[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
 CORPORATE CAMPAIGNS AND THE NLRB: THE IMPACT OF UNION PRESSURE ON JOB 
                                CREATION

=======================================================================

                                HEARING

                               before the

                        SUBCOMMITTEE ON HEALTH,
                     EMPLOYMENT, LABOR AND PENSIONS

                         COMMITTEE ON EDUCATION
                           AND THE WORKFORCE

                     U.S. House of Representatives

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

              HEARING HELD IN WASHINGTON, DC, MAY 26, 2011

                               __________

                           Serial No. 112-24

                               __________

  Printed for the use of the Committee on Education and the Workforce


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                COMMITTEE ON EDUCATION AND THE WORKFORCE

                    JOHN KLINE, Minnesota, Chairman

Thomas E. Petri, Wisconsin           George Miller, California,
Howard P. ``Buck'' McKeon,             Senior Democratic Member
    California                       Dale E. Kildee, Michigan
Judy Biggert, Illinois               Donald M. Payne, New Jersey
Todd Russell Platts, Pennsylvania    Robert E. Andrews, New Jersey
Joe Wilson, South Carolina           Robert C. ``Bobby'' Scott, 
Virginia Foxx, North Carolina            Virginia
Bob Goodlatte, Virginia              Lynn C. Woolsey, California
Duncan Hunter, California            Ruben Hinojosa, Texas
David P. Roe, Tennessee              Carolyn McCarthy, New York
Glenn Thompson, Pennsylvania         John F. Tierney, Massachusetts
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          David Wu, Oregon
Richard L. Hanna, New York           Rush D. Holt, New Jersey
Todd Rokita, Indiana                 Susan A. Davis, California
Larry Bucshon, Indiana               Raul M. Grijalva, Arizona
Trey Gowdy, South Carolina           Timothy H. Bishop, New York
Lou Barletta, Pennsylvania           David Loebsack, Iowa
Kristi L. Noem, South Dakota         Mazie K. Hirono, Hawaii
Martha Roby, Alabama
Joseph J. Heck, Nevada
Dennis A. Ross, Florida
Mike Kelly, Pennsylvania

                      Barrett Karr, Staff Director
                 Jody Calemine, Minority Staff Director

         SUBCOMMITTEE ON HEALTH, EMPLOYMENT, LABOR AND PENSIONS

                   DAVID P. ROE, Tennessee, Chairman

Joe Wilson, South Carolina           Robert E. Andrews, New Jersey
Glenn Thompson, Pennsylvania           Ranking Minority Member
Tim Walberg, Michigan                Dennis J. Kucinich, Ohio
Scott DesJarlais, Tennessee          David Loebsack, Iowa
Richard L. Hanna, New York           Dale E. Kildee, Michigan
Todd Rokita, Indiana                 Ruben Hinojosa, Texas
Larry Bucshon, Indiana               Carolyn McCarthy, New York
Lou Barletta, Pennsylvania           John F. Tierney, Massachusetts
Kristi L. Noem, South Dakota         David Wu, Oregon
Martha Roby, Alabama                 Rush D. Holt, New Jersey
Joseph J. Heck, Nevada               Robert C. ``Bobby'' Scott, 
Dennis A. Ross, Florida                  Virginia


                            C O N T E N T S

                              ----------                              
                                                                   Page

Hearing held on May 26, 2011.....................................     1

Statement of Members:
    Andrews, Hon. Robert E., ranking minority member, 
      Subcommittee on Health, Employment, Labor and Pensions.....     4
    Roe, Hon. David P., Chairman, Subcommittee on Health, 
      Employment, Labor and Pensions.............................     1
        Prepared statement of....................................     3
    Wilson, Hon. Joe, a Representative in Congress from the State 
      of South Carolina, prepared statement of...................     6

Statement of Witnesses:
    Bego, David A., president and CEO, Executive Management 
      Services, Inc..............................................     7
        Prepared statement of....................................     9
    Fisk, Catherine L., chancellor's professor of law, University 
      of California, Irvine......................................    36
        Prepared statement of....................................    38
    Fritts, Jonathan C., partner, Morgan, Lewis & Bockius LLP....    45
        Prepared statement of....................................    47
    Karnas, F. Chet, president and owner, Lone Sun Builders, 
      Inc., on behalf of Associated Builders and Contractors.....    26
        Prepared statement of....................................    28

Additional Submissions:
    Mr. Andrews:
        Cincinnati Post article, ``Justice for Janitors,'' July 
          31, 2007...............................................    86
        Indianapolis Star article, ``Pay and Hours Improve for 
          Indianapolis Janitors,'' April 20, 2008................    87
        Indianapolis Clergy Committee, statement of principles...    87
        Executive Management Services, Inc., employee manual for 
          hourly employees.......................................    91
    Chairman Roe:
        Ritsema, Bill, president, Ritsema Associates:
            Prepared statement of................................    76
            Additional materials.................................    78
        Questions submitted from Hon. Martha Roby, a 
          Representative in Congress from the State of Alabama...   106
        Response from Mr. Fritts to questions submitted..........   108


                      CORPORATE CAMPAIGNS AND THE
                       NLRB: THE IMPACT OF UNION
                        PRESSURE ON JOB CREATION

                              ----------                              


                         Thursday, May 26, 2011

                     U.S. House of Representatives

         Subcommittee on Health, Employment, Labor and Pensions

                Committee on Education and the Workforce

                             Washington, DC

                              ----------                              

    The subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2175, Rayburn House Office Building, Hon. Phil Roe 
[chairman of the subcommittee] presiding.
    Present: Representatives Roe, Wilson, Thompson, Walberg, 
DesJarlais, Hanna, Rokita, Bucshon, Noem, Andrews, Kucinich, 
Kildee, Hinojosa, Tierney, Holt, and Scott.
    Also Present: Representatives Kline, Gowdy, and Miller.
    Staff Present: Katherine Bathgate, Press Assistant/New 
Media Coordinator; Casey Buboltz, Coalitions and Member 
Services Coordinator; Ed Gilroy, Director of Workforce Policy; 
Benjamin Hoog, Legislative Assistant; Marvin Kaplan, 
Professional Staff Member; Barrett Karr, Staff Director; Ryan 
Kearney, Legislative Assistant; Brian Newell, Deputy 
Communications Director; Krisann Pearce, General Counsel; Molly 
McLaughlin Salmi, Deputy Director of Workforce Policy; Ken 
Serafin, Workforce Policy Counsel; Linda Stevens, Chief Clerk/
Assistant to the General Counsel; Loren Sweatt, Professional 
Staff Member; Aaron Albright, Minority Communications Director 
for Labor; Kate Ahlgren, Minority Investigative Counsel; 
Tylease Alli, Minority Hearing Clerk; Jody Calemine, Minority 
Staff Director; John D'Elia, Minority Staff Assistant; Brian 
Levin, Minority New Media Press Assistant; Jerrica Mathis, 
Minority Legislative Fellow, Labor; Richard Miller, Minority 
Senior Labor Policy Advisor; Megan O'Reilly, Minority General 
Counsel; Julie Peller, Minority Deputy Staff Director; and 
Meredith Regine, Minority Labor Policy Associate.
    Chairman Roe. A quorum being present, the Subcommittee on 
Health, Employment, Labor, and Pensions will come to order.
    Good morning, everyone.
    And welcome to our witnesses. And thank you for joining us 
today.
    Today, we will examine the role of the National Labor 
Relations Board in corporate campaigns.
    I realize this is a general definition of the term, but a 
corporate campaign is a union effort to disrupt the employer's 
routine business. The campaign can take the form of negative 
advertising, complaints against employers with various 
government agencies, and can even include appeals to political 
and religious leaders to put pressure on a targeted employer.
    The intent of these tactics is to undermine the reputation 
as well as break the will of an employer who refuses to accept 
union demands. In some cases, an employer can either concede to 
the demands that may undermine the success of his or her 
business or accept public contempt, government penalties, 
outside interference, and extraordinary litigation costs. 
Regardless of the potential outcomes, these campaigns can have 
a detrimental impact on the business' bottom line and threaten 
the livelihoods of its workers.
    Over the years, the use of corporate campaigns has 
accelerated. According to one study, between 1974 and 1999, 
only 200 corporate campaigns were identified. Yet, in 2005, it 
was estimated that between 15 and 20 corporate campaigns were 
under way at any given time.
    And, recently, the NLRB has taken a number of steps to 
expand the arsenal of tactics available for a corporate 
campaign. The Board has removed bannering restrictions 
previously placed on boycotts of neutral employers. Employees 
of on-site contractors have been granted greater access to the 
property of the contracting employer connected to an organizing 
activity. The Board has also requested briefs that would allow 
even greater access to an employer's property.
    In one case, the Board moved to uphold an election tainted 
by intimidation of workers because the intimidation originated 
with nonparties to the election. According to the Board's 
logic, the outcome of an election can be overturned only when 
the threats by nonparties are ``so aggravated as to create a 
general atmosphere of fear and reprisals, rendering a free 
election impossible,'' end quote.
    Who will determine when a, quote, ``general atmosphere of 
fear and reprisals,'' end quote, exists? The worker who 
receives an anonymous call at their home or hears a voice 
promising to get even if the worker opposes union 
representation? Or a Federal bureaucrat?
    Actions taken by the Federal Government can send shockwaves 
across the country. At a time when our economy is struggling to 
get back on its feet and millions are desperate for jobs, 
employers and workers are paying close attention to the actions 
taken by leaders here in Washington. Policymakers in the 
Nation's capital must understand that even the most modest 
action can have a dramatic effect on our economy.
    The action taken by the NLRB against the Boeing Company is 
a good example. While the facts are still in dispute, the 
outcome of the case may significantly alter the manner in which 
employers invest in our economy and our workforce. I recognize 
the case is in the early stages of what will be a costly 
litigation, but I wonder if anyone seriously doubts the 
tremendous implications this case poses to our workforce and 
could possibly deny Congress' responsibility to consider those 
implications, ask questions, and determine what is the best 
interest of our workers and their families.
    Although this is just one of many cases presented to the 
NLRB, we must remember the Board does not operate in a vacuum. 
It is an arm of the Federal Government, and its decisions 
govern virtually every private workplace in the Nation. That is 
a tremendous power that comes with great responsibility to act 
on behalf of the public good. I am concerned that the Board has 
jettisoned this responsibility over the last 2 years in favor 
of an activist agenda designed to advance the cause of big 
labor over the rights of everyday workers.
    The committee has pledged to make job creation and American 
competitiveness the leading priorities. We have a job to do, 
and it includes overseeing the various boards, agencies, and 
departments within our jurisdiction to ensure that they do not 
undermine the strength of our workforce. Today's hearing is an 
important part of that effort.
    I would like to thank you all, the witnesses, again for 
your participation and will now yield to Mr. Andrews, our 
senior Democratic member of the subcommittee, for his opening 
remarks.
    Mr. Andrews?
    [The statement of Chairman Roe follows:]

        Prepared Statement of Hon. David P. Roe, M.D., Chairman,
         Subcommittee on Health, Employment, Labor and Pensions

    Good morning everyone. Welcome to our witnesses; thank you for 
joining us today.
    Today we will examine the role of the National Labor Relations 
Board in corporate campaigns. I realize this is a general definition of 
the term, but a corporate campaign is a union effort to disrupt an 
employer's routine business. The campaign can take the form of negative 
advertising, complaints filed against employers with various government 
agencies, and can even include appeals to political and religious 
leaders to put pressure on a targeted employer.
    The intent of these tactics is to undermine the reputation as well 
as break the will of an employer who refuses to accept union demands. 
In some cases, an employer can either concede to demands that may 
undermine the success of his or her business, or accept public 
contempt, government penalties, outside interference, and extraordinary 
litigation costs. Regardless of the potential outcomes, these campaigns 
can have a detrimental impact on a business' bottom line and threaten 
the livelihood of its workers.
    Over the years the use of corporate campaigns has accelerated. 
According to one study, between 1974 and 1999, only 200 corporate 
campaigns were identified. Yet in 2005 it was estimated that between 15 
and 20 corporate campaigns were underway at any given time. And 
recently the National Labor Relations Board has taken a number of steps 
to expand the arsenal of tactics available for a corporate campaign.
    The board has removed bannering restrictions previously placed on 
boycotts of neutral employers. Employees of onsite contractors have 
been granted greater access to the property of the contracting employer 
connected to organizing activity. The board has also requested briefs 
that could allow even greater access to an employer's property.
    In one case, the board moved to uphold an election tainted by 
intimidation of workers because the intimidation originated with 
``nonparties'' to the election. According to the Board's logic, the 
outcome of an election can be overturned only when the threats by 
nonparties are ``so aggravated as to create a general atmosphere of 
fear and reprisal rendering a free election impossible.'' Who will 
determine when a ``general atmosphere of fear and reprisal'' exists? 
The worker who receives an anonymous call at their home and hears a 
voice promising to ``get even'' if the worker opposes union 
representation? Or a federal bureaucrat?
    Actions taken by the federal government can send shockwaves across 
the country. At a time when our economy is struggling to get back on 
its feet and millions of Americans are desperate for jobs, employers 
and workers are paying close attention to the actions taken by leaders 
here in Washington. Policymakers in the nation's capital must 
understand that even the most modest action can have a dramatic effect 
on our economy.
    The action taken by the National Labor Relations Board against The 
Boeing Company is a good example. While the facts are still in dispute, 
the outcome of the case may significantly alter the manner in which 
employers invest in our economy and our workforce. I recognize the case 
is in the early stages of what will be costly litigation. But I wonder 
if anyone seriously doubts the tremendous implications this case poses 
to our workforce, and could possibly deny Congress' responsibility to 
consider those implications, ask questions, and determine what is in 
the best interest of our workers and their families.
    Although this is just one of many cases presented to the NLRB, we 
must remember the board does not operate in a vacuum. It is an arm of 
the federal government, and its decisions govern virtually every 
private workplace in the nation. That is tremendous power that comes 
with a great responsibility to act on behalf of the public good. I am 
concerned the board has jettisoned this responsibility over the last 
two years in favor of an activist agenda designed to advance the cause 
of Big Labor over the rights of every day workers.
    The committee has pledged to make job creation and American 
competitiveness its leading priorities. We have a job to do and that 
includes overseeing the various boards, agencies, and departments 
within our jurisdiction to ensure they do not undermine the strength of 
our workforce. Today's hearing is an important part of that effort.
    I would like to thank the witnesses again for their participation 
today, and will now yield to Mr. Andrews, the senior Democrat member of 
the subcommittee, for his opening remarks.
                                 ______
                                 
    Mr. Andrews. Good morning, Mr. Chairman.
    Good morning to the witnesses.
    And good morning, ladies and gentlemen.
    As I think about this hearing, I reflect upon a question 
that we should be asking, a question for which I think the 
answer is well-settled, and some questions that we shouldn't be 
asking.
    The question we should be asking is, how can we work 
together, as Republicans and Democrats, to address the problem 
that nearly 15 million Americans are unemployed as we meet here 
this morning? How can we come together and find ways to improve 
our investment climate, our business climate, our labor 
climate, so that we can put Americans back to work? I think the 
chairman was correct in saying that that should be the major 
focus of the committee. I just regret the fact that it really 
hasn't been. Not one jobs bill has come before this committee 
since January when the new majority took over.
    The second question that I think is a settled question is, 
when people in our system have a political dispute, when they 
disagree with each other over something, do they have the right 
to express themselves as to how they feel about that dispute? I 
think the answer is unequivocally, yes, they do, under the 
First Amendment of our Constitution, that if you hold strongly 
a political view, you have the right to express it. You 
certainly don't have the right to stop someone else from 
expressing their view; you don't have the right to defame 
someone. But you have the right to express your views.
    And some of the testimony we are going to hear this 
morning, I think, is actually an excellent example of the First 
Amendment at work, that you have one group that feels one way 
about a dispute and another group that feels another way about 
a dispute, and they take their disagreement to the public 
square and they make their point, and we settle our differences 
that way.
    So I think that this underlying notion that there is 
something unusual about political speech that involves a labor 
dispute is, in and of itself, unusual. I think the operating 
premise of our country is, people have the right to express 
themselves, and should express themselves, politically because 
it contributes to our dialogue.
    And then there is the third question I don't think we 
should be asking. The chairman said a few minutes ago about the 
Boeing case that the facts are still in dispute, I believe was 
the phrase that he used. Well, certainly, it is where the facts 
are in dispute that really needs to be noted. The facts are in 
dispute in front of an administrative law judge that will begin 
conducting a trial on June the 14th.
    So here is a situation where there is pending litigation 
before an administrative law judge, where the general counsel 
of the NLRB has made a decision to pursue an argument in that 
forum, and that argument is being vigorously defended by the 
other side in that forum. In the normal course of action, it 
would be that the judge who runs that forum would make a 
decision and the issue would run its course. If people disagree 
with the decision, they could take it eventually to the Federal 
court system, and the courts will decide who is right and who 
is wrong. And then we would have the opportunity to decide if 
we want to, in some way, alter or improve the law based upon 
the outcome of that decision.
    This is perhaps the most egregious example of putting the 
legislative cart before the litigation horse. There has been no 
decision in the Boeing case. The general counsel has pursued a 
claim; that claim will be litigated starting on the 14th of 
June, and a decision will be rendered.
    What I find the question is that we should not be asking is 
the question that, frankly, the chairman of the full committee 
and the chairman of the Committee on Oversight have been 
asking, which is for the general counsel to turn over his work 
product, his attorney deliberations, his trial strategy before 
the 14th of June. I think this is irregular. I think it is 
inappropriate. And I think that we should let the process go 
the way that it plays out.
    So we, Mr. Chairman, would rather this morning be talking 
about cooperating in ways that would create jobs, but we are 
once again having a hearing where we are rehashing some 
questions that I think have been settled and some questions 
that aren't ours to settle.
    But, with that in mind, we are glad the witnesses are here, 
and we look forward to robust dialogue. And thank you for the 
hearing.
    Chairman Roe. Thank you to the ranking member.
    It is now my pleasure to introduce our distinguished panel 
of witnesses. First, let me turn to my colleague from Indiana, 
Mr. Rokita, to introduce our first witness.
    Mr. Rokita?
    Mr. Rokita. Thank you, Mr. Chairman.
    It is my honor to introduce my friend and a great Hoosier, 
Mr. Dave Bego.
    Dave is the president and CEO and the founder of Executive 
Management Services in Indianapolis. He is an industry leader 
in the field of environmental workplace maintenance, which he 
founded in 1989. EMS prides itself on providing clients a 
single-source solution for commercial cleaning, facility 
services management, maintenance supply, security, and even 
landscaping.
    By 2006, EMS, Mr. Chairman, had grown to become a national 
company with approximately 5,000 employees servicing over 3,000 
facilities. That same year, the SEIU started a corporate 
campaign to organize EMS employees, which only recently 
concluded.
    Given that experience, he has been able to share his story 
through his book, ``The Devil At My Doorstep,'' which, Mr. 
Chairman, he asks me about once a month if I have read it. I 
read most of it. But the fact is, Mr. Chairman, I have lived 
this story with Dave Bego.
    And I thank him for his leadership. Instead of cowering or 
not being able to afford the cost of his story, like so many 
captains of industry do, he took the offensive and filed what I 
believe to be over 30 pieces of litigation, at the 
administrative and other levels, to fight back, and he won 
every case.
    Thank you. I yield back.
    Chairman Roe. I thank the gentleman.
    And welcome, Mr. Bego.
    Mr. Chet Karnas, our next witness, is the founder and 
president of Lone Sun Builders, Inc. Lone Sun Builders is a 
licensed general contractor located in Albuquerque, New Mexico, 
specializing in commercial construction and remodeling. In 
2004, the United Brotherhood of Carpenters initiated a 
corporate campaign against Lone Sun Builders, mailing negative 
letters to his clients and bannering his work sites.
    Welcome.
    Ms. Catherine Fisk is professor at the University of 
California Irvine School of Law. Ms. Fisk is an expert in labor 
and employment law. She has authored three books: ``Labor and 
Law in the Contemporary Workplace,'' ``Labor Law Stories,'' and 
``The Working Knowledge: Employee Innovation and the Rise of 
Corporate Intellectual Property.'' Ms. Fisk received her BA 
from Princeton University, JD from the University of 
California-Berkeley, and LLM from the University of Wisconsin.
    And welcome to the committee.
    Mr. Jonathan Fritts is partner of Morgan Lewis' labor and 
employment practice. Mr. Fritts' practice encompasses a broad 
range of labor and employment law matters, with a particular 
emphasis on labor matters arising under the NLRA and the 
Railway Labor Act. He is regional co-chair of the American Bar 
Association Committee on Practice and Procedure under the NLRA 
and an adjunct professor at Georgetown University Law Center. 
Mr. Fritts received his BA from the University of Virginia and 
his JD from Georgetown University Law Center.
    Welcome to the committee.
    Pursuant to Committee Rule 7(c), all Members will be 
permitted to submit written statements to be included in the 
permanent hearing record. And, without objection, the hearing 
record will remain open for 14 days to allow such statements 
and other extraneous material referenced during the hearing to 
be submitted for the official hearing record.
    [The information follows:]

  Prepared Statement of Hon. Joe Wilson, a Representative in Congress 
                    From the State of South Carolina

    Mr. Chairman, thank you for holding a hearing on corporate 
campaigns and the National Labor Relations Board. I would also like to 
thank Dave Bego, Chet Karnas, Jonathan Fritts, and Catherine Fisk for 
coming to speak with us this morning.
    From the moment the 112th Congress began, one of the main focuses 
for House Republicans has been to address job creation and job growth. 
Earlier this month, the U.S. Department of Labor announced that the 
national unemployment rate is 9.0 percent. This means over 13 million 
Americans are currently unemployed. That is why I am so concerned with 
the unemployment situation in our country, specifically in South 
Carolina. Recently, my home state has served as the center of a 
controversial holding involving the executive branch and a large 
manufacturer that has created thousands of jobs across the country.
    Businesses should have a right to contract where to work in the 
best interest of their shareholders and workers. We are now in an age 
that is unprecedented: the Boeing complaint is a threat to all right-
to-work states, not just South Carolina.
    Being a right to work state means employees in those states can 
choose for themselves whether or not to join a union. The NLRB decided 
to file a complaint against Boeing on behalf of a union, the 
International Association of Machinists and Aerospace Workers District 
Lodge No. 751. The complaint alleges Boeing ``transferred work'' of its 
787 Dreamliner assembly line from Washington state to South Carolina. 
However, not one single union employee suffered a detriment due to 
Boeing's decision to relocate. I believe this pursuit by the NLRB will 
be resolved quickly.
    I hope this hearing will provide clarity to these issues. I look 
forward to hearing what you all have to say on how we can move forward 
to focus on creating a climate that promotes job growth and job 
creation.
    I would like to ask a question of Mr. Fritts:
    1. In 2009, over 16,000 unfair labor practice charges were filed 
against employers. Approximately a third of the charges were found to 
have merit and only a portion of those resulted in an unfair labor 
practice conviction. How many unfair labor practice complaints have you 
defended? How many of those complaints were found to have merit? On 
average, how much does it cost an employer to defend an unfair labor 
practice charge? How can Congress stop frivolous administrative 
complaints?
                                 ______
                                 
    Chairman Roe. Now, before I recognize each of you to 
provide your testimony, let me briefly explain the lighting 
system. You will each have 5 minutes to present your testimony. 
When you begin, the light in front of you will turn green. When 
1 minute is left, the light will turn yellow. And when your 
time has expired, the light will turn red, at which point I 
would ask you to wrap up your remarks as best you can. And the 
chair will try to do the same thing.
    After everyone has testified, Members will have 5 minutes 
to ask questions of the panel.
    And now we begin. I would like to recognize the witnesses. 
I would like to start with Mr. Bego.

   STATEMENT OF DAVID A. BEGO, PRESIDENT AND CHIEF EXECUTIVE 
          OFFICER, EXECUTIVE MANAGEMENT SERVICES, INC.

    Mr. Bego. Well, thank you, Chairman Roe, distinguished 
members of the committee.
    Todd, thank you very much. You stole about the first 1 
minute of my speech.
    I thank you for having me here today. I think my story is 
not unique across this country. In fact, I think it is buried a 
lot. And I think everybody, including the people in this room, 
need to understand what happens with corporate campaigns.
    Before I go on, though, I would like you all to know that I 
am not anti-union. Before I started Executive Management 
Services in 1989, I worked for an agribusiness company out of 
Fort Wayne, Indiana, where I ran soybean processing plants and 
feed mills and grain elevators for almost 8 years. And I was 
kind of their turnaround specialist; I would have to go into 
plants that were underperforming and fix them.
    Invariably, what I found was that the processes, machinery, 
and everything was not the problem. The problem was, the people 
weren't engaged. And I spent a lot of time working with the 
people, getting the management staff working with the people, 
cleaning up break rooms and locker rooms, and turning the 
workforce around.
    Now, the key to this: Every one of those plants were union 
plants--Teamsters, grain millers, and others. I never had any 
problems with the rank-and-file union members. What I am about 
to talk about in the corporate campaign is really about big 
labor. It is not the rank and file.
    As Todd said, I started the company in 1989. It was just 
myself and my wife, and we started out with a $30,000 
investment in our savings account. And we progressed through 
the years, and, from my management style and perspective, in an 
entry-level-position company, which we are, we needed to take 
care of our employees. We started out offering health care and 
other benefits in the mid-1990s. We continued to grow until, by 
2005, at that point we were about 4,000 people in about 33 
States.
    And then the devil knocked at my doorstep, in the form of 
the Service Employees International Union, the SEIU. I received 
a letter from them that they wanted to talk to me about the 
benefits they could bring. I had a meeting with them, and at 
the meeting all the guy would tell me was, ``I want you to sign 
a neutrality agreement.'' And for those of you who don't know 
what a neutrality agreement is--and, by the way, he didn't have 
one with him; he just wanted me to sign it. And I told him, ``I 
have to read it first.''
    When he finally gave it to me about a month later, it is 
the genesis of the Employee Free Choice Act, card check. It has 
eliminated secret-ballot elections, has a gag order on the 
employers, expedites arbitration and contract negotiation. And 
one of the most fundamentally onerous provisions I have ever 
seen is you have to give a list of all your employees and their 
home addresses. Because it reverts to card check, that is so 
they could go and beat on their doors and intimidate them into 
signing cards.
    And if you don't think it is true, I invite you to read my 
book and the stories that are in it about it, because they did 
it to some of my employees anyway. I wrote the book because I 
was appalled at the tactics and the ruthlessness that they used 
against my employees, my customers, my company, and my family.
    You have to understand something about this. Corporate 
campaigns, for the most part, are not because the employees 
invited the unions to come in. And I would guess somewhere in 
the 90-percent-plus range. It is a business model. What they do 
is they target an area like ours, in 2005-2006, it was 
Indianapolis, Cincinnati, and Columbus, Ohio, and they also 
came after us in St. Louis and Pittsburgh. They look at it and 
say, ``If we can organize this many janitors, we can make this 
much money off of it.''
    When I finally met with them the last time before the war 
started, I said, ``Look, why don't we just have an election?'' 
And they said, ``No, we don't want to have an election. We want 
you to sign the neutrality agreement.'' And an employee from 
the Service Employees International Union looked at me and he 
says, ``Mr. Bego, you are not going to see the neutrality 
agreement, are you?'' I said, ``I have no intention of signing 
it. It is morally wrong. I cannot take my employees' free 
choice away by eliminating the secret-ballot elections. If you 
are going to have an election, fine.'' He said, no. He looked 
at me and said, ``We enjoy conversation, but we embrace 
confrontation. We are going to attack you, your employees, and 
your customers in the next 90 days.''
    That was a 5-year war that we won. And you know something? 
Today, our employees enjoy better wages and better benefits. 
They don't pay union dues. And I feel sorry for all my 
competitors who gave in and signed, because I will tell you, 
they are sorry too.
    [The statement of Mr. Bego follows:]

        Prepared Statement of David A. Bego, President and CEO,
                  Executive Management Services, Inc.

