First National Maintenance Corporation v. National Labor Relations Board

Decision Date22 June 1981
Docket NumberNo. 80-544,80-544
CourtU.S. Supreme Court

Petitioner, a company engaged in the business of providing housekeeping, cleaning, maintenance, and related services for commercial customers, had a contract to do maintenance work for a nursing home. As a result of a dispute with the home over the size of the management fee, petitioner terminated the contract, and petitioner's employees who worked at the nursing home were discharged. While the contract was still in effect, a labor union was certified as the bargaining representative for petitioner's employees at the