Amicus Curiae Brief — BE&K Constr. Co. v. NLRB

Supreme Court, US.

~_ i F L E p

3 . pec 5 2001

No. 01-518 :

CLERK

INTHE _ _

Supreme Court of the Gnited States —

OCTOBER TERM, 2001

BE&K CONSTRUCTION CO,

Petitioner,

Vv.

NATIONAL LABOR RELATIONS BOARD,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

BRIEF OF AMICI CURIAE

CHAMBER OF COMMERCE OF THE UNITED STATES

AND ASSOCIATED BUILDERS AND CONTRACTORS,

INC. IN SUPPORT OF PETITIONER

MICHAEL E. AVAKIAN*

SMETANA & AVAKIAN

5211 Port Royal Road, Ste. 103

Springfield, VA 22151

(703) 321-9181

Attorney for Amicus Curiae

*Counsel of Record

~-—w

Of Counsel:

Stephen A. Bokat

Robin S. Conrad

Joshua A. Ulman

NATIONAL CHAMBER LITIGATION CENTER

1615 H Street, NW

Washington, DC 20062

(202) 463-5337

Attorneys for Amicus Curiae

Chamber of Commerce of

the United States

OO LOOT lt A TOD IIT Pe

TABLE OF CONTENTS

SUCCES GO ME GUUS oc cect wee eees 2

Ct. be deg bk oo 8 6 Oe oi 6 4644 4 4 W's 0 0 04 8 3

og eee ee ee 3

1. ABSENT REVIEW BY THIS COURT, THE

DECISIONS BELOW THREATEN TO CHILL

FUNDAMENTAL EMPLOYER RIGHTS OF

ACCESS TO THE COURTS DUE TO

CONFLICTING STANDARDS USED TO

DETERMINE WHETHER BUSINESS

LAWSUITS ARE “MERITORIOUS.” .......... 6

Il. REVIEW SHOULD ALSO BE GRANTED IN

ORDER TO RESOLVE THE CIRCUIT

CONFLICT WHICH NOW _ EXISTS

REGARDING THE BOARD'S POWER TO

AWARD ATTORNEYS’ FEES TO NON-

EMPLOYEE LABOR ORGANIZATIONS ...... 16

Ee ee Pa eee 25

TABLE OF AUTHORITIES

CASES

Page

American Pacific Concrete Pipe,

ane WDD. CSRS CERRO . wc cece ceu eee eee

B.E.&K Construction Co.,

PRR SE Of) ee ee 2

Bill Johnson's Restaurants v. NLRB,

GSU US. Vol CURD 5k kein cased bee in passim

Brown & Root, Inc. v. Louisiana State AFL-CIO,

© F.38 SUS Gah Cis. GRD .. cc cease eens ee 14

California Motor Transport Co. v. Trucking Unlimited,

406 U.S. SEB (IPT we ce cta canvas eee 8-10

Chauffeurs, Teamsters, Local 776 v. NLRB,

enw bP: tt fe |=6he re 1S

Diamond Walnut Growers, Inc. v. NLRB,

53 F.38 OGGS Ga Civ. CURED oo cece cenecuee een 16, 17

Dist. 65, Distributive Workers v. NLRB,

G33 F.28 10856 GC. Gis. QURED 0 000 sScae eee 21

East Bay Chevrolet v. NLRB,

66D F.26. 0685 Gs Cer. SSNS) wet teceueeuseee 21

Eastern R. Presidents Conf. v. Noerr Motor Freight, Inc.,

305 U.S. 1Z7 (OGRE) wee teehee eee 14

Federal Prescription Service, Inc. v. NLRB,

G06 F.26 SiS Gb Cer. CORED 2 nec ee ines eee eee 21-22

Federal Security, Inc.,

EN EE.

Gibson Greetings, Inc. v. NLRB,

rr tt eee ewes 17

IBEW, Local 532 (Brink Constr. Co.),

EEE 22

Hecks, Inc.,

en ee tt cee 18, 21

Heisler Food Enter., Lid.,

Case No. 2-CA-30899, 1999 NLRB LEXIS 889 (1999) . 22-23

International Union of Electrical Workers v. NLRB,

Ee 17

J.P. Stevens & Co. v. NLRB,

See Ue UG, BUUED ccc ccc ccc ccc ceccees 21

Johnson & Hardin Co.., ;

DCCEED cscvcoecesececoccccces 16

Johnson & Hardin Co. v. NLRB,

re ee te tec eee eee. 23

Lang Towing, Inc.,

CTC cscs ce ee eee vececcees 17

Lechmere, Inc. v. NLRB,

tees 5, 17, 20

Linn v. United Plant Guard Workers, Local 114,

De tee eeee 7, 11

Local 32B-32J, Service Employees Int'l] Union,

68 F.3d 490 (D.C. Cir. 1995) ...... seeeeseveses 23

-iv-

Martin v. Gingerbread House, Inc.,

977 F.2d 1405 (10th Cir. 1992) 2... 1. ee ee eee eee 14

McDonald v. Smith,

GRE GREP cece cc tcceesernseceseoes 10

Mine Workers v. Pennington,

Pe Ff arena eee ee ee 14

Montgomery Ward Co..

y FRR ae, Teer eee 20

NLRB v. Federal Security, Inc.,

154 F.3d 751 (7th Cir. 1998) ....... 22 eee eee eeee 22

NLRB vy. Food Store Empl., Local 347,

if § ee are ee eee ee ee 20

NLRB v. Vanguard Tours, Inc.,

961 F.2d 62 (3d Cir. 1992) ..... cc eee rece r cence 9

Petrochem Insulation, Inc. v. NLRB,

240 F.3d 26, 32 (D.C. Cir. 2001) ........-+- ee eee 13

Power Systems,

239 N.L.R.B. 445 (1978) 2... ee ee ees 19

Professional Real Estate Investors, Inc. v.

