## Facts

- Belknap, Inc., a Kentucky manufacturing employer, reached an impasse with the union while negotiating a new collective-bargaining agreement, and employees began an economic strike.
- Belknap unilaterally granted a wage increase to employees who continued working and advertised for and hired “permanent” replacements for strikers.
- Replacement workers signed acknowledgments and received assurances from Belknap that their jobs were “permanent” and would remain so.
- The union filed unfair labor practice charges with the NLRB based on Belknap’s unilateral wage increase; charges and complaints were pursued while Belknap continued to reassure replacements.
- The NLRB matter ended through a settlement under which Belknap agreed to reinstate the striking employees.
- Belknap laid off replacement workers to make room for returning strikers.
- Laid-off replacements sued Belknap in Kentucky state court for damages, alleging misrepresentation (fraudulent and/or negligent) and breach of contract based on promises of permanent employment.

## Issues

1. Whether the National Labor Relations Act preempts state-law damages actions by strike replacements for misrepresentation and breach of contract arising from an employer’s promises of “permanent” employment.
2. Whether the claims are barred by Garmon preemption because the employer’s conduct was arguably protected or prohibited by §§ 7 or 8 of the NLRA.
3. Whether the claims are barred by Machinists preemption because they would regulate economic weapons Congress intended to leave to the free play of economic forces.

## Decision

- The Supreme Court affirmed the Kentucky Court of Appeals (6–3) and held the state-law causes of action were not preempted by the NLRA.
- Machinists preemption did not apply because Congress did not intend employer promises to replacement workers about job permanence to be insulated from ordinary state tort and contract liability.
- Garmon preemption did not apply because the claims focused on alleged misrepresentations and contract promises to replacement workers, involved substantial state interests, and did not present a realistic threat of interference with NLRB processes.
- The Court emphasized the NLRB lacked authority to award the replacements damages for injuries caused by misrepresentations about the permanence of their employment.
- The dissent would have found preemption, viewing the claims as tightly connected to the strike and the Board’s role in managing settlement and reinstatement.

## Legal Principles

- NLRA preemption does not automatically bar state-law fraud/misrepresentation and contract damages claims by strike replacements based on individualized hiring representations, even when the dispute arises in the context of a strike settlement.
- Machinists preemption is limited to state regulation of conduct Congress intended to leave unregulated; state damages actions concerning employer misrepresentations to replacements are not categorically within that protected zone.
- Under Garmon, state jurisdiction may remain where the NLRB cannot provide an adequate remedy for the plaintiff’s injury and where adjudication does not materially interfere with the federal labor scheme or create conflicting labor-law rules.
- Traditional state interests in preventing misrepresentation and enforcing contracts can support allowing state remedies where the claims do not function as regulation of collective bargaining or strike conduct.

## Conclusion

The Court held that replacement workers laid off after a strike settlement could pursue state-law misrepresentation and breach of contract damages claims based on promises of “permanent” employment, because the NLRA’s preemption doctrines did not displace these traditional state remedies and the NLRB could not award equivalent relief.


Belknap, Inc. v. Hale, 463 U.S. 491 (1983)