BROCKWAY MOTOR TRUCKS, DIVISION OF MACK TRUCKS, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
No. 77-1974.
United States Court of Appeals, Third Circuit.
Argued March 28, 1978. Decided July 19, 1978.
582 F.2d 720
The plurality opinion in Louisiana Power & Light also requires a defendant to demonstrate that the state policy pursuant to which it acts is sufficiently weighty to override the presumption against implied exclusion from the antitrust laws and the national policies embodied in those laws. Bates establishes that the policy of regulating publicity by lawyers carries such weight. Id. 433 U.S. at 361-62, 97 S.Ct. 2691.36
For the foregoing reasons, we hold that, on the facts of this case, the actions of defendants constitute state actions exempt from § 1 of the Sherman Act.
The judgment of the district court will be affirmed in part and reversed in part and the case remanded for action consistent with this opinion as summarized in the last sentence of the first paragraph of this opinion.
Wilbur C. Creveling, Jr., Allentown, Pa., for petitioner.
Paul J. Spielberg, Andrew F. Tranovich, John S. Irving, John E. Higgins, Jr., Carl L. Taylor, Elliott Moore, N. L. R. B., Washington, D. C., for respondent.
Before ADAMS, VAN DUSEN and ROSENN, Circuit Judges.
ADAMS, Circuit Judge.
Many of the critical problems in contemporary legal discourse arise out of the difficulty of bringing ideals of public law into the basically private sector of community life. That difficulty has both a philosophical and legal dimension. It is necessary to accommodate norms of private right and individualism, fundamental to our society, with principles of public responsibility,
One area of labor law reflecting the intricacy of bridging the private and public realms is that of the duty to bargain imposed on parties participating in the collective bargaining process. When a court is asked whether an employer is obliged to meet with a union before making a decision vitally affecting the employees, as we are here, the task of meshing public duty and private purpose is squarely presented. In discussing the scope of the employer‘s duty to bargain, it is essential to avoid overly simple solutions and instead to reflect the subtle interrelationship between public law principles and conceptions of private right.
I.
With these concepts in mind, we now address ourselves specifically to the facts of the present appeal, which has emerged from a decision by Brockway Motor Trucks, a division of Mack Trucks, Inc., to close its facility in Philadelphia without first mentioning or discussing the possibility of closing with the affected union. The National Labor Relations Board (NLRB) has concluded that such unilateral action violates the duty to bargain imposed on an employer by the National Labor Relations Act (NLRA). Brockway has petitioned this Court for a review of the NLRB‘s ruling. At the same time, the Board has filed a cross-application for enforcement of its order that Brockway “cease and desist” from refusing to bargain with the union about the decision to shut down the plant, and that upon request the employer commence bargaining on that subject.2
Prior to the plant closing, Brockway had a number of facilities, including the one in Philadelphia, that were engaged in the manufacture and sale of trucks.3 The plant in Philadelphia was utilized for the sale and servicing of new and used vehicles. Employees at the plant were represented by Local 724, International Association of Machinists and Aerospace Workers, AFL-CIO. Brockway and the union negotiated a three-year collective bargaining agreement covering these employees, and the contract expired on September 14, 1975.
Less than one month after Brockway decided to cease operations at its plant, the union filed a charge with the NLRB alleging that Brockway, by failing to bargain about that decision, had violated
On September 23, 1976, the NLRB issued a complaint and notice of hearing in which it asserted that, on July 19, Brockway unlawfully had refused to bargain with the union regarding the plant closing. In its answer, Brockway admitted that it had decided unilaterally to shut down the facility and had refused to bargain with the union regarding that matter; it stated that notice had been given to the union on the day after the decision was made.
Both parties entered into a stipulation on December 27, 1976, in which they agreed that certain documents—including the charge, complaint, notice of hearing, answer and stipulation—would constitute the entire record in the case. They also waived all proceedings before an administrative law judge, and submitted the case directly to the NLRB for resolution on the basis of the record and opposing briefs.
It was stated in the stipulation that the discontinuance of operations at Brockway‘s Philadelphia facility was based solely on “economic considerations.” Thus, it is to be assumed that the decision was not the product of anti-union animus on the part of Brockway.5 There are no facts in the record, however, to explain in any detail the nature, extent or history of the considerations prompting the employer‘s decision to close its Philadelphia plant. Notably, the record does not make reference to economic necessity as a basis of the decision. Moreover, there is no indication that in any specific way the employer‘s interest in managing the business would have been imped-
In a decision dated July 21, 1977,6 the NLRB concluded that Brockway had violated its duty to bargain with the union regarding “wages, hours and other terms and conditions of employment.” The Board‘s opinion is rooted in the premise that an employer who decides to shut down part of its business violates
Brockway challenges the Board‘s conclusion as contrary to the law of this Court. It also insists that the prevailing view among the Circuits is that there never is any duty to bargain about a partial closing, such as we have here,10 and that that view should be embraced in this case. In response, the Board urges that Brockway‘s refusal to bargain about the closing is properly seen to constitute an unfair labor practice. Further, the Board maintains that the opinion of this Court on which Brockway primarily relies—NLRB v. Royal Plating & Polishing Co.11—is not only distinguishable from the present case, but also should not be read to reach this situation.
II.
A.
