International Union v. Lowe Excavating Co.

• Decision Date: 30 November 2006
• Docket Number: No. 101231.,No. 101347.,101231.,101347.
• Citation: 870 N.E.2d 303,225 Ill.2d 456
• Parties: INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, Appellant and Cross-Appellee, v. LOWE EXCAVATING COMPANY, Appellee and Cross-Appellant.
• Court: Illinois Supreme Court

870 N.E.2d 303

225 Ill.2d 456

INTERNATIONAL UNION OF OPERATING ENGINEERS, LOCAL 150, Appellant and Cross-Appellee, v. LOWE EXCAVATING COMPANY, Appellee and Cross-Appellant.

No. 101231.

No. 101347.

Supreme Court of Illinois.

November 30, 2006.

Rehearing Denied May 29, 2007.

R. Mark Gummerson, of Gummerson & Rausch, Woodstock, Dale D. Pierson and Elizabeth A. LaRose, Countryside, for appellant and cross-appellee.

Gerard C. Smetana, Chicago, and Michael E. Avakian, North Springfield, VA, for appellee and cross-appellant.

OPINION

Justice FITZGERALD delivered the judgment of the court, with opinion:

This case involves litigation spanning 18 years between plaintiff, Lowe Excavating Company (Lowe), and defendant, International Union of Operating Engineers, Local 150 (the Union). In 1988, Lowe filed a multicount complaint against the Union in the circuit court of McHenry County, generally alleging that the Union picketed a Lowe work site with placards containing false information. After a bench trial, the trial court ruled in favor of the Union. The appellate court reversed, concluding that Lowe proved a cause of action for trade libel because the evidence showed that the Union made false statements and the statements were made with actual malice. On remand, the trial court awarded Lowe $4,680 in compensatory damages and $525,000 in punitive damages. The appellate court reduced the punitive damages award to $325,000. 358 Ill.App.3d 1034, 295 Ill.Dec. 344, 832 N.E.2d 495. We granted the parties' petitions for leave to appeal. For the reasons that follow, we reverse the judgment of the appellate court.

BACKGROUND

Lowe is an Illinois corporation that performs excavating and site-preparation services. In February 1988, Lowe was performing excavation work at the Canterbury Place Retirement Community in McHenry County. Specifically, Lowe was working on a portion of the project known as Ballashire Hall, which was funded by the federal government through the Department of Housing and Urban Development (HUD). In order to obtain the contract on this project, Lowe had to certify its payroll with the federal government, and thus had to demonstrate that it was paying its employees prevailing wages and benefits established by the United States Secretary of Labor. 40 U.S.C. § 276a (1982).

On February 15, 1988, the Union began picketing the Ballashire Hall site with placards stating:

"NOTICE TO THE PUBLIC

LOWE EXCAVATING DOES NOT PAY THE PREVAILING WAGES AND ECONOMIC BENEFITS FOR

OPERATING ENGINEERS WHICH ARE STANDARD IN THIS AREA

OUR DISPUTE CONCERNS ONLY SUBSTANDARD WAGES AND BENEFITS PAID BY THIS COMPANY LOCAL 150

International Union of Operating Engineers, AFL-CIO."

Lowe was ordered off the project by the general contractor as a result of the Union's picketing. On that same day, Lowe filed a complaint in the McHenry County circuit court seeking a temporary restraining order (TRO), preliminary and permanent injunctions, and damages. The complaint alleged a cause of action for tortious interference with a prospective economic advantage. The Union promptly filed a petition for removal of the matter to federal court, asserting that Lowe's complaint sought relief for an unfair labor practice, which was a federal law issue. The federal court found that it did not possess subject matter jurisdiction over Lowe's cause of action and returned the cause to the circuit court.

Lowe subsequently amended its complaint to allege causes of action for trade libel, tortious interference with a contractual relationship, tortious interference with a prospective economic advantage and negligent interference with a contract. Lowe also continued to seek a TRO and further injunctive relief. The trial court granted Lowe's request for a TRO, but denied Lowe's request for other injunctive relief as being preempted by federal law. Lowe then filed an interlocutory appeal of the trial court's judgment. The appellate court concluded that the cause of action was not preempted by federal law and thus remanded the matter for the circuit court to review Lowe's motion for a preliminary injunction. Lowe Excavating Co. v. International Union of Operating Engineers Local No. 150, 180 Ill.App.3d 39, 129 Ill. Dec. 300, 535 N.E.2d 1065 (1989) (Lowe I). The Union filed a petition for leave to appeal to this court, which was denied. Lowe Excavating Co. v. International Union of Operating Engineers, 126 Ill.2d 560, 133 Ill.Dec. 669, 541 N.E.2d 1107 (1989) (table). The Union then filed a petition for a writ of certiorari to the United State's Supreme Court, which was likewise denied. International Union of Operating Engineers, Local 150 v. Lowe Excavating Co., 493 U.S. 975, 110 S.Ct. 499, 107 L.Ed.2d 502 (1989).

