California Anti-SLAPP Project

Bill Johnson's Restaurants v. NLRB

Cite as: 461 U.S. 731, 76 L.Ed.2d 277, 103 S.Ct. 2161


BILL JOHNSON'S RESTAURANTS, INC., Petitioner
v.
NATIONAL LABOR RELATIONS BOARD.

No. 81-2257.
Supreme Court of the United States
Argued March 29, 1983.
Decided May 31, 1983.


Syllabus [FN*]

[FN*] The syllabus constitutes no part of the opinion of the Court but has been prepared by the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Lumber Co., 200 U.S. 321, 337, 26 S.Ct. 282, 287, 50 L.Ed. 499.
After one Helton, a waitress at petitioner's restaurant, filed unfair labor practice charges with the National Labor Relations Board (NLRB) alleging that she had been fired because of her efforts to organize a union, Helton and others, including other waitresses, picketed the restaurant and distributed leaflets. Petitioner and three of its co-owners then filed a suit for damages and injunctive relief against Helton and the other demonstrators in an Arizona state court, alleging that the defendants had harassed customers, blocked access to the restaurant, created a threat to public safety, and libeled plaintiffs by false statements in the leaflets. On the following day, Helton filed a second charge with the NLRB, alleging, inter alia, that petitioner had filed the civil suit in retaliation for the defendants' protected, concerted activities and the filing of charges against petitioner with the NLRB. After a consolidated hearing on the unfair labor practice complaints, an Administrative Law Judge (ALJ) concluded that, "on the basis of the record and from [his] observation of the witnesses," the evidence failed to support the allegations of the complaint in the state-court action, and that such action thus lacked a "reasonable basis" and its prosecution was retaliatory, in violation of ss 8(a)(1) and (4) of the National Labor Relations Act (Act). On petitioner's appeal, the NLRB adopted, with minor exceptions, the ALJ's findings and recommendations, and ordered petitioner to withdraw its state-court complaint. The Court of Appeals enforced the NLRB's order.

Held:

1. The NLRB may not halt the prosecution of a state-court lawsuit, regardless of the plaintiff's motive, unless the suit lacks a reasonable basis in fact or law. Retaliatory motive and lack of reasonable basis are both essential prerequisites to the issuance of a cease-and-desist order against a state suit. Pp. 2168-2171.

(a) The filing and prosecution of a well-founded lawsuit may not be enjoined as an unfair labor practice, even if it would not have been commenced but for the plaintiff's desire to retaliate against the defendant for exercising rights protected by the Act. The Act's provisions guaranteeing employees the enjoyment of their rights to unionize, engage in concerted activity, and utilize the NLRB's processes without fear of coercion or retaliation by their employer are to be liberally construed. However, countervailing considerations against allowing the NLRB to condemn the filing of a suit as an unfair labor practice include the First Amendment right of access to the courts and the States' compelling interests in maintaining domestic peace and protecting its citizens' health and welfare. Thus, the NLRB's interpretation of the Act that the only essential element of a violation by the employer is retaliatory motive in filing a state-court suit is untenable. Pp. 2168-2170.

(b) However, it is an enjoinable unfair labor practice to prosecute a baseless lawsuit with the intent of retaliating against an employee for the exercise of rights protected by the Act. Such suits are not within the scope of First Amendment protection, and the state interests noted above do not enter into play when the suit has no reasonable basis. Pp. 2170-2171.

2. In determining whether a state-court suit lacks a reasonable basis, the NLRB is not limited to considering the bare pleadings in the suit, but its inquiry must be structured in a manner that will preserve the state plaintiff's right to have a state-court jury or judge resolve genuine material factual or state-law legal disputes pertaining to the lawsuit. Therefore, if the NLRB is called upon to determine whether a suit is unlawful prior to the time that the state court renders final judgment, and if the state plaintiff can show that such genuine material factual or legal issues exist, the NLRB must await the results of the state-court adjudication with respect to the merits of the state suit. If the state proceedings result in a judgment adverse to the plaintiff, the NLRB may then consider the matter further and, if it is found that the lawsuit was filed with retaliatory intent, the NLRB may find a violation and order appropriate relief. Pp. 2171-2172.