Ever since the Supreme Court in NLRB v. Jones & Laughlin Steel Corp., 301 U.S. 1, 30-40, 46-47, 57 S.Ct. 615, 81 L.Ed. 893 (1937), upheld the NLRA as constitutional, it has been a prime principle of
At the center of the Congressional effort to provide a framework for peaceful labor relations is the idea that collective bargaining between the parties should be encouraged.13 The NLRA provides affirmative legal protection against the employer‘s exercise of its power to frustrate the organization of employees for collective bargaining.14 Also, the Act imposes on employers an enforceable duty to bargain with unions representing appropriate bargaining units.15
Congress did not undertake to specify the precise subjects that the parties are obliged to discuss. Rather,
to refuse to bargain collectively with the representatives of his employees, subject to the provisions of
section 9(a) .16
In 1947 Congress amended the NLRA to include a new section,
A matter falling within the scope of
The range of subjects that courts have held to be mandatory topics of bargaining is rather broad, and includes such diverse matters as compensation,23 pensions,24 profit-sharing plans,25 bonuses,26 stock purchase arrangements,27 merit wage increases,28 insurance schemes,29 company housing and meals,30 hours31 and—the category relevant here—issues of employment security. Subjects touching on the employees’ interest in the security of their employment include those of hiring practices,32 procedures for bidding jobs,33 methods of selecting employees for layoffs,34 procedures for promotion or transfer,35 the operation of an employer‘s seniority program,36 policies relating to compulsory retirement,37 subcontracting out unit work38 and partial closings.39
We shall confine further discussion to the last two areas: subcontracting out unit work and partial closings.
To place Brockway‘s appeal in the appropriate legal perspective, it is necessary to provide, in some detail, a picture of the evolution of the law relating to an employer‘s duty to bargain about the decisions to subcontract out work and to close one of a firm‘s facilities. For in this area there are several doctrinal cross-currents.40
The starting point is the Supreme Court‘s landmark opinion of Fibreboard Paper Products Corp. v. NLRB.41 In affirming decisions by the NLRB and the court of appeals, the Supreme Court there held that “the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment” is within the reach of
Also, the Court noted, to conclude that such a matter was a mandatory subject of bargaining would promote the basic purpose of the NLRA, which is to encourage the peaceful settlement by the parties themselves of industrial disputes.44 This position was said to be reinforced by existing practices in industry, which indicated that contracting out is a fit subject for negotiation since many collective bargaining agreements include a clause covering that eventuality.45
Shortly after Fibreboard, this Court and the Eighth Circuit decided cases in which they distinguished Fibreboard factually and did not impose a duty to bargain. In NLRB v. Royal Plating & Polishing Co.,46 we held that there was no duty to bargain about a determination to close one of two plants engaged in the business of metal plating and polishing, since prior to the decision the employer had been suffering from “severe” economic losses for years, and the property on which the plant that was closed was located had been designated by the city‘s housing authority for redevelopment.47 Particularly in light of the action by the governmental entity, the Court asserted that there was “no room for union negotiation in these circumstances.”48
Royal Plating distinguished Fibreboard on the ground that the subcontracting of concern in Fibreboard did not lead to a “change in the economic direction of the company,” for the same functions were to be performed by the independent contractor as had been handled by the firm‘s employees. Also, the employer‘s decision in Royal Plating, unlike the one in Fibreboard, was said to entail a major “commitment of capital investment.”49
The Eighth Circuit in NLRB v. Adams Dairy, Inc.50—which had been remanded by
Most significantly, Adams Dairy noted that the record indicated that bargaining about the matter of concern in fact had taken place before the then-existing collective bargaining agreement came into effect. That was in contradistinction to the situation in Fibreboard whereas in the present case—the employer‘s action occurred in the absence of prior discussion and during contract negotiations when, as the Eighth Circuit put it, “there was little or no excuse for not negotiating the disputed issue . . . .”53
After Royal Plating and Adams Dairy, the NLRB took the opportunity in Ozark Trailers, Inc.54 to explain its interpretation of Fibreboard in the setting of a partial closing. In Ozark Trailers, the Board held that the closing of a plant engaged in the manufacture of refrigerated truck bodies was a mandatory subject of bargaining. It flatly refused to accept the notion that whenever a “basic” change in a business or a management decision to recommit or reinvest funds is involved, such a factor by itself is enough to preclude a duty to bargain.55 The NLRB emphasized that that approach represented an excessively one-sided allegiance to the interests of management, and that the appropriate mode of analysis in deciding what is a mandatory subject of bargaining is to balance the interests of the employer against those of labor.56 In addition, the Board stressed that, in the circumstances of Ozark Trailers, bargaining would likely be efficacious since during the negotiations the union could be expected at least to attempt to alleviate the employer‘s concern about the costs of production.57
The suggestion that the duty to bargain does not exist simply because it would impinge upon the management‘s prerogative in running a business was unequivocally rejected. In dealing with that contention, Ozark Trailers underscored that Congress, in enacting the NLRA, had made the policy decision not to permit employers to remain entirely free to take actions affecting the future of a firm—such as a partial closing—unconstrained by the need to bargain with labor. The Board reasoned that to
Ozark Trailers emphasized that to hold that there was a duty to bargain requires only that the parties participate in discussion, and does not in any way compel them to reach an agreement about the issue of the plant closing. If bargaining fails, declared the Board, “the employer is wholly free to make and effectuate his decision.”59 Because the employer‘s ability to act as it sees fit ultimately remains untrammelled, Ozark Trailers concluded that the employer‘s discretion to close the plant cannot be said to be unduly hampered by allowing employees to bargain about the partial-closing determination.
After Ozark Trailers, there existed a tension between the approach of the Board toward the duty to bargain in the partial-closing context and that of some courts of appeals. For instance, in a case in which the evidence suggested that the company “was faced with the . . . threat of becoming unable to serve adequately its principal customer,”60 the Ninth Circuit held that the removal of a shipyard‘s facilities to a new location was not a mandatory
C.