    Chairman Roe and Distinguished members of the Committee: My name is 
David A. Bego. For the past twenty (20) plus years, I have been the 
president and CEO of Executive Management Services, Inc. (hereafter, 
``EMS''), a janitorial and facilities maintenance company headquartered 
in Indianapolis, Indiana, which I founded in 1989. I appreciate the 
invitation and the opportunity to speak to you on a topic on which I 
have, unfortunately, become quite familiar. From 2005 through 2008, EMS 
was subjected to a vicious corporate campaign by the Service Employees 
International Union, Local 3, based, at the time, in Cleveland, Ohio. 
While the campaign ultimately failed, it was at a substantial cost, 
both in the financial sense, and in terms of reputational and 
relationship damage. In light of these experiences, I have become an 
advocate against forced unionism, against legislation providing 
political favor to labor unions, and against the current labor board's 
agenda to empower Big Labor.

Introduction
    I began EMS as a young entrepreneur with $30,000 and a dream of 
running a first-class company. Through hard work and good luck, EMS 
fulfilled my dream. EMS now has approximately 4,000 employees, 
maintains branch operations in twenty-two states, and services 
companies in thirty-eight states, as far east as New Jersey, and as far 
west as Utah. The EMS business model is to contract with companies for 
the provision of janitorial and maintenance services, to place our 
employees into customer facilities to provide such service, and to 
provide first class service through superior training and the proper 
tools and equipment. Unlike many of our competitors, our benefit is not 
necessarily reflected in the pricing. We do not cut corners to provide 
price advantages. Rather our edge is in our people, in the quality of 
our services, and in our ability to meet almost any customer need.
    Our company is unique in that, in addition to standard office 
cleaning, we also provide such services in industrial and other 
environments with unique needs. We provide our services in steel mills, 
in processing plants, in laboratories and medical offices, and in 
educational settings, in addition to the standard commercial office 
environment.
    We are on the forefront of the ``green'' movement. EMS is one of 
only two companies headquartered in the state of Indiana to obtain the 
GS-42 certification for green cleaning from ``Green Seal,'' a non-
profit organization devoted to setting environmental standards for 
cleaning, and promoting the use of environmentally responsible 
products, as well as providing education and training on 
environmentally friendly cleaning services and products. Such 
certification assures its customers that EMS is on the forefront of 
providing healthy and environmentally friendly services.
    I am not a person who is anti-union by nature. Nor am I one who 
believes that labor unions have necessarily exhausted their usefulness. 
Prior to my founding of EMS, I was employed by Central Soya as a 
supervisor in an experimental feed mill. As supervisor, I often 
supervised union employees. My perspective was that it did not matter 
whether the employees were union or not. To operate the mill 
effectively, the employees needed a clean and safe working environment, 
they needed to be treated fairly, and they needed to have the belief 
that management respected them. This philosophy served me well, as I 
was recognized as an individual with a unique ability to turn around 
problem mills and make them highly productive. In retrospect, perhaps 
this ``ability'' was not unique at all, rather just a philosophical 
belief in abiding by the ``Golden Rule.'' Such treatment should be 
applied to all employees, union or not. For purposes of full 
disclosure, I believe that there are situations, particularly where 
employees are in work environments, which involve substantial threats 
to their safety or health, that labor unions fulfill a great need to 
maximize worker safety. However, the existence of a union alone does 
not necessarily make one position better than an equivalent position 
without union representation.
    Unfortunately, events that have transpired over the past five to 
six years have made me aware of the efforts of certain labor unions 
attempt to impose forced unionism. This is an effort by labor unions, 
not to organize employees based on employee needs, but rather to 
organize companies, or at a minimum, subdivisions of a company, for the 
purpose of increasing membership and, ultimately, the union's political 
power. While the union rhetoric remains that they are acting for the 
benefit of the employee, their actions clearly indicate they are not. 
To be perfectly clear--this practice of forced unionism is one to which 
I am very much opposed.

Forced Unionism and the Push for EFCA
    A labor union's attempt at forced unionism is based on a business 
model. This model includes identification of a geographic area, 
identification of the potential business targets in that geographic 
area, and analysis of the total number of potential ``members'' which 
the union may acquire. It is simple statistical analysis. In many, if 
not most, cases there is no attempt by any employee of the companies 
targeted to reach out to the labor union for assistance.
    Once the labor union has identified the scope of its target, its 
representatives then reach out to the companies to be impacted. The 
representative approaches a key executive of the employer in a 
relatively friendly matter, requesting a meeting. When they are granted 
this meeting, the labor union representative informs the company that 
it intends to unionize the workforce and that it wishes for the company 
to sign a ``Neutrality Agreement'' in which the company will agree to 
remain ``neutral.'' \1\ The union's definition of ``neutrality'' 
however, is surprisingly one-sided. Per the terms of the the agreement, 
the company is required to (1) produce the names of all of it's 
employees and their contract information, (2) agree not to say anything 
negative about the union or otherwise interfere with their attempts to 
organize the company's employees, and (3) agree to accept the union as 
the representative of the company if they produce authorization 
cards\2\ for more than fifty percent (50%) of the class of employees. 
This automatic recognition would be in lieu of the holding of a secret 
ballot election by the National Labor Relations Board, the federal 
agency charged with the oversight of labor matters and the 
administration of such representation elections. The system proposed in 
the neutrality agreement is very much like the ``card check'' 
legislation that has been proposed under the misnomer of the ``Employee 
Free Choice Act,'' which has been before Congress on multiple occasions 
over the past several years, and which its proponents have been unable 
to pass.
---------------------------------------------------------------------------
    \1\ The Neutrality Agreement presented to Executive Management 
Services by the SEIU Local 3 for signature is enclosed as Attachment 1. 
EMS has obtained copies of other Neutrality Agreements entered into by 
the SEIU, and all are in substantially the same format as Attachment 1.
    \2\ The Union Authorization Card utilized by the SEIU local 3 is 
enclosed as Attachment 2.
---------------------------------------------------------------------------
    If the company refuses to sign the neutrality agreement, or if it 
otherwise takes action which the union finds, in its own definition, 
not to be ``neutral,'' the union begins to target the company through a 
variety of means, including smear campaigns, deceptive representations, 
filing of frivolous charges with government agencies, the targeting of 
the company's employees and customers, and other actions ultimately 
designed to force the company to capitulate to the union's demands.
    It does not make one bit of difference to the union who the company 
is, how well they treat their employees, how much better they pay their 
employees, or what benefits they provide. In short, the unions 
utilizing the forced unionization drives, ARE NOT, in any way, 
concerned with the best interests of the employees, and they are not 
motivated, by the ``injustices'' they allege to have been committed by 
the company.

The SEIU at My Doorstep
    Prior to 2005, I would not have believed such a scenario to 
actually exist. In that year, however, the SEIU came to my doorstep. It 
began with calls in December of 2005, and finally an arranged meeting 
with SEIU contract administrator Dennis Dingow in April 2006. Mr. 
Dingow provided the altruistic sales pitch of the SEIU--that they were 
interested in improving working hours and working conditions for 
janitors around the country. I pressed Mr. Dingow for details on the 
proposal he was setting forth. He was not forthcoming, but rather 
surprisingly evasive. I also asked for information as to which of our 
accounts the request for the union's representation had come from. Mr. 
Dingow did not have an answer. To date, I have received no information 
which leads me to believe that any of our employees took steps to 
affirmatively request the SEIU's assistance due to any work condition, 
wage or benefit, or other condition of employment.
    I indicated to Mr. Dingow that he needed to provide me details of 
what the SEIU intended. He responded that they intended to organize all 
of the janitors in the Indianapolis area, and this included those 
employed by Executive Management Services, Inc. It was the desire of 
the SEIU that EMS be ``neutral'' in the process. I responded that I 
believed that EMS would be. Mr. Dingow indicated that by ``neutral,'' 
he meant that they wanted EMS to sign a neutrality agreement.
    As I researched the issue more carefully, spoke with advisors, and 
generally became more educated on the issue, it became clear to me that 
I simply could not agree to that which the SEIU was asking. First, I 
was not willing to give my employees confidential contact information 
to the SEIU. I was not sure if I could legally do so, and more 
importantly, I felt that the employees would be angered by the company 
divulging such information. I also feared that the union might abuse 
such information by contacting employees at inappropriate times, 
bothering those who may be uninterested through repeat contact, or 
placing undue pressure on the employee to commit to its cause.
    Second, it seemed clear to me that if the employees wanted to have 
a union, they could choose to do so through a secret ballot election, 
in much the same manner as traditional elections are conducted. In this 
manner, their votes would remain private and, more importantly, there 
wouldn't be a concern as to whether the employees were being improperly 
persuaded or bothered. The system of ``card check,'' on the other hand, 
seemed to me to be both public and fraught with danger. Would 
organizers share the identities of employees who had abstained with 
those who had signed the cards? How would I know if organizers were 
harassing my employees? Would organizers attempt to meet them at their 
homes? While the rhetoric of the union is that they don't commit any 
undue influence, only in an election atmosphere are there proper 
safeguards to ensure that such influence is not exerted. In short, in 
my attempt to do that which was in the best interest of the employee, I 
simply could not see how it would be to their benefit to risk 
subjecting them to undue pressure, and to unilaterally sacrifice their 
right to vote on whether to be represented by this labor union.
    There were additional conversations and meetings with Mr. Dingow. 
Ultimately, however, he recognized that I was not going to sign the 
Neutrality Agreement. I stated such, but also told Mr. Dingow on 
several occasions I was amenable to the SEIU petitioning for an 
election and would live with the results. It was at this moment that 
the relationship truly turned adversarial for the first time. Mr. 
Dingow stated to me, ``Mr. Bego, we enjoy conversation but embrace 
confrontation. If you do not execute this Neutrality Agreement, we will 
begin to target you, your employees and your customers.'' Needless to 
say, Mr. Dingow's threat did not work. EMS did not capitulate, and a 
four-year, million-dollar battle ensued between EMS and SEIU ensued.
    On advice of our counsel, we instructed our managers to keep 
detailed records of the activities any organizing activity which 
occurred. We provided extensive training and instruction to our 
managers and supervisors on compliance with the National Labor 
Relations Act. Our various accounts were in close communication with 
our human resources department, and they, in turn, were in close 
communication with the executive staff and our legal advisors. What 
developed out of these efforts was a detailed record of the SEIU's 
corporate campaign against EMS. In addition to the noisy rallies and 
constant handbilling which typically occasion these campaigns, the 
actions of the SEIU included:
     From January 2007 to May 2008, the SEIU, not the employees 
of EMS, filed thirty-six unfair labor charges against EMS with the 
National Labor Relations Board. Approximately twenty-four of these were 
dismissed or voluntary withdrawn as having no merit. The remainder was 
resolved pursuant to a settlement agreement entered into between EMS 
and the SEIU (discussed further below).
     The SEIU assisted in the filing of three complaints with 
the Occupational Safety and Health Administration (or the state 
equivalent agencies). Two of these complaints alleged acts against EMS 
in facilities in which we were not present. The third made allegations 
that EMS required its employees to dispose of human body parts from 
biological labs. This, of course, made our customer very worried and 
generated a phone call from the appropriate governmental agency. 
However, we were able to quickly resolve and dismiss the concern.
     The SEIU paid religious leaders to support its cause, 
including distributing letters against EMS, holding rallies, and 
staging sit-ins and hunger strikes. At one point, this group of 
religious leaders requested that I meet with them. I did so, and found 
their motivations to be based on lack of knowledge and misinformation 
provided by the union. For example, this group believed that the wages 
and benefits provided by EMS to its employees were inferior to those, 
which had been secured by the SEIU to other accounts in the geographic 
area and in similar areas. Union contracts that have been obtained by 
EMS have proven this not to be the case.
     Over a dozen members of the SEIU trespassed into one of 
the largest buildings in downtown Indianapolis, and one of the largest 
accounts of EMS, and caused to be released hundreds of purple balloons 
into the building's five-story atrium.\3\
---------------------------------------------------------------------------
    \3\ Attachment 3 consists of a photograph taken during the event of 
the SEIU's balloon release in the atrium of a building in downtown 
Indianapolis.
---------------------------------------------------------------------------
     The SEIU staged a lemonade stand on a public street at 
which they provided free lemonade to passer-bys if these persons would 
call the CEO of a customer of EMS and request that they cease business 
with EMS and find a ``responsible'' contractor. The SEIU even supplied 
the cell phone from which these calls were made.
     The SEIU accessed the roof of the Western Southern 
Insurance corporate headquarters in Cincinnati, Ohio and hung a massive 
multi-story banner.\4\
---------------------------------------------------------------------------
    \4\ Attachment 4 is a photograph of the banner hung from the 
rooftop of the corporate headquarters of Western Southern Insurance. 
``Justice for Janitors'' is a reference to a campaign in which the 
SEIU, including SEIU Local 3, was involved.
---------------------------------------------------------------------------
     The SEIU filed frivolous charges with the NLRB, and then 
distributed fliers indicating that EMS was under investigation by the 
``federal government'' for ``unfair labor practices,'' including the 
harassment and intimidation of its employees.
     Distributed fliers making unsubstantiated allegations of 
civil rights violations.\5\
---------------------------------------------------------------------------
    \5\ A copy of one of the flyers alleging ``civil rights abuses'' is 
attached as Attachment 5.
---------------------------------------------------------------------------
     The SEIU utilized religious organizations to interfere 
with the international business affairs of a customer of EMS, in an 
effort to pressure the customer cease business with EMS. This included 
paying for a disgruntled employee of EMS to be flown to London to 
embarrass the customer at an economic conference.
     On Halloween night in 2007, the SEIU had children trick or 
treat in my residential neighborhood. The children were instructed to 
hand out fliers at each house they went to for candy. These flyers 
claimed that buildings cleaned by EMS were ``Houses of Horror'' where 
employees were abused and mistreated every night.\6\ Meanwhile, union 
organizers were in cars driving the streets of my neighborhood!
---------------------------------------------------------------------------
    \6\ See Attachment 6.
---------------------------------------------------------------------------
     Organizers continually harassed our employees trying to 
coerce them into signing union cards.
     The SEIU Infiltrated local governments to obtain favorable 
decisions for the SEIU, and used politicians in an attempt to have EMS 
contracts canceled in favor of responsible contractors, a euphemism for 
union contractors.
    The details of the campaign are more fully set forth in my book, 
The Devil at My Doorstep.\7\ The examples above are but a small 
sampling of the hundreds of tactics we were forced to endure. By these 
examples, however, it is my hope to demonstrate the manner in which the 
SEIU utilized government agencies and the media in general to 
accomplish their own objectives. This campaign against EMS was a prime 
example of their utilization of the strategy of a ``death by a thousand 
cuts.''
---------------------------------------------------------------------------
    \7\ For more information on the book The Devil at My Doorstep, 
visit http://www.thedevilatmydoorstep.com.
---------------------------------------------------------------------------
    It is important to understand that, throughout this process, I 
consistently communicated to the SEIU that EMS was happy to participate 
in an election. In June 2007, I even took out an advertisement in the 
Indianapolis Star calling on the SEIU to either ``Fish or Cut Bait.'' 
\8\ I did not want to continue through this campaign, and hoped that 
through the court of public opinion I could place pressure on them to 
agree to an election, in which I was confident the employees would 
choose not to go with the SEIU as their bargaining representative. This 
did not work, as the SEIU simply did not have any interest whatsoever 
in an employee election.
---------------------------------------------------------------------------
    \8\ The newspaper advertisement inviting the SEIU to engage in a 
secret ballot election is included as Attachment 7.
---------------------------------------------------------------------------
    On September 25, 2007, EMS was notified by a representative of the 
SEIU that seven of EMS's workers several of which we believed to be 
union salts were going on strike--a first in the nearly twenty year 
history of EMS. Eventually a total of ten workers (out of approximately 
350 in the Indianapolis area) went on strike, representing 
approximately three percent (3%) of our Indianapolis workforce. The 
notice indicated that the strike was due to unfair labor practices. We 
knew based on the activities of the union to date, that this was not 
true.

The Involvement of the NLRB
    In May 2008, following nearly two (2) years of picketing, 
harassment, wrongful accusations, and defamatory language, I agreed to 
enter into a settlement agreement with the SEIU with an intent and hope 
of ending the entire campaign. Both EMS and the SEIU had filed unfair 
labor practices charges with the NLRB against the other. By entering 
this agreement, the SEIU was agreeing to no longer picket or threaten 
to picket EMS in Central Indiana. EMS was required only to abide by the 
provisions of the National Labor Relations Act, which I believe had 
been done any way. In my mind, there was little reason not to enter 
this agreement. By the Agreement, there was no finding that EMS had 
engaged in any wrongdoing, and no admission by EMS as to such. Had 
either of these elements been a requirement of settlement, I almost 
certainly would not have agreed to execute the document. Entering the 
Settlement Agreement was simply an attempt to put the events of the 
corporate campaign behind me.
    Shortly after execution of the Settlement Agreement, however, I was 
notified by the union that eight (8) workers that had gone on strike 
were demanding reinstatement. Upon consultation with my attorneys, I 
refused. From the start, it was clear that the worker's strike was a 
recognitional strike with economic motivations. The signs that were 
carried in the course of the picketing, and the handbills which were 
distributed, consistently made reference to ``worker wages,'' ``health 
care,'' ``worker benefits,'' and ``working conditions,'' or they made 
generally reference to EMS not being a ``responsible'' company. It was 
rare when a handbill referenced an unfair labor practice. The strike 
simply did not have a ``unfair labor practice'' component to it.
    Upon receiving notice of EMS' refusal to reinstate the employees, 
the union again filed multiple unfair labor practice charges against 
EMS. We were comfortable that the NLRB would rule in our favor on the 
issue. The settlement agreement itself identified that the SEIU had 
engaged in illegal recognitional picketing when it had not filed a 
petition with the board to be recognized as the bargaining 
representative of the employees, and had set forth the union's 
agreement not to engage in any further picketing of Executive 
Management Services in Central Indiana or engage in secondary 
boycotting against EMS where the purpose was to force EMS to recognize 
bargain with the SEIU.
    To our shock, the NLRB, an agency whose mission statement clearly 
states it is bound to protect the secret ballot election and administer 
the NLRA act fairly without prejudice to employees, employers and 
unions, agreed with the SEIU and the General Counsel filed charges 
against EMS for refusing to reinstate the employees in retaliation for 
their support of the union. It was the position of the NLRB that EMS 
had engaged in unfair labor practices, and that this--at least in 
part--motivated the employees to engage in a strike, and that because 
the strike was an unfair labor practice strike, the employees had the 
right to reinstatement.
    The position was absolutely preposterous. The SEIU had concocted an 
elaborate scheme involving the filing of a frivolous charges by 
organizers, not EMS employees, to convey the illusion of a multitude of 
``unfair labor practices'' to support the notion that the strike was 
motivated by the unfair labor practices. Despite this, the NLRB, in the 
settlement agreement, had required the SEIU to no longer engage in 
illegal recognitional picketing and refrain from secondary boycotting. 
The NLRB was now reversing course and stating to EMS that it believed 
the picketing to have been motivated by unfair labor practices.
    I can only believe that the position taken by the NLRB was either 
motivated by bias by the General Counsel's office in favor of the local 
union, or was the result of gross incompetence. In reviewing the 
numerous handbills and picket sign, there can be no doubt that the 
strike was an attempt for recognition by the union, and was 
economically motivated. The record from the hearing also shows that 
some of the striking employees produced affidavits indicating that no 
unfair labor practices had been committed. Nevertheless, the NLRB 
utilized their testimony in an effort to prove the unfair labor 
practices, despite their previous affidavits.
    Further, it was absolutely clear in speaking with the employees, 
that the strike was completely motivated by economics. The employees 
appeared to have been coached in to discuss unfair labor practices in 
their testimony. They made reference to ``UPLs'' and ``unfair practice 
labors,'' as if to indicate that they knew they were to say something 
to this effect, but not fully understanding what it meant. In the 
decision rendered by Administrative Law Judge Arthur Amchan, he wrote, 
``* * * at many points it is clear to me that the testimony of General 
Counsel's witnesses is contrived and very likely to be untruthful.'' 
\9\ Executive Management Services, and Service Employees International 
Union, Local 3 and Service Employees International Union, Local 1, 
Cases 25-CA-30221, 25-CA-30223, 25-CA-30226, 25-CA-30266, 25-CA-30328, 
25-CA-30392, 25-CA-
---------------------------------------------------------------------------
    \9\ The link for Judge Amchan's decision may be found at Attachment 
8. 30459, 25-CA-30485, 25-CA-30486, 25-CA-30487, 25-CA-30489, 25-CA-
30553, 25-CA-30537, 25-CA-30690, 25-CA-30692, 25-CA-30693, 25-CA-30694, 
25-CA-30695, 25-CA-30697, 25-CA-30698 (2009) at page 5. Further, Amchan 
wrote, ``[the] record indicates at least several instance of outright 
fabrication.'' Id.
---------------------------------------------------------------------------
    When Judge Amchan rendered his decision in favor of EMS, it was my 
belief that the ordeal was finally finished. Once again, I was to be 
surprised. Despite the overwhelming evidence to the contrary, and the 
convoluted and clearly false testimony of the NLRB's witnesses, the 
General Counsel of the NLRB appealed Judge Amchan's decision to the 
five-member NLRB in Washington. In June, 2010, Chairperson Liebman, 
along with members Schumber and Pierce, issued a decision in favor of 
EMS finding that the strike was not, in any way, motivated by unfair 
labor practices, and was instead only a strike motivated by a desire to 
force the company to recognize the SEIU as the bargaining 
representative of the employees.\10\
---------------------------------------------------------------------------
    \10\ The link to the NLRB's decision is found in Attachment 9.
---------------------------------------------------------------------------
Current Actions of the NLRB
    As an individual who has witnessed first-hand the unsavory tactics 
employed by some labor unions in their corporate campaigns to force 
unionization on companies and their employees, I am troubled by the 
direction of the current labor board, their current path of 
implementing the agenda of big labor, and their unapologetic actions in 
contravention of the will of Congress. Over the past five to six years, 
Congress has failed to generate the support necessary to pass the 
disastrous Employee Free Choice Act (``EFCA''). The goal of EFCA was to 
provide labor unions the tools to bypass the secret ballot process to 
increase its struggling membership. The current labor board is 
accomplishing this goal through its rulemaking, overruling of case law 
precedent, and though the General Counsel's issuance of enforcement 
directives to the NLRB field offices. Much of the action that has been 
taken is designed to provide labor unions with greater ability to 
pressure employers and their employees to execute neutrality agreements 
and check cards without consequence. The NLRB has recently issued 
rulings expanding their rights without running afoul of rules on 
bannering, secondary boycotting, and even the making of verbal threats. 
These actions are all designed to increase the labor union's ability to 
utilize the card check process, rather than the traditional secret 
ballot.
    The question of why Congress left an exception to the secret ballot 
election open in the NLRA when it passed the Taft-Hartley amendment in 
1947 should be considered. Was it to provide labor unions with an 
opportunity to run smear campaigns against employers in the form of 
corporate campaigns? Or was it, as the language suggests, simply an 
avenue left available to unions and employers that decided to work 
conjunctively for the employees? If it was the later, have we been 
faced with years of erroneous case law which has led us to where we are 
today?
    Of further concern are the various memorandums issued by the 
interim General Counsel, wherein he has sought to broaden the fines and 
penalties that are assessed in situations involving violations of the 
National Labor Relations Act. While these policies appear neutral on 
their face, they are in fact a sword to be used by big labor in its 
corporate campaign arsenal when organizing employers. As was seen in 
the case of EMS, the labor union never hesitated to use the process of 
filing unfair labor practice charges in an effort to exert pressure to 
make EMS capitulate with its demands. Despite the fact that the union 
was unsuccessful on all of its charges, there was no mechanism to deter 
such behavior. To date, there exist no penalties against either unions 
or employers for filing frivolous claims with the NLRB or any other 
administrative agency. Until such laws are enacted, it should be 
expected that the labor unions will continue to use all weapons in its 
arsenal, as it is in their business model to do so.
    Finally, I fine it unfortunate that Congress has continued to allow 
the National Labor Relations Act to function as a biased and 
politically motivated piece of legislation. The Act is a creature of 
the legislature. Rather than drafting the legislation in such a manner 
as to control the process, thereby removing politics from the equation, 
Congress has left the NLRB with a tremendous amount of authority to 
dictate the outcome of labor matters. It should, therefore, be expected 
that without implementation of the proper safeguards and controls, this 
trend shall continue. So long as politicians receive benefits from 
their friends in big labor, the NLRB can never be independent and free 
from political influence, and its integrity shall always be 
compromised.
    Thank you again for the opportunity to present this information to 
you today. I am happy to provide the Subcommittee with additional 
information that it may deem to necessary or helpful, and to answer any 
questions from the members.
                                 ______
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                              ATTACHMENT 2



                              ATTACHMENT 3



                              ATTACHMENT 4




                              ATTACHMENT 5










                                ------                                

    Chairman Roe. Mr. Karnas?

            STATEMENT OF F. CHET KARNAS, PRESIDENT,
                    LONE SUN BUILDERS, INC.