Columbia Pictures Ind., Inc..,

. Sie 7). eer 4,7, 9, 10, 13

San Filippo v. Bongiovanni,

30 F.3d 424 (3d Cir. 1994) 2.0... cee ees 14

Shepard v. NLRB, .

P Lik GY. | re eee 21

Summitville Tiles, Inc..,

300 N.L.R.B. G4 (19SO) 0. wc ee cere eee 15

- Vv -

Summit Valley Industries, Inc. v.

United Brotherhood of Carpenters & Joiners,

ee cus ecweun eed bese da cvues 6, 19

Sure-Tan, Inc. v. NLRB,

eee ea ee 9

Teamsters Local 776 (Rite Aid Corp.),

Nee ne ee eau 23

Teamsters, Local 776 v. NLRB,

Ore ©.ae Soe, SOO GG Gis. BOGE... ww ccc ccs 23

Three Affiliated Tribes v. Wold Engineering, P.C.,

El ne 9

Tiidee Products, Inc..,

194 N.L.R.B. 1234 (1972) ............ 4, 17, 20, 21, 23

USS Posco v.

Contra Costa County Bldg. & Constr. Trades Council,

28 P38 GEO Gs Cir. 1GBG) 0... ccc ccc cece 12, 14

Unbelievable, Inc.,

Pee Ce, GV GID nc cccccccccccecce 21, 22

United Steelworkers of Amer. v. NLRB,

496 F.2d 1342 (Sth Cir. 1974) .......... 0.2.2... 21

NLRB v. Vanguard Tours, Inc..,

981 F.2d 62 (2d Cir. 1992).............. ‘--whewe 15

White v. Lee,

227 F.34 1214 (Sth Cir. 2000)... ee ee 12

- Vi - ™

OTHER

Balmer, Sham Litigation and the Antitrust Laws,

29 Buffalo L.Rev. 39 (1980) ..... 6-6 eee ee eee

Fed R. Civ. Proc ll... . 2... ee ee cee etter eeee®

2B U.S.C. § IG2T 0. cee err eee erereees

No. 01-518

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 2001

BE&K CONSTRUCTION CO.,

Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent.

BRIEF OF AMICI CURIAE IN SUPPORT OF

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

INTRODUCTION

Pursuant to Supreme Court Rule 37.2(a), the

Chamber of Commerce of the United States and the

Associated Builders and Contractors, Inc. submit this

joint brief as amici curiae in support of the Petitioner.

All parties have given written consent to the filing of this

Brief.

‘Letters of consent have been filed with the Clerk of Court.

Pursuant to Supreme Court Rule 37.6, amici curiae state that this

’ brief was not prepared, written or produced by any person or entity

other than the amici curiae or its counsel.

= =

INTEREST OF AMICI CURIAE

The amici curiae Chamber of Commerce of the

United States (the “Chamber”) and Associated Builders

and Contractors, Inc. (“ABC”) are, respectively, a

federation of businesses and a trade association. They are

filing this brief because of their mutual concern that the

Decisions of the National Labor Relations Board (the

“Board”) and the Court of Appeals conflict with prior

holdings of this Court on an issue of great importance:

the First Amendment protection attaching to lawsuits filed

by employers against labor organizations. The individual

amici and their specific individual interests in this case

are set forth below.

The Chamber is the world’s largest federation of

business companies and associations, with an underlying

membership of nearly 3,000,000 businesses and

professional organizations of every size, in every industry

sector, and every region of the country. An important

function ofthe Chamber is to represent the interests of its

members by filing briefs amicus curiae in cases involving

issues of concern to American business.

ABC is an association of more than 23,000

construction contractors and related firms. ABC

members are regularly confronted by activities of labor

organizations and their agents intent on removing them

from both bidding on and performing private and

governmental construction projects. Its members have a

fundamental business interest in their business reputations

and in protecting their businesses from competitors’ anti-

competitive activities.

The amici jointly believe that the legal issues under

review herein are extremely important to employers

nie

throughout the nation. The Board’s decision here in

B.E.&K Construction Co., 329 N.L.R.B. No. 68 (1999),

enf'd, 246 F.3d 619 (6th Cir. 2001), imposes a burden on

employers under the National Labor Relations Act (the

“Act”) that emasculates employer rights preserved under

the Act and under the First Amendment right to Petition

the Courts for redress of grievances.

The Chamber's and ABC's participation as amici

curiae will assist the Court in obtaining full consideration

of the public-interest issues.

ISSUES

The amici hereby adopt and incorporate by reference

the Petitioner's Questions Presented.

STATEMENT OF THE CASE

The amici hereby adopt and incorporate by reference

the Petitioner’s Statement of the Case.

