U.S. Supreme Court poised to give companies new power to sue over strikes

Workers at South Africa's state-owned logistics firm Transnet carry sticks outside the Port of Cape Town, October 14, 2022. REUTERS/Esa Alexander

(Reuters) - The U.S. Supreme Court appears set to deliver on another longstanding conservative policy goal in its first major labor law case this term, with a ruling that could hobble workers’ right to strike, amid a resurgence of worker organizing and a cost-of-living crisis.

The justices decided on Oct. 4 to consider whether businesses can sue unions in state court for the economic consequences of strikes and other employee protests, like spoiled products.

That sort of labor dispute is a special category of legal action that the National Labor Relations Board has maintained original exclusive jurisdiction over for nearly 65 years, under Supreme Court precedent dating back to 1959.

The right to strike, including the attendant financial harms, is protected by the National Labor Relations Act. The statute responded to a turbulent history in U.S. labor relations, including violent suppression of workers by corporations and the government. It essentially erected a national structure to equalize the tremendous power imbalance between employers and employees, primarily by making worker organizing, collective bargaining – and strikes -- legally protected activities.

That said, the right isn’t without limitations. Conduct clearly outside the scope of a peaceful work stoppage can lose the act’s protection, and workers are required to take reasonable precautions to protect employers’ property from foreseeable harm.

The dispute taken up by the Supreme Court arose from a strike by Teamsters Local 174, a union of truck drivers for Glacier Northwest Inc in Washington state, which does business as CalPortland. The company bills itself as the largest producer of building materials in the western United States. Lawyers for Glacier didn’t respond to requests for comment. Representatives of Local 174 declined to comment publicly because of the pending litigation.

The petition is backed by corporate groups seeking new and potentially expansive powers to recoup money from unions for financial harms incidental to labor activity. It’s also supported by conservative groups like the Landmark Legal Foundation, one of the leading organizations behind the “school choice” movement for expanding religious education, and an opponent of teachers' unions since the 1990s.

The question in the case portends an unprecedented ruling that could expose unions to costly litigation for previously routine activities, blunting their most powerful bargaining tool for improving workers’ pay and benefits during a time of significant labor strife.

There have been at least 316 strikes so far in 2022, up from 257 strikes in 2021, according to the Labor Action Tracker project at the Cornell University School of Industrial and Labor Relations. At least 240 company-owned Starbucks Corp locations have unionized in roughly the past year.

Stanford Law professor William Gould, a former Labor Board chairman, told me the current Supreme Court has already “expressed deep antipathy” toward employee unions, culminating in major decisions in 2018 and last year that also overturned decades-old pro-worker precedents. Gould wrote For Labor to Build Upon, a 2022 book on race, the COVID pandemic and other issues affecting the labor movement.

“I imagine the court will take a double-barreled approach to narrow the [labor] board’s jurisdiction” over certain union-related disputes, “and also expose unions to damages for engaging in strikes -- which is really unprecedented,” Gould said.

In August 2017, about 45 drivers went on strike to support Local 147 in negotiations over a new contract for 80 to 90 cement truck drivers, according to court filings. At least 16 drivers returned trucks still loaded with concrete to the company’s yard and left them running, according to the union.

Glacier's managers were forced to scramble to dispose of the concrete, which hardens within 20 to 30 minutes after the trucks shut off and can damage the vehicles. They missed a planned delivery to a customer as a result.

The strike ended a week later and the parties reached a new collective bargaining agreement.

In most circumstances, and per existing law, the matter of the company's losses would be handled via an unfair labor practice charge to the board, whose lawyers and judges have decades of specialized expertise interpreting industry-wide and workplace-specific collective bargaining agreements and working within the unique structure of the NLRA.

But Glacier instead sued Local 146 for a host of common-law torts, including conspiracy to destroy its concrete. The company alleged the union intentionally sabotaged its business by deliberately timing the strike so concrete would be destroyed.

The union maintains that the strike started at 7 a.m., when the drivers scheduled to work that day had arrived, noting also that the NLRA generally doesn’t require advance notice for lawful strikes.

Unsurprisingly, the Washington Supreme Court kicked the case out. It held that the state claims were preempted by federal law under U.S. Supreme Court precedent from 1959. San Diego Building Trades Council v. Garmon established that courts must defer to the labor board if challenged activity is even arguably within the categories of conduct protected by the NLRA, like strikes and collective bargaining.

The dispute is an NLRB case because it’s at least arguable that the product damage was incidental to a legally protected strike, the Washington court said.

Glacier then went to the business-friendly U.S. Supreme Court.

The company’s petition presents its assertion about the union’s intentions to destroy property as fact, without any further proof than it presented to the Washington court that rejected the case, and even as the union completely disputed that allegation.

Nonetheless, that assumption has become the premise of the case: The question the court took up is whether federal law can “preempt a state tort claim against a union for intentionally destroying an employer’s property" during a labor dispute.

The petition also mischaracterizes the Washington court’s holding, saying that court held that “it is ‘arguable’ that the NLRA protects intentional property destruction.” The Washington court actually held that the law protects “incidental destruction of products during a strike, as opposed to property damage for its own sake.”

Still, the Supreme Court has taken up the case, allowing the company to reframe a labor dispute as a property rights case, and set the terms of debate.

The court's ruling, whatever the details of its final answer, will likely deliver a serious blow to organized labor.

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Hassan Kanu writes about access to justice, race, and equality under law. Kanu, who was born in Sierra Leone and grew up in Silver Spring, Maryland, worked in public interest law after graduating from Duke University School of Law. After that, he spent five years reporting on mostly employment law. He lives in Washington, D.C. Reach Kanu at hassan.kanu@thomsonreuters.com