    Mr. Karnas. Chairman Roe, Ranking Member Andrews, and 
members of the Subcommittee on Health, Employment, Labor, and 
Pensions, good morning. And thank you for the opportunity to 
testify before you today.
    In the interest of time, I request that my full testimony 
be included in the hearing record, please.
    My name is Chet Karnas. I am the president of Lone Sun 
Builders, a small framing and drywall subcontractor in 
Albuquerque, New Mexico. Lone Sun and its 55 employees are 
dedicated to providing quality work through ethical business 
practices, and we are very involved in our community.
    I also appear before you today on behalf of Associated 
Builders and Contractors. ABC represents more than 23,000 merit 
shop construction contractors, employing nearly 2 million 
workers. ABC's membership is bound by a shared commitment of 
merit shop philosophy based on the principles of 
nondiscrimination due to labor affiliation and the awarding of 
construction contracts through competitive bidding.
    I also am a Board of Directors position at AGC of America, 
as well.
    Lone Sun Builders started as a small company. As we grew, 
we cultivated a family atmosphere in which workers were taken 
care of and fairly treated. Today, Lone Sun is one of the most 
well-respected contractors in the State.
    Despite our reputation, or perhaps because of it, we have 
been targeted over the years by unions, particularly the 
carpenters' union. We have experienced corporate campaigns 
firsthand, during which unions engage in unethical coercion and 
intimidation in an attempt to smear responsible employers' good 
names.
    In the construction industry, unions do this to pressure 
merit shop contractors to sign neutrality agreements or become 
union signatories. If these objectives fail--and they often 
do--they use these tactics to try to put contractors out of 
business.
    Lone Sun has battled the aggressive corporate campaign 
tactics, including bannering, for several years now. But prior 
to that, our company enjoyed a professional and respectful 
relationship with the unions for more than 20 years. We all 
lived and worked in the same community, so the relationship was 
courteous and professional. We were all stakeholders in our 
community.
    Eventually, the carpenters' union decided to bring in 
organizers from other parts of the country, and the situation 
started to change. The carpenters' organizers sent letters to 
our clients, as well as developers and general contractors, 
which stated the union had a labor dispute with us, and they 
wrongly and falsely claimed that we did not provide benefits to 
our employees, which we do. We refuted the claims and 
publicized our excellent benefits program. Rather than engage 
in an open and constructive dialogue, the union told us to 
expect continued harassment.
    In 2008, the aggressive bannering campaign started, where 
``Shame On'' banners appeared on approximately one dozen of our 
construction sites. The carpenters displayed these large signs 
in front of our clients' buildings, emblazoned with 
inflammatory, unfounded claims about labor policies. And, on 
some projects, the client's name on the banners had not even 
hired us; they were tenants having work performed by general 
contractors or building owners and had no relationship with the 
contractors.
    The following year, the union escalated its campaign, to 
include mass pickets at several large projects. These pickets 
included vulgar chants, physical threats, name-calling, false 
accusations, trespass, blocking of egress and ingress. During 
the campaign, the carpenters showed up at a local church, where 
they disturbed services after repeated pleas to stop. They were 
eventually dispersed by the police at that event.
    Realizing that we needed to fight back to survive the 
union's undue treatment, we embarked on a campaign of our own 
to protect our integrity and our reputation. We do have 
something to protect, and that is our reputation.
    We generated media interest and launched a blog chronicling 
Lone Sun's experience with the carpenters' corporate campaign. 
We also learned, doing that blog, that the union was hiring 
outside laborers to engage in this behavior, paying them low 
wages and no benefits. It is ironic that a company like ours 
that pays excellent wages and has benefits would be picketed by 
people that don't have benefits and paid low wages.
    I firmly believe that our actions had a positive impact on 
the court of public opinion and it helped us avert complete 
disaster. But despite our efforts, business has still suffered, 
many clients were impacted, and many general contractors were 
reluctant to utilize our services, fearing the organizers' 
aggressive and vulgar presence. We estimate that we have 
suffered about a 20 to 30 percent decline in sales directly due 
to the negative impact of the carpenters' corporate campaign.
    As a responsible, ethical contractor with a workforce full 
of happy and well-compensated employees, I have to wonder, why 
us? Experience has taught me that I may never get the direct 
answer. All I know is that, as long as we remain defiant, the 
union seems ready to do anything it can to destroy our 
company's reputation.
    On behalf of Lone Sun Builders and ABC, I would like to 
again thank the committee for holding today's hearing. And I am 
pleased to see a renewed interest on Capitol Hill in the 
problems that corporate campaigns can cause for honest, 
hardworking merit shop contractors. I look forward to working 
with you on this issue.
    This concludes my formal remarks. Thank you.
    [The statement of Mr. Karnas follows:]

  Prepared Statement of F. Chet Karnas, President and Owner, Lone Sun 
    Builders, Inc., on Behalf of Associated Builders and Contractors

    Chairman Roe, Ranking Member Andrews and members of the 
Subcommittee on Health, Employment, Labor, and Pensions: Good morning 
and thank you for the opportunity to testify before you today on 
``Corporate Campaigns, the NLRB and the Impact of Union Pressure on Job 
Creation.''
    My name is Chet Karnas. I am the president and owner of Lone Sun 
Builders, Inc., a small framing and drywall subcontractor based in 
Albuquerque, New Mexico. Lone Sun provides hands-on project management, 
qualified supervision, timely and cost-efficient scheduling, and a 
certified safety program. Our mission is, and always has been, to 
provide quality with integrity through ethical business practices. Lone 
Sun's reputation is reinforced by our loyalty to and respect for our 
clients, vendors and, most importantly, our 55 employees.
    I also appear before you today on behalf of Associated Builders and 
Contractors (ABC). ABC is a national trade association representing 
more than 23,000 merit shop contractors that employ nearly two million 
workers whose training and experience span all of the 20plus skilled 
trades that comprise the construction industry. ABC's membership is 
bound by a shared commitment to the merit shop philosophy. This 
philosophy is based on the principles of nondiscrimination due to labor 
affiliation and the awarding of construction contracts through 
competitive bidding based on safety, quality and value.
Lone Sun Builders' Battle with Corporate Campaigns and Bannering
    Lone Sun Builders has simple roots, starting as a ``two guys and a 
pick-up truck'' operation. As we have grown to add more employees, we 
have chosen to operate our business like an extended family in which 
workers are taken care of and treated fairly. Today, Lone Sun has grown 
to be one of the most highly regarded subcontractors in the state, and 
a proud merit shop contractor.
    However, because Lone Sun sets the bar high among subcontractors, 
we have been repeatedly targeted by unions attempting to organize our 
employees. Unions have launched several ``corporate campaigns'' against 
us over the years, during which they have engaged in many unethical 
practices, including attempts to smear our name through ``bannering.'' 
In Lone Sun's experience, bannering has consisted of the union 
displaying large signs in front of our clients' (and other neutral 
third parties') places of business. These signs were emblazoned with 
inflammatory, unfounded claims about our labor policies, and designed 
to publicly humiliate and discredit us. These deplorable tactics are 
desperate attempts to unfairly gain market share by targeting merit 
shop construction companies and their clients--regardless of the wishes 
of their employees. In the construction industry, unions use bannering 
to threaten or coerce merit shop contractors' clients into hiring 
union-affiliated firms, or to force merit shop contractors to sign 
neutrality agreements or become union signatories. If these objectives 
fail--and they often do--they use bannering to try to put merit shop 
competition out of business for good.

More Amicable Times
    Lone Sun's experience with aggressive union bannering began almost 
four years ago, but it is important to note that we have had 
interactions with various divisions of the United Brotherhood of 
Carpenters for more than two decades. Initially, the relationship was 
professional and respectful, and involved the New Mexico District 
Council of Carpenters. From time to time, a local organizer would come 
out to Lone Sun jobsites to look around and ask employees why they were 
working for a merit shop company. After these visits, we would 
sometimes have discussions over coffee, where I would provide him with 
information about Lone Sun's wage structure and benefits program, as 
well as the community service we performed. In retrospect, I believe 
the non-threatening nature of our initial relationship with the 
carpenters was largely due to the fact that we lived and worked in the 
same community. We felt a connection through our mutual goal of 
positive future development in the area.
    After a few years, however, the situation started to change. My 
local union contact informed me that the District Council had decided 
to bring in organizers from other parts of the country--specifically 
Chicago and El Paso, Texas. I firmly believe the union felt it could 
more effectively execute aggressive organizing efforts and corporate 
campaigns if it utilized organizers that had not lived and worked in 
our community.

Shift to Aggressive Tactics
    Around 2004, when the District Council was folded into the Mountain 
West Regional Council of Carpenters, they began sending letters to Lone 
Sun's current and prospective clients stating the union had a ``labor 
dispute'' with us, wrongly claiming we ``did not provide benefits'' to 
our employees when we actually did (and still do). In fact, Lone Sun 
offers an excellent benefits program that includes health and life 
insurance, a public works pension plan and even a 401(k)--a rarity for 
our industry's tradesmen and laborers.\1\ As a continued commitment to 
our employees, we have steadily increased the amount we pay toward 
their health care premiums--currently 85 percent--and we cover 100 
percent of the premiums for our employees' life insurance. In addition, 
we offer trade-specific certifications, first aid training, 
Occupational Safety and Health Administration (OSHA) training and an 
apprenticeship program.
---------------------------------------------------------------------------
    \1\ Incidentally, Lone Sun's peers in the industry that are union 
signatories have stated that their benefits programs have become less 
solvent, with retirees being paid less as employer contributions are 
rising. In the area controlled today by the Southwest Regional Council 
of Carpenters, these contributions are scheduled to rise another .50 
cents per hour by the end of 2011.
---------------------------------------------------------------------------
    We responded to each of the union's letters with one of our own, 
countering the claims and providing an overview of Lone Sun's benefits 
program. In a preemptive move, we also provided letters and 
documentation to the New Mexico Department of Workforce Solutions, the 
governor of New Mexico, the lieutenant governor, state legislators, the 
president of the University of New Mexico, as well as developers, 
general contractors, owners, and trade and professional associations.
    At the same time, the new union organizers began to show up at 
jobsites claiming to be holding ``raffles'' in which employees were to 
submit their names, addresses and telephone numbers in order to win. 
Although none of the employees who signed up for the raffles ever won 
anything, most said they were contacted by the union. Some employees 
were even personally visited at their homes.
    In May 2006, the union organizers contacted us and we agreed to a 
meeting at our office.
    During the meeting, I mentioned their letter campaign and the 
raffles, and I once again reminded them about our benefits program, as 
well as our respect for union tradesmen and contractors. I discussed my 
friendships with other principal owners of union signatory contractors, 
and our commitment to the industry as a whole and our community at 
large. I told them I believed we should concentrate our efforts into 
making things better for everyone. At the end of the meeting, they 
remarked that they did not care for Lone Sun Builders, and would 
continue to harass me and my employees.
    The following year, the carpenters again reorganized into another 
larger regional council--this time referred to as the Southwest 
Regional Council of Carpenters. This group consolidated what originally 
was a small group of locals, with approximately 2,500 members, into a 
massive council in excess of 32,000 members. This allowed the 
carpenters to export their corporate campaign and bannering tactics 
from California, through Arizona and into New Mexico. Throughout the 
next two years, the carpenters sent letters to owners, contractors and 
developers stating they were engaged in a ``labor dispute'' with Lone 
Sun, and that they would be pursuing an ``aggressive public information 
campaign'' against us that would ``unfortunately impact all parties 
associated with projects where they are employed.''
    In 2008, the aggressive bannering started in earnest. The 
carpenters recruited day laborers to hold large signs, stating, ``SHAME 
ON'' the third party owners of businesses where Lone Sun performed 
work. On some projects, the entities named on the banners had not even 
hired us, or even the general contractor. In many cases, the owner or 
developer hired the contractors, and the end user--the tenant--was 
named on the banner. In all, Lone Sun was targeted with banners on 
approximately a dozen projects in 2008.
    In June 2009, the union organized a mass picket at a high-
visibility project in Santa Fe, New Mexico. The mass picket included 
vulgar chants, physical threats, name calling and false statements, 
including that Lone Sun paid employees in cash and did not provide 
health benefits. After the mass picket in Santa Fe, the carpenters 
duplicated the process at multiple sites, including a furniture outlet, 
a church and the University of New Mexico's Tamarind Institute. At this 
point, we knew we could not sit idly by and allow the unions to 
pressure us and our clients any longer.

Fighting Back Legally and Ethically
    Over the years our preferred response to the carpenters' actions 
had been direct dialogue with their representatives--always accompanied 
by explicit statements that the conversations were not to be construed 
as bargaining discussions. However, once the union became extremely 
aggressive, this method of communication failed. We attempted to 
contact the Southwest Regional Council's headquarters in Los Angeles 
multiple times, but they never responded. When members of the public 
and state legislators were similarly unsuccessful, we learned that it 
had become the union's procedure to not respond to inquiries into the 
motivations behind their actions. From time to time, they would promise 
to make a statement, but never did.
    In 2009, we embarked on a campaign to protect our company's 
integrity, and to educate as many professional organizations as 
possible in and around Albuquerque about the true motivation behind the 
carpenters' actions. We gave presentations to many local trade 
associations, employer groups, schools and press outlets, resulting in 
task forces, awareness materials and positive media coverage.
    We visited many of the carpenters' bannering sites around the 
area--regardless of whether Lone Sun was the target--and learned that 
the day laborers were not even union members. Instead, the carpenters 
used day laborers and paid them low wages, with no deductions or 
benefits. We, of course, found it ironic that these individuals had 
chosen to discredit a company with loyal employees who enjoy excellent 
pay and benefits.
    In 2009, we launched our blog, which chronicles Lone Sun's 
experience with the carpenters' corporate campaign. We also created our 
own banners, which read, ``LONE SUN BUILDERS--EMPLOYEE BENEFITS AND 
GREAT WAGES,'' and ``SHAME ON THE CARPENTERS UNION--HONESTY AND 
INTEGRITY ARE THE AMERICAN WAY--STOP THE LIES!'' We produced a brochure 
that provided photos of the union's banners at local hospitals and 
pharmacies, churches and schools, appealing to government officials and 
the business community to take action. We held a ``silent'' 
demonstration and community breakfast for friends and colleagues (and 
even welcomed the union picketers) at a local church where the 
carpenters had disrupted a service.
    I firmly believe our actions positively impacted public opinion in 
New Mexico and helped Lone Sun Builders avoid complete financial and 
professional ruin.

Aftermath
    Despite the outpouring of support we received from our community, 
and the successes of our own public education campaign, business has 
suffered greatly. Many of the clients and building tenants that were 
publically named on the union's banners also were impacted by the 
negative publicity. In addition, just as the carpenters intended, our 
general contractors became reluctant to utilize our services for fear 
of the negative publicity and the organizers' aggressive and vulgar 
presence. In all, we estimate that we have suffered a 20 percent to 30 
percent decline in sales directly due to the negative impact of the 
carpenters' corporate campaign. To date, prospective clients express 
concerns about working with us--and in many instances they have opted 
to go elsewhere for services.
    Even though business has been negatively impacted, we continue to 
promote our company and its skilled workforce, display our banners 
touting our benefits program, and contribute charitably to our 
surrounding community. In addition, Lone Sun's experience with union 
corporate campaigns is extensive and we have become knowledgeable in 
their tactics--and how to lawfully combat them.
    The last few years have taught Lone Sun that as long as we remain 
defiant and our employees express their unwillingness to organize, the 
union will continue to do anything it can to destroy our company and 
its reputation. The carpenters union has violated our property rights, 
issued false claims, made vulgar and threatening remarks, and vowed to 
put us out of business. To my disappointment, the National Labor 
Relations Board (NLRB) has recently signaled it will give them cover 
every step of the way.

The NLRB's Support of Corporate Campaigns and the Impact on Job 
        Creation
    The NLRB's recent actions clearly demonstrate the agency has 
abandoned its role as a neutral enforcer and arbiter of labor law in 
order to promote the special interests of politically powerful unions. 
These actions have negative implications for workers, consumers, 
businesses and the economy, and will inevitably invite greater union 
intimidation of employees, consumers and small businesses; trample 
private property rights; reduce employee access to secret ballots; and 
greatly limit the ability of U.S. businesses to quickly and flexibly 
adjust to the demands of global competition and a changing economy.
    The Board's September 2010 bannering decisions have been most 
disappointing for Lone Sun. In these cases, the Board took steps to 
protect this coercive practice, failing to apply longstanding laws 
against secondary union activity intended to prohibit confrontational 
conduct aimed at neutral parties, such as our clients.\2\ For decades, 
the ranks of construction unions have been dwindling, which is 
reflected in the fact that today, only 13 percent of construction 
workers belong to a union.\3\ This statistic, which illustrates a clear 
industry-wide choice not to organize, and leads unions to employ 
bannering and other desperate, unethical tactics. The NLRB's decision 
will no doubt embolden and encourage more unions to incorporate this 
practice into their already aggressive and irresponsible corporate 
campaign efforts.
---------------------------------------------------------------------------
    \2\ In consolidated cases known as United Brotherhood of Carpenters 
Local No. 1506 [355 NLRB No. 159 (2010)], the Board determined in a 3-2 
split decision that bannering is protected speech under federal labor 
law. In his dissent, Board Member Brian Hayes argued that bannering was 
nothing more than ``stationary picketing,'' and should be considered 
``secondary coercion,'' as originally intended by Congress in Section 
8(b)(4)(ii) of the National Labor Relations Act.
    \3\ U.S. Department of Labor, Bureau of Labor Statistics, Economic 
News Release: Union Members Summary, Jan. 21, 2011; available at: 
http://www.bls.gov/news.release/union2.nr0.htm.
---------------------------------------------------------------------------
    The Board also has made it easier for construction unions to engage 
in so-called ``salting'' abuse, in which they apply for work with merit 
shop contractors without being genuinely interested in performing that 
work, solely to provoke unfair labor practice charges and disrupt merit 
shop workforces.\4\ Endorsing the hiring of individuals whose 
motivation for seeking employment is the disruption of the workplace 
runs directly contrary to the Obama administration's efforts to grow 
our economy and improve working conditions for the American people.
---------------------------------------------------------------------------
    \4\ See KenMor Electric Co.; 355 NLRB No. 173 (2010).
---------------------------------------------------------------------------
    I understand the Board also is looking at whether employers can be 
forced to allow non-employee union agents to trespass on their premises 
for the purpose of harming their businesses if the employer has allowed 
access to other non-employee individuals or groups that have no 
intention of harming the business (such as the United Way or the Girl 
Scouts).\5\ This decision will have an enormous impact on employers' 
ability to shield customers, clients and employees from interference 
and harassment by union agents.
---------------------------------------------------------------------------
    \5\ See Roundy's vs. Milwaukee Building and Construction Trades 
(Case No. 30-CA-17185).
---------------------------------------------------------------------------
    In yet another recent case, the NLRB determined that threats of 
violence made by pro-union employees were acceptable because those 
threats did not meet the Board's vague, undefined standard of creating 
a ``general atmosphere of fear and reprisal.\6\ Lone Sun's policy is to 
not tolerate any threats of violence among our employees. It is 
disturbing that the Board does not share my view.
---------------------------------------------------------------------------
    \6\ See Mastec Direct TV; 356 NLRB No. 110 (2011).
---------------------------------------------------------------------------
    Regrettably, the NLRB's actions have been wholly consistent with 
the agenda set by the Obama administration, which has regularly put the 
interests of its union supporters ahead of fiscal responsibility and 
job growth. Through interpretations, regulations and executive orders, 
the administration has repealed union transparency requirements and 
consistently promoted union-backed policies, including flawed wage 
mandates under the Davis-Bacon Act and discriminatory project labor 
agreements (PLAs) on federal construction projects. The 
administration's policies cost taxpayers billions of dollars, 
negatively impact business opportunities for small businesses and limit 
employment opportunities for workers. PLAs, for example, discriminate 
against the vast majority (87 percent) of the construction workforce 
that chooses not to join a union by denying them an opportunity to work 
on federal projects.
    The NLRB remains the main offender, as far as Lone Sun is 
concerned. Just recently, the Board took unprecedented steps to mandate 
where and how a company can operate and expand its business. As I'm 
sure many of you would agree, the federal government has no right to 
dictate where a company can or cannot create jobs or to prevent 
companies from speaking about costs related to union actions.

Conclusion
    The Obama administration and the NLRB continue to pursue a labor 
agenda that stifles job creation and economic growth. With a current 
unemployment rate of nearly 18 percent in our industry, there is simply 
no place for corporate campaigns' disruptive and destructive 
practices.\7\ It is unfortunate that the Board has chosen to turn the 
clock back more than 60 years to a time when secondary boycotts 
threatened to paralyze the industry and stifle job growth. Regardless 
of the Board's behavior, ABC members like me will not be deterred from 
their dedication to the merit shop philosophy.
---------------------------------------------------------------------------
    \7\ U.S. Department of Labor, Bureau of Labor Statistics, 
Construction Sector at a Glance: Employment, Unemployment, Layoffs, and 
Openings, Hires, and Separations, April 2010; available at: http://
www.bls.gov/iag/tgs/iag23.htm.
---------------------------------------------------------------------------
    On behalf of Lone Sun Builders and ABC, I'd like to again thank the 
Education and the Workforce Committee for holding today's hearing. I am 
pleased to see the Committee take a renewed interest in the problems 
that corporate campaigns--bannering in particular--can cause for 
honest, responsible contractors, and I look forward to working with you 
on this issue. Mr. Chairman, this concludes my formal remarks. I am 
prepared to answer any questions you may have.
                                 ______
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                 
                                ------                                

    Chairman Roe. Thank you, Mr. Karnas.
    Ms. Fisk?

STATEMENT OF CATHERINE L. FISK, ESQ., LAW PROFESSOR, UNIVERSITY 
               OF CALIFORNIA IRVINE SCHOOL OF LAW

    Ms. Fisk. My name is Catherine Fisk. I am the Chancellor's 
Professor of Law at the University of California at Irvine. 
Thank you for inviting me to testify today.
    Corporations adopt codes of social responsibility for good 
reasons, and unions play an important role in helping companies 
adhere to their principles. A union corporate social 
responsibility campaign is designed to provide information to 
consumers, the public, and regulatory agencies about a 
company's labor practices. Thus, corporate social 
responsibility campaigns and union representation help protect 
good jobs for all workers--a goal endorsed by the House 
Committee on Education and Labor in 2007 in a pair of hearings 
on strengthening America's middle class.
    I will address two questions today: First, should the 
National Labor Relations Board protect the rights of employees 
and unions to publicize their concerns about labor practices? 
And, second, is the NLRB appropriately exercising its statutory 
power to enforce the Federal labor law? The answer to both 
questions is ``yes.''
    As to the first question, the First Amendment to the United 
States Constitution protects the right to speak out on matters 
of public concern, including a company's labor record. 
Displaying banners and picketing is one way to do this.
    Generally speaking, the National Labor Relations Board's 
past efforts to prohibit peaceful bannering and street theater 
have been rejected by the Federal courts. Quite rightly, 
therefore, the NLRB has now concluded that peaceful bannering 
and street theater cannot be prohibited by the National Labor 
Relations Act.
    In a number of cases in 2010, the Board exhaustively 
canvassed the law on leafleting, banners, and picketing in 
light of the Supreme Court's evolving First Amendment 
jurisprudence. The Board quite reasonably concluded that the 
display of a banner is closer to the leafleting protected by 
the Supreme Court in the DeBartolo case than it is to the 
picketing prohibited by the Supreme Court in the 1950 Teamsters 
case.
    The Board's decisions on banners are entirely reasonable. 
As the Supreme Court has emphasized for decades, the National 
Labor Relations Act gives the Board the responsibility to 
regulate and protect both worker and employer speech in the 
context of its labor relations setting.
    The First Amendment does, however, allow the government to 
prohibit threats. In deciding when a statement constitutes a 
threat, the court has held that the NLRB should consider the 
power employers have over employees who fear for their jobs. 
Thus, Federal law can and does prohibit statements like, 
``Sleep with me or you are fired,'' or, ``If you join a union 
or if you go on strike, I will fire you or eliminate your 
job.'' Thus, the Boeing case does not break new ground in the 
law and is entirely consistent with a half-century of labor law 
prohibiting employers from threatening to move or eliminate 
jobs, or from actually doing so, in retaliation for employees 
having exercised their statutory rights.
    Moreover, the mere fact of a corporate campaign does not 
coerce a company in violation of the Federal racketeering law. 
Several Federal courts have rejected RICO challenges to union 
efforts to organize through card check and neutrality 
agreements.
    Let me now turn to the second question: Is the NLRB 
appropriately exercising its powers to interpret and enforce 
the NLRA?
    There is no basis for suggesting that the decision of the 
acting general counsel to issue a complaint in Boeing and the 
Board's request for amicus briefs in the Specialty Healthcare 
case is evidence that the Board is somehow exceeding its 
statutory authority.
    While it is not unheard of for Members of Congress to 
criticize the Board when its decisions on important matters of 
labor law and policy are contrary to the Members' own 
preferences, it is important not to allow criticism of past 
decisions or concerns about the general direction of Board law 
to become efforts to coerce or intimidate the Board into 
resolving disputed issues of law and fact in pending cases.
    As an independent agency that exercises powers to 
adjudicate cases subject to deferential review in the United 
States court of appeals, the NLRB is obligated by the National 
Labor Relations Act to decide cases based on evidence adduced 
in an evidentiary hearing. Due process, a constitutional right, 
requires any entity that formally adjudicates cases based on 
law and fact, including the NLRB and Federal and State trial 
courts, to have a degree of independence from legislative 
intervention.
    The Board's recent decisions in the area of labor protests 
are entirely consistent with the trend in the United States 
Supreme Court's First Amendment jurisprudence. They are, 
moreover, a reasonable agency response to the fact that the 
agency's prior and less speech-protective approach to 
leafleting, bannering, and other speech was inappropriate.
    Whatever the views of the current congressional majority 
about the trend in the NLRB's case law on labor protests or 
other areas, there will be time enough for the losing party in 
those cases to seek review in the Federal courts of appeals. 
Congress should allow the Board to continue its work without 
intervention.
    Thank you.
    [The statement of Ms. Fisk follows:]

Prepared Statement of Catherine L. Fisk, Chancellor's Professor of Law, 
                    University of California, Irvine

    My name is Catherine L. Fisk. Thank you for the opportunity to 
testify before the House of Representatives Subcommittee on Health, 
Employment, Labor and Pensions on the way in which the NLRB has 
regulated corporate (also known as comprehensive or corporate social 
responsibility) campaigns.
    Since 2008, I have been the Chancellor's Professor of Law at the 
School of Law, University of California, Irvine. Previously, I was the 
Douglas Blount Maggs Professor of Law at Duke University School of Law, 
where I taught from 2004 to 2008, and was on the faculty of a number of 
other law schools since 1991. I am the co-author of a casebook, Labor 
Law in the Contemporary Workplace (West Publishing Co. 2009), as well 
as two other books on labor and employment law (Labor Law Stories 
(Foundation Press 2005) and Working Knowledge: Employee Innovation and 
the Rise of Corporate Intellectual Property (UNC Press 2009). I have 
published dozens of articles on labor and employment law in leading law 
reviews. I regularly teach Labor Law, Employment Law, Employment 
Discrimination Law, and a course on the legal profession, and 
previously have taught Civil Procedure, Legislation, and specialized 
courses on the law of the workplace, labor markets, and employee 
intellectual property. I am admitted to the bar in California and in 
the District of Columbia (inactive in DC), and have briefed and/or 
argued cases in state and federal trial and appellate courts.

