Case Handling Instructions for
Bill Johnson's Restaurants and BE&K Construction
OFFICE OF THE GENERAL COUNSEL
|MEMORANDUM GC 02-09
||September 20, 2002
TO: All Regional Directors, Officers-in-Charge, and
FROM: Arthur F. Rosenfeld, General Counsel
SUBJECT: Case Handling Instructions for Cases
Concerning Bill Johnson's Restaurants and BE&K Construction Co.
This memorandum sets forth instructions for cases that
raise issues concerning Bill Johnson's Restaurants, Inc. v. NLRB1
and the Supreme Court's recent decision in BE & K Construction Company v.
These cases address the circumstances under which the
Board may find a lawsuit to be an unfair labor practice. In analyzing this issue
the courts and the Board have distinguished whether the suit was
"ongoing" or "concluded." In Bill Johnson's Restaurants, the
Court held that the Board may find the prosecution of an ongoing lawsuit
unlawful if the suit lacks a reasonable basis in fact or law and was brought
with a retaliatory motive.3 The Court also dealt
with the circumstances in which the Board might find a concluded suit to be an
unfair labor practice. It explained that if the concluded proceedings result in
a judgment adverse to the plaintiff, or if the suit was withdrawn or otherwise
shown to be without merit, then the Board could proceed to find a violation if
the suit was filed with a retaliatory motive.4
In determining whether the suit had been filed in retaliation for the exercise
of the employees' Section 7 rights, the Board could take into account that the
suit lacked merit.5
After Bill Johnson's, the Board's policy with
respect to ongoing suits evidenced a preference for awaiting the outcome of the
litigation. Thus, in Beverly Health & Rehabilitation Services, Inc.,
331 NLRB No. 121 (2000), the Board directed that the unfair labor practice
charge be held in abeyance pending the conclusion of the suit because the
evidence presented questions of the proper inferences to be drawn from
undisputed facts. To do otherwise, the Board concluded would deprive the
plaintiff of its First Amendment right to have state law questions decided by
the state court judicial system. 331 NLRB No. 121, slip op. at 3.
Such an approach accomodated the plaintiff's First
Amendment rights and the interests of comity while preserving the Board's
interest in remedying unfair labor practices. For, under the Bill Johnson's
Court's discussion of concluded suits, the Board would be free to find the suit
unlawful if, at the end of the state court litigation, the suit was found
non-meritorious and the Board found it was brought with a retaliatory motive.
BE & K Construction Company involved a
completed lawsuit. Applying the "concluded suit" standard of Bill
Johnson's, the Board found the suit was "unmeritorious" since all
of the petitioner's claims were rejected by the district court on the merits, or
were voluntarily withdrawn with prejudice.6 The
Board then concluded that retaliatory motive could be inferred from the
following factors: the petitioner's federal suit was "by its terms"
directed at the conduct that the Board had found was protected under Section 77
and the suit "necessarily tended to discourage similar protected
activity;" the lawsuit's attempt to have the district court impose
liability on unions that had not engaged in the conduct at issue indicated that
petitioner "was interested only in harassing the Unions, not in obtaining
justice;" and certain of the petitioner's claims suffered from an
"utter absence of merit."8
On writ of certiorari, the Supreme Court viewed the Board
as having adopted a standard of finding retaliatory motive if the plaintiff
acted with a subjective motive to interfere with activity protected under the
Act. It unanimously rejected this standard for finding retaliatory motive in
non-meritorious, but reasonably based, cases, announcing that its prior
statement in Bill Johnson's regarding concluded suits was dicta.9
It explained that a non-meritorious lawsuit may be reasonably based even though
it is ultimately unsuccessful. Even though the suit may attack activity that is
ultimately determined to be protected, the suit nevertheless enjoys First
Amendment protection if the plaintiff reasonably believes the conduct is
unprotected and illegal.10 Similarly, the Court
reasoned that inferring a retaliatory motive from evidence of animus would
condemn genuine petitioning in circumstances where the plaintiff's "purpose
is to stop conduct he reasonably believes is illegal."11
For the Court, then, the Board's retaliatory motive standard incorrectly
"broadly covers a substantial amount of genuine petitioning."12
Although the Court unanimously rejected the Board's
approach as overbroad, it was significantly divided as to the implications of
its holding. Seven Justices left open whether any circumstances would permit the
Board to find a reasonably based but unsuccessful suit to be an unfair labor
practice because it is retaliatory. Justice O'Connor, writing for the Court,
explicitly stated, "We do not decide whether the Board may declare unlawful
any unsuccessful but reasonably based suits that would not have been filed but
for a motive to impose the costs of the litigation process, regardless of the
outcome, in retaliation for NLRA protected activity. . . ."13
Justice Breyer, in a concurring opinion joined by Justices Stevens, Souter and
Ginsburg, also suggested there might be circumstances in which the
"evidence of 'retaliation' or antiunion motive might be stronger or
different" than that found insufficient in BE&K. He noted not
only the possible retaliatory motive standard suggested by Justice O'Connor but
also suits brought as "part of a broader course of conduct aimed at harming
the unions and intefering with employees' exercise of their rights under §7. .
