UPDATE 4-Boeing, U.S. labor board lock horns over 787 plant

Tue Jun 14, 2011 7:43pm EDT

 * Hearing on NLRB complaint against Boeing starts
 * Boeing moves to dismiss case
 * Boeing shares up 2.8 percent
 (Adds details from Boeing's motion, expected schedule)
 By Bill Rigby and Kyle Peterson
 SEATTLE/CHICAGO, June 14 (Reuters) - Boeing Co (BA.N) on
Tuesday asked a court to throw out a government case that
accuses the plane-maker of putting a production line for the
787 Dreamliner in South Carolina to punish its unionized
Washington-based workers for past labor strikes.
 The case has become the fulcrum of a larger conflict
between supporters of labor union rights and those who believe
U.S. companies should have the freedom to build factories where
they want, for whatever reasons they choose.
 A hearing before an administrative law judge started on
Tuesday in Seattle, the home of Boeing's commercial airplane
division. The process could take months, judge Clifford
Anderson warned.
 The National Labor Relations Board, a government agency
that is independent but dominated by Democrats, has "ample
evidence" that Boeing acted in retaliation, one of its lawyers
told the judge on Tuesday.
 Boeing immediately filed a motion to dismiss the case in
court, claiming its move to protect itself from potential
future strikes was legitimate, and that it had added more than
3,000 jobs in the Seattle area since the Charleston, South
Carolina, plant was conceived, so no workers had lost jobs or
suffered any harm.
 A lawyer representing Boeing characterized the NLRB
complaint as "rather a strange runaway shop case," a labor term
used to describe the relocation of facilities to avoid union
 Addressing about 20 lawyers and another 60 or so people in
the courtroom, Anderson urged both sides to consider a
 Both Boeing and the International Association of Machinists
and Aerospace Workers, District Lodge 751 (IAM) -- which
represents the company's workers in Washington and filed the
original complaint against Boeing in 2010 -- said on Tuesday
they are open to settlement talks.
 But neither side seems willing to budge on its stance, and
sources close to the matter said on Tuesday that a quick
settlement was unlikely.
 The NLRB has until next Tuesday to reply to Boeing's motion
to dismiss. Until then, the parties are meeting periodically to
discuss what documents need to be exchanged. Presentation of
evidence and arguments before the judge are not expected to
start for several weeks.
 Neither Boeing nor the NLRB said what it was spending on
the litigation. The NLRB has seven lawyers on the case.
 Lafe Solomon, the NLRB's acting general counsel, will
testify on Friday in South Carolina at a field hearing on the
complaint before the House Committee on Oversight and
Government Reform. He had initially declined the request for
his testimony, citing the ongoing open case.
 "This is a very simple case, and it's an egregious case,"
the general counsel for the International Association of
Machinists and Aerospace Workers said on a conference call with
reporters on Tuesday.
 "Work stoppages are protected by law as part of concerted
activity. So is the collective bargaining process," IAM General
Counsel Christopher Corson added.
 Boeing Chief Executive Officer Jim McNerney has weighed in
on the complaint several times, saying the NLRB has overreached
its authority.
 Boeing shares closed up 2.3 percent at $74.64 on Tuesday on
the New York Stock Exchange.
 Tom Wroblewski, local IAM president in Seattle, has said
Boeing opened the South Carolina line to "intimidate our
members with the idea that the company would take away their
work unless they made concessions at the bargaining table."
 The $750 million 787 plant opened on Friday.
 The company has said it did not violate the law by putting
its second 787 production line in South Carolina, where workers
will assemble three planes each month. The South Carolina jobs
are new to Boeing and are not a relocation of work previously
done in Washington, it says.
 Boeing said if it loses the NLRB case, it would be forced
to assemble those three planes in Washington, where it is set
to produce seven 787s per month.
 "It means a headache, but it's one they'll probably be able
to get around," said analyst Richard Aboulafia of
Virginia-based Teal Group. "It's going to be very
 The 2009 decision to open the 787 line in South Carolina
came after an aggressive campaign by workers in Washington's
Puget Sound area to keep the project there.
 The IAM went on strike for 58 days in 2008 over a contract
dispute. The strike led to one of the costly delays that have
put the 787 program over budget and about three years behind
schedule. Boeing also blames glitches in its global supply
chain for the delays.
 The 787, a lightweight, carbon-composite aircraft, is set
for first delivery in the third quarter of this year.
 The NLRB and Boeing expect the first round of hearings
before the administrative law judge to take weeks or months.
The losing side may then appeal, first to the NLRB board, then
to a federal court, and finally to the U.S. Supreme Court.
 The first several days of the hearing are likely to be
largely procedural, featuring no testimony.
 J. Michael Luttig, Boeing's general counsel and a former
appeals court judge, has said he anticipates losing before an
administrative law judge, but prevailing at the U.S. Court of
 The dispute has drawn the attention of pro-business
politicians and industry leaders, who believe the charge
against Boeing makes a broader statement about U.S. government
support for business.
 John Engler, former Michigan governor and President of
Business Roundtable, an association of U.S. CEOs, said on
Tuesday the NLRB charge weakens the general business outlook.
 "If suddenly (we get) more decisions like the NLRB decision
that they announced relative to Boeing, that goes in the
opposite direction," Engler said on a conference call. "That
dims optimism."
 South Carolina Republicans last week complained that the
NLRB case threatens industry and jobs in their state. Senator
Lindsey Graham told Reuters that the labor relations board is
"stacked with union stooges."
 Senator Lamar Alexander, Tennessee Republican, has said he
will propose legislation prohibiting the NLRB from taking
similar action against other companies.
 (Additional reporting by Nick Zieminski in New York)
 (Editing by Gary Hill and Sofina Mirza-Reid)

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