March 11, 2009: A federal judge in New York March 9 dismissed Cintas Corp.'s racketeering and trademark infringement claims against UNITE HERE, the International Brotherhood of Teamsters, and their labor federation Change to Win (Cintas Corp. v. UNITE HERE, S.D.N.Y., No. 08cv2185, 3/9/09).
Even accepting as true the allegations in the 105-page amended complaint, Judge William H. Pauley of the U.S. District Court for the Southern District of New York held that the “corporate campaign” conducted by the unions to pressure the company to sign a neutrality/card-check agreement does not constitute attempted extortion under federal and Ohio law.
Cintas alleged that the unions engaged in a pattern of racketeering activity in violation of the Racketeer Influenced and Corrupt Organizations Act by committing attempted extortion in violation of the federal Hobbs Act and Ohio law. However, Pauley found that Cintas, not just the unions, would receive some benefit from a neutrality/card-check agreement and that the company does not have a right to pursue its business interests without receiving any criticism.
Cintas also alleged that the unions infringed the company's trademark in violation of the Lanham Act by using the “CINTAS” trademark on Web sites directed at Cintas's customers and workers. But Pauley found that the unions are not using the trademark to sell competing goods or services but rather to criticize the company's actions.
The judge declined to exercise supplemental jurisdiction over Cintas's state-law claims and dismissed the suit.
Organizing Campaign Began in 2003
Cintas is the largest uniform supplier in North America and has more than 34,000 employees. UNITE HERE formally launched a campaign in February 2003 to organize about 17,000 Cintas laundry workers (25 DLR A-9, 2/6/03). The Teamsters later joined the organizing campaign (123 DLR A-12, 6/26/03).
The unions want Cintas to sign a neutrality/card-check agreement requiring the company to remain neutral regarding their employees' choice about union representation and to recognize either union as the exclusive bargaining representative of each unit in which a majority of the workers sign union authorization cards. Cintas alleged that the unions are conducting a corporate campaign to pressure the company to sign an agreement by disparaging the company through letters, flyers, newsletters, press releases, and Web sites directed at customers, investors, stock analysts, and employees.
Some of the “consumer bulletins” on a Web site www.cintasexposed.org run by UNITE HERE use the company's trademark. The site contains a link to the homepage of the union's main Web site, which in turn has a link to the union's online “store” that sells items bearing the union's logo. The homepage also includes links to Web sites that promote uniforms and other products made by union-represented workers. The “Cintas exposed” Web site included a disclaimer stating that it is an independent site run by UNITE HERE.
UNITE HERE, the Teamsters, and CTW each have Web sites that accuse Cintas of paying poverty-level wages, discriminating against workers, having workplace safety problems, and violating federal laws. The three organizations also maintain a Web site www.uniformjustice.org that invites Cintas employees to report health and safety violations and another site www.notonmytrack.info that asks car-racing fans to urge NASCAR to stop using Cintas.
Cintas filed the racketeering and trademark infringement suit one year ago (48 DLR A-4, 3/12/08) and filed an amended complaint a few months later. The unions filed a joint motion to dismiss in June 2008.
In other litigation between the parties, the U.S. Court of Appeals for the Third Circuit ruled 2-1 last September that UNITE HERE violated the federal Driver's Privacy Protection Act by accessing Cintas employees' motor vehicle records to obtain their addresses (176 DLR AA-1, 9/11/08). UNITE HERE brought a False Claims Act suit alleging that Cintas defrauded the federal government by failing to comply with the Service Contract Act's minimum labor standards (182 DLR A-13, 9/20/07). The union's appeal of a district court's dismissal of the suit is pending in the Ninth Circuit. UNITE HERE voluntarily dismissed a securities suit against Cintas after a judge denied the union's motion for a preliminary injunction and found that the union failed to show a likelihood of success on the merits (102 DLR A-6, 5/29/07).
Judge Calls Complaint ‘Public Relations Piece.'
Pauley criticized Cintas's amended complaint as “sprawling,” “larded with” exhibits, and “a manifesto by a Fortune 500 company that is more a public relations piece than a pleading.”
