Supreme Court Allows Some Lawsuits for Strike Damages

Author: Robert S. Teachout, XpertHR Legal Editor

June 2, 2023

The National Labor Relations Act (NLRA) does not preempt a company's state court tort claims when a union's strike-related activity intentionally destroys the company's property, the US Supreme Court has ruled. The ruling will allow employers to sue unions over strikes that are planned to deliberately cause damage to company property.

The decision creates a significant carve out to the Garmon preemption doctrine, a Supreme Court precedent that maintains that the NLRA preempts state laws (such as tort claims) even if the laws only arguably conflict, and requires state and federal courts to defer to the National Labor Relations Board (NLRB) in most cases involving labor dispute activities.

Case History

Glacier Northwest sells ready-mix concrete to customers. Each concrete batch must be mixed to a customer's specifications and is highly perishable, beginning to harden immediately when at rest. To preserve the concrete, it must be transferred in trucks with rotating bins, but the concrete will still harden and cause significant damage to the truck if it remains in the rotating bins too long.

After bargaining between Glacier and the union broke down, a union agent called for a work stoppage after the company had mixed substantial amounts of concrete, loaded the batches into ready-mix trucks and sent them out to make deliveries.

Upon hearing that a strike had been called, the company instructed the drivers to complete their deliveries, but the union told the drivers to ignore those orders. Sixteen drivers returned with their fully loaded trucks. Seven of the drivers parked their trucks and informed the company, asking for instructions or taking actions to protect the trucks, but nine abandoned their trucks and left without informing anyone.

Glacier had to find a way to empty the trucks before the hardening concrete caused serious damage. Over the next five hours the company used non-labor workers and managers to successfully unload the concrete. The emergency measures prevented damage to the trucks, but all the concrete hardened and was a total loss.

The company filed a lawsuit alleging that the labor union intentionally destroyed the company's concrete during the labor dispute, but the Teamsters argued that the NLRA prevented the company from suing because the loss of the concrete was the result of a protected activity.

The state trial court agreed with the union and dismissed the lawsuit but was reversed on appeal. Finally, the state supreme court again dismissed the case, stating that the NLRA preempted the state tort claims and required the NLRB to first rule on whether the activity was protected. Afterward, the US Supreme Court granted review.

Supreme Court Determination

In an 8-1 ruling, the Supreme Court held that the company's state-law tort claims were not preempted by the NLRA.

The Court acknowledged that the NLRA protects the right to strike but stated that the right is not absolute. The Court noted that the NLRB has long held that the NLRA does not shield strikers who fail to take "reasonable precautions" to protect their employer's property from foreseeable, aggravated and imminent danger due to the sudden cessation of work.

The Court found that not only had the union failed to take reasonable precautions to protect the company's property from foreseeable and imminent danger, "the union executed the strike in a manner designed to compromise the safety of Glacier's trucks and destroy its concrete." This was shown by the facts that the union:

• Knew that concrete is highly perishable and that it can last for only a limited time in a delivery truck's rotating drum;
• Knew that concrete left to harden in a truck's drum causes significant damage to the truck; and
• Chose to initiate the strike after Glacier was in the midst of batching large quantities of concrete and delivering it to customers rather than calling the strike before the concrete was mixed.

Because the Union took affirmative steps to endanger Glacier's property rather than reasonable precautions to mitigate that risk, the NLRA does not arguably protect its conduct, the majority ruled. In his concurring opinion, Justice Alito stated that the "Garmon preemption does not prevent States from imposing liability on employees who intentionally destroy their employer's property."

The ruling means that employers may be able to file a lawsuit against unions in some situations where union strike activity actually precipitates the risk of damage and destruction of property and the union does not take reasonable steps to prevent such damage.