Williams, David R.

English

bepress Legal Repository

Labor Law--Termination of Business--Employer\u27s Right to Permanently Close Manufacturing Plant--Union Discrimination [\u3ci\u3eTextile Workers Union v. Darlington Mfg. Co.\u3c/i\u3e, 380 U.S. 263 (1965)]

Case Western Reserve University School of Law

Case Western Reserve Law ReviewVolume 17 | Issue 11965Labor Law--Termination of Business--Employer'sRight to Permanently Close Manufacturing Plant--Union Discrimination [Textile Workers Union v.Darlington Mfg. Co., 380 U.S. 263 (1965)]David R. WilliamsFollow this and additional works at: https://scholarlycommons.law.case.edu/caselrevPart of the Law CommonsThis Recent Decisions is brought to you for free and open access by the Student Journals at Case Western Reserve University School of Law ScholarlyCommons. It has been accepted for inclusion in Case Western Reserve Law Review by an authorized administrator of Case Western Reserve UniversitySchool of Law Scholarly Commons.Recommended CitationDavid R. Williams, Labor Law--Termination of Business--Employer's Right to Permanently Close Manufacturing Plant--UnionDiscrimination [Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263 (1965)], 17 W. Res. L. Rev. 338 (1965)Available at: https://scholarlycommons.law.case.edu/caselrev/vol17/iss1/12[VoL 17:338Recent DecisionsLABOR LAW - TERMINATION OF BUSINESS - EMPLOYER'SRIGHT TO PERMANENTLY CLOSE MANUFACTURING PLANT- UNION DISCRIMINATIONTextile Workers Union v. Darlington Mfg. Co.,380 U.S. 263 (1965).Darlington Manufacturing Company, a South Carolina corpora-tion operating one textile mill, was substantially owned by DeeringMilliken & Co., which in turn was controlled by Roger Milliken,president of Darlington. In March of 1956, the Textile WorkersUnion began an organizational campaign at Darlington, which inSeptember of the same year resulted in the election of that unionas the collective bargaining representative. This result was bit-terly resented by the company, and it therefore refused to bargainwith the union. The president called a board of directors meetingto recommend that the plant be closed. Six days after the unionwas established at the company, the board decided to liquidate thecorporation and shareholder approval followed in October. Theplant closed in November and equipment was sold at an auction inDecember.The National Labor Relations Board, acting upon a union com-plaint, found that the Darlington Company had been closed becauseof the anti-union motives of Roger Milliken,' its president, and heldthat such action was a violation of section 8(a) (3) of the NationalLabor Relations Act.' The Board further decided that since Darl-ington was part of a single, integrated employer group controlled byRoger Milliken and his family,3 Deering Milliken & Co. could beheld liable for the unfair labor practices of Darlington. Accordingly,the Board ordered back pay for all Darlington employees until theyhad obtained equivalent work or were put on the preferred hiring'Darlington Mfg. Co., 139 N.L.R.B. 241 (1962), rev'd, 325 F.2d 682 (4th Cir.1963), vacated and remanded, 380 U.S. 263 (1965).261 Stat. 140 (1947), as amended, 29 U.S.C. § 158(a) (3) (1964) provides inpart:(a) It shall be an unfair labor practice for an employer . . . (3) by dis-crimination in regard to hire or tenure of employment or any term or condi-tion of employment to encourage or discourage membership in any labororganization....3 Darlington Mfg. Co., 139 N.LR.B. 241 (1962), rev'd, 325 F.2d 682 (4th Cir.1963), vacated and remanded, 380 U.S. 263 (1965). Deering Milliken & Co. ownedapproximately 41% of the Darlington stock at the time of the 1956 liquidation.UNFAIR LABOR PRACTICESlists at the other Milliken mills. However, the court of appeals re-versed, holding that an employer has the absolute prerogative tocease doing business entirely or to continue it in part regardless ofanti-union motives.' On appeal, the Supreme Court held "thatwhen an employer closes his entire business, even if the liquidationis motivated by vindictiveness toward the union, such action is notan unfair labor practice."5 But this did not dispose of the case, forthe Court further held "that a partial dosing is an unfair labor prac-tice under [section] 8(a) (3) if motivated by a purpose to chillunionism in any of the remaining plants of the single employer andif the employer may reasonably have foreseen that such dosing[would] ... likely have that effect."6 Since no findings were made asto the purpose and effect of Darlington's dosing with respect toemployees in other plants in the Deering Milliken group, the casewas remanded to the court of appeals with instructions to remandto the Board for further proceedings consistent with the Court'sopinion.7Since the Darlington case was one of first impression, the Su-preme Court had to decide whether an employer has the absoluteright to cease doing business for any reason whatsoever. Prior toDarlington, the only language by the Court alluding to this prob-lem was found in Southport Petroleum Co. v. NLRB, which by nomeans resolved the issue. However, the courts of appeal have heldthat an employer may cease plant operations entirely without violat-ing section 8, regardless of the fact that an anti-union motive con-tributed to the shut-down.' What these courts did not say, however,4 Darlington Mfg. Co. v. NLRB, 325 F.2d 682 (4th Cir. 1963), vacated and re-manded, 380 U.S. 263 (1965). Here the court qualified its decision as follows:Of course, the right of discontinuance which we here uphold, means anactual, unfeigned and permanent end of operations - not a removal, norsubcontract, nor a change merely in the form of the corporate entity. Nouse or subterfuge is suggested here. Id. at 685.5 Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263, 273-74 (1965).6 id. at 275.7 Id. at 277. The Court felt that this procedure was particularly appropriate sinceissues of "first impression" were involved.8315 U.S. 100 (1942). The Court said, "Whether there was a bona fide discon-tinuance and a true change of ownership - which would terminate the duty of rein-statement created by the Board's order - or merely a disguised continuance of the oldemployer, does not clearly appear...." Id. at 106.9 NLRB v. New England Web, Inc., 309 F.2d 696 (1st Cir. 1962). Here the recordindicated that defective merchandise brought about serious consumer dissatisfactionwhich resulted in a considerable loss of revenue. In holding that New England Webhad not committed an unfair labor practice under § 8 the court relied on the follow-ing premise: "We start with the proposition that a businessman still retains the un-trammeled prerogative to close his enterprise when in the exercise of a legitimate1965]WESTERN RESERVE LAW REVIEWis that an employer has an absolute right to cease doing business forany reason whatsoever. In all the prior cases, there was usuallyan economic justification for dosing down the particular businessinvolved, and union organization was considered a legitimate eco-nomic factor.' ° In determining whether a shutdown was in factjustified, prior history of union hostility was considered to be arelevant factor."The Supreme Court clearly distinguished the situation in Darl-ington from that of a "runaway shop,"' 2 in which a company merelyrelocates its plant, and a "shutdown" in which employees could causea plant to reopen by renouncing the union. 3 Such cases involve dis-criminatory practices aimed at obtaining some future benefit fromnew employees. In contrast, the Darlington Mill was dosed per-manently and its assets were sold to a third party. It should be notedthat the Court recognized that its holding in Darlington might havesome adverse effects upon organizational activities of unions, inde-pendent of the decision to dose the business; however, the Court didnot consider this to be of sufficient importance in the over-all labor-management picture to justify altering its decision.'" Even thoughsuch a result might be expected in a marginal business, the Courtsaw no practical alternative to its decision in the present case.Concerning the relationship between Darlington and the Deer-and justified business judgment he concludes that such a step is either economicallydesirable or economically necessary. This prerogative exists quite apart from whetheror not there is a union on the scene." Id. at 700. See, e.g., NLRB v. New MadridMfg. Co., 215 F.2d 908 (8th Cir. 1954); Mount Hope Finishing Co. v. NLRB, 