Darlington Manufacturing Company v. NLRB, 11554.

• Citation: 397 F.2d 760
• Decision Date: 31 May 1968
• Docket Number: No. 11554.,11554.
• Parties: DARLINGTON MANUFACTURING COMPANY; Deering Milliken & Co., Inc., and Deering Milliken, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent. Textile Workers Union of America, AFL-CIO, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

397 F.2d 760 (1968)

DARLINGTON MANUFACTURING COMPANY; Deering Milliken & Co., Inc., and Deering Milliken, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent Textile Workers Union of America, AFL-CIO, Intervenor.

No. 11554.

United States Court of Appeals Fourth Circuit.

Argued December 5, 1967.

Decided May 31, 1968.

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Thornton H. Brooks, Greensboro, N. C., (McLendon, Brim, Brooks, Pierce & Daniels, Greensboro, N. C., on the brief) for Darlington Manufacturing Co.

John R. Schoemer, Jr., and Stuart N. Updike, New York City, (John D. Canoni, Bronxville, N. Y., on the brief) for Deering, Milliken, Inc., and Deering, Milliken and Co., Inc.

Frank H. Itkin, Atty., N. L. R. B., (Arnold Ordman, Gen. Counsel, Dominick L. Manoli, Associate Gen. Counsel, Marcel Mallet-Prevost, Asst. Gen. Counsel, and Nancy M. Sherman, Atty., N. L. R. B., on the brief) for respondent.

Daniel B. Jordan, Gen. Counsel, Textile Workers Union of America, AFLCIO, for intervenor.

Before HAYNSWORTH, Chief Judge, and SOBELOFF, BOREMAN, BRYAN, WINTER, CRAVEN and BUTZNER, Circuit Judges, sitting en banc.

BUTZNER, Circuit Judge.

Soon after the Textile Workers Union won an election at Darlington Manufacturing Co., stockholders liquidated and dissolved the corporation. In Textile Workers Union of America v. Darlington Mfg. Co., 380 U.S. 263, 85 S.Ct. 994, 13 L.Ed.2d 827 (1965), the Court held that an employer does not engage in an unfair labor practice when he permanently closes his entire business, even if the liquidation is motivated by vindictiveness toward a union. A partial closing, however, "is an unfair labor practice under § 8(a) (3)¹ if motivated by a purpose to chill unionism in any of the remaining plants of the single employer and if the employer may reasonably have foreseen that such closing would likely have that effect."² The Court remanded the case to allow the National Labor Relations Board to make findings on the purpose and effect of the closing and to afford this court an opportunity to review the Board's single employer finding and the remedy it proposed.³

Upon remand, the Board, disagreeing with the trial examiner,⁴ found the persons controlling Darlington had sufficient interest and relationship with Deering Milliken, Inc., and other affiliated corporations, to establish a single enterprise; and that Darlington's closing was accomplished under circumstances that established the factors of "purpose" and "effect" with respect to chilling unionism in other mills of the Deering Milliken group. Consequently, the Board concluded that the closing of Darlington's mill was the partial closing of a business in violation of § 8(a) (3). The Board ordered Darlington and Deering Milliken to pay back wages until the employees obtained substantially equivalent employment or were put on a preferential hiring list by Deering Milliken.

The case is before us on the joint petition of Darlington and Deering Milliken to review and set aside the Board's order and on the cross-application of the Board for enforcement. We hold the Board correctly applied the precepts governing remand and that the Board's findings are supported by substantial evidence on the record as a whole. Accordingly, we enforce the Board's order.

I.

When this case was last before us, we did not review the Board's finding that Darlington and Deering Milliken, affiliated corporations, were a single employer, because we concluded that an employer had an absolute prerogative to terminate its business permanently in whole or in part.⁵ Now, however, the single employer issue is crucial, for if Darlington were independent, the liquidation of its business would not be an unfair labor practice. The same conclusion does not necessarily follow, however, if "Darlington is regarded as an integral part of the Deering Milliken enterprise."⁶

Mr. Justice Harlan, writing for the Court, stated the criteria that determine the employer's status, and the elements that must be established to show an unfair labor practice:⁷

"While we have spoken in terms of a `partial closing\' in the context of the Board\'s finding that Darlington was part of a larger single enterprise controlled by the Milliken family, we do not mean to suggest that an organizational integration of plants or corporations is a necessary prerequisite to the establishment of such a violation of § 8(a) (3). 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 affiliated with or engaged in the same line of commercial activity as the closed plant, of sufficient substantiality to give promise of their reaping a benefit from the discouragement of unionization in that business; (2) act to close their plant with the purpose of producing such a result; and (3) occupy a relationship to the other business which makes it realistically foreseeable that its employees will fear that such business will also be closed down if they persist in organizational activities, we think that an unfair labor practice has been made out.

