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Advice Memorandum issued by the NLRB Division of Advice

DATE: January 7, 2005


TO : Alvin P. Blyer , Regional Director

Region 29

FROM : Barry J. Kearney, Associate General Counsel

Division of Advice


SUBJECT: Cool Wind Ventilation Corp.

Case 29-CA-25439 512-5009-0100



This case was submitted for advice as to whether, under Bill Johnson’s Restaurants[1] and BE & K,[2] the Employer violated Section 8(a)(1) when it amended a federal antitrust suit to name, inter alia, the Sheet Metal Workers International Union (SMWIA or Union) as a new defendant.


We conclude that there is no merit to the instant charge. Preliminary proceedings before the district court upheld the legal validity of the theory of the Employer’s pleadings regarding the SMWIA’s alleged participation in the alleged antitrust conspiracy of its Local 28 and various employer entities. Further, the evidence adduced by the Employer to support its claim that the SMWIA was a participant in this alleged conspiracy was sufficient to raise a colorable claim before a trier of fact. In these circumstances we cannot conclude that the Employer’s amendment to add the SMWIA as a defendant to its outstanding antitrust litigation was baseless in law or fact. There was also no evidence that the Employer filed the amended complaint with the motive relevant to retaliation in reasonably based suits, i.e., to impose the costs of the litigation process on SMWIA, regardless of its outcome.




A. Background and the Employer’s

Original Antitrust Lawsuit


Cool Wind Ventilation Corp.(the Employer or Cool Wind), performs sheet metal duct work in heating and air conditioning systems (HVAC) in the Greater New York City and Long Island area. Until early 2001, the Employer had a labor agreement with Local 1205 Teamsters (Local 1205) covering its HVAC employees, drivers and warehousemen.


Sheet Metal Workers Local 28 (Local 28) represents employees of other sheet metal contractors in New York City and Long Island. In the summer of 2000,Local 28 began to organize the employees of Cool Wind. By letter of June 14, 2000, Timothy Lynch, President of Teamsters Local 1205, requested that the International Brotherhood of Teamsters file a formal Article XX "no-raid" proceeding before the AFL-CIO against SMWIA based on the conduct of its Local 28.[3]


The lawsuit at issue in this case was originally filed on June 21, 2000.[4] It alleged that Local 28 and various employers and multi-employer associations both signatory and not signatory with Local 28 entered into a conspiracy to restrain trade and monopolize sheet metal and duct work in the City of New York and Nassau and Suffolk counties (Long Island) and exclude from the market the Employer and other non-Local 28 contractors. Among other practices the complaint alleged that (1) Local 28 unlawfully picketed and threatened to picket construction jobs where non-Local 28 contractors were working; (2) Local 28 and its trust funds misused job targeting programs to share information about bids and contracts made by non-Local 28 and Local 28 contractors for HVAC work; the information was shared with, among other, signatory and non-signatory mechanical contractors, which let contracts for HVAC work, so as to eliminate the non-Local 28 contractors from the market; and (3) Local 28 dealt directly with non-signatory mechanical contractors to set the amount of job targeting subsidies that would be awarded to Local 28 contractors in order to exclude non-Local 28 contractors from the market. The District Court denied the original defendants’ motion to dismiss the suit on April 16, 2001. It concluded that the facts alleged by Cool Wind were sufficient to state a cause of action under various anti-trust theories.


SMWIA’s unfair labor practice charge attacks an amendment to the complaint, filed in August 2002, that alleged that SMWIA, together with Teamsters Local 1205 and the Teamsters International Union, participated in the alleged antitrust conspiracy. Specifically, the Employer alleged that these unions conspired with Local 28 to disable the Employer from competing with Local 28 shops or, alternatively, to require the Employer to join the alleged monopoly by ending Teamster Local 1205’s representation of the Employer’s employees and forcing the Employer to become a signatory to a contract with Local 28. To that end, the Employer alleged, Local 1205, the Teamsters International Union and SMWIA delayed an Article XX proceeding, ultimately caused it to be dismissed and engaged in other actions to enable Local 28 to become the representative of the Employer’s employees.[5]


The defendants named in the amendment opposed the proposed amendment arguing among other things that it did not, in effect, state a cause of action. In an order dated August 21, 2002, a magistrate judge rejected the new defendants arguments and granted leave for the amendment. On December 2, 2002, the District Court denied the new defendants’ motion to dismiss relying on the rationale of the magistrate judge’s August 21 ruling.


