Smithfield Foods, Inc. v. Ufcw

• Decision Date: 30 May 2008
• Docket Number: Civil Action No. 3:07cv641.
• Citation: 633 F.Supp.2d 214
• Parties: SMITHFIELD FOODS, INC. and Smithfield Packaging Company, Plaintiffs, v. UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

633 F.Supp.2d 214

SMITHFIELD FOODS, INC. and Smithfield Packaging Company, Plaintiffs, v. UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, et al., Defendants.

Civil Action No. 3:07cv641.

United States District Court, E.D. Virginia, Richmond Division.

May 30, 2008.

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Gregory Branch Robertson, Kurt George Larkin, Thomas Glascock Slater, Jr., Hunton & Williams LLP, Richmond, VA, George Robert Blakey, Notre Dame Law School, Notre Dame, IN, James Phillip Naughton, Hunton & Williams LLP, Norfolk, VA, for Plaintiffs.

Andrew Dean Roth, Charlotte Jennifer Garden, Matthew Hirsch Clash-Drexler, Robert William Alexander, Robert Mark Weinberg, W. Gary Kohlman, Bredhoff & Kaiser PLLC, Washington, DC, for United Food and Commercial Workers International Union, Gene Bruskin, Joseph Hansen, William T. McDonough, Leila McDowell, Patrick J. O'Neill, Andrew L. Stern, Tom Woodruff.

Carey Robert Butsavage, Butsavage & Assoc PC, Washington, DC, for United Food and Commercial Workers Local No. 400, Jobs with Justice.

Paul Wilbur Jacobs, II, Christian & Barton LLP, Richmond, VA, for United Food and Commercial Workers International Union, United Food and Commercial Workers Local No. 400, Change to Win, Research Associates of America, Jobs with Justice, Gene Bruskin, Joseph Hansen, William T. McDonough, Leila McDowell, Patrick J. O'Neill, Andrew L. Stern, Tom Woodruff.

Patrick Joseph Szymanski, Change to Win, Washington, DC, for Change to Win.

Joshua Aaron Levy, Robert Lawrence Bredhoff, Robert Francis Muse, Stein Mitchell & Mezines, Washington, DC, for Research Associates of America.

MEMORANDUM OPINION

ROBERT E. PAYNE, Senior District Judge.

This matter is before the Court on the DEFENDANTS' JOINT MOTION TO DISMISS UNDER FEDERAL RULE OF CIVIL PROCEDURE 12(b)(6) (Docket No. 25) filed by Defendants United Food and Commercial Workers International Union ("UFCW"), United Food and Commercial Workers Local No. 400 ("Local 400"), Change to Win, Research Associates of America, Jobs with Justice, Gene Bruskin, Joseph Hansen, William T. McDonough, Leila McDowell, Patrick J. O'Neill, Andrew L. Stern, and Tom Woodruff (collectively "Defendants"). For the reasons set forth below, the motion to dismiss will be denied in part and granted in part.

STATEMENT OF FACTS

Smithfield Foods, Inc. is a Virginia corporation with its principal place of business in Smithfield, Virginia. (Amended Compl. at ¶ 8.) Smithfield Packaging Company is a wholly-owned subsidiary of Smithfield Foods.¹ (Id. at ¶ 9.) Smithfield's largest asset is its pork processing plant in Tar Heel, North Carolina. (Id.) The Tar Heel plant employs 4,650 hourly employees, and according to the Complaint, the Unions have been trying unsuccessfully to become the bargaining representative for over a decade. Smithfield also alleges that the Defendants view the employees of the Tar Heel plant as a potentially massive collective bargaining unit, representation of which will produce for the Unions significant monetary benefits and power.

The National Labor Relations Act ("NLRA") 29 U.S.C.A § 158(a)(3) permits a union to become a collective bargaining representative for an employer's employees if the union prevails in an election certified by the National Labor Relations Board ("NLRB"). The NLRA also permits an employer, under certain circumstances, to voluntarily recognize a union with need for an election. See 29 U.S.C.A. § 158(a)(3) (2008).² Smithfield alleges that, after several unsuccessful attempts beginning in 1994 to achieve a majority vote of the hourly employees through the NLRB election process, UFCW and Local 400 and the other defendants, conspiring together, devised an unlawful scheme to extort an agreement from Smithfield to recognize UFCW and Local 400 as the exclusive bargaining agents of the hourly employees of the Tar Heel plant. (Amended Compl. at ¶ 66.)

