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Supreme Court Strikes Down NLRB's Imposition of Liability Against Employer Who Filed Unsuccessful Lawsuit

BE&K Construction Company, a general contractor, was engaged to modernize a steel mill. After unions engaged in activities to attempt to delay the project because BE&K's employees were non union, BE&K filed suit against the unions. Each of its claims in the suit were ultimately dismissed or withdrawn. The unions filed unfair labor practice charges against BE&K claiming that by filing and maintaining its lawsuit, BE&K violated ยง 8(a)(1) of the National Labor Relations Act (which prohibits employers from restraining, coercing, or interfering with employees' rights to engage in protected concerted activities).

The NLRB found that BE&K's unsuccessful lawsuit was "directed at protected conduct" and "necessarily tended to discourage similar protected activity" and it ordered the employer to cease and desist from this type of litigation, to post a notice to employees admitting that it had violated the NLRA and promising not to pursue such litigation in the future, and to pay the legal fees and expenses incurred by the unions in defending against the lawsuit. The Court of Appeals for the Sixth Circuit upheld the NLRB's decision and orders.

The Supreme Court granted certiorari on the following question:

"Did the Court of Appeals err in holding that under Bill Johnson's Restaurants, Inc. v. NLRB, . . . the NLRB may impose liability on an employer for filing a losing retaliatory lawsuit, even if the employer could show the suit was not objectively baseless under Professional Real Estate Investors, Inc., v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993)?"

In BE&K Construction Company v. NLRB, the Supreme Court unanimously reversed the Sixth Circuit and ruled that the NLRB's standard for imposing liability is invalid in light of the First Amendment's right to petition the government for redress of grievances (which includes the right of access to the courts). The Justices agreed that the NLRB had wrongfully based its "finding of 'retaliatory motive' almost exclusively upon the simple fact that the employer filed a reasonably based but unsuccessful lawsuit and the employer did not like the union." The Court ruled that the NLRA cannot be broadly read to prohibit all "reasonably based but unsuccessful suits filed with a retaliatory purpose."

The Court appears to be split 5-4 on the standard to be applied in the future. Justice O'Connor's opinion (joined by four other Justices) refers to the two prong test utilized by the Supreme Court in the Professional Real Estate Investors case (which concerned anti-trust laws); an employer's lawsuit against a union will not violate Section 8(a)(1) unless it is found to be objectively baseless (i.e. "no reasonable litigant could realistically expect success on the merits") and subjectively motivated by an unlawful purpose.

Justice O'Connor states that the Court "need not decide what our dicta in Bill Johnson's may have meant by retaliation". But her opinion provides that the NLRB's reliance "on evidence of antiunion animus to infer retaliatory motive" is misplaced. She notes that "[I]ll will is not uncommon in litigation ... . We may presume that every litigant intends harm to his adversary ... . As long as a plaintiff's purpose is to stop conduct he reasonably believes is illegal, petitioning is genuine both objectively and subjectively."

Justice Breyer, whose opinion was joined by the other three Justices, concurred in the judgment and limited his concurrence to the specific circumstances of the case. He agreed that the NLRB was wrong in finding that an employer's loss of "a lawsuit against a union, in and of itself, virtually alone, shows retaliation." However, he noted that the Court expressly left open circumstances in which there is "stronger or different" evidence of retaliation or antiunion motive - for example where an employer who is indifferent to the outcome of the lawsuit brings a reasonably based suit "simply to impose litigation costs on a union" or where a lawsuit is part of a broader course of conduct aimed at harming a union and interfering with employees' Section 7 rights.

Whatever decision is ultimately reached in the future on the open issues, the Supreme Court's decision in BE&K reduces the potential exposure of employers who file lawsuits to combat unions' corporate campaigns and other union conduct.


August 31, 2002




Bacharach, Charles R.
Kellner, Robert C.