211F.2d 365 (4th Cir. 1954); NLRB v. Caroline Mills, Inc., 167 F.2d 212 (5th Cir.1948); NLRB v. Tupelo Garment Co., 122 F.2d 603 (5th Cir. 1941).10 In NLRB v. Rapid Bindery, Inc., 293 F.2d 170 (2d Cir. 1961), the court said,"the decided cases do not condemn an employer who considers his relationship withhis plant's union as only one part of the broad economic picture he must survey whenhe is faced with determining the desirability of making changes in his operation." Id.at 175.11NLRB v. New England Web, Inc., 309 F.2d 696, 701 (1st Cir. 1962); NLRBv. Lassing, 284 F.2d 781, 783 (6th Cir. 1960), cert. denied, 366 U.S. 909 (1961); cf.NLRB v. Corning Glass Works, 293 F.2d 784 (1st Cir. 1961); NLRB v. R. C. MahonCo., 269 F.2d 44, 47 (6th Cir. 1959).12E.g., NLRB v. Preston Feed Corp., 309 F.2d 346 (4th Cir. 1962). Here, al-though the transfer of trucking operations had been decided prior to union activity, itwas emphasized that it was an unfair labor practice to put the transfer into immediateeffect, only after the company had learned of the success of the union's organizationalcampaign. In NLRB v. Wallick, 198 F.2d 477 (3d Cir. 1952) a similar situation waspresented where a department was closed for anti-union reasons and work was trans-ferred to an independent contractor. See, e.g., NLRB v. Kelly & Picerne, Inc., 298 F.2d895 (1st Cir. 1962); Jay Foods, Inc. v. NLRB, 292 F.2d 317 (7th Cit. 1961); NLRBv. R. C. Mahon Co., 269 F.2d 44 (6th Cit. 1959).13 NLRB v. Norma Mining Corp., 206 F.2d 38 (4th Cir. 1953).14 Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263, 274 n.20 (1965).[Vol. 17:338UNFAIR LABOR PRACTICESing Milliken group, the Court agreed with the court of appeals thatif Darlington were to be viewed as an independent employer, thenclosing the business was not an unfair labor practice. On the otherhand, the Court could not accept the view that the same conclusionwould follow if Darlington were considered an integral part of theDeering Milliken enterprise.1 " Since the Court was unable to deter-mine whether the Deering Milliken group constituted a single enter-prise, the case was remanded to the court of appeals for further re-view of this point. In addition, the Board's findings dealt only withthe foreseeable effect of the Darlington dosing upon Darlingtonemployees. Thus, the case was also remanded to the Board on thispoint for further findings as to the "purpose" and "effect" of theclosing upon employees in other Deering Milliken enterprises.The Court also drew an analogy between a partial dosing, aswas apparently the situation in Darlington, and the "runaway shop"and "temporary dosing" cases. The Court intimated that a pos-sible remedy in a case of discriminatory partial dosing, similar tothe remedies available in the latter cases, might be to reinstate thedischarged employees in other parts of the business.1"Although the Court finally remanded the case for further find-ings on whether the Deering Milliken group constituted a singleenterprise, there was some discussion of whether an employer whocontrols a number of related enterprises is actually to be regardedas a "single employer" for the purpose of finding a violation ofsection 8. Criteria applied in numerous cases17 in the past todetermine single employer status included whether there were "pres-ent unity of interest, common control, dependent operation, samenessin character of work and unity of labor relations ... .""8 But inmaking a determination of this question in Darlington, the Courtdid not want to suggest that a close organizational integration of15 Id. at 274.l Id. at 275.17 E.g., NLRB v. Williams, 195 F.2d 669, 672 (4th Cir.), cert. denied, 344 U.S.834 (1952). Here the fact that two companies were three-quarters of a mile apartand that ownership of one was in the name of the wife of the principal owner did not-destroy its status as a single unit. In NLRB v. Lund, 103 F.2d 815 (8th Cit. 1939),the existence of a single employer was obvious. The corporations involved were familyowned; the business was similar; employees were transferred back and forth; identicaltrademarks were often used; and, all the employees recognized the central authority ofone man. See also, NLRB v. Deena Artware, Inc., 361 U.S. 398 (1960); A. M. An-drews Co. v. NLRB, 236 F.2d 44 (9th Cir. 1956); NLRB v. Somerset Classics, Inc.,193 F.2d 613 (2d Cir.), cert. denied, 344 U.S. 816 (1952).18 NLRB v. Gibraltar Indus., Inc., 307 F.2d 428, 431 (4th Cir. 1962), cert. denied,372 U.S. 911 (1963).1965]WESTERN RESERVE LAW REVIEWcorporations is a necessary prerequisite to establishing a violationof section 8(a) (3); therefore, it set out even less stringent criteriathan those above.' 