: 

Whether an employer and a union may violate Section 302 of the Labor Management Relations Act, 29 U.S.C. Section 186, by entering into an agreement under which the employer exercises its freedom of speech by promising to remain neutral to union organizing, its property rights by granting union representatives limited access to the employer’s property and employees, and its freedom of contract by obtaining the union’s promise to forego its rights to picket, boycott, or otherwise put pressure on the employer’s business.

Section 302(a) of the Labor Management Relations Act, which amended the National Labor Relations Act, makes it a crime for “any employer ... to pay, lend or deliver, any money or other thing of value ... to any labor organization ... which seeks to represent, or would admit to membership any of the employees of such employer who are employed in an industry affecting commerce.” 

The Court will be asked to resolve a split among the Circuit courts on the applicability of Section 302’s prohibitions to neutrality agreements. The Third and Fourth Circuits have held that providing a union with confidential employee information, access to the employer’s property and a promise that the employer will remain neutral in the face of union organizing activities are not “payment” of “things of value.” Adcock v. Freightliner LLC, 550 F.3d 369, 374 (4th Cir. 2008); Hotel Employees and Restaurant Employees Union, Local 57 v. Sage Hospitality Res., 390 F.3d 206 (3d Cir. 2004).

The Eleventh Circuit in Mulhall, however, came to the opposite conclusion, but did so by relying on the terms of the neutrality agreement itself, the union’s expenditure of a substantial sum of money in compliance with the agreement, the employer’s refusal to comply after receiving the benefit of the bargain and on potentially damaging admissions by the union in a related case. Under the neutrality agreement in Mulhall, the union agreed to support a ballot initiative favorable to the employer. The union kept its promise, spending more than $100,000 campaigning in support of the initiative. However, after realizing the benefit of the union’s support and initially cooperating with the union, the employer apparently had second thoughts. 

In support of his cross-petition for certiorari, Mulhall pointed to these facts and to the union’s admission in a parallel court proceeding that the employers’ disavowal of the agreement resulted in “increased organizing expenses and lost revenues for the Union” as proof that a “thing of value” had been delivered in violation of the Act. The Eleventh Circuit agreed. “Mulhall has adequately alleged that the organizing assistance promised by Mardi Gras in the MOA is valuable, and indeed essential, to Unite’s effort to gain recognition,” it said, and adding that “UNITE ultimately spent $100,000 on the initiative campaign ... suggest[ing] that the organizing assistance it bargained for was significant in a monetary sense.”

Several circuits have taken a dim view of employers seeking to extricate themselves from neutrality agreements, but the question of whether an individual employee might be better positioned to do so by arguing that the agreements deprive employees of their right of self-determination under Section 7 of the National Labor Relations Act was largely ignored. Mulhall provides the Court with an opportunity to confront that question.

Mulhall, nevertheless, raises several issues that provide the Court with other options in disposing of the case. These include: whether Mulhall lacks standing to bring the action; whether the case is now moot; whether any or all of the concessions promised by the employer are “things of value”; whether a “thing of value” can be measured in non-monetary terms; whether the agreement at issue is unlawful; and whether the fact that the employer received the benefit of the bargain before disavowing the agreement has any significance.

But the stakes are very high for organized labor.