The National Labor Relations Board (“NLRB” or the “Board”) recently issued a decision adopting the position, advocated by Venable on behalf of a client, that employer lawsuits against unions do not constitute unfair labor practices simply because the employer ultimately loses in court provided there was a reasonable basis for the suit. See BE&K Construction Company, 351 NLRB No. 29 (2007) (“BE&K”).

This is an important ruling protecting employers’ First Amendment right to seek protection from union abuses in the courts, and is consistent with an earlier decision issued in a related proceeding in which the Supreme Court, also at the petitioning of Venable and its client, struck down the NLRB’s previous “sham litigation standard” on constitutional grounds. See BE&K Constr. Co. v. NLRB, 536 U.S. 516 (2002).

Background

Under the NLRB’s previous sham litigation standard, the Board could declare that a reasonably based, but ultimately unsuccessful, lawsuit violated the National Labor Relations Act if the suit was based on a motive to interfere with employees’ right to organize under NLRA § 7.

Relying on that standard, the Board originally determined that BE&K Construction Company (“BE&K” or the “Company”) committed an unfair labor practice by filing and maintaining a lawsuit against two unions. On appeal to the Supreme Court, however, the Court rejected the Board’s analysis and reversed.

The Court held that, among other infirmities, the Board’s expansive definition of a retaliatory suit covered a substantial amount of genuine petitioning that is protected by the Bill of Rights. For example, an employer’s suit to stop what the employer reasonably believes is illegal union conduct may interfere with or deter some employees’ exercise of NLRA rights. However, if the employer’s motive reflects a subjectively genuine desire to test the conduct’s legality, then declaring the suit to be an unfair labor practice would unconstitutionally burden the right to engage in genuine petitioning.

The NLRB’s New Standard

On remand, the Court instructed the Board to devise a new standard for determining whether unsuccessful suits brought by employers against unions can ever be unfair labor practices (“ULPs”) when the suits are reasonably based. The Board, by a 3-2 vote, adopted Venable’s position and affirmed that the First Amendment protects all such litigation against second guessing via the unfair labor practice process.

Under the new standard, “a lawsuit lacks a reasonable basis, or is objectively baseless, if no reasonable litigant could realistically expect success on the merits.” Otherwise, a lawsuit “cannot be found to be an unfair labor practice.”

Applying this standard to the instant case, the Board found that BE&K’s lawsuit against the unions was reasonably based, and thus did not constitute an unfair labor practice. As a result, the unions’ unfair labor charge was dismissed.