Lead Opinion
delivered the opinion of the Court.
The federal labor relations laws recognize both economic strikes and strikes to protest unfair labor practices. Where employees have engaged in an economic strike, the employer may hire permanent replacements whom it need not discharge even if the strikers offer to return to work unconditionally. If the work stoppage is an unfair labor practice strike, the employer must discharge any replacements in order to accommodate returning strikers. In this case we must decide whether the National Labor Relations Act (NLRA or Act) pre-empts a misrepresentation and breach-of-contract action against the employer brought in state court by strike replacements who were displaced by reinstated strikers after having been offered and accepted jobs on a permanent basis and assured they would not be fired to accommodate returning strikers.
I — C
Petitioner Belknap, Inc., is a corporation engaged in the sale of hardware products and certain building materials. A bargaining unit consisting of all of Belknap’s warehouse and maintenance employees selected International Brotherhood of Teamsters Local No. 89 (Union) as their collective-bargaining representative. In 1975, the Union and Belknap entered into an agreement which was to expire on January 31, 1978. The two opened negotiations for a new contract
Shortly after the strike began, Belknap placed an advertisement in a local newspaper seeking applicants to “permanently replace striking warehouse and maintenance employees.”
“I, the undersigned, acknowledge and agree that I as of this date have been employed by Belknap, Inc. at its*495 Louisville, Kentucky, facility as a regular full time permanent replacement to permanently replace_in the job classification of_”
On March 7, the Union filed unfair labor practice charges against petitioner Belknap. The charge was based on the unilateral wage increase granted by Belknap. Belknap countered with charges of its own. On April 4, the company distributed a letter which said, in relevant part:
“TO ALL PERMANENT REPLACEMENT EMPLOYEES
“We recognize that many of you continue to be concerned about your status as an employee. The Company’s position on this matter has not changed nor do we expect it to change. You will continue to be permanent replacement employees so long as you conduct yourselves in accordance with the policies and practices that are in effect here at Belknap.
“We continue to meet and negotiate in good faith with the Union. It is our hope and desire that a mutually acceptable agreement can be reached in the near future. However, we have made it clear to the Union that we have no intention of getting rid of the permanent replacement employees just in order to provide jobs for the replaced strikers if and when the Union calls off the strike.”
On April 27, the Regional Director issued a complaint against Belknap, asserting that the unilateral increase violated §§ 8(a)(1), 8(a)(3), and 8(a)(5) of the Act.
*496 “We want to make it perfectly clear, once again, that there will be no change in your employment status as a result of the charge by the National Labor Relations Board, which has been reported in this week’s newspapers.
“We do not believe there is any substance to the charge and we feel confident we can prove in the courts satisfaction that our intent and actions are completely within the law.”
A hearing on the unfair labor practice charges was scheduled for July 19. The Regional Director convened a settlement conference shortly before the hearing was to take place. He explained that if a strike settlement could be reached, he would agree to the withdrawal and dismissal of the unfair labor practice charges and complaints against both the company and the Union. During these discussions the parties made various concessions, leaving one major issue unresolved, the recall of the striking workers. The parties finally agreed that the company would, at a minimum, reinstate 35 strikers per week. The settlement agreement was then reduced to writing. Petitioner laid off the replacements, including the 12 respondents, in order to make room for the returning strikers.
Respondents sued Belknap in the Jefferson County, Ky., Circuit Court for misrepresentation and breach of contract. Belknap, they alleged, had proclaimed that it was hiring permanent employees, knowing both that the assertion was false
Belknap, after unsuccessfully seeking to remove the suit to federal court,
We granted Belknap’s petition for certiorari,
Our cases have announced two doctrines for determining whether state regulations or causes of action are pre-empted by the NLRA. Under the first, set out in San Diego Building Trades Council v. Garmon,
Petitioner argues that the action was pre-empted under both Garmon and Machinists. The Board and the AFL-CIO, in amicus briefs, place major emphasis on Machinists; they argue that the Kentucky courts are attempting to impose Kentucky law with respect to areas or subjects that Congress intended to be unregulated. We address first the Machinists and then the Garmon submissions.
Ill
It is asserted that Congress intended the respective conduct of the Union and Belknap during the strike beginning on February 1 ‘“to be controlled by the free play of economic forces,’” Machinists v. Wisconsin Employment Relations Comm’n, supra, at 140, quoting NLRB v. Nash-Finch Co.,
Arguments that entertaining suits by innocent third parties for breach of contract or for misrepresentation will “burden” the employer’s right to hire permanent replacements are no more than arguments that “this is war,” that “anything goes,” and that promises of permanent employment that under federal law the employer is free to keep, if it so chooses, are essentially meaningless. It is one thing to hold that the federal law intended to leave the employer and the union free to use their economic weapons against one another, but is quite another to hold that either the employer or the union is also free to injure innocent third parties without regard to the normal rules of law governing those relationships. We cannot agree with the dissent that Congress intended such a lawless regime.
