463 F.2d 907 (D.C. Cir. 1972), 71-1159, International Ladies' Garment Workers Union, AFL-CIO v. N. L. R. B.

Docket Nº:71-1159, 71-1328.
Citation:463 F.2d 907
Case Date:June 08, 1972
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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463 F.2d 907 (D.C. Cir. 1972)






NATIONAL LABOR RELATIONS BOARD, Respondent, International Ladies' Garment Workers Union, Intervenor.

Nos. 71-1159, 71-1328.

United States Court of Appeals, District of Columbia Circuit.

June 8, 1972

Argued April 13, 1972.

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[Copyrighted Material Omitted]

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Mr. Bernard Dunau, Washington, D. C., with whom Mr. Morris P. Glushien, New York City, was on the brief, for petitioner in No. 71-1159 and intervenor in No. 71-1328.

Mr. Earl D. Yaffe, Chicago, Ill., for petitioners in No. 71-1328.

Mr. John H. Ferguson, Atty., N. L. R. B., with whom Mr. Marcel Mallet-Prevost, Asst. Gen. Counsel, and Mrs. Nancy M. Sherman, Atty., N. L. R. B., were on the brief, for respondent.

Before WRIGHT, McGOWAN and ROBINSON, Circuit Judges.

J. SKELLY WRIGHT, Circuit Judge:

In this consolidated statutory review proceeding under the National Labor Relations Act, 1 McLoughlin Manufacturing Corporation asks us to upset a finding of the National Labor Relations Board that the company violated Section 8(a) (5) and (1) of the Act, 29 U.S.C. § 158(a) (5) and (1), by failing to bargain with the union with respect to its decision to relocate its plant and the rights of its former employees flowing

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from that decision. The union challenges the Board's finding that the relocation was not "discriminatorily motivated" and therefore not a violation of Section 8(a) (3), 29 U.S.C. § 158(a) (3). Finally, both the union and the company attack various aspects of the Board's order. For reasons given below, we affirm the Board's finding as to the substantive violations and grant the Board's cross-application for enforcement of its order as modified by our decision today.


McLoughlin Manufacturing Corporation is a privately held corporation engaged in the manufacture and sale of women's blouses and other sportswear. J. Sidney Smith, Walter Eckerling and Sydelle Schlifke are the sole stockholders, officers and directors of the company. 2 Until August 31, 1965, McLoughlin operated out of an antiquated plant in Peru, Indiana. Throughout its existence the company maintained a narrow profit margin, and in the 11 years between its inception in 1954 and August 31, 1965, no dividends were declared. Smith and Eckerling, who devoted their full time to managing the business, received annual salaries of $13, 000.

The International Ladies' Garment Workers Union was the collective bargaining representative of McLoughlin's production employees from 1954 through August 31, 1965. Until the events leading up to the instant controversy in 1965, there was no evidence of any overt hostility to the union or of opposition to the employees' exercise of their statutory rights. (D&O 3.) In 1962, after a one-day strike, the union obtained a three-year agreement providing for gradual adoption of a 35-hour work week. In addition, this agreement contained a seniority provision governing layoffs which, together with the reduction in the work week, caused severe hardship to the company. 3 As a result, on March 4, 1964, during the term of the 1962 agreement, Eckerling wrote the union requesting modification of the

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35-hour work week and the seniority provision. In this letter Eckerling described the company as "rapidly choking * * * to death" under its contract. (D&O 3; Co. Exh. 1a, p. 2.) On March 17, Eckerling met with Norbert Ceicil, the union's representative, who said that "when the contract expired * * * there would be the possibility of change" but that "it was not something that we could do" during the term of "an existing contract." (Tr. 136.)

On October 30, 1964, the union notified McLoughlin that the current contract would expire on January 1, 1965, and that it wished to meet at an early date for the purpose of negotiating a new agreement. At a meeting on November 17, 1964, the union presented McLoughlin with its proposals for a new contract, and the company responded that it would need time to consider them. Subsequently, at the end of November, Eckerling met with Ceicil in Chicago. Ceicil explained that the union was engaged in negotiations with the Garment Industries of Illinois, a trade association of which McLoughlin was not a member, and that he could entertain no proposals other than those he had made on November 17 until the association negotiations were completed. The parties met again on February 5, 1965. Eckerling suggested modifications of the seniority provision and stated that "due to business conditions" the company might be forced to discontinue "operations until we could get some sort of relief." (TXD 3; Tr. 237.) According to Eckerling, Ceicil then "exploded" and warned that unless Eckerling signed the union's proposed contract he was "through." (TXD 4; Tr. 238.) After further discussion, however, Ceicil agreed to reconsider the union proposals. On February 22, the union presented a set of reduced demands, but it still sought a wage increase and did not relent on the question of the seniority clause. The meeting therefore ended without the parties having reached any accommodation.

