A new ruling from the U.S. Supreme Court demonstrates how unions may have to pay hefty penalties if a strike causes damage to a company's property.
In Glacier Northwest v. International Brotherhood of Teamsters, the court ruled 8-1 on June 1 in favor of an employer that sued in state court after a strike risked significant damage to its trucks.
The National Labor Relations Act (NLRA) gives workers the right to strike, but those protections don't apply if workers fail to take reasonable precautions to avoid foreseeable, imminent harm to the employer's property.
"The ruling means that employers stand a better chance of succeeding in their lawsuits against unions for damages resulting from property damage," said Dan Altchek, an attorney with Saul Ewing in Baltimore. "That, in turn, could cause unions to think twice about striking if there is a concern that the strike could cause property damage and could also be found to be unprotected under federal labor law."
"The ruling in this case is actually quite narrow. It will permit a tiny fraction of cases where strikers damaged the employer's property, or even injured people, to be decided by a state court," said David Miller, an attorney with Bryant Miller Olive in Miami. "Only those cases where it can be shown that the strikers or union essentially intended to cause the damage will squeak through the crack into state court. All other such cases will continue to be heard by the very union-friendly National Labor Relations Board (NLRB)."
"I think in the end the result was correct. I'm not sure it's significant expansion of current doctrine," said Arthur Telegen, an attorney with Seyfarth in Boston. "What may change a little bit is some of the strategic responses to a strike."
Glacier Northwest, a building materials company in Seattle, sued its employees' union, the International Brotherhood of Teamsters, after workers started a strike while concrete was scheduled to be batched and delivered. The company claimed the striking workers intentionally sabotaged its business operations and property because they waited until the concrete was loaded into the trucks to strike. The union argued that the employer's state-law claims were pre-empted under federal law.
A Washington state trial court agreed that the state law against intentional property destruction was pre-empted because the union's actions did not involve vandalism or violence. The Washington Court of Appeals agreed, stating that the strike was arguably protected as a legitimate bargaining tactic.
The Supreme Court reversed and remanded that decision.
"Given that Glacier alleges that the union took affirmative steps to endanger Glacier's property, rather than reasonable precautions to mitigate that risk, the NLRA does not arguably protect the union's conduct," Justice Amy Coney Barrett wrote in the majority opinion.
The court noted striking during work shifts without warning to the business is permissible. "The union's decision to initiate the strike during the workday and failure to give Glacier specific notice do not themselves render the union's conduct unprotected," the court said.
Unions don't have to prevent the incidental loss of perishable products when they strike, but this case is different because the truck drivers prompted the creation of a perishable product (concrete), the court noted. Thus, the employer could bring its state-law claims.
The Supreme Court "typically applies a high bar before concluding that federal law strips state courts of jurisdiction to hear their own state claims," Justice Clarence Thomas wrote in a concurrence.
Justice Ketanji Brown Jackson dissented, arguing that Congress intended the NLRB, not the courts, to investigate and address this type of labor dispute. The NLRB is "uniquely positioned to evaluate the facts and apply the law in cases such as this one," she wrote.
Lessons for Employers
Companies and unions "should evaluate the extent that a strike is likely to cause property damage or losses, as opposed to being merely disruptive," said Jack Sullivan, an attorney with Dorsey & Whitney in Minneapolis.
Employers should be prepared to respond quickly to strikes, even when perishable products aren't involved.
"Strikes are often unexpected, at least as to the exact day and hour. When they occur, management must be on the scene as fast as possible and try to assess and, if possible, mitigate property damage and personal injury," Miller said. "Evidence, including the testimony of management witnesses, must be gathered immediately. All this will be necessary for evaluation of whether the circumstances show intent to do harm. Intent is very difficult to prove circumstantially."