In defense of this position, Belknap, supported by the Board in an amicus brief, urges that permitting the state suit where employers may, after the beginning of a strike, either be ordered to reinstate strikers or find it advisable to sign agreements providing for reinstatement of strikers, will deter employers from making permanent offers of employment or at the very least force them to condition their offer by stating the circumstances under which replacements must be fired. This would considerably weaken the employer’s position during the strike, it is said, because without assuring permanent employment, it would be difficult to secure sufficient replacements to keep the business operating. Indeed, as the Board interprets the law, the employer must reinstate strikers at the conclusion of even a purely economic strike unless it has hired “permanent” replacements, that is, hired in a manner that would “show that the men [and women] who replaced the strikers were regarded by themselves and the [employer] as having received their jobs on a permanent basis.” Georgia Highway Express, Inc., 165 N. L. R. B. 514, 516 (1967), aff’d sub nom. Truck Drivers and Helpers Local No. 728 v. NLRB, 131 U. S. App. D. C. 195,
Belknap counters that conditioning offers in such manner will render replacements nonpermanent employees subject to discharge to make way for strikers at the conclusion or settlement of a purely economic strike, which would not be the case if replacements had been hired on a “permanent” basis as the Board now understands that term. The balance of power would thus be distorted if the employer is forced to condition its offers for its own protection. Under Belknap’s submis
An employment contract with a replacement promising permanent employment, subject only to settlement with its employees’ union and to a Board unfair labor practice order directing reinstatement of strikers, would not in itself render the replacement a temporary employee subject to displacement by a striker over the employer’s objection during or at the end of what is proved to be a purely economic strike. The Board suggests that such a conditional offer “might” render the replacements only temporary hires that the employer would be required to discharge at the conclusion of a purely economic strike. Brief for NLRB as Amicus Curiae (NLRB Br.) 17. But the permanent-hiring requirement is designed to protect the strikers, who retain their employee status and are entitled to reinstatement unless they have been permanently replaced. That protection is unnecessary if the employer is ordered to reinstate them because of the commission of unfair labor practices. It is also meaningless if the employer settles with the union and agrees to reinstate strikers. But the protection is of great moment if the employer is not found guilty of unfair practices, does not settle with the union, or settles without a promise to reinstate. In that eventuality, the employer, although it has prevailed in the strike, may refuse reinstatement only if it has hired replacements on a permanent basis. If it has promised to keep the replacements on in such a situation, discharging them to
Belknap and its supporters, the Board and the AFL-CIO, offer no substantial case authority for the proposition that the Machinists rationale forecloses this suit. Surely Machinists did not deal with solemn promises of permanent employment, made to innocent replacements, that the employer was free to make and keep under federal law. J. I. Case Co. v. NLRB,
If federal law forecloses this suit, more specific and persuasive reasons than those based on Machinists must be identified to support any such result. Belknap insists that the rationale of the Garmon decision, properly construed and applied, furnishes these reasons.
IV
The complaint issued by the Regional Director alleged that on or about February 1, Belknap unilaterally put into effect a 500-per-hour wage increase, that such action constituted un
Under Garmon, a State may regulate conduct that is of only peripheral concern to the Act or that is so deeply rooted in local law that the courts should not assume that Congress intended to pre-empt the application of state law. In Linn v. Plant Guard Workers,
Belknap contends that the misrepresentation suit is preempted because it related to the offers and contracts for permanent employment, conduct that was part and parcel of an arguable unfair labor practice. It is true that whether the strike was an unfair labor practice strike and whether the offer to replacements was the kind of offer forbidden during such a dispute were matters for the Board. The focus of these determinations, however, would be on whether the rights of strikers were being infringed. Neither controversy would have anything in common with the question whether Belknap made misrepresentations to replacements that were actionable under state law. The Board would be concerned with the impact on strikers not with whether the employer deceived replacements. As in Linn v. Plant Guard Workers, supra, “the Board [will] not be ignored since its sanctions alone can adjust the equilibrium disturbed by an unfair labor practice.” Id., at 66. The strikers cannot secure reinstatement, or indeed any relief, by suing for misrepresentation in state court. The state courts in no way offer them an alternative forum for obtaining relief that the Board can provide. The same was true in Sears and Farmer. Hence, it appears to us that maintaining the misrepresentation action would not
Neither can we accept the assertion that the breach-of-contract claim is pre-empted. The claimed breach is the discharge of respondents to make way for strikers, an action allegedly contrary to promises that were binding under state law. As we have said, respondents do not deny that had the strike been adjudicated an unfair labor practice strike Belknap would have been required to reinstate the strikers, an obligation that the State could not negate.
For the most part, we agree with respondents. We have already concluded that the federal law does not expressly or impliedly privilege an employer, as part of a settlement with a union, to discharge replacements in breach of its promises of permanent employment. Also, even had there been no settlement and the Board had ordered reinstatement of what it held to be unfair labor practice strikers, the suit for damages for breach of contract could still be maintained without in any way prejudicing the jurisdiction of the Board or the interest of the federal law in insuring the replacement of strikers. The interests of the Board and the NLRA, on the one hand, and the interest of the State in providing a remedy to its citizens for breach of contract, on the other, are “discrete” concerns, cf. Farmer v. Carpenters,
V
Because neither the misrepresentation nor the breach-of-contract cause of action is pre-empted under Gannon or Machinists, the decision of the Kentucky Court of Appeals is
Affirmed.
Notes
The advertisement said:
“PERMANENT EMPLOYEES WANTED
“BELKNAP, INC.
“Ill EAST MAIN STREET LOUISVILLE, KENTUCKY
“OPENINGS AVAILABLE FOR QUALIFIED PERSONS LOOKING FOR EMPLOYMENT TO PERMANENTLY REPLACE STRIKING WAREHOUSE AND MAINTENANCE EMPLOYEES.
“EXCELLENT EARNINGS, FRINGE BENEFITS AND WORKING CONDITIONS WITH STEADY YEAR-ROUND EMPLOYMENT.