3. This case must be returned to the NLRB for further consideration in light of the proper standards. It was not the ALJ's province, based on his own evaluation of the evidence, to determine that the libel and business- interference counts in petitioner's state-court suit were in fact without merit. He should have limited his inquiry to the question whether petitioner's evidence raised factual issues that were genuine and material. Furthermore, because, in enforcing the NLRB's order, the Court of Appeals ultimately relied on the fact that "substantial evidence" supported the NLRB's finding that the prosecution of the lawsuit violated the Act, the NLRB's error has not been cured. Pp. 2172-2173.

660 F.2d 1335 (9th Cir.1981), vacated and remanded.

Lawrence Allen Katz argued the cause and filed briefs for petitioner.

Carolyn F. Corwin argued the cause for respondent. With her on the brief were Solicitor General Lee, Deputy Solicitor General Wallace, Norton J. Come, Linda Sher, and Candance M. Carroll.*

*J. Albert Woll, Laurence Gold, Michael H. Gottesman, and Jeremiah A. Collins filed a brief for the American Federation of Labor and Congress of Industrial Organizations as amicus curiae urging affirmance.

Edward B. Miller, Matthew R. McArthur, and Stephen A. Bokat filed a brief for the Chamber of Commerce of the United States as amicus curiae.

Justice WHITE delivered the opinion of the Court.

We must decide whether the Board may issue a cease-and-desist order to halt the prosecution of a state court civil suit brought by an employer to retaliate against employees for exercising federally-protected labor rights, without also finding that the suit lacks a reasonable basis in fact or law.

I

The present controversy arises out of a labor dispute at "Bill Johnson's Big Apple East," one of four restaurants owned and operated by the petitioner in Phoenix, Arizona. It began on August 8, 1978, when petitioner fired Myrland Helton, one of the most senior waitresses at the restaurant. Believing that her termination was the result of her efforts to organize a union, she filed unfair labor practice charges against the restaurant with the Board.

On September 20, after an investigation, the Board's General Counsel issued a complaint. On the same day, Helton, joined by three co-waitresses and a few others, picketed the restaurant. The picketers carried signs asking customers to boycott the restaurant because its management was unfair to the waitresses. Petitioner's manager confronted the picketers and threatened to "get even" with them "if it's the last thing I do." Petitioner's president telephoned the husband of one of the picketing waitresses and impliedly threatened that the couple would "get hurt" and lose their new home if the wife continued to participate in the protest. The picketing continued on September 21 and 22. In addition, the picketers distributed a leaflet that accused management of making "[u]nwarranted sexual advances" and maintaining a "filthy restroom for women employees." The leaflet also stated that a complaint against the restaurant had been filed by the Board and that Helton had been fired after suggesting that a union be organized.

On the morning of September 25, petitioner and three of its co-owners filed a verified complaint against Helton and the other demonstrators in an Arizona state court. Plaintiffs alleged that the defendants had engaged in mass picketing, harassed customers, blocked public ingress to and egress from the restaurant, and created a threat to public safety. The complaint also contained a libel count, alleging that the leaflet contained false and outrageous statements published by the defendants with the malicious intent to injure the plaintiffs. The complaint sought a temporary restraining order and preliminary and permanent injunctive relief, as well as compensatory damages, $500,000 in punitive damages, and appropriate further legal and equitable relief. App. 3-9. After a hearing, the state court declined to enjoin the distribution of leaflets but otherwise issued the requested restraining order. App. 19-23. Expedited depositions were also permitted. The defendants retained counsel and, after a hearing on the plaintiffs' motion for a preliminary injunction on November 16, the court dissolved the temporary restraining order and denied preliminary injunctive relief. App. 52.

