Minnesota Court of Appeals Rules that Defamation Claim Against Union Not Preempted by NLRA

In an unpublished decision filed on March 22, 2021, the Minnesota Court of Appeals held that a defamation lawsuit brought by Madison Equities, Inc. (“Madison”), a real estate management company, against SEIU Local 26, SEIU MN State Council, and security guard Christopher Lewis (collectively, “SEIU”), was not preempted by the NLRA and allowing, at least for now, Madison’s state law claims to move forward.

Background

According to Madison’s complaint, SEIU had posted a press release online titled “Massive Wage Theft Scheme Alleged at Downtown St. Paul Buildings Run by Madison Equities.” The press release stated that security officers at buildings managed by Madison had made “wage theft complaints” to the Minnesota Attorney General and that Madison “had employees work 40 hours under one company” and then work for a different company “for time that should have been overtime time-and-a-half pay,” resulting in the workers being underpaid by thousands of dollars.  Madison alleged that the press release (and a flyer making similar statements) contained false and defamatory statements that interfered with its business relationships.

In response, SEIU asserted that Madison’s state-law defamation claims were preempted by the National Labor Relations Act (“NLRA”).  Based on that argument, they moved for judgment on the pleadings.  The district court denied the motion, concluding that Madison’s claims were not preempted by federal law.

The Court of Appeals’ Decision

The Court of Appeals ultimately ruled in favor of Madison and found that its state-law claims were not preempted.

SEIU argued that Madison’s claims were preempted under the Garmon preemption doctrine.  The court explained that, under Garmon, state-law claims are presumptively preempted if 1) they concern conduct that is actually or “arguably” protected under Section 7 of the NLRA or 2) prohibited under Section 8 of the NLRA.  Section 7 protects employees’ rights to organize, while Section 8 prohibits unfair labor practices by employers and labor organizations.

The Court analyzed the conduct at issue – i.e., SEIU’s speech criticizing Madison’s wage practices – to first see if that conduct was protected by the NLRA.

Section 7 of the NLRA broadly provides that employees have the right to form, join, or assist labor organizations, and to otherwise engage in protected concerted activities pertaining to their terms and conditions of employment. The Court first concluded that SEIU could not identify a single provision within Section 7 that arguably protected their conduct, and further rejected the Union’s citations to prior decisions which held that Section 7 provides unions with freedom-of-speech protections on the basis that those decisions were decided in the context of union-organizing efforts, which was not the case in the matter at hand.

The Court further noted that SEIUs conduct was not a violation of Section 8 of the NLRA, and therefore Madison would not have been able to seek protection from the National Labor Relations Board, leaving the Court as its only avenue for relief.

SEIU further attempted to broadly argue that “a labor organization’s speech criticizing conditions of employment is always preempted and that Garmon preemption forecloses state court jurisdiction over any labor dispute.”  The Court of Appeals was again unpersuaded, stating SEIU’s “attempt to invoke Garmon preemption based on the alleged existence of a labor dispute without articulating how their conduct is either protected or prohibited under the NLRA is inconsistent with Minnesota precedent.”

Because SEIU could not identify a provision of the NLRA which arguably protected or prohibited their public statements regarding Madison’s alleged wage theft, Madison’s state-law tort claims were held to not be preempted under Garmon.

Bottom Line

The Court of Appeals’ decision, while unpublished and therefore nonprecedential, makes clear that if a party to a lawsuit wishes to argue that state-law claims are preempted by the NLRA, they must be able to point to specific provisions within Section 7 or 8 of the NLRA that arguably protect or prohibit the conduct at issue, thereby placing the dispute within the jurisdiction of the NLRB.

Counsel for SEIU has indicated they will seek review from the Minnesota Supreme Court.  We will continue to monitor this case for any further developments.