November 14, 2007

Addressing a dispute that began 20 years ago, the National Labor Relations Board has issued a new standard for determining when employer legal action challenging union campaign tactics is lawful. Following a long trail of litigation, including a Supreme Court decision in 2002, in BE&K Construction Co., 351 N.L.R.B. No. 29 (Sept. 29, 2007), the Labor Board has held that "the filing and maintenance of a reasonably based lawsuit does not violate the [NLRA], regardless of whether the lawsuit is ongoing or completed, and regardless of the motive for initiating the lawsuit."  This ruling may provide employers with additional tools for pushing back against union corporate campaign tactics through reasonably based legal recourse, such as allegations of labor law and antitrust violations, even if ultimately unsuccessful.

In 1987, the employer, a nonunion general contractor in California, received a contract to refurbish a steel mill. Various building trades unions engaged in a campaign that included lobbying politicians for new emissions standards, handbilling and picketing at the site, encouraging subcontractors' employees to strike the project, filing state court claims alleging violations of state health and safety codes, and initiating grievance proceedings against the employer’s business partner.

In response, the employer and the mill operator sued the unions for conducting an illegal secondary boycott in violation of federal labor law and, subsequently, for violating the Sherman Antitrust Act. In the court proceedings at trial, and in the appeals that followed, most of the employer’s claims were dismissed or ruled against, including the antitrust allegations. At one point, the trial court ordered civil sanctions against the employer, later reversed by the appeals court. After its legal actions failed, the employer was charged with and found liable for committing an unfair labor practice by filing and maintaining the lawsuit in retaliation for the unions’ campaign. The Labor Board’s ruling was upheld by the federal appeals court, including an order that the employer reimburse the unions for legal defense costs.

Supreme Court Found Old Standard Invalid
That decision was appealed to the U.S. Supreme Court, which ruled in 2002 that the Labor Board's old standard -- that all reasonably based but unsuccessful lawsuits filed with a retaliatory purpose violated the National Labor Relations Act -- was invalid. With its old standard debunked, the Labor Board had to reconsider the employer’s case. It also had to address a question left undecided by the Supreme Court: whether the Board could decide that any unsuccessful but reasonably based lawsuit in retaliation for NLRA-protected activity with the sole purpose of imposing litigation costs against the union was unlawful.

In formulating its new standard, the Labor Board took into account a Supreme Court decision that involved an attempt to stop an ongoing lawsuit, which a union had claimed was in violation of the NLRA. In holding that an ongoing reasonably based suit cannot be enjoined as an unfair labor practice, the Supreme Court had found it necessary to protect the party’s constitutional right to petition for redress of grievances. Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983). The Labor Board reasoned that the same protection must apply to a completed lawsuit that was reasonably based in order to avoid a "chilling effect on the right to petition.”

Constitutional Guarantees Extend to Reasonable Basis for Success
Finding the “same weighty First Amendment considerations” applicable to completed lawsuits, the Board cautioned that the very prospect of liability for an unfair labor practice may deter prospective plaintiffs from filing legitimate claims. In evaluating legitimacy, the Board adopted the test used by the Supreme Court in antitrust cases and said a lawsuit lacks a reasonable basis if no reasonable litigant could realistically expect to win.

Using its newly developed standard, the Labor Board found that, in this case, the employer’s lawsuit was reasonably based. The 3-2 Board majority assured the dissenting members that it was not putting an absolute primacy on First Amendment interests. Under the new standard, the majority said, "[A] lawsuit that targets conduct protected by the Act can be condemned as an unfair labor practice if it lacks a reasonable basis and was brought with the requisite kind of retaliatory purpose."

New Standard May Aid Strategy to Counter Corporate Campaigns
With the increasing sophistication and prevalence of corporate campaign-style organizing, employers should take heart in the board’s new standard for litigation brought against union campaign tactics. The reduced risk of a reasonably based lawsuit being found an unfair labor practice can empower the employer’s defense and encourage a willingness to use legitimate avenues for judicial redress to push back against a union’s use of the courts, government agencies, and other third party processes. Even if ultimately unsuccessful, the employer will not be burdened with the costs of a union’s legal defense unless there is no reasonable basis to believe the action would be successful and it is undertaken with a retaliatory motive, a difficult hurdle for a union to clear.

The attorneys of the Jackson Lewis Labor Relations Practice Group are available to advise clients on strategies in defense of union corporate campaigns. For more information on employer strategies for union organizing, collective bargaining, and other labor and employment matters, please contact the Jackson Lewis attorney with whom you regularly work or our Practice Group coordinators Philip B. Rosen and Michael J. Lotito.

© 2007 Jackson Lewis LLP.  Reprinted with permission.  Originally published at www.jacksonlewis.com.  Jackson Lewis LLP is a national workplace law firm with offices nationwide.

For More Information Contact:

Michael J. Lotito
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