Meanwhile, on the day after the state-court suit was filed, Helton filed a second charge with the Board alleging that petitioner had committed a number of new unfair labor practices in connection with the dispute between the waitresses and the restaurant. Among these was a charge that petitioner had filed the civil suit in retaliation for the defendants' protected, concerted activities, and because they had filed charges under the Act. The General Counsel issued a complaint based on these new charges on October 23. As relevant here, the complaint alleged that petitioner, by filing and prosecuting the state suit, was attempting to retaliate against Helton and the others, in violation of ss 8(a)(1) and (4) of the National Labor Relations Act (NLRA or Act), 29 U.S.C. ss 158(a)(1) and (4). [FN1]

[FN1] These provisions state: "It shall be an unfair labor practice for an employer -- (1) to interfere with, restrain, or coerce employees in the exercise of rights guaranteed in [s 7 of the Act];

* * *

(4) to discharge or otherwise discriminate against an employee because he has filed charges or given testimony under this subchapter." 29 U.S.C. ss 158(a)(1) and (4). Section 7 guarantees employees "the right to self-organization, to form, join, or assist labor organizations, ... and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." 29 U.S.C. s 157.

In December 1978, an Administrative Law Judge (ALJ) held a four-day consolidated hearing on the two unfair-labor-practice complaints. [FN2] On September 27, 1979, the ALJ rendered a decision concluding that petitioner had committed a total of seven unfair labor practices during the course of the labor dispute. 249 N.L.R.B. 155, 168-169 (1980). With regard to the matter presently before us, the ALJ agreed with the General Counsel that the prosecution of the civil suit violated ss 8(a)(1) and (4). The ALJ applied the rationale of Power Systems, Inc., 239 N.L.R.B. 445, 449-450 (1978), enforcement denied, 601 F.2d 936 (CA7 1979), in which the Board held that it is an unfair labor practice for an employer to institute a civil lawsuit for the purpose of penalizing or discouraging its employees from filing charges with the Board or seeking access to the Board's processes.
[FN2] On March 15, 1979, while the ALJ had the matter under submission, the state court issued an order granting the defendants' motion for summary judgment on the business interference claims but leaving the libel count for trial. Before the state court issued this ruling, the defendants had filed a counterclaim alleging abuse of process, malicious prosecution, wrongful injunction, libel, and slander. The parties then apparently cross-moved for summary judgment on both the claim and the counterclaim. The state court, in the same order of March 15, 1979, dismissed the abuse of process count in the counterclaim and left the libel counterclaim for trial. See App. to Brief for Petitioner D1. Meanwhile, there had been other developments. On October 27, 1978, the Board's Regional Director petitioned the United States District Court pursuant to s 10(j) of the Act, 29 U.S.C. s 160(j), for an order enjoining petitioner from maintaining its state-court suit pending a final Board decision. On January 22, 1979, the District Court denied the request for an injunction. App. to Brief for Petitioner C1-C7.
In Power Systems, the Board inferred that the employer had acted with retaliatory animus from the fact that the employer lacked "a reasonable basis upon which to assert" that its suit had merit. Similarly, in the present case, the ALJ found that petitioner's suit lacked a reasonable basis and then concluded from this fact that the suit violated the Act because it was "an attempt to penalize Helton for having filed charges with the Board, and to penalize the other defendants for assisting Helton in her protest of the unfair labor practice committed against her." 249 N.L.R.B., at 165. He bolstered his conclusion by noting the direct evidence that the suit had been filed for a retaliatory purpose, i.e., the threats to "get even with" and "hurt" the defendants. Ibid.