“MINIMUM STARTING RATE $4.55 PER HOUR. TOP RATE $5.85, DEPENDING ON SKILL, ABILITY AND EXPERIENCE. PLUS INCENTIVE EARNINGS OVER HOURLY RATE FOR MOST JOBS.
“APPLY IN PERSON AT THE BELKNAP OFFICE LOCATED AT 111 EAST MAIN STREET BETWEEN 9:00 A.M. AND 2:30 P.M., MONDAY THRU FRIDAY. PARK IN COMPANY LOT AT 1st AND MAIN.
‘WE ARE AN EQUAL OPPORTUNITY EMPLOYER”
Section 8(a) of the National Labor Relations Act, 61 Stat. 140, as amended and as set forth in 29 U. S. C. § 158(a), provides, in relevant part:
*496 “It shall be an unfair labor practice for an employer—
“(1) to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in section 167 of this title;
“(3) by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization ....
“(5) to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section 159(a) of this title.”
Respondents assert that Belknap’s failure to appeal from the remand order bars Belknap from further litigating the pre-emption issue. The inference is that the state court lacks jurisdiction to proceed and that we should dismiss the petition. The remand order, however, is not reviewable. 28 U. S. G. § 1447(d).
The court also noted that the misrepresentation and breach of contract involved nonunion individuals who were not parties to the collective-bargaining agreement between the Union and Belknap.
The judgment of the Kentucky Court of Appeals is final within the meaning of 28 U. S. C. § 1257: it finally disposed of the federal pre-emption issue; a reversal here would terminate the state-court action; and to permit
See also NLRB v. Mars Sales & Equipment Co.,
The dissent’s argument that state causes of action such as this must be pre-empted because they make it more difficult for the employer to hire replacements proves entirely too much. For example, it might be easier for an employer to obtain replacements by misstating the wages or fringe benefits that it would provide. But if the employer did so, surely the employees affected could seek protection in the state courts.
The refusal to fire permanent replacements because of commitments made to them in the course of an economic strike satisfies the requirement of NLRB v. Fleetwood Trailer Co.,
The dissent and the concurrence make much of conditional offers of employment, asserting that they prevent replacements from being permanent employees. As indicated in the text, however, the Board’s position is that even unconditional contracts of permanent employment are as a matter of law defeasible, first, if the strike turns out to be an unfair labor practice strike, and, second, if the employer chooses to settle with the union and reinstate the strikers. If these implied conditions, including those dependent on the volitional act of settlement, do not prevent the replacements from being permanent employees, neither should express conditions which do no more than inform replacements what their legal status is in any event.
The dissent and the concurrence suggest that if offers of permanent employment are not necessary to secure the manpower to keep the business operating, returning strikers must be given preference over replacements who have been hired on a permanent basis. That issue is not posed in this case, but we note that the Board has held to the contrary. In Hot Shoppes, Inc., 146 N. L. R. B. 802, 805 (1964), the Board held as follows:
“We, however, disagree with the Trial Examiner’s premise that an employer may replace economic strikers only if it is shown that he acted to preserve efficient operation of his business. The Supreme Court’s decision in Mackay Radio & Telegraph Company, and the cases thereafter, although referring to an employer’s right to continue his business during a*505 strike, state that an employer has a legal right to replace economic strikers at will. We construe these cases as holding that the motive for such replacements is immaterial, absent evidence of an independent unlawful purpose. Therefore, we reject the Trial Examiner’s conclusion that the plan to replace the economic strikers here was itself improper and that the strike was converted to an unfair labor practice strike on January 4 by Respondent’s implementation of such plan.”
The Board noted its holding in Hot Shoppes, Inc., in its Twenty-Ninth Annual Report of the National Labor Relations Board 29 (1964), and the holding has not been repudiated by the Board. See, e. g., Pennsylvania Glass Sand Corp., 172 N. L. R. B. 514, n. 3, 535 (1968). There are no cases in this Court that require a different conclusion. Indeed, as indicated above, in Hot Shoppes, Inc., supra, the Board read NLRB v. Mackay Radio & Telegraph Co.,
Justice Blackmun also suggests that the Board has held that employment conditioned on the employer’s settling with the union is not a permanent employment arrangement and that we should defer to the Board. But the Board’s position in this Court is equivocal at best: “[S]uch a conditional offer might well render the replacements only temporary hires . . . .” (Emphasis added.) NLRB Br., at 17. This case is thus a far cry from NLRB v. Transportation Management, Inc.,
If, as we hold, an employer may condition its offer to replacements and hence avoid conflicting obligations to strikers and replacements in the
The AFL-CIO disavows this argument. It suggests that replacements are bound only by those agreements that a union makes, as the exclusive bargaining agent for the struck employer’s workers, regarding the terms and conditions of employment for the employer’s work force after the termination of the strike. Brief for AFL-CIO as Amicus Curiae 12,
Monahan Ford Corp., 157 N. L. R. B. 1034, 1045 (1966) (telegram asking unfair labor practice strikers to return to work or suffer replacement violative of § 8(a)(1) as a threat to striker’s job tenure for engaging in concerted activity).
