Retaliatory Capital Allocation or Defensive Dual Sourcing; the Boeing Dreamliner Case

Abstract

The General Counsel’s decision to file a complaint in the Boeing case was an appropriate response to a major industrial decision that posed new questions about how to resolve a central tension in the National Labor Relations Act. On the one hand, the Act protects concerted activity by employees to enhance their wages and working conditions, while, on the other hand, the Act maintains the freedom of employers to make important capital allocation decisions. Resolution of this tension requires drawing a fine line, on the basis of a series of Supreme Court decisions, between legal capital allocations that are implemented to protect the employer from the effects of future strikes, and illegal capital allocations that are implemented to retaliate against employees for engaging in past strikes in order to discourage future strikes. Illegal retaliatory capital allocations may include some that do not result in an immediate reduction of employment opportunities.