On February 20, 2003, SMWIA filed the instant Section 8(a)(1) charge alleging that the Employer’s filing of the amended complaint against the Union was baseless and in retaliation for Section 7 activity. On May 30, 2003, consistent with Bill Johnson’s Restaurants, the Region decided to hold this charge in abeyance pending disposition of the antitrust suit.


In September 2003, the Region was advised that the Employer’s antitrust lawsuit was dismissed pursuant to a Stipulation and Order of Dismissal issued by the Court. Cool Wind withdrew its suit against all defendants after it reached a confidential settlement with Local 28 and certain other defendants. No settlement was reached between the Employer and the SMWIA. The Charging Party did not seek Fed. R. Civ. P. Rule 11 sanctions in the district court against the Employer for filing its amended complaint naming the Union as a defendant.


B. The Employer’s Claims Regarding the

Reasonable Basis for the Amendment


After the suit was settled, the Charging Party asked the Region to resume processing of its unfair labor practice charge. In support of its claim that the suit was reasonably based the Employer pointed to the following facts.


On August 21, 2000, Local 28 filed an RC petition (Case 29-RC-9523) to represent the HVAC employees of Cool Wind. Around the same time, the Teamsters International Union formally requested the AFL-CIO to initiate an Article XX proceeding against the Sheetmetal Workers.[6] SMWIA, appeared and otherwise supported Local 28’s position in that proceeding.

In a letter dated November 14, 2000, SMWIA President Michael Sullivan asked Teamsters International Union President Hoffa, to withdraw the Article XX proceeding, claiming that Local 28 had a 60% card majority of Cool Wind’s HVAC employees; he asserted that by permitting Local 28 to organize Cool Wind’s employees, the Teamsters would help protect "area standards" for HVAC employees. In this letter, SMWIA offered to help the Teamsters organize the drivers and warehousemen of similar New York City sheet metal contractors.


On January 12, 2001, in a telephone conversation between Local 1205 President Lynch and Dominic Grasso, a management official of the Employer, Lynch argued to Grasso that the Employer should consider becoming a Local 28 shop. Lynch also informed the Employer that Local 1205 would be dropping its representation of the Employer’s employees except for the drivers and that "Washington" was involved in the Teamsters’ decision. The Employer alleges that, by "Washington," Lynch meant the Teamsters International Union and the SMWIA.


On January 31, 2001, Local 295 Operating Engineers (Local 295) filed a petition (Case 29-RC-9596) to represent a unit of Cool Wind’s HVAC employees.


On February 13, 2001, the Teamsters International Union notified the AFL-CIO that it had adjusted the dispute with SMWIA underlying the Article XX proceeding and desired to withdraw its complaint. Teamsters Local 1205 later informed the Region that it had decided to cease representing the Employer’s HVAC employees. Sometime in February or March 2001, Local 28 commenced an Article XXI proceeding before the AFL-CIO against Local 295, to keep that union out of the representation case involving the Employer. The AFL-CIO ultimately dismissed that proceeding.[7]


The Employer argues that these facts support its contention in the lawsuit that SMWIA had become a co-conspirator in Local 28’s unlawful scheme to monopolize the sheet metal market by becoming a representative of the Employer’s employees. Specifically, it alleged that the filing of the Article XX proceeding was not bona fide and was intended to delay the resolution of the question concerning representation and allow Local 28 additional time to campaign. It also alleged that SMWIA acted unlawfully by its participation in the adjustment of the Article XX proceeding and the disclaimer of representation of Cool Wind’s HVAC employees by Local 1205, thereby clearing the way for Local 28’s participation in the representation election. All of this conduct was alleged to be for the purposes of either disabling the Employer from competing in the sheet metal construction market or by substituting Local 28 for Local 1205 as the employees’ bargaining representative, and to carry on the larger antitrust conspiracy of Local 28.


As noted above, the magistrate (and the district court relying on the magistrate’s reasoning) rejected the defendant unions argument that amendment should not be allowed or should be dismissed. Specifically, the union defendants had argued that the allegations against them all concerned conduct covered by the statutory labor exemption to antitrust liability for actions taken by a labor organization in its own self interest and not in combination with non-labor groups.[8] They asserted that the conduct alleged in the amended complaint concerned only actions by labor organizations and that such conduct was in furtherance of protected organizing activity. The magistrate concluded, however, that the claim directed at the new union defendants must be viewed in the context of the entire conspiracy alleged in the Employer’s whole complaint. It noted that the district court had already concluded that the original complaint alleged sufficient facts to support the antitrust claims alleged. In those circumstances the magistrate viewed the allegations against the new union defendants to be part of an alleged larger course of conduct between unions and non-labor groups that would not be exempt.