The dissent makes the same ineffective argument, ineffective because it cannot explain in any convincing way why the breach, if required by federal law, should not be subject to a damages remedy. It is not easy to grasp why the employer who settles a purely economic strike (such as one in which no unfair labor practice charge is filed) and fires permanent replacements to make way for returning strikers could be made to respond in damages; yet the employer who violates the labor laws is for that reason insulated from damages liability when it discharges replacements to whom it has promised permanent employment. The dissent asserts that to subject the unfair labor practice employer to damages suits would cause intolerable confusion, but as we see it there would be no interference with the Board’s authority to impose its remedy for violating the federal labor law. Performing that function neither requires nor suggests that the replace
Of course, here there was no adjudication of an unfair practice. The employer settled short of that possible outcome. That action was not required by federal law. We do not share the dissent’s apparent view that federal labor policy favoring settlement privileges the employer to make and break contracts with innocent third parties at will. Nor do we understand why the threat of liability to discharged replacements, in the event the employer loses the unfair labor practice case and discharges them, would deter the employer from settling with the Board where it thinks the unfair labor practice charge will be sustained. Settling would not increase its potential liability to replacements. It may be that the employer would prefer to settle even a case that it is quite confident it could win, but that is surely no reason to deprive the replacements of their contract. Nor in such a case do the equities favor the strikers over the replacements, who would be entitled to stay unless the employer has violated the federal law.
Kentucky may not mandate specific performance of the contract between Belknap and respondents nor may it enter an injunction requiring the reinstatement of respondents as a remedy for fraud if either action necessitates the firing of a striker entitled to reinstatement. To do so would be to deprive returning strikers of jobs committed to them by the national labor laws. As the Court said in National Licorice Co. v. NLRB,
“The effect of the Board’s order, as we construe it, is to preclude the petitioner from taking any benefit of the contracts which were procured through violation of the Act and which are themselves continuing means of violating it, and from carrying out any of the contract provisions, the effect of which would be to infringe the rights guaranteed by the National Labor Relations Act. It does notforclose the employees from, taking any action to secure an adjudication upon the contracts, nor prejudge their rights in the event of such adjudication. We do not now consider their nature and*512 extent. It is sufficient to say here that it will not be open to any tribunal to compel the employer to perform the acts, which, even though he has bound himself by contract to do them, would violate the Board’s order or be inconsistent with any part of it.” (Emphasis added.)
Concurrence Opinion
concurring in the judgment.
H-1
Earlier this month, the Court unanimously reaffirmed the principle that the National Labor Relations Board’s construction of the National Labor Relations Act (NLRA), if reasonable, is entitled to deference from the courts. NLRB v. Transportation Management, Inc.,
In rejecting the Board’s longstanding view of the Act, the Court does not pause to determine whether the Board’s view is reasonable, or whether it is contrary to the statutory mandate or frustrates Congress’ policy objectives. See FEC v. Democratic Senatorial Campaign Committee,
Indeed, an employer who makes a conditional promise has no legitimate, much less substantial, business justification to refuse to agree with the union to reinstate the strikers. Under the Court’s scenario, the employer has managed to operate its business by hiring replacements on the understanding that they may be fired as part of a settlement of the strike. And whether or not state contract and tort remedies are pre-empted by the Act, the employer can agree to reinstate the strikers at the replacements’ expense without incurring liability. The Court’s convoluted attempt to establish that its conditional promise would serve some legitimate business purpose, see ante, at 503-504, and n. 8, fails to come to grips with these simple facts.
The Court’s conditional promise achieves only one thing: it permits an employer, during settlement negotiations with the union, to threaten to retain replacement employees in preference to returning strikers despite the fact that the employer has not promised to do so. The naked interest in making such a threat, silently endorsed in the Court’s opinion, could not be less legitimate under the NLRA. From the employer’s point of view, one benefit of offering strike replacements permanent employment is that strikers become fearful that they will lose their jobs. But it is clear that creating this fear, which discourages union membership and concerted activities, is a deleterious side effect of, rather than a legitimate business justification for, the power to hire permanent strike replacements. See NLRB v. Erie Resistor Corp.,
The Board’s construction of the Act is reasonable and entitled to a deference that is wholly lacking in the Court’s opinion. By brushing aside the Board’s interpretation of the Act, and substituting its own novel construction, the Court sidesteps the real question in what is, as the dissent observes, post, at 523, “a difficult case.” The question presented is whether respondents’ state contract and tort actions are pre-empted by the Act, not whether the Act can be manipulated into a posture consistent with such lawsuits. Taking federal law as it is, however, while the question is close, I conclude that neither of respondents’ causes of action is pre-empted.
II
A
I cannot easily dismiss the basic premises underlying either the Court’s opinion or the dissenting opinion. On the one hand, the dissent aptly observes that respondents’ state-
Any attempt to reconcile these concerns, in my view, must begin with an analysis of the nature of the economic weapon at issue. The heart of the weapon is the power to hire replacements. The promise of permanent employment is simply one means of achieving this end, a means that unquestionably is permitted by the NLRA. The dissent appears to view the self-help weapon as the power to make such promises, and concludes that Congress intended that this power would be largely unregulated. See post, at 536-538. The Court appears to take a different view of the nature of the weapon, implying that the weapon properly is seen as the power to contract with replacement employees, not merely to promise permanent jobs, and that the normal state-law accompaniments of contracts were contemplated and accepted by Congress. See ante, at 500, 512.
