BE&K Construction Co. v. National Labor Relations Board, et al. (06/24/2002)

By: Aaron Lovell, Medill News Service

Questions presented

Did the Court of Appeals err in holding that under Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S.731 (1983), 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)?

Brief

In late 1986 or early 1987 industrial contractor BE&K contracted with USS-POSCO Industries, Inc., to modernize a steel mill in Pittsburg, Calif. Various labor unions objected to the BE&K agreement, because the contractor did not maintain a collective bargaining relationship with the unions and awarded the modernization work to a non-union contractor.

Together, BE&K and USS-POSCO filed suit in federal court in California, seeking damages for what they called the unions' ""corporate campaign."" That campaign, BE&K and USS-POSCO alleged, involved the unions advocating for toxic waste emissions enforcement, even though the unions had no real concern that the mill modernization would be environmentally harmful; picketing at BE&K's premises without disclosing the nature of their disagreement with the company, encouraging employees of subcontractors to engage in a strike, and filing suit claiming health and safety violations in an effort to delay the project.

The federal court ruled for the unions, finding that the labor action was protected by the 1st Amendment and federal laws.

The court cited the 1983 Supreme Court opinion in Bill Johnsons Restaurants, Inc. v. NLRB, ruling that petitioning was a matter of free expression. The court also cited federalism concerns in referring to a states substantial interest in ""protecting the health and well-being of its citizens"" from toxic waste.

In considering the issue of whether the unions improperly filed a state court action against the companies, the court noted while the right of access to the courts is a protected 1st Amendment right, that would not be the case for a baseless suit. The court allowed additional discovery to determine if the state suit was baseless.

During this time, BE&K and USS-POSCO filed two amended complaints, largely reiterating the claims in their original suit and adding two antitrust claims. The district court dismissed all the claims other than the anti-trust allegations and before it was over, imposed sanctions against USS-POSCO and BE&K for violating the federal courts rule 11 that guards against frivolous actions. USS-POSCO then withdrew from the suit.

The antitrust claims were more complicated because they involved a legal issue over whether a company, in order to succeed on its antitrust claims, must prove both that unions improperly combined with non-labor groups and that the combination had occurred for an illegitimate purpose. The federal court resolved that too against BE&K, which then appealed to the 9th Circuit Court of Appeals, claiming error on the antitrust issue and on rule 11 sanctions.

The appeals court found against BE&K on the antitrust claim, but reversed the award of rule 11 sanctions.

Through all this, the unions had filed their own federal action before the National Labor Relations Board, alleging unfair labor practices by BE&K. Here too, the case turned on the Supreme Court's ruling in Bill Johnson's Restaurants v. NLRB. The board found the union activity to be protected 1st Amendment speech, ordered BE&K to cease and desist from its illegal activities and ordered the company to reimburse the unions for their attorneys' fees and costs.

On April 9, 2001, a unanimous 9th Circuit panel found that the NRLB was right to order BE&K to pay for attorneyss fees and court court incurred by the unions while fighting the companys suit. The issue turned on whether attorneys fees and courts are appropriately imposed only in baseless suits.

In rejecting BE&Ks interpretation of the Supreme Courts 1993 opinion in Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., that only ""sham"" suits serve to restrict the otherwise ""unfettered right to seek court resolution of differences,"" Judge Martha Craig Daughtrey wrote that ""the principles BE&K seeks to extract from Professional Real Estate Investors are totally inapplicable to the circumstances presently before us in this case.""

In conclusion, the 9th Circuit supported the imposition of costs and attorneys fee ""to return the unions to the position in which they would have been without having to defend the unlawful lawsuit.""

BE&K attorney Maurice Basking said BE&K believes the case ""goes beyond the legal fees"" and boils down to the right to file a lawsuit. ""The Supreme Court seems like it doesnt want to address any issue other than the 1st Amendment issue,"" he said.

On Jan. 4, 2002, the U.S. Supreme Court granted certiorari in the case and limited review to the question presented above.

On June 24, 2002, as the Court's term was drawing to a close, the Court unanimously held that the NLRB can't impose liability on an employer forfiling a losing retaliatory suit, ons Act, in that such actions include a substantial amount of genuine petitioning.

Justice Sandra Day O'Connor wrote the Court's lead opinion, with Justices Antonin Scalia and Stephen Breyer crafting concurrences in support.