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LABOR & EMPLOYMENT LAW — 6/26/08

RICO claims arising out of corporate campaign may proceed

Claims brought by pork processing giant Smithfield against the United Food and Commercial Workers union, a UFCW local, Change to Win, and other defendants under the Racketeer Influenced and Corrupt Organizations Act (RICO) have survived a motion to dismiss. The company has alleged the defendants engaged in racketeering activity by carrying out a scheme to extort voluntary recognition after attempts to achieve recognition through a traditional, NLRB-conducted election failed (Smithfield Foods, Inc v United Food and Commercial Workers, EDVa, 156 LC ¶11,042).

The court's refusal to dismiss the RICO suit means the union has lost a battle in its larger war with Smithfield. The UFCW has been trying since 1994 to organize the Tar Heel, NC, plant of 4,650 workers, having lost prior Board-conducted elections that were fraught with unfair labor practices by Smithfield (the NLRB's findings of labor law violations were upheld by appellate courts).

The RICO complaint marks Smithfield's bold offensive against the union's relentless corporate campaign against it. The Smithfield complaint provided a laundry list of standard corporate campaign tactics, which the employer alleged constituted racketeering. The union defendants sought to dismiss the RICO action, claiming the conduct alleged by the company in its complaint was merely coercive activity and not extortion. The union argued that, since its actions were not directed toward obtaining Smithfield "property"--a necessary showing under the Act--it did not rise to the level of racketeering within the meaning of RICO.

However, the "property" in play here, according to a federal district court in Virginia, was the owner's property right to voluntarily recognize (or not) the union and to operate its business free from interference by or involvement of the union. "The very existence of the Corporate Campaign concept is founded on the recognition that the exercise of that right is of great import and of great consequence," the court noted.

"Until the Unions prevail in a valid NLRB certified election," it is this intangible, but no less valuable, property right that is capable of being extorted by the defendants through the use of corporate campaign tactics, the court concluded. As such, the company has stated a cognizable RICO claim.

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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