Court Reverses Extortion Convictions of Teamsters Who Threatened to Picket Unless Union Workers Were Hired

It seems to be increasingly the case that employers find themselves facing conflicting demands from labor unions for assignments of work.  Such competing claims are often referred to as jurisdictional disputes.  In other circumstances, employers may find themselves faced with a labor union’s claims that the employer does not provide employees with “area standard” wages or benefits.  While often addressed under the National Labor Relations Act or the terms of labor agreements, a recent decision analyzes the issues with a distinct approach.

In a case involving the intersection of federal labor law and federal criminal law, the First Circuit Court of Appeals recently held that threatening to picket nonunion companies that do not provide jobs to union members does not constitute extortion under the Hobbs Act.  In so holding, the court reversed in large part the convictions of two Teamsters who had been jailed for extorting local businesses.  United States v. Burhoe, 2017 WL 3947056 (1st Cir. Sept. 8, 2017).

Factual Background

The defendants/appellants, Joseph Burhoe and John Perry, were in the Teamsters Union, whose members worked at trade shows and other events in Boston. Burhoe allegedly argued heatedly with an owner of a company, telling him the company needed to use union workers; informed another company’s representative that the Teamsters could picket if that company did not hire union workers; used an aggressive tone to tell an event manager at a third company that he needed to hire union workers; and threatened to picket and block the loading dock of a fourth company if it did not hire union workers.  Perry, in a “polite and friendly” manner, threatened to picket another company if it did not use union labor.

All five companies mentioned above gave in to the defendants’ threats and hired Teamsters members.  The Teamsters members performed actual work for at least four of the companies.

Subsequently, Burhoe was found guilty of four counts of extortion of nonunion companies and Perry was found guilty of one count of extortion.  Burhoe and Perry appealed.

Appellate Court’s Reasoning

The First Circuit Court of Appeals examined the Hobbs Act (18 U.S.C. § 1951), the federal law used to convict the defendants.  The Hobbs Act criminalizes extortion or attempted extortion.  It defines “extortion” as “the obtaining of property from another, with his consent, induced by wrongful use of actual or threatened force, violence, or fear, or under color of official right.”

The Court of Appeals noted the Supreme Court had interpreted the term “wrongful” to mean that the alleged extortionist had no lawful claim to the property he obtained.  Accordingly, the use of legitimate economic threats to procure property is wrongful under the Hobbs Act only if the defendant knowingly had no claim of right to that property.

The Court of Appeals also cited the Supreme Court’s holding that it is not wrongful to take action in order to achieve legitimate union objectives, such as higher wages in return for genuine work for an employer.  The Court of Appeals held that the Teamsters had a lawful claim to turn nonunion jobs into union jobs at prevailing wages.  Therefore, the defendants’ actions were not necessarily wrongful.

Next, the Court of Appeals examined the jury instructions at the defendants’ trial.  These instructions provided in part: “Obtaining personal payoffs or wages for imposed, unwanted, and superfluous work or imposed, unwanted or fictitious work” is not a legitimate union objective.  The Court of Appeals stated that these instructions had inappropriately allowed the jury to find the defendants pursued an illegitimate labor objective in seeking payment for imposed, unwanted, or superfluous work.

A finding of wrongdoing based upon these jury instructions would conflict with National Labor Relations Board’s (NLRB) guidance that although seeking payment for fictitious work is illegitimate, seeking payment for imposed, unwanted, or superfluous work is legitimate.  The Court of Appeals recognized that the Hobbs Act, by its own terms, does not “repeal, modify or affect” the National Labor Relations Act (NLRA) and certain other labor law provisions.  The court also recognized that it should defer to the NLRB’s interpretations of unfair labor practices.

The Court of Appeals determined that because, in its view, the NLRB finds no unfair labor practice in a union’s threat to picket in order to exact jobs at prevailing wages, the Hobbs Act should not either.

Of Note

The analysis of whether union conduct demanding a work assignment is lawful under the NLRA often turns on labor agreements, past practice, and the details of a situation.  Likewise, the determination whether picketing, or threats to picket, in furtherance of a dispute touching upon wages, benefits, or “area standards” is lawful will rely heavily upon the context in which the issues arise.  Recourse to federal or other criminal law has been, and will likely remain, rare in these instances.

In today’s workplace, such issues might arise in either a unionized or non-union workplace.  Employers faced with such activity and wanting to avoid disruption in the workplace should carefully monitor the facts to ensure best advice and strategies going forward when challenged by such demands and workplace action.  Proactive employers should review the potential for such issues and create an action plan with labor counsel before disputes escalate.

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