The matter proceeded to a bench trial in April 2000. At trial, the relevant evidence demonstrated that Lowe has been in business since 1969. Prior to 1988, Lowe employees were not unionized. In 1987, Colin Darling, a business agent for the Union, received information about the wages and benefits paid to Lowe employees from two individuals who were then employed with the company. That same year, the Union, at the invitation of Lowe's president, Marshall Lowe, met with Lowe employees, seeking to represent them for collective-bargaining purposes. Negotiations between the Union and Lowe stalled. Several months later, in February 1988, the Union decided to picket Lowe because it believed that the company was not paying area-standard wages. The decision to picket was made by Darling and another Union employee without any further investigation into Lowe's wage or benefit packages.

On Friday, February 12, 1988, the Union sent Lowe a Mailgram indicating that it would be picketing at Ballashire Hall because Lowe was not paying its operating engineers area-standard wages. Lowe sent a telegram back to the Union which stated: "We are paying area standards." The Union nevertheless began picketing the Ballashire Hall work site on the following Monday, February 15, 1988, at 6 a.m.

The Union claimed that it did not know that Ballashire Hall was a federally funded project when it began picketing. However, the evidence presented at trial demonstrated that the Union was quickly advised of this fact by Bradley Brei, the president of FAMCO, the company serving as the general contractor of the Canterbury Place project. Brei testified that, when the picketing started, he approached Darling and "I asked Mr. Darling why they were even there, that Ballashire Hall was a HUD project and that I had already filed certified payrolls with HUD that Lowe Excavating was paying the prevailing wage rates and I could not understand on what bases * * * he was there or why the pickets were there." Despite this information, the Union continued picketing and did not cease until Brei ordered Lowe to discontinue its work and Lowe's equipment was removed from the site.

Lowe remained off the Ballashire Hall project until September 1988, when employees returned to do finishing work. Although the Union knew at that point, through Colin Darling, that Ballashire Hall was a federally funded project, it nevertheless picketed the work site. Lowe was removed a second time from the Ballashire Hall project by Bradley Brei. According to Marshall Lowe, the company suffered lost profits of $4,680 as a result of its removal from the Ballashire Hall project. Additionally, FAMCO declined to do business with Lowe for five to six years. Brei testified that he did not want to work with Lowe because he felt the company did not have its "house in order."

At trial, Lowe presented testimony from Frank Stampler, a certified public accountant, who stated that an audit of Lowe's wages and benefits for the period of January 13, 1988, through February 16, 1988, demonstrated that Lowe employees at the Ballashire Hall project were actually being paid more than the federal prevailing wage rate. Additionally, John O'Hagan, president of Human Resources Planning Associates, a business which provides compensation, benefits and insurance planning services, testified that he compared Lowe's benefits with those of the Union in 1987 and 1988 at the request of Marshall Lowe. O'Hagan determined that Lowe's health and life insurance plans were superior to the those of the Union.

Marshall Lowe, however, admitted that, prior to August 1988, Lowe did not pay its employees prevailing wages and was not meeting the area standards for wages and employee benefits. Marshall Lowe specified that between 1969 and 1986, Lowe was not paying contract wage rates received by Union employees and did not offer a retirement plan for its employees. This practice changed when Lowe and the Congress of Independent Unions (CIU) entered into a collective-bargaining agreement in 1988, which provided that Lowe would pay prevailing wages at all times retroactive to April 15, 1988. Marshall Lowe added that the Ballashire Hall project was one of the first prevailing wage projects that Lowe ever worked on and, therefore, was one of the first times Lowe paid its employees the prevailing wage.

After hearing the evidence, the trial court ruled in favor of the Union on all counts. Lowe appealed, and the Union cross-appealed. The appellate court reversed the judgment of the trial court. Lowe Excavating Co. v. International Union of Operating Engineers, Local No. 150, 327 Ill.App.3d 711, 262 Ill.Dec. 195, 765 N.E.2d 21 (2002) (Lowe II). The appellate court concluded that the statement appearing on the placards used by the Union in picketing Lowe constituted defamation per quod. Lowe II, 327 Ill. App.3d at 722, 262 Ill.Dec. 195, 765 N.E.2d 21. The court determined that, after being told by Brei that Ballashire Hall was a federally funded project, that Lowe's payroll had been certified, and that Lowe was paying prevailing wages, "Darling at least should have entertained serious doubts as to the truth of the statements contained on the picket signs." Lowe II, 327...