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Ninth Circuit Permits Lawsuit Over Alleged Union Bullying
Opinion Permits Single Based on Thwarted Efforts to Construct Hotel at San Diego’s SeaWorld
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has reversed the jettisoning of a complaint to the extent that it alleges that two unions and their respective leaders, through threats of reprisals against SeaWorld, San Diego’s top tourist attraction, if it continued to do business with plaintiffs Evans Hotels, LLC, and two related entities, intimidated the amusement center into backing out of a deal under which a hotel was to be constructed on land it occupies pursuant to lease from the city.
At issue is whether the Noerr-Pennington Doctrine—which confers antitrust immunity on private parties that petition the government to adopt laws or rulings that could be viewed as anticompetitive—bars all claims, as a District Court judge held that it does, or whether any claim is saved under the “sham exception” where petitioning activity is undertaken or threatened without merit, to oppress.
All three members of a panel—Circuit Judges Ana de Alba and Consuelo M. Callahan and Senior Circuit Judge William A. Fletcher—agreed that a viable clam, based on that exception, was stated as to a secondary boycott in violation of 29 U.S.C. §158(b)(4)(ii)(B). Callahan, in a partial dissent to Thursday’s memorandum opinion, indicated that she would revive an additional claim.
A “secondary boycott” entails an action against a non-party to a labor dispute that does business with a party to such a dispute.
Alleged Threats
After Evans shunned a union demand that it utilize only union workers in the construction of a SeaWorld hotel and remain neutral in an effort to unionize hotel employees, the defendants, according to the complaint, “turned their focus instead on SeaWorld,” communicating, through an intermediary, “that if SeaWorld continued its partnership with Evans Hotels, SeaWorld would face severe opposition from the unions and union allies in connection with its plan to open new attractions every year.”
It is also alleged that the defendants threatened to exert pressure to deter other administrative action by the city desired by SeaWorld and would “undermine SeaWorld’s business by damaging its reputation and public image” through assertions on subjects like animal cruelty.”
The complaint sets forth:
“The message to SeaWorld was clear: either terminate your deal with Evans Hotels or face years of delay in getting future attractions approved and immeasurable damage to your image, reputation, and business in San Diego.”
SeaWorld cut off relations with Evans.
Sec. 158(b)(4)(ii)(B) declares it to be an unlawful practice “to threaten, coerce, or restrain any person engaged in commerce or in an industry affecting commerce” to “cease doing business with any other person.”
The action is against Unite Here! Local 30, and its president, Brigette Browning, as well as the San Diego County Building and Construction Trades Council, AFL-CIO, and its former leader, Tom Lemmon.
Ninth Circuit’s Opinion
The Ninth Circuit opinion, partially reversing a July 6, 2023 decision by District Court Judge Robert S. Huie of the Southern District of California, says:
“Evans does plead facts sufficient to show the sham exception applies to the Unions’ threats to raise administrative challenges to Sea World’s future attractions to pressure SeaWorld to cease doing business with Evans. Construing the allegations in the light most favorable to Evans, the Unions sought to use the governmental process, rather than the outcome of that process, to coerce SeaWorld….Further, the threat was objectively baseless as the Unions neither knew which attractions SeaWorld intended to build nor did they intend to follow through on their threat. Therefore, they could not have reasonably expected to secure favorable government action.”
The opinion continues:
“Evans states a claim against the Unions for secondary boycott in violation of 29 U.S.C. § 158(b)(4)(ii)(B). Evans alleges the Unions threatened to oppose SeaWorld’s future park attractions, with the ‘object thereof’ to force SeaWorld to cease doing business with Evans.”
Redevelopment Project
Among other claims put forth by Evans was that the defendants employed improper means in an effort to have the city block its planned expansion of one of its three hotels, saying in the third amended complaint, the operative pleading:
“The latest target of Defendants’ unlawful activity is the redevelopment of the Bahia Resort Hotel. The Bahia Resort Hotel is on Mission Bay Park, land leased from the City. It was the first commercial lessee on Mission Bay and has operated under long term leases from the City since the 1950s.”
It contended that the defendants “presented sham environmental and land use challenges” to the proposed project, “communicated behind the scenes with a majority of the City Council members and demanded their opposition to the redevelopment unless and until Evans Hotels agreed to the labor demands” and “made false statements to the public concerning the project.” It added that they “told Plaintiffs point blank that if they did not agree” to abide by the unions’ demands, “they would use their extensive control over the City Council to kill the project.”
The memorandum opinions declares that the Noerr-Pennington doctrine precludes liability. Disagreeing, Callaghan wrote:
“In my view, the Unions do not enjoy Noerr-Pennington immunity for those threats because the operative complaint adequately alleges that the Unions made the threats ‘pursuant to a policy of starting legal proceedings without regard to the merits and for the purpose of injuring [others].’ ”
Where, as alleged with respect to the defendants, “a party files a series of lawsuits without regard to the merits,” Callaghan said, “it has engaged in serial sham petitioning, and its conduct is not protected.”
She argued that there should be a “remand for further consideration whether Evans’ allegations are sufficient to state a claim.”
Broad Allegations
The third amended complaint broadly alleges:
“This is a case about unions and union leaders that, in their quest for increased dues and power in the Relevant Market, have abandoned traditional (and legal) statutory systems of labor democracy in favor of a pattern of abusive and unlawful secondary boycotts, sham ‘environmental’ and land use challenges, false statements, extortion, bribery, threats, and intimidation.”
“Relevant Market” is defined as “the market for luxury destination resorts in the cities of San Diego and Coronado.
“Defendants openly flaunt to owners, developers, and the remaining City of San Diego…officials not under their thumb that it’s a ‘new day’ in San Diego and that business owners and developers ‘better figure out who runs this town,’ ” the pleading avers, adding:
“Of course, Defendants are not (nor have they ever been) elected officials. Rather, they exercise their control over the City by communicating in serial fashion, behind the scenes with elected city officials, to secure their opposition to non-union projects (in violation of the Ralph M. Brown Act…) in exchange for campaign funding and other ‘support.’ ”
The case is Evans Hotels, LLC v. Unite Here! Local 30, 23-55692.
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