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BE&K Construction - Retaliatory, but Reasonably Based, Lawsuit Against Union Not an Unfair Labor Practice

Good news for employers!  In BE&K Construction Co., 351 N.L.R.B. No. 29 (September 29, 2007), the National Labor Relations Board (Board) held that an employer’s reasonably based, albeit unsuccessful, lawsuit against a union did not violate the National Labor Relations Act (Act), even though it was filed to retaliate against the union.

The Facts
The employer, an industrial general contractor, received a contract to renovate a steel mill.  Because BE&K’s employees were nonunion, a number of unions tried to delay the project.  The unions lobbied for stricter emissions standards, despite having no real environmental concerns, picketed the Company and urged subcontractors to strike.  This delayed construction and significantly increased the Company’s costs.  Consequently, the Company sued, claiming the unions’ secondary boycotting had injured the Company and unlawfully restrained trade.  The Company’s lawsuit ultimately failed.

The unions filed an unfair labor practice charge with the Board.  Relying on its then current rule that all unsuccessful retaliatory suits against unions are unlawful—even if reasonably based, the Board found that BE&K violated the Act.  BE&K appealed the decision all the way to the U.S. Supreme Court.

The Supreme Court found the Board’s current rule had an unacceptable chilling effect on employers’ First Amendment right to pursue any claim that is reasonably grounded in law or fact.  The Court noted that not all genuine claims are successful, and but even unsuccessful claims have purpose and promote the evolution of the law.  Thus, only suits which are clearly baseless are not protected by the First Amendment.  The Court remanded the case, leaving the Board to articulate a new rule.

The Board’s Analysis on Remand
On remand, a three Member panel of the Board held that “the filing and maintaining of a reasonably based lawsuit does not violate the Act, regardless of whether the lawsuit is ongoing or is completed and regardless of the motive for initiating the lawsuit.”  The First Amendment protects the right to file a claim, regardless of one’s motives, provided the claim has a reasonable basis.  The fact that a claim fails cannot diminish this right:  “Nothing in the Constitution restricts the right to petition to winning litigants.”  Thus, a suit which is reasonably based cannot violate the Act, regardless of motive or outcome.

Applying the new rule, the Board found BE&K’s suit reasonably based.  “A lawsuit lacks a reasonable basis, or is objectively baseless, if no reasonable litigant could realistically expect success on the merits.”  The Company reasonably believed the union was trying to delay construction.  Despite the absence of legal precedent, BE& K “raised a reasonable argument for the extension of existing law.”  Thus, the suit was protected by the First Amendment and did not constitute an unfair labor practice.

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