I believe that the Court’s view is more consistent with the purposes and qualities of this particular economic weapon. One may agree with the dissent that permitting employers to hire replacement workers “is part of the balance struck by the Act between labor and management,” post, at 536, without conceding that all means of accomplishing this were meant to be unregulated. As noted above, the very purpose of enabling an employer to offer permanent employment to strike replacements is to permit the employer to keep its business running during a strike. If the promises of perma
Moreover, it is difficult to explain the employer’s power to prefer permanent strike replacements over returning economic strikers unless, through the promise of permanent employment, the employer has incurred an obligation to those replacements. The employer makes offers of permanent employment to induce replacement workers to take jobs. But what is the legitimate and substantial business justification for later refusing to reinstate returning strikers if, as a matter of federal law, the employer is entitled to discharge the replacements in derogation of its promises to them? This power to override the economic strikers’ statutory entitlement to reinstatement must be based on the common-sense notion that, in order to continue to operate the business, the employer was required to obligate itself to third parties in a manner inconsistent with the strikers’ right to subsequent reinstatement. Certainly, avoidance of liability for breach of contract is a legitimate business objective. Because federal law apparently does not obligate the employer to fulfill its promises to the replacements, it must be the typical state-law obligation to honor one’s commitments that justifies the employer’s disregard for the returning strikers’ otherwise paramount statutory entitlement.
B
Because this case does not fit comfortably within labor preemption doctrine as heretofore developed by this Court, see post, at 523-524,530, and n. 2 (dissenting opinion), and because I share the Court’s doubt that Congress could have intended
The dissent’s suggestion that a state action for misrepresentation would frustrate the policies of the Act by making employers more hesitant to promise permanent employment,
Much more troubling is the dissent’s argument that the state-law action will discourage the settlement of strikes. Post, at 532-533. I agree that, where the employer has chosen to promise permanent employment to strike replacements, its potential liability to them would make the employer reluctant to settle by giving the strikers their old jobs. This problem, it seems to me, is inherent in Congress’ choice to permit employers to offer permanent employment in order to obtain replacements. The potential dilemma is one the employer must consider at the time it chooses whether to promise permanent employment. If it makes no promises, settlement will not be impeded.
) — I J — I HH
I fully recognize that this view may appear to put the employer between Scylla and Charybdis. Neither the Court’s approach, nor the dissent’s, however, provides the employer with a safer harbor. The Court’s concept of a conditional promise will not help the employer attract replacements, and if the employer wishes to make a meaningful promise, the Court’s opinion leaves the employer just where my approach
Although I cannot believe that Congress has reconciled the conflict between the striker’s right to reinstatement and the employer’s right to operate its business during a strike by requiring lies and broken promises to strike replacements to go unredressed, Congress certainly is free to prove me wrong. Congress also is free to resolve the great tensions inherent in this complex three-way struggle entirely within the framework of federal law. Certainly, some form of federal regulation of promises of permanent employment is the most desirable solution to the perplexing problem before the Court, because it would provide both consistency within federal labor law itself and uniformity throughout the Nation. At this time, however, it appears to me that the logic of the Act permits respondents’ damages actions.
Accordingly, I concur in the judgment of the Court.
The Court’s suggestion that the employer’s conditional promise “is of great moment if the employer is not found guilty of unfair practices, does not settle with the union, or settles without a promise to reinstate,” ante, at 503, ignores the significant fact that this is the one situation for which a strike replacement would not need reassurances. An employer that refuses to reinstate strikers as a part of a strike settlement, when it could have demanded concessions from the union in exchange, is unlikely to fire the replacements and reinstate strikers unilaterally. The Court’s conditional promise does not relate to potential replacements’ concerns — that in order to end the strike, the employer will agree with the union to reinstate the strikers at the replacements’ expense.
As the Court’s own quotation from Hot Shoppes, Inc., 146 N. L. R. B. 802 (1964), demonstrates, ante, at 504-505, n. 8, that case is not to the contrary. Hot Shoppes merely holds that, in order to retain strike replacements, the employer need not show in a given case that its offers of permanent employment were motivated by the need to continue the operation of its business. As Mackay Co. makes clear, the Act gives the employer the right to make such promises because it is presumed that they serve this purpose,
The Court also quotes incompletely from the Board’s brief in this Court in an effort to demonstrate that the Board’s position is “equivocal at best,” and therefore not entitled to deference. Ante, at 505, n. 8. The full quote is as follows, and is very clear:
“An employer could not escape the dilemma posed by the threat of a state court fraud action simply by informing prospective replacements of all the contingencies that might affect their tenure. In the first place, if an employer were to extend only such a conditional offer, its ability to hire replacement workers quickly would be diminished and its chief weapon for combatting the employees’ strike pressure would consequently be weakened. Furthermore, such a conditional offer might well render the replacements only temporary hires and would mean that the employer would be obligated to reinstate the strikers even if the strike turned out to be an economic one. ...” Brief for NLRB as Amicus Curiae 17 (emphasis supplied).
This Court, and not the Board, reviews state-court lawsuits said to conflict with federal law. Although it is well established that the Board’s construction of the substantive scope of the NLRA is due deference, I am unaware of any case in which this Court has deferred to the Board’s views on pre-emption. Cf. ante, at 505, n. 8.
