U.S. Supreme Court Holds Reasonably-Based Employer Lawsuits Against Unions Do Not Violate National Labor Relations Act
By David S Farkas Breathe easier, open shop employers. Your First Amendment rights are now a little better protected, thanks to a recent decision by the United States Supreme Court.
In BE & K Construction Company v. National Labor Relations Board, the Supreme Court held that reasonably-based employer lawsuits against unions do not violate the National Labor Relations Act (Act). This decision overturns lower court and National Labor Relations Board (Board) decisions holding to the contrary. The Board and the Sixth Circuit Court of Appeals had ordered BE & K to pay attorney fees to California construction unions against which BE & K had filed an unsuccessful lawsuit.
The genesis of this case begins more than 15 years ago, in 1987, when BE & K received a contract to modernize a California steel mill. In September of that year, a number of unions attempted to disrupt work on the site, and the company filed suit against the unions. Subsequently, the unions’ activity stopped, and the company was able to finish the project. But that was not the end of it. A California district court then found that there was no merit in the company’s lawsuit. This decision was appealed, but BE & K again lost.
Meanwhile, two of the unions lodged a complaint against BE & K with the Board, alleging that the company’s lawsuit had an improper purpose, or, in other words, it was meant to restrain or interfere with the employee’s right to organize.
The Board held that the company’s lawsuit was in fact unlawfully motivated. The Board cited numerous bits of evidence to support this holding, among them, the fact that the claims “were directed at protected conduct,” that the claims had “an utter absence of merit,” and further that the company had lost on summary judgment in the district court level. As a result of these findings, the Board ordered BE & K to at no time file such lawsuits again, at all. The Board also ordered the company to pay the union’s legal fees and expenses incurred in defense of the original lawsuit.
Unhappy, to say the least, with the Board’s order, the company sought review before the court of appeals. The appellate court, however, declined to overturn the Board’s order, instead granting the Board’s petition for enforcement of the order. The court found that the company’s lawsuit against the unions was retaliatory. At this point, the case had almost completely toured the federal justice system. It was therefore now ready for its final stop in Washington D.C.
Justice O’Connor wrote the opinion for the majority of the Court. In the opinion, she scrupulously avoided framing the issue as a question of whether or not this suit was retaliatory, or indeed, what exactly “retaliatory” meant. Rather, she suggested that the question was whether there was anything in the Act to indicate that it applies to reasonably based, but unsuccessful, lawsuits filed with a retaliatory purpose. She concluded that there was not.
Justice Scalia, joined by Justice Thomas, went a little further in his understanding of the Court’s decision. He wrote that, in his view, the Act would now be construed in the same way that the Sherman Antitrust Act is construed, or, in other words, the Act would prohibit only lawsuits that are both objectively baseless and subjectively intended to abuse process.
The importance of this decision cannot be overemphasized. As Justice O’Connor noted, the First Amendment of the United States Constitution guarantees the right of the people to petition the government to address their grievances. Prior to this decision, non-union employers were significantly more hesitant to protest adverse decisions of the Board, as they knew that if they lost, there action might be considered as an unfair labor act. Thus, it was nearly impossible for employers to bring suit because to do so they would have needed to have almost 100 percent certainty of success, which is something no employer or its counsel could have reasonably guaranteed in advance. This sort of assurance of success was entirely necessary because if the employer lost, it could very well be ordered to pay the union’s legal fees and expenses, a significant blow, both psychologically and financially speaking.
With this decision, therefore, a great deal more breathing room has been provided. While claims must still be evaluated for merit and worth, the margin for error has been expanded, thus widening the legal strategies available to open-shop employers.
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