We agree with the Region that the Employer’s amended complaint naming SMWIA was reasonably based in law and in fact. We also conclude that there is no evidence to establish that the suit would not have been filed "but for a motive to impose the costs of the litigation process, regardless of the outcome."[9] Thus, consistent with the First Amendment protections discussed by the Supreme Court in BE & K, the Region should dismiss this charge, absent withdrawal.


A. The Law under BE & K and

Bill Johnson’s Restaurants

In BE & K, the Supreme Court reconsidered the circumstances under which the Board could find a "completed" lawsuit to be an unfair labor practice.[10] In Bill Johnson’s Restaurants, the Court had appeared to articulate two standards for evaluating alleged retaliatory lawsuits: one for ongoing suits and one for concluded suits.[11] Bill Johnson’s held that the Board may, consistent with the First Amendment, only halt prosecution of an ongoing lawsuit if it lacks a reasonable basis in fact or law and was brought with a retaliatory motive.[12] The Court stated that a concluded lawsuit which resulted in a judgment adverse to the plaintiff, or which was withdrawn or otherwise shown to be without merit, could be attacked as an unfair labor practice if it was filed with a retaliatory motive.[13] Thus, under Bill Johnson’s, it appeared that the Board could find that a completed lawsuit, even if reasonably based, was an unfair labor practice if it was unsuccessful and was filed to retaliate against the exercise of rights protected under the Act.


The Supreme Court in BE & K rejected the Board’s application of Bill Johnson’s for adjudicating unsuccessful but reasonably based lawsuits.[14] The Court found that the Board’s reading of Bill Johnson’s was overly broad, because the class of lawsuits that the Board wished to proscribe included a substantial portion that involved genuine "petitioning" the government that is protected by the Constitution.[15] The Court thus indicated that the Board could no longer rely on the fact that a lawsuit was ultimately meritless, but must determine whether it was reasonably based regardless of its outcome on the merits.[16]


The BE & K Court also considered the Board’s standard of finding retaliatory motive in cases in which the employer could show the suit was not objectively baseless.[17] The Court criticized the Board for having adopted a standard in reasonably based suits that permitted finding retaliatory motive if the lawsuit itself related to protected conduct that the petitioner believed was unprotected.[18] Similarly, the Court reasoned that inferring a retaliatory motive from evidence of a respondent’s union animus would condemn genuine First Amendment "petitioning" in circumstances where the plaintiff’s "purpose is to stop conduct he reasonably believes is illegal[.]"[19] In dictum, however, the Court suggested that an unsuccessful but reasonably based lawsuit could be considered an unfair labor practice if it would not have been filed "but for a motive to impose the costs of the litigation process, regardless of the outcome."[20]


Because the Supreme Court in BE & K did not enunciate the standard for determining whether a completed lawsuit is baseless, the Bill Johnson’s standard for evaluating ongoing lawsuits remains authoritative. In Bill Johnson’s, the Court ruled that while the Board’s inquiry need not be limited to the bare pleadings, the Board could not make credibility determinations or draw inferences from disputed facts so as to usurp the fact-finding role of the jury or judge.[21] Thus, while "genuine disputes about material historical facts should be left for the state court, plainly unsupportable inferences from the undisputed facts and patently erroneous submissions with respect to mixed questions of fact and law may be rejected."[22] Further, just as the Board may not decide "genuinely disputed material factual issues," it must not determine "genuine state-law legal questions." These are legal questions that are not "plainly foreclosed as a matter of law" or otherwise "frivolous."[23] Thus, a lawsuit can be deemed baseless only if it is premised on unsupportable facts or unsupportable inferences from facts, or if it depends upon "plainly foreclosed" or "frivolous" legal issues.


B. The Instant Case

In the instant case, we cannot conclude that the Employer’s amended complaint naming SMWIA as a defendant was baseless either as a matter of law or in fact.


Thus, the 2002 decisions of the U.S. Magistrate Judge and the U.S. District Court which permitted the complaint to be amended and which denied a Rule 12(b)(6) motion to dismiss the amended complaint, clearly indicated that on the facts alleged regarding SMWIA’s involvement in the dismissal of the Article XX proceeding and Local 1205’s disclaimer of representation, the amended complaint presented legal theories valid under antitrust law.


