• Illinois: Decision Strengthens Employer's Ability to Combat Defamatory Union Picketing
  • June 19, 2003 | Author: Mark A. Spognardi
  • Law Firm: Holland & Knight LLP - Chicago Office
  • 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.