A federal appeals court in New York City has ruled that Local 3, International Brotherhood of Electrical Workers, must pay contempt fines ordered by a court-appointed Special Master for engaging in illegal secondary picketing in violation of a 1983 court ruling and a 1996 consent decree. The court also upheld the master’s dismissal of an NLRB request that the union pay compensatory damages to businesses damaged by the picketing.

Union unlawfully targeted owners, GCs.

After a 1983 judgment against it, IBEW Local 3 in New York City agreed to a consent order in 1996 that it would not continue to engage in illegal picketing of owners and contractors with whom it did not have a direct dispute. In 2003, Hertz Corp. contracted with Mac K Construction to upgrade its Kennedy Airport rental facility. Mac K hired Gunzer Electric as a subcontractor on the job. Local 3 was involved in a dispute with Gunzer and picketed the entire jobsite, and not just the areas and days when Gunzer was working. It also brought a 10-ft-tall inflatable rat with a sign that read “HURTS IS A RAT” and attempted to disrupt Hertz’s operations.

In 2004, the Empire State Brewing Co. sought to build a restaurant in the Empire State Building. R&L Systems was hired as an electrical subcontractor on the job, and Local 3 again picketed the entire worksite without regard to whether R&L was on the job.

The NLRB claimed these were violations of the 1996 consent decree and the U.S. Court of Appeals for the Second Circuit appointed Special Master John A. Martin Jr. to decide whether the consent decree was violated and what penalties should be assessed. Martin found that Local 3’s picketing and use of the inflatable rat was an illegal secondary boycott. He recommended contempt fines of $20,000 for four violations of the decree and an additional $250 for each day of illegal picketing. He also ordered Local 3 to pay NLRB  attorneys’ fees at “the prevailing private practice market rates” for New York City—over $200,000.

Martin also ruled that, for future violations, the union would face contempt fines of $25,000 for each violation, $5,000 per day for each day of illegal picketing.  Individual union officers and members partipating in such violations would also face fines. However, he rejected NLRB’s request that employers injured by Local 3’s illegal picketing be compensated. Local 3 and NLRB appealed.

The federal appeals court upheld the master’s ruling that Local 3 violated the 1996 consent decree and upheld the contempt fines of $33,250. It also rejected Local 3’s appeal of the master’s proposed increase in fines for future violations. As the union repeatedly violated the consent decree and had more than $33 million in assets, “the proposed increase in the prospective fines seems necessary and not unduly onerous,” the court ruled.

The court also accepted the master’s recommendation that attorneys’ fees be assessed at “the prevailing private practice market rate.” The court said that “because government attorneys receive a fixed salary and do not bill a client for their services, a proportionate share of attorneys’ salaries does not necessarily correlate to expenses actually incurred.” It said that time spent on this case prevented the government from pursuing other violations.

However, the appeals court declined to accept the master’s recommendation that individual officers and members be subject to contempt fines. The threat of contempt fines against individuals could have a chilling effect on legitimate organizing activity, the court ruled.

The court also rejected NLRB’s appeal of the master’s refusal to award compensatory damages to the businesses harmed by the illegal picketing. There was no precedent for awarding compensatory damages to third parties not involved in a contempt proceeding. Further, “employers may bring their own actions for damages under Section 303” of the federal labor law, the court concluded. NLRB v. Local 3, IBEW, No. 04-5912-ag (USCA 2nd Cir. 2006).