Appellate courts often struggle with the tension between allowing for consideration of the individual circumstances of each case and establishing clear dividing lines between conduct that violates the law and conduct that does not. Courts have assigned varying amounts of weight to each of these considerations at different points in history. Particularly in recent years (and particularly in U.S. Supreme Court decisions), the goal of line-drawing and predictability has been increasingly emphasized.
Yesterday, the 11th Circuit released its opinion in Mulhall v. Unite Here Local 355 (No. 11-10594), a case involving union-employer relations, that appears to be a step in the opposite direction. The first thing that jumps out about Mulhall is that, unlike in many cases involving employer-union relations, the litigation did not result from the failure of an employer and union to reach an agreement, but from the fact that they did reach an agreement. The problem, according to Mulhall (who worked for the employer, Mardi Gras Gaming) was that the agreement allegedly violated the Labor Management Relations Act (a/k/a the Taft-Hartley Act).
The essential facts are these: The union wanted to organize Mardi Gras employees. Mardi Gras wanted support for a ballot initiative regarding casinos. They entered into an agreement under which Mardi Gras would give the union access to and information about employees and would remain neutral about unionization. In return, the union promised not to strike if the employees chose to unionize, and to provide financial support for the ballot initiative.
Mulhall didn’t want Mardi Gras employees to unionize. So he sued the employer and union, claiming their agreement violated the LMRA’s prohibition on “any employer…pay[ing], lend[ing], or deliver[ing] any money or other thing of value…to any labor organization…[that] seeks to represent” its employees. The purpose of this prohibition is to prevent corruption, i.e., unions being bought off by employers.
The issue in Mulhall was whether the access, information, and neutrality Mardi Gras promised to the union could amount to a “thing of value” paid, lent, or delivered to the union. The district court said it could not, and dismissed the complaint.
Subsumed within that issue was the question of how to define “thing of value.” The majority of the 11th Circuit panel (consisting of Judges Wilson and Fay) held that it was for the jury to decide whether the “organizing assistance” (access, information and neutrality) promised by Mardi Gras had monetary value and was therefore a “thing of value.” In so holding, the 11th Circuit acknowledged that it was creating a circuit split with the 3rd and 4th Circuits, both of which have held that, as a matter of law, an employer’s promise of neutrality and cooperation does not violate the LMRA.
The majority partly based its conclusion on 11th Circuit decisions interpreting the phrase “thing of value” in other statutes as well as on a recent 6th Circuit decision finding that an intangible benefit can be a “thing of value.” But its decision was more heavily influenced by an old 2nd Circuit opinion explaining that courts should use common sense in deciding whether a benefit is a “thing of value” because value is in the eyes of the beholder. Applying the 2nd Circuit’s “common sense” test, the majority said that intangible benefits cannot be categorically exempted from the LMRA.
Whether a cooperation and neutrality agreement violates the LMRA depends on the circumstances, the majority concluded. Most important is the intent underlying the agreement, as “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.” So it was for the jury to decide whether the agreement between Mardi Gras and the union crossed that line. Thus, the court majority rejected the 3rd and 4th Circuits’ categorical rule for a case-by-case analysis of the surrounding circumstances.
The dissent went the other way. Judge Restani of the U.S. Court of International Trade, sitting on the 11th Circuit by designation (as she does on a fairly regular basis), agreed with the 3rd and 4th Circuits’ reasoning. She also took issue with the majority’s focus on intent as the deciding factor, and noted that even if intent was the polestar, Mulhall’s complaint did not allege facts showing corrupt intent.
Mulhall is a good illustration of the trade-off between line-drawing and situational justice, and the reason for the tension between them. It’s hard to argue with the majority’s common sense insight that depending on the circumstances, an intangible benefit can be either innocuous or corrupt. And the benefit of its case-by-case approach is that it does not give immunity in situations where there is a corrupt bargain.
But the countervailing consequence is that employers and unions within the 11th Circuit’s jurisdiction are now left without clear guidance about the legality of entering into cooperation and neutrality agreements. Lacking such predictability, they may forego entering into such arrangements entirely, even when to do so would be beneficial and entirely legal.
Of course, given the circuit split, there’s a decent chance that Mulhill will wind up before the U.S. Supreme Court. And if recent history is any guide, the Court may well choose to elevate clear line-drawing over consideration of individual circumstances. Or not.