The ALJ reached his conclusion that petitioner's state suit lacked a reasonable basis "on the basis of the record and from [his] observation of the witnesses, including their demeanor, and upon the extensive briefs of the parties." Id., at 164. In the view of the ALJ, the "evidence fail[ed] to support" the complaint's allegations that the picketers clogged the sidewalks, harassed customers, or blocked entrances and exits to the restaurant. Id., at 165. The libel count was deemed baseless because "the evidence establishe[d] the truthfulness" of everything stated in the leaflet. [FN3]

[FN3] The ALJ was apparently not made aware of the state court's denial of summary judgment as to the libel count. This fact is most apparent by virtue of the ALJ's statement, 249 N.L.R.B., at 163, that the defendants' counterclaim for abuse for process was still pending before the state court. As noted supra, at n. 2, the state court dismissed the abuse of process counterclaim at the same time it denied summary judgment on the libel counts of both the claim and counterclaim.
On petitioner's appeal, the Board adopted, with minor exceptions, the ALJ's findings, conclusions of law and recommended order. Id., at 155. Accordingly, petitioner was ordered to undertake a number of remedial measures. Among other things, petitioner was required to withdraw its state-court complaint and to reimburse the defendants for all their legal expenses in connection with the suit. Id., at 169-170.

The Court of Appeals enforced the Board's order in its entirety, 660 F.2d 1335 (CA9 1981), holding that substantial evidence supported both the Board's findings that the employer's "lawsuit lacked a reasonable basis in fact, and that it was filed to penalize Helton [and] the picketers for engaging in protected activity." Id., at 1342. Petitioner sought certiorari, urging that it could not properly be enjoined from maintaining its state-court action. [FN4] We granted the writ, 459 U.S. 942, 103 S.Ct. 253, 74 L.Ed.2d 198 (1982), and we now vacate and remand for further proceedings.

[FN4] In its merits brief, at 33-36, petitioner for the first time argues to this Court that the Board erred by concluding that the taking of the state-court defendants' depositions constituted an unfair labor practice. This issue was not presented in the petition for certiorari and we decline to consider it. See Sup.Ct. Rule 34.1(a).

II

The question whether the Board may issue a cease-and-desist order to halt an allegedly retaliatory lawsuit filed by an employer in a state court has had a checkered history before the Board. [FN5] At first, in W.T. Carter & Bro., 90 N.L.R.B. 2020, 2023-2024 (1950), where an employer sued and obtained a state-court injunction barring its employees from holding union meetings on company property, a divided Board held that the prosecution of the suit constituted an unfair labor practice. The Board analogized from the common law of malicious prosecution and rejected the employer's contention that its "resort to court proceedings was a lawful exercise of a basic right." The dissent objected that the Board should recognize the employer's right to present its case to a judicial forum, even if its motive in doing so was to interfere with its employees' rights. Id., at 2029 (Herzog, Chairman, dissenting). Ten years later, in Clyde Taylor Co., 127 N.L.R.B. 103, 109 (1960), where the employer obtained an injunction banning peaceful union picketing in protest of unlawful discharges, the Board overruled W.T. Carter and adopted the view of the earlier dissent.

