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Corporate Campaigns: Is There a Legal Remedy for the Company?
Since the early 1980s, unions have used “corporate campaigns” as the economic weapon of last resort in major labor disputes. Cintas Corporation, the largest uniform supplier in North America, was the target of such a campaign initiated by UNITE HERE, Change to Win, and the Teamsters, who were trying to organize Cintas locations by pressuring Cintas to agree to card check recognition, a procedure that would allow the unions to avoid National Labor Relations Board elections and obtain recognition at Cintas locations based on a card check. Cintas responded with a suit under the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, claiming that the unions had falsely portrayed Cintas as an anti-union company which harasses and fires employees who seek to organize and as a racist and sexist company; that the unions sent disparaging and misleading information to Cintas shareholders, potential investors and stock analysts, with the intent of driving down the price of Cintas stock and causing customers to stop doing business with Cintas, which, according to the complaint, actually occurred.
The primary issue in this case was whether these kinds of claims were actionable as a matter of law. The federal district court found that they were not and dismissed the complaint. Cintas Corp v. UNITE HERE, et al., 601 F. Supp. 2d 571 (S.D.N.Y., 2009). That decision was affirmed (in an unpublished opinion) by the court of appeals (DLR, 12/11/09, 2d Circuit).
Without attempting to summarize all of the elements of a RICO claim, certain aspects of the district court’s decision illustrate how that court viewed the union’s activities. For example, RICO claims require at least two acts of “racketeering,” which Cintas claimed occurred when the unions attempted to extort property (a card check agreement) through fear of economic loss. The court concluded that a card check agreement provided at least some value to Cintas and that Cintas had no right to operate free from criticism and union pressure which was largely protected constitutionally.
Cintas fared no better on its claim of trademark infringement which, among other things, requires that Cintas show that the unions used the Cintas trademark in a manner that caused confusion as to association of Cintas with the person using their trademark (the unions). The court noted that there was no confusion in this instance since the unions were not in competition with Cintas, did not associate themselves with Cintas and lacked the bad faith required for trademark infringement since they were simply seeking to further their own legitimate objectives by criticizing Cintas’ practices.
The lesson one draws from this case is the difficulty—perhaps the impossibility—of using RICO to restrict corporate campaigns. Although the court did not emphasize it, the fact is that most of the allegedly unlawful actions that the unions used against Cintas were protected under the National Labor Relations Act which restricts union actions like picketing and striking for certain objectives but grants broad leeway to unions to achieve their objectives through publicity and free speech, which is essentially what the unions were doing in this case, even if the effect of that speech was harmful to Cintas.
