Darlington Manufacturing Company v. NLRB
| Decision Date | 15 November 1963 |
| Docket Number | 8906.,No. 8790,8861,8790 |
| Citation | 325 F.2d 682 |
| Parties | DARLINGTON MANUFACTURING COMPANY and Deering Milliken, Inc., Petitioners, v. NATIONAL LABOR RELATIONS BOARD, Respondent. Textile Workers Union of America, AFL-CIO, Intervenor. TEXTILE WORKERS UNION OF AMERICA, AFL-CIO, Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent. Darlington Manufacturing Company and Deering Milliken, Inc., Intervenors. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. DEERING MILLIKEN AND COMPANY, Inc., Respondent. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Thornton H. Brooks, Greensboro, N. C. (McLendon, Brim, Holderness & Brooks, Greensboro, N. C., on the brief) for Darlington Manufacturing Co.
Stuart N. Updike and John R. Schoemer, Jr., New York City (Townley, Updike, Carter & Rodgers, New York City, on the brief) for Deering Milliken, Inc., and Deering, Milliken and Company, Inc.
Nancy M. Sherman, Atty., N.L.R.B., Arnold Ordman, Gen. Counsel; (Dominick L. Manoli, Associate Gen. Counsel; Marcel Mallet-Prevost, Asst. Gen. Counsel, and James C. Paras, Atty., N.L.R.B., on the brief) for National Labor Relations Board.
Benjamin Wyle, New York City (Patricia Eames, New York City, on the brief) for Textile Workers Union of America, AFL-CIO.
Before SOBELOFF, Chief Judge, and HAYNSWORTH, BOREMAN, BRYAN and BELL, Circuit Judges, sitting en banc.
The National Labor Relations Board in these consolidated cases has made these pivotal decisions1:
1. Darlington Manufacturing Company committed an unfair labor practice under the National Labor Relations Act, Section 8(a) (3)2 — forbidding discrimination in regard to tenure of employment — by closing and liquidating its only plant, and discharging its employees, in 1956 because of the election of Textile Workers Union of America, AFL-CIO as bargaining representative for the employees;
2. Darlington must pay all of such discharged employees their wages, less current net earnings, "until the discharged employees are able to obtain substantially equivalent employment" or until they are put on a preferential hiring list by Deering Milliken, Inc.; and
3. Deering Milliken, Inc. and its affiliates are liable for the payment of these wages on the ground that Darlington, with others, was such an affiliate of Milliken and together they constituted a single employer.
In petition No. 8790 Darlington and Milliken seek to vacate these Board orders. In No. 8861 the Union, which was the charging party before the Board, prays that the orders be enlarged to require also the reopening of the Darlington plant with reinstatement of the employees, and that Roger Milliken, president of both Darlington and Milliken, notwithstanding the contrary decision of the Board, be held personally liable to satisfy the orders. In No. 8906 the Board seeks enforcement against Milliken of the Darlington liabilities.
As these actions have common issues they have been argued and considered together. We decline to enforce these orders of the Board against Darlington and Milliken.
Darlington, chartered under the laws of South Carolina, operated a print cloth mill there, manufacturing and selling cotton greige goods. It had no other plant. In 1937 Darlington went through a Section 77B bankruptcy proceeding, 11 U.S.C. § 207 (1937 ed.). Milliken, then known as Deering Milliken & Co., Inc., as one of the largest creditors, received in payment of its debt about 41% of Darlington's common stock. When Darlington was liquidated in 1956, as previously mentioned, there were outstanding 150,000 shares of common stock owned as follows:
Deering Milliken & Co., Inc. 41.4%
Cotwool Manufacturing Corp. 18.3
Roger Milliken and members of
his immediate family 6.4
Directors and employees of
Deering Milliken & Co. 2.9
Outsiders or non-Milliken family
or interests (about 100 stockholders
living in South Carolina
50 in New York, and more
than 50 scattered over the United
States) 31.0
______
100.0%
In March 1956 the Union commenced a campaign to organize the Darlington employees and to become their bargaining representative. An election conducted under the direction of the Board was called for September 6, 1956. The Union won, 258 to 252.