The right to hire replacements during a strike also differs from the self-help weapon at issue in Teamsters v. Morton,
In some circumstances, Congress has permitted parties to a labor dispute to impose harm on third parties with impunity. See, e. g., Teamsters v. Morton,
It is noteworthy, in light of the argument that permitting these state actions violates the rule in Machinists, that neither the Board nor the AFL-CIO can explain in whose favor such actions tip the collective-bargaining process. See Brief for NLRB as Amicus Curiae 18-19; Brief for AFL-CIO as Amicus Curiae 4-5. “Permanent” strike replacements will have certain rights, but employers will hesitate to make permanent
Dissenting Opinion
In some respects, this is a difficult case. Pre-emption cases in the labor law area are often difficult because we must decide the questions presented without any clear guidance from Congress. See Motor Coach Employees v. Lockridge,
Despite the conceded difficulty of this case, I cannot agree with the Court’s conclusion that neither respondents’ breach-of-contract claim nor their misrepresentation claim is preempted by federal law. See ante, at 512. In my view these claims go to the core of federal labor policy. If respondents are allowed to pursue their claims in state court, employers will be subject to potentially conflicting state and federal regulation of their activities; the efficient administration of the National Labor Relations Act will be threatened; and the structure of the economic weapons Congress has provided to parties to a labor dispute will be altered. In short, the purposes and policies of federal law will be frustrated. I, therefore, respectfully dissent.
I
In NLRB v. American Ins. Co.,
A union’s most important economic weapon is the strike. “The economic strike against the employer is the ultimate weapon in labor’s arsenal for achieving agreement upon its terms . . . .” NLRB v. Allis-Chalmers Mfg. Co.,
Employers also have lawful economic weapons at their disposal. See NLRB v. Brown,
A variety of rules have been developed regarding the use of economic weapons by employers and unions. As noted, if an employee decides to strike he does not lose his status as an employee. If he offers to return to work at the end of an economic strike, the employer must reinstate him. Fleet-
One such justification arises within the context of an economic strike when “the jobs claimed by the strikers are occupied by workers hired as permanent replacements during the strike in order to continue operations.” Fleetwood Trailer Co., supra, at 379. In NLRB v. Mackay Co., supra, the Court recognized that an employer may replace strildng employees in an effort to carry on his business.
“The replacements must be permanent at the time of the discharge ... or the discharge and refusal to reinstate constitute an unfair labor practice. ... If an employer hires replacements without a commitment or under*527 standing that the job is permanent and also discharges the strikers, the interest in protecting economic strikers by an entitlement to reinstatement is not overcome by a substantial business justification. The employer has not had to offer the jobs on a permanent basis as an inducement to continuing his operations. Hence, an economic striker whose job has not been permanently promised to a replacement at the time the striking employee is discharged is entitled to reinstatement.”626 F. 2d, at 572-573 .
See also International Assn. of M. & A. W., Dist. No. 8 v. J. L. Clark Co.,
A different set of rules applies if employees have decided to strike in response to employer unfair labor practices. Under these circumstances, “the striking employees do not lose their status and are entitled to reinstatement with back pay, even if replacements for them have been made.” Mastro Plastics Corp. v. NLRB,
These rules are the product of the “delicate task ... of weighing the interests of employees in concerted activity against the interest of the employer in operating his business in a particular manner and of balancing in the light of the Act and its policy the intended consequences upon employee rights against the business ends to be served by the employer’s conduct.” Erie Resistor Corp., supra, at 229 (footnotes omitted). See also NLRB v. Truck Drivers, supra, at 96. The questions presented by this case cannot be addressed, or answered
r-H HH
Respondents’ breach-of-contract claim is based on the allegation that petitioner breached its contracts with them by entering into a settlement agreement with the union that called for the gradual reinstatement of the strikers respondents had replaced. See App. 3a-5a. The strike involved in this case, however, arguably was converted into an unfair labor practice strike almost immediately after it started. See ante, at 494-495, 507-508. If the strike was converted into an unfair labor practice strike, the striking employees were entitled to reinstatement irrespective of petitioner’s decision to hire permanent replacements. See NLRB v. Johnson Sheet Metal, Inc.,
In Motor Coach Employees v. Lockridge,
Prohibiting specific enforcement, but permitting a damages award, does nothing to eliminate the conflict between state and federal law in this context. The Court fails to rec
The pre-emption doctrine described in Machinists finds its roots in Garner v. Teamsters,
Machinists relied on Garner and Morton in expressly articulating a branch of labor law pre-emption analysis distinct from the Garmon line of cases. The Court in Machinists described this branch as “focusing upon the crucial inquiry whether Congress intended that the conduct involved be unregulated because left ‘to be controlled by the free play
As noted, see supra, at 525, employers have the right to hire replacements for striking employees. This is an economic weapon that the employer may use to combat pressure brought to bear by the union. Permitting the use of this weapon is part of the balance struck by the Act between labor and management. There is no doubt that respondents’ misrepresentation claim, involving as it does the potential for substantial employer liability, burdens an employer’s right to resort to this weapon. This is especially apparent when one considers the fact that the character of a strike is often unclear. A strike that starts as an economic strike, during which an employer is entitled to hire permanent replacements that he need not discharge to make way for returning strikers, may be converted into an unfair labor practice strike, in which case the employer loses his right to hire per
In order to avoid misrepresentation claims, an employer might decide not to hire replacements on a permanent basis or to hire permanent replacements only in cases in which it is absolutely clear that the strike is an economic one. Either of these developments would mean that employers were being inhibited by state law from making full use of an economic weapon available to them under federal law. Moreover, if an employer decided not to hire replacements on a permanent basis, his ability to hire replacements might be affected adversely. An employer also might decide to disclose to prospective replacements the possibility, even if it is remote, that the strike might be determined to have been an unfair labor practice strike and that he might be ordered to reinstate the strikers and to discharge the replacements. This course of action, however, might limit an employer’s ability to hire replacements, and it might have the further effect of
Based on this analysis, it is clear that permitting respondents to pursue their misrepresentation claim in state court would limit and substantially burden an employer’s resort to an economic weapon available to him under federal law. This would have the inevitable effect of distorting the delicate balance struck by the Act between the rights of labor and management in labor disputes. For these reasons, respondents’ misrepresentation claim must be pre-empted.