The Congressionally-mandated process of collective bargaining may be viewed essentially as a compromise between two antithetical and immoderate approaches to the respective roles of public duty and private right. On the one hand, the bargaining process is designed not to interpose government as the central actor in labor relations, but rather to preserve intact the liberty of the parties to agree by themselves on the substantive terms governing their interaction. On the other hand, collective bargaining was seen by the Congress that enacted the NLRA as a rejection of an excess of private economic freedom, an excess which was considered to pose a substantial danger in the setting of our modern, highly independent economy.
To the degree that the governmentally-supervised process of collective bargaining represents such a compromise, it also may be conceived to be in the mainstream of American life and thought. For ours remains essentially a pluralistic society that is respectful of the value of the pragmatic adjustment of competing interests. Collective bargaining is best seen in the context of such tendencies, for it is ultimately based on a willingness of the parties to pursue common ends in a spirit of cooperation while remaining cognizant of their differing goals.72
When a court is asked, as we are, to determine whether an employer has a duty to engage in collective bargaining before making a decision to shut down a plant based solely on unspecified “economic considerations“, it has a choice between two opposite types of approaches. First, it can advance one of the extreme positions implicitly rejected by the theory of collective bargaining, and say either that the preeminence of public duty is such that the employer always has an obligation to bargain about a partial closing, or, in the alternative, take the position espoused by the dissent that the status of the employer‘s private interest is such that there never is a responsibility to bargain in such a situation. This first type of analysis, grounded in the adoption of a per se rule, we explicitly reject. The second, more reasonable method, which is more responsive to the values of collective bargaining, is to begin with the statutory commitment to collective bargaining and to proceed to balance the parties’ interests in the decision at issue. It is this second course that we adopt here.
1. The Parties’ Arguments: the Per Se Approach
Underlying Brockway‘s position is the conception that when a decision by an employer affects in a major way the structure of a firm, as does a partial closing, and when the closing is not colored by the presence of anti-union sentiment, as to which there is no issue here, the employer should be able to make such a determination without previously advising its employees or bargaining with them about it.73 To but-
The major premise of the Board‘s view, in sharp contrast to Brockway‘s, is that an employer has a duty to bargain about a decision to close one of its facilities, for such an action intimately affects the interests of the employees and is the sort of subject that the NLRA was designed to reach. However, at oral argument, the Board appeared to allow for at least one class of situations arising in a partial closing context where there is no duty to bargain, namely, when an employer elects to terminate completely a discrete line of its business.75
Thus, Brockway commences by assuming that the private interest of an employer is so inviolable that when a partial closing is predicated on “economic considerations,” whatever they may be, there can be no duty to bargain about it. And the NLRB starts by postulating that whatever the specific circumstances, there normally is a public-law imposed duty to bargain about a partial closing, although that obligation may disappear when, for example, an employer decides to shut down entirely a distinct line of business.
The striking characteristic of these two positions is that they are quite extreme. Both tend to posit a per se rule—each being the mirror image of the other—relating to the duty to bargain about partial closings. As such, they ignore the guidance of the Supreme Court in Fibreboard, which by its example counselled a practical, balancing approach to the problem of articulating the scope of the employer‘s duty to bargain under the NLRA.76
As for Brockway‘s argument, it rests principally upon an attempt to read Royal Plating as expounding the proposition—indeed, the per se rule—that an employer need never bargain about an economically-based decision to close one of its facilities. Yet Royal Plating does not stand, explicitly or implicitly, for such a rule or for any principle other than that directly stated in it, namely, that “an employer faced with the economic necessity of either moving or consolidating the operations of a failing business has no duty to bargain with the union respecting its decision to shut down.” (emphasis added)77 Saying that there is no duty to bargain about a partial closing when the employer is faced with the “economic necessity” of moving or of otherwise restructuring the operations of a “failing business” is a far cry from indicating that an employer has no duty to bargain about a partial closing when its action is founded on
The language in Royal Plating on which Brockway seeks in particular to rely78 is misinterpreted when read as encompassing the notion that simply because an operational change like a partial closing is contemplated by an employer for undefined economic reasons, no duty to bargain obtains. Rather than saying that, the panel in Royal Plating took pains to distinguish its factual situation—where there was an economic necessity of closing and the employer‘s business was failing—from that in Fibreboard.79
Moreover, Royal Plating explicitly concentrated on the need, in deciding what is a mandatory subject of bargaining, to weigh the competing interests of the employer against those of the employees.80 In so doing, the opinion noted that the employer‘s decision to cease operations at one of its plants resulted only after a prolonged period of severe financial loss. Further, it was emphasized that the action of a municipal housing authority, which had designated for redevelopment the land on which the plant was located, rendered the prospect of bargaining a pointless one.81 There would have been no value, the Court in effect was indicating, for the employer to have bargained about a decision utterly beyond its control. In light of these circumstances—and there is no suggestion in the record here of anything comparable—this Court held that there was no duty to bargain about the partial closing.82
Although it is surely the case, as the NLRB suggests, that the employees’ keen interest in the possibility of a partial closing must not be ignored, it is equally true that that consideration should not be so highlighted as to blur the countervailing interests of the employer. One of the major norms governing the operation of the federal labor laws is that both sides of the controversy, the employer‘s and the employees‘, should be seen as crucial, and one should not be exalted to the exclusion of the other. As the Supreme Court stated in John Wiley & Sons v. Livingston:84
The objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship.
In view of the principles of Fibreboard, Royal Plating and Wiley, then, a per se rule covering this appeal cannot be accepted.