I. The Benefits of Corporate Social Responsibility Campaigns in a Free 
        Society with a Market Economy
    The topic of this hearing raises significant issues at the 
intersection of labor law and the United States Constitution. A union 
corporate social responsibility campaign is designed to provide 
information to consumers, the public, and relevant regulatory agencies 
about a company's labor practices, including its wages, health and 
safety record, and environmental practices. Thus, at the heart of a 
corporate social responsibility campaign is the right to speak on 
matters of public concern and to petition government for the redress of 
grievances. See James J. Brudney, Collateral Conflict: Employer Claims 
of RICO Extortion Against Union Comprehensive Campaigns, 83 Southern 
California L. Rev. 731, 733 (2010). Corporate social responsibility 
campaigns are thus within the First Amendment's protections of freedom 
of association and the right to petition government for the redress of 
grievances, as well as freedom of verbal and written speech, including 
the dissemination of handbills and other written texts, the use of hand 
gestures, picketing, the display of placards and banners, symbolic 
conduct, and the expenditure of money to support or oppose political 
candidates and issues.
    The Court's recent and strong protection for the First Amendment 
rights of companies (Citizens United v. Fed. Election Comm'n, 130 S. 
Ct. 876, 908 (2010), organizations (Boy Scouts of America v. Dale, 530 
U.S. 640 (2000) (First Amendment protects right of Boy Scouts to 
discriminate against gays)), and individuals (United States v. Stevens, 
130 S. Ct. 1577 (2010) (individual right to create, possess and sell 
offensive depictions of animals)) is based on a longstanding belief 
that in a democratic society with a market economy, the best protection 
for both liberty of conscience and robust economic growth lies in the 
electorate, consumers, and citizens having access to a full range of 
information on which to base their political, social and economic 
choices. As the Court recently emphasized: ``The First Amendment 
confirms the freedom to think for ourselves.'' Citizens United, 130 S. 
Ct. at 908. Each of these decisions strikes some as wrong as a matter 
of policy and constitutional interpretation, but for the moment they 
are the law.
    The purpose of corporate social responsibility campaigns is to 
provide workers, consumers, and citizens with the information we need, 
as the Court put it in Citizens United, ``to think for ourselves'' 
about which products to buy, which businesses to patronize, and where 
to work. Corporations adopt codes of corporate responsibility for a 
reason, and there is no basis to restrict the ability of workers and 
their unions to hold companies to the policies and values they 
announce. There is no evidence that providing workers and consumers 
information about companies' labor practices and safety records has any 
adverse effect on the economy. Indeed, to the extent that workers and 
consumers are empowered by information to choose jobs and to patronize 
businesses that pay good wages and have strong safety and environmental 
records, the economy is strengthened. Elementary principles of 
economics show that information facilitates efficient transactions, 
prevents negative externalities, and prevents a race to the bottom in 
which companies gain a competitive advantage by driving down wages and 
externalizing the environmental or other safety costs of their 
operations.
    Corporate social responsibility campaigns are designed to 
strengthen the middle class, a goal which the House Committee on 
Education and Labor in the 100th Congress endorsed in a pair of 
hearings on ``Strengthening America's Middle Class'' in 2007. See H. 
Rep. No. 110-23, text accompanying notes 25-43 (2007). As the House 
Report produced from those hearings found, the decline of unionization 
and the associated decline in wages and rise in economic insecurity 
have had devastating effects on the size and security of the American 
middle class, even as corporate profits have soared. Id. Employees who 
are paid well are more likely to have money to spend, which bolsters 
the economy. Indeed, Congress specifically found when it enacted the 
Wagner Act 1935, at the depth of the Great Depression, that promoting 
the rights of workers to unionize would eliminate the bargaining and 
wage inequality that ``tends to aggravate recurrent business 
depressions, by depressing wage rates and the purchasing power of wage 
earners in industry and by preventing the stabilization of competitive 
wage rates and working conditions within and between industries.'' 29 
U.S.C. Sec. 151. Employees with decent wages and benefits are more able 
to pay taxes to support education and infrastructure. They are less 
likely to depend on public assistance. Employees with decent wages and 
benefits are more likely to have health care for themselves and their 
children and are less likely to have to work two jobs. Decent wages 
support strong families and strong communities. See Steven Greenhouse, 
The Big Squeeze: Tough Times for the American Worker (2009).
    Workers and their unions perform a valuable role when they 
publicize the labor records of companies and urge those sympathetic to 
their view to support their efforts to ensure that people work for good 
wages in safe conditions. It is well known that unionized workplaces 
are generally better paid. In 2010, the median usual weekly earnings of 
full-time workers who are union members is $917, whereas for nonunion 
workers it is $717. That is not a lot of money: it works out to $47,684 
for a 52 workweek year, as compared to $37,284 for a nonunion worker, 
but the difference could be huge for a family struggling to make ends 
meet. Unionized workplaces are more likely to provide employee health 
insurance. Unionized workplaces are more likely to provide defined 
benefit pension plans, which (like Social Security benefits) provide a 
more secure retirement by placing the risk of economic downturn on the 
plan rather than on the individual. Union workers are more likely than 
nonunion workers to enjoy freedom from wage discrimination based on 
gender, race, or ethnicity. See U.S. Department of Labor, Bureau of 
Labor Statistics, Union Members in 2010, Jan. 21, 2011; U.S. Department 
of Labor, Bureau of Labor Statistics, National Compensation Survey: 
Employee Benefits in Private Industry in the United States, March 2008, 
August 2008.

II. The First Amendment and Worker Free Speech Rights
    The First Amendment protects speech that most people value, 
including the right of people and political candidates to speak on 
political issues (Brown v. Hartilage, 456 U.S. 45 (1982) (political 
candidate has a right to promise in an election campaign to work for a 
lower salary)), the right to take out advertisements in newspapers 
criticizing government officials for failing to protect civil rights 
(New York Times v. Sullivan, 376 U.S. 254 (1964)), the right to display 
flags, Stromberg v. California, 283 U.S. 359 (1931), and the rights of 
both workers and employers to speak on issues relating to unionization, 
wages, and working conditions, NLRB v. Gissel Packing Co., 395 U.S. 575 
(1969). The First Amendment also protects speech that many appreciate 
but some find problematic in some circumstances, such as the right of 
companies to advertise. Central Hudson Gas v. Public Serv. Comm'n, 447 
U.S. 557 (1980). And, in a free society, the First Amendment 
necessarily also protects speech that many people find offensive, 
including picketing at women's health clinics and military funerals, 
Snyder v. Phelps, 131 S. Ct. 1207 (2011); Schenck v. Pro-Choice 
Network, 519 U.S. 357 (1997); Madsen v. Women's Health Center, Inc., 
512 U.S. 753 (1994), the burning of crosses and flags, Texas v. 
Johnson, 491 U.S. 397 (1989); United States v. Eichman, 496 U.S. 310, 
318 (1990), and burning a cross on a person's lawn, RAV v. City of St. 
Paul, 505 U.S. 377, 391 (1992).

            A. The Contemporary First Amendment Protection for 
                    Picketing and Protest
    In recent years, the Court has made clear that picketing--including 
displaying signs and people patrolling--is protected speech under the 
First Amendment that enjoys the highest level of constitutional 
protection when it addresses any matter of political, social or other 
concern to the community. Thus, the Court upheld picketing at a 
military funeral, Snyder v. Phelps, 131 S. Ct. 1207 (2011), and 
picketing outside clinics that provide family planning services, 
Schenck v. Pro-Choice Network, 519 U.S. 357 (1997); Madsen v. Women's 
Health Center, Inc., 512 U.S. 753 (1994). Even offensive and 
intimidating speech and symbolic conduct is protected by the First 
Amendment. Snyder, 131 S. Ct. at 1216 (``The arguably `inappropriate or 
controversial character of a statement is irrelevant to the question 
whether it deals with a matter of public concern' '' and is thus 
entitled to the highest level of First Amendment protection), quoting 
Rankin v. McPherson, 483 U.S. 378, 387 (1987)).
    The First Amendment protection generally means that government 
cannot prohibit or regulate speech or symbolic conduct expressing a 
political message based on content unless the regulation is narrowly 
tailored to a compelling governmental interest. Turner Broadcasting 
System, Inc. v. Federal Communications Comm'n, 520 U.S. 180 (1997). The 
government can prohibit threats, Virginia v. Black, 538 U.S. 343 
(2003), and can consider the coercive power employers have over 
employees in deciding which employer statements to employees are 
threats (``sleep with me or you're fired'' or ``if you join a union, 
I'll fire you''). See NLRB v. Gissel Packing Co., 395 U.S. 575 (1969); 
NLRB v. Exchange Parts Co., 375 U.S. 405 (1964). But saving the targets 
of offensive speech from psychological or economic harm is usually not 
a compelling governmental interest. Thus, the Court struck down 
prohibitions on flag burning, Texas v. Johnson, 491 U.S. 397 (1989); 
United States v. Eichman, 496 U.S. 310, 318 (1990), on burning a cross 
on a person's lawn, RAV v. City of St. Paul, 505 U.S. 377, 391 (1992), 
on shouting at women entering a medical clinic seeking family planning 
services, Schenck, 519 U.S. 357; Madsen, 512 U.S. 753, and on picketing 
at a military funeral blaming the soldier's death on God's vengeance 
for American tolerance for gays and lesbians, Snyder, 131 S. Ct. 1207. 
The Court has struck down prohibitions on picketing directed at 
individuals in residential neighborhoods when the prohibition 
discriminated on the basis of subject matter. Carey v. Brown, 447 U.S. 
455, 465 (1980). Thus even when it is alleged that the picketing 
infringes the rights of the targets of the protest by making it harder 
for them to run their business without disruption, the Court has 
rejected regulation.

            B. The Older Rules Applicable to Labor Picketing
    Given the robust contemporary First Amendment protection for 
picketing and protest, the treatment of labor picketing is anomalous. 
In International Brotherhood of Teamsters v. Vogt, the Court upheld a 
state law prohibiting peaceful picketing by union members at a work 
site because picketing ``involved more than just communication of ideas 
* * * since it involves patrol of a particular locality and since the 
very presence of a picket line may induce action of one kind or 
another, quite irrespective of the nature of the ideas which are being 
disseminated.'' 354 U.S. 284, 289 (1957). Since then, the Court has 
upheld against constitutional challenge the application of federal 
labor law to picketing encouraging a strike by employees other than 
those employed by an entity with whom the picketing employees have a 
labor dispute. NLRB v. Denver Building & Construction Trades Council, 
341 U.S. 675 (1951). The implicit rationale of these cases is that 
labor picketing is a uniquely persuasive form of speech that induces 
union members to refuse to work regardless of their views on the merits 
of the labor dispute. In upholding a prohibition on picketing calling 
for a consumer boycott of a business if a successful boycott would 
threaten the business with ruin or substantial financial loss, the 
Court emphasized the harm that picketing can cause when consumers are 
persuaded of the union's message. NLRB v. Retail Store Employees Union, 
Local No. 1001 (Safeco Title Ins. Co.), 447 U.S. 607 (1980).
    Under current First Amendment doctrine, these decisions are 
difficult, if not impossible, to justify. In the first place, they 
allow Congress to treat picketing engaged in by employees affiliated 
with a labor union more harshly than other picketing. Today, such a 
distinction would fail, inasmuch as the Court has struck down bans on 
worksite picketing and worksite calls for consumer boycotts when 
engaged in by civil rights activists. Police Department of the City of 
Chicago v. Mosley, 408 U.S. 92 (1972); NAACP v. Claiborne Hardware Co., 
458 U.S. 886, 912 (1982). The Court recently affirmed that the First 
Amendment prohibits differential regulation of speech depending on the 
identity of the speaker: ``[T]he Government may commit a constitutional 
wrong when by law it identifies certain preferred speakers. By taking 
the right to speak from some and giving it to others, the Government 
deprives the disadvantaged person or class of the right to use speech 
to strive to establish worth, standing, and respect for the speaker's 
voice. The Government may not by these means deprive the public of the 
right and privilege to determine for itself what speech and speakers 
are worthy of consideration.'' Citizens United v. Fed. Election Comm'n, 
130 S. Ct. 876, 899 (2010). Second, the old labor picketing cases allow 
government to proscribe speech based on its content: picketing 
requesting workers to withhold their labor is prohibited; picketing 
urging workers to work or requesting consumers to withhold their 
patronage is not. Today, of course, this sort of content-based or 
viewpoint-based regulation is unconstitutional, as content-based 
restrictions are invalid unless strict scrutiny is met. Mosley, 408 
U.S. 92; Carey, 447 U.S. 455. Finally, the notion that labor picketing 
can be prohibited because it is so persuasive to workers and consumers 
sympathetic to labor's causes is simply impossible to square with the 
rest of free speech jurisprudence, which does not allow government to 
prohibit speech simply because some find it persuasive.
    The anomalous treatment of labor picketing can be understood as an 
historical artifact when we recall that the Supreme Court developed the 
law of labor picketing before it developed its modern robust 
protections for picketing and other forms of symbolic speech. Thus, it 
made sense to the Court in the 1950s to hold that picketing was not 
pure speech because it involves conduct (walking). Although there was 
some judicial protection for symbolic speech before 1950, it was not 
until the late 1960s that the Court clearly articulated a test for 
First Amendment protection for symbolic speech and increased the 
constitutional protection for it. Once the Court expanded First 
Amendment protection for symbolic conduct in the 1960s and 1970s, 
United States v. O'Brien, 391 U.S. 367 (1968) (burning draft cards); 
Spence v. Washington, 418 U.S. 405 (1974) (hanging a United States flag 
upside down with a peace symbol affixed to it), the differential 
treatment of labor picketing lost its conceptual moorings.
    As First Amendment protection for picketing by civil rights and 
other groups has expanded in recent decades, the Court has begun to 
accord greater First Amendment protection to non-picketing labor 
protest. In essence, the Court distinguishes between labor picketing 
(still subject to the old cases) and other forms of peaceful labor 
protest, which enjoys constitutional protection more akin to that 
enjoyed by civil rights and other protest. Thus, the Court held that 
labor handbilling at a work site is not prohibited by federal labor 
law. DeBartolo Corp. v. Florida Gulf Coast Trades Council, 485 U.S. 568 
(1987). The Court reasoned that the distribution of handbills is 
``expressive activity'' and that ``legislative proscription of such 
leaflets would pose a substantial issue of validity under the First 
Amendment.'' 485 U.S. at 576. Similarly, in holding that the NLRA does 
not prohibit picketing urging a consumer boycott of a product, the 
Court reasoned that its construction of the statute ``reflect[s] 
concern that a broad ban against peaceful picketing might collide with 
the guarantees of the First Amendment.'' NLRB v. Fruit and Vegetable 
Packers, Local 760 (Tree Fruits), 377 U.S. 58, 63 (1964). Similarly, 
the Court has read the federal labor laws to protect the rights of 
employees to distribute newsletters and leaflets in the workplace 
urging workers to support legislation and political candidates 
protective of workers' rights. Eastex, Inc. v. NLRB, 437 U.S. 556 
(1978).
    In attempting to reconcile the older cases upholding regulation of 
labor picketing with recent cases affording expansive protection for 
picketing, handbilling, and other forms of verbal and symbolic speech, 
the Court has emphasized that the federal labor laws strike a 
``delicate balance between union freedom of expression and the ability 
of neutral employers, employees, and consumers to remain free from 
coerced participation in industrial strife.'' NAACP v. Claiborne 
Hardware Co., 458 U.S. 886, 912 (1982). The NLRB is obligated to 
construe the NLRA so as to maintain that delicate balance in the facts 
of each case. Its decisions are entitled to deference if the factual 
determinations are supported by substantial evidence on the record as a 
whole, its interpretation of the statute is rational, and ``its 
explication is not inadequate, irrational, or arbitrary.'' 29 U.S.C. 
Sec. 159(e); Allentown Mack Sales and Serv., Inc. v. NLRB, 522 U.S. 
359, 364 (1999).
    The continuing vitality of the Supreme Court's labor picketing 
cases may be doubtful given the Court's expansive protection for 
picketing on myriad other topics, including issues pertaining to fair 
treatment at work. Police Department of the City of Chicago v. Mosley, 
408 U.S. 92 (1972). Nevertheless, the law of labor picketing and 
protest draws two crucial distinctions: (1) whether the speech is 
picketing or is instead handbilling, or other comparably expressive and 
non-coercive communication, and (2) whether the speech is at a worksite 
and is directed at workers or whether it is directed at consumers or 
the public. The law with respect to two categories of labor speech is 
settled under Supreme Court law: picketing directed at workers can be 
regulated, and handbilling directed at consumers cannot. DeBartolo 
Corp. v. Florida Gulf Coast Trades Council, 485 U.S. 568 (1987). The 
Supreme Court has not addressed the outer limits of regulation of labor 
picketing directed only or primarily at the public, nor has it 
addressed the constitutional permissibility of prohibiting non-
picketing speech directed only or primarily at workers, at least when 
the speech occurs at the worksite and when it does not call for an 
immediate work stoppage.
    This leaves two categories of labor protest of uncertain status: 
peaceful picketing directed at the public (which is generally protected 
by the statute, but whose constitutional status has not been addressed) 
and dissemination of leaflets, display of banners, and other comparable 
forms of pure speech or non-coercive conduct directed at workers 
(which, similarly, is generally protected by the statute but whose 
constitutional status has not been addressed by the Court). It is these 
two categories of speech that the Board has recently held entitled to 
First Amendment protection.

            C. The Lower Court and NLRB Approaches to Labor Protest
    In the absence of Supreme Court precedent, the NLRB and the federal 
courts of appeals have reached an array of conclusions on the statutory 
and constitutional protection for picketing directed at the public and 
leafleting and other non-coercive protest directed at workers. Although 
the cases are not entirely consistent, overall they have found 
protection for such expression. Three types of protest activity have 
drawn the most litigation: display of banners; distribution of 
handbills; and various forms of street theater, including the 
appearance at a worksite of employees dressed up in rat costumes and 
the staging of mock funerals. As will be explained below, generally 
speaking the NLRB's past efforts to prohibit peaceful bannering and 
street theater have been rejected by the federal courts. It is entirely 
appropriate--indeed, it is explicitly contemplated by the statutory 
scheme--that the Board has now concluded that peaceful bannering and 
street theater cannot be prohibited by the NLRA.

                        1. BANNERS AND LEAFLETS

    The courts of appeals have held that the display of a banner may 
not be prohibited by the NLRA unless the message on the banner would 
lead consumers and passersby to conclude that the worksite is dangerous 
or unhealthful. In Overstreet v. United Brotherhood of Carpenters, 409 
F.3d 1199 (9th Cir. 2005), on public sidewalks some distance from 
retailers that contracted with contractors using non-union labor and 
paying low wages, the Carpenters Union displayed banners reading 
``Shame on [name of retailer]'' in large letters, with the words 
``Labor Dispute'' in smaller letters underneath. The NLRB General 
Counsel issued a complaint against the Carpenters Union and sought an 
injunction against the activity under section 10(l) of the NLRA. The 
court of appeals rejected the General Counsel's interpretation of the 
statute and held that the bannering was protected by the First 
Amendment and could not be equated with signal picketing prohibited 
under the Supreme Court's labor picketing jurisprudence. The court 
explained:
    [T]he reliance on the physical presence of speakers in the vicinity 
of the individuals they seek to persuade * * * is no basis for lowering 
the shield of the First Amendment or turning communication into 
statutory ``coercion.''
    Nor are the union members' activities ``coercive'' for any reason 
other than their physical presence. The union members simply stood by 
their banners, acting as human signposts. Just as members of the public 
can ``avert [their] eyes'' from billboards or movie screens visible 
from the public street, they could ignore the Carpenters and the 
union's banners. If anything, the Carpenters' behavior involved less 
potential for ``coercing the public than the handbilling in DeBartolo, 
as there was no one-on-one physical interaction or communication.'' 409 
F.3d at 1214.
    When the message on the banner would lead consumers to conclude 
that the targeted business is dangerous or unhealthful (as where the 
union displayed a banner saying ``This Medical Facility is Full of 
Rats''), a divided panel of the Ninth Circuit, over the dissent of 
Judge Kozinski, held the banner was defamatory. San Antonio Community 
Hospital v. Southern California District Council of Carpenters, 125 
F.3d 1230 (9th Cir. 1997). Distinguishing other cases in which unions 
had referred to employers as ``rats'' on the ground that the audience 
would know that rat is a slang term of art for an employer paying 
substandard wages, the court found that passersby might think that the 
hospital in this case had a rodent problem. Id. at 1235. Alternatively, 
if a union distributes handbills to workers (rather than to consumers 
and the public) and a work stoppage immediately ensues, a divided panel 
of the D.C. Circuit held that the handbilling was tantamount to 
picketing urging a strike and could be prohibited. Warshawsky & Co. v. 
NLRB, 182 F.3d 948 (D.C. Cir. 1999).

                     2. STREET THEATER AND THE RAT

    In labor disputes across the country, workers and their unions have 
engaged in a variety of forms of street theater as protest. In a few 
cases, workers staged a mock funeral accompanied by signs proclaiming 
that patronizing the target business ``should not be a grave 
decision.'' Sheet Metal Workers' International Association, Local 15 v. 
NLRB, 491 F.3d 429 (D.C. Cir. 2007); Kentov v. Sheet Metal Workers, 
Local 15, 418 F.3d 1259 (11th Cir. 2005). In another few cases, 
employees dressed up in rat costumes and strolled around public 
sidewalks near job sites with leaflets complaining that targeted 
businesses were rats because they paid substandard wages. Construction 
& General Laborers Local Union 4 (Quality Restorations), Case 13-CC-
2006, Advice Memorandum (January 19, 1996) (individual dressed as a rat 
who patrolled in front of association confronted customers or employees 
and thus was not engaged in protected free speech). Northern California 
Regional Council of Carpenters, Cases 32-CC-1469-1; 32-CC-1480-1; 32-
CC-1482-1; 32-CC-1483-1; 32-CB-5451-1, Advice Memorandum (October 31, 
2002) (person in rat costume who patrolled in front of employer 
premises was confrontational and coerced employers and thus violated 
section 8(b)).
    At least one protest involved inflating a 16-foot-tall balloon in 
the shape of a cartoon rat. Sheet Metal Workers' Int'l Assn, 491 F.3d 
at 432. In other cases, janitors have conducted sing-alongs on the 
sidewalk outside of commercial office buildings or paraded around with 
mops and brooms. Service Employees Union Local 87, 312 NLRB 715 (1993). 
And in at least one instance which appears never to have resulted in a 
published agency or judicial decision, hotel room cleaners supported 
their demand for better wages by wheeling a bed onto a public sidewalk 
outside a hotel and demonstrated the physically arduous labor of 
changing the sheets on hotel beds.
    There have been only a few court of appeals decisions on the 
permissibility of worker street theater, and they have reached 
conflicting conclusions. The D.C. Circuit, in an extensive and 
scholarly opinion by Chief Judge Douglas Ginsburg, held that the mock 
funeral could not constitutionally be prohibited, Sheet Metal Workers' 
Int'l Assn, 491 F.3d at 439. The Eleventh Circuit, in an opinion by 
Judge Kravitch, held that the mock funeral was more like picketing than 
it was like leafleting and thus could be prohibited. Kentov, 418 F.3d 
at 1266. Because review may be had in the D.C. Circuit in any case 
decided by the NLRB, 29 U.S.C. Sec. 159(f), it is not unreasonable for 
the Board to follow the D.C. Circuit's guidance and hold that banners 
and street theater cannot constitutionally be prohibited under section 
8(b).
    The NLRB's recent efforts to reconcile its own jurisprudence on the 
distinction between picketing, leafleting, bannering, and street 
theater are entirely reasonable. In Eliason & Knuth, 355 NLRB No. 159 
(2010), the Board exhaustively canvassed the Supreme Court's and its 
own prior treatment of picketing and other labor protest in light of 
the Court's historical and evolving First Amendment treatment of the 
various forms of symbolic speech. The Board quite reasonably concluded 
that the display of a banner is closer to the leafleting protected by 
the Court in DeBartolo than to the picketing prohibited in Vogt and its 
progeny. See also Carpenters Local Union No. 1506 (Marriott), 255 NLRB 
No. 219 (2010) (following Eliason & Knuth). The Board concluded in 
Southwest Regional Council of Carpenters, 356 NLRB No. 88 (2011), that 
the display of banners is not prohibited by the statute even if the 
banners are at construction sites rather than at places frequented by 
the general public. The Board concluded that the bannering cannot be 
prohibited in the absence of evidence that the display of a banner is 
intended as a covert signal to engage in an illegal secondary work 
stoppage (as might be the case if the employees picket) rather than as 
an effort to persuade workers, consumers, and other friends of labor 
about the harm caused by the employers paying substandard wages.
    These recent efforts to reconcile the First Amendment rights of 
workers to publicize the nature of their labor dispute with the Supreme 
Court's treatment of labor picketing are entirely reasonable. As the 
Supreme Court has emphasized for decades, the National Labor Relations 
Act gives the Board the responsibility to regulate and protect both 
worker and employer speech ``in the context of its labor relations 
setting.'' NLRB v. Gissel Packing Co., 395 U.S. 575 (1969). See also 
NLRB v. Exchange Parts Co., 375 U.S. 405 (1964). In both Gissel and 
Exchange Parts the Court deferred to the Board's determination of 
whether particular speech was protected or prohibited by the NLRA. The 
Board has for 75 years attempted to decide, based on the evidence in 
cases and its expertise in labor relations, which speech by employees 
and by employers should be protected by the NLRA, prohibited by the 
NLRA, or left unregulated. Given that the weight of court of appeals 
decisions have rejected the Board's previous efforts to prohibit 
peaceful dissemination of leaflets or display of banners, as discussed 
above, and given the Supreme Court's recent unequivocal First Amendment 
protection for picketing and other protest, the Board reasonably has 
concluded that bannering and leafleting are not prohibited by section 
8(b) of the NLRA. The Board would also be reasonable to conclude that 
other forms of symbolic speech, including street theater such as the 
rat and mock funerals, cannot be proscribed unless the conduct blocks 
ingress or egress to the property or contains false and defamatory 
statements. Indeed, given the Supreme Court's recent 8-1 decision in 
Snyder v. Phelps upholding offensive picketing at military funerals, 
the Board's prior jurisprudence allowing extensive prohibitions of 
worker protest based on its content and even its viewpoint is 
constitutionally suspect. Thus, the Board is well within its broad 
statutory authority to interpret the NLRA in light of workplace 
realities and to develop a labor policy that grants robust protection 
to worker speech. Indeed, its decisions in this area are all but 
compelled by the protection courts of appeals and the Supreme Court 
have granted to non-picketing labor protest.

            D. Corporate Social Responsibility Campaigns Do Not Violate 
                    RICO
    The title of this hearing suggests possible concern about whether 
union corporate social responsibility campaigns are desirable as a 
matter of policy or permissible as a matter of law. Inasmuch as they 
are designed to enforce workers' statutory rights to unionize and to 
inform consumers and workers about a company's labor, safety, and 
environmental practices, they are good policy. Whatever one's views 
about their desirability as a matter of policy, however, there is no 
basis in law for an outright prohibition. As noted above, to the extent 
that a corporate social responsibility campaign involves publicity 
about a company's labor, safety, or environmental record, it is 
protected by the First Amendment. To the extent that it involves 
invoking regulatory proceedings or litigation challenging the legality 
of particular practices, the usual rules governing meritorious 
litigation apply. But to the extent that the argument is that the mere 
fact of a corporate campaign, including an effort to secure recognition 
through card-check and a neutrality agreement, coerces a company, the 
law is on the unions' side. To date, several federal courts have 
rejected RICO challenges to union efforts to organize through card 
check and neutrality agreements. Cintas Corp. v. UNITE HERE, 601 F. 
Supp. 2d 571 (S.D.N.Y.), aff'd, 355 F. App'x 508 (2d Cir. 2009); 
Wackenhut Corp. v. Service Employees Int'l Union, 593 F. Supp. 2d 1289 
(S.D. Fla. 2009). See generally Brudney, supra, 83 S. Cal. L. Rev. 731.

