By Amanda Becker and Bernie Woodall

CHATTANOOGA, Tenn./DETROIT (Reuters) - The United Auto Workers, surprising even its supporters, on Monday abruptly withdrew its legal challenge to a union organizing vote that it lost at a Volkswagen AG plant in Chattanooga, Tennessee in February.

Just an hour before the start of a National Labor Relations Board hearing on the challenge, the union dropped its case, casting a cloud over its long and still unsuccessful push to organize foreign-owned auto plants in the U.S. South.

VW workers due to testify at the hearing were already at the courthouse in downtown Chattanooga when they heard the news, which left lawyers in the hearing room wondering how to proceed.

The union did not explain why it waited until the 11th hour to drop the case, but UAW official Gary Casteel said the decision not to go ahead was made last week.

That was when Tennessee Governor Bill Haslam, U.S. Senator Bob Corker from Tennessee, and Washington small government activist Grover Norquist said they would ignore subpoenas to attend the hearing, which was to have focused partly on their conduct in the days leading up to the plant workers vote.

"It became obvious to us that they were going to become objectionists and not allow the process to go forward in a transparent way. When that happens, these things can drag on for years," Casteel said in an interview.

UAW President Bob King, whose term expires in June, had vowed four years ago to successfully bring the union into a foreign-owned Southern plant. Three years ago, he said that if the union was unable to do so, its future was in jeopardy.

"The UAW is ready to put February's tainted election in the rearview mirror and instead focus on advocating for new jobs and economic investment in Chattanooga," King said in a statement on Monday.


Labor experts said the union's move would allow it to devote more energy to trying to win representation at other Southern plants: the Nissan Motor Co plant near Jackson, Mississippi where the UAW has sought worker support for more than two years; or the Daimler AG Mercedes-Benz plant near Tuscaloosa, Alabama.

The UAW could also now work for a new election in Chattanooga. But they will have to wait at least until 2015. NLRB rules prohibit the same group of workers from voting again in the 12 months following a valid election.

"It's a significant setback for the UAW," said Dennis Cuneo, a pro-management attorney with long auto industry experience. "Losing the election, then pursuing an appeal only to withdraw it at the last minute. It has to be seen as a huge setback."

Casteel said the UAW was still committed to representing workers at Chattanooga. "This should not be construed as any type of surrender. It's just another page in the journey."

Some 15 to 20 pro-UAW workers handed out leaflets explaining the union's move during both shifts, said worker Devin Gore, 25. For some workers, the leaflet they received when leaving the plant was the first they had heard about the UAW's withdrawal.

The leaflet included the line, "The UAW is here to stay."

After decades of declining membership and no success in recruiting workers at foreign-owned auto assembly plants in the U.S. South, the Volkswagen plant last year seemed to be the best chance for the UAW.

VW officials agreed not to fight the UAW and allowed the union direct access to workers at the plant during work hours, which the union hoped would increase its chances of victory.

But in the February 12-14 election, workers voted 712-626 against allowing the UAW to represent them.

The UAW asked the NLRB to invalidate the vote and hold a new one, alleging that workers were improperly influenced by anti-union statements made by Tennessee Republican politicians and outside interest groups in the days leading up to the election.

The election results were certified on Monday after the UAW objection was withdrawn.

Volkswagen officials at the automaker's German headquarters want Chattanooga workers to be represented by a works council that would include both blue- and white-collar employees. But most legal and labor experts say that to do so in accordance with U.S. labor law, an American union would have to represent workers on issues of wages and benefits.

"We welcome the decision by the UAW," Volkswagen said in a statement. "It provides an important gesture for a constructive dialogue in Chattanooga."

In his statement, the UAW's King said, "The unprecedented political interference by Gov. Haslam, Sen. Corker and others was a distraction for Volkswagen employees and a detour from achieving Tennessee's economic priorities."

During the election campaign, Haslam and other Tennessee politicians threatened to cut off financial incentives for Volkswagen to expand the plant if the UAW succeeded in organizing the workers there.

(Reporting by Amanda Becker in Chattanooga and Bernie Woodall in Detroit; editing by Kevin Drawbaugh and Ross Colvin)

[Image via Agence France-Presse]