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Supreme Court Issues Graniterock Ruling


On June 24, the U.S. Supreme Court of the United States ruled in Granite Rock Company v. International Brotherhood of Teamsters & Teamsters Local 287, confirming a jury verdict against Local 287 and refusing to dismiss the International Brotherhood of Teamsters from the case

On June 24, the U.S. Supreme Court of the United States ruled in Granite Rock Company v. International Brotherhood of Teamsters & Teamsters Local 287, confirming a jury verdict against Local 287 and refusing to dismiss the International Brotherhood of Teamsters from the case.

The Court was unanimous concerning the union and voted 7 to 2 to confirm the jury verdict. This leaves Graniterock several options to pursue claims against the union.

Concrete ready-mix drivers represented by Teamsters Local 287 went on strike against Graniterock in June 2004. The strike forced more than 450 employees from their jobs. The company and the union settled the strike in the early morning hours of July 2, 2004, with the union agreeing to return to work immediately. After ratifying a collective-bargaining agreement that contained a no-strike clause, the union refused to allow its members to return to work unless the company agreed to release the union for damage claims and unfair labor practice charges that arose during the strike. The Teamsters union demanded the release for the benefit of the union locals, as well as the International. When Graniterock refused to provide the release, the strike continued for more than two months.

Graniterock filed an action against Local 287 and the International Brotherhood of Teamsters alleging that the Local violated the no-strike clause of the newly ratified agreement, and that the International was orchestrating the continued strike for its own benefit (to obtain the release).

A district court dismissed Graniterockís claims against the International, ruling that those claims were preempted by federal labor law. The claims against the Local proceeded to a jury trial on the issue of whether the collective-bargaining agreement had actually been ratified by the Local membership. The jury reached a unanimous verdict that the agreement had been ratified.

The Local appealed this jury verdict, claiming the issue of whether the contract was ratified should have been heard in arbitration, not by a jury. Graniterock appealed the courtís dismissal of its claims against the International. The Ninth Circuit Court of Appeal ruled in favor of the unions on both issues. Graniterock petitioned the Supreme Court for review of the Ninth Circuitís ruling.

The Court held that federal law does not provide a shield for an international union that uses its influence over a local union to injure an employer. While the Court declined to recognize a new federal tort cause of action, the Court stated this ìdoes not mean that we approve of the IBTís alleged actions.î Accordingly, the Court held that Graniterock may still seek its damage claims from the 2004 strike.

The 2004 strike already has been determined to have been unlawful by the National Labor Relations Board, a decision that was affirmed by a court of appeal. As the Court stated in the opinion, ìGraniterock describes a course of conduct that does indeed seem to strike at the heart of the collective bargaining process federal labor laws were designed to protect.î

Graniterock is seeking significant strike cost reimbursement, including back pay for employees.

Graniterockís case was selected for review by the Supreme Court in June 2009, one of 75 selected from 10,000 cases annually considered for review. Graniterock and the Union appeared before the Court in oral argument in January, 2010. The Courtís decision concerning the International was unanimous. Justices Sotomayor and Stevens dissented from the portion of the decision concerning arbitration.

Kevin Jeffery, a Graniterock lawyer, participated in the drafting of briefs submitted to the Court and attended the oral argument. ìThe Ninth Circuit decision wrongfully granted the International immunity for interfering with the contract between Graniterock and the Local," he says. "The Ninth Circuit said there was effectively a ëno manís landí in the law that allowed an international union to cause the violation of contracts made by its locals, and legally avoid the consequences of its bad acts. The Ninth Circuit dismissed the International from the case. The Supreme Court refused to adopt this view. Instead, the Court simply declined to recognize a new federal tort cause of action, and suggested several potential claims that Graniterock may bring against the International under existing law.î

ìGraniterock sought to enforce its labor contracts, which the union had violated. During the strike, the union misleadingly stated publicly that it was embroiled in a labor contract dispute with the company over health care and other contract terms. In fact, there were no such unsettled contract matters because a labor contract had been reached and ratified. The actual fact was the union used its own members in a deliberate scheme to escape financial liability. Union officials, including Locals 890, 912, 287, and 853, and the International required their members to honor an unlawful strike in the summer of 2004 to apply inappropriate pressure on a business to give up its rights to enforce contract violations. The union demanded complete amnesty so it could avoid paying damages from deliberate union-caused violations of multiple labor contracts. There is simply no reason to have a labor contract if the terms and promises in that contract cannot be enforced,î says Bruce Woolpert, Graniterock's president and CEO.