The amici wish to stress that the Petitioner in this

case filed suit against the unions only after its business

had been attacked in a series of frivolous legal actions by

the labor organizations. Even then, the Petitioner did not

bring its antitrust claims until after consulting with

numerous legal experts who advised that the claims had

merit and should be pursued. In short, it is undisputed

that BE&K filed its suit based upon a good faith belief

that its claims had merit, and there has been no finding by

the NLRB or the Circuit Court that BE&K’s were

“objectively baseless.”

=

It must also be noted that BE&K did not file any

litigation against its own employees or against employees

of any other employer. BE&K solely took legal action

against labor organizations who themselves had initiated

legal proceedings against BE&K and its customer in the

first instance. There is no dispute that the unions did not

represent BE&K’s employees and did not act on their

behalf at any point in the proceedings.

SUMMARY OF ARGUMENT

The Petition presents a circuit court conflict

concerning an issue of great public importance: whether

the First Amendment will any longer protect the right of

employers to petition the courts against non-employee

labor organizations. The decisions of the NLRB and the

Sixth Circuit, by misapplying the Court’s holding in Bill

Johnson’s Restaurants v. NLRB, 461 U.S. 731 (1983),

threaten to chill the business community’s right of access

to the courts due to the unavoidable risk of committing

unfair labor practices under the newly announced

standard.

The Board and court of appeals have improperly

departed from the uniform standard established by the

Court in Professional Real Estate Investors, Inc. v.

Columbia Pictures Ind., Inc., 508 U.S. 49, 51 (1993),

under which the First Amendment protects all, but

“objectively baseless” litigation.. That departure conflicts

with decisions in the Second, Third, Fifth, and Ninth

Circuits.

As demonstrated in the Petition, the Board has

abandoned the practice of evaluating the bona fides of an

sie

employer’s lawsuit upon objective considerations at the

time the suit is filed, by erecting a rule that every lawsuit

lost is an unfair labor practice. This Court’s approach in

Professional Real Estate Investors, Inc. , established “that

litigation cannot be deprived of immunity as a sham

unless the litigation is objectively baseless.” 508 U.S. at

51.

Employers filing suit under the Board’s “prevailing”

test, as employed against the Petitioner in this case, will

be unable to determine whether or not litigation is

permissible under the Act. If BE&K’s suit is unlawful,

though filed and maintained with the support of expert

advice and in defense of plainly improper non-employee

conduct, then every employer lawsuit against a labor

organization is a potential unfair labor practice.

The chilling effect of the Board and circuit decisions

is compounded by their conflict with this Court’s holding

in Lechmere, Inc. v. NLRB, 502 U.S. 527, 532 (1992),

where the Court established that important distinctions

exist between employees and labor organizations: Ҥ 7

simply does not protect nonemployee union organizers.”

BE&K here did not sue its own employees. Rather, it

treated the non-certified, non-employee labor

organizations in the same manner it would treat unlawful

action of a competitor damaging its business.

Moreover, the Board’s new policy departs from

instructions given the Board by this Court in NLRB v.

Food Store Empl., Local 347, 417 U.S. 1 (1974), where

the Board’s Tiidee Products, Inc., 194 N.L.R.B. 1234

(1972), case was considered and the Board on remand

determined that unless “patently frivolous defenses” are

~ ?

asserted or the employer's defenses “are debatable,” then

attorneys’ fees should not be awarded. Heck’s, Inc., 215

N.L.R.B. No. 142 (1974). Certainly, they should not be

awarded where the employer's underlying action has been

filed under Section 303 of the LMRA. Summit Valley

Industries, Inc. v. United Brotherhood of Carpenters &

Joiners, 456 U.S. 717 (1982).

Absent review by this Court, the amici are greatly

concerned that the balance of labor relations will be

undermined by the decisions below, as non-employee

labor organizations are free to attack legitimate

businesses, while those employers who believe in good

faith that they have valid claims against union misconduct

are nevertheless afraid to petition the courts in their own

defense.

For these reasons, the Petition should be granted.

REASONS FOR GRANTING THE PETITION

I.

ABSENT REVIEW BY THIS COURT, THE

- DECISIONS BELOW THREATEN TO

CHILL FUNDAMENTAL EMPLOYER

RIGHTS OF ACCESS TO THE COURTS

DUE TO CONFLICTING STANDARDS

USED TO DETERMINE WHETHER

BUSINESS LAWSUITS ARE

“MERITORIOUS.”

In 1983, this Court fashioned a balancing test to

determine when the National Labor Relations Board

(“Board”) may enjoin a private state court lawsuit

n ~ »

because the suit itself constitutes the commission of an

unfair labor practice and when the Board might find an

unsuccessful lawsuit to be retaliatory in violation of the

Labor Act. See Bill Johnson’s Restaurants v. NLRB, 461

U.S. 731 (1983). At the same time, the Court

affirmatively established, however, that “an employer has

the right to seek local judicial protection from tortious

conduct during a labor dispute.” Jd. at 742.

In the decisions below, amici assert that the Board

and the Court of Appeals distorted the intent and purpose

of the Court’s deliberate restrictions on the Board’s

jurisdiction to condemn lawsuits to be retaliatory unfair

labor practices under the Act. In doing so, they have set

up an almost impossible regime for employers to follow

to protect their business interests.

That regime, simply stated, finds employer lawsuits

against labor organizations to be unfair labor practices if

the employer does not “prevail,” regardless of the

employer's good faith in filing suit and regardless of the

objective “merit” of the litigation. This is an

unwarranted expansion of the holding in Bill Johnson’s

Restaurants that completely disregards this Court’s

extension of First Amendment protection to all but

“sham” litigation, in the cases of Professional Real Estate

"In Linn v. United Plant Guard Workers, Local 114, 383 U.S.