2. The Preferred Approach to the Duty to Bargain
Having rejected a per se analysis of the duty to bargain about a partial closing, we necessarily encounter the task of elaborating an alternative. In considering a broader approach, we must contemplate the theory of collective bargaining embodied in the NLRA: a commitment to the efficacy of a framework of discussion and compromise between the parties to labor disputes. Direct negotiations by the disputants is viewed as helpful both to the nation, which thereby can be spared to some extent the disruptive products of a lack of communication between labor and management, and to the participants themselves, who thereby are put in a position of listening to the other side and understanding, if not agreeing, with the opposing view.
In the abstract, the aims of collective bargaining would be furthered by requiring an employer to negotiate with a union before deciding irrevocably to close down a plant. Such a requirement would lead to some discussion—however brief it may be—between the parties, and would allow them in advance of a fait accompli by one or the other to comprehend the factors motivating each of them. It would at least help foster
Further, the act of closing a plant appears to come within the literal language of the statute in that it concerns “terms and conditions of employment.” This is so for the same reason expressed in Fibreboard in support of the proposition that the subcontracting decision there came within the ambit of the statutory phraseology—namely, it usually, and rather quickly, leads to the termination of at least some employees. As Fibreboard stated:
The subject matter of the present dispute is well within the literal meaning of the phrase ‘terms and conditions of employment.’ . . . A stipulation with respect to the contracting out of work performed by members of the bargaining unit might appropriately be called a ‘condition of employment.’ The words even more plainly cover termination of employment which, as the facts of this case indicate, necessarily results from the contracting out of work performed by members of the established bargaining unit. (emphasis supplied)86
Just as subcontracting is likely to lead to the termination of employment, so, too, will the closing down of an employer‘s plant—and thus the latter act “might appropriately be called a ‘condition of employment‘.”
Accordingly, it would seem that there is an initial presumption, founded on statutory purposes and language, that a partial closing is a mandatory subject of bargaining. However, as earlier pointed out, any such presumption should not be construed as a per se rule, as the dissent appears to do. Rather, the main point is that there seems to be no justification for drawing any bright line between a partial closing situation, as to which there is decisional disagreement regarding the duty to bargain, and the subcontracting situation of Fibreboard, where the Supreme Court held that there was a duty to bargain. With regard to both matters, bargaining would serve an important statutory function.
The next and crucial step in the analysis, following the lead of Fibreboard, is to focus on the facts of each case in determining whether there is a duty to bargain about the decision to close a plant. Such a particularistic inquiry is especially salutary as a practical matter since it directs the court‘s attention to the interests of each of the parties.
Of chief concern to the employees is the prospect of losing their jobs. It is in fact difficult to imagine any result of a decision by the employer about which labor would be more highly sensitized.87
Because of that, it seems realistic, as Fibreboard indicated, to suppose that the union would endeavor in the course of discussion to seek to persuade the employer to alter its decision to close the plant.88
In
Even if the union does not undertake such acts in bargaining about the decision to close the plant, it might still be able to avert the closing by convincing the employer that such a step would cost it more in terms of post-termination expenses, as in severance pay, than it would save. And even if the employer were to remain intransigent, the union could at least attempt to make suggestions about the decision‘s timing and implementation in order to moderate the closing‘s impact on the work force.91
The weakness of such an argument is that it paints with too broad a brush. Like any important action by an employer, including that of subcontracting, the decision to close a portion of an employer‘s operations has many components. With regard to some aspects of an employer‘s decision, the union perhaps may not be an expert or, even, a particularly helpful interlocutor. But that observation does not in any way defeat the proposition that with respect to other aspects of such a determination—especially those bearing upon the production costs of labor and the labor-related expenses involved in carrying the decision into effect—the union is fully apprised of relevant and important facts, and could well make a contribution that might enable the employer to keep the plant in question economically viable.92
As Fibreboard pointed out, one indicator that bargaining might be useful is the frequency with which parties to labor-management contracts include clauses in their agreements bearing on such a matter.93 In Fibreboard, the Supreme Court referred to a Department of Labor report indicating that about one-fourth of the contracts reviewed had some form of limit on subcontracting.94 Similarly, it would seem apposite here to note that a Department of Labor study shows that about 21.5% or slightly more than one-fifth, of the contracts under consideration contained a clause dealing with the closing of a plant or its removal from its present location.95 Although such statistics are not determinative, they are indicative that the decision to shut down a facility like Brockway‘s plant in Philadelphia is the sort of matter as to which bargaining may well be helpful.
