Franczek P.C.’s Mike Warner and Jenny Lee Pen Law360 Article: Does NLRA Preempt Suits Against Unions For Strike Damage?

Originally published on Law360 
On Oct. 3, the U.S. Supreme Court granted review of a case in which the central issue is whether the National Labor Relations Act preempts state lawsuits brought against unions for causing property damage while conducting strikes.[1]

This case could have significant implications for employers, unions, and the balance between state and federal law, regarding whether — and to what extent — unions should be held liable for damages for strike-related conduct.

Background of the Case

The case, Glacier Northwest Inc. v. International Brotherhood of Teamsters Local Union No. 174,[2] involves a lawsuit by a construction materials company seeking damages from Teamsters Local 174 for concrete that spoiled during a drivers’ strike.

The construction company accused Local 174 of conversion and trespass to chattels, tortious interference with contract and civil conspiracy to destroy the concrete by timing the strike to occur during concrete deliveries, which caused the concrete in Glacier’s trucks to harden and spoil. Local 174 moved to dismiss Glacier’s tort claims by arguing that the claims were preempted by Sections 7 and 8 of the NLRA.

The case before the Supreme Court is an appeal of a decision by the Washington Supreme Court affirming the dismissal of the state tort claims under the Garmon preemption doctrine, which blocks state lawsuits pertaining to conduct such as strikes that are arguably protected by the NLRA.

The Garmon doctrine is derived from the 1959 U.S. Supreme Court case San Diego Unions v. Garmon,[3] in which the court held that states must defer to the exclusive competence of the National Labor Relations Board regarding activity “arguably subject” to the NLRA in order to avoid potential conflicts between state law and federal labor law.

In Garmon, the Supreme Court recognized two exceptions to the preemption doctrine: (1) activity that is “merely peripheral” to the NLRA, and (2) claims that implicate interests that are “so deeply rooted in local feeling and responsibility” that courts may not infer that Congress intended to block states from acting, such as in cases of violent conduct, intimidation, defamation, intentional infliction of emotional distress, obstruction of access to property or imminent threats to the public order.

While the court did not articulate a bright-line rule for the local feeling exception, the court noted in dicta that states have a compelling interest in maintaining domestic peace “in the absence of clearly expressed congressional direction.” However, an analysis of whether the state has a compelling interest is fact-specific, to be determined by the type of conduct at issue.

In Glacier, the construction company asserted that the local feeling exception to the Garmon doctrine applied in this case. The Washington Supreme Court rejected this argument, holding that the NLRA preempted the state tort claims related to the loss of the company’s concrete product “because that loss was incidental to a strike arguably protected by federal law.”

The court distinguished the incidental damage incurred during Local 174’s strike from “intentionally destroyed … property damage for its own sake.” The court framed the local feeling analysis along a continuum between the interests of the union versus those of the state:

If viewed as product damage incidental to the strike, the drivers’ conduct is closely tethered to the exercise of their section 7 rights and, at the same time, is attenuated from the State’s general interest in regulating violent conduct, such as vandalism, which is the core concern of the “local feeling” exception.

The Washington Supreme Court further determined that even if Local 174 “willfully and intentionally interfered” with Glacier’s property, intent itself would not be controlling of the preemption question — instead, the type of conduct, per Garmon, determines the analysis, not the strikers’ intent.

In May 2022, the Glacier construction company petitioned the U.S. Supreme Court to determine whether the NLRA preempts state-law suits against unions for intentional destruction of employer property during labor disputes.[4] Local 174 opposed the petition, arguing that the strike was arguably protected by the NLRA.[5]

Furthermore, the union denied that its members intentionally destroyed the company’s property during the strike. Instead, the union stated, the striking drivers returned their trucks to Glacier and left them running precisely so that the concrete would not harden, and the company could salvage its concrete. The union argued that Glacier’s failure to arrange for contingencies related to the strike was the cause of the concrete’s spoilage.

What to Expect in the Arguments and Potential Outcome

The Supreme Court has not directly addressed the extent to which the NLRA preempts state law claims against unions for strike-related conduct since the case of Sears Roebuck & Co. v. San Diego County District Council of Carpenters,[6] which was decided in 1978.

In that case, the court held that the NLRA did not preempt an employer’s state law claim for trespass against a union that refused to cease picketing on the employer’s property. The court held that the mere fact that the board could find that the union’s activity was protected under the NLRA was not sufficient to preempt state trespass law. The court found it notable that the union did not invoke the Board’s jurisdiction by filing an unfair labor practice charge.

The current conservative makeup of the Supreme Court suggests that the court is likely to be strongly protective of employer property rights and skeptical of broad federal agency jurisdiction.

Last year, in Cedar Point Nursery v. Hassid,[7] the court upheld in a 6-3 decision a farm owner’s private property rights over farmworkers’ right to unionize, striking down a California law that allowed union representatives to enter farmland to organize workers without compensating property owners. A majority of the court could similarly find in this case that private property interests protected by state law override federal labor law and policy protecting unions.

The Supreme Court’s decision will undoubtedly affect the balance of power between unions and employers during labor disputes. Organized labor has argued that allowing employers to pursue state lawsuits for property damage caused by strike activity will lessen the ability of unions to use work stoppages as a means of extracting meaningful wage and working condition improvements from employers by imposing unacceptable liability risks on unions and employees.

Conversely, a decision in favor of the union will increase union bargaining leverage by giving unions the ability to maximize economic hardship on employers through strategically timed work stoppages.

The Glacier case is scheduled for oral argument before the Supreme Court on Jan. 10, 2023.