53 (1966), the court had held that the state tort of libel was not

preempted by the Labor Act. Neither are secondary boycotts or

Sherman antitrust claims preempted by the Labor Act. See Summit

Valley Industries, Inc. v. United Brotherhood of Carpenters &

Joiners, 456 U.S. 17 (1982); Mine Workers v. Pennington, 381

U.S. 657, 669 (1965).

2

Investors, Inc. v. Columbia Pictures Ind., Inc. , 508 U.S.

49 (1993), and California Motor Transport Co. Vv.

Trucking Unlimited, 404 U.S. 508 (1972).

By establishing a regime that discounts employers’

First Amendment rights, the Board and the Court of

Appeals threatened the entire business community's right

of access to the courts to challenge potentially unlawful

activity conducted by labor organizations. No employer

can tell in advance of litigation whether a suit against a

union will or will not be found to be an unfair labor

practice.

Under the Board’s standard, the only way to avoid an

unfair labor practice finding is not to file suit, no matter

how valid the employer believes its claim to be. This

newly formulated Board caselaw adversely burdens and

chills all employers’ First Amendment rights to petition

the government for redress of grievances. The amici urge

the Court to grant Certiorari in order to prevent this

chilling effect and to re-establish a single, uniform

“sham” litigation standard.

Uniform standards under the First Amendment assure

predictability and certainty to all litigants. As this Court

affirmed in Bill Johnson’s Restaurants, “weighty

countervailing considerations...militate against allowing

the Board to condemn the filing of a suit as an unfair

labor practice and to enjoin its prosecution.” 461 U.S. at

731. These considerations include “the right of access”

to the state courts to seek redress of grievances, the

preservation of domestic peace, and the substantial state

interest in protecting the health and well-being of its

x

citizens. Jd. at 742. Three Affiliated Tribes v. Wold

Engineering,-P.C., 476 U.S. 877, 888 (1986).

Furthermore, the Court observed in Bill Johnson's

Restaurants that the right of access to the courts was

recognized to “stand apart” from other forms of action

because it is a protected “aspect of the First Amendment

right to petition the Government for redress of

grievances.” 461 U.S. at 741. That right, the Court

explained “is too important to be called an unfair labor

practice solely on the ground that what is sought in the

court is to enjoin employees from exercising a protected

right.” Jd (emphasis added). Of course, here, the record

shows that BE&K has not sought to enjoin any of its

employees from exercising any right they may have.

This Court also showed in Bill Johnson's Restaurants

that the proper manner for the Board to obtain jurisdiction

after the state court case had concluded, required it to

demonstrate that the state case was both improperly

motivated and lacked a reasonable basis in fact or law.

It explained the lack of reasonable basis in the First

Amendment context to occur “when litigation is based on

intentional falsehoods or on knowingly false claims.” Bill

Johnson's Restaurants, 461 U.S. at 743. This is itself the

“sham” exception previously outlined from the Court’s

decision in California Motor Transport Co. v. Trucking

Unlimited, 404 U.S. 508, 510 (1972), which the Court

explained in Professional Real Estate Investors, 508 U.S.

at 57, that in California Motor Transport Co. “we

extended Noerr to ‘the approach of citizens...to

administrative agencies...and to courts.’”

= =

In California Motor Transport, this Court recognized

that the First Amendment guarantee of a right to petition

the government for a redress of grievances includes the

right of access to the courts: “The right of access to the

courts is indeed but one aspect of the right of petition.”

Also McDonald v. Smith, 472 U.S. 479, 482 (1985)

(“The right to petition is cut from the same cloth as the

other guarantees of [the First) Amendment....”). In

Professional Real Estate Investors, this Court reaffirmed

the “sham” litigation standard ten years after Bill

Johnson's Restaurants, without any indication that Bill

Johnson’s Restaurants was intended to create an

anomalous labor law exception to the otherwise uniform

application of the First Amendment established by the

Court.

Yet, in the cases now before the Court, the Board and

the Court of Appeals, relying on unclear dicta from Bill

Johnson’s Restaurants, have ignored Petitioner BE&K’s

good faith belief in the merit of its lawsuit and ruled

against BE&K without any finding that the suit was

“objectively baseless.” Indeed, the record shows that

BE&K consulted with numerous antitrust experts prior to

filing its claims, and those experts advised that BE&K’s.

case-against the unions had merit.’

*The Court in Professional Real Estate Investors, viewed its test

as similar to considerations undertaken in a tort for malicious

prosecution. 508 U.S. at 63. It also believed that what the

underlying court thinks of the lawsuit was important, especially “in

light of the unsettled condition of the law, Columbia plainly had

probable cause to sue....or at the very least...an objectively ‘good

faith argument for the extension, modification, or reversal of

(continued. ..)

~~

The lawsuit was therefore not a “knee-jerk” reaction

to alleged Section 7 rights the labor organizations

possessed. The rulings below create an unwarranted

anomalous labor exception to access to the courts, one

where the First Amendment protections are now

nonexistent for non-prevailing plaintiffs.

