Local 20, Teamsters, Chauffeurs and Helpers Union v. Morton/Opinion of the Court

The petitioner is a labor organization. The Respondent is a company engaged in the business of providing dump trucks and drivers, as a subcontractor on highway construction, with its principal place of business at Tiffin, Ohio. The petitioner represented the respondent's employees from 1950 until 1956 under an oral agreement. In 1956 the parties engaged in negotiations for a written agreement. An impasse in barg ining precipitated a strike which lasted from August to October of that year. During the strike the petitioner engaged in secondary activities involving some of the respondent's customers and suppliers, for the purpose of inducing them to cease doing business with the respondent. Claiming that these activities were unlawful both under § 303 of the Labor Management Relations Act of 1947, 29 U.S.C. § 187, and under the common law of Ohio, the respondent sued the petitioner in the United States District Court for the Northern District of Ohio, claiming damages for business losses caused by the petitioner's allegedly unlawful conduct during the strike.

After a trial without a jury, the District Court found that the petitioner had encouraged the employees of France Stone Co., a supplier of the respondent, and the employees of C. A. Schoen, Inc., and O'Connel Coal Co., customers of respondent, to force their employers to cease doing business with the respondent, in violation of § 303 of the federal Act. The court awarded the respondent some $1,600 damages for business losses cau ed by this violation of federal law. The court also determined that during the strike the petitioner had persuaded the management of Launder & Son, Inc., another of the respondent's customers, to refrain from doing business with the respondent. Since there had been no approach to Launder's employees, the court held that the request to Launder management was permissible activity under federal law, but ruled that this conduct violated the common law of Ohio, which, the court said, prohibits 'making direct appeals to a struck employer's customers or suppliers to stop doing business with the struck employer * *  * .' The respondent was accordingly awarded almost $9,000 as compensatory damages for this violation of Ohio law. In addition, the court awarded the respondent more than $9,000 for the loss of a contract to haul sand for the Wilson Sand & Gravel Co., which loss had resulted from an insufficient number of drivers available during the strike to perform the contract. This award was based upon the court's reasoning that the respondent was entitled to recover damages measured by all of the profits lost as a result of the petitioner's total strike activity, so long as some of that activity was unlawful. Finally, the court awarded punitive damages of $15,000, although expressly finding that the petitioner's conduct during the strike had at all times been free of any violence.

The Court of Appeals affirmed the award in all respects. Relying on the doctrine of pendent jurisdiction, Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148, and cases involving union violence, e.g., Flame Coal Co. v. United Mine Workers, 6 Cir., 303 F.2d 39, the appellate court concluded that '(a) nonfederal cause of action is not extinguished because a state court is preempted by federal law from providing relief,' and that 'punitive damages are recoverable for unlawful secondary boycott activities * *  * .' Certiorari was granted to consider the issues of federal labor law which this case presents. 375 U.S. 939, 84 S.Ct. 348, 11 L.Ed.2d 270.

At the outset we affirm the award of compensatory damages for the violation of § 303 of the federal Act. The District Court found that 'the defendant encouraged the employees of the O'Connel Company to stop using plaintiff's trucks for the purpose of forcing or requiring the O'Connel Company to cease doing business with the plaintiff * *  * .' This finding of a clear violation of § 303 was supported by the evidence, as was the amount of damages awarded therefor.

With respect to the remaining components of the money judgment recovered by the respondent, the central question to be decided is whether a court, state or federal, is free to apply state law in awarding damages resulting from a union's peaceful strike conduct vis-a -vis a secondary employer, or is confined in the field of damage actions brought for union secondary activities to the specifically limited provisions of § 303 of the federal Act. We disagree with the Court of Appeals that this question can be resolved either by reference to the doctrine of pendent jurisdiction or by reference to the line of precedents which have permitted state law to be applied in situations where union activities involving violence were present.

If the provisions of § 303 mark the limits beyond which a court, state or federal, may not go in awarding damages for a union's secondary activities, then the doctrine of pendent jurisdiction can be of no service. Pendent jurisdiction permits a federal court under some circumstances to determine a state cause of action which otherwise would have to be heard in the state court. Hurn v. Oursler, supra. But if the state court would be without authority to award damages under state law, then the doctrine of pendent jurisdiction can give 'the District Court * *  * no greater power to do so.' Lauf v. E. G. Shinner & Co., 303 U.S. 323, 328, 58 S.Ct. 578, 581, 82 L.Ed. 872.

And in cases involving union violence, state law has been permitted to prevail by reason of controlling considerations which are entirely absent in the present case. '(W)e have allowed the States to grant compensation for the consequences, as defined by the traditional law of torts, of conduct marked by violence and imminent threats to the public order. International Union, United Automobile, etc., Workers v. Russell, 356 U.S. 634, 78 S.Ct. 932, 2 L.Ed.2d 1030; United Construction Workers, etc., v. Laburnum Const. Corp., 347 U.S. 656, 74 S.Ct. 833, 98 L.Ed. 1025. * *  * State jurisdiction has prevailed in these situations because the compelling state interest, in the scheme of our federalism, in the maintenance of domestic peace is not overridden in the absence of clearly expressed congressional direction. * *  * In the present case there is no such compelling state interest.' San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 247-248, 79 S.Ct. 773, 781, 3 L.Ed.2d 775.