Cintas alleged a pattern of racketeering activity consisting of attempted extortion in violation of the Hobbs Act, violation of Ohio extortion law, and violation of the Travel Act by traveling between states with the intention to commit extortion.
The Hobbs Act defines attempted extortion as attempting to “obtain the property of another, with his consent, induced by the wrongful use of actual or threatened force, violence, or fear.” Cintas argued that the unions attempted to obtain property in the form of a neutrality/card-check agreement through fear of economic loss. Pauley found that a Hobbs Act violation occurs “when a defendant exploits a plaintiff's fear of economic loss and receives property to which it has no lawful claim.”
Courts “have held uniformly” that a neutrality/card-check agreement “provides benefits to both an employer and a union,” Pauley said. He found that if the “victim receives something of value in return for capitulating to fear of economic loss,” the victim must show that it had a pre-existing right to pursue its business interests free of that fear. Cintas “does not have a right to operate free from any criticism, organized or otherwise,” the judge said. However, he found that the company is not precluded from bringing a state-law defamation claim.
Pauley explained that trademark infringement under the Lanham Act requires the plaintiff to prove that it has a valid trademark that the defendant used without the plaintiff's consent to sell or advertise goods or services and that the defendant's use is likely to cause confusion as to a connection between the plaintiff and the defendant “or as to the origin, sponsorship, or approval of the defendant's goods, services, or commercial activities by plaintiff.”
Most of the relevant factors “weigh heavily” in the unions' favor, Pauley said. He found that Cintas and the unions “occupy entirely distinct spheres,” that there is “no proximity” between their goods or services, and that there is “no likelihood” that the unions will enter the company's field. Cintas did not allege that the unions used the trademark with the intent of associating themselves with the company or capitalizing on the company's reputation and goodwill, Pauley said. He also found that Cintas's customer base is “a sophisticated corporate audience” that is unlikely to be confused about who provides Cintas goods and services.
Cintas also alleged that the unions are using the trademark for profit because the “Cintas exposed” Web site links to the UNITE HERE Web site, which links to the union's online store, and because the unions are attempting to obtain a neutrality/card-check agreement, union dues, and pension contributions.
“The twice-removed links to a union ‘store' is at least one bridge too far and insufficient to establish the use of the CINTAS mark for profit,” Pauley said. He also found that an effort to obtain a neutrality/card-check agreement “does not represent an attempt to profit.” The unions can obtain union dues and pension contributions only if the Cintas employees choose either union as their bargaining representative, the judge said. “This is too attenuated and independent from the accused conduct to support any inference that the use is an attempt to profit,” he said.
Unions Welcome Decision
“This is a victory not only for Cintas workers—and all working families—across the country, but a victory for free speech,” UNITE HERE General President Bruce Raynor said March 10. “This decision will hopefully end the absurd practice of using RICO lawsuits to try to criminalize worker organizing,” he said.
The district court ruling “represents a significant reaffirmation of the basic right that every citizen has to expose companies that make money by exploiting their workers and consumers,” Teamsters Press Secretary Galen Munroe said March 10. The decision “recognizes that unions have the legitimate right to use publicity about a company's business practices as part of an organizing campaign, a right that has been recognized by the courts for decades.”
Gregory M. Utter of Keating, Muething & Klekamp in Cincinnati, who represented Cintas, said the judge “was clearly wrong” and failed to apply the Second Circuit's definition of extortion. The unions say they will stop disparaging the company if it signs a neutrality/card-check agreement, which is something of value, Utter said. “That's extortion,” he said. It is no different than standing on a street corner and saying bad things about someone but promising to stop if the person pays $10,000, Utter said. Cintas has not yet decided whether to appeal the ruling, he said.
In addition to Utter, Jamie M. Ramsey, Patricia Hogan, Drew M. Hicks, and Christy M. Nageleisen-Blades in the same firm; Jonathan M. Wagner of Kramer Levin Naftalis & Frankel in New York; and Notre Dame Law School professor George R. Blakey represented Cintas. Tobin J. Romero of Williams & Connolly in Washington, D.C., and Irwin Rochman of Tesser, Ryan & Rochman in New York represented UNITE HERE. Leon Dayan of Bredhoff & Kaiser in Washington, D.C., represented the Teamsters and CTW.
By Susan J. McGolrick