Amici submit, however, that it is simply not enough

for the Board to undertake an “academic” review of the

record to reach self-fulfilling conclusions of law in order

to condemn as an unfair labor practice any act to petition

the government for redress of grievances. When that

same government, through the federal judiciary, denies

relief to a litigant, efforts undertaken by another federal

arm of the government—such as the Board here—to

punish plaintiff for bringing the case must be denied

unless the litigation is shown to be objectively baseless.

For any government ffunctionary to punish a

citizen/petitioner for exercising a fundamental

constitutional right must be subject to the highest level of

scrutiny, not the lowest.

Thirty years ago this Court in Linn provided labor

organizations with fair warning that they were to be

treated as functional entities who were not privileged to

engage in reckless actions free from legal sanction:

“[a]fter all, the labor movement has grown up and must

assume ordinary responsibilities.” Linn, 383 U.S. at 63

(emphasis added).

‘(...continued)

existing law’” under Fed R. Civ. Proc. 11. /d. at 65.

“ F

~

It is paradoxical to attempt to hold labor unions

subject to “ordinary responsibilities” and to continue to

grant them immunity and privileges when their actions

might facially amount to tortious activity. The failure to

consider the importance of First Amendment access in the

context of whether intentional falsehoods or knowingly

frivolous administrative claims were asserted, as occurred

here, is underscored by the Court’s quotation in Bill

Johnson’s Restaurants from Balmer, Sham Litigation and

the Antitrust Laws, 29 Buffalo L.Rev. 39, 60 (1980), to

support the proposition that the same balancing approach

taken by this Court under the antitrust laws should be

followed under the Labor Act.*

Importantly , the Bill Johnson’s Restaurant Court ruled

that “[wje should follow a similar course under the

NLRA.” 461 U.S. at 744.

The District of Columbia Circuit has recognized this

conflict and called upon this Court to “one day create a

uniform standard for sham litigation governing both

NLRA and non-NLRA cases (or explain why the First

“The Ninth Circuit recently so observed in White v. Lee, 227

F.3d 1214 (9th Cir. 2000), a case raised by Petitioner BE&K,

where HUD sought similar fees as a statutory remedy against

homeowners filing a state court lawsuit to prevent issuance of a use

permit for homeless housing. The court found that the claim would

“conflict with our prior case law which protects the First

Amendment right of citizens to engage in petitioning activity,

including the filing of lawsuits with an objective basis in fact or

law, even if they ultimately prove unsuccessful.” /d. at 1236.

There is no reason supplied by the Sixth Circuit why uniformity

should not apply to all federal agency enforcement statutes.

~ =

Amendment protects erring litigants less in the NLRA

context than others).” Petrochem Insulation, Inc. v.

NLRB, 240 F.3d 26, 32 (D.C. Cir. 2001). That day has

now arrived.°

However unclear the Court’s language in Bill

Johnson's Restaurants may have been in identifying “suits

based on insubstantial claims” not entitled to protection,

461 U.S. at 731, the Sixth Circuit’s position clearly sets

itself against this Court’s explanation in Real Estate

Investors, Inc. v. Columbia Pictures Ind., Inc., 508 U.S.

49 (1993).

In Professional Real Estate Investors, the Court

resolved that the “sham” exception turns on the objective

intent of the filer and included Bill Johnson’s Restaurants

in its legal overview of how the “sham” exception applies

in “other contexts.” 508 U.S. at 58. That case defined

a two-part analysis where “[f]irst, the lawsuit must be

objectively baseless in the sense that no reasonable litigant

could realistically expect success on the merits.” Jd at

60. If so, then the reviewing court could examine the

subjective motivation of the litigant focused on whether

*The facts of the present petition stand in stark contrast to the

litigation found to be “frivolous” by the D.C. Circuit in Petrochem

Insulation, Inc., 240 F. 3d at 31. Whereas in Petrochem, the

employer “failed to identify a single meritless objection to any

construction project” made by the unions against it, BE&K

identified fourteen meritless legal actions taken against it by the

unions in the USS-POSCO litigation. See USS POSCO v. Contra

Costa County Bldg. & Constr. Trades Council, 31 F. 3d 800, 804

(9® Cir. 1994).

- 14-

the baseless lawsuit attempts to directly interfere with the

opponent’s business. Jd.

Specifically, the Court viewed its line of decisions as

demonstrating that “[wJe regard as sham ‘private action

that is not genuinely aimed at procuring favorable

government action’ as opposed to ‘a valid effort to

influence government action.’” 508 U.S. at 58. It also

demonstrated the force of its ruling by stating that “we

have repeatedly reaffirmed that evidence of anti-

competitive intent or purpose alone cannot transform

otherwise legitimate activity into a sham.” Jd. At 59.

The Sixth Circuit’s rejection of the “sham” principle

also places it in conflict with the decisions of the Ninth

Circuit in USS Posco v. Contra Costa County Bldg. &

Constr. Trades Council, 31 F.3d 800, 804 (9th Cir.

1994), stating that this Court in Bill Johnson’s Restaurant

was “applying Noerr-Pennington to [the] labor context;”

the Third Circuit in San Filippo v. Bongiovanni, 30 F.3d

424, 429 (3d Cir. 1994), where “the unprotected status of

‘sham litigation;’” was recognized “in construing the

NLRA in the present context;” and the Fifth Circuit in

Brown & Root, Inc. v. Louisiana State AFL-CIO, 10 F.3d

316, 325 (Sth Cir. 1994), where that Court stated that in

Bill Johnson's Restaurants, this “Court proceeded to input

the sham exception to the Noerr-Pennington doctrine into

labor law.”° Unlike the decision in BE&K v. NLRB here,

these three circuits did apply the Professional Real Estate

*Eastern R. Presidents Conf. v. Noerr Motor Freight, Inc. , 365

U.S. 127 (1961); Mine Workers v. Pennington, 381 U.S. 657, 669

(1965).

