In Volkswagen Meddling, Did Tennessee Officials’ Actions Violate a Supreme Court Ruling?

April 10, 2014

Update on 4/21/14: Hours before today’s scheduled NLRB hearing, the United Auto Workers withdrew their election appeal and urged Gov. Bill Haslam to reinstate his $300 million offer of expansion subsidies with no strings attached this time. Saying that Tennessee officials could again interfere with an election re-run, the UAW said it will ask a federal Congressional inquiry to look into the role of federal funds in the conditioned-subsidy dispute. “The UAW is ready to put February’s tainted election in the rearview mirror and instead focus on advocating for new jobs and economic investment in Chattanooga,” said UAW President Bob King in a statement.

Recent revelations by NewsChannel5 investigative reporter Phil Williams in Chattanooga explicitly raise an issue that I hinted at in my blog on public officials in Tennessee interfering with the vote among Volkswagen workers about joining the United Auto Workers. In that blog, I pointed out that Gov. Bill Haslam asserted that the past granting of subsidies to the plant gave him a right to weigh in on the vote and that a state legislator broadly hinted he would oppose new subsidies to expand the plant if the workers voted to unionize.

The Channel 5 revelations make these links much more vivid. The secret expansion negotiations were dubbed “Project Trinity,” and an August 23, 2013 “ Project Trinity Final Summary of Incentives,” in which the state offers $299.8 million in subsidies, has as its first line of content: “The incentives described below are subject to works council discussions between the State of Tennessee and VW being concluded to the satisfaction of the State of Tennessee.”

I am not a lawyer, but that stipulation stands out to me because of the 1985 Supreme Court Case Golden State Transit Corp. v. Los Angeles. In this case, the Court ruled that state and local governments may not pre-empt the power of the National Labor Relations Board in enforcing those private-sector matters governed by the National Labor Relations Act. Specifically, the Court found that Los Angeles, by canceling a taxi franchise, interfered in “permissible economic tactics” being used by the company and its Teamster workforce during a strike.

The Channel 5 revelations suggest Tennessee officials were committing an equivalent act: they were using the conditioned offer of future subsidies to influence a representation election. It looks like impermissible interference in private-sector labor relations.

Indeed, the Haslam administration now admits that it withdrew the August expansion-aid offer in January as the UAW vote neared. While a state official told Channel 5 that the offer had a standard 90-day duration (which had already been extended two months), Channel 5 reports that the offer it obtained “contains no reference to any sort of 90-day deadline.”

The leaked emails also make it clear that Tennessee Department of Economic and Community Development officials were paying close attention to the vote. Indeed, Gov. Haslam even wrote Volkswagen a letter on February 4 th protesting what he considered an unfair lack of access to the plant for anti-union organizers (Volkswagen allowed UAW organizers access).

The emails also show that high-level Tennessee officials, including the chief of staff to U.S. Senator Bob Corker, and chief of staff to Gov. Haslam’s commerce department, were interacting with anti-union consultants during the union election.

The United Auto Workers have seized upon the Channel 5 revelations to broaden the evidence for their Labor Board case seeking to invalidate the vote as tainted by the officials’ actions. The UAW for an April 21 NLRB hearing in Chattanooga has subpoenaed: Gov. Haslam, his economic development commissioner Bill Hagerty, and Hagerty’s chief of staff; Grover Norquist of Americans for Tax Reform; State Senator Bo Watson; Sen. Corker’s chief of staff; Peter List of; and Tennessee House Majority Leader Gerald McCormick, among others.

Among the materials requested of the witnesses are records of “Government Incentives” defined as “…aid or relief of any nature – whether proposed, contemplated, or effectuated…” by the state for the benefit of Volkswagen.

We await that hearing with interest.