US Steel Launches ‘Longshot’ Attack on Union in Merger Fallout

A US Steel Corp. lawsuit against the United Steelworkers president and a rival manufacturer is likely to fail in court using an untested antitrust argument, yet could still damage the two defendants nonetheless.

US Steel is accusing USW President David McCall and Cleveland-Cliffs Steel Holding Corp. of illegally conspiring together to sabotage a proposed $14.1 billion merger with Japan’s Nippon Steel Corp., costing US Steel billions of dollars in damages.

Even if the claims are unsuccessful, the rarely used legal accusations against the union could rework the dynamic between unions and employers during mergers and raise negative public perceptions, labor observers said.

“There’s a lot of lines of attack for this suit and the plaintiff would have to win them all for it to work,” said Rebecca Haw Allensworth, a law professor at Vanderbilt University. “A union’s job is to advocate for the welfare of its own workers, and this union apparently believes that a merger with Cliffs is better for their workers, and so it is pursuing that.”

The Jan. 6 complaint, filed in the US District Court for the Western District of Pennsylvania, alleges violations of the Sherman Antitrust Act and federal laws against racketeering. The company said McCall and Cliffs launched a “no-holds-barred campaign” to undermine US Steel’s competitive value, and to ultimately sought to allow Cliffs to acquire US Steel, creating an unlawful monopoly.

The lawsuit is but one facet of a contentious fight to confirm the US Steel-Nippon Steel merger. President Joe Biden blocked the acquisition Jan. 3, saying it presents a threat to national security. The US on Monday extended the deadline for Nippon to abandon the deal from Feb. 2 to June 18.

US Steel and Nippon have also sued the Biden administration over the move to block the merger.

Union Immunity

Labor unions are largely shielded from antitrust liability under the 1914 Clayton Antitrust Act and an implicit labor exemption that covers negotiations between employers and unions.

According to Marshall Steinbaum, an assistant professor of economics at the University of Utah, the only exception to the non-statutory labor exemption is agreements that are intended to exclude other employers.

“This strikes me as a long shot,” Steinbaum said of the lawsuit. “USW is clearly throwing its weight around, using its political influence to mess with US Steel management. It’s hard for me to see a judge somehow ruling that an antitrust violation.”

The exemption likely to come to McCall’s defense is the Noerr-Pennington doctrine, created by the US Supreme Court in the 1961 Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc. and 1965 United Mine Workers v. Pennington cases.

The high court said in those decisions that efforts to influence public officials can’t be a violation of antitrust law, even if they’re intended to eliminate competition. The only exception to the doctrine is if the petition is made in bad faith.

McCall and USW’s leadership discussed their concerns about the merger during an October meeting with Biden, and publicly lobbied against it for months.

For US Steel and Nippon to convince a judge, they would have to prove that McCall’s actions were in bad faith and that it caused them direct harm.

“That’s not an illegal agreement causing the harm, that’s a policy decision causing the harm, with speculation that it was the lobbying that led to it,” Steinbaum said.

McCall said in an emailed statement that Biden’s move to block US Steel’s acquisition “safeguarded our national security and helped preserve a domestic steel industry that underpins our country’s critical supply chains.”

“We are reviewing the complaint and will vigorously defend against these baseless allegations,” he said of the lawsuit against him.

The companies didn’t respond to requests for comment.

‘The Way the Sausage Is Made’

US Steel and Nippon accused USW leadership of entering into an illegal agreement with Cliffs, requiring the union to torpedo any acquisition of US Steel by a competitor and said McCall knowingly spread false claims about the two entities.

While the suit is likely to fail on the merits, a lengthy court battle could give US Steel more leverage against its competitor and the union and bring to light the details of their relationship, said Allensworth.

“They know the public will perceive at least some of this as shady back room deals with the unions picking the winners and losers on the free market and that will make the union look bad. The way the sausage is made in labor relations may not violate the antitrust laws but may be unattractive to a certain kind of voter,” she said.

According to the complaint, Cliffs’ Chairman and CEO Lorenco Goncalves said he “fixed the situation in a way so that it cannot go against” him. The charge also cites numerous media appearances by Goncalves and McCall where they both advocated against the deal.

According to a 2024 research paper by University of Chicago law professor Eric Posner, unions have played an outsized role in merger discussions this century, despite their declining membership and prominence in the private workforce.

While a union’s support or opposition doesn’t guarantee an outcome, it can be used to extract concessions or secure agreements from merging employers, Posner said.

In a review of 47 mergers since 1999, 39 were opposed by the workers’ unions but only 12 of those mergers ultimately failed. The United Food and Commercial Workers’ Union vocally opposed Kroger’s proposed Albertsons in 2022 before the Federal Trade Commission sued to block it under claims that the deal would limit workers’ bargaining power.

The case is U.S. Steel Corp. v. Cleveland-Cliffs Inc., W.D. Pa., No. 2:25-cv-00015.