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

Nathan Newman nathan.newman at
Wed Nov 24 13:44:25 PST 1999

> -----Original Message-----
> From: owner-lbo-talk at
> [mailto:owner-lbo-talk at]On Behalf Of jmage at
> This Vodafone statement looks like it got a thorough going-over by lawyers
> for the fiduciary duty stuff Nathan is learning about. Having litigated
> fiduciary duty more than a bit, as you will find out, Nathan, discretion
> will trump fiduciary duty 9 times out of 10.

Not sure what your point is, other than to be a touch condescending, "as you will find out", indeed :) Since I had noted the success of corporate campaigns in a number of areas, of course unions have been figuring out how to use discretion to get around fiduciary duty rules. (Which is not the same as saying that fiduciary rules don't constrain union action, which is more the point).

> Also tried & got shot down with the extortion/RICO bit when fiduciary duty
> got nowhere in greenmail cases (check out Viacom v. Icahn, 2d Cir 1991 -
> don't have full cite here) & my old tax prof Joe Sneed - sitting by
> designation - asked if we were intending to outlaw capitalism! On
> behalf of Viacom! (that's precisely how I saw it of course, but not what
we told
> Viacom's in-house counsel).

And of course, capitalist acts between capitalists are protected by corporate law. And worker acts against companies are protected under labor law (within a narrow set of rules). The interesting question is whether labor acts will be protected within corporate law, or, more interestingly, at the intersection of labor law and corporate law.

Viacom v. Icahn says little about union actions, since all greenmail consists of is using stock transactions to leverage higher stock value payments. As the judges said in that case, Icahn refusing to sell stock at the market price does not prove anything. In fact, the decision was shaped by the fact that the "greenmail" price paid Icahn by Viacom was less than the price eventually paid by a takeover bid months later. The charge was dismissed on the fact that no damage was done to shareholders by Icahn's bid.

In the case of union corporate campaigns, on the other hand, the goal of a successful action is to do damage to shareholders - namely force the company to raise wages and quite likely decrease potential profits. There is nothing in Viacom v. Icahn that blocks an anti-union suit on that basis.

Now, that does not mean judges are going to jump on granting such anti-corporate campaign RICO suits either. But most recently Bayou Steel Corporation brough a RICO suit against the United Steelworkers of America (USWA) and got through discovery before agreeing to settle the case in 1997. But the judge didn't laugh the case out of court specifically because the RICO issue around union securities actions have not been definately settled in any higher court yet.

But whether the law as it stands will knock down corporate campaigns, the corporate lobbies are already legislatively to change the law to make it clear that the courts can block them.

> US Courts have a most excellent nose for the class interests of the US
> ruling class, and attempts affirmatively to use the courts to challenge
> those interests head-on are a dumb waste of time.

Absolutely. Again, that was the point of my post in noting the class consciousness of the capitalist class in how they run corporate law.

The attractiveness of corporate campaigns is that, first, they are a nice indirect bludgeon against specific corporations using the tools of general corporate interests - i.e. using the master's tools against him - for purely strategic blackmail purposes. You take the law as given and just use it for its nuisance power in applying pressure to supplement the workplace-based battle.

The second attractive aspect of corporate campaigns is that they do highlight the contradictions of capitalism, where union-investors are legally barred from pursuing their interests in a broad range of areas, even prohibited from getting a vote at corporate shareholders meetings on many issues, when those issues serve workers interests rather than investor interests. Win or lose, that makes them great propaganda tools as well for highlighting the fact that those interests are not aligned as well as the fact that all the bullshit about democratic control of capital is empty rhetoric when push comes to shove.

-- Nathan Newman

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