9 In addition, the Court mentioned that the old ele-ment of "motivation which is aimed at achieving the prohibitedeffect," in addition to concerted anti-union activities, must be shownbefore there is a violation of section 8 (a) (3). 0Thus, the Darlington decision is favorable to labor in that theadverse effect upon unionism in cases of partial closing has beenreduced, as in the "runaway shop" and "temporary dosing" situa-tions. However, there are potential evils remaining for which thereis no apparent remedy. For example, the criteria established forfinding a violation of section 8 emphasize the motivation for par-tially closing down. A finding of motivation was considered to bea necessary prerequisite "in an area which trenches so closely uponotherwise legitimate employer prerogatives . .. " Even in theabsence of an and-union motive it is possible that the practical ef-19 Textile Workers Union v. Darlington Mfg. Co., 380 U.S. 263 (1965), where itwas said:If the persons exercising control over a plant that is being closed for anti-union reasons (1) have an interest in another business, whether or not af-filiated with or engaged in the same line of commercial activity as the closedplant, of sufficient substantiality to give promise of their reaping a benefitfrom the discouragement of unionization in that business; (2) act to closetheir plant with the purpose of producing such a result; and (3) occupy arelationship to the other business which makes it realistically foreseeable thatits employees will fear that such business will also be closed down if theypersist in organizational activities, we think that an unfair labor practice hasbeen made out. Id. at 275-76.It should be noted that the above criteria are apparently not so stringent as to require"dependent operation, sameness in character of work and unity of labor relations" forestablishing an unfair labor practice. Instead, persons exercising control over a plantneed only have such a substantial interest in another business that a closing motivatedby anti-unionism will foreseeably cause employees in the other business to fear that theirplants will also close down if they persist in union activities.Furthermore, at the present stage of proceedings before the National Labor RelationsBoard, the Board has withheld ruling on whether the record should be reopened forfurther hearing, but has ordered that General Counsel for the National Labor RelationsBoard file a bill of particulars describing the nature of the evidence it expects to useshould the record be reopened. The Board felt that such additional information wouldassist it in determining whether the proposed evidence would so materially relate tothe issue of "purpose" and "effect" as to justify reopening the record. In its order fora bill of particulars, the Board considered the following information to be relevant: (1)Any publicity that may have been circulated, its source, and by whom it was circulatedif known; (2) The nature of the knowledge of employees of Deering-Milliken Mills,generally; (3) A description of statements made or action taken; (4) Any additionalevidence; and, (5) A description of any documentary evidence to be offered includingits title, date, author, party to whom addressed, and a summary of its contents. 4 CCHLAB. L. REP. § 9717, at 16477 (Oct. 7, 1965).20 Id. at 276.21 Id. at 276.[Vol. 17:338

https://scholarlycommons.law.case.edu/cgi/viewcontent.cgi?article=4350&amp;context=caselrev

Labor Law--Termination of Business--Employer\u27s Right to Permanently Close Manufacturing Plant--Union Discrimination [\u3ci\u3eTextile Workers Union v. Darlington Mfg. Co.\u3c/i\u3e, 380 U.S. 263 (1965)]

Abstract

Similar works

Full text

Available Versions

bepress Legal Repository

Case Western Reserve University School of Law