Contractor’s Reasonably Based Lawsuit Against Unions Can’t Be an Unfair Labor Practice
An employer does not commit an unfair labor practice by filing and maintaining a reasonably based but unsuccessful lawsuit against a union even if the employer had a retaliatory motive for suing, the National Labor Relations Board (NLRB) has held.
The dispute arose over 20 years ago, after open-shop contractor BE&K was awarded a contract to modernize a California steel mill. A group of unions objected to the award and initiated a corporate campaign against the company. The campaign included lobbying state and local government for the adoption of a toxic waste emission standard for the project, picketing and handbilling BE&K, encouraging subcontractor employees to strike, and filing a lawsuit alleging violations of the state health and safety code. BE&K sued the unions in federal district court, claiming that the unions’ activities violated federal labor and antitrust laws. All of BE&K’s claims were either dismissed by the court or withdrawn. The unions filed unfair labor practice charges against the company with the NLRB, and the Board ruled in a 1999 decision that the unions had engaged in activity protected by the National Labor Relations Act and that BE&K violated the Act by prosecuting an unsuccessful suit with a retaliatory motive. It ordered BE&K to pay the unions’ defense fees and expenses. The U.S. Court of Appeals for the Sixth Circuit affirmed the Board order, but the Supreme Court reversed. The Supreme Court held that the Board’s standard – which deemed all unsuccessful lawsuits to be unlawful if filed with a retaliatory motive, regardless of whether they were reasonably based – is too broad. The Court declared that the Board may not impose liability on an employer for bringing an unsuccessful retaliatory lawsuit if the employer can show that the suit was not objectively baseless, and it remanded the case back to the Board for further proceedings.
Reconsidering the matter in light of the Supreme Court’s decision, the Board now holds that “the filing and maintenance of a reasonably based lawsuit does not violate the Act, regardless of whether the lawsuit is ongoing or is completed, and regardless of the motive for initiating the lawsuit.” Such a rule is necessary to avoid “chilling the fundamental First Amendment right to petition.” The Board then set forth a new test for determining whether a lawsuit is “reasonably based,” adopting a standard set by the Supreme Court in antitrust cases: a lawsuit lacks a reasonable basis, or is “objectively baseless,” if “no reasonable litigant could realistically expect success on the merits.” The Board cautioned that, even under the new standard, a lawsuit that targets conduct protected by the Act can constitute an unfair labor practice if it lacks a reasonable basis and was brought with a retaliatory purpose.
Applying the standard to the facts of the present case, the Board concluded that BE&K’s lawsuit was reasonably based and dismissed the complaint against the company.
BE&K Construction Co., 351 NLRB No. 29 (9/29/07).
For more background on this case and similar cases involving retaliatory lawsuits against unions, click here.
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