The Court rejects the argument that the prospect of misrepresentation claims being filed in state court will burden an employer’s right to hire permanent replacements for employees engaged in an economic strike. The Court suggests that employers may avoid liability for misrepresentation by conditioning their offers of employment to replacements. In the Court’s view, a requirement that employers condition their offers of employment will not have an adverse effect on an employer’s ability to hire permanent replacements because under a system in which an employer is not liable for misrepresentation or breach of contract his offers are, as a matter of law, conditional. Honest employers would not make promises that they know they are not obligated to keep and, in any event, replacements would know that the offers were, in some respects, nonpermanent. See ante, at 502. Putting aside the validity of these observations, the Court’s analysis creates another problem: a requirement that employers condition their offers to replacements might render the replacements nonpermanent under federal law and result in employ
“An employment contract with a replacement promising permanent employment, subject only to settlement with its employees’ union and to a Board unfair labor practice order directing reinstatement of strikers, would not in itself render the replacement a temporary employee subject to displacement by a striker over the employer’s objection during or at the end of what is proved to be a purely economic strike. The Board suggests that such a conditional offer ‘might’ render the replacements only temporary hires that the employer would be required to discharge at the conclusion of a purely economic strike. . . . But the permanent-hiring requirement is designed to protect the strikers, who retain their employee status and are entitled to reinstatement unless they have been permanently replaced. . . . [T]he protection is of great moment if the employer is not found guilty of unfair practices, does not settle with the union, or settles without a promise to reinstate. In that eventuality, the employer, although it has prevailed in the strike, may refuse reinstatement only if it has hired replacements on a permanent basis. If it has promised to keep the replacements on in such a situation, discharging them to make way for selected strikers whom it deems more experienced or more efficient would breach its contract with the replacements. Those contracts, it seems to us, create a sufficiently permanent agreement to permit the prevailing employer to abide by its promises.” Ante, at 503-504 (footnote omitted).
The fact that the Court feels compelled to announce a new standard of “permanency” under federal law highlights the need to pre-empt respondents’ misrepresentation claim in
The real problem in this case, and another factor that supports pre-emption, is that the words “permanent replace
I share the Court’s concern over the plight of workers hired to replace striking employees. Contrary to the Court’s suggestion, however, strikes are, to some extent, “war.” See ante, at 500. As Judge Learned Hand stated more than 40 years ago in a case involving the reinstatement of strikers:
“It is of course true that the consequences are harsh to those who have taken the strikers’ places; strikes are always harsh; it might have been better to forbid them in quarrels over union recognition. But with that we have nothing to do; as between those who have used a lawful weapon and those whose protection will limit its use, the second must yield; and indeed, it is probably true today that most men taking jobs so made vacant, realize from the outset how tenuous is their hold.” NLRB v. Remington Rand, Inc.,94 F. 2d 862 , 871 (CA2 1938).
It might be a better world if strike replacements were afforded greater protection. But if accomplishing this end requires an alteration of the balance of power between labor and management or an erosion of the right to strike, this Court should not pursue it.
Permitting respondents to pursue their breach-of-contract and misrepresentation claims in state court will subject employers to potentially conflicting state and federal regulation of their activities; interfere with the orderly administration of the National Labor Relations Act; and alter the balance of power between labor and management struck by Congress. For these reasons, the claims should be pre-empted, and the judgment of the Kentucky Court of Appeals, therefore, should be reversed.
The Court went on to state, however, that considerations of federalism have “required us not to find withdrawal from the States of power to regulate where the activity regulated was a merely peripheral concern of the Labor Management Relations Act . . . [o]r where the regulated conduct touched interests so deeply rooted in local feeling and responsibility that, in the absence of compelling congressional direction, we could not infer that Congress had deprived the States of the power to Act.”
The Court established the following standard:
“When it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by § 7 of the National Labor Relations Act, or constitute an unfair labor practice under § 8, due regard for the federal enactment requires that state jurisdiction must yield. To leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed by state law. Nor has it mattered whether the States have acted through laws of broad general application rather than laws specifically directed towards the governance of industrial relations. Regardless of the mode adopted, to allow the States to control conduct which is the subject of national regulation would create potential frustration of national purposes.” Id., at 244 (footnote omitted).
See also id., at 245 (“When an activity is arguably subject to § 7 or § 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted”).
The “arguably required” activity at issue in this case is not covered explicitly by Garmon’s “arguably protected, arguably prohibited” standard. See
I do not share the Court’s apparent belief that the character of any given strike can be predicted with anything approaching certainty. See ante, at 508-509, n. 12. As the Board points out: “Whether a particular strike is an economic strike or an unfair labor practice strike ... is often unclear until the strike has ended. Where the character of a strike is contested, as it frequently is, the issue must be resolved in an unfair labor practice proceeding before the Board.” Brief for NLRB as Amicus Curiae 12. See also id., at 12, n. 5. As noted, supra, at 528-529, the relevant concern is with “potential” conflict. See, e. g., Garmon,
“The nature of the judicial process precludes an ad hoc inquiry into the special problems of labor-management relations involved in a particular set of occurrences in order to ascertain the precise nature and degree of federal-state conflict there involved, and more particularly what exact mischief*531 sueh a conflict would cause. Nor is it our business to attempt this. Such determinations inevitably depend upon judgments on the impact of these particular conflicts on the entire scheme of federal labor policy and administration. Our task is confined to dealing with classes of situations. To the National Labor Relations Board and to Congress must be left those precise and closely limited demarcations that can be adequately fashioned only by legislation and administration.” Ibid.
