Declining to decide whether organized labor must abandon the neutrality agreement as an organizing tool, the U.S. Supreme Court has dismissed as “improvidently granted” a union petition for review in UNITE HERE Local 355 v. Mulhall et al., No. 12-99 (Dec. 10, 2013). The action came in a per curiam order only after the parties had briefed the case and the Court had heard oral argument.

Mulhall involved a construction of Section 302(a) of the Labor Management Relations Act, which 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 was asked to resolve a split among the U.S. Circuit courts on the applicability of Section 302’s prohibitions to neutrality agreements. The Third Circuit (in Philadelphia) and the Fourth Circuit (in Richmond) 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, do not represent “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 UNITE HERE Local 355 v. Mulhall, Hollywood Greyhound Track Inc. d/b/a Mardi Gras Gaming, 667 F.3d 1211 (11th Cir. 2012), 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 to advance the employer’s business interests 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, 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.

Cross-petitioning for certiorari to the Supreme Court, Martin Mulhall, an employee whom the union sought to represent under this arrangement, 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, 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 has not been decided by the Supreme Court. 

Justice Stephen G. Breyer, joined by Justices Sonia Sotomayor and Elena Kagan dissented from the dismissal. He wrote:

We have received briefs on the issue, and we have heard oral argument. But in considering the briefs and argument, we became aware of two logically antecedent questions that could prevent us from reaching the question of the correct interpretation of §302. First, it is possible that the case is moot because the contract between the employer and union that contained the allegedly criminal promises appears to have expired by the end of 2011, before the Eleventh Circuit rendered its decision on the scope of §302. Second, it is arguable that respondent Mulhall, the sole plaintiff in this case, lacks Article III standing.

Justice Breyer reasoned that the importance of the issue to collective-bargaining should have moved the Court to consider asking for further briefing, rather than ordering dismissal. He wrote:

Unless resolved, the differences among the Courts of Appeals could negatively affect the collective-bargaining process. This is because the Eleventh Circuit’s decision raises the specter that an employer or union official could be found guilty of a crime that carries a 5-year maximum sentence, see 29 U. S. C. §186(d), if the employer or union official is found to have made certain commonplace organizing assistance agreements with the intent to “corrupt” or “extort.”

The withdrawal leaves the legal issue open, with a continuing split between the Circuit Courts, at least temporarily, regarding neutrality agreements. The Court’s disposition and the dissent leave open the possibility that the Court may agree to rule on a similar case in the future.