According to the Complaint, the first manifestation of this strategy was when UFCW publicly announced a so-called "Corporate Campaign" against Smithfield in June 2006. (Id. at ¶ 38.) It has been held that a Corporate Campaign includes a "wide and indefinite range of legal and potentially illegal tactics used by unions to exert pressure on an employer ... [including] litigation, political appeals, requests that regulatory agencies investigate and pursue employer violations of state and federal law, and negative publicity campaigns aimed at reducing the employer's goodwill with employees, investors, or the general public." Food Lion, Inc. v. UFCW, 103 F.3d 1007, 1014 n. 9 (D.C.Cir. 1997). The alleged object of the Corporate Campaign was either to force Smithfield to recognize UFCW as the collective bargaining representative of the employees at the Tar Heel plant or to force the plant, if not Smithfield, to become so unprofitable as to necessitate cessation of operations. (Amended Compl. at ¶¶ 38-41.)

While the Complaint details numerous allegations respecting the actions taken by UFCW and Local 400, and the other defendants, against Smithfield, the following outlines the most significant allegations.

(1) UFCW retained Research Associates of America to prepare and release a false report to the public entitled "Packaged with Abuse: Safety and Health Conditions at Smithfield Packing's Tar Heel Plant." The report was released in August 2006 and was re-released in January 2007. It is further alleged that the defendants intentionally and maliciously caused the false report to be published regarding the working conditions in the Tar Heel plant. In addition to charging that Smithfield violated safety laws and regulations, the report accused Smithfield of routinely and illegally denying, or causing to be denied, the workers compensation claims of its injured employees. (Amended Compl. at ¶¶ 88-95.)

(2) The Defendants allegedly interfered with Smithfield's business relationship with Harris Teeter, one of Smithfield's largest customers. Defendants are alleged to have continually and repeatedly attempted to cause Harris Teeter to cease doing business with Smithfield, inter alia, by organizing "Days of Action," which called for demonstrations to take place at Harris Teeter grocery stores across the southeast. The protests allegedly focused on Smithfield's treatment of its workers and accused Smithfield of racial bias with respect to Smithfield's African American and Latino workers. (Id. at ¶¶ 96-116.) All of these charges are alleged to be false.

(3) Smithfield alleges that the Defendants attempted to interfere with Smithfield's business relationships with numerous other grocery stores nationwide by sponsoring protests in Ann Arbor, Atlanta, Boston, and Nashville. (Id. at ¶¶ 117-124.) The protests are alleged to have been based on falsified grounds.

(4) UFCW allegedly issued a nationwide directive in August 2007 to all of its affiliated local unions regarding the commencement of a "National Boycott" of Smithfield products. Each affiliated local union was directed to contact retailers in its local jurisdiction that carry Smithfield's products and instruct them to discontinue sales of Smithfield's products or face demonstration activity. (Id. at ¶¶ 125-130.) The retailers allegedly were given false information to justify the boycott.

(5) The Defendants allegedly interfered with Smithfield's business relationship with celebrity chef, Paula Deen, who had entered a contractual agreement to promote Smithfield's products on her cooking shows. In an effort to interfere with the business relationship, the Defendants are said to have sponsored, and caused to take place, a series of demonstrations at "Paula Deen Live Tour" events and book signings in several cities. (Id. at ¶¶ 131-140.) These demonstrations too are alleged to have propounded false information.

(6) The Defendants allegedly encouraged cities to effect and publish resolutions condemning Smithfield and banning the sale of its products within their municipal jurisdictions. The Defendants tried to effect such resolutions in New York City; Cambridge, Massachusetts; Somerville, Massachusetts; Chelsea, Massachusetts; and Boston, Massachusetts. The Defendants also encouraged members of the Potomac Association of the Central Atlantic Conference of the United Church of Christ to effect and publish a similar resolution condemning Smithfield. (Id. at ¶¶ 141-154.) The information provided in pursuit of these resolutions allegedly was untrue.

(7) The Defendants allegedly attempted to devalue Smithfield's stock by mailing letters containing falsely disparaging information about the company to financial analysts who follow publicly traded companies in the food industry. (Id. at ¶¶ 155-158.)

(8) The Defendants also are alleged to have orchestrated, sponsored, and conducted protests against Smithfield which took place at the company's 2006 and 2007 shareholders' meetings. (Id. at ¶¶ 159-167.)

(9) In or around June 2006, the Defendants issued untrue and misleading press releases in numerous markets as part of the so-called "Justice at Smithfield" campaign. (Id. at ¶¶ 190-196.)

It was these acts, and others, that allegedly were undertaken for the purpose of causing Smithfield either to recognize the unions without the use of NLRB supervised elections or, alternatively, to cause Smithfield great economic loss, if not financial ruin. The conduct, says Smithfield, violated the Racketeer Influenced and Corrupt Organizations Act ("RICO") 18 U.S.C. § 1962 and certain state laws.

DISCUSSION

Smithfield has presented a nine count Complaint. Counts One through Four allege RICO claims. Counts Five through Nine allege various state law claims. Defendants have moved to dismiss Counts One through Four, as legally deficient, on the principal ground that the conduct alleged therein does not constitute extortion, and, therefore, as a matter of law, those counts allege no racketeering activity. Alternatively, the...