III. Congress Should Not Interfere With the NLRB's Adjudication of 
        Pending Cases
    It appears from the public commentary of some Members of Congress 
that some of the NLRB's recent decisions on labor protest and other 
topics, along with the decision of the Acting General Counsel to issue 
a complaint one case, have caused consternation. While it is not 
unheard of for Members of Congress to criticize the Board when its 
decisions on important matters of labor law and policy are contrary to 
the Members' own preferences, it is important not to allow criticism of 
past decisions or concerns about the general direction of Board law to 
become efforts to coerce or intimidate the Board into resolving 
disputed issues of fact in pending cases. There is no basis for 
suggesting that the decision of the Acting General Counsel to issue a 
complaint in one case and the Board's request for amicus briefs in 
another is evidence that the Board is somehow exceeding its statutory 
authority. Specialty Healthcare and Rehabilitation Center of Mobile and 
United Steelworkers, District 9, 15-RC-8773, and Boeing and 
International Ass'n of Machinists District Lodge 751, 19-CA-32431.
    As an independent agency that exercises powers to adjudicate cases 
subject to deferential review from the courts of appeals under the 
substantial evidence standard, Universal Camera Corp. v. NLRB, 340 U.S. 
474 (1962), the NLRB is obligated by the National Labor Relations Act 
to decide cases based on evidence adduced in an adversary hearing. Its 
adjudicatory processes are relatively formal as compared to those of 
many agencies. It acts in the place of a United States District Court 
in enforcing the statutory rights of individuals and entities. Like any 
entity that adjudicates cases based on law and fact, including federal 
and state trial courts, principles of separation of powers and due 
process necessitate a degree of independence from legislative oversight 
as the agency carries out its adjudicatory role.
    Although a number of federal court decisions have addressed the 
propriety of Congressional interference in agency processes, the most 
closely on point is Pillsbury Co. v. Federal Trade Commission, 354 F.2d 
952 (5th Cir. 1966). In Pillsbury, a Senate subcommittee interrogated 
the Chair of the FTC and members of his staff regarding a pending case 
and expressed views on how it should be decided. After the FTC later 
decided the case along the lines suggested by the Senators, the court 
of appeals found the Senate inquiry to be improper and to have 
infringed the due process rights of the litigants to a ``fair trial'' 
and to be free from the ``appearance of impartiality.'' Id. at 964. The 
court of appeals said that when a congressional investigation ``focuses 
directly and substantially upon the mental decisional processes of a 
Commission in a case which is pending before it, Congress is no longer 
intervening in the agency's legislative function, but rather, in its 
judicial function.'' Id. Accord: Koniag v. Andrus, 580 F.2d 601, 610 
(D.C. Cir. 1978) (holding that a letter sent from a chair of a House 
committee to the Secretary of Interior regarding the Secretary's review 
of decisions of the Bureau of Indian Affairs created the appearance of 
a compromise of the Secretary's impartiality and remanding to the new 
Secretary of the Interior for a fair and dispassionate treatment of the 
matter).
    Later cases that have rejected challenges to Congressional 
interference in agency processes have emphasized that the interference 
did not express a view on the merits but was instead intended only to 
expedite the decision, Gulf Oil Corp. v. Federal Power Commission, 563 
F.2d 588 (3d Cir. 1977), or that there was no evidence that the 
intervention had an effect on the agency's decision, ATX, Inc. v. U.S. 
Dep't of Transp., 41 F.3d 1522, 1529-30 (D.C. Cir. 1994); State of 
California v. Federal Energy Regulatory Comm'n, 966 F.2d 1541, 1552 
(9th Cir. 1992), or that the agency proceeding was informal, United 
States ex rel. Parco v. Morris, 426 F. Supp. 976 (E.D. Pa. 1977). See 
generally Morton Rosenberg & Jack H. Maskell, Congressional Research 
Serv., RL 32113, Congressional Intervention in the Administrative 
Process: Legal and Ethical Considerations (2003).

Conclusion
    The Board's recent decisions in the area of labor protest are 
entirely consistent with the trend in the United States Supreme Court's 
First Amendment jurisprudence. They are, moreover, a reasonable agency 
response to the fact that the agency's prior and less speech-protective 
approach to leafleting, street theater, and other non-picketing protest 
met with hostility from several federal courts. Wholly apart from the 
question whether the recent cases upholding worker protest rights are 
compelled by the First Amendment, there is no evidence that robust 
protection for employee speech has any adverse effect on job creation 
or the health of the American economy, and there is some evidence 
suggesting that it helps both the economy and the polity by enabling 
consumers and workers make informed decisions to support companies that 
adopt responsible labor and environmental practices that are consistent 
with the consumers' and workers' values.
    Whatever the views of the current Congressional majority about the 
trend of the NLRB's case law on labor protest or other areas, there 
will be time enough for the losing party in those cases to seek review 
in the federal courts of appeals and for Members of Congress to call 
hearings to criticize the decisions later. To interfere with the 
Board's adjudication of pending cases jeopardizes the due process 
rights of all the parties to the case and casts doubt on the ability of 
the administrative state to fairly adjudicate the statutory and 
constitutional rights of the parties that appear before it.
                                 ______
                                 
    Chairman Roe. Thank you, Ms. Fisk.
    And Mr. Fritts?

STATEMENT OF JONATHAN C. FRITTS, ESQ., PARTNER, MORGAN, LEWIS & 
                            BOCKIUS

    Mr. Fritts. Chairman Roe, Ranking Member Andrews, members 
of the subcommittee, thank you for inviting me to testify 
today. I am honored to appear before you.
    I am a partner in the law firm of Morgan, Lewis & Bockius. 
I represent employers in many industries regulated by the 
National Labor Relations Act.
    The act serves an important function in our national 
economy. Its primary purpose is to encourage unions and 
employers to resolve their disputes peacefully through the 
collective bargaining process. The act protects the right of 
employees to strike and the right of employers to lock out, but 
the act does not assume that the parties will be engaged in a 
constant state of industrial warfare. To the contrary, the act 
assumes that the threat of a strike or lockout will provide a 
strong incentive for the parties to resolve their disputes at 
the bargaining table. Once the parties reach an agreement, the 
act assumes that there will be labor peace during the term of 
the agreement.
    This system of collective bargaining was designed at a time 
when the strike was the primary weapon used by labor to exert 
pressure on an employer. What has changed in recent years is 
that unions increasingly believe that the strike is an 
ineffective weapon, so they are abandoning it in favor of the 
corporate campaign.
    Whereas the act carefully regulates the right to strike, 
corporate campaigns are difficult to regulate because they 
involve conduct that is arguably protected by the First 
Amendment. Strikes also differ from corporate campaigns in that 
a strike necessarily entails a loss of pay for the striking 
employees, which creates an incentive to resolve their dispute 
as quickly as possible. In contrast, corporate campaigns result 
in little or no economic harm to the employees, which means 
that the union can engage in a prolonged campaign without any 
real pressure from the employees to resolve the dispute.
    Before I discuss some recent NLRB decisions that involve 
corporate campaign tactics, I want to express my respect for 
the Board and its many employees who have dedicated their 
careers to administering the act. The issues presented to the 
Board often do not have easy answers, and there are multiple 
interests at stake. The interests of employees, unions, and 
employers are often in conflict, but a balance must be reached. 
It is said that people who work in labor relations are doing 
their job well when everyone is angry with them. I think that 
saying holds true for the Board.
    Employers seem to be more upset with the Board these days 
than unions or employees. The Board has issued a number of 
decisions that provide additional weapons for unions and 
employees to use against their employer in a corporate 
campaign.
    One of these cases holds that unions have the right to 
display large banners calling for a boycott of a secondary 
employer without violating the act's secondary boycott 
provisions. Another case held that employees of AT&T had the 
right to wear T-shirts that said ``inmate'' on the front and 
``prisoner of AT&T'' on the back while they were on the job and 
visiting AT&T's customers in their homes. And another recent 
case held that off-duty employees of a restaurant located in a 
hotel had the right to distribute handbills to hotel customers 
while on hotel property.
    There has been a lot of publicity surrounding the acting 
general counsel's decision to prosecute a complaint against 
Boeing based on its decision to locate some additional 787 
assembly work in South Carolina rather than at its union-
represented facilities in Washington State and Oregon.
    What is remarkable to me about the Boeing case is that the 
acting general counsel found that Boeing satisfied its duty to 
bargain with the machinists' union over the decision to locate 
this work in South Carolina. The Board found that the union had 
waived its right to bargain on the issue in its collective 
bargaining agreement with Boeing.
    In my view, the prosecution of the Boeing case does not 
advance the core purpose of the act, which is to promote 
industrial peace through the process of collective bargaining. 
The Boeing dispute arguably was resolved at the bargaining 
table when the union recognized Boeing's right to determine the 
location where the work will be performed. Instead, the dispute 
has exploded into an intense public relations campaign as a 
result of the acting general counsel's prosecution.
    Because Board litigation often takes years to resolve, the 
dispute is not likely to end anytime soon. This is an 
unfortunate outcome for all parties, regardless of who 
ultimately prevails in the litigation.
    This concludes my prepared testimony. Thank you.
    [The statement of Mr. Fritts follows:]

           Prepared Statement of Jonathan C. Fritts, Partner,
                      Morgan, Lewis & Bockius LLP

    Chairman Roe, Ranking Member Andrews, and Members of the 
Subcommittee, thank you for your invitation to participate in this 
hearing. I am honored to appear before you today.
    By way of introduction, I am a partner in the law firm of Morgan, 
Lewis & Bockius LLP, where I represent employers in many industries 
under the National Labor Relations Act, including manufacturing, 
construction, maritime, retail food, and higher education. I am also an 
Adjunct Professor at Georgetown University Law Center, where I co-teach 
a course on labor law with a retired chief counsel of the National 
Labor Relations Board. Beginning in September 2011, I will serve as the 
management co-chair of the American Bar Association's Committee on 
Practice and Procedure under the National Labor Relations Act.\1\
    In my testimony today, I will describe the phenomenon of union 
corporate campaigns and how they relate to the structure and policies 
of the National Labor Relations Act (NLRA or Act).\2\ I will also 
discuss recent National Labor Relations Board (NLRB or Board) cases 
that relate to union corporate campaign tactics and what effect those 
cases have on employers that are the target of a corporate campaign. 
Finally, I will address the Boeing case and its relevance to the 
subject matter of this hearing.

What Is a Corporate Campaign?
    One of the most frequently cited definitions of a corporate 
campaign is attributed to the current President of the AFL-CIO, Richard 
L. Trumka:
    Corporate campaigns swarm the target employer from every angle, 
great and small, with an eye toward inflicting upon the employer the 
death of a thousand cuts rather than a single blow.\3\
    Unions engage in corporate campaigns as an alternative to calling a 
strike as a means of applying pressure on employers. This is because 
unions increasingly believe that the strike is an ineffective weapon of 
industrial warfare.\4\ A strike necessarily entails a loss of pay for 
the striking employees, which tends to have a mitigating effect on the 
duration of the labor dispute. Because both parties (the employer and 
the union-represented employees) suffer economic consequences during a 
strike, there is an incentive on both sides of the table to resolve the 
labor dispute as quickly as possible.
    During a corporate campaign, however, employees generally continue 
to work and receive pay. Therefore, employees suffer little or no 
economic harm as a result of the union's campaign against their 
employer. This means that a union can wage a prolonged corporate 
campaign without any real pressure from the employees to resolve the 
underlying dispute. Consequently, the dispute may persist for as long 
as the employer is willing to resist the union's demands and absorb the 
economic damage caused by the campaign.
    Corporate campaigns are used in various types of labor disputes. 
They are used during an organizing campaign in order to pressure an 
employer to remain neutral during the campaign and to recognize the 
union without an election. They also can be used as a means of creating 
leverage for the union in the context of negotiating a collective 
bargaining agreement on behalf of a group of employees that the union 
already represents.
    The target of the corporate campaign may not be the employer with 
which the union has a labor dispute. For instance, the union may engage 
in corporate campaign tactics against the employer's customers, 
suppliers, lenders, creditors, or investors as a means of creating 
secondary pressure against the employer.\5\
    The types of tactics employed in a corporate campaign vary widely, 
and are limited only by the union's imagination. They typically involve 
efforts to generate negative publicity for the employer though print, 
radio, or television advertisements or the display of billboards, 
banners, or inflatable rats. The union may coordinate these public 
relations activities with civic or religious leaders, politicians, or 
public interest groups. Corporate campaigns can involve calls for 
boycotts of the employer's products, including through picketing, 
handbilling, or demonstrations at stores or other retail outlets. The 
union also may seek to apply personal pressure against the 
corporation's officers and directors, through picketing or 
demonstrations at their residences or at social events.
    Corporate campaigns may involve other forms of pressure that have 
no apparent connection to the labor dispute. For instance, the union 
may lobby legislators or regulators to withhold government contracts, 
to block zoning approvals, or to deny public financing to the employer 
that is the target of the corporate campaign. The union also may file 
charges or initiate legal action under a variety of state or federal 
laws, such as environmental laws, securities laws, or employment laws. 
These claims or charges may then be withdrawn as soon as the labor 
dispute is resolved.

Does Federal Labor Law Regulate Corporate Campaign Tactics?
    Corporate campaigns must be understood in the context of the 
structure and policy of the NLRA. The basic policy objective of the Act 
is to promote industrial peace through the process of collective 
bargaining.\6\ Somewhat paradoxically, the right to strike (and the 
employer's corresponding right to lockout) promotes industrial peace by 
creating an incentive for the parties to negotiate and resolve their 
differences at the bargaining table.\7\ In most cases, the parties do 
not engage in a strike or a lockout, but instead decide to enter into 
an agreement that reflects each side's actual or perceived economic 
leverage.
    Once the parties have entered into a collective bargaining 
agreement, the Act assumes that there will be labor peace during the 
term of the agreement. Section 8(d) of the Act prohibits the parties 
from engaging in a strike or lockout until at least 60 days after they 
have provided written notice of their desire to negotiate a new 
agreement.\8\ In addition, the party seeking to modify the agreement is 
obligated to notify the Federal Mediation and Conciliation Service and 
any equivalent state agency, so that these agencies may help the 
parties resolve their negotiations peacefully.\9\
    To further ensure industrial peace during the term of a collective 
bargaining agreement, Congress enacted Section 301 of the Labor 
Management Relations Act, which creates a federal cause of action to 
enforce the terms of the collective bargaining agreement, including the 
duty to resolve disputes through arbitration.\10\ The legislative 
history of Section 301 clearly reflects Congress's expectation that 
employers should be able to run their businesses without the threat of 
economic warfare during the term of a collective bargaining agreement:
    The chief advantage which an employer can reasonably expect from a 
collective labor agreement is assurance of uninterrupted operation 
during the term of the agreement. Without some effective method of 
assuring freedom from economic warfare for the term of the agreement, 
there is little reason why an employer would desire to sign such a 
contract.\11\
    Corporate campaigns are designed to ``sidestep the labor laws'' by 
creating new forms of economic warfare as an alternative to the 
carefully regulated right to strike, either during or after the term of 
a collective bargaining agreement.\12\ There is no provision of the 
NLRA that regulates ``corporate campaigns.'' To the contrary, unions 
typically employ corporate campaign tactics that cannot be regulated 
because they fall within the arguable scope of First Amendment speech 
or petitioning activity.\13\ Thus, while a corporate campaign may have 
a destructive impact on an employer's business, the employer is largely 
without a remedy to counteract the union's campaign.

Recent NLRB Cases That Relate to Union Corporate Campaign Tactics
    Some recent NLRB decisions provide additional weapons for unions to 
use in a corporate campaign. For instance, the Board recently decided 
that a union's display of large (3 to 4 feet high and 15 to 20 feet 
wide) stationary banners, calling for a boycott of a neutral employer's 
business, did not violate the Act's secondary boycott provisions.\14\ 
The Board held that the display of these banners outside the secondary 
employer's facility did not ``coerce'' the secondary employer and 
therefore did not constitute an unlawful secondary boycott under the 
Act.
    As a result of this decision, unions are more likely to utilize 
large banners in a corporate campaign. Banners such as these typically 
are not directed against the employer with which the union has a labor 
dispute. Instead, they are used to pressure companies that do business 
with the target employer. Displaying a large, and often provocative, 
banner may be as effective, if not more effective, than traditional 
picketing, which is regulated by the Act's secondary boycott 
provisions. By holding that banners, unlike picketing, constitute non-
coercive speech, the Board has effectively exempted these types of 
banners from regulation under the Act.
    In another recent case,\15\ the Board held that AT&T could not 
prohibit employees from wearing, while on the job and visiting 
customers in their homes, t-shirts that said ``INMATE #'' on the front 
and ``PRISONER OF AT$T'' on the back. The Board dismissed the 
employer's concern that customers would be disturbed by an employee 
arriving at their home wearing this t-shirt. The Board found that the 
``totality of the circumstances would make it clear that the technician 
was one of [AT&T's] employees and not a convict.'' \16\ Member Hayes 
dissented, arguing that the Board majority ``failed to give sufficient 
weight to the potential for employees wearing these shirts to frighten 
customers in their own homes and thereby to cause substantial damage to 
[AT&T's] reputation.'' \17\
    The AT&T case demonstrates that the current Board will allow unions 
and employees to engage in corporate campaign tactics while they are on 
the job. This means that employees can work and collect pay from their 
employer while they are engaged in a form of economic warfare against 
their employer. Such tactics stand in contrast to the traditional 
strike, which involves a deliberate withholding of labor (and therefore 
a foregoing of pay) by employees who wish to protest their wages, 
hours, or working conditions. For this reason, a corporate campaign is 
viewed by unions and employees as a superior alternative to a 
traditional strike because a corporate campaign is effectively a 
``strike with pay.''
    In addition to permitting employees to engage in corporate campaign 
tactics while on the job, the current Board is inclined to permit 
employees to engage in such tactics while on the employer's property. 
For instance, in a case arising in the hotel industry, the Board held 
that off-duty employees of a restaurant company are entitled to 
distribute handbills while on the hotel's property.\18\ Even though the 
employees were employed by the restaurant company and not the hotel, 
the Board concluded that the hotel violated the Act when it prohibited 
the off-duty restaurant employees from distributing handbills to hotel 
customers while on hotel property.\19\
    The Board is currently considering the extent to which non-employee 
union agents should be permitted to distribute anti-employer literature 
on the employer's property, even if the union has no labor dispute with 
that employer.\20\ On November 12, 2010, the NLRB solicited briefs on 
the question of whether the Board should continue to apply its existing 
precedent, which holds that an employer may not prohibit non-employee 
union agents from soliciting or distributing literature on its property 
if the employer allows charitable or civic organizations to solicit on 
its property.\21\ Several federal courts of appeals have criticized the 
Board's current standard in cases involving non-employee union agents 
who seek access to an employer's property in order to persuade 
customers to boycott the employer.\22\ It remains to be seen whether 
the Board will adhere to its precedent despite the contrary views of 
these federal courts of appeals.

How Does the Boeing Case Fit in to All of This?
    The Acting General Counsel's much-publicized decision to prosecute 
an unfair labor practice complaint against Boeing can be viewed as a 
corporate campaign tactic in the sense that it involves an effort by 
the International Association of Machinists and Aerospace Workers (IAM) 
to obtain an outcome that the union was not able to achieve at the 
bargaining table.
    The complaint alleges that Boeing violated the Act when it decided 
to locate a second production line for its 787 Dreamliner aircraft at a 
facility in South Carolina, rather than at its IAM-represented 
facilities in Washington State and Oregon.\23\ The theory of the 
complaint is that Boeing made this decision in order to retaliate 
against the IAM-represented employees based on their past strike 
activity at the Washington State and Oregon facilities.
    This complaint will be litigated before an NLRB Administrative Law 
Judge at a hearing beginning on June 14, 2011. I am not in a position 
to comment on the issues and allegations that will be litigated at the 
hearing. I am not privy to any of the evidence that will be presented 
in the hearing, beyond what has been reported publicly. I will, 
however, comment on a significant issue that is not going to be 
litigated in that hearing.
    According to the ``fact sheet'' published on the NLRB's 
website,\24\ the Acting General Counsel decided not to prosecute any 
allegation that Boeing violated its duty to bargain with the IAM over 
the decision to locate the second 787 production line in South 
Carolina. This is because the Board concluded that the IAM ``waived its 
right to bargain on the issue in its collective bargaining agreement 
with Boeing.'' \25\
    The Board's conclusion that Boeing had the unilateral right, under 
its collective bargaining agreement, to locate this work in South 
Carolina is a significant one. The Board's standard for proving that a 
union has waived its right to bargain over an issue is an exceedingly 
high one, requiring proof that the union's waiver was ``clear and 
unmistakable.'' \26\ In other words, the employer and the union must 
``unequivocally and specifically express their mutual intention to 
permit unilateral employer action with respect to a particular 
employment term, notwithstanding the statutory duty to bargain that 
would otherwise apply.'' \27\ This standard ``reflects the Board's 
policy choice, grounded in the Act, in favor of collective bargaining 
concerning changes in working conditions that might precipitate labor 
disputes.'' \28\
    In this case, the Board found that Boeing and the IAM negotiated 
about Boeing's right to perform work in other locations and 
``unequivocally and specifically'' agreed that Boeing was entitled to 
make these decisions unilaterally. Boeing exercised that right when it 
decided to locate the second 787 Dreamliner production line in South 
Carolina. The Board concluded that Boeing had no further obligation to 
bargain with the IAM over this decision.
    Nonetheless, the Acting General Counsel decided to challenge 
Boeing's decision as a violation of the NLRA based on a theory of 
discrimination and retaliation under Section 8(a)(3) and (1) of the 
Act. If the Acting General Counsel succeeds on this theory, he will ask 
the Board to order Boeing to move the second 787 production line from 
South Carolina to the IAM-represented facilities in Oregon and/or 
Washington State. This remedy, if granted, will override Boeing's 
collectively bargained right to decide where it wishes to perform this 
work.
    In my view, this prosecution does not advance the core purpose of 
the Act--promoting industrial peace through the process of collective 
bargaining. Certainly, the Acting General Counsel has an obligation to 
protect the rights of employees to engage in strikes and other 
concerted activity protected by the Act. But this is not a case where 
the employees are in the vulnerable early stages of an organizing 
campaign. The Boeing employees have been represented for decades by a 
powerful and sophisticated union, the IAM. They have a mature 
collective bargaining relationship, with an agreement that no doubt 
reflects a series of carefully negotiated compromises over time. By 
stepping into this dispute, the Acting General Counsel is altering the 
delicate balance of power and likely undermining the deal that the 
parties negotiated when the IAM agreed to recognize Boeing's right to 
determine the location where the additional 787 assembly work will be 
performed.
    For these reasons, the Acting General Counsel's decision to 
prosecute this case does not serve ``the Board's policy choice, 
grounded in the Act, in favor of collective bargaining concerning 
changes in working conditions that might precipitate labor disputes.'' 
\29\ Board litigation can be a distraction from the bargaining process. 
And because Board litigation often takes years to resolve, it can 
disrupt labor relations and the expectation of industrial peace during 
the term of a multi-year collective bargaining agreement.
    The Board's job is not an easy one, to be sure. There are important 
rights and interests on both sides of the table. And in a labor dispute 
of this magnitude, a breakdown in the collective bargaining 
relationship can have a profound effect on the national economy. In 
these circumstances, the aggressive prosecution of unfair labor 
practice charges may ultimately disrupt, rather than promote, 
industrial peace. A dispute that might otherwise have been resolved at 
the bargaining table (and arguably was resolved by virtue of the IAM's 
waiver in this case) has exploded into an intense public relations 
campaign as a result of the Acting General Counsel's decision to 
prosecute. That is an unfortunate and costly result, whatever the 
outcome of the litigation may be.
    This concludes my prepared testimony. Thank you again for the 
invitation to appear today. I would be happy to answer any questions 
that Members of the Subcommittee may have.