It is the respondent's contention, however, that since the petitioner union's peaceful conduct was neither arguably protected under § 7 nor arguably prohibited under § 8 of the National Labor Relations Act, as amended, the trial court was free to award damages on the basis of state law for injuries caused by this conduct. But even though it may be assumed that at least some of the secondary activity here involved was neither protected nor prohibited, it is still necessary to determine whether by enacting § 303, 'Congress occupied this field and closed it to state regulation.' International Union of United Automobile, etc., Workers v. O'Brien, 339 U.S. 454, 457, 70 S.Ct. 781, 783, 94 L.Ed. 978. The basic question, in other words, is whether 'in a case such as this, incompatible doctrines of local law must give way to principles of federal labor law.' Local 174, Teamsters, etc., v. Lucas Flour Co., 369 U.S. 95, 102, 82 S.Ct. 571, 576. The answer to that question ultimately depends upon whether the application of state law in this kind of case would operate to frustrate the purpose of the federal legislation. Colorado Anti-Discrimination Comm'n v. Continental Air Lines, 372 U.S. 714, 722, 83 S.Ct. 1022, 1026, 10 L.Ed.2d 84.

Section 303(b) of the Labor Management Relations Act expressly authorizes state and federal courts to award damages to any person injured by certain secondary boycott activities described in s 303(a). The type of conduct to be made the subject of a private damage action was considered by Congress, and § 303(a) comprehensively and with great particularity 'describes and condemns specific union conduct directed to specific objectives.' Local 1976, United Brotherhood of Carpenters, etc. v. National Labor Relations Board, 357 U.S. 93, 98, 78 S.Ct. 1011, 1015, 2 L.Ed.2d 1186. In selecting which forms of economic pressure should be prohibited by § 303, Congress struck the 'balance * *  * between the uncontrolled power of management and labor to further their respective interests,' id., 357 U.S. at 100, 78 S.Ct. at 1016, by 'preserving the right of labor organizations to bring pressure to bear on offending employers in primary labor disputes and (by) shielding unoffending employers and others from pressures in controversies not their own.' National Labor Relations Board v. Denver Bldg. & Construction Trades Council, 341 U.S. 675, 692, 71 S.Ct. 943, 953, 95 L.Ed. 1284.

In this case, the petitioner's request to Launder's management to cease doing business with the respondent was not proscribed by the Act. '(A) union is free to approach an employer to persuade him to engage in a boycott, so long as it refrains from the specifically prohibited means of coercion through inducement of employees.' Local 1976, United Brotherhood of Carpenters, etc. v. National Labor Relations Board, supra, 357 U.S. at 99, 78 S.Ct. at 1016. This weapon of self-help, permitted by federal law, formed an integral part of the petitioner's effort to achieve its bargaining goals during negotiations with the respondent. Allowing its use is a part of the balance struck by Congress between the conflicting interests of the union, the employees, the employer and the community. Local 761, International Union of Electrical, etc., Workers v. National Labor Relations Board, 366 U.S. 667, 672, 81 S.Ct. 1285, 1288, 6 L.Ed.2d 592. If the Ohio law of secondary boycott can be applied to proscribe the same type of conduct which Congress focused upon but did not proscribe when it enacted § 303, the inevitable result would be to frustrate the congressional determination to leave this weapon of self-help available, and to upset the balance of power between labor and management expressed in our national labor policy. 'For a state to impinge on the area of labor combat designed to be free is quite as much an obstruction of federal policy as if the state were to declare picketing free for purposes or by methods which the federal Act prohibits.' Garner v. Teamsters, etc., Union, 346 U.S. 485, 500, 74 S.Ct. 161, 171, 98 L.Ed. 228. We hold, therefore, that the damages awarded against the petitioner based upon its peaceful persuasion of Lanunder's management not to do business with the respondent during the strike cannot stand.

The same considerations require reversal of the award of punitive damages. Punitive damages for violations of § 303 conflict with the congressional judgment, reflected both in the language of the federal statute and in its legislative history, that recovery for an employer's business losses caused by a union's peaceful secondary activities proscribed by § 303 should be limited to actual, compensatory damages. And insofar as punitive damages in this case were based on secondary activities which violated only state law, they cannot stand, because, as we have held, substantive state law in this area must yield to federal limitations. In short, this is an area 'of judicial decision within which the policy of the law is so dominated by the sweep of federal statutes that legal relations which they affect must be deemed governed by federal law having its source in those statutes, rather than by local law.' Sola Electric Co. v. Jefferson Electric Co., 317 U.S. 173, 176, 63 S.Ct. 172, 174, 87 L.Ed. 165. Accordingly, we hold that since state law has been displaced by § 303 in private damage actions based on peaceful union secondary activities, the District Court in this case was without authority to award punitive damages.

There remains for consideration only the question of the damage award for the respondent's loss of the Wilson account. The respondent conceded at trial that there was 'no evidence of unlawful activity in connection with this (the Wilson) job,' and the record makes clear that the respondent lost the Wilson account because his drivers were discouraged from working during the strike by the petitioner's primary strike activity. Since § 303(b) authorizes an award of damages only in the event of injury 'by reason of any violation of subsection (a)' and peaceful primary strike activity does not violate § 303(a), Local 761, International Union of Electrical, etc., Workers v. National Labor Relations Board, 366 U.S. 667, 672, 81 S.Ct. 1285, 1288, 6 L.Ed.2d 592, the District Court was without power to award damages proximately caused by lawful, primary activities, even though the petitioner may have contemporaneously engaged in unlawful acts elsewhere. See Chauffeurs, etc., Local Union No. 175 v. National Labor Relations Board, 111 U.S.App.D.C. 65, 294 F.2d 261.

The judgment is vacated and the case remanded to the District Court for further proceedings consistent with this opinion. It is so ordered.

Vacated and remanded.