"Although the Board\'s single employer finding necessarily embraced findings as to Roger Milliken and the Milliken family which, if sustained by the Court of Appeals, would satisfy the elements of `interest\' and `relationship\' with respect to other parts of the Deering Milliken enterprise, that and the other Board findings fall short of establishing the factors of `purpose\' and `effect\' which are vital requisites of the general principles that govern a case of this kind."

The facts leading to the Board's finding of a single employer previously have been published.⁸ Repetition of all the details is unnecessary. Darlington was chartered by South Carolina in 1883. It operated a mill in Darlington, South Carolina, for the manufacture and sale of cotton greige goods. It had no other plant or office. In 1937, Deering Milliken & Co., a New York corporation,⁹ acquired 41% of Darlington's stock through a bankruptcy proceeding. The majority stockholders of Deering Milliken & Co. were members of the Milliken family. In 1956, when Darlington was closed, members of the Milliken family, through their majority ownership of Deering Milliken and Cotwool Manufacturing Corp., and their individual Darlington holdings, controlled about 66% of Darlington's stock.

The Milliken family controlled 17 corporations operating 27 textile mills, of which 20, including Darlington, were in South Carolina. Directors of Deering Milliken constituted a majority of the boards of directors of the mill corporations except one. Deering Milliken was the exclusive sales agent and factor of all 27 mills. It had no non-Milliken clients. The head of Deering Milliken's tax department was an officer of each corporation. Deering Milliken's insurance department handled insurance for the mills. A single workmen's compensation policy and a single fire policy covered all mills. One attorney advised all mills on labor relations. Products of the mills were sold under the name, "Milliken." Two wholly owned subsidiaries, Deering Milliken Service Corporation, and The Deering Milliken Research Corporation, conducted surveys, inspections, research, and studies for the benefit of all mills. They developed a standard cost system and a uniform preventive maintenance program, and set production goals. The subsidiaries purchased machinery, equipment and cotton, and recruited supervisory and technical trainees for the mills. The day to day manufacturing operations were conducted by the mill treasurers, who were the chief executive officers at each mill. They were granted considerable authority in hiring, firing, wage rates and pricing. They recognized, however, that they were a part of the Deering Milliken group.¹⁰ After Darlington was closed, arrangements were made to carry Darlington supervisory personnel on the payroll of the Deering Milliken Industrial Engineering Department for a three-month period, within which they could be picked up by other Deering Milliken mills. A number of the supervisors were transferred to positions in the Deering Milliken organization.

Roger Milliken was president of Deering Milliken and all the mill corporations except one, for which he served as vice president and member of the board. He was president of Darlington at the time it closed. He kept himself well-informed and frequently advised the mill treasurers on nearly every phase of the mills' operations. No one expressed better than Milliken that he was the head of a well-integrated single enterprise. He wrote of the necessity of "goals for each of the mills in the organization" as a proper subject for discussion at the next meeting of the mill treasurers. He planned to hold quarterly meetings "of all our mills at which each one of them will make a presentation to the group of what they have accomplished * * *." He went on to say, "So many of the policies of the whole company are developed at meetings like this that I think it would be extremely valuable if you could plan to be present and thus know of all the things that are being done to make the manufacturing of Deering Milliken as outstanding as possible."

Darlington and Deering Milliken have argued that lack of common control of labor policy and absence of substantial identity of ownership negate the Board's single employer finding. The record viewed as a whole supports the Board's finding that Milliken exercised ultimate control over the labor relations of all the corporations. Milliken did not limit his participation in a uniform labor policy to a mere statement of views. For example, when he felt it necessary to clarify a uniform policy on payroll deductions, he issued a directive calling upon his mill officers to observe the group's policy. One attorney, J. D. Poag, represented and advised all mills on labor relations. His employment was not the result of coincidental action taken by independent...