Union Cannot Avoid State Court Claims for Property Damage Caused by Strike, Supreme Court Holds

The United States Supreme Court issued its highly anticipated labor decision in Glacier Northwest, Inc. v. International Brotherhood of Teamsters Local Union No. 174 today. The 8-1 majority opinion is a win for management and big disappointment for labor unions.

The Facts

Glacier Northwest is a ready-mix concrete company in Washington. It mixes batches of concrete to customers’ specifications, and then delivers the concrete to its customers in ready-mix trucks. As the Supreme Court wrote, “[i]n this business, time is of the essence.” Concrete hardens immediately when at rest. The ready-mix trucks are equipped with rotating drums to stave off hardening, but this only works for a limited time. If the concrete stays in the drum too long, it will begin to harden and potentially cause damage to the truck.

After labor negotiations went sour between Glacier Northwest and the International Brotherhood of Teamsters Local Union No. 174 (the “Union”), the Union ordered a strike. As the Court wrote, “a Union agent signaled for a work stoppage when the Union knew that Glacier was in the midst of mixing substantial amounts of concrete, loading batches into ready-mix trucks, and making deliveries.” Drivers ignored Glacier Northwest’s orders to finish the in-progress deliveries. Of the 16 drivers who had already started their deliveries, seven parked their loaded trucks and notified Glacier Northwest, but nine abandoned their trucks “without a word to anyone.”

After a “mad scramble,” Glacier Northwest was able to save its trucks. The concrete, however, was wasted.

Glacier Northwest sued the union in Washington state court for damage to its property. The Union moved to dismiss these tort claims, arguing that they were preempted by the National Labor Relations Act (“NLRA”) under a doctrine known as Garmon preemption (more on this below). The trial court agreed with the Union and granted the motion to dismiss. The case made its way to the Washington Supreme Court, which affirmed the trial court’s decision.

After the Washington Supreme Court issued its decision, the National Labor Relations Board’s (“NLRB” or the “Board”) General Counsel filed an administrative complaint against Glacier Northwest, alleging that Glacier Northwest had violated the NLRA by disciplining the drivers who walked off the job and by filing the tort suit in state court.

The Supreme Court’s Decision

The Supreme Court reversed, finding that Garmon preemption did not apply.  

Garmon preemption is a longstanding labor doctrine that requires a court to defer to the NLRB when a state-law claim is based on conduct “arguably protected” by the NLRA. The court takes a “jurisdictional hiatus” while the NLRB decides in the first instance if the challenged conduct was protected by the NLRA. If the Board finds that it was protected conduct, then the court may not hold the union liable on the state-law claims; if the Board finds that it was not protected, then the state-law claims may proceed.

The Supreme Court had little difficulty finding that the Union’s strike conduct was not “arguably protected” by the NLRA. Citing the NLRB’s decision in Bethany Medical Center, 328 NLRB 1094 (1999), the Court explained that “[t]he Board has long taken the position . . . that the NLRA does not shield strikers who fail to take ‘reasonable precautions’ to protect their employer’s property from the foreseeable, aggravated, and imminent danger due to the sudden cessation of work.” Here, the Union “failed” to take those reasonable precautions, and instead “executed the strike in a manner designed to compromise the safety of Glacier’s trucks and destroy its concrete.” This type of strike activity is not “arguably protected” by the NLRA.

The Court rejected the Union’s argument that this case is no different from cases involving work stoppages when the loss of perishable products is foreseeable, which the NLRB has found protected. In this case, “by reporting for duty and pretending as if they would deliver the concrete, the drivers prompted the creation of the perishable product. Then, they waited to walk off the job until the concrete was mixed and poured in the trucks. In so doing, they not only destroyed the concrete but also put Glacier’s trucks in harm’s way.”

Justice Jackson penned an impassioned dissent, in which she argued that the majority misapplied Garmon “in a manner that threatens to both impede the Board’s uniform development of labor law and erode the right to strike.” In Justice Jackson’s view, the NLRB – not the courts – is in the best position to, in the first instance, make the fact-sensitive determination of whether strike activity is protected by the NLRA. She would have found the NLRB’s administrative complaint to be sufficient to satisfy Garmon’s “arguably protected” requirement. She also criticizes the majority for “tak[ing] it upon itself to apply the Board’s reasonable-precautions principle to the factual allegations about the Union’s conduct,” arguing instead that it should be left to the NLRB to apply its own precedent. Finally, she takes the majority to task for what she argues is its misapplication of the NLRB’s reasonable-precautions principle. None of the other eight justices joined Justice Jackson’s dissent.

Takeaways

The upshot of this case is that it may be harder going forward for unions to escape (or at least delay) adjudication of state tort claims based on strike activity. The majority’s decision here signals a more active role for the courts in scrutinizing the conduct challenged in the state-court suit (i.e., deciding whether it was “arguably protected”) before deferring to the NLRB to decide whether the conduct was in fact protected by the NLRA.

The outcome here also has the potential to alter the economic balance of power between management and labor in some circumstances. One of labor’s most potent weapons is the strike. But now that labor faces the prospect of more searching review by courts of state tort claims arising out of strike activity, labor may be forced in certain instances to moderate its conduct.

Disclaimer: Please contact your Payne & Fears attorney for current guidance on the subject matter of this article.

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A brief note: because this case came to the Supreme Court on a motion to dismiss, the facts are taken from Glacier Northwest’s Complaint filed in Washington state court.