. ."14 Justice Scalia, however, in a
concurring opinion joined by Justice Thomas, indicated that he would apply the Professional
Real Estate Investors test to the NLRA and preclude the Board from finding a
suit unlawful unless it was both objectively baseless and subjectively intended
to abuse process.15
While the full implications of BE & K will only
be discerned through individual cases over time, it is clear that the Court's
decision will affect the treatment of both "reasonable basis" and
retaliatory motive. First, BE&K concerned a lawsuit that, although
ultimately non-meritorious, was, in the Court's view, reasonably based. The
Court did not discuss how, if at all, its analysis of retaliatory motive in that
context affects the Board's retaliatory motive analysis with respect to baseless
suits.16 Second, given the Court's rejection of
the previously sanctioned approach to concluded suits, the Board can no longer
be satisfied with determining merely that the suit ultimately proved
non-meritorious, before turning to an analysis of retaliatory motive. Rather,
even with respect to concluded suits, the Board must determine whether the suit
was baseless or reasonably based.
Based on the foregoing, Regions are directed to take the
following approach regarding charges alleging that a lawsuit is an unfair labor
When the Region receives a charge alleging that an ongoing
lawsuit is unlawful, it should investigate whether the suit is arguably
reasonably based and whether it is arguably brought with a retaliatory motive.17
If it is both, the Region should hold the unfair labor practice charge in
abeyance as it is often difficult to decide definitively at an early stage of
litigation whether a suit is reasonably based. Thus, the pleadings may not
disclose the full scope of the litigation and, during the unfair labor practice
investigation, charged parties may not fully cooperate in disclosing the legal
and evidentiary support for their lawsuit. Given these difficulties, we conclude
it is more prudent to hold cases in abeyance at the early stage of litigation.
If the Region believes that the suit is arguably
reasonably based but not arguably retaliatory, and would thus warrant dismissal,
it should nevertheless submit the case to Advice. The Office of the General
Counsel should be directly involved in formulating a position on what
constitutes retaliatory motive, given the importance of the First Amendment and
Section 7 policy issues involved.
If the Region believes the lawsuit is not arguably
reasonably based, the Region should conduct a full investigation of the case,
including the retaliatory motive issue, and submit it to Advice.18
As to cases held in abeyance, if, at the conclusion of the
suit, the charged party wins, the charge should be dismissed. If the suit is
dimissed on the merits or otherwise disposed of adversely to the plaintiff,
however, the Region should conclude its investigation regarding whether the suit
was reasonably based or baseless and whether it was brought with a retaliatory
motive and should submit the unfair labor practice case to Advice.
Release to the Public
MEMORANDUM GC 02-09
1 461 U.S. 731 (1983).
2 122 S. Ct. 2390 (2002).
3 461 U.S. at 731, 742-743.
4 Id. at 747, 749.
5 Id. at 747.
6 329 NLRB 717, 722-723 (1999)
7 The conduct at issue included lobbying for
the adoption and enforcement of environmental standards, picketing and striking,
suits under health and safety codes and grievances against a joint venture
partner of the plaintiffs. See. 122 S. Ct. at 2393.
8 329 NLRB at 726-727.
9 122 S. Ct. at 2400, 2397.
10 122 S. Ct. at 2399-2401, citing Professional
Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S.
49 (1993) (suit may be condemned as violative of anti-trust Act only if it is
objectively baseless, in the sense that no reasonable litigant could
realistically expect success on the merits, and it is subjectively a sham
attempt to use government process - as opposed to the outcome of the process -
as an anti-competitive weapon)
11 122 S. Ct. at 2401 (emphasis in original).
12 122 S. Ct. at 2400.
13 122 S. Ct. at 2402.
14 122 S. Ct. at 2403.
15 122 S. Ct. at 2402-3
16 We do not read BE&K to alter the
Board's power to enjoin a baseless suit that has a retaliatory motive. Nor do we
read BE&K to affect the analysis outlined in Bill Johnson's
footnote 5 regarding preempted lawsuits (see, e.g., Manno Electric, Inc.,
321 NLRB 278 (1996)) or those filed with an unlawful objective (see, e.g., Long
Elevator & Machine Co., Inc., 289 NLRB 1095 (1988)).
17 The standard for determining
"arguable" in this context should be similar to the standard applied
in determining whether or not to defer cases under Collyer Insulated Wire,
192 NLRB 837 (1971).
18 Consistent with GC Memorandum 02-03, Regions
should also submit to the Division of Advice cases that involve preempted
lawsuits or those filed with an illegal objective. See n.16, above.