=~ -

Investors “baseless” test, i.e., no realistic chance of

success on the merits, to their individual situations.’

As the Third Circuit observed in Chauffeur,

Teamsters, Local 776 v. NLRB, 973 F.2d 230, 235 (3d

Cir. 1992), the right of access to the courts is a “more

significant consideration” than the potential that a lawsuit

may be a powerful instrument of coercion. The Sixth

Circuit’s analysis unwinds the Court’s Bill Johnson's

Restaurants national standard and directly conflicts with

the Court’s fundamental conclusion that the use of a

lawsuit for coercive purposes is proper so long as the

lawsuit is not baseless.

This structure is also consistent with NLRB v.

Vanguard Tours, Inc., 981 F.2d 62 (2d Cir. 1992).

There, the Second Circuit held the Board to the Bill

Johnson’s Restaurants requirement to identify disputed

issues of fact or law and rejected the Board’s automatic

finding of lack of reasonable basis from an unsuccessful

verdict (a settlement) in favor of the employer: “We think

the better reading, however, requires the Board to find

that the withdrawn suit lacked a reasonable basis in fact

or law.” See Summitville Tiles, Inc., 300 N.L.R.B. 64,

65 (1990) (Board previously recognized “both essential

prerequisites to enjoin prosecution of a state court

lawsuit”; company conceded retaliatory motive).

’Also Martin v. Gingerbread House, Inc., 977 F.2d 1405, 1407

(10th Cir. 1992), identified the “baseless test” in Bill Johnson's

Restaurants to exist where “controlling federal law bars the

plaintiff's right to relief, ... clear state law makes the case frivolous,

or ... no reasonable jury could [find] in favor of the plaintiff.” 461

U.S. at 754-55 (Brennan, J., concurring).

= -

Further, intrusion by the Board in second guessing

_ federal court litigation results requires review. Because

the federal courts retain the inherent power to monitor

and reprimand parties before them under Fed. R. Civ.

Proc. 11 and 28 U.S.C. § 1927, if the court has

jurisdiction of statutory violations of Section 8(b)(4) of

the Act under 29 U.S.C. § 187, its refusal to impose

sanctions with due respect for the employer’s

constitutional rights, must not be relooked at by the Board

as it construes the same statute.

Il.

REVIEW SHOULD ALSO BE GRANTED IN

ORDER TO RESOLVE THE CIRCUIT

CONFLICT WHICH NOW EXISTS

REGARDING THE BOARD’S POWER TO

AWARD ATTORNEYS’ FEES TO NON-

EMPLOYEE LABOR ORGANIZATIONS.

The chilling effect of the Board’s decision in the

present case is compounded by the fact that the Board has

expanded the scope of Bill Johnson’s Restaurants beyond

its intended employee beneficiaries. The Sixth Circuit

has endorsed the Labor Board’s exercise of authority to

award costs and attorneys’ fees to uncertified non-

employee labor organizations and has done so in a

summary manner without fair consideration of the

employer’s non-retaliatory motives. The holdings of the

Board and the Court of Appeals are wrong and must be

reversed to prevent considerable harm to the balance of

interests in labor relations throughout the country.

The Sixth Circuit’s order conflicts with the Ninth

Circuit’s reasoning in Diamond Walnut Growers, Inc. v.

|

- 17 -

NLRB, 53 F.3d 1085 (9" Cir. 1995), and with the Sixth

Circuit’s own views expressed previously in Johnson &

Hardin Co. v. NLRB, 49 F.3d 237, 244 (6th Cir. 1995).

Overriding each of these decisions is this Court’s plain

holding in Lechmere, Inc. v. NLRB, 502 U.S. 527, 532

(1992) (Ҥ 7 simply does not protect nonemployee union

organizers.”).

In Diamond Walnut the employer had sued a union

that represented its striking employees along with another

union that actually issued an allegedly defamatory letter.

53 F.3d at 1089. Similarly, in Gibson Greeting v. NLRB,

53 F.3d 385 (D.C. Cir. 1993), the Court denied a

certified union’s cross-petition alleging that the Board had

erred by failing to award it attorneys’ fees and costs

under its winning § 8(a)(5) charge, for expenses incurred

where the employer did not prevail in a section 301, 29

U.S.C. § 185, lawsuit filed for breach of the collective

bargaining agreement. In Gibson Greeting, the Board did

not consider “whether the employer’s claims were made

in bad faith.” 53 F.3d at 394. The Sixth Circuit's

expansive ruling is not supported by these two cases.

The traditional test for an attorneys’ fee award under

Board law was set forth in Tiidee Products, Inc., 194

N.L.R.B. 1234 (1972), enf’d mod. International Union of

Electrical Workers v. NLRB, 502 F.2d 349 (D.C. Cir.

1974), cert. denied, 417 U.S. 921 (1974). In Tiidee

Products, a company was ordered to pay litigation costs

associated with the NLRB proceeding due to the

company’s “clear and flagrant violation of the law” to

discourage “future frivolous litigation.” Jd. See also

Lang Towing, Inc., 201 N.L.R.B. No. 92 (1973) (setting

= -

forth a “frivolous” defense standard); Heck’s, Inc., 215

N.L.R.B. No. 142 (1974) (affirming frivolous defense

standard).

