By Alvin Velazquez (Indiana University Maurer School of Law)
The main character in 2019 Game of the Year Award winning video game Disco Elysium is an amnesiac detective with a murder and a strike by the dockworker union to solve. The strike is the result of a dispute concerning pay with a multinational corporate conglomerate. The damage arising from the economic strife between the parties is evident on the streets of the fictional city in which the game takes place. While the game is certainly entertaining and a vehicle for pondering the implications of various political philosophies, it also raises an interesting question about moral hazard—who bears the costs of a strike, and to what extent should unions bear the costs of the economic damage a strike might inflict on an employer?
The question is not theoretical. Union representation of the workforce has shrunk rapidly. Unions only represent 6% of the private sector workforce. Normally, damages arising out of a strike are damnum absque injuria (not recognized by law). However, labor strife is messy. At times, the emotions that animate a strike and hard bargaining may spill over into the realm of tortious conduct. In the last twenty years, employers have sued unions for defamation, racketeering, and property damage arising out of strike conduct. For example, the Supreme Court’s recent ruling in Glacier Northwest v. Teamsters made it even harder for unions to go on strike and avoid responsibility for the damages they may cause. These developments increase the likelihood that unions will have to file for Chapter 11 protection as debtors. While unions are used to combatting motions under §1113 of the Code to set aside collective bargaining agreements with their employers, they are not regular participants in bankruptcy as a debtor. Additionally, unions seeking bankruptcy protection find themselves fighting motions arguing that their filings are not done in good faith.
My upcoming article in the Stanford Law Review, Bankrupting Labor Power, argues that unions should be able to discharge tort damages that arise from labor disputes on the same terms that corporations discharge tort and contract claims in Chapter 11. Labor strife is an integral part of the institutional design of American labor law. However, as the paper demonstrates, labor law’s understanding of when a union is acting in good faith collides with bankruptcy law’s understanding of when a union acts in good faith. As a result, bankruptcy law serves to drain labor power by punishing it for using the tools that it uses to engage in labor strife by closing off access to claim discharge. However, that is not what happens when corporations seek bankruptcy protection. The article builds on literature observing how corporations engage in “tactical restructurings” to discharge sexual harassment claims and mass tort claims. These torts do not have a socially beneficial purpose. In contrast, when unions engage in labor disputes to organize workers and strike for better collective bargaining agreements, they are doing something that Congress encourages collective bargaining. When examined through a law and political economy lens, the tension between corporation’s access and union’s access to Chapter 11’s discharge raises questions about whether bankruptcy’s promise of a “fresh start” exists only for corporations but not unions.
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