The fact that collective bargaining agreements often include clauses dealing with a plant closing or removal might be said to indicate that there is less of a need to impose a statutory duty to bargain about that subject. However, even assuming that this is a valid argument in general, it misses the mark in the present case, for the contract between the parties here—even if it contained such a provision, and the record includes no evidence one way or the other—had lapsed at the time that the employer unilaterally decided to close the facility. In addition, Fibreboard does not permit the conclusion that the relatively common appearance of contractual clauses about a certain subject makes the statutory duty to bargain about it any less important. To the contrary, Fibreboard stated that the frequent appearance of contractual provisions covering a specific subject constitutes affirmative evidence that such a subject is the type of issue as to which bargaining should be thought useful.96
We cannot accept the employer‘s suggestion that imposing on it a duty to bargain would necessarily strip it of its management prerogative. Nothing in a holding that the employer has a duty to bargain about the partial closing by itself would impinge on the employer‘s freedom ultimately to determine whether to close the facility. Rather, all that such a conclusion would require is that the two sides discuss the matter at the bargaining table. Should the parties fail to reach an agreement, Brockway could then go ahead with its plan to close the plant.98
Additionally, the record here is devoid of support for the employer‘s assertion that its freedom would be unacceptably constrained by bargaining. Specifically, there is no evidence to suggest that bargaining about the decision to close would be fruitless or unfair to the employer, either because of an action by some third party—such as a condemnation of the employer‘s property by a municipal housing authority, as in Royal Plating99—or of the dire financial straits of the company. There is, for instance, nothing in the record indicating a history of severe losses on the part of Brockway. At oral argument, Brockway‘s counsel conceded that there was no evidence that the firm was in financially straitened circumstances or that it was economically required to shut down the Philadelphia facility.100 Nor is there any indication in the record of the need to restructure the company in order for it to remain in business.101 There is also not the slightest
Brockway‘s argument comes down to the proposition that the stipulation that the partial closing was due to “economic considerations” is, in itself, sufficient to forestall imposition of the duty to bargain. Such a contention presumes that there exists a rule that an employer need not bargain about a partial closing so long as there is no anti-union animus and whenever the decision is induced by economic considerations, regardless of the nature of such considerations. As we have noted, not only is there no such per se rule in this Circuit, but also it is contrary to the analysis of Fibreboard.103 Moreover, it is inconsistent with the purpose of the NLRA, which is to establish a framework of bargaining so as to allow for the peaceful resolution of industrial controversies and, additionally, to foster the dissipation of labor disagreements before they become open disputes.104
To conclude that Brockway was not under an obligation to bargain solely because its decision was based on unspecified “economic considerations” might well disrupt the structure of collective bargaining contemplated by the NLRA. It would unduly diminish the scope of the employer‘s public duty by overly protecting the assertion of its private interest. And it would predictably chill future bargaining by the employees’ representatives who would have reason to fear that, in response to aggressive negotiation, an employer could simply shut down one of its plants and be protected by an exclusion from the responsibility of bargaining about that decision.
Yet, just as we decline to say that there is no duty to bargain when a decision to close is based on unspecified “economic considerations,” it likewise appears inappropriate to enforce an order predicated on an unfair labor practice when we do not know with specificity what the circumstances surrounding the employer‘s decision to close its facility actually were. The somewhat enigmatic phrase, “economic considerations,” is of little help in the process of ascertaining whether the employer‘s interests in this case were in fact of a magnitude and immediacy that would make unacceptable and unfair the imposition of a duty to bargain.
Because the precise nature of the conditions leading to Brockway‘s decision is not
III.
There remains the issue whether, even if the facts ultimately were to provide a basis for concluding that Brockway committed an unfair labor practice, it would be appropriate in such event to require that Brockway enter negotiations upon request with the union. It is true that the NLRB “has broad discretion to adapt its remedies to the needs of particular situations” in order to effectuate the policies of the Act.106 It is still necessary, however, that the order be fitting in view of the factual configuration in a given case. Indeed, the Supreme Court has specified that the NLRB should not be foreclosed from issuing rather sweeping orders to remedy an unfair labor practice so long as “the circumstances of the particular case” justify the action.107
A difficulty with ordering bargaining in this case has become evident from an uncontradicted statement at oral argument that, in the interval since the NLRB issued its direction in this matter, Brockway has ceased all of its truck-related business operations. If that is correct, and we are unable to determine with exactitude whether it is or not, then it would appear that to require bargaining with the union at this time regarding the decision to close the Philadelphia plant would constitute a futile act. For if Brockway is entirely out of business, it would be most unlikely to undertake to reconsider its earlier determination to close the Philadelphia facility. There is no apparent purpose in directing a meaningless activity and, indeed, there is a strong policy in favor of limiting enforcement of the Board‘s orders to situations where it would not be fruitless.108
This is not to say, however, that the NLRB could not properly direct such a remedy if, after further factual development in proceedings before the Board, it appears that there is a basis for concluding that, first, there was a violation of the duty to bargain and, second, to command bargaining with the union would not be pointless.109
IV.
In sum, we will not at this time enforce the Board‘s order that Brockway “cease and desist” from refusing to bargain with the union about the decision to shut down the plant in question and that, upon request, the employer commence bargaining on that subject.110 That conclusion is, of course, without prejudice to the NLRB to commence additional proceedings should it seek to do so.
ROSENN, Circuit Judge, dissenting.
There is but a single narrow issue before us in this appeal. Is an employer‘s decision to close one of its plants, without prior consultation with its union representatives, an unfair labor practice under the National Labor Relations Act (“NLRA“),1 if that decision is motivated solely by economic considerations? Because of its failure to confine itself to this limited question, the majority opinion departs from the principles of this court‘s landmark decision in NLRB v. Royal Plating & Polishing Co., 350 F.2d 191 (3d Cir. 1965), and the views prevailing in a majority of federal appellate courts. Therefore, I must respectfully dissent.
I.
The facts of this case are brief and straightforward. Brockway Motor Trucks, Division of Mack Trucks, Inc., (“Brockway“) and Local 427 of the International Association of Machinists and Aerospace Workers (“the Union“) had been parties to collective bargaining agreements covering employees at the company‘s Philadelphia facility2—identified by the National Labor Relations Board (“the Board“) as “Garage, Factory Branch” engaged in “Sales and Services, New and Used Trucks.” On September 14, 1975, the last collective bargaining agreement between the company and the Union expired. The parties engaged in fruitless negotiations over a new contract for a period of about ten months, when the company unilaterally decided to discontinue operation of the Philadelphia facility. One day later, in writing, Brockway informed the Union of that decision.
On August 16, 1976, the Union filed a charge with the Board that Brockway had committed unfair labor practices under sections 8(a)(1) and 8(a)(5) of the NLRA3 by failure to negotiate over the closing of the plant. The Union asserted that the closing of the Philadelphia facility was a mandatory subject of bargaining and that therefore the company‘s unilateral decision was an
On September 23, 1976, the Board filed a complaint against Brockway for its action in the closing of the Philadelphia facility.
