The National Labor Relations Board, in one of its most significant decisions in recent years on “union protest” issues, has substantially eroded the protection given to “neutral” parties when unions erect large inflatable rats and other displays targeting businesses that have no direct involvement in the underlying labor dispute. This ruling will likely promote more widespread tactics directed against such neutral businesses, which will predictably expand the scope of labor disputes beyond the particular employer whose actions gave rise to the dispute.
On July 21, a three-member majority of the National Labor Relations Board (the Board) decided IUOE Local 150 (Lippert Components), 371 NLRB No. 8 (2021), which upheld the use of “Scabby the Rat,” a 12-foot high inflatable rat with red eyes, fangs, and claws – along with two 8-by-3.75 feet banners using words like “SHAME” and referencing “Safety Violations” by a different company – displayed at an RV trade show event sponsored by a “neutral” party, Lippert Components. Lippert had no involvement in the underlying dispute, except for its relationship with a contractor (MacAllister Machinery) who was objectionable to the union.
The ruling is significant for several reasons. First, existing law makes clear that union “picketing” in front of neutral businesses (based on a dispute involving a different employer) violates the secondary boycott provision in the National Labor Relations Act (NLRA), which makes it unlawful for unions to “threaten, coerce, or restrain” any person with the objective of forcing that person to cease doing business with the “primary” employer that is directly involved in the union dispute. (There are some exceptions where, for example, a union engages in consumer-directed picketing identifying a particular product that consumers are urged to boycott.)
Second, in October 2020, the Board (with then-Member Lauren McFerran dissenting) invited briefs in the Lippert case to address whether the Board should apply, modify or overrule prior Board cases that upheld the display of large banners targeting “neutral” parties. Many observers had anticipated that the Board would overrule its existing precedent and find unions’ use of Scabby the Rat in these circumstances “threatens, coerces, or restrains” the neutral employer in a manner that supplants any First Amendment protection.
Third, in the most recent Lippert decision, a three-member Board majority – including two Republican members who supported the Board’s earlier solicitation of briefs – held that targeting a neutral party with the “inflatable rat and stationary banners” was lawful under the NLRA (even though picketing would violate the Act), based on their conclusion that a contrary ruling “would raise serious First Amendment issues.” In this respect, the Board majority has effectively concluded that union protests against neutral parties using a 12-foot inflatable rat (“Scabby the Rat,” of considerable notoriety for its widespread appearances in labor protests) and large 8-foot wide banners are functionally equivalent to passing out 8-1/2-by-11-inch leaflets (which are considered permissible “handbilling” under existing law).
The Board majority ruled that – similar to non-labor cases in which the US Supreme Court found it was unconstitutional to restrict the burning of crosses and US flags – First Amendment concerns warranted a conclusion that federal law permits the use of Scabby the Rat and large banners – even when they target neutral parties – despite the NLRA’s broad prohibition against threats, coercion, and restraint against neutral parties based on labor disputes in which the targeted neutral parties have no direct involvement.
Balancing Prohibitions on Secondary Boycotts with First Amendment Protections
The NLRA, specifically Section 8(b)(4)(B), expressly prohibits conduct that “threaten[s], coerce[s], or restrain[s]” a neutral party—businesses that have no direct involvement in the labor dispute at issue—where an object is forcing or requiring the neutral to cease doing business with the “primary” employer—the employer with which the union has some type of dispute involving employee representation or wages, hours, or working conditions. This prohibition is consistent with the policy objectives underlying the NLRA, namely to “minimize industrial strife” and to “eliminate . . . substantial obstructions to the free flow of commerce.” Indeed, the Supreme Court has acknowledged that Congress enacted Section 8(b)(4)(B) to address the “isolated evils which experience has established flow from [secondary] picketing.”
For more than 70 years, the Board and the Supreme Court have balanced the NLRA’s prohibition against unlawful secondary activity with rights afforded under the First Amendment. For example, in Edward J. DeBartolo Corp. v. Florida Gulf Coast Building. & Construction Trades Council, the Supreme Court distinguished handbilling from picketing and related secondary activities that “threaten, coerce, or restrain” neutral parties. DeBartolo held that handbilling was permissible notwithstanding the NLRA’s prohibition against secondary threats, restraint, and coercion directed against neutral parties, whereas “picketing is qualitatively different from other modes of communication,” involving “a mixture of conduct and communication” and, therefore, could be found violative of the NLRA’s secondary boycott provisions notwithstanding the First Amendment’s freedom-of-speech guarantees.
