SEIU Guilty of Illegal Secondary Activity

The First Circuit Court of Appeals held Mar. 2 that trial is required on an employer’s claim that the Service Employees Int’l Union violated the Labor-Management Relations Act’s ban on secondary activity by threatening to picket a customer. Judge Frank M. Coffin wrote the opinion reversing the district court’s grant of judgment as a matter of law for SEIU, stating that a jury reasonably could have drawn inferences that SEIU’s picketing threat caused Intercity Maintenance Co. to lose a contract five weeks later with Blue Cross/Blue Shield in Providence, R.I.

Intercity had provided janitorial services to Blue Cross since 1990. SEIU began attempts to organize Intercity in late 1994. Intercity’s president refused to sign SEIU’s proposed collective bargaining agreement, saying it was up to the workers to decide whether to unionize. SEIU’s assistant director of organizing repeatedly warned Intercity’s president, and later its attorney, to sign the agreement or SEIU would attempt to drive the company out of business by picketing its major customers.

On Mar. 20, 1995, the organizing director sent two letters to Blue Cross accusing Intercity of violating laws on the handling of hazardous substances. The union boss on Mar. 28 threatened to picket Blue Cross. Five weeks later, on May 5, Blue Cross solicited bids for performing cleaning services and awarded the contract to a unionized company. A Blue Cross official allegedly told Intercity’s president that the company would not get the contract back unless it came to terms with SEIU.

The U.S. Dist. Court for the Dist. of Rhode Island granted summary judgment to SEIU on a number of tort claims by Intercity but conducted a trial on the LMRA and defamation claims against the union. Midway through the trial, the court granted judgment as a matter of law to SEIU. Even assuming that SEIU’s actions were illegal secondary activity, the district court found that Intercity failed to show the activity caused the loss of the service contracts with Blue Cross. Although the district court found “overwhelming” evidence that SEIU knowingly or recklessly made false statements, the court decided that there was no evidence that the company lost the two service contracts because of the defamatory statements.

LMRA makes it an unfair labor practice for a union to threaten, coerce, or restrain a company for the purpose of forcing it to stop doing business with another company or forcing an employer to recognize an uncertified union. “Direct efforts to pressure an employer with whom a union has a dispute are acceptable, but indirect efforts to pressure a secondary employer are unfair labor practices,” Coffin explained. In finding insufficient evidence that SEIU’s conduct caused Intercity to lose the service contract, the district court noted that the company did not call anyone from Blue Cross to testify and drew an inference that Intercity probably was not the lowest bidder. Coffin decided that the lower court impermissibly drew an inference against Intercity and that a jury reasonably could have rejected the negative inference. He found that the company presented sufficient evidence to require submitting the case to the jury for decision.

Blue Cross’ attorney corroborated the Intercity president’s testimony that the union had threatened to picket customers, Coffin found. Even though no Blue Cross official testified that the union’s conduct caused the loss of Intercity’s contract, the judge said the jury was entitled to believe the president’s testimony on this point. The timing of events — just five weeks between the last union action and Blue Cross’s solicitation of bids — also gives rise to an inference that SEIU’s actions caused the loss of the Blue Cross contract, Coffin found.

Vincent F. Ragosta of Providence, R.I., represented Intercity. John B. Lawlor of East Providence, R.I., represented two union officials. Steven K. Hoffman of James & Hoffman in Washington, D.C., was the attorney for SEIU. [BNA 3/7/01 citing Intercity Maintenance Co. v. Local 254, SEIU]  James & Hoffman is the firm of Edgar N. James and Judith A. Scott both of whom played important roles in the Teamsters money-laundering scandal that lead to the recent indictment of ex-Teamsters boss Ron Carey.