[FN5] It should be kept in mind that what is involved here is an employer's lawsuit that the federal law would not bar except for its allegedly retaliatory motivation. We are not dealing with a suit that is claimed to be beyond the jurisdiction of the state courts because of federal-law preemption, or a suit that has an objective that is illegal under federal law. Petitioner concedes that the Board may enjoin these latter types of suits. Brief of Petitioner 12-13, 20; Reply Brief for Petitioner 8. Nor could it be successfully argued otherwise, for we have upheld Board orders enjoining unions from prosecuting court suits for enforcement of fines that could not lawfully be imposed under the Act, see Granite State Joint Board, Textile Workers Union, 187 N.L.R.B. 636, 637 (1970), enforcement denied, 446 F.2d 369 (CA1 1971), rev'd, 409 U.S. 213, 93 S.Ct. 385, 34 L.Ed.2d 422 (1972); Booster Lodge No. 405, Machinists & Aerospace Workers, 185 N.L.R.B. 380, 383 (1970), enforced in relevant part, 148 U.S.App.D.C. 119, 459 F.2d 1143 (1972), aff'd, 412 U.S. 84, 93 S.Ct. 1961, 36 L.Ed.2d 764 (1973), and this Court has concluded that, at the Board's request, a District Court may enjoin enforcement of a state-court injunction "where [the Board's] federal power pre-empts the field." NLRB v. Nash-Finch Co., 404 U.S. 138, 144, 92 S.Ct. 373, 377, 30 L.Ed.2d 328 (1971). Nash-Finch also requires rejection of petitioner's assertion that the Board is precluded from enjoining a state-court suit by virtue of 28 U.S.C. s 2283, which, subject to certain exceptions, prohibits a court of the United States from enjoining proceedings in a state court. In Nash-Finch, the Court held that s 2283 was inapplicable in instances where the Board files an action to restrain unfair labor practices, because the purpose of s 2283 "was to avoid unseemly conflict between the state and the federal courts where the litigants were private persons, not to hamstring the Federal Government and its agencies in the use of federal courts to protect federal rights." 404 U.S., at 146, 92 S.Ct., at 378.
During the next eighteen years after Clyde Taylor, the Board's decisions do not appear to us to have been entirely consistent. [FN6] Then, in Power Systems, supra, at 450, the Board concluded: "Since we have found that Respondent had no reasonable basis for its lawsuit, ... the lawsuit had as its purpose the unlawful objective of penalizing [the employee] for filing a charge with the Board." The suit therefore was enjoined as an unfair labor practice. The gravamen of the offense was thus held to be the unlawful objective, which could be inferred by lack of a reasonable basis for the employer's suit.
[FN6] Compare, e.g., S.E. Nichols Marcy Corp., 229 N.L.R.B. 75 (1977); Peddie Buildings, 203 N.L.R.B. 265 (1973); and United Aircraft Corp. (Pratt & Whitney Division), 192 N.L.R.B. 382 (1971), modified, 534 F.2d 422 (CA2 1975), cert. denied, 429 U.S. 825, 97 S.Ct. 79, 50 L.Ed.2d 87 (1976); with, e.g., United Stanford Employees, Local 680, 232 N.L.R.B. 326 (1977); International Organization of Masters, Mates and Pilots, 224 N.L.R.B. 1626 (1976), enforced, 188 U.S.App.D.C. 15, 575 F.2d 896 (1978); and Television Wisconsin, Inc., 224 N.L.R.B. 722 (1976).
Although the Board in Power Systems purported to distinguish Clyde Taylor and its progeny on the basis that the lawsuit in each of those cases "was not a tactic calculated to restrain employees in the exercise of their rights under the Act," id., at 449, the distinction was illusory. In Clyde Taylor itself the Board found no unfair labor practice despite the ALJ's specific finding that the employer's lawsuit "was for the purpose of preventing his employees from exercising the rights guaranteed to them under the Act, rather than for the purpose of advancing any legitimate interest of his own." 127 N.L.R.B., at 121. Since 1978, the Board has consistently adhered to the Power Systems rule that an employer or union who sues an employee for a retaliatory motive is guilty of a violation of the Act. [FN7] Under this line of cases, as the Board's brief and its counsel's remarks at oral argument in the present case confirm, [FN8] the Board does not regard lack of merit in the employer's suit as an independent element of the s 8(a)(1) and s 8(a)(4) unfair labor practice. Rather, it asserts that the only essential element of a violation is retaliatory motive.
[FN7] See Sheet Metal Workers' Union Local 355, 254 N.L.R.B. 773, 778-780 (1981); United Credit Bureau of America, Inc., 242 N.L.R.B. 921, 925-926 (1979), enforced, 643 F.2d 1017 (CA4), cert. denied, 454 U.S. 994 (1981); George A. Angle, 242 N.L.R.B. 744 (1979), enforced, 683 F.2d 1296 (CA10 1982).

FN8. See Brief for Respondent 13, 18-21. At oral argument, despite close questioning by the Court, the Board's counsel declined to rule out the possibility that prosecution of a totally meritorious suit might be deemed by the Board to be an unfair labor practice, if filed for a retaliatory purpose. Tr. of Oral Arg. 29-35, 39-41, 46-47.


Note! This case is continued in Part Two


U.S. Supreme Court Cases || Federal Menu || Home Page