Advocates for Labor and Progressive Institutions

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Ninth Circuit Holds that a Union’s Use of Intense Economic Pressure to Achieve Its Objectives Is Not Extortion and Cannot Be the Basis of a RICO Action

In a landmark ruling of great importance to unions and other activist organizations, the Ninth Circuit held that the non-violent use of economic pressure, including “intense” economic pressure that may be tortious under state law, is not “extortion” under the federal Racketeering Influenced and Corrupt Organizations Act (RICO).

United Bhd. of Carpenters & Joiners v. Bldg. & Constr. Trades Dep’t, AFL-CIO, 770 F.3d 834 (9th Cir. 2014). In so ruling, the Court of Appeals affirmed the dismissal of a 246-page RICO complaint against the Building and Construction Trades Department of the AFL-CIO (BCTD). Bredhoff & Kaiser lawyers represented the BCTD both at the trial and appellate levels.

The Ninth Circuit’s ruling clears the way for labor organizations and other groups to attempt to change corporate and other institutional behavior by engaging in comprehensive campaigns, sometimes referred to as “corporate campaigns.” Such campaigns often involve a combination of economic pressure activities – including the use of mass media, regulatory filings, shareholder actions, and various forms of peaceful direct action – to criticize or challenge targeted corporate behavior on a regular basis until the behavior changes.

For decades, unions have engaged in campaigns of this type as a means of successfully securing improved contracts, organizing rights, and other lawful objectives that benefit the workers they represent. But beginning in the late 1990s, many employers and other large institutions began to use the in terrorem effect of RICO treble-damages lawsuits and the legal costs that such lawsuits can impose, even when ultimately found unmeritorious, to attempt to deter their adversaries from engaging in such campaigns. While several district courts and one court of appeals had previously rebuffed such attempts to use RICO to silence union critics, the Ninth Circuit’s decision in this case is the first published appellate decision to address the issue. The court’s comprehensive and unanimous opinion, authored by an appointee of Ronald Reagan and joined by appointees of Presidents Bush and Clinton, therefore is apt to become a particularly influential decision in this area.