Board Precedent Being Considered in Lippert Components
On October 27, 2020, the Board issued a Notice and Invitation to File Briefs as to whether it should, among other things, overrule its holdings in two cases: Carpenters Local 1506 (Eliason & Knuth of Arizona, Inc.) and Sheet Metal Workers Local 15 (Brandon Medical Center). In Eliason & Knuth, the Board found that holding large stationary banners, which were “3 or 4 feet high and from 15 to 20 feet long,” near public sidewalks outside of several secondary employers’ establishments—as close as 15 feet away from entrances—did not violate Section 8(b)(4)(B). The Board distinguished unlawful secondary picketing from holding or waving the banners, finding that the stationary banners did not involve patrolling or picketing, and thus were not sufficiently disruptive or coercive.
Extending its holding in Eliason & Knuth, the Board in Brandon Medical Center held that positioning a “16-feet tall and 12-feet wide” inflatable rat outside of a secondary employer’s hospital did not violate Section 8(b)(4)(B) because the rat was stationary and “entailed no element of [physical] confrontation.”
LIPPERT COMPONENTS DECISION
A Board majority in Lippert Components (Chairman McFerran and Members John Ring and Marvin Kaplan) reaffirmed the holdings in Eliason & Knuth and Brandon Medical Center, finding that the 12-foot inflatable rat and 8-by-3.75 feet banners placed in front of a neutral employer, “without more, does not ‘threaten, coerce, or restrain’ the neutral in violation of Section 8(b)(4)(ii)(B).” Here, the union displays targeted neutral employer Lippert Components during a four-day trade show event hosted by Lippert’s customer Thor Industries, an RV manufacturer. One banner read “Shame on Lippert Components, Inc. for Harboring Rat Contractors.” The second banner read “OSHA Found Safety Violations Against MacAllister Machinery, Inc.” The record contained no evidence that the inflatable rat and two banners blocked the entrance of the RV show, which was a vehicle entrance. The display was on public land bordering the road and did not block any ingress and egress into the show. Significantly, the union had no dispute with Lippert Components, apart from Lippert’s business relationship with a different company, MacAllister Machinery, which was the object of the union’s protests.
Although a majority found that the rat, banners, and two nearby yet stationary union representatives were lawful, the Board in Lippert Components issued three separate opinions: two concurrences (one authored by Chairman McFerran and the second by Members Ring and Kaplan) and one dissent (Member William Emanuel).
Chairman McFerran Concurrence
Chairman McFerran viewed the case as straightforward. She reasoned that because Eliason & Knuth and Brandon Medical Center were directly analogous to the instant case, the Board should follow its precedent without deviation. Specifically, she noted that Eliason & Knuth and Brandon Medical Center, applying relevant Supreme Court precedent, clearly supported that this conduct was constitutionally protected expressive activity that could not be restricted under Section 8(b)(4)(ii)(B).
Members Ring and Kaplan Concurrence
Members Ring and Kaplan, while concurring in the holding that the inflatable rat and banner did not violate Section 8(b)(4)(ii)(B), relied heavily on their interpretation of Supreme Court precedent in their concurring opinion. Specifically, even though the Supreme Court’s decision in DeBartolo specifically differentiated between unlawful “picketing” and permissible “handbilling,” Members Ring and Kaplan suggested that the NLRA more broadly permitted any “activity—handbilling or otherwise—[which] employs ‘mere persuasion’ to achieve its goal.” Members Ring and Kaplan relied on non-labor cases decided by the Supreme Court (involving flag burning, cross burning, and anti-gay demonstrations that were found protected under the First Amendment) and reasoned that “[s]urely, if the First Amendment protects this conduct, prohibiting an inflatable rat and stationary banners shaming a secondary employer would raise significant constitutional concerns in the eyes of the Court.” Thus, the concurrence determined that the doctrine of constitutional avoidance—where the Board curtails an otherwise expansive interpretation of the NLRA to avoid constitutional questions that might put NLRA statutory provisions in peril—warranted dismissal of the complaint. Notwithstanding their endorsement of the Board’s prior cases upholding “bannering” against neutral parties, Members Ring and Kaplan expressed disagreement with some aspects of those cases “to the extent that they attach decisive significance to whether disputed union conduct has the same attributes as ‘traditional picketing’ of, if not, whether it disrupts the neutral employer’s operations.” Thus, Members Ring and Kaplan suggest certain tactics targeting neutrals might violate the NLRA’s secondary boycott provisions, although much of their opinion appears to suggest otherwise.