The Employer has submitted verification, and SMWIA does not seriously dispute, that the conduct attributed to it in the complaint occurred. In his November 2000 letter, to Teamsters International President James, SMWIA President Sullivan clearly sought to persuade the Teamsters to abandon the Article XX claim and to disclaim representation of the Employer’s sheet metal employees and offered to assist the Teamsters in organizing drivers of Local 28 signatories. Similarly, the transcript of the telephone conversation between Teamsters Local 1205 president Lynch and the Employer confirms that Local 1205 did "drop" its representation of the Employer’s HVAC employees and attempted to convince the Employer to become a Local 28 shop. This conversation also indicated that the decision of the Teamsters to cease representing the Cool Wind HVAC employees was made in "Washington." We cannot say that the Employer is unreasonable in inferring this is a reference to the International Unions.


SMWIA takes issue, not with these factual allegations, but with the Employer’s further contention of the inferences to be drawn from these facts. The Employer alleged that SMWIA’s conduct was part of a broader conspiracy to monopolize a sheet metal market. While the Charging Party alleges that its conduct involving the Article XX proceeding was entirely innocent and was protected by Section 7 of the Act, the magistrate and district court concluded the Employer was entitled to rely on the entire factual context of the complaint to infer an improper motive. Thus, the court was prepared to test the credibility of the participants and to draw inferences from their testimony and the undisputed facts to determine the true motives of the parties. The decisions to allow the motion to amend and the denial of the motion to dismiss made clear that the case raised genuine issues of material fact that turned on the credibility of witnesses or on the proper inferences to be drawn from undisputed facts. We cannot summarily reject the inferences which the Employer sought to draw from these facts as "plainly unsupportable." To do so here would usurp the role the Supreme Court in Bill Johnson’s assigns to the courts.[24]


Finally, there was no evidence adduced that the Employer filed its amended complaint against SMWIA for the purpose of imposing the costs of the litigation, regardless of the outcome.[25]


Accordingly, in all these circumstances the instant charge should be dismissed, absent withdrawal.






[1] Bill Johnson’s Restaurants, Inc. v. NLRB, 461 U.S. 731 (1983).


[2] BE & K Construction Co. v. NLRB, 536 U.S. 516 (2002).

[3] For a discussion of Article XX proceedings, see, e.g., VFL Technology Corp., 332 NLRB 1443 (2000).


[4] Cool Wind Ventilation Corp. v. Sheet Metal Workers International Assoc., Local Union No. 28 et al., No. CV-00 3678 (E.D.NY.)

[5] See, Complaint Sixth Claim For Relief, 223 through 231.


[6] Based on the pendency of the Article XX proceeding, the Region held the representation proceeding on Local 28’s petition in abeyance.


[7] On May 30, 2001, the Region approved a consent election agreement involving Locals 28 and 295. Local 1205 declined to intervene in the representation case. On July 5, 2001, Local 295 won the Board election and it was later certified by the Region to be the Section 9(a) representative of the Cool Wind HVAC employees.


[8] See U.S. v. Hutcheson, 312 U.S. 219, 232 (1941).


[9] See BE & K, 536 U.S. at 536-537.


[10] 536 U.S. at 527.


[11] 461 U.S. at 747-749.


[12] Id. at 748-749.


[13] Id. at 747, 749.


[14] 536 U.S. at 532-536.


[15] Id., 536 U.S. at 532 (". . .even unsuccessful but reasonably based suits advance some First Amendment interests").


[16] Id. at 532-536.


[17] Id. at 534.


[18] Id. at 533 (". . .the Board’s definition broadly covers a substantial amount of genuine petitioning").


[19] Id. at 534 (emphasis in original), citing Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49, 60-61 (1993).


[20] 536 U.S. at 536-537.


[21] 461 U.S. at 744-746.


[22] Id. at 746, n. 11.


[23] Id. at 747.


[24] See Bill Johnson’s Restaurants, 461 U.S. at 746, n. 11. See also Beverly Health and Rehabilitation Services, Inc., 331 NLRB 960, 962-963 (2000), motions for reconsideration denied 336 NLRB 332 (2001) (rejecting under Bill Johnson’s the General Counsel’s contention that respondent’s ongoing defamation lawsuit was “conclusively” baseless under federal law). Compare Dimarzio, Inc., Case 29-CA-21206, JD(NY)-54-03, dated October 20, 2003, 2003 WL 22415361, adopted by the Board in the absence of exceptions December 12, 2003 (employer’s counterclaim in federal court based upon employee’s filing charges with the NLRB, held to be baseless and retaliatory; ALJ noted federal court had imposed Rule 11 sanctions on employer counsel for filing meritless counterclaim without any factual support).


[25] See BE & K, 536 U.S. at 536-537.






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