On September 12 Darlington filed objection to the election. A conference was requested on the same day by the Union to discuss a collective bargaining agreement. The request was refused by Darlington on the ground the election protest had not been decided and the Union had not been certified.
Also on September 12, the Board of Directors met, with all of them present. Following a brief discussion of the business status of Darlington, they resolved to recommend to the stockholders the liquidation and dissolution of the corporation. A meeting of the stockholders to act upon the resolution was called for October 17. Employees of Darlington were at once told of the recommendation. While no new ones were accepted, the plant continued to fill the orders then in hand. The objection of Darlington to the election was overruled on October 8, and the Union shortly certified as the bargaining representative.
With the stockholders on October 17 adopting the recommendation of the Board of Directors by a vote of 134,911 shares to 3,774 the officers proceeded with the liquidation. Discharge of employees occurred over a span of about six weeks: from 510 employees on October 13, the payroll dropped to 460 on October 20, to 345 on October 27 and to none when the plant closed on November 24. The machinery and equipment were sold at auction on December 12 and 13, 1956. Since that time Darlington has not operated any plant in South Carolina or elsewhere3.
Deering Milliken & Co., Inc.'s capital stock was owned in a majority amount by the members of the Milliken family. In addition they were the major (but by no means the only) shareholders in Darlington and in certain other textile corporations. The latter are the corporations referred to by the Board and in this opinion — somewhat imprecisely — as "affiliated corporations" of Milliken. Prior to 1960 Deering Milliken & Co., Inc. was not a manufactory. It was the exclusive sales representative of the producing corporations controlled by the Milliken family.
In June 1960 Deering Milliken & Co., Inc. was merged into the Cotwool Manufacturing Corporation, and the latter's name then changed to Deering Milliken, Inc., herein known as Milliken. A majority of its stock was owned by the Milliken family. After the merger Milliken carried on the textile manufacturing formerly pursued by Cotwool.
The finding of the Board — that the decision to close the mill was an unfair labor practice under § 8(a) (3) — was spelled out in this way:
"Darlington discriminated in regard to its employees\' tenure of employment by closing its plant — thereby discharged the employees — and, because the plant closing was the direct result of the employees\' selection of the Charging Union as their collective bargaining representative, Darlington\'s retaliation against the employees for their activities in behalf of the Union discouraged the employees\' continued membership in the Union."
Abridged and as pertinent here the terms of § 8(a) (3) are these:
"It shall be an unfair labor practice for an employer — by discrimination in regard to hire or tenure of employment or any term or condition of employment to encourage or discourage membership in any labor organization."
In this determination the Board acknowledged, as the Trial Examiner had found, that there were economic considerations sufficient in themselves to support the decision by Darlington to terminate operations. However, both the Examiner and the Board concluded that "the decision to close the mill was not a fact based on economic factors, and that, but for the Union's election victory, that decision would not then have been made."
Upon this premise the Board declared all the closure discharges to be unlawful, justifying the usual remedy of reinstatement and reimbursement for loss of pay. But with the shutdown complete and permanent reinstatement not achievable, the relief was necessarily directed primarily to restitution of wages. The monetary redress was awarded by the Board as follows:
"We shall therefore order the Respondent, Darlington, to provide back pay until the discharged employees are able to obtain substantially equivalent employment". Accent added.
Further, the Board overruling the Trial Examiner found that "Darlington occupied a single employer status with Deering Milliken and its affiliated corporations". On this basis Milliken and its affiliates were declared "liable for back pay to the same extent as we have heretofore directed with respect to Darlington" and were ordered to place the discharged employees on a preferred hiring list. Additionally, Milliken was commanded to offer employment to these discharged workers in its other mills in South Carolina or nearby States, without prejudice to their seniority and other privileges.
All of these orders were qualified by the proviso that if no work was available at the Milliken mills, then the accumulation of back pay would be tolled as and when the dischargees were put upon Milliken's preferential hiring list.
I. Our opinion is that the decision to close the plant was not an unfair labor practice. In this we accept the findings of fact made by the Board. While, as just observed, the evidence discloses substantial economic reasons warranting the determination to close the plant without reference to the entry of the Union into the plant, we accede arguendo to the contention of the Board that these reasons were not acted upon. Even if they were, however, we shall assume, again arguendo,...
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