Labor & Employment Law Daily Wrap Up, LABOR—UNIONS, UNION MEMBERS—9th Cir.: Hotel operator revives secondary boycott claim related to SeaWorld development project, (Jan 3, 2025)

By Todd Harrison, J.D.

The hotel operator alleged that the unions threatened to oppose SeaWorld’s future park attractions, with the object of forcing SeaWorld to cease doing business with the company.

Reversing in part the dismissal of a hotel operator’s claims against two unions, the Ninth Circuit, in an unpublished opinion, determined that the company had stated a claim for a secondary boycott in violation of the NLRA under 29 U.S.C. § 158(b)(4)(ii)(B). However, the court found that the Noerr-Pennington doctrine protected the unions from statutory liability for the conduct alleged in support of the operator’s 29 U.S.C. § 158(b)(4)(ii)(A) claim. The court affirmed the dismissal of the company’s remaining allegations. In a partial dissent, Judge Callahan wrote that she would not have affirmed the dismissal of the company’s NLRA § 8(b)(4)(ii)(A) claim as she believed that the unions did not enjoy Noerr-Pennington immunity for the alleged threats they had made concerning another development project (Evans Hotels, LLC, v. UNITE HERE! Local 30, Nos. 23-55692 and 23-55728 (9th Cir. Jan. 2, 2025, unpublished)).

The hotel operator brought suit against UNITE HERE! Local 30, and the San Diego County Building and Construction Trades Council, AFL-CIO, accusing them of blocking its efforts to develop two of its San Diego properties, including plans for the development of a SeaWorld-branded hotel. Here, the hotel operator appealed the district court’s order dismissing with prejudice its third amended complaint and the denial of its motion for leave to file a fourth amended complaint.

Noerr-Pennington. First, the court explained that the Noerr-Pennington doctrine shielded the unions from statutory liability for their efforts to oppose a lease amendment before the Mayor of San Diego and the San Diego City Council. The doctrine also shielded the unions from liability for their threats to raise administrative and legal challenges to the Bahia redevelopment project.

No sham exception. The court found that the hotel operator failed to plead sufficient facts to show that the sham exception applied to the unions’ lobbying before the Mayor and City Council. In this instance, the unions successfully petitioned the Mayor and City Council to decline approving the Bahia lease amendment, observed the court. Because the hotel operator failed to allege that this harm was caused by the legislative process—rather than the outcome of the process—the unions’ lobbying activity did not fall within the sham exception, said the appeals court.

In addition, the hotel operator similarly failed to plead sufficient facts to show that the sham exception applied to the unions’ threats to raise administrative and legal challenges to the Bahia redevelopment. At best, explained the court, it alleged that one argument the unions had threatened to raise may not have prevailed. It did not show that the remaining arguments the unions had threatened to raise were baseless.

Further, the hotel operator did not show that the serial sham exception applied to the unions’ conduct. The operator had alleged that the unions raised administrative challenges to, or filed lawsuits to block, eight different development projects between 2007 and 2018. However, the operator was not a party to any of those proceedings.

Sham exception. One instance where the sham exception did apply concerned the unions’ threats to raise administrative challenges to SeaWorld’s future attractions in an effort to pressure SeaWorld to cease doing business with the hotel operator.

Here, construing the allegations in the light most favorable to the hotel operator, the court determined that the union sought to use the governmental process, rather than the outcome of that process, to coerce SeaWorld. Further, the threat was objectively baseless as the unions neither knew which attractions SeaWorld intended to build nor did they follow through with their threat. As such, they could not have reasonably expected to secure favorable government action.

Secondary boycott. Regarding the hotel operator’s claim for a secondary boycott in violation of 29 U.S.C. § 158(b)(4)(ii)(B), it had alleged that the unions threatened to oppose SeaWorld’s future park attractions with the objective of forcing SeaWorld to cease its business dealings with the operator. However, the operator did not state a claim for secondary boycott in violation of 29 U.S.C. § 158(b)(4)(ii)(A) with regard to the Bahia redevelopment. As previously discussed, the Noerr-Pennington doctrine protected the unions from statutory liability for the conduct alleged in support of this claim.

Sherman Act. Turning to the hotel operator’s Sherman Act claims, the court found that the operator did not state a claim for attempted monopolization or conspiracy to monopolize. In this instance, the operator defined the relevant market as the “the market for luxury destination resorts in the cities of San Diego and Coronado....” However, it did not plead facts showing that the unions competed in that market.

Motion to leave. Next, the appellate court determined that the district court did not abuse its discretion in denying the hotel operator’s motion for leave to file a fourth amended complaint. The record supported the district court’s determination that the operator unduly delayed in seeking to add a new Sherman Act claim, and that granting the motion would prejudice the unions, who would incur additional expense.

Cross-appeal. The appellate court did, however, find that the district court erred in ruling that the unions were not entitled to fees and costs solely because their anti-SLAPP motion was no longer pending when they filed their fee motion. Here, the court found that the unions would have partially prevailed on their anti-SLAPP motion with regard to the Bahia redevelopment.

“A defendant who partially prevails on an anti-SLAPP motion is generally the prevailing party, unless there is a determination that that party achieved no practical benefit from bringing the motion,” explained the court, remanding the matter for the district court to make such a determination in the first instance.

Partial dissent. Judge Callahan concurred with the majority with the exception that she would not have affirmed the dismissal of the hotel operator’s NLRA § 8(b)(4)(ii)(A) claim based on the unions’ alleged threats to file legal challenges to the Bahia redevelopment project. According to Judge Callahan, the unions should not have enjoyed Noerr-Pennington immunity for those threats because the complaint adequately alleged that the unions made the threats pursuant to a policy of starting legal proceedings without regard to the merits and for the purpose of injuring others.

The cases are Nos. 23-55692 and 23-55728.

Judge: Per curiam.

Attorneys: Edwin M. Boniske (Higgs Fletcher & Mack) for Evans Hotels, LLC. Luke Dowling (McCracken, Stemerman & Holsberry) for UNITE HERE! Local 30. Stacey Leyton (Altshuler Berzon) for San Diego County Building and Construction Trades Council, AFL-CIO.

Companies: Evans Hotels, LLC; UNITE HERE! Local 30; San Diego County Building and Construction Trades Council, AFL-CIO

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