Illinois: Decision Strengthens Employer’s Ability to Combat Defamatory Union Picketing
March 27, 2003
One of unions’ favorite tactics is to picket nonunion
construction contractors with messages stating that the contractor is not paying
the “prevailing wages and benefits” in the local area or as required by state or
federal law on government construction projects. This places employers in a
bind even if the statements are untrue, because the remedies offered by the
National Labor Relations Board are ineffective. As a result, contractors have
sought to sue unions for defamation under state law. Contractors then face
another hurdle, however; arguments from the unions that the National Labor
Relations Act (NLRA) precludes employers from relying on state defamation law.
A recent “nondecision” from the United States Supreme Court
significantly strengthens contractors’ hands. The Supreme Court recently
declined to review an Illinois appellate court ruling that a construction trades
union defamed a construction site contractor through picket sign messages
claiming that it was not paying prevailing wages and benefits. The Supreme
Court’s “nondecision” means that contractors can use the threat of substantial
defamation damages to protect against false union picket messages.
See Lowe Excavating Co. v. International Union of Operating Engineers Local No. 150, 765 N.E.2d 21, (Ill.App. 2 Dist. 2002), cert. denied ___ U.S. ___, 123 S.Ct. 555, 154 L.Ed.2d 442 (2002).
The defendant union, International Union of Operating
Engineers, Local 150 (union) picketed a McHenry, Illinois, jobsite and accused
the contractor, Lowe Excavating Co. (Lowe) of failing to pay prevailing wages
and benefits on a federally funded project. Lowe informed the union that it was
paying prevailing wages and benefits and that it had submitted certified payroll
records to the government establishing this fact. Nevertheless, the union
continued picketing, and Lowe was terminated from the project.
Lowe sued for defamation in state circuit court in McHenry
County, Illinois. The trial court found that the claim was preempted by the
National Labor Relations Act (NLRA), but the ruling was reversed and remanded by the state
appellate court and review was declined by both the Illinois and United States
Supreme Courts.
On remand, the McHenry County Circuit Court found the
statements not defamatory. However, the state appellate court reversed, finding
damage to Lowe’s reputation. The court noted that the union failed to present
any evidence that Lowe was violating prevailing wage and benefits regulations.
The court concluded that the union’s messages were false and the union business
agent should have had serious doubts about the truthfulness of the messages.
The Illinois Supreme Court refused to review the appellate court’s decision.
In seeking review by the United States Supreme Court, the
union argued that the claim was preempted by the NLRA. Lowe countered that the
NLRA did not preempt statements made with actual knowledge of their falsity or
in reckless disregard of the truth. Lowe argued that the recklessness was
established by the union business agent’s refusal to acknowledge or verify
Lowe’s statements that it was paying prevailing wages and had submitted
certified payroll records to the federal government.
This case is a significant victory for general contractors
and contractors confronting untruthful area picketing harassment tactics by
construction trade unions. The case further strengthens the developing body of
law that states that untruthful statements against employers by unions in labor
disputes are not preempted by the NLRA, and that the employer may find redress
under state defamation law.
For more information, call Mark Spognardi, toll free, at
1-888-688-8500.
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