In Bill Johnson’s Restaurants, 461 U.S. at 747

(emphasis added), this Court set forth the following

attorneys’ fees standard:

The employer’s [civil] suit having proved

unmeritorious, the Board would be warranted in

taking that fact into account in determining

whether the suit had been filed in retaliation for

the exercise of the employee's Section 7 rights.

If a violation is found, the Board may order the

employer to reimburse the employees whom he

had wrongfully sued for their attorneys’ fees and

other expenses. (Emphasis added).

Thus, the Court based its civil lawsuit/attorney’s fee

grant of authority on an anticipated finding of “employer

retaliation” against its own employees, including but not

limited to whether the civil suit had merit. The Court

concluded “it is an enjoinable unfair labor practice to

prosecute a baseless lawsuit with the intent of retaliating

against an employee for the exercise of rights protected

by § 7 of the NLRA.” 461 U.S. at 744 (emphasis

added).

- 19- >

Notably, in Bill Johnson’s Restaurants, the employer

did not sue any union, but instead sued eight of its own

employees.*®

In ordering BE&K to pay the union’s fees and costs

here, the Board ruled that the order is appropriate even

though the lawsuit included causes of action which were

not preempted and which might have constituted a

reasonable basis for a damage suit before the Federal

district court under Section 303 of the Act. This holding

directly conflicts with this Court’s decision in Summit

Valley Industries, Inc. v. United Brotherhood of

Carpenters & Joiners, 456 U.S. 17 (1982) (prohibiting an

award of attorneys fees for filing a non-prevailing suit

against a union under Section 303 of the LMRA).

The Sixth Circuit expressed an unfounded concern

over creating an anomaly in the law by permitting suits

against unions which would not have been permissible if

undertaken against employee union members. The appeals

court’s resulting holding departs from the law enacted by

Congress (and so interpreted by this Court), which plainly

*The key ingredient in Bill Johnson's Restaurants was the

defendant employees’ status. This theme is repeated throughout the

Court’s opinion: “Since 1978, the Board has consistently adhered

to the Power Systems[, 239 N.L.R.B. 445 (1978), enf. denied, 601

F.2d 936 (7th Cir. 1979),] rule that an employer or union who sues

an employee for retaliatory motive is guilty of a violation of the

Act,” id at 739; “by suing an employee who files charges with the

Board...the employer can place its employees on notice,” id. at 740,

and “{wjhere, as here, such a suit is filed against hourly-wage

waitresses or other individuals who lack the backing of a union, the

need to allow the Board to intervene and provide a remedy is at its

greatest,” id. at 741.

-®.

defines labor organizations separately from employees.

The amici are concerned that the Board’s and Circuit

Court’s holding threatens to undermine the long accepted

distinction between non-employee unions and _ their

employees. “By its plain terms, . . . the NLRA confers

rights only on employees, not on unions or their

nonemployee organizers.” Lechmere, Inc. v. NLRB, 502

U.S. 527, 532 (1992).”

That the Board’s holding constitutes a revolutionary

expansion of Bill Johnson’s Restaurants can be seen in

earlier rulings of the Board itself. Thus, in Montgomery

Ward Co., 288 N.L.R.B. 126, 195 (1988), the Board

upheld an ALJ recommendation not to award attorneys’

fees as a remedy to a stranger union that was not the

employee bargaining representative, as follows:

[T]he cases where the Board has awarded

litigation expenses for civil or criminal court

proceedings resulting from an employer's

unlawful conduct, such awards have been

uniformly given to employees. None of the cases

involve non-employee union representatives.

[citations omitted]. In light of the above I find

no compelling basis for extending recovery of

legal expenses for the criminal action or to direct

the Respondent to request expurgation of the

court’s records on behalf of non-employee

Johnson. (Emphasis added).

The Board has not ruled that BE&K’s lawsuit was

patently frivolous or its defenses not debatable, two

requirements this Court adopted when it considered a

Board reimbursement remedy case utilizing Tiidee

.

Products. NLRB v. Food Store Empl., Local 347, 417

U.S. 1, 9-10 & n.9 (1974). In Tiidee, the remedy there

would have been considered “extraordinary,” while here,

it appears to have become simply part of a “conventional

make-whole remedy.”°

On remand from this Court’s decision in Food Store

Empl., Local 347, the Board clarified its policy and made

it clear that costs and fees are limited to cases where

“patently frivolous defenses” are asserted and are not

recoverable where the defenses “are debatable,” which

includes situations that are “dependent on resolutions of

credibility.” Heck’s, Inc., 215 N.L.R.B. No. 142

(1974). Until the recent series of cases outlined here, this

procedure remained the Board’s unwavering standard.

Unbelievable, Inc., 318 N.L.R.B. 857, 860-61 (1995).

These standards derived from Tiidee Products have

been uniformly applied in sustaining fee awards “only

where the defenses asserted by the employer...are totally

without merit or frivolous.” ~ East Bay Chevrolet v.

