Belknap, Inc. v. Hale, 463 U.S. 491 (1983)

Belknap, Inc. v. Hale

No. 81-1966

Argued January 11, 1983
Decided June 30, 1983
463 U.S. 491

CERTIORARI TO THE COURT OF APPEALS OF KENTUCKY

Syllabus

When negotiations for a new collective bargaining agreement between petitioner employer and the union representing certain of its employees reached an impasse, some of the employees went out on strike, and petitioner then unilaterally granted a wage increase for employees who stayed on the job. Petitioner also advertised for and hired "permanent" replacements for striking employees. Under federal labor law, where employees engage in an economic strike, the employer may hire permanent replacements whom he need not discharge even if the strikers offer to return to work unconditionally. However, if the strike is an unfair labor practice strike, the employer must discharge replacements in order to accommodate returning strikers. Based on the unilateral wage increase, the union filed unfair labor practice charges with the National Labor Relations Board (Board) against petitioner, which countered with charges of its own, and complaints were issued against both parties. In the meantime, petitioner assured its replacement employees that they would continue to be permanent replacements, but the unfair labor practice complaints were later dismissed by the Board pursuant to a settlement agreement between the parties under which petitioner agreed to reinstate the strikers. Respondents, replacement employees who were laid off to make room for returning strikers, then sued petitioner in a Kentucky state court to recover damages for misrepresentation and breach of contract. The trial court granted summary judgment for petitioner on the ground that respondents’ causes of action were preempted by the National Labor Relations Act (NLRA), but the Kentucky Court of Appeals reversed.

Held: Respondents’ causes of action for misrepresentation and breach of contract are not preempted. Pp. 498-512.

(a) The doctrine of Machinists v. Wisconsin Employment Relations Comm’n, 427 U.S. 132, proscribing state regulation and state law causes of action concerning conduct that Congress intended to be unregulated, does not foreclose this suit. There is no indication that Congress intended conduct of an employer and a union, such as that involved here, to be controlled solely by the free play of economic forces, so as to preclude state court damages actions by discharged replacement employees on the theory that such actions would upset the delicate balance of forces established by federal law. Entertaining suits such as the instant suit does not interfere with the asserted policy of federal law favoring settlement of labor disputes. There is no substantial impact on the availability of settlement of economic or unfair labor practice strikes, because the employer may protect himself against suits like this by promising permanent employment to replacement employees, subject only to settlement with the union or to a Board unfair labor practice order directing reinstatement of strikers. Such contracts are sufficiently "permanent" to permit the employer who prevails in a strike to keep replacements he has hired if he prefers to do so. Pp. 499-507.

(b) Nor are respondents’ causes of action preempted under San Diego Building Trade Council v. Garmon, 359 U.S. 236, which held that state regulations and causes of action are presumptively preempted if they concern conduct that is actually or arguably either prohibited or protected by the NLRA. While the questions whether the strike was an unfair labor practice strike -- requiring reinstatement of strikers -- because of petitioner’s unilateral wage increase and whether its offering permanent employment to respondents was also an unfair labor practice, were matters for the Board, nevertheless, under Garmon, a State may regulate conduct arguably protected or prohibited by the NLRA if the conduct is of only peripheral concern to the NLRA or if it is so deeply rooted in local law that it cannot be assumed that Congress intended to preempt the application of state law. The critical inquiry is whether the controversy presented to the state court is identical to that which could be presented to the Board. Here, the controversies cannot fairly be called identical, since the focus of the Board’s determinations would be on the rights of strikers under federal law, whereas the state court claims would concern the rights of replacement employees under state law. And at the same time the State has substantial interests in protecting its citizens from misrepresentations that have caused them grievous harm, and in providing a remedy to its citizens for breach of contract. Pp. 507-512.

Affirmed.

WHITE, J., delivered the opinion of the Court, in which BURGER, C.J., and REHNQUIST, STEVENS, and O’CONNOR, JJ., joined. BLACKMUN, J., filed an opinion concurring in the judgment,post, p. 513. BRENNAN, J., filed a dissenting opinion, in which MARSHALL and POWELL, JJ., joined, post, p. 523.