I am disturbed that Yale's teaching assistants (TAs) would withhold grades from undergraduates. It punishes the students--and certainly doesn't help their cause any. Nevertheless, the graduate students have the right to unionize, and Yale University should recognize the union.
The very fact that Yale University is paying the TAs to do a job makes them employees. Furthermore, the TAs are frequently attempting to support themselves--and frequently their spouses and children--on these salaries.
The TAs should have the right to negotiate their salaries and benefits as a group, like any other group of employees.