In reaching this conclusion, the Court also appears to rely on language in National Licorice Co. v. NLRB,
National Licorice Co. addressed the validity under federal law of contracts obtained by the employer through negotiations with an employee organization dominated by the employer. See
I do not share the Court’s apparent view, see ante, at 508-509, n. 12, that the outcome of all unfair labor practice proceedings can be predicted with any confidence. See, e. g., Brief for NLRB as Amicus Curiae 12, n. 5. In any event, the important point is that the threat of potential liability to replacements is likely to deter an employer from settling in any case in which the unfair labor practice charges provide him with the chance to present a strong, or perhaps even a colorable, defense.
In this regard, it is important to keep in mind that strike settlement negotiations are part of the collective-bargaining process. As the Court stated in Teamsters v. Lucas Flour Co.,
Moreover, it is a legitimate bargaining demand for a union to seek reinstatement of strikers in preference to replacements. See Portland Stereo-typers’ Union No. 48, 137 N. L. R. B. 782, 786 (1962).
We recognized the importance of strike settlement agreements in Retail Clerks v. Lion Dry Goods, Inc.,
Strike settlement agreements are enforceable under § 301(a) of the Labor Management Relations Act, 29 U. S. C. § 185(a). As we stated in Lion Dry Goods, “[i]f this kind of strike settlement were not enforceable under § 301(a), responsible and stable labor relations would suffer, and the attainment of the labor policy objective of minimizing disruption of interstate commerce would be made more difficult.”
The Board states: “Over 82% of Board unfair labor practice complaints are resolved through settlement. Since the Board issues nearly 8,000 complaints a year, its regulatory mission would be frustrated by any impediments to settlements.” Brief for NLRB as Amicus Curiae 13, n. 6.
Even assuming that such analysis is necessary, this claim clearly does not fall within the exceptions to the pre-emption doctrine described in Garmon. See n. 1, supra. The claim at issue here hardly can be said to relate to activity that is “a merely peripheral concern of the . . . Act.” Garmon,
If this strike was converted into an unfair labor practice strike almost immediately after it started, see ante, at 494-495, 507-508; supra, at 528, petitioner’s offers of permanent employment to replacements may have constituted additional unfair labor practices under § 8(a)(1), 29 U. S. C. § 158(a)(1). See NLRB v. Laredo Coca Cola Bottling Co.,
See Cox, Labor Law Preemption Revisited, 85 Harv. L. Rev. 1337, 1339 (1972) (“[T]he need for preserving the balance of power established by Congress in labor-management relations against disturbance by the application of state laws or decisions making a different accommodation furnishes compelling reason for federal preemption in the areas predominantly involving employee self-organization, collective bargaining, or the use of economic power to secure organizational or bargaining objectives, regardless of whether the alleged misconduct is ‘arguably protected or prohibited’ ”).
As noted, supra, at 528, the strike in this case arguably was converted into an unfair labor practice strike almost immediately after it started. See ante, at 494-495, 507-508.
More than likely, it was the need to carry this burden that caused petitioner to have respondents sign the statements involved in this case. See ante, at 494-495.
It is also true that the prospect of facing misrepresentation claims would make an employer less likely to enter into an agreement settling a strike for the same reasons that were discussed with respect to the breach-of-contract claim. See supra, at 528-533. This would also undermine the policies of the Act and affect adversely its administration. See supra, at 532-533. and nn. 4. 5. and 6.
The Court suggests that the conditional nature of an offer and promise of permanent employment “does not render the hiring any less permanent if the conditions do not come to pass.” Ante, at 504, n. 8. The Court goes on to state: “All hirings are to some extent conditional. As the Board recognizes, . . . although respondents were hired on a permanent basis, they were subject to discharge in the event of a business slowdown.” Ibid. There is a difference, however, between conditions that turn on the performance of the employee, or on the state of the economy, and conditions that depend on the sole discretion of the employer. In the latter case, the condition renders the initial promise of “permanence” wholly illusory.
The Court further suggests:
“Had [petitioner] not settled and no unfair practices had been filed, surely it would have been free to retain respondents and obligated to do so by the terms of its promises to them. The result should be the same if [petitioner] had promised to retain them if it did not settle with the union and if it were not ordered to reinstate strikers.” Ibid.
If petitioner had not settled in this case and the strike was later adjudicated to have been an economic one, petitioner might have been free to retain respondents and to refuse to reinstate the strikers. The record suggests that petitioner hired respondents on a permanent basis in order to continue business operations. See ante, at 494-495. It is difficult to imagine, however, how a conditional offer like the one described by the Court could be construed as an offer of permanent employment. Under the terms of the Court’s conditional offer, the employer is simply saying that he will
As the Court of Appeals stated in Laidlaw Corp. v. NLRB,
As additional support for its conclusion, the Court appears to rely on J. I. Case Co. v. NLRB,
In its amicus brief, the Board suggests that under the broad misrepresentation theory involved in this case, see Brief for NLRB as Amicus Curiae 15, n. 7, an employer still might be vulnerable to a fraud suit even if he refuses to enter into a settlement agreement and litigates the character
The Board suggests that respondents might have an action against the union for breach of its duty of fair representation. Id., at 21, n. 11. There is no need to reach this question in this case.