Supreme Court Decision Cements Employers’ Power to Sue Unions for Damaged Property During Strikes

The United States Supreme Court confirmed today that businesses may sue unions for deliberately damaging company property during a strike.

This ruling gives employers a significant tool for potential use when unions resort to strikes (and maybe other organizing or bargaining tactics) that cause foreseeable damage to company property.

The Court’s decision stems from a 2017 strike at a concrete company in Washington state. The company was in the business of delivering concrete using ready-mix trucks with rotating drums that prevented the concrete from hardening.

If the concrete hardened, it would become useless, the trucks would be destroyed, and the company would suffer a financial loss. After a collective bargaining agreement between the company and the union representing the company’s truck drivers expired, the union called for a strike on a morning it knew the company was in the midst of mixing substantial amounts of concrete.

That morning, 16 drivers left their trucks fully loaded with wet concrete. The company worked quickly to remove the concrete before it destroyed the trucks, but they were unable to salvage the concrete itself.  The company suffered substantial losses as a result of the spoiled product.

The company sued the union in Washington state court to recoup its losses. The union, however, argued that the drivers’ actions were fully protected from liability under the National Labor Relations Act (NLRA), which protected their right to engage in concerted activities for the purpose of collective bargaining and other mutual aid or protection.

The union claimed this right protected the drivers’ conduct, as they allowed the concrete to harden to secure better work conditions for themselves. The union contended that any state law claims brought by the company for property damages were preempted by the drivers’ federal rights under the NLRA. The Washington state court sided with the union and dismissed the company’s lawsuit.

In an 8-1 decision, the U.S. Supreme Court reversed the state court’s ruling and held that the NLRA does not bar companies from suing unions for damaging a company’s property even when the damage was done to extract better working conditions. The Supreme Court explained that the drivers’ rights under the NLRA were not absolute and did not entitle them to damage company property indiscriminately for the purpose of seeking more favorable work conditions.

Rather, the drivers were obligated to take “reasonable precautions” to protect their employer’s property from foreseeable, aggravated and imminent danger caused by the strike.

The Court ultimately held that the company’s state law claim was viable and not preempted by the NLRA because the union allegedly did not take the necessary precautions to protect the company’s property, but instead coordinated with the drivers to initiate the strike when the company was in the middle of batching large quantities of concrete, making it susceptible to foreseeable harm.

This ruling opens the door for employers to fight back against strikes (and potentially other organizing or bargaining activity) that cause property damage unless the union takes reasonable steps to prevent foreseeable and imminent damage.

For questions or guidance regarding this, please reach out to Matt Perez or any member of the Phelps Labor and Employment team.