                                ENDNOTES

    \1\ I am not speaking on behalf of Morgan, Lewis & Bockius, the 
Georgetown University Law Center, or the American Bar Association, and 
my testimony should not be attributed to any of these organizations. My 
testimony reflects my own personal views, although I wish to thank Ross 
H. Friedman and David R. Broderdorf for their efforts in helping me 
preparing this testimony.
    \2\ 29 U.S.C. Sec. Sec.  151 et seq.
    \3\ Jarol B. Manheim, THE DEATH OF A THOUSAND CUTS: CORPORATE 
CAMPAIGNS AND THE ATTACK ON THE CORPORATION (2001).
    \4\ See Cynthia L. Estlund, The Ossification of American Labor Law, 
102 COLUM. L. REV. 1527, 1605 (2002).
    \5\ See id.
    \6\ See Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 211 
(1964) (``One of the primary purposes of the Act is to promote the 
peaceful settlement of industrial disputes by subjecting labor-
management controversies to the mediatory influence of negotiation.''); 
Local 24, Int'l Bhd. of Teamsters v. Oliver, 358 U.S. 283, 295 (1959) 
(``The goal of federal labor policy, as expressed in the Wagner and 
Taft-Hartley Acts, is the promotion of collective bargaining * * * and 
thereby to minimize industrial strife.'').
    \7\ See NLRB v. Insurance Agents' Int'l Union, 361 U.S. 477, 489 
(1960) (``The presence of economic weapons in reserve, and their actual 
exercise on occasion by the parties, is part and parcel of the system 
that the Wagner and Taft-Hartley Acts have recognized.'').
    \8\ 29 U.S.C. Sec.  158(d)(1) & (4).
    \9\ 29 U.S.C. Sec.  158(d)(3).
    \10\ 29 U.S.C. Sec.  185; see also Textile Workers Union v. Lincoln 
Mills of Alabama, 353 U.S. 448, 455 (1957) (finding that Section 301 
``expresses a federal policy that federal courts should enforce these 
agreements on behalf of or against labor organizations and that 
industrial peace can be best obtained only in that way'').
    \11\ Lincoln Mills, 353 U.S. at 454 (quoting S.Rep. No. 105, 80th 
Cong., 1st Sess., p.16).
    \12\ See Estlund, supra note 4, at 1603.
    \13\ See Edward DeBartolo Corp. v. Florida Gulf Coast Bldg. & 
Constr. Trades Council, 485 U.S. 568, 588 (1988) (holding that union 
handbills calling for boycott of shopping mall did not constitute a 
secondary boycott in violation of the NLRA because of potential First 
Amendment concerns); Linn v. United Plant Guard Workers, 383 U.S. 53, 
65 (1966) (holding that employer may pursue defamation action against 
union only if the defamatory statements were made ``with knowledge of 
their falsity or with reckless disregard of whether they were true or 
false'').
    \14\ Carpenters Local 1506 (Eliason & Knuth of Arizona, Inc.), 355 
NLRB No. 159 (Aug. 27, 2010).
    \15\ AT&T Connecticut, 356 NLRB No. 118 (March 24, 2011).
    \16\ Id., slip op. at 1.
    \17\ Id., slip op. at 3.
    \18\ New York New York Hotel & Casino, 356 NLRB No. 119 (March 25, 
2011).
    \19\ Member Hayes dissented in this case as well. Id., slip op. at 
15-19.
    \20\ Roundy's Inc, 30-CA-17185.
    \21\ Sandusky Mall Co., 329 NLRB 618, 622 (1999). If the employer 
has permitted only a few ``isolated'' acts of charitable solicitation 
on its property, the Board might permit the employer to exclude non-
employee union agents from its property. Id. at 621.
    \22\ See, e.g., Salmon Run Shopping Ctr. LLC v. NLRB, 534 F.3d 108, 
114 (2d Cir. 2008); Sandusky Mall Co. v. NLRB, 242 F.3d 682, 685-86 
(6th Cir. 2001); Be-Lo Stores v. NLRB, 126 F.3d 268, 284 (4th Cir. 
1997).
    \23\ The Boeing Company, Case 19-CA-32431 (April 20, 2011), 
available at http://www.nlrb.gov/sites/ default/files/documents/443/
cpt--19-ca-032431--boeing----4-20-2011--complaint--and--not--hrg.pdf.
    \24\ Boeing Complaint Fact Sheet, available at http://www.nlrb.gov/
boeing-complaint-fact-sheet.
    \25\ Id.
    \26\ See Provena St. Joseph Medical Center, 350 NLRB 808, 811 
(2007).
    \27\ Id.
    \28\ Id.
    \29\ Provena St. Joseph Medical Center, 350 NLRB at 811.
                                 ______
                                 
