U.S. Supreme Court Rules in Favor of Graniterock Against Unions

By Tina Grady Barbaccia, News and Digital Editor

The U.S. Supreme Court ruled in favor of Graniterock in a 7-2 vote, a decision that refused to dismiss from the case a local union that went on strike and held it responsible for disregarding a “no-strike” clause contained in the union’s most recent collective bargaining agreement.

The strike forced more than 450 Graniterock employees from their jobs, which effectively “harmed hundreds of [company employee] families, the company’s customers, and the company itself,” Graniterock notes in a written statement. Now the company is seeking “significant strike cost reimbursement, including back pay” for Graniterock’s 450 team members that the company said were forced from their jobs.

In Granite Rock Company v. International Brotherhood of Teamsters & Teamsters Local 287 (Case No. 08–12140), Graniterock took the union to court after concrete ready-mix drivers represented by Teamsters Local 287 went on strike against Graniterock in June 2004.

“The Teamsters Union decided to hold Graniterock team members hostage and use blackmail to escape responsibility for what they did,” says Tom Trainor, a preventative maintenance manager who attended the Supreme Court’s oral argument, in a written statement. “The Court obviously values the promises made in collective bargaining agreements and does not believe that those promises should be easily forgotten or broken.”

Trainor says this ruling means that “unions will now be held responsible for their conduct because of the Supreme Court’s decision, and the payment of damages will push their repugnant actions into the light of day.”

The company and the union settled the strike on July 2, 2004, and the union agreed to go back to work immediately.

However, even after ratifying a collective bargaining agreement that contained the no-strike clause, the union wouldn’t allow its members to return to work unless Graniterock agreed to release the union for damage claims and unfair labor practice charges that occurred during the strike. The union demanded the release to benefit the union locals as well as the International Brotherhood of Teamsters. However, Graniterock refused to release the union so the strike continued for an additional two months.

Graniterock then filed a lawsuit against the local and international unions in the U.S. District Court in San Jose. The suit alleged that Local 287 violated the no-strike clause of the newly ratified agreement, and that the international union was orchestrating the continued strike for its own benefit — i.e. in order to obtain the release.

“Graniterock sought to enforce its labor contracts which the union had violated,” says Tom Squeri, Graniterock general counsel, in a written statement. “During the strike, the union misleadingly stated publicly that it was embroiled in a labor contract dispute with the company over health care and other contract terms…the actual fact was that the union used its own members in a deliberate scheme to escape financial liability.”

The court dismissed Graniterock’s claims against the Teamsters and ruled that the claims were preempted by federal labor law, but the jury unanimously reached a verdict in favor of Graniterock that the bargaining agreement had been ratified. The local union appealed the jury verdict, challenging whether the ruling that the contract had been ratified should have been heard in arbitration instead of by a jury. The Ninth Circuit Court of Appeal ruled in favor of the unions. Graniterock appealed the court’s dismissal of its claims against the Teamsters and petitioned the Supreme Court for review of the Ninth Circuit Court’s ruling.

Graniterock’s case was selected for review by the Supreme Court in June 2009, one of 75 selected from 10,000 cases annually considered for review. Graniterock and the union appeared before the Court in oral argument in January 2010 and the final ruling came on June 24, 2010.