Before rendering a decision on that complaint, the Board entered into an agreement with Brockway that the case would be decided on the basis of a stipulated record. The parties then agreed that Brockway had discontinued operations at the Philadelphia facility solely because of “economic considerations.” Brockway, in answer to the Board‘s complaint, asserted that because of that stipulation, the case was governed by Royal Plating & Polishing Co., supra, and that even absent the stipulation, an employer‘s decision to close a facility is never a mandatory subject of bargaining unless motivated by anti-union animus.
The Board rejected Brockway‘s arguments. Instead, it decided that the company had committed an unfair labor practice by failing to bargain with the Union prior to deciding to close the Philadelphia facility. It took the position that an employer is generally obligated to bargain with its employees over a partial closing of the employer‘s business,5 even if the decision to close is motivated solely by “economic considerations.”
Therefore, in the posture of this appeal, both Brockway and the Board assert broad positions calling for per se rules to deal with any decision of an employer to partially close his business. The majority take the position that neither the Board nor Brockway is correct, and reject any per se rule. Maj. Op. at 734. Paradoxically, the majority adopt a per se rule of their own: that the decision to partially close a business is presumptively a mandatory subject of bargaining except in the very limited situation when that decision is the result of severe economic conditions. In reaching this unprecedented and unnecessary conclusion, the majority brush aside the teaching of Royal Plating, give inadequate consideration to the important interests of the employer partially to close its business, and create an untenable rule based on the degree of economic harm. Such a shaky foundation for so broad a construction of the duty to bargain compels me to dissent.
II.
Royal Plating & Polishing Co., supra, is the cornerstone of this court‘s decisional law dealing with an employer‘s duty to bargain over the partial closing of its business. In that case, the Board had found the company guilty of an unfair labor practice because it had closed one of its two plants, located within two blocks of the other, without undertaking negotiations with the union. On appeal, this court narrowly tapered the issue before it, “whether an employer‘s unilateral decision to close part of his business solely for economic reasons” constitutes an unfair labor practice. 350 F.2d at 193 (emphasis supplied). We reasoned that under the facts of the case—the company had suffered severe losses and was facing a possible condemnation—the failure of the employer to bargain was not an unfair labor practice. Chief Judge Biggs concluded that “an employer faced with the economic necessity of either moving or consolidating the operations of a failing business has no duty to bargain with the union respecting its decision to shut down.” Id. at 196.6
“Nothing the Court holds today should be understood as imposing a duty to bargain collectively regarding such managerial decisions, which lie at the core of entrepren[e]urial control. Decisions concerning the commitment of investment capital and the basic scope of the enterprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate employment.
* * * * * *
[T]hose management decisions which are fundamental to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from that area [Section 8(d)].”
Id. at 196-97. In the instant case, we are concerned neither with discriminatory motive nor failure to bargain over effects.
Royal Plating & Polishing Co., supra, 350 F.2d at 196, quoting with approval, Fibreboard Paper Products Corp. v. NLRB, supra, 379 U.S. at 223, 85 S.Ct. 398 (Stewart, J., concurring).
I believe that the stipulation in this case, that the closing of the Philadelphia facility was solely for economic reasons, puts this case within the four corners of Royal Plating. The majority, however, endeavor to distinguish the instant case from Royal Plating on the ground that the decision to close in the latter case came only after prolonged severe economic loss and a threatened condemnation of the land on which the plant was located. Maj. Op. at 727-728. In my view, this distinction cannot be drawn validly from the reasoning of Royal Plating.7
The majority indicate that the case stands for the extremely narrow proposition that bargaining is mandatory except when economic conditions are so severe that a move is a financial necessity and negotiation would serve no rational purpose. Maj. Op. at pp. 728, 732. While it is true that the company in Royal Plating was in such a condition, the opinion did not address the general question of severity of distress posed by the majority. Rather, the opinion‘s reasoning indicates that the severe circumstances faced by the company, added up to no more than that the closing rested on bona-fide economic reasons8 and was not
The majority‘s tenuous distinction which creates a bright line between closings for economic reasons and closings for severe economic reasons finds no support among other courts. In fact, the view prevailing across the federal judiciary is that bona-fide economic considerations for a partial closing remove a case from mandatory bargaining.9 Moreover, the majority distinction appears to be no more than a post facto rationalization from the facts of certain cases to support a novel principle. The clear standard enunciated by the courts that have spoken on this issue is that “absent union animus, a company has no legal duty to bargain with a union over the decision to partially shut down its operation because of economic reasons.” Royal Typewriter Co. v. NLRB, 533 F.2d 1030, 1039 (8th Cir. 1976), (emphasis supplied). Although in some cases these “economic reasons” have been severe, see, e. g., NLRB v. Transmarine Navigation Corp., 380 F.2d 933 (9th Cir. 1967); NLRB v. Rapid Bindery, Inc., 293 F.2d 170 (2d Cir. 1961), no court has stated the rule as narrowly as advocated by the majority and the majority can cite no case in which an employer was found to have bona fide economic reasons for a partial closing and yet was required to bargain mandatorily.10 Therefore, the gen-
III.
In determining the scope of the employer‘s duty to bargain, the majority assert that “the act of closing a plant appears to come within the literal language” of the NLRA because it concerns “terms and conditions of employment.” Maj. Op. at 735. From this assertion they conclude that “there is an initial presumption that a partial closing is a mandatory subject of bargaining.” Id. They then would focus on the facts of each case to determine the “applicability” of the duty to bargain and balance the interests of the employer and his employees to ascertain whether bargaining should be ordered. Id. at 737. This procedure, in my view, confuses the question of what is a mandatory subject of bargaining with the question of the proper remedy to order once it has been determined that an employer should have bargained. The focus should not be on the “applicability” of the duty to bargain, but should be on whether the duty exists at all. The question is one of line-drawing—does the employer‘s action fall on the side of the line requiring bargaining or does it fall on the side of the line not requiring bargaining? Balancing is used in assessing the propriety of the employer‘s action, not in determining if the employer is to be excused because of equitable considerations from bargaining.