    Chairman Roe. Thank you, Mr. Fritts.
    Mr. Andrews, questions?
    Mr. Andrews. Thank you, Mr. Chairman.
    I would like to thank the witnesses for their preparation 
and their compelling testimony this morning.
    Mr. Fritts, thank you for the respect that you showed to 
the employees and the board members of the NLRB. It is 
appreciated, and I thought it was very appropriate.
    You have accomplished a lot in your career as a lawyer 
representing parties in labor disputes--right? That is 
essentially what you do?
    Mr. Fritts. Yes.
    Mr. Andrews. Let's assume that you were representing an 
employer in a labor dispute and there was controversy around 
what the employer did. And let's say that the workers who were 
contesting things with your client said that your employer was 
engaging in a systematic campaign to coerce the employees, you 
know, to avoid their collective bargaining rights. And the 
committee decided to write you a letter that said, we want to 
see all of the communications that exist between you and your 
client, you and that employer, about this alleged coercion 
campaign.
    Would you comply with that request?
    Mr. Fritts. Ranking Member Andrews, there would certainly 
be attorney-client privilege issues associated with that. But 
your question raises a policy issue that currently is before 
the Board----
    Mr. Andrews. Well, look, my question was, would you comply 
with the request? Is the answer ``no''?
    Mr. Fritts. I would not disclose attorney-client privileged 
communication.
    Mr. Andrews. Okay. And the basis of your refusal to 
disclose that would be what, would be the attorney-client 
privilege? And could you explain to us why you think that would 
be an invasion of that privilege?
    Mr. Fritts. Well, to the extent the communications 
reflected advice of counsel or efforts by me as counsel to 
prepare for litigation, they would be privileged.
    I would also say that to the extent, in preparing for any 
type of litigation, the employer had collected statements from 
witnesses, employee witnesses, and there was a promise of 
confidentiality, that employer would seek to refuse to disclose 
those statements to the Board or to any third party prior to 
any litigation, just as the Board----
    Mr. Andrews. So the basis of your refusal to turn it over 
would be the attorney-client privilege and I guess what we 
would call the attorney-work-product privilege?
    Mr. Fritts. Right.
    Mr. Andrews. I am going to read to you from a letter from 
this committee to the acting general counsel of the NLRB of May 
5th in which the committee directs the acting general counsel 
to turn over, quote, ``all documents and communications between 
NLRB Region 19,'' which is where the Boeing complaint 
originated, ``and the NLRB national office addressing the 
Boeing complaint.''
    Do you think that that request violates the attorney-client 
privilege?
    Mr. Fritts. Well, I think, to the extent there is 
privileged communications, the general counsel might be 
entitled to withhold those. But I think----
    Mr. Andrews. Let's examine that extent. If the general 
counsel has said to the people in the field office, ``What 
material facts might exist that would show a violation of the 
National Labor Relations Act, and give me your opinion as to 
whether you think these facts are credible and whether they 
rise to that level,'' would that be within the attorney-client 
privilege?
    Mr. Fritts. Well, I think what you are referring to is what 
the Board, historically, zealously defends, and those are 
statements of witnesses who have provided affidavits in the 
course of investigating the complaint.
    Mr. Andrews. Right. And do you agree the Board should 
zealously defend that privilege?
    Mr. Fritts. I agree that they do, and I agree that they 
should. And I think they also should----
    Mr. Andrews. So, do you agree that this characterization 
that I have given in this letter of May 5th would require those 
communications to be turned over?
    Mr. Fritts. Well, it depends on, I think, the scope of what 
is in the acting general counsel's file----
    Mr. Andrews. Well, let's say if there were statements from 
witnesses that would be material witnesses that were in those 
documents, you believe they shouldn't be turned over, right?
    Mr. Fritts. I believe that is consistent with the Board's 
longstanding position. And I think the Board's longstanding 
position----
    Mr. Andrews. Okay. I agree with you. I agree with you that 
this request from the committee was inappropriate.
    And I would yield back the balance of my time.
    Chairman Roe. I thank the ranking member.
    Dr. DesJarlais?
    Mr. DesJarlais. Thank you, Mr. Chairman.
    And thank you to all our witnesses for being here today.
    I wanted to start a little bit off-topic and ask if any of 
you are aware of a draft Executive order that has been brought 
forth by President Obama requiring companies who contract with 
the Federal Government to disclose any campaign contributions 
in advance of receiving a contract. Are any or all of you 
familiar with that Executive order?
    Mr. Bego, yes.
    Ms. Fisk, no.
    Okay. Well, Mr. Bego, you had mentioned that when the SEIU 
had come to you that they had asked that you give a list of all 
your employees and homes and addresses. So you are familiar 
with the draft Executive order.
    And for those of you who are not, it is an order where any 
company seeking a government contract must supply, in advance 
of being awarded the contract, disclosure of all financial 
contributions, not only for themselves but also for their 
employees.
    And we discussed that in the Oversight Committee. And, 
basically, one of the glaring exemptions was that unions were 
not required to give the same information.
    And I thought, maybe, Ms. Fisk, you would have an opinion 
on that. But you have no knowledge of that draft Executive 
order?
    Ms. Fisk. No, I haven't seen the draft Executive order.
    Mr. DesJarlais. Okay.
    Mr. Bego, you have. Does that particular order bother you 
in the same way?
    Mr. Bego. Well, I have not had the opportunity to read the 
whole thing, but I am familiar with it. And I----
    Mr. DesJarlais. Okay. All right. Well, let me move on.
    And as we discussed here already today, that unions use 
diverse tactics to disrupt an employer's business, including 
legislation, political/religious appeals, assaulting complaints 
to regulatory agencies, et cetera, negative publicity 
campaigns, such as banners and as we spoke of.
    How many unfair labor practice charges were filed against 
your company during SEIU's corporate campaign?
    Mr. Bego. Well, initially, in the first 11 or 12 months, we 
had 36 them filed against us. By the time it was over, it was 
close to 50.
    Mr. DesJarlais. How much did it cost to defend these 
charges?
    Mr. Bego. Well, just our attorney fees alone were close to 
a million dollars in defending ourselves.
    Mr. DesJarlais. And, obviously, that had a great impact on 
your company?
    Mr. Bego. Well, it did. And the thing is, we are fortunate 
enough that we could withstand it. The problem is that, today, 
most employers can't or aren't willing to go through what I 
call the psychological and financial warfare that these 
corporate campaigns entail.
    And I can tell you categorically that some of the other 
cleaning contractors that were being attacked in our area gave 
in because psychologically they couldn't take it, financially 
they couldn't take it. One case of one contractor I know, it 
got so bad, his wife told him that, ``Look, sign the neutrality 
agreement. If you don't, I am going to divorce you.''
    Mr. DesJarlais. Okay.
    Mr. Karnas, the same line of questioning to you. What 
tactics did the carpenters use against your company?
    Mr. Karnas. Well, they started with bannering, and they 
have done a lot of active pickets on job sites. They have gone 
to our office complex and have picketed in front of our office 
complex.
    During one event, they blocked the ingress and egress to 
our office property. I had painted the property line with a 
utility paint in front of the property, and when they came 
there, they promptly kicked all the utility paint away and 
violated our private property rights. The next day, we did the 
same thing, and they also kicked away the paint. There was some 
minor vandalism.
    So my biggest concern is that, the rulings allow bannering 
but, quite often, they overstep their bounds and they do 
illegal acts.
    Mr. DesJarlais. How much did it cost your company?
    Mr. Karnas. Well, it has cost me tens of thousands of 
dollars in legal fees, and it has cost me in business volume, I 
would say, probably $100,000 in contracts.
    Mr. DesJarlais. Any layoffs of employees?
    Mr. Karnas. Well, yes, I have had a tremendous amount of 
layoffs. I mean, it is in conjunction with the economy as well 
as the union bannering. I basically have very minimal work in 
my hometown of Albuquerque.
    Mr. DesJarlais. All right.
    Thank you all.
    I am about out of time, so I will go ahead and yield back, 
Mr. Chairman.
    Chairman Roe. Thank you.
    Mr. Kucinich?
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    In looking at this hearing, which I appreciate the chairman 
calling, we are really looking at some deeper constitutional 
questions and questions of labor law, as to whether or not the 
intention of the National Labor Relation Act can actually be 
satisfied anymore. Because if you see attempts to destructively 
undermine the principles underpinning the National Labor 
Relations Act and to further attack those who are trying to 
work together to settle their disputes, then you have to ask 
questions of whether or not the rule of law can prevail when it 
comes to the insistence, in this case, of certain corporate 
interests to have their way notwithstanding what the law is.
    Case in point, we know that the situation at Boeing, in 
brief, was a question of unlawful retaliation against union 
workers and that it was a retaliation for previous strikes. 
This is what the NLRB essentially found, that a new plant was 
being located in South Carolina because machinists had gone on 
strike and Boeing had determined and made no secret that they 
were going to relocate to South Carolina because of these 
strikes. However, what Boeing overlooked and what the NLRB 
determined is that there was a violation of the National Labor 
Relations Act because of retaliation for protected labor 
activity. And that is really what we are talking about here: 
what is protected and what is not protected.
    I am not aware, Mr. Chairman, Ranking Member Andrews, I am 
not aware that Boeing filed a counterclaim here to say that 
there was a violation on the other side, because the Labor 
Relations Act gives rights to both parties, as we know.
    So we have here at issue whether or not Congress should be 
intervening even more deeply in this dispute by upending the 
position of the National Labor Relations Board.
    Now, Ms. Fisk, do you see any problems with the violation 
of due-process rights of workers if a congressional committee 
goes in and tries to get the work product of the NLRB, which 
basically made the decision advancing a case saying that there 
was a violation of the Labor Relations Act which resulted in 
work being moved out of an area, in a sense, in retaliation?
    Is there a question, not just of what the Board's rights 
are--we got the attorney-client privilege--but is there a 
question of an undermining of the due-process rights of the 
workers?
    Ms. Fisk. Yes, Representative Kucinich, there is.
    The Board induces witnesses to testify about the 
circumstances in a workplace under promises of confidentiality. 
And the Board stands in the shoes of the individual workers in 
enforcing their statutory rights.
    An individual can't file a lawsuit in Federal court 
claiming that his rights were violated under the National Labor 
Relations Act. Only the Board decides which cases to prosecute. 
And so, when Congress interferes in the Board's processes to 
try and sway the outcome, it violates the rights of the 
individual workers that the Board is trying to protect.
    Mr. Kucinich. Thank you very much, Ms. Fisk.
    Mr. Chairman and members of the committee, what we are 
looking at here is a double violation of workers' rights. On 
one hand, workers are told that their jobs are going to be 
moved simply because they took up the right to strike, which is 
a protected right under the National Labor Relations Act. And 
there is a further violation by attacking their due-process 
rights, when, in fact, they have had a decision in their favor 
at the National Labor Relations Board.
    Now, we have to put this in context. The right to strike 
met a corporate response, which was replacement workers. 
Corporate campaigns, which were the only other way that unions 
defending their workers could appeal to the community in which 
they live--it is a free-speech right--appeal to the community 
in which they live to look at the corporate conduct and see if 
this is the kind of conduct you want to obtain in the 
community, now that is under attack.
    So we have the right to organize under attack, the right to 
collective bargaining, the right to strike, and the First 
Amendment right to free speech all under attack here. And we 
have to look at this in a larger context, because what is 
happening in this country right now, as you look at the State 
areas, where unions are under attack at the State level, this 
is really an attack on free speech, the right to organize, the 
right to collective bargaining.
    I thank the chair for calling this hearing because it gives 
us a chance to discuss these things. Thank you very much.
    Chairman Roe. I thank the gentleman.
    Mr. Wilson?
    Mr. Wilson. Thank you, Mr. Chairman.
    And thank you, witnesses, for being here.
    Over the decades, I have had the extraordinary privilege of 
working in a bipartisan manner, Democrats and Republicans, to 
recruit industry to South Carolina. We work together--
municipal, county, regional, State, Federal--to recruit 
industry, and we have been very, very successful. But it has 
become a real shock to the people of our State, our region, the 
recent attack by the NLRB, a threat to job creation in our 
State.
    I go back--I served on the board of the State Department of 
Commerce with Governor Jim Edwards to recruit Michelin to South 
Carolina. We have the North American headquarters of Michelin 
in South Carolina, five plants across the State, two in the 
district that I represent. It has been very successful. Just 2 
weeks ago, an expansion was announced for Earthmover tires to 
be developed and built in the district I represent.
    We are very grateful that the late Governor Carroll 
Campbell recruited BMW to locate in South Carolina. It has been 
phenomenally successful. Every X5, X6, Z3, Z4 in the world is 
made in South Carolina. In fact, they just announced an 
expansion of the plant 2 years ago--it has been completed--to 
increase production from 160,000 cars to 240,000 cars.
    Now we have Boeing. I want to give credit to our Secretary 
of Commerce, Joe Taylor; the chairman of the State Senate 
Finance Committee, Hugh Leatherman. They worked with Boeing to 
bring--and it has even been agreed to in Politico today for a 
new production line. Not moving a line, not moving jobs, it is 
a new production line, the second line.
    Significant portions of 787s are already being made in 
South Carolina.
    It is particularly a shock because just 2 months ago--I was 
there for the groundbreaking a year and a half--2 months ago, I 
was there; the building is complete. A million square feet. The 
American people need to know this building is there. A thousand 
people have been employed. In fact, they announced 2 months ago 
solar panels to provide for the energy to be used at that plant 
be one of the largest investments in the world to produce solar 
power.
    And then out of the blue, the reckless decision by NLRB. It 
is not a shift of jobs from the Washington State. It is very 
clear that new jobs have been created in Washington State since 
this announcement.
    With that background, Mr. Fritts, if you could tell us, in 
2009, there was 16,000 unfair labor practices filed in our 
country, and what has been your experience--how many years have 
you worked in this field and your experience and then what 
recommendation, or do you have any, for Members of Congress to 
stop a frivolous complaint?
    Mr. Fritts. In my practice, I try very hard to avoid a 
client having a charge filed against them, and if the charge is 
filed, I work very hard to either have it dismissed or settled 
in some fashion, and the vast majority of unfair labor practice 
charges filed are ultimately either dismissed and settled in 
some fashion. But in that process of determining whether a 
charge has merit through the general counsel's investigation, 
there is a lot of work that goes into that, a lot of cost for 
the employer that goes into that, and unfortunately, because of 
the politicization of the board and the policies of the act and 
the shift in precedent, an employer can often be in the 
position of having to defend the charge that is a vehicle for 
changing the law. And so that is what I try to work to avoid 
and avoid being in the position of having an unfair labor 
practice trial.
    Mr. Wilson. And I want to congratulate Mr. Bego and Mr. 
Karnas for surviving.
    It was Samuel Gompers, the father of the American labor 
movement, who indicated the greatest threat for American labor 
is a failed business. And so I want to thank you for 
succeeding.
    And Mr. Bego, your positive attitude, about $1 million in 
attorney's fees, as an attorney myself, I am startled that you 
have such a positive attitude. But I was a real estate 
attorney, not litigation.
    With that, do you have a recommendation to other 
businesses, either one of you, as to how to face these type of 
charges.
    Mr. Bego. Well, it is very difficult. Like I said, they 
filed 36 of them against us and most of them are very, very 
frivolous. I will give you a couple of real quick. We weren't 
allowing them to wear union buttons, which we were. We just 
wouldn't allow them to wear them over our logo because we have 
to be identified when we are in the buildings at night. But 
they put them there on purpose so that they get stract from our 
supervisors that you have got to move them. Then they would go 
down and file an unfair labor practice that they were told to 
remove them, which was not the case.
    Another one was that one of our supervisors walked--put his 
hand in the pocket of an employee to get out union information. 
They do these because they know it is his word against her word 
or vice versa, and they know it is hard for the company to 
prove. In most cases, the NLRB will uphold these. So, 
unfortunately, in those types of cases, the business is 
spending money to defend themselves.
    Mr. Wilson. Again, thank you very much.
    Our State is very grateful to have a right-to-work law. 
Thank you.
    Chairman Roe. Thank you.
    Mr. Tierney.
    Mr. Tierney. Thank you very much.
    Mr. Bego, in your testimony, you asserted that you had no 
problem basically with unions. In fact, at one point, you said, 
well, if you want to have a union, fine.
    I see that, but when I look at your Executive Management 
Services, Inc., employee manual for hourly employees, you make 
these statements: Indeed, we believe that a union would serve 
only to hurt our profitability and, thus, our job security. 
Unions can adversely affect production by narrow work 
classifications, silly grievances, strikes and inflexibility. 
It is our positive intention to oppose unionism at every proper 
and lawful means.
    It goes on and on and on that basis. Do you consider that a 
popular attitude towards unionism?
    Mr. Bego. I don't believe that is our manual, sir, but 
anyway.
    Mr. Tierney. We can send it down for you to look at it so, 
yeah.
    Mr. Bego. Okay. Our intent is to stay nonunion unless our 
employees come to us.
    Mr. Tierney. Okay. It is interesting to note that you----
    Mr. Bego. I haven't seen the latest one, okay, that is 
fine.
    Mr. Tierney. But you are the CEO?
    Mr. Bego. Yes, I am, sir.
    Mr. Tierney. You wrote this book as well, ``The Devil at My 
Doorstep,'' on that, and you mention in your testimony as well. 
In that book, you contended that the Obama administration was 
under pressure from the Service Employee International Union, 
and under that pressure, they weighed in with the National 
Labor Relations Board's general counsel to urge him to take an 
appeal of an administration decision that you had won.
    What you say is, despite your attorney's belief that the 
appeal by the NLRB on the union's behalf made no sense, it was 
not unexpected and very clear to me, in my mind--and I am not a 
conspiracy theory believer--Stern and the SEIU were introducing 
their proclaimed persuasion of power via their association with 
the White House. I believe that the SEIU contacted the Obama 
administration when they learned of the decision, who in turn 
made a call to the general counsel of the NLRB in Washington, 
D.C., and demanded an appeal of the case.
    Mr. Bego, were you aware that Ron Meisberg, who was then 
the NLRB general counsel, was in fact appointed by the Bush 
administration?
    Mr. Bego. Yes, I am, sir.
    Mr. Tierney. And you are aware that the Bush administration 
board had favored generally employers in a lot of different 
instances, right?
    Mr. Bego. Well, that is true.
    Mr. Tierney. And you ultimately prevailed in front of the 
Obama-appointed National Labor Relations Board in June of 2010; 
isn't that right?
    Mr. Bego. Yes. Are you going to let me answer?
    Mr. Tierney. Well, I just asked you, was that right, yes or 
no?
    Mr. Bego. Yes, but I would like to----
    Mr. Tierney. Okay. And do you believe that that was a fair 
decision?
    Mr. Bego. We won after going through 2 years----
    Mr. Tierney. Do you believe it was a fair decision?
    Mr. Bego. We won after 2 years with appeals hearings and 
waiting on a decision that was appealed. We won the appeals 
hearing, okay.
    Mr. Tierney. Do you believe it was fixed?
    Mr. Bego. Which the administrative law judge overwhelmingly 
found in our favor and said that the union's testimony was 
contrived and unbelievable, and yet despite that, the National 
Labor Relations Board appealed the decision----
    Mr. Tierney. And you won, correct?
    Mr. Bego. And the reason we won----
    Mr. Tierney. And do you think that in the board deciding 
that you were correct, that you got a fair resolution by that 
board?
    Mr. Bego. Only because we kept meticulous records. Most 
companies can't afford or take the time to do that.
    Mr. Tierney. Do you think that the fact that the President 
has the CEO of Boeing on his Export Council in any way means 
that Boeing has undue influence on National Labor Relations 
Board decisions?
    Mr. Bego. I have no comment on that. I don't know the 
situation there.
    Mr. Tierney. You had a theory here that Andrew Stern----
    Mr. Bego. Well, Andrew Stern had been in the White House at 
that point about 27 times and we know that----
    Mr. Tierney. How about Jeffrey Immelt, the CEO of General 
Electric, who is now on the President's Economic Jobs Council; 
do you think he has undue influence on National Labor Relations 
Board decisions?
    Mr. Bego. I wouldn't have any idea.
    Mr. Tierney. Mr. Fritts, you testified that the company has 
a right to relocate where it wants, and they had settled that 
matter on the negotiating table on that issue. But I want to 
ask, that is correct, right?
    Mr. Fritts. That is the finding of the acting general 
counsel.
    Mr. Tierney. Now, Ms. Fisk, do you see any distinction at 
all between the labor union and the company deciding that it 
would be the company's right to decide where to locate and a 
distinguishable issue of whether or not the company can violate 
the National Labor Relations Act in discriminating in having 
conduct?
    Ms. Fisk. Yes. There is a huge distinction. It is common 
for collective bargaining agreements to give the employer the 
right to make certain kinds of entrepreneurial or business 
decisions, but a collective bargaining agreement cannot waive 
the individual statutory rights of the members of the union to 
be free from discrimination on the basis of Section 7 rights.
    Mr. Tierney. Thank you.
    I yield back, Mr. Chair.
    Chairman Roe. I thank the gentleman.
    Mr. Rokita.
    Mr. Rokita. Thank you, Mr. Chairman.
    I want to again thank all the witnesses for their time here 
today and remind them and the audience that the witnesses 
aren't under trial here today.
    This isn't some kind of trial. In fact, the duty of this 
committee is to have oversight jurisdiction on the NLRB, and 
each of you are helping in doing that today. So thank you.
    Mr. Bego, in light of that, do you want to add anything to 
your previous answers from questions from Member Tierney?
    Mr. Bego. The fact is, and you know, we have always been an 
employee-friendly employer. And yes, we have our employee 
handbook, and we do believe that workers, if given the 
opportunity to work on their own and their free choice, perform 
very well under that atmosphere. Now that doesn't mean we are 
anti-union.
    As I said during the introduction, we gave the SEIU many, 
many opportunities to hold an election. In fact, I took out a 
half page ad in the ``Indianapolis Star,'' I believe in the 
summer of 2007, where we asked the union to have an election, 
and they refused to do it. My guess on that is, is you only 
need 30 percent to petition for election. I don't think they 
had anywhere close, and that is probably drawn out by the fact 
that they finally held a strike against our company in 2008 
where they got 10 of our employees out of 400 to go on strike. 
That is less than 3 percent.
    Mr. Rokita. I will follow up on that point, Mr. Bego. Did 
the SEIU provide you any evidence that employees of EMS invited 
them to begin unionization proceedings?
    Mr. Bego. None at all. In fact, I have never received any 
information on that.
    Mr. Rokita. And then following up on my comment at the 
beginning of this questioning that we have a constitutional 
duty on this committee and as Members of Congress to oversee 
the Federal Government, specifically here the NLRB, and 
understanding that one of the two primary functions of the NLRB 
is to prevent and remedy unlawful acts by either employers or 
unions--so the idea is and as the law that created the NLRB 
contemplated--that was supposed to be an arbiter, and an 
unbiased one and given the fact that you must be one of the few 
people in America that have had this many cases before the 
NLRB, do you care to comment at all as to whether the NLRB has 
been a fair arbiter of your cases, and can you give any 
specific examples?
    Mr. Bego. Well, I believe that, you know, the playing field 
at this point is unlevel, and I think that is seen in the 36 
unfair labor practices they filed against us, initially about 
10 or 11 of them were upheld, ones like the buttons and the guy 
putting his hand in the employee's pocket. And these continued 
to be upheld until we finally filed 33 unfair labor practices 
against the SEIU in 1 day.
    Mr. Rokita. That is what I thought; you went on the 
offensive at one point.
    Mr. Bego. Yeah, and that was the only way for us to have an 
opportunity. Otherwise, we would have continued to be under 
assault.
    Mr. Rokita. Thank you.
    Mr. Karnas, hearing that testimony, and I couldn't 
remember, do you--did you have cases before the NLRB?
    Mr. Karnas. I do not, no, sir.
    Mr. Rokita. Okay. Thank you.
    Mr. Bego, you spoke of the neutrality agreement which you 
chose not to sign. Do you know of companies that have chosen to 
sign these agreements, and if so, can you explain to the 
committee the outcome once those agreements were in place? You 
mentioned something about companies that did sign them being 
sorry. Do you have specific examples?
    Mr. Bego. The interesting thing is that the law firm that 
represented us during the corporate campaign by the SEIU also 
represented another company in town. That company did, in fact, 
sign a neutrality agreement. We did not. We were the only major 
company that did not. When they sat down for negotiations, we 
had national companies, regional companies, and companies from 
the Indianapolis area there, and from what my attorney says, 
almost to a man, they all wished they would have not signed the 
neutrality agreement.
    Mr. Rokita. All right.
    Mr. Karnas, anything to add to that?
    Mr. Karnas. Just to reflect on, I have tried to always keep 
an open mind. I would like to see some bipartisanship here in 
Congress and between unions.
    I am a former union member of two unions, household Workers 
Union 1199 and the International Brotherhood of Laborers. My 
wife is currently in a teachers union.
    So I am not anti-union. I have always tried to keep an open 
dialogue and conversation with the union members, of course, 
under the premise or the mandate that the conversations that we 
have are not to be construed as bargaining agreements, and we 
try to be very transparent, ethical and honorable.
    And what bothers me when I talk to somebody man on man, I 
have been told multiple times, it is just my job. But it is 
never just your job to spit upon somebody or to disparage a man 
or a woman or to threaten their reputation. So I feel that the 
playing field is unlevel.
    Mr. Rokita. Thank you, Mr. Chairman.
    I yield back.
    Chairman Roe. I thank the gentleman.
    Mr. Holt.
    Mr. Holt. Thank you.
    Clearly, these matters that come before the NLRB are 
complicated matters.
    Ms. Fisk, you have stated quite strongly and clearly that 
workers cannot and should not be penalized for exercising their 
existing rights, whether they be civil rights or rights, such 
as on the basis of race or sex, or rights that derive from the 
NLRA.
    And, Mr. Fritts, in your conversation with Mr. Andrews, I 
think it was established pretty well that it is inappropriate 
to interfere with the orderly process before an administrative 
law judge for establishing whether workers have been penalized 
and whether these are, indeed, established rights.
    So, as someone who always tries to simplify things so I can 
understand them, I would like to get really to the basis for 
this, and my question is for you, Ms. Fisk. Why are these 
established? I mean, I go back to the time when the Wagner Act, 
these protections, were established. These were tough economic 
times. Clearly, this was not to make it hard for employers. It 
was not to try to make disadvantageous economic decisions. Why 
is it important to protect these rights for economic reasons? 
In your testimony, you talked about preventing a race to the 
bottom. Could you elaborate on that, please?
    Ms. Fisk. Yes, of course.
    The reason why Congress enacted the National Labor 
Relations Act in 1935 at the depths of the Great Depression was 
because Congress found that collective bargaining would improve 
working conditions, that it would raise labor rates and 
increase the rates of employment. And that, in fact, proved 
true.
    From the time that the statute was enacted through the 
1970s, America enjoyed enormously expanding productivity, a 
vibrant middle class, and that was made possible and still is 
sometimes made possible by union representation. Median weekly 
wages for union workers average $917 a week; that is about 
$47,000 a year. Median weekly wages in a nonunion workplace, 
about $800--$700 a week which is about $37,000 a year. Union 
workplaces are more likely to respect safety protections. These 
are the kinds of the things that the National Labor Relations 
Act was enacted.
    My brother was trained in a union apprenticeship program as 
a machinist. He now lives in Arizona, works nonunion, because 
it is a right-to-work State, and makes less in real terms than 
he made when he was a young man.
    Moreover, last summer he was working in Phoenix, in a shop, 
with no air conditioning. It was about 125 degrees inside that 
machine shop on a daily basis. I said to him, why don't you 
file a complaint with the Occupational Safety and Health 
Administration? That is unsafe. It is dangerous. They didn't 
even provide water.
    And he said, because I need my job. If I ban together with 
my coworkers to complain about this or Lord knows if I go down 
to some government agency, I will get fired like that.
    And I said, yes, but then you could file a claim and get 
your job back.
    He said, I can't afford to wait 6 or 8 months and be 
unemployed. I have to pay my mortgage. I will lose my house.
    Mr. Holt. Well, would you say that in our efforts to ensure 
that due process is followed, that the administrative law judge 
is able to operate in a fair and efficient way, still is useful 
today as it was in yesteryear that you are describing? Is it 
still true that by providing for good wages and a strong safety 
record and communications about a company's practices actually 
benefits the consumer and the economy at large?
    Ms. Fisk. Of course, because it enables workers to demand 
their rights to be respected, and it enables consumers to urge 
companies to respect the legal rights of employees.
    Mr. Holt. Thank you.
    Chairman Roe. I thank the gentleman.
    Dr. Bucshon.
    Mr. Bucshon. Thank you, Mr. Chairman.
    A question for Mr. Karnas. The carpenters, they claim I 
guess that you didn't provide benefits to your employees. Can 
you kind of provide a brief overview of what you provided?
    Mr. Karnas. Yes, sir.
    We pay about 85 percent of our employees' health and dental 
plan. We also will pay 100 percent of a life insurance plan. We 
have a 401(k), a public works pension plan. We have safety 
training that we pay for.
    And Ms. Fisk mentioned safety. We are a member of three 
OSHA--Federal OSHA partnership programs and our rating for 
workmen's comp is a .81, which is a testament to what our 
safety in our culture--in our company is. So we are very proud 
of those things.
    Mr. Bucshon. As you should be. How would you think that 
benefits program compares to other companies in your area?
    Mr. Karnas. Oh, I think it is probably--we set the bar for 
subcontractors. There might be some general contractors. We are 
a small company, truly are, 55 employees. I am not trying to be 
the richest guy in the graveyard. My employees are my family, 
and we set the bar for subcontractors.
    Mr. Bucshon. Great.
    Ms. Fisk, I want to ask you, you were commenting on the 
1970s, and I just wanted to give a background. My dad was a 
United Mine Worker for 37 years. I grew up in that atmosphere. 
Could you comment on maybe how Federal law has changed and 
responded to workplace conditions in that--probably I would 
imagine it is tremendously different now the protections that 
the government has for workers and everything compared to the 
1960s and 1970s. Would you think that there has been a big 
change in that?
    Ms. Fisk. Well, let's see, since the 1970s, Congress 
prohibited discrimination on the basis of disability, but the 
Occupational Safety and Health Act was enacted in the 1960s. 
The National Labor Relations Act has not been amended in 
substance really since the 1950s, except it was applied to the 
health care industry in 1974. So there has not been huge 
statutory expansion.
    Mr. Bucshon. I guess my question would be is that, would 
you think today's work climate--is today's work climate in 2011 
significantly different from the 1970s, when my dad was in the 
United Mine Workers, to enough of an extent where it is 
difficult to justify this aggressive activity that we have been 
describing today on behalf of the unions, claiming that there 
are continuing ongoing safety issues and other unfair practices 
going on, compared to historically why unions were valuable to 
our society in the past?
    I mean, is there a difference because in my mind, there is 
a significant difference in our climate, in our country today, 
compared to when I grew up, when my dad was--and what I 
experienced when I was a kid.
    Ms. Fisk. Work still remains difficult and dangerous. Coal 
mines still have massive explosions, killing dozens of people. 
I think that----
    Mr. Bucshon. I want to clarify that. Dozens of explosions 
killing many people. There has been--we had one coal mine 
explosion, and I know that that is what you are talking about. 
My dad worked in the coal mine at Peabody Mine No. 10, Pawnee, 
Illinois, 37 years, didn't lose 1 day for a work-related 
injury, and during that time frame, they had no explosions, and 
they had a few injuries based on rooftop problems. So I think 
you are over generalizing and sensationalizing that particular 
aspect. I know the coal industry very well.
    So what I am trying to get at is, is there ongoing 
justification for this type of aggressive activity in the 
workplace against businesses today compared to when unions 
were, you could argue, very, very necessary in the history of 
our country? Because, in my view, this type of activity that is 
overly aggressive, that what goes outside of people's 
constitutional rights or what the labor law has in place, isn't 
necessary.
    Ms. Fisk. I didn't say dozens of explosions. I said 
explosions that kill dozens of people. Work still remains 
dangerous in many sectors. Construction still has high rates of 
injuries.
    Mr. Bucshon. I have a limited time so I want to ask you 
this question then. How would what these people are doing 
impact that? How would that make it better?
    Chairman Roe. If you will hold that question. His time has 
expired.
    Mr. Bucshon. My time has expired.
    Chairman Roe. Mr. Hinojosa.
    Mr. Hinojosa. Thank you, Mr. Chairman.
    I thank the panelists for coming before our committee, and 
I would like to make a statement and then ask some questions.
    While Congress' oversight of the NLRB is important, I 
strongly urge my colleagues on this committee to refrain from 
pointing to the NLRB and refrain from linking them to our 
Nation's unacceptable unemployment rate.
    Instead, we must do what Congressman Rob Andrews said in 
his opening statement: We must focus on working together to 
create jobs and provide much-needed relief to American workers.
    Dr. Fisk, in your testimony, you indicate that corporate 
social responsibility campaigns are designed to strengthen the 
middle class, a goal which the House Committee on Education and 
Labor in the last 110th Congress endorsed in a pair of 
congressional hearings which I attended. They were on 
strengthening America's middle class in 2007. In your opinion, 
how do corporate social responsibility campaigns accomplish the 
goal of strengthening the working middle class?
    Ms. Fisk. Union corporate social responsibility campaigns 
are designed to provide information to workers, to enable them 
to assert their rights, in particular, rights to decent wages, 
to benefits, to safe workplaces, and to consumers so that 
consumers can choose to patronize those companies that have 
strong labor practices and safety records and environmental 
records, and not patronize those companies that have dangerous 
workplaces or pay low wages. It is information that allows all 
of us as consumers, as workers, and as citizens to hold 
companies accountable and to make sure that they treat their 
workers fairly.
    Mr. Hinojosa. Dr. Fisk, in your testimony, you conclude 
that the board's recent decisions in the area of labor protests 
are entirely consistent with the trend in the United States 
Supreme Court's First Amendment jurisprudence. Can you 
elaborate on that point?
    Ms. Fisk. Yes, of course. The United States Supreme Court 
has recently decided a number of cases protecting rights to 
picket and protest in various ways. Sometimes people find those 
protests deeply offensive.
    Depending on your point of view, Operation Rescue protests 
outside of women's health clinics is deeply offensive, but it 
happens to be constitutionally protected, as the Supreme Court 
has twice held.
    Depending on your point of view, protests at military 
funerals accusing the death of the serviceperson on America's 
attitudes with respect to sexual orientation are outrageously 
offensive, but just this spring, by an 8-1 vote, the United 
States Supreme Court held that that kind of protest is 
constitutionally protected.
    In a free society, we have to protect speech that we don't 
like.
    Mr. Hinojosa. Thank you for that clarification.
    My next question is to Chet Karnas, Lone Sun Builders.
    In your testimony you state that you fought back against 
the Carpenters Union by engaging in your own public campaign 
through presentations to local groups and the press, creating a 
blog, producing a brochure, and even creating your own banners 
that said, in part, shame on Carpenters Union; honesty and 
integrity are the American way; stop the lies.
    Do you believe that the First Amendment protects your 
rights to free speech?
    Mr. Karnas. Yes, I do.
    Mr. Hinojosa. If yes, in your testimony, you state you were 
disappointed with the board's recent bannering decision because 
it protected this coercive practice. Do you believe your 
actions were coercive?
    Mr. Karnas. I do not because I believe the recent decision 
on Carpenters Union 1506 was on the Carpenters Union, and I 
consider the Carpenters Union's tactics to be a rogue union 
with rogue tactics. The AFL-CIO construction unions----
    Mr. Hinojosa. If that is how you feel, did you file a 
complaint or charge against the NLRB?
    Mr. Karnas. No, sir. Due to the litigation costs and due to 
counsel--just due to the environment, the business environment, 
it is not cost-effective. It didn't pass the cost-benefit 
analysis, and I really thought I had a dialogue with the 
carpenters' representative. I am very transparent, tried to 
communicate multiple times. I tried that. I tried to be 
bipartisan and honest and communicate first.
    Mr. Hinojosa. My time has expired.
    Chairman Roe. I thank the gentleman.
    Mr. Gowdy.
    Mr. Gowdy. Thank you, Mr. Chairman.
    Mr. Fritts, can Boeing factor in South Carolina's financial 
incentives in their decision to relocate.
    Mr. Fritts. There is certainly nothing unlawful with Boeing 
considering what financial benefit the State of South Carolina 
may be willing to provide them, and that will be one of the 
issues I am sure that they will argue in the hearing.
    Mr. Gowdy. You will be doing a pretty sorry job for your 
shareholders if you didn't factor in the fact that a State was 
willing to incentivize your relocation there, wouldn't you?
    Mr. Fritts. I would think that is an important business 
consideration.
    Mr. Gowdy. Are you familiar with the case of First National 
Maintenance Corp. v. NLRB?
    Mr. Fritts. Yes.
    Mr. Gowdy. Am I stating this correctly: Congress had no 
expectation that the elected union representative would become 
an equal partner in the running of the business enterprise?
    Mr. Fritts. Yes, that is accurate.
    Mr. Gowdy. Is that a fair quote from either the holding or 
dicta in that case?
    Mr. Fritts. Yes, that is an accurate quote.
    Mr. Gowdy. All right. So Boeing has to make what is the 
best decision for them, correct? They can factor in the fact 
that South Carolina provides financial incentives to locate to 
that State?
    Mr. Fritts. Yes.
    Mr. Gowdy. All right. Is there any evidence that Boeing 
negotiated in bad faith?
    Mr. Fritts. I don't know what evidence the acting general 
counsel has or collected----
    Mr. Gowdy. That is not part of the complaint.
    Mr. Fritts. But what I do know is the acting general 
counsel has determined that there was no violation of Boeing's 
duty to bargain in good faith. They did, in fact, satisfy their 
duty to bargain with the union by negotiating language in their 
collective bargaining agreement that gave them the right to 
place new work wherever they wanted to.
    Mr. Gowdy. All right. And this case is going to turn on 
whether or not it was a new line of work or a transfer of 
existing work, correct?
    Mr. Fritts. I believe so, but again, I am not privy to all 
of the evidence that is----
    Mr. Gowdy. Are you privy to the fact that Boeing added 
2,000 jobs in Washington State even after the transfer of work 
to North Charleston?
    Mr. Fritts. My understanding is that the work in the Puget 
Sound area has grown, and that no IAM representative or 
employee is going to be laid off as a result of this decision.
    Mr. Gowdy. Are you familiar with the quote from the 
spokesperson for the NLRB?
    Mr. Fritts. I am sorry, which quote?
    Mr. Gowdy. We are not telling Boeing they can't build 
planes in South Carolina; we are talking about one specific 
piece of work, three planes a month. If they keep those three 
planes a month in Washington, then there is no problem. Beyond 
the 10 planes, Boeing can build whatever it wants in South 
Carolina.
    Have we gotten to the point where the NLRB is going to tell 
a company how many widgets or planes or anything else they can 
build in any particular State? Is that how you read this? The 
NLRB is going to tell a company precisely the number of a 
product it can build in a State?
    Mr. Fritts. That is the essence of the complaint, yes.
    Mr. Gowdy. Let me ask you about another quote.
    Mr. McNerney, who is the CEO of Boeing, said that one of 
the considerations in where to place the new work was strikes. 
Is it inappropriate, legally, for him to say that one of the 
considerations for where they are going to place a new line of 
work is whether or not they will have a consistent source of 
labor?
    Mr. Fritts. There is a certain level of candid dialogue 
that occurs when you have an established bargaining 
relationship. I know based on what has been reported that there 
were concerns about customers who were unwilling to tolerate 
interruption in production.
    Mr. Gowdy. Let's be very clear on that because there was a 
customer who said we are going to have to reevaluate our 
business relationship with you because of the unpredictability 
of your work, correct? A customer is threatening to take its 
work somewhere else because there have been four strikes, 
correct?
    Mr. Fritts. That is what I understand, yes.
    Mr. Gowdy. Am I to be led to believe by the NLRB that that 
cannot be considered?
    Mr. Fritts. Ultimately, the issue in the case is would 
Boeing have made this decision for business reasons other than 
the strike activity of the employees in the plant, and 
ultimately, that is the issue for the board.
    Mr. Gowdy. Well, let me ask you this. Is it okay for him to 
think it but just not say it? Would he have been fine to just 
think to himself, we better look for a consistent workforce, 
instead of saying it? Was that the sin he committed, that he 
actually said it?
    Mr. Fritts. I think as a result of this case, employers are 
going to be cautious about what they say publicly about their 
business decisions.
    Mr. Gowdy. Well, my time is almost up. I find it an 
abomination that you can wear a prison uniform and represent 
yourself as a prisoner while you are at work, but a CEO of 
Boeing cannot say we can't survive with these continued work 
stoppages.
    That is an abomination, and I will yield back my time, Mr. 
Chair.
    Chairman Roe. I thank the gentleman.
    Mr. Scott.
    Mr. Scott. Thank you, Mr. Chairman.
    Ms. Fisk, are you aware that our committee has requested 
documents from the NLRB?
    Ms. Fisk. Yes, I am.
    Mr. Scott. Are those documents accessible under the normal 
discovery process or Freedom of Information?
    Ms. Fisk. I imagine that documents about pending cases that 
reflect attorney-client privilege, as Mr. Fritts said, work 
product, or strategic decisions of the general counsel are not 
available either through the ordinary board processes or 
through a FOIA request.
    Mr. Scott. Can a litigant benefit if the secret internal 
communications of NLRB are made public?
    Ms. Fisk. Yes, of course. That is what the Supreme Court 
held in Hickman v. Taylor in the 1930s.
    Mr. Scott. Thank you. We have heard a lot of complaints, 
but do any of the witnesses have legislative recommendations?
    Mr. Bego. As far as unfair labor practices in the corporate 
campaigns?
    Mr. Scott. Right.
    Mr. Bego. Well, in our experience with all corporate 
campaigns run against us. It is called death by a thousand 
cuts. So not only were they filing unfair labor practices but 
OSHA complaints, EEOC complaints. We had people in my 
neighborhood on Halloween trick-or-treating, handing out fliers 
to people in my company. We had clergy people involved. It goes 
on and on and on. Daily, you wake up and say, what is next.
    One thing I do believe that is necessary is, on the unfair 
labor practice side, is there has to be some type of loser pay 
law, that if people, unions or employers, either one, file 
complaints that are frivolous and they lose, they need to be 
held accountable for them.
    Mr. Scott. Ms. Fisk, is there a prohibition against 
frivolous claims?
    Ms. Fisk. Yes, of course.
    Well, explicitly in the statute, no, but any adjudicative 
entity, whether it is a court or the National Labor Relations 
Act, has a way of dealing with nonmeritorious complaints.
    The challenge is protecting the right of people to file 
claims that later turn out not to be successful with 
prohibiting complaints that are filed for harassing or other 
purposes. That is a complicated line to draw for Federal 
courts. It is a complicated line to draw for an agency.
    But as long as we are committed to the constitutional right 
of people to petition government for redress of grievances, we 
have to have a regime that allows people to file complaints 
that turn out, upon investigation, not to be well based either 
in the fact or the law.
    Mr. Scott. And are there limitations on freedom of speech 
as to what legislative response we can have? Ms. Fisk?
    Ms. Fisk. I am sorry?
    Mr. Scott. Are there limitations on freedom of speech under 
the Constitution or right to freedom of speech as to what we 
can do to some of these complaints?
    Ms. Fisk. Yes, of course. I mean, you can't defame somebody 
by standing around in public and shouting falsehoods that harm 
their reputation unless they are a public figure and you lack 
malice, but in terms of just filing litigation documents, there 
is a First Amendment right to make allegations in litigation 
documents, including allegations of fact that later turn out 
not to be true.
    Chairman Roe. I thank the gentleman.
    Mr. Walberg.
    Mr. Walberg. Thank you, Mr. Chairman.
    And before I ask the question, I just feel compelled to let 
off some steam as well.
    It is absolutely frustrating to even have to have a hearing 
like this. I come from Michigan, that led this country into 
recession, and I am hopeful that we don't ultimately be the 
last one out.
    But the impact of what the NLRB is doing indicates to me 
and I think it ought to indicate to people of goodwill and 
belief in what capitalism and what this country is all about, 
it ought to lead them to fear as well, that what either the 
bureaucrats and this NLRB board are doing is either out of 
ignorance of what it takes to move a country forward or it is 
just malice aforethought, to change this country from what it 
is, what it has been, what it can be.
    Having said that, I thank the panel for being here, and Mr. 
Bego, I thank you for being here. I see you are from Michigan, 
that you have operations in Michigan, that you are providing 
jobs in my State, and I thank you for that, in tough times.
    Mr. Bego. I thank you.
    Mr. Walberg. I come from a county that has a 14 percent 
unemployment rate still to this day. So jobs are important to 
us, and I thank you for taking the risk and taking the abuse 
that I read and I hear is going on here.
    You said that it costs about $1 million to defend yourself 
from the corporate campaign. How many jobs could have been 
created, to your guesstimate, with that kind of investment?
    Mr. Bego. Forty, 50 jobs or more, and you know, that is the 
problem when you go into these, and that is why a lot of 
employers don't fight them because they don't have the 
resources to do it. We are fortunate we do, that we are big 
enough, and we stretch across the country, and we can withstand 
it.
    Mr. Walberg. From a financial and personal standpoint, I 
say relational standpoint even, in the case of your employees, 
what kind of a toll did it take on your employees?
    Mr. Bego. Well----
    Mr. Walberg. Marriages, whatever.
    Mr. Bego. It was difficult for everybody, and the ones that 
I felt the worst for were our cleaners who are out in the 
buildings because the organizers would be out there at night, 
waiting for them to come out of the buildings to try and force 
them to sign union cards while they were doing all the other 
things to me and my customers. And I saw some of the affidavits 
that they wrote when we were in the hearing, and it just--I am 
sorry, I get emotional--it just was appalling what they did to 
some of our employees.
    And then, you know, that is what hurt the most, but the 
bright spot was is that when I met with the employees, they 
understood what was going on, and they didn't want any part of 
what the union had to sell, and that kept me going.
    Mr. Walberg. Well, I appreciate that.
    Mr. Karnas, how has the NLRB's September 2010 bannering 
decision affected your business? And a follow-up question for 
your consideration, what cost did it have on your businesses 
and your employees?
    Mr. Karnas. Well, first of all, the bannering decision, 
September 2010, again, was not endorsed by all the construction 
trade unions.
    In New Mexico, we have the New Mexico Construction Building 
and Trades Council, and they have had an editorial in our local 
paper saying that they don't endorse those kind of tactics 
because those kind of tactics are divisive. It is a visual 
blight. It is bad for tourism. It is bad for business. It is 
bad for the construction profession, for its reputation, and it 
is a job killer, and it is not a job creator by any means.
    And I believe that bannering decision was made for the 
minority of the construction trade groups. Most construction 
trade groups do not agree with those tactics, and they have 
openly stated that.
    So, again, I believe the Carpenters Union is a rogue union, 
and I believe their tactics are unethical and reprehensible, 
and I would like the National Labor Relations Board to take 
that into consideration and make sure that the bannering 
decision is enforced. We all have free speech rights, but they 
have violated those rights every time.
    Mr. Walberg. It is a chilling effect on those rights?
    Mr. Karnas. I am sorry.
    Mr. Walberg. This is a chilling effect on all of those 
rights, even for a majority of the trades people?
    Mr. Karnas. Yes, and our employees, they have no--after 
their abhorrent behavior, they are with us 100 percent, and 
again, we are not anti-union. You talk about collective 
bargaining. Our employees are involved in our processes. I 
mentioned our benefits programs before. On top of our health 
benefits, we also include an has for employee savings accounts 
when they have the larger deductibles, and this is all from 
employee input. And we have a lot of buy in, but it has had a 
chilling effect on our employees. There has been some fear of 
some safety, some threats. Of course, even the threats have 
been loud, and so we have had a negative impact, but we 
continue on. I think we are closer for it, and we still keep an 
open mind, and we wish to have dialogue.
    Mr. Walberg. I thank you, and Mr. Chairman, I thank you for 
the time and I also thank you for letting the time go so we 
could hear that employees get it, in many cases, even though 
their leadership doesn't.
    Chairman Roe. Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    Mr. Fritts, in your submitted testimony, you suggested that 
in the discussions about the movement of the plant, that the 
employees had waived their right to Boeing making this 
decision?
    Mr. Fritts. That is what the acting general counsel found.
    Mr. Miller. And Ms. Fisk, in your statement, I think in 
responding to Mr. Andrews you suggested that that may be so, 
but they did not waive their rights against being discriminated 
against under the law?
    Ms. Fisk. That is correct.
    Mr. Miller. And that would be what right?
    Ms. Fisk. The right under Section 8(a)(3) of the NLRA to be 
free from discrimination in regard to having exercised 
statutory rights.
    Mr. Miller. So when various officers and the CEO of Boeing 
make a series of public statements that they made this decision 
and will continue to make these decisions because of the 
strikes at the Washington facility, one of the units of the 
Washington facility, what choice does the general counsel have 
here given that retaliatory actions against legal union 
activities are prohibited under the law?
    Ms. Fisk. The general counsel is appointed to enforce the 
National Labor Relations Act. It is important to distinguish 
that there may not have been a violation under 8(a)(5), which 
imposes a duty to bargain, but that has nothing to do with 
whether there was a violation under Section 8(a)(3) of the 
statute, which prohibits discrimination in regard to union 
activity.
    Mr. Miller. So if Boeing, if these same corporate officers 
had said, well, we are going to move our planet because there 
are too many African-Americans in Seattle, would those African-
American workers have lost their right because Boeing and the 
machinists decided that they could move this facility prior to 
the knowledge of that reason?
    Ms. Fisk. Of course not. The African-Americans have rights 
under Title VII of the Civil Rights Act of 1964, as does 
everybody, to be free from discrimination in regards to race as 
companies make decisions about how to run their operations.
    Mr. Miller. And to date, we have this complaint--we haven't 
heard from the administrative law judge yet, correct?
    Ms. Fisk. That is correct. We have no idea what the 
evidence is ultimately going to show about why Boeing decided 
to move its operations.
    Mr. Miller. You don't know whether or not the board will 
agree with that finding or whether it will be appealed to the 
board or whether the board will disagree with that finding; is 
that not correct?
    Ms. Fisk. That is correct.
    Mr. Miller. And we don't know in fact whether that will be 
appealed?
    Ms. Fisk. That is correct.
    Mr. Miller. But the allegation here is that this decision 
was based in part on an illegal activity?
    Ms. Fisk. That is correct. It is an allegation based on the 
board's investigation of the facts, but those facts have not 
been proven.
    Mr. Miller. So the idea that somehow this decision--I find 
it rather ironic that we would say that this decision somehow 
is going to change America for what it could be, when, in fact, 
what you have is the protection of rights of workers, under the 
law, clearly stated. You have on videotape comments by these 
individuals saying that that is the reason why they are 
continuing to move the facility or move the facility, and the 
question is whether or not the law will be allowed to work or 
whether this committee and the oversight committee will be able 
to reach in and tamper and interfere with that process, which 
is essentially a judicial process.
    Ms. Fisk. That is correct.
    Mr. Miller. Have you ever asked--Mr. Fritts, have you ever 
asked the Congress to defund a case against one of your 
clients?
    Mr. Fritts. I am not a lobbyist. I am a lawyer.
    Mr. Miller. No, I am just asking as a lawyer. This is one 
of the tools that is in apparently now available if you come to 
the Congress and ask them to defund the agency bringing the 
case, prior to any little bit of, you know, presentation of 
evidence.
    Mr. Fritts. Congressman, all I can tell you is my client's 
pay me to litigate cases. They don't pay me to lobby.
    Mr. Miller. It is not a question of lobbying. It is a 
question of whether or not you think that is a proper tool.
    Mr. Fritts. I am not here to comment on what is appropriate 
for Congress or for the purposes of congressional oversight. I 
am here to testify about the National Labor Relations Act and 
practice before the board.
    Mr. Miller. Ms. Fisk, you also state in your testimony 
that, in fact, the Supreme Court has found the board to be too 
restrictive on the issues of free speech in union campaigns; is 
that accurate?
    Ms. Fisk. That is correct.
    Mr. Miller. It wasn't on initiation by the board. In fact, 
the board was going the other direction until the Supreme Court 
spoke.
    Ms. Fisk. It wasn't the Supreme Court. It was the Federal 
Courts of Appeals. What happens is the board interprets the 
statute one way and then tries to get enforcement, either by 
going into a district court to get an injunction or it issues a 
decision, and then one of the parties appeals it or seeks 
review in the Federal Courts of Appeals. And the board was 
losing its cases in which it was holding that bannering is 
coercive, and ultimately, therefore, the board decided that it 
had to change its position because the Federal Courts of 
Appeals, including the D.C. Circuit in the Sheet Metal Workers 
case, in an opinion by Chief Judge Douglas Ginsburg, who is 
nobody's liberal, found that bannering is protected by the 
First Amendment.
    Chairman Roe. The gentleman's time has expired.
    Mr. Kline.
    Mr. Kline. Thank you, Mr. Chairman.
    Thank you to the panel for being here.
    Mr. Fritts, earlier in the discussion today, there were 
questions raised regarding attorney-client privilege. In 
inquiries that this committee has made of the National Labor 
Relations Board, I have got to admit up front I am not an 
attorney, but it is my understanding that attorney-client 
privilege is not an absolute, that in some circumstances, the 
parties can be compelled to provide information. Is that 
correct?
    Mr. Fritts. That is correct. Certainly----
    Mr. Kline. Thank you. More to the point raised earlier, 
this committee is authorized, indeed obligated, to conduct 
oversight of the agencies and entities within its purview and 
the actions those agencies and entities take. And that is an 
obligation that we take seriously.
    And I would point out that both parties have taken this 
obligation seriously. It is fundamental, fundamental to the 
role of Congress.
    I want to be clear that inquiries this committee has made 
of the NLRB have been made in connection with our authority and 
obligation to conduct congressional oversight, and that 
authority has been exercised consistent with House Rules.
    Now, would you say, Mr. Fritts, that if there are concerns 
regarding the information requested, wouldn't you agree that it 
would fall to Congress and the board to discuss and resolve any 
disagreement over what can be produced consistent with 
congressional responsibilities and rules?
    Mr. Fritts. I agree.
    Chairman Kline. Thank you.
    We have had this discussion back and forth many times, the 
members of this committee. Oversight is a tough business. With 
the National Labor Relations Board, it is absolutely 
indisputable--and I am ready to argue with anybody here--that 
the nature, and I would argue, the bias, of that board shifts. 
Typically when it is a Republican administration, the Democrats 
claim that workers' rights are being denied and it is too pro-
business. And when it is a Democrat's administration, 
Republicans complain. When it is a Republican administration, 
this committee has called for hearings and brought board 
members here to testify, and I have complained about it, and 
now in this administration, I think we have an outrageous 
overreach of the board, and I am doing what I can do to provide 
the oversight to that board.
    It is very powerful. It is powerful beyond what we imagined 
that it could be, and we need to exercise checks and balances 
that the legislative branch, Congress, and the executive branch 
and this board to watch for overreach both ways.
    So I would just say to my colleagues, to the panel, and to 
those here in the room that we are going to continue to 
exercise our authority as both parties have done and provide 
oversight to this board and to all agencies and departments in 
the executive branch.
    I yield back.
    Chairman Roe. I thank the gentleman for yielding. I will 
now exercise my time for questions, and I would start out by 
saying that--well, first of all, Mr. Bego and Mr. Karnas, thank 
goodness there are people like you out there who have the deep 
pockets, and you, Mr. Karnas, are a very small business, and I 
am very familiar with the backbone to not be intimidated. And I 
think you are absolutely right. I grew up in union households.
    As a matter of fact, I have also belonged to a union, and I 
think it is inherent on all of us to allow and make sure that 
workers are treated properly and make sure that employers are 
treated properly.
    Jobs are the single most important because, as Mr. Andrews 
brought up in the very beginning, and I have got a news flash 
for you. We don't have an income tax from Tennessee. We are a 
right-to-work State, and we would love to have your business. 
That is the way our Governor feels, and that is the way I feel 
about this.
    When you see a company like Boeing, a great company--I have 
been through part of their company in Washington State, great 
employees. That business competes around the world, and they 
have a lot of factors. Part of it is labor, a huge part, and 
any business--I heard both of you all say that. And absolutely, 
I am aware of it myself. The most important person in my shop 
are my employees, who work with me every day. They didn't work 
for me. They worked with me in a small business.
    And Mr. Karnas, I heard you say that, too. You are very 
proud of your people.
    And the same thing, Mr. Bego.
    And I would like to know why in the world in American 
business, we have got jobs going overseas, and you see losing 
jobs and jobs and especially our manufacturing jobs, why in the 
world we would have a situation where you could go to a non--a 
shop or an employer who is not even involved in a conflict, a 
discussion, and have someone show up with a rat out there as an 
inflatable rat or a banner, how that creates a job or helps a 
worker. I am sort of slow, but I don't understand that.
    And the other thing I can't understand is, when you have a 
business--Mr. Bego, I want you to speak to this--is when you 
have a business out there, and you have hundreds or you, in 
case, thousands of employees, who haven't asked for a union, no 
one in your shop asks, and if you want to have a vote, that is 
the way America votes. You have an election. We now have a 
process for that, but these corporate campaigns are a way to 
avoid any pain on the side of the person asking for it 
completely, and you used the same tactics as you can with a 
strike, except you don't feel, as Mr. Fritts pointed out, the 
pain of losing your paycheck.
    So, in your case, you didn't have anyone asking for a 
union. They stepped in to ask, and then you went through 
essentially $1 million worth of litigation to protect yourself 
from something you didn't ask for or your employees asked for. 
Can you speak to that?
    Mr. Bego. Well, that is correct, and I think people have to 
understand what a corporate campaign is versus what is going on 
with Boeing right now.
    In a corporate campaign, the union, as I said before, has 
come in and looked at as a business model. And in our case, 
they came went out to about 10 janitorial firms in the Midwest, 
okay. And the thing about this is, if they could follow the 
law, the National Labor Relations Act, and get 30 percent of 
the people to sign cards, they could petition for an election. 
They didn't do that. My guess is because they couldn't get 
enough people to sign the cards.
    So what they did then is start this campaign that would 
force unionize my people, and I said, no, because it wasn't 
right for my people.
    And it continues, and the board today is trying to 
promulgate rules that will help them process these corporate 
campaigns easier, and one simple example real quick is, they 
are trying to get one where you have to post the National Labor 
Relations Act, specifically the part of it that says you can 
unionize. Sounds good, but they also want to attach fines to 
it, like $10,000 every time you are found guilty of not 
posting.
    That is not the real goal. The real goal is, is not to 
inform the people. The real goal is they go in. They don't have 
it up. The organizer goes back to the union hall, and he says, 
we will file an unfair labor practice. All of the sudden, the 
business has two or three of those sitting there, and the union 
comes in and says, I can make your pain go away; here is what I 
will do. You sign this neutrality agreement, we will withdraw 
the charges. And they have got what they want because now they 
have got card check; they have got the people's home addresses 
and their names. That is what the game is.
    Chairman Roe. I am going to ask Mr. Fritts very quickly, is 
a private employer subject to oversight by a Member of 
Congress?
    Mr. Fritts. Is it proper----
    Chairman Roe. Private citizen, they are not. We are not.
    Mr. Fritts. No.
    Chairman Roe. And is a private employer subject to the 
oversight of this committee?
    Mr. Fritts. I am not an expert on oversight.
    Chairman Roe. The answer is no, and is a private employer 
subject to oversight of this Congress?
    Mr. Fritts. I assume not, no.
    Chairman Roe. Well, is the National Labor Relations Board 
subject to oversight by this Congress?
    Mr. Fritts. Yes.
    Chairman Roe. And by this committee?
    Mr. Fritts. Yes.
    Chairman Roe. I think that is the point Mr. Kline was 
trying to make. My time has expired.
    Any closing statements from the ranking member.
    Mr. Andrews. Yes. I would like to again thank the witnesses 
and our colleagues for what I think was a very interesting and 
instructive exchange.
    I think the record of the hearing establishes four 
propositions: The first is that in a boisterous and exuberant 
democracy, when people express their opinions, sometimes people 
are troubled and find them offensive. I hope we always find 
opinions offensive because that means people are free to speak 
their minds.
    The second proposition established is that the Boeing 
decision is very controversial and hasn't been decided yet. So 
I guess we are a little ahead of our time in that regard that 
we are discussing a decision that hasn't been made yet, and 
someday it will be made, and we will assess the impact of it.
    The third proposition I think is clearly established is 
that asking the general counsel of the National Labor Relations 
Board for his work product and his privileged communications 
with his client in a pending matter or any matter is wrong and 
should not have been done.
    And the fourth proposition is that this is yet another 
example of how we could have focused on the issue of creating 
an environment where businesses and entrepreneurs could 
actually address the number one problem in this country, which 
is creating jobs, instead of talking about cases that haven't 
been decided, asking people for information to which we are not 
entitled, and sort of remarking on the fact that in a free 
speech democracy, people sometimes say things that offend other 
people.
    I appreciate--I think the witnesses did contribute in a 
meaningful and important way, and I appreciate their time and 
their preparation, but I would, frankly, again urge that the 
committee refocus our attention on the number one issue that we 
hear about in our district, which is working together to create 
jobs for the American people.
    I yield back.
    Chairman Roe. I thank the gentleman.
    I agree with the gentleman that jobs are the single biggest 
issue facing this country right now. I went back and reviewed 
all of the recessions that have occurred, major recessions that 
have occurred since 1945, and all--the four steepest ones when 
we have come out of recession--and this is essentially 13 
months past that time--we have come out, the GDP, about 7 
percent higher than we went in and jobs about 4 percent, 4.7 
percent higher than when we went in. So we came out pretty 
steep after the deepest recessions.
    And the two I remember, the first was 1973. I was in the 
Army and Korea, and I got heat 3 hours a day. People here stood 
in gas lines in this country. In 1981, we had a very steep 
recession, and the same thing occurred then. This particular 
recession, our GDP is up about a 10th of a percent. That is why 
when you ask people, is this recession over--go ask when you 
get home to your constituents, is this recession over, and no 
one will raise their hand. And the reason is because they can't 
find a job, and the reason they can't find a job is that our 
job creation is 5 percent lower than where it was. We are 7 
million jobs below when we started this recession.
    And for the life of me, I am trying to figure out how 
harassing Mr. Bego for 3 years when he said it cost him $1 
million and he could have created potentially 20, 30, 40, 50 
jobs, how that helps with job creation, and that is my 
situation here and my concern here, I mean. I think certainly 
workers need to be protected, no doubt. I put on a uniform and 
left this country so that you would have a right to a secret 
ballot.
    My wife claims she voted for me in the election, but I 
don't know that for sure because it is a secret ballot, and 
that is the way it should be. The President is elected that 
way. The Congress is elected that way. The union members are 
elected that way. And that is exactly the right we want to 
protect.
    And I think you all so much for coming today. It was a 
great hearing. You all did a wonderful job. Without any further 
comments, this meeting is adjourned.
    [Additional submissions of Chairman Roe follow:]

