Picket Line Liability: Can Shareholders Sue Over a Strike?

By: Dominic McDermott, Class of 2028

Introduction: Boeing Strikes Out

On November 6, 2024, 33,000 Boeing machinists came back to work. Their 53-day strike was over, and with lopsided results: while the machinists achieved salary increases of 38%, their employer lost $12 billion.[1][2] Losses like Boeing’s are common with labor strikes and can have lasting impacts on shareholder value. A typical recourse for shareholders looking to recover lost company value is shareholder derivative litigation. In a derivative suit, a shareholder sues on behalf of her corporation, alleging that the defendant, usually either management or a third party, breached its duty to the corporation (and thus indirectly to its shareholders) by causing or allowing it harm.[3] Where a strike is what causes this harm, could a shareholder bring a derivative suit to recover the losses? If so, who should pay: the company’s management or the labor union?

The Natural Choice: Suing Management

Suing management seems like the obvious route. A shareholder plaintiff could easily establish that management both has a duty to the corporation and is at fault in the strike. Since a public company must report workplace safety data to OSHA and personnel concerns to the SEC, a shareholder could point to these government disclosures (or, alternatively, management’s failure to make them) to show that management’s employment practices led to the strike.[4][5]

In addition to directly causing strikes, management may inflict further harm by trying to prevent them. One common preventative measure is re-levering, whereby a company takes on hefty loans or repurchases issued stock to increase its debt relative to equity. Re-levering is helpful precisely because it is harmful: it discourages strikes against a company by making the company seem financially unwell. After all, a union will expect fewer concessions from a company that apparently has less to concede.[6] But often, higher debt does more than make a company seem unwell. Higher debt means higher default risk and lower investor confidence, each of which can hurt long-term company value. Where a strike results in such harmful re-levering, shareholders may have a case for recovery against management.

The Reach: Suing Labor Unions

While management may be a clear target, suing a union could be a bit more complicated. Even where a shareholder shows under the NLRA that a strike is illegal (e.g. coercive to employees) and that a right to remedy exists under the Labor Management Relations Act (LMRA), these same statutes generally protect unions from lawsuits related to strikes.[7][8] One recent Supreme Court case, however, placed limits on this immunity. In Glacier Northwest v. The International Brotherhood of Teamsters (2023), a company sued the Teamsters union after its members let concrete damage the company’s trucks as part of a strike. SCOTUS held that while a plaintiff cannot sue a union just for striking, a company can sue a union where its strike inflicts foreseeable harm to the company’s property.[9] A shareholder plaintiff suing a union for strike-related harm to company value could plausibly argue that Glacier Northwest’s exception to strike immunity extends beyond just physical property to company value as well.

But even if a shareholder can prove a union liable for damage, showing that a union has a duty to the corporation, and, by extension, to its shareholders, would be another hurdle. In the closest case on point, Jamur Productions Corp v. Quill, a New York state court determined there was no such duty and that the production company plaintiff could thus not recover its strike-related losses against the transit union that caused them.[10] Crucially, however, the plaintiff in Jamur was not the company that employed the strikers. Where the plaintiff’s employees are members of the union on strike, the plaintiff could look to the terms of the collective bargaining agreement (CBA) to show duty. A CBA establishes obligations of both the employer and the union regarding the union members’ employment. If a shareholder feels that CBA terms unfavorable to the corporation allowed the strike, the shareholder could potentially sue management and the union jointly. Here, the shareholder would be suing management for breaching its duty and the union for assisting in this breach.[11]

Conclusion

Both literally and figuratively, a strike indicates that something in a company is not working. Blaming management for this malfunction seems like the surer course, but are the lines between management and a union always so clear? Where a union contains only employees of one corporation, e.g., the Starbucks or Amazon labor union, does suing that union equate to suing a third party, or does it rather equate to suing a collective of employees so powerful within the company that it could amount to “management”? It appears from Delaware case law that only an employee in a position of control and special trust has the duty to shareholders required for such an action.[12] Whether a union could have the requisite authority over a large enough portion of a company’s workforce to qualify for this position is worthy of further discussion.

[1]Sara Samora, Boeing Reports Nearly $12 Billion Loss for 2024, Yahoo Finance (Jan. 29, 2025), https://finance.yahoo.com/news/boeing-loses-nearly-12b-2024-103700731.html

[2] Reuters, Boeing Workers Vote on Wage Deal That Could End Strike, Reuters (Nov. 4, 2024), https://www.reuters.com/business/aerospace-defense/boeing-workers-vote-wage-deal-that-could-end-strike-2024-11-04/.

[3] Christopher Lometti & Richard E. Lorant, Understanding Shareholder Derivative Lawsuits, Cohen Milstein (Apr. 21, 2022), https://www.cohenmilstein.com/understanding-shareholder-derivative-lawsuits/.

[4] 29 C.F.R. pt. 1904 (2024)

[5] 17 C.F.R. § 229.10 (2024)

[6] Brett W. Myers & Alessio Saretto, Union Strikes and the Impact of Non-financial Stakeholders on Capital Structure (Krannert School of Management, Purdue University, Working Paper, Jan. 2010).

[7] 29 U.S.C.A. § 151 (2018)

[8] 29 U.S.C.A. § 185 (2018)

[9] Glacier Nw., Inc. v. Int'l Bhd. of Teamsters Loc. Union No. 174, 598 U.S. 771 (2023).

[10] Jamur Prods. Corp. v. Quill, 51 Misc. 2d 501 (N.Y. Sup. Ct. 1966).

[11] In re Rural/Metro Corp. S'holders Litig., 102 A.3d 205 (Del. Ch. 2014)

[12] Witmer v. Armistice Cap., LLC, No. 2022-0807-MTZ, 2025 WL 2350799 (Del. Ch., Aug. 14, 2025).