Like the majority, I too begin with an analysis of the Fibreboard decision, for within that opinion is the philosophical guidepost that has led most courts to the conclusion that certain decisions in the running of a business may be made by the employer alone without prior consultation with its union representatives. In Fibreboard, the Court held that the contracting out of work “previously performed by members of an existing bargaining unit is a subject about which the National Labor Relations Act requires employers and the representatives of their employees to bargain collectively.” 379 U.S. at 209, 85 S.Ct. at 402. In reaching this conclusion, the court pointed out that the employer‘s decision to subcontract the maintenance work did not alter the company‘s basic operation, that the maintenance work still had to be performed at the plant, and that the company was merely replacing its employees with those of a contractor who would do the same work at the same plant under similar circumstances. From these facts, the Court concluded that contracting out was not so central to the management of a business that requiring “the employer to bargain about the matter would . . . significantly abridge his freedom to manage the business.” Id. at 213, 85 S.Ct. at 404, see id. at 223, 85 S.Ct. at 409 (Stewart, J., concurring) (“Decisions concerning the commitment of investment capital” are for the employer).11 Implicit in Fibreboard is that the NLRA does not require mandatory bar-
The majority read Fibreboard to stand for the proposition that employer actions that lead “to the termination of at least some employees” are subjects for bargaining. Maj. Op. at 735. However broad the language in Fibreboard quoted by the majority may be, the case does not support the expansive proposition for which it is cited. The Court did not hold that all actions of an employer leading to terminations are mandatory subjects of bargaining; it specifically held that not even all subcontracting actions are such subjects.
We are thus not expanding the scope of mandatory bargaining to hold, as we do now, that the type of “contracting out” involved in this case—the replacement of employees in the existing unit with those of an independent contractor to do the same work under similar conditions of employment—is a statutory subject of collective bargaining under
§ 8(d) . Our decision need not and does not encompass other forms of “contracting out” or “subcontracting” which arise daily in our complex economy.
Fibreboard Paper Products Corp. v. NLRB, supra, 379 U.S. at 215, 85 S.Ct. at 405 (emphasis supplied).
Justice Stewart‘s concurring opinion makes it clear beyond doubt that Fibreboard does not hold “termination” actions per se to be mandatory subjects of bargaining. “The Court most assuredly does not decide that every management decision which necessarily terminates an individual‘s employment is subject to the duty to bargain.” 379 U.S. at 218, 85 S.Ct. at 407. Justice Stewart emphasized that entrepreneurial decisions as to “what shall be produced, how capital shall be invested in fixed assets, or what the basic scope of the enterprise” should be, even if they result in termination of employees, are not subjects of bargaining. Id. at 225,12 85 S.Ct. at 410. Rather, he joined the majority opinion because the case involved
the substitution of one group of workers for another to perform the same task at the same plant under the ultimate control of the same employer. The question whether the employer may discharge one group of workers and substitute another for them is closely analogous to many other decisions within the traditional framework of collective bargaining.
Fibreboard Paper Products Corp. v. NLRB, supra, 379 U.S. at 225, 85 S.Ct. at 410 (Stewart, J. concurring).
This limited holding, balancing the right of an employer to substitute new and cheaper labor for his present employees against their rights, is of little relevance to a case such as this, where the employer is severing his relationship with all employees at a plant and not seeking any replacements.
Textile Workers Union v. Darlington Manuf. Co., 380 U.S. 263, 85 S.Ct. 994, 13 L.Ed.2d 827 (1965), reinforces this conclusion. Darlington, after unsuccessfully resisting a union organizing campaign, promptly liquidated and sold its plant and
The majority recognize that a decision to close an entire business is not a mandatory subject of bargaining, but nonetheless attempt to place this case, involving a partial closing, into a separate analytic category. They equate this case with a plant relocation and see “no justification for drawing any bright line between a partial closing situation . . . and the subcontracting issue of Fibreboard.” Maj. Op. at 724, n. 10; 735. I believe that by placing the closing of an entire business on one side of the bargaining line and partial closings, plant relocations, and subcontracting on the other side, the majority fail to recognize a crucial distinction—relocation and subcontracting generally result in replacement of employees, closings do not.
As much as a partial closing results in termination of employment, so does a closing of an entire business. There is no logical way, in terms of the presumption established by the majority, to create a bright line between the closing of an entire business and any of the situations listed above. The only consistent factor I can discern is that both plant relocations and contracting out usually result in the replacement of present employees with others, and partial and entire closings do not. In my view, the line for mandatory bargaining purposes falls between subcontracting and relocation on the one hand and plant closings on the other, except when anti-union animus is present.15
Taking our decision in Royal Plating and those of the Eighth Circuit, see n. 9 & 11, supra, in light of Fibreboard and Darlington,
IV.
I respect the majority‘s solicitude for those who may suffer from the closing of plant operations. I too am concerned with the potentially harsh and demoralizing impact upon the lives and fortunes of employees and their families dislocated by the permanent closing of a plant, a problem which has engaged the constructive concern of the Congress, state legislatures, employers, and organized labor and which has led to the enactment of unemployment compensation laws, supplemental unemployment compensation plans, severance pay, and other forms of remedial relief. That concern, however, does not blind me to the countervailing interests of a freely operating economic system. I believe that, at least as to a plant closing for economic reasons, an employer has the right to unilaterally close his operations.