   Prepared Statement of Bill Ritsema, President, Ritsema Associates

    Chairman Roe, Ranking Member Andrews and members of the 
Subcommittee on Health, Employment, Labor and Pensions: Thank you for 
the opportunity to submit my testimony today to your subcommittee. My 
company has been adversely impacted by the Michigan Regional Council of 
Carpenters (MRCC) union as they have singled-out our small business for 
no concrete reason and use methods such as letters, picket lines and 
``bannering'' at several of our high profile job sites. Congress needs 
to put an end to the currently allowed harassment practices on small 
businesses that are based on no merit.
    My name is Bill Ritsema, and I am the President of Ritsema 
Associates which is a second generation merit shop specialty contractor 
that has been in business since 1955. We are a family owned business 
that has a strong reputation in Michigan for providing a quality 
product and providing quality benefits and pay to our employees.
    On July 13, 2010, we received a letter that stated the carpenters' 
union had investigated our wages and benefits and deemed that they were 
lower than the area standard. Coincidentally, our business did not 
provide them with any wage and benefit information nor have our 
employees submitted a survey to them directly. They are attempting to 
blackmail us into providing them with proprietary information intended 
to be used for their own benefit with the threat of harassment to our 
customers and business. They requested that we fill out our wage 
structure and send it back to them within seven days. See exhibit 1. 
Instead of filling out their forms, we sent them a response letter on 
July 23, 2010 asking to see the results from their investigation of our 
wages and benefits. See exhibit 2. Interestingly, they did not send us 
the results of their investigation of our own wages and benefits.
    To date, the union has no recorded complaint filed with the 
National Labor Relations Board (NLRB). However, the union began a 
harassment campaign by sending letters to more than one dozen of 
Ritsema Associates' customers claiming a ``Notice of Labor Dispute.'' 
The letter requests of customers, ``[W]e are asking that you use your 
managerial direction to not allow these non area standard contractors 
to perform any work on any of your projects unless and until they 
generally meet area labor standards for all their carpentry craft 
work.'' The MRCC is attempting to remove our carpenters off the job 
site even though they do not represent our carpenters or have 
legitimate cause. While this was couched as a request from the MRCC, 
the union also informed the customers that there would be adverse 
impacts if they continued using the employees of Ritsema Associates. 
``We want you to be aware that our new and aggressive public 
information campaign against this company will unfortunately impact all 
parties associated with projects where they are employed,'' the notice 
warns. The impact is defined as ``highly visible'' banner displays and 
``distribution of handbills'' at the job sites of Ritsema Associates' 
customers. Shortly thereafter, large banner displays manned by teams of 
demonstrators did begin to appear outside of several job sites where 
employees of Ritsema Associates were working.
    When asked, the banner holders denied being employed by Ritsema 
Associates, the customer or any of the other contractors on the job 
site. They stated that they were not carpenters and not members of the 
MRCC union. They would only state that they had been hired by the MRCC 
to ``hold the banner.'' Additionally, video interviews done by the 
Mackinac Center for Public Policy confirm that the union hired homeless 
individuals from a shelter in downtown Grand Rapids. Committee members 
can view the videos at the following web addresses:

             http://www.youtube.com/watch?v=JUwy_Ot1d4I and
               http://www.youtube.com/watch?v=Ndb_xGkZY5w

    The union has been ``bannering'' and picketing many of our 
construction sites claiming that we do not pay the area standard wages, 
health benefits and pension to all of our employees. What they say on 
our job sites essentially mirrors what their letters say and are 
patently false. The union was actually picketing right outside a cancer 
center where cancer patients were resting and, according to the 
hospital's lawyer, were doing so illegally.
    The MRCC has also sent letter to our customers' clients that are 
filled with lies, approximately 60 letters have been sent. See exhibit 
3 (Standard letter). Nearly every statement they claim as a fact is in 
reality fiction. Additionally, Kathy Hoekstra from the Mackinac Center 
for Public Policy has a union representative on video accusing us of 
hiring illegal aliens, which is also false.
    Customers have stopped using Ritsema Associates in order to make 
the MRCC demonstrations stop. Demonstrations that are unfounded and 
based on no proof. To be clear, I have never spoken with anyone from 
the MRCC union. The dispute that they have with our small business is 
based on ulterior motivations rather than facts.
    Congress needs a legislative solution to stop the currently legal 
practice of harassment and lies. These current practices allowable by 
the National Labor Relations Board (NLRB) are destroying business and 
have given the unions the right to harass good long-standing companies 
such as our own.
    Ritsema Associates pays a superior package of wages and benefits to 
our employees. We are also very competitive and, accordingly, are able 
to provide the kind of job security that allows our employees to earn 
fair wages and benefits on a consistent basis. We provide our employees 
with a quality benefit package that includes a financially sound health 
plan and a 401(k) plan where every dollar that goes in belongs to our 
employees. Our company and customers have been needlessly harmed by the 
acts of harassment by the Michigan Regional Council of Carpenters. 
These acts have no merit or basis other than to damage our reputation 
and therefore harm our workers.
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    [Additional submissions of Mr. Andrews follow:]

    
    
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                     INDIANAPOLIS CLERGY COMMITTEE
                 A Project of Interfaith Worker Justice

    In accordance with our various faith traditions, we believe that 
dignity and just compensation are essential human rights for all 
workers. As religious leaders, God has called us to share a vision of 
reconciliation and economic equality. We invite business, labor, and 
political leaders to work together to make this vision a reality for 
the workers in our city.

                        STATEMENT OF PRINCIPLES

    Therefore, we call upon business leaders to enact polices and 
practices for janitors and all low-wage workers, whether they are 
direct employees or contracted out, which will:
     Pay a living wage that allows workers to meet the basic 
needs of their families.
     Provide full health care benefits for workers and their 
families at an affordable rate.
     Prevent tactics which intimidate workers who want to join 
a union.
     Negotiate in good faith. We call upon labor leaders to:
     Make the needs of low-wage workers their primary concern.
     Be honest about services provided.
     Negotiate in good faith.
    It is our prayer that the economic inequality in our city can be 
overcome through cooperation. It is our commitment to stand up for the 
rights of all low-wage workers. It is our calling to keep before this 
city a vision of God's justice and mercy.

                                  Bishop Michael J. Coyner,
                       Indiana Area of The United Methodist Church;
                      Rev. Stephen Gray, Regional Minister,
                   Indiana-Kentucky Conf., United Church of Christ;
                   Rev. Dick Hamm, former Genl Min & Pres.,
                     Christian Ch, Disciples of Christ, US, Canada;
                 Rev. Richard L. Spleth, Regional Minister,
                    Christian Church (Disciples of Christ) Indiana;
                                  Bishop Catherine Waynick,
                                 Episcopal Diocese of Indianapolis;
                                          Rev. Mmoja Ajabu,
                               Light of the World Christian Church;
                                          Rev. Chad Abbott,
                            Lockerbie Central United Methodist Ch.;
                                    Rev. Michael Alexander,
                                Aldersgate United Methodist Church;
                                         Rev. Laurie Adams,
                            Christian Church (Disciples of Christ);
                                  Rev. Dr. Ronald J. Allen,
                                    Christian Theological Seminary;
                                    Dr. Preston Adams, III,
                                Light of the World Christian Church
                                   Rev. Kevin R. Armstrong,
                                     North United Methodist Church;
                                          Rabbi Jon Adland,
                                  Indianapolis Hebrew Congregation.

                     INDIANAPOLIS CLERGY COMMITTEE

                 A Project of Interfaith Worker Justice

Rev. Sharon Baker, Lockerbie Central United Methodist
Rev. Louise Baldwin Rieman, Northview Church of the Brethren
Rev. Phil Baldwin Rieman, Northview Church of the Brethren
Pastor Stan Banker, Indianapolis First Friends (Quaker)
Minister Oscar E. Banks, IV, Light of the World Christian Church
Rev. Robert S. Bates, Christian Church (Disciples of Christ)
Rev. Dr. John Bean, Downey Ave. Christian Church
Rev. Johnson A. Beaven III, Citadel of Faith Church of God in Christ
Fr. Carlton Beever, St. Philip Neri Catholic Church
Fr. Justin Belitz, O.F.M., Archdiocese of Indianapolis
Bishop T. Garrott Benjamin, Light of the World Christian Church
Rev. Jeffrey Bessler, Christ Church Cathedral (Episcopal)
Mr. J. Brent Bill, Religious Society of Friends (Quakers)
Rev. Howard Boles, Roberts Park United Methodist Church
Rev. Rayford Brown, Rock of Faith Missionary Baptist Church
Rev. Kent Burcham, Edgewood United Methodist Church
Rev. Larry Bush, Amity United Methodist Church
Rev. Audrey Borschel, Christian Church (Disciples of Christ)
Rev. Bob Cannon, Danville United Methodist Church
Rev. Dr. James M. Capers, Lamb of God Church (ELCA)
Rev. Patricia Case, Christian Church (Disciples of Christ)
Fr. Tom Clegg, Sacred Heart Catholic Church
Rev. Richard Clough, First Congregational Church
Rev. Clarinda Crawford, Bradley United Methodist Church
Fr. Larry P. Crawford, St. Gabriel the Archangel Catholic Ch.
Rev. Darrel Crouter, Central Christian Church
Rev. Canon Kate Cullinane, Christ Church Cathedral (Episcopal)
Rev. Darren Cushman-Wood, Speedway United Methodist Church
Rev. Clement T. Davis, St. Bartholomew Catholic Church
Rev. Garnett Day, Downey Ave Christian Church
Rev. Jean Denton, St. Paul's Episcopal Church
Rev. Brian Durand, St. Luke's United Methodist Church
Rabbi Sandy Eisenberg-Sasso, Congregation Beth-El Zedeck
Rev. Pat Engel, Epworth United Methodist Church
Rev. Ed Fischer, Trinity United Methodist Church
Fr. Tom Fox, O.F.M., Archdiocese of Indianapolis
Rev. Joseph Freeman, Sr., Christ the Savior Lutheran Church
Rev. Carol Fritz, Sheridan United Methodist Church
Rev. Dr. Daniel Gangler, Indiana Area, United Methodist Church
Rev. James Gentry, Indiana Area Fdtn., United Methodist Ch.
Rev. Henry Gerner, United Methodist Church
Rev. John Gibson, United Methodist Church
Rev. Betty Gilbert-Griffin, Immanuel Presbyterian Church
Fr. Jeffrey Godecker, Immaculate Heart Catholic Church
Rev. Ronald Goldfarb, St. Timothy's Episcopal Church
Fr. Todd Goodson, St. Ambrose Catholic Church
Rev. C. Mac Hamon, Castleton United Methodist Church
Rev. Dr. Adolf Hansen, St. Luke's United Methodist Church
Rev. Holly Hardsaw, Horizons of Faith United Methodist
Rev. Charles Harrison, Barnes United Methodist Church
Rev. C.J. Hawking, United Methodist Church
Rev. Rosella Helms, St. Mark's Carmel United Methodist Ch.
Rev. Dr. James Higginbothham, Earlham School of Religion
Rev. Aaron Hobbs, New Market United Methodist Church
Rev. James P. Hollis, Westview Christian Church
Rev. Jonathan Hutchinson, St. David's Episcopal Church
Rev. Bill Johnson, Avon United Methodist Church
Rev. William Keith, Indianapolis East, United Methodist Ch.
Rev. Karen King, Trinity Episcopal Church
Rev. Keith Kriesal, Our Redeemer Lutheran Church
Rev. Douglas Kriz, Speedway Christian Church
Rev. Thomas M. Kryder-Reid, Trinity Episcopal Church
Sr. Mary Ann Lechner, S.P., Sisters of Providence
Rev. Meredith Loudon, United Church of Christ
Rev. Zoila Manzanares, Christ Church Cathedral (Episcopal)
Rev. Mike Mather, Broadway United Methodist Church
Fr. John McCaslin, St. Anthony, Holy Trinity Catholic Ch.
Rev. Linda McCrae, Central Christian Church
Rev. Greg McGarvey, Carmel United Methodist Church
Rev. Linda McKiernan-Allen, First Christian Church, New Castle
Rev. Kent Millard, St. Luke's United Methodist Church
Rev. Jack Miller, Epworth United Methodist Church
Rev. Dr. Richard Moman, Christian Theological Seminary
Pastor James Mulholland, Irvington Friends Meeting
Rev. Wayne Nichols, Faith United Methodist Church
Rev. William Nottingham, Disciples of Christ, United Ch. of Christ
Rev. Bill Novak, Bethlehem Lutheran Church
Fr. Arturo Ocampo, O.F.M., St. Patrick Catholic Church
Fr. Michael E. O'Mara, St. Mary Catholic Church
Rev. David Penalva, Vida Nueva United Methodist Church
Rev. Mark J. Powell, Christian Theological Seminary
Fr. Marty Peters, Archdiocese of Indianapolis
Rev. Bonnie Plybon, Victory United Methodist Church
Rev. Steve Rasmussen, Union Chapel United Methodist Church
Rev. Robert Reister, Allisonville Christian Church
Fr. Joseph G. Riedman, Holy Spirit Catholic Church
Rev. Leon Riley, Central Christian Church
Rev. Gwendolyn Roberts, Metro Ministries, United Methodist Ch.
Imam Michael Saahir, Nur-Allah Islamic Center
Rabbi Dennis Sasso, Congregation Beth-El Zedeck
Rev. Michael Scaife, New Light Christian Church
Rev. Lisa Schubert, North United Methodist Church
Rev. Steven C. Schwab, St. Thomas Aquinas Catholic Church
Rev. Canon David I. Shoulders, The Episcopal Church
Rev. David J. Smith, Abundant Grace Evangelical Lutheran
Rev. Dr. L. Wayne Smith, Abundant Harvest United Methodist Ch.
Rev. Diane Spleth, Franklin Central Christian Church
Rev. Ned Steele, Indianapolis West, United Methodist Ch.
Rev. Kevin Stiles, Cumberland United Methodist Church
Rev. Dan Strobel, St. Andrew's Lutheran Church
Rev. George Sullivan-Davis, Christian Church (Disciples of Christ)
Rev. John Thomas, New Palestine United Methodist Church
Rev. Edgar A. Towne, emeritus, Christian Theological Seminary
Rev. Randall Updegraff, Spleth Geist Christian Church
Rev. Laurin Vance, Salem Lutheran Church
Rev. Art Vermillion, Christian Theological Seminary
Rev. Doug Walker, Rosedale United Methodist Church
Rev. Reid Walker, Zionsville United Methodist Church
Rev. Rodger Ward, Mace/New Ross United Methodist
Rabbi Lewis Weiss, Indianapolis Jewish Community
Fr. Christopher Weldon, All Saints Catholic Church
The Rev. William D. Wieland, St. Andrew's Episcopal Church
Rev. Kirsteen Wilkinson, St. Alban's Episcopal Church
Rev. Canon Alfredo Williams, Christ Church Cathedral (Episcopal)
Rev. Richard Willoughby, Promise Land Christian Church
Rev. David Wise, Otterbein United Methodist Church
Rev. Cynthia Wolfe, Bethel African Methodist Episcopal Ch.
Rev. Kevin Wrigley, Plainfield United Methodist Church
Rev. Amanda Yoder Schrock, First Mennonite Church
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    [Questions submitted for the record and their responses 
follow:]

                                             U.S. Congress,
                                    Washington, DC, August 5, 2011.
Mr. Jonathan C. Fritts,
Morgan Lewis, 1111 Pennsylvania Avenue, NW, Washington, DC 20004-2541.
    Dear Mr. Fritts: Thank you for testifying at the May 26, 2011, 
Subcommittee on Health, Employment, Labor, and Pensions hearing 
entitled, ``Corporate Campaigns and the NLRB: The Impact of Union 
Pressure on Job Creation.'' I appreciate your participation.
    Enclosed are additional questions submitted by Committee members 
following the hearing. Please provide written responses no later than 
August 19, 2011, for inclusion in the official hearing record. 
Responses should be sent to Benjamin Hoog of the Committee staff who 
may be contacted at (202) 225-4527.
    Thank you again for your contribution to the work of the Committee.
            Sincerely,
                                        Phil Roe, Chairman,
           Subcommittee on Health, Employment, Labor, and Pensions.

                   QUESTIONS FROM REPRESENTATIVE ROBY

    Representing a district that is in a Right-To-Work State, the 
current activist agenda of the National Labor Relations Board greatly 
concerns me. Congress has a responsibility to ensure the NLRB 
objectively applies the law written by the people's elected 
representatives. Congress must also work to ensure labor interests are 
not undermining an employer's efforts to create jobs. At a time when 
more than 14 million individuals are unemployed and searching for work, 
public officials in Washington should look to provide greater certainty 
to America's employers so they can grow their businesses and create new 
jobs, not hinder them. Unfortunately, the recent rulings and 
proceedings of the NLRB have demonstrated otherwise.
    1. In your testimony you highlighted the controversial Boeing case 
before the NLRB. In your opinion, does this case threaten Right-To-Work 
states and their ability to compete with states that are Non-Right-To-
Work states?
    2. If the NLRB rules in favor of the International Association of 
Machinists & Aerospace Workers, do you foresee business owners less 
likely to open or expand their businesses into Right-To-Work states?
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    [Whereupon, at 11:58 a.m., the subcommittee was adjourned.]

                                 
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