NLRB, 659 F.2d 1006, 1011 (9th Cir. 1981); J.P. Stevens

& Co. v. NLRB, 612 F.2d 881, 883 (4th Cir. 1980)

(“only for frivolous or dilatory conduct”); Dist. 65,

Distributive Workers v. NLRB, 683 F.2d 1155, 1167

(D.C. Cir. 1978) (affirming the Heck’s frivolous

standard); United Steelworkers of Amer. v. NLRB, 496

F.2d 1342, 1352-53 (Sth Cir. 1974) (make whole remedy

"In Shepard v. NLRB, 459 U.S. 344, 350 (1983), a wrongful

dues cases, the Court affirmed the Board’s order that the

reimbursement remedy is to be “reserved for especially egregious

cases.” The decision below does not explain the reason for the

dichotomy of treatment in the Board’s decisions.

2.

not available where “factually debatable questions,” exist,

the conduct was not for delay of collective bargaining, or

frivolous); Federal Prescription Service, Inc. v. NLRB,

496 F.2d 813, 819 (8th Cir. 1974) (frivolous). The case

at bar represents a dramatic departure from this standard

without explanation.

The Board’s remedial powers should not be applied

to award attorneys’ fees in cases involving non-employee

actions filed with “debatable support.” /d. See

Unbelievable, Inc., 318 N.L.R.B. at 860. For a lawsuit

“proven to. be without merit, [] does not mean that the

suit was ipso facto an unfair labor practice.” JBEW,

Local 532 (Brink Constr. Co.), 291 N.L.R.B. 437, 438

(1988).

In situations that should have required the Board to

use a disciplined approach to determining retaliatory

intent, the Board has not been circumspect at all in

awarding fees. For example, in American Pacific

Concrete Pipe, 292 N.L.R.B. 1264 (1989), it awarded

fees against an employer’s breach of contract and fraud

suit where the union breached a private settlement

agreement with it and pursued further remedies with the

Board.

In Federal Security, Inc., 336 N.L.R.B. No. 52

(2001), the Board issued a Bill Johnson’s Restaurant

remedy against the employer when it sought to recover

damages for malicious prosecution and libel stemming

from employee activity found not to be concerted activity

by the Seventh Circuit in NLRB v. Federal Security, Inc.,

154 F.3d 751 (7th Cir. 1998). In Heisler Food Enter.,

Ltd., Case No. 2-CA-30899, 1999 NLRB LEXIS 889

oe ee ee ES ee

. -

(1999), an ALJ ordered dismissal of the employer’s libel

and slander lawsuit against the union for publicizing

through letters and flyers that its Jewish bakery was

violating Kosher rules by contaminating dairy products

with meat and other goods. Because the ALJ found the

union’s conduct protected activity, “it was by definition

retaliatory within the meaning of Bill Johnson....” 1999

NLRB LEXIS at *82.

in Johnson & Hardin Co. v. NLRB, 49 F.3d 237, 244

(6th Cir. 1995), the court plainly refused to enforce an

attorney’s fee award in favor of non-employee union

organizers. Relying upon this Court’s decision in Bill

Johnson's Restaurants and Tiidee Products it found the

“harsh remedy of a grant of attorneys’ fees” should not

be awarded to non-employee unions.

In addition, under Tiidee Products, BE&K’s defense

of the single unfair labor practice charge stemming from

its filing of a secondary boycott and an antitrust count in

federal court cannot be deemed “frivolous,” in “clear

flagrant violation of the law,” id., pre-empted or an

illegal act. Local 32B-32J, Service Employees Int'l

Union, 68 F.3d 490, 496 (D.C. Cir. 1995) (interpreting

Bill Johnson’s Restaurants as allowing the Board to award

fees “if the litigation was unlawful”). '°

‘In Teamsters Local 776 (Rite Aid Corp.), 305 N.L.R.B. 832

(1991), the Board explained, that “[t}he ‘retaliatory motive’ refers

to actual motive of the respondent-plaintiff in filing the suit.” /d.

at 834. This requires “an improper motivation, a subjective

criterion.” Teamsters, Local 776 v. NLRB, 973 F.2d 230, 236 (3d

Cir. 1992). Here, the Board did not explain this -criterion in

(continued...)

,

It has become clear that the Board’s cases show it has

completely lost the ability to distinguish between cases

against labor organizations and ‘employees and in

situations where Section 7 activity is and is not involved

for purposes of issuing a remedial order. In every case,

the Board finds a judicial loss is equivalent to lack of

merit and therefore a violation of Section 8(a)(1) of the

Act.

In Bill Johnson’s, this Court was asked to protect

relatively defenseless employees from retaliatory,

nonmeritorious employer lawsuits. The present decision,

however, shifts the entire balance of American labor

relations by threatening employers with unfair labor

practice findings merely for defending their businesses

against well funded “corporate campaign” activities by

large labor organizations, much of which is occurring

Outside the confines of the NLRA. BE&K’s petition

Should be granted so that the Court can resolve the

serious and important conflicts created in the law by the

holdings of the NLRB and the Court of Appeals.

'°(...continued)

BE&K’s situation.

8.

CONCLUSION

For these reasons, and for each of the reasons set

forth in greater detail in BE&K’s Petition, amici curiae

respectfully request that a writ of certiorari issue to

review the judgment of the court of appeals.

Respectfully submitted,

Michael E. Avakian*

SMETANA & AVAKIAN

5211 Port Royal Road, Suite 103

Springfield, VA 22151

(703) 321-9181

*Attorney of Record for Amici Curiae

Dated: December 5, 2001