There are valid reasons why a requirement that an employer bargain over a decision partially to close its business could be harmful to the employer, to the economy, and to the prospects for further jobs. If an employer must bargain before he can reach a decision to close a plant, how long must he continue to operate under possibly adverse, costly, and unprofitable conditions while the bargaining process goes on? How long must bargaining continue and who shall decide and by what criteria shall it be determined whether the bargaining has been sufficient? When the employer ceases bargaining, is he susceptible to a charge of bad faith or coercion? Must he engage in protracted litigation over a significant business judgment which may have to be implemented promptly, if it is to be made at all? These questions are unanswered by the majority and are treated as subsidiary to the ultimate question of whether there is a duty to bargain.16
That ultimate question—the duty to bargain—is, in my view, inextricably bound in considerations such as those raised above. As we stated in Royal Plating & Polishing Co., supra, in each case, the interests of the employees and the purpose of the NLRA in securing industrial tranquillity “must be carefully balanced against the right of the employer to run his business.” 350 F.2d at 196. The majority have barely explored that right.
The balance to me in the case of a partial closing for economic reasons seems to rest with the employer. On the one hand, when the employer in the exercise of his knowledge, experience, and judgment concludes that it is no longer economically feasible to continue operation of one of its several plants, a timely termination of the investment in that plant and a reinvestment elsewhere makes a genuine contribution to the economy—possibly preserving the jobs of the employees at the employer‘s other plants or creating new jobs with the reinvested funds. On the other hand, notice in advance to the union of an expected decision to close and forced bargaining of the issue will allow the union to discuss the question and make suggestions for preservation of the business. However, that interest must be balanced against the effects of the bargaining decision which not only could place the company at a disadvantage in dealing with its suppliers and customers, but could also cause the loss of the business of those seeking new supply sources in the face of the impending closing. Moreover,
A private free enterprise system requires and our national labor policy is flexible enough to reflect, that private ownership must have necessary prerogatives to independently decide whether it can remain in business, whether it must close one of its several plants, or whether it must restructure its business through merger or some other form of association.17 Such a decision, although it will no doubt have an effect upon the employees18 is not a mandatory subject of bargaining if it is free from anti-union overtones and is based on bona fide economic considerations.
V.
The majority recognize the important interest that the employer has in the ability to make an unfettered decision to terminate a business suffering from severe economic distress, but do not extend their reasoning to a case of “economic considerations.” Although the degree of economic harm which influenced Brockway‘s decision to close is not known, certain inferences may be made and certain facts are evident:
- No evidence of anti-union animus or vindictiveness was involved in Brockway‘s decision to close. See Royal Plating & Polishing Co., supra, 350 F.2d at 196 n. 4.
- No evidence exists that Brockway closed its plant to avoid contractual obligations with the Union. See International Ladies’ Garment Workers Union v. NLRB, 150 U.S.App.D.C. 71, 463 F.2d 907 (D.C.Cir. 1972) (“runaway plant” situation).
- No evidence exists that Brockway closed part of a plant and substituted non-unit workers for those it displaced. See Fibreboard Paper Products Corp. v. NLRB, supra.
- One can reasonably infer that in the absence of anti-union animus, a profit-maximizing company, stipulated to be acting solely for economic reasons, will not close its facility in a major metropolitan area of the nation unless, in its judgment the economic reasons are so severe as to mandate such action.
Given these considerations, and those raised in parts III and IV, supra, there is no justification for ordering bargaining here.19
v.
Madeline BUCHANAN et al., Robert H. McBride, Elise Grossman, Joseph J. Crowley, William E. Spence, Clyde Bishop and Richard H. Farmer, constituting all the members of the State Board of Education of the State of Delaware, Delaware Association of School Boards, Intervening Defendants, Alexis I. duPont, Alfred I. duPont, Appoquinimink, Claymont, Conrad, Marshallton-McKean, Mt. Pleasant, New Castle-Gunning Bedford, Newark, and Stanton School Districts, DeLaWarr School District.
Appeal of ALEXIS I. duPONT SCHOOL DISTRICT, in No. 77-2336.
Appeal of DELAWARE STATE BOARD OF EDUCATION and the following defendant school districts, Alexis I. duPont School District, Alfred I. duPont School District, Claymont School District, Conrad Area School District, New Castle-Gunning Bedford School District, Marshallton-McKean School District, Newark School District, Mount Pleasant School District and Stanton School District, in No. 77-2337.
Appeal of CLAYMONT SCHOOL DISTRICT and Stanton School District, in No. 78-1143.
Appeal of NEW CASTLE-GUNNING BEDFORD SCHOOL DISTRICT, in No. 78-1144.
Appeal of DELAWARE STATE BOARD OF EDUCATION, in No. 78-1145.
Appeal of ALFRED I. duPONT SCHOOL DISTRICT, Alexis I. duPont School District, Conrad School District and Mount Pleasant School District, in No. 78-1146.
Appeal of NEWARK SCHOOL DISTRICT, in No. 78-1147.
Appeal of MARSHALLTON-MCKEAN SCHOOL DISTRICT, in No. 78-1148.
STATE OF DELAWARE, in No. 78-1743.
v.
The Honorable Murray M. SCHWARTZ, United States District Judge for the District of Delaware.
Nos. 77-2336, 77-2337, 78-1143 to 78-1148 and 78-1743.
United States Court of Appeals, Third Circuit.
Argued In Banc May 10, 1978.
Decided July 24, 1978.
Notes
(a) It shall be an unfair labor practice for an employer—
(1) to interfere with, restrain, or coerce employees in the exercise of [their rights];
* * * * * *
(5) to refuse to bargain collectively with the representatives of his employees . . .