Third Circuit Rejects RICO Claim Filed Against Unions For Conduct During Corporate Campaign By Adopting A Union's "Claim-of-Right" Defense

• Published date: 11 January 2022
• Subject Matter: Corporate/Commercial Law, Employment and HR, Litigation, Mediation & Arbitration, Corporate and Company Law, Employment Litigation/ Tribunals, Employee Rights/ Labour Relations, Trials & Appeals & Compensation
• Law Firm: Proskauer Rose LLP
• Author: Mr Paul Salvatore, Joshua S. Fox and Claudia C. Khoury-Yacoub

The Third Circuit issued a noteworthy split 2-1 decision last month, finding that a company's claim under the federal Racketeer Influenced and Corrupt Organizations Act ("RICO") against several Unions failed, where the Unions' tactics as part of a corporate campaign and its "extortion through fear of economic loss" directed at the company is committed to achieve a legitimate union objective. See Care One Mgmt., LLC v. United Healthcare Workers East, No. 19-3693 (3d Cir. 2021). The Court also found that the alleged acts of vandalism and sabotage could not be attributed to the Unions, and thus the Company's RICO claims could not survive summary judgment.

Factual and Procedural History

Five Unions engaged in a "corporate campaign" against Care One Management LLC and related companies (collectively, the "Company"), seeking to pressure the Company to recognize the Unions for collective bargaining purposes and, according to the Unions, to provide better wages and working conditions to Company employees. The Company described this campaign as a "campaign of intimidation, interference, threats, deceptive trade practices, abuse of process, vandalism, and other illegal and extortionate conduct."

As background, a "corporate campaign" is a multi-faceted and typically long-running attack by a union or unions against a company in order to pressure the company to accede to the union's bargaining demands. Corporate campaigns routinely involve conduct by the unions directed towards harming the company's reputation and damaging its media, political, and/or business relationships, as well as extensive litigation filings.

Here, the acrimonious relationship between the Unions and the Company involved, among other things:

• Unfair labor practice charges filed by the Unions against the Company related to petitions for election the Unions filed, and allegedly discriminatory terminations by the Company toward several employees.
• On the eve of the parties' collective bargaining negotiations, certain of the Company's facilities were vandalized and sabotaged - e.g., patient identifying information was mixed up, medical records were altered, equipment damaged or hidden, and laundry equipment vandalized. An investigation commenced by the State's Attorney, but it did not yield any suspects or charges. The only evidence tying the conduct to the Unions were plans to inspire workers to "become angry about their working conditions" and to resort to "more militant" levels of activity"'but...