Employer Sues Union for Defamation; Minnesota Court of Appeals Finds Action Not Preempted by Federal Law

Those who read a lot of labor law cases know that during labor disputes between unions and employers, pretty much anything goes.  While there are some restrictions on the use of threats by the parties, they are able to cast as many aspersions as they wish at the other side, and not run afoul of the NLRA.  However, just because some speech is protected under the federal labor act does not mean that parties cannot use other means of fighting back against the statements made by their opponent.

In the case of Madison Equities Inc. v. SEIU MN State Council, Madison Equities sued SEIU for defamation and tortious interference with business relations after SEIU posted a press release on its website, stating that security officers had made wage theft complaints to the Minnesota Attorney General, and had also failed to pay employees overtime for hours worked over 40 in a week.  Madison alleged that the statements were both false and defamatory.

In effort to head off the lawsuit before it even reached the discovery stage, SEIU filed a motion for judgment on the pleadings, based on the fact that the claims were preempted by federal law, i.e., the NLRA.  That motion was denied, and appealed to the Minnesota Court of Appeals.

In its appeal, SEIU argued that Madison’s claims were subject to Garmon preemption, in that the United States Congress desired uniform application of the NLRA, which covers most issues having to do with labor disputes in the private sector.  Under Garmon, state causes of action are preempted if they concern conduct that is “arguably” protected under section 7 or section 8 of the NLRA.  However, conduct is not considered preempted if the conduct is either “only a peripheral concern of the NLRA or…the conduct ‘touches interests deeply rooted in local feeling and responsibility.’”  The U.S. Supreme Court has held that defamation claims were actionable as long as they were made with actual malice and cause actual injury.

There was a high standard for dismissal in this case.  First, as it was a judgment on the pleadings, there was very little evidence in the record on which the court could make a decision.  Second, the U.S. Supreme Court has stated that a party claiming preemption must be able to demonstrate that the case is one the NLRB could decide in its favor, and put forth enough evidence to show that the NLRB would actually decide in its favor.

As there was not much evidence for the court to examine, the court looked to the text of both sections 7 and 8 of the NLRA, and could not identify any language that protected SEIU’s allegedly false publications.  The court found that the allegedly false statements did not contain any threats, and therefore could not have been pursued as an unfair labor practice under the NLRA.  The court found that, based on the record, the controversy was not the same as a complaint that could have been presented to the NLRB.  As a result, SEIU’s motion was denied.

This case could go one of two ways: SEIU could attempt to take it all the way to the Minnesota Supreme Court, or they could go back to the district court to develop the record more, and attempt to get it thrown out at that level.  While the allegations against Madison cast them in a very bad light, it will be interesting to see if the employer is able to rein in the level of discourse between the parties through its lawsuit.  It will also be interesting to see how this decision could influence other employers across Minnesota who are caught up in union disputes of their own.  We will keep our eye on this case.  If you, or your organization, need guidance on how to respond to acts taken against you by a labor organization, contact the Wiley Law Office, for experience that works.