Labor Law -- 2010

Granite Rock Co. v. International Brotherhood of Teamsters   (U.S. Supreme Court)

Union contract formation and remedies for breach

After Granite Rock reached an agreement with the union representing one of its facilities, and the workers ratified the agreement, the union sought an additional contract provision that would absolve the international union of any liability for damages arising from its activities at other Granite Rock facilities. The company refused to make the additional concession, and the union went on strike. When Granite Rock sued for breach of the no-strike clause, two issues wound up on appeal to the Supreme Court.

The first involved whether a court or an arbitrator should decide whether there was in fact a valid contract. The NAM filed an amicus brief May 1, 2009, urging the Supreme Court to hear the appeal and apply existing law that federal courts have the authority to determine the existence of a collective bargaining agreement. In its ruling on June 24, 2010, the Court agreed. Whether a collective barganing agreement has been created is an issue to be decided by a court, not an arbitrator, according to the 7-2 majority.

Also at issue in the case was whether there is any remedy under Section 301 of the Labor Management Relations Act against the international union for allegedly interfering in the contractual obligations of the local. The NAM supported review of the Ninth Circuit decision, which said the international union was immune from suit even if it compelled its affiliated union to refuse to honor its previous commitment to Granite Rock. We argued that many unionized employers will face the prospect of internationally sanctioned strikes that violate local bargaining agreements but that cannot be remedied. It is very common for international unions to retain control over the bargaining process even though they do not sign the final agreement, and the Ninth Circuit's narrow interpretation conflicted with other federal court rulings and ignored the realities of the relationship between local unions and their international controllers. On this issue, the Supreme Court ruled unanimously that the Ninth Circuit did not err in rejecting Granite Rocks' request for a remedy under Section 301, but 7 Justices left the door open to such a claim if further proceedings in this case fail to provide relief under a different statute. It is possible that the Court could recognize a claim under Section 301 if no other remedies are available.

Related Documents:
NAM brief on the merits  (September 3, 2009)
NAM brief on the petition  (May 1, 2009)


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