Member Emanuel Dissent
In a dissenting opinion, Member Emanuel expressed his view that the Board should overturn Eliason & Knuth and Brandon Medical Center, and, instead, would find that “the displays at issue here constitute coercive picketing or, in the alternative, that the displays are coercive even if they do not constitute picketing.”
Member Emanuel stated that “picketing,” long subject to the Section 8(b)(4)(ii)(B) restrictions, is not confined only to patrolling and carrying signs. Instead, citing Board precedent, Member Emanual defined picketing as posting individuals near an establishment for “a purpose which advances the cause of the union, such as keeping employees away from work or keeping customers away from the employer’s business.” Member Emanuel then applied this standard to the inflatable rat and banners utilized by the union, finding the union’s conduct “easily meets” the definition of picketing—and therefore violated Section 8(b)(4)(ii)(B). Member Emanuel further stated that the conduct in this case was “a far cry from the handbilling” in DeBartolo and the Eliason & Knuth and Brandon Medical Center decisions applied a restrictive approach to Section 8(b)(4)(ii)(B) that fails to distinguish “the continuum of union behavior from permissible handbilling to proscribed coercive picketing in its many forms.”
Alternatively, Member Emanuel would find the use of an inflatable rat and banners as coercive nonpicketing conduct. Member Emanuel criticized Eliason & Knuth and Brandon Medical Center for creating a new, unduly restrictive standard to nonpicketing conduct requiring a disruption of the neutral employer’s operations in order for the conduct to be coercive. Member Emanuel stated that this standard was not supported by the NLRA and incentivizes exploitation, providing “cold comfort for neutral employers.”
Member Emanuel concluded that the majority’s decision “invites a dramatic increase in secondary boycott activity” and “leaves targeted neutral employers without recourse.”
- Lippert Components is a damaging decision that appears to broadly permit a range of “secondary” tactics against neutral parties that have no direct involvement in the underlying labor dispute, where the union seeks to force the neutral party to cease doing business with a particular contractor or vendor or to boycott particular manufacturers, brands, or suppliers deemed objectionable by the unions.
- Instead of expanding protection for neutral employers, the decision upholds Obama-era Board decisions permitting the use of large banners and inflatable objects directed against neutral parties that are designed to pressure the neutral to apply pressure against the “primary” employer involved in the underlying labor dispute and/or to cease doing business with the “primary” employer.
- In separate concurring opinions, the Board majority concluded that the targeting neutral parties with a giant inflatable rat and large banners was effectively the same as permissible handbilling rather than constituting the same type of unlawful restraint and coercion that results from impermissible picketing. The expansive reasoning utilized by the Board majority will likely be relied upon by unions to pressure neutral parties through a variety of additional disruptive tactics at key events and important locations.
- The Lippert Components decision likely serves as a precursor for even more pro-union decisions in the future as the Board moves from a Republican to Democratic majority, which may occur in late August or early September, when it is expected that President Joseph Biden’s two Democratic NLRB nominees will be confirmed by the US Senate. Together with Chairman McFerran, this will create a working Democratic majority for the first time since 2017.
- This case also underscores the importance for an employer to show that union protests or displays caused an actual blockage or direct interference with access by customers, attendees, suppliers, and other parties. The lack of such evidence in Lippert Components concerning vehicles travelling into the show made the employer’s case on coercion and restraint much weaker.
 29 U.S.C. § 158(b)(4)(B).
 Local 24, International Brotherhood of Teamsters v. Oliver, 358 U.S. 283, 295 (1959).
 NLRB v. Fruit & Vegetable Packers, Local 760 (Tree Fruits), 377 U.S. 58, 63 (1964) (quoting NLRB v. Drivers, Chauffeurs, Helpers, Local Union No. 639, 362 U.S. 274, 284 (1960)).
 485 U.S. 568 (1988).
 Id. at 580.
 355 NLRB 797 (2010).
 356 NLRB 1290 (2011).
 355 NLRB at 805-06.
 356 NLRB at 1291-92.
 371 NLRB No. 8, slip op. at 1.
 Id. slip op. at 5.
 Id. slip op. at 6.
 The Ring-Kaplan concurrence here followed the same approach as the majority opinion in Bethany College, 369 NLRB No. 98 (2020), which had relied on the doctrine of constitutional avoidance to dodge a conflict with the First Amendment’s religion clauses.
 371 NLRB No. 8,slip op. at 8.
 Id. slip op. at 9 quoting Lumber & Sawmill Workers Local 2797 (Stoltze Land & Lumber Co.), 156 NLRB 388, 394 (1965).
 Id. slip op. at 10.
 Id. slip op. at 11.