In either the latter part of February or the beginning of March 1965 Eckerling contacted Bernard Rosenthal, president of the Manufacturers and Contractors Service Corporation (MCS), to discuss the possible sale of McLoughlin as a going business. During the course of this discussion, Rosenthal informed Eckerling of the full range of MCS' services, including handling of arrangements for contracting out production and assisting companies to relocate. Eckerling and Rosenthal met again around March 10, at which time the possibility of moving McLoughlin to Uniontown, Alabama was actively discussed. Rosenthal explained that a labor survey was necessary to determine the suitability of Uniontown for the proposed move. Eckerling expressed a willingness "to look at" the Uniontown area and to be present at the survey. (TXD II 2-3; Tr. II 37-41.)

Thus on March 25-27 Eckerling, Smith and Rosenthal visited Uniontown to attend the labor survey. Also present, by prearrangement with Rosenthal, were Larry Malloy, president of William James Associates, Inc., and Philip Kantor, president of Philip Kantor Associates, Inc. Rosenthal had known Malloy and Kantor for "many years" and had frequently worked with them in relocating factories in the South. 4 Rosenthal, Kantor and Thomas R. Long, mayor of Uniontown, were instrumental in arranging the particular

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dates for the labor survey, 5 At which approximately 1, 500 persons registered for employment. Smith was clearly "impressed" by the large turnout, and Rosenthal felt that "there was a much larger quantity of possible applicants than would be needed." (TXD II 4; Tr. II 56, 322.) During the survey, the parties inspected the premises of the Cannebrake Shoe Company factory to determine the suitability of the space available there to conduct McLoughlin's operations pending construction of a new plant. In addition, William James Associates presented McLoughlin's representatives with a letter of intent 6 and some concrete form of proposal for construction of a new factory for the company. 7

On April 6, 1965, some ten days after the labor survey in Uniontown, McLoughlin held its final collective bargaining meeting with the union at the Peru plant. Eckerling began the meeting by announcing that the company was going out of business. He explained that no dividends had ever been paid on the shareholders' investment, that the company could no longer compete effectively in the garment industry, and that the shareholders wanted to get their money out while they still could. 8 Norbert Ceicil, the union's representative who had participated in the prior negotiations, expressed surprise at this announcement and inquired if there was anything the union could do to induce the company to change its decision. Eckerling replied in the negative, stating flatly that "this was an irreversible decision." (TXD 4; Tr. 114-115, 177, 261-262, 310.) He said that McLoughlin had already contacted a broker to put the business up for sale and that

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both he and Smith planned to accept positions with other companies. In response to a question as to why McLoughlin was still making sample garments if it was going out of business, Eckerling stated that he intended to use the samples in his own line in the future. 9 Ceicil then raised the topic of severance pay, and Smith promised he would take care of it because "he wanted the girls to have whatever they were entitled to." (TXD 5; Tr. 178.) Thus the meeting ended with no mention of the fact that McLoughlin was in reality considering a relocation to Uniontown and with the union having been misled into believing the company had made an "irreversible" decision to liquidate.

After its April 6 meeting with the union, McLoughlin began the process of actually closing its Peru plant. The company formulated a plan for completing the work in process and arranged to contract out certain orders so they could be completed within the time required by customers. As the employees completed the remaining work, McLoughlin gradually laid them off, and by June only about half the employees were still working. The company's manufacturing operations in Peru ceased entirely on August 31, 1965, and those employees who had not left previously were terminated.

Meanwhile, the clandestine plan to relocate in Uniontown continued. On April 8, Mayor Long visited the Peru plant in order to inspect McLoughlin's operations. On May 3, Mayor Long and the town council of Uniontown met in special session and adopted an...

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