Class Consciousness and Corporate Law (RE: Union Card Checks: Conservative Analysis of Tactic

Nathan Newman nathan.newman at
Wed Nov 24 07:32:47 PST 1999

> -----Original Message-----
> From: owner-lbo-talk at
> [mailto:owner-lbo-talk at]On Behalf Of Tom Lehman
> Nathan, from what I know these union tactics are nothing new.
> Only the names
> have changed somewhat over the years.
> Tom Lehman

In some ways, the tactics are not new, but they were hardly used for decades and, in fact, many of the regulatory structures and corporate law tools used by unions in recent years to challenge corporations simply did not exist a generation or two ago. As well, union pension funds were largely ignored as a power tool by unions; they were left to the management of professional investors and the only creative use of them was the "creative accounting" of the occasional corrupt official. To be fair, Taft-Hartley and the 1974 ERISA (retirement) law significantly restricts the freedom of unions to manage their own pension funds.

But the level of corporate campaigns across unions has grown significantly with new departments at many unions devoted specifically to the national coordination needed to achieve their goals. The contemporary rebirth of corporate campaigns is usually traced to its success in the J.P.Stevens textile campaign. Since then a whole range of unions have begun emulating the successes of that campaign and added new tactics. HERE has been especially successful and were one of the earliest unions to hire a significant research staff for that purpose.

The kicker to such campaigns is that they take unions outside the traditional legal venues of the National Labor Relations Board into whole other areas of economic and legal conflict where unions have no clear status. This is causing all sorts of turmoil with employers seeking to have union officials indicted or sued on RICO conspiracy charges for engaging in blackmail, extortion and (my favorite) tortious inteference with contractual relations. Since unions are technically in the business of "extorting" higher wages from employers, this actually is opening some really interesting and potentially dangerous areas. Employers would love to either get judges to support their position or pass legislation that clearly makes any union action illegal outside the straightjacket of traditional labor law.

Forget striker replacement or other headline "labor law" issues. This is where the next line of legislative combat between unions and employers is going to be fought.

I've actually just plunged into research on this whole area in the last week or so, although I've been interested for a while, since plans to work on corporate campaigns was the main reason I decided law school would be a useful endeavor. But the legal framework of labor law in relation to corporate law - the exact issue raised by union corporate campaigns - is fascinating intellectually.

In a sense, and contrary to intuition, you can see how starkly class conscious American economic law is. On one hand, you have a set of hard-fought labor laws that create a narrow, but deep right of workers to fight employers collectively for as high a share of profits as they can. Both Right and Left at its inception had contempt for any argument for shared interests between investors and workers. From the ban on company unions to the refusal to let supervisors collectively organize, the question of "which side are you on" was the basic question asked in the law. Labor on one side, management on the other. No social democratic co-determination, just flat out labor-management opposition. Now, this degenerated with more and more conservative labor laws piled on top into a much more narrow, almost functional division between labor and management within the corporate enterprise, but its core is more class conscious than most folks understand.

And this is matched by a class consciousness in corporate law. If US labor law assumes that labor pursues its self-interest with full-bore pressure (however legally circumscribed), so corporate law assumes investors seek only their own self-interest. In fact, it is essentially illegal under the law for public corporations to make decisions other than in the interests of those shareholders. In fact, it is illegal for shareholders themselves to choose any decision that lowers their own profits and share values - the assumption being that this "oppresses" minority shareholders who might not agree with the majority's social values. So investor interest- the pure class interest - is the only value allowed within most areas of corporate law. Investment funds are largely restrained as well by "fiduciary responsibilities" that essentially require them to pursue the highest returns possible for their investor clients.

The legal puzzle and explosive social issue is what happens when worker-investors cross the legal divide and engage within this corporate world. If those union-investors pursue their interests as workers rather than as investors, can the corporate law block this attempt as contrary to the class rules of investing, essentially treating such attempts at lower returns as a "scabbing" against other investors. But if those worker-investors are pursuing their self-interest and are forced by the law to stop, doesn't that itself betray the capitalist argument that growth is best achieved by pursuit of self-interest, rather than paternal legal regulation?

The most amusing part of this class conflict dillemma is the way it plays out in an almost ping-pong movement between courts. Say a corporation wants to challenge a union waging a corporate campaign against it. A corporation whose workers are located in Louisiana bring a suit in state court charging the union with extortion and blackmail; the union brings a motion to move the whole case to the National Labor Relations Board since federal labor law preempts state court regulation of unions; the corporation replies by appealing to federal court under the argument that the national RICO (racketeering) law overrides labor law in such areas. Then the unions could argue that Louisiana extortion law is not valid in such corporate campaigns, since it is Delaware law (where the corporation is most likely encorporated) that governs such corporate campaigns.

This division of courts can look amusing but this separation of courts is a major way that class consciousness of both workers and investors has both been maintained and depoliticized, since almost no courts have traditionally taken cases or had jurisdiction where all the legal contradictions of class conflict have had full sway.

What makes corporate campaigns interesting is that they are bring to a head many of these contradictions and are likely to force a much more dramatic debate on the class politics of American law and its structuring of the economy than most people I think would expect. Corporate campaigns are all about the politicization of the control of capital - an issue that corporate law has sought to avoid and contain since the late 19th century. In the happy version, it evokes the dreams of "pension fund socialism" and in harder class conflict terms, it just reveals how unequal under the law workers are when push comes to shove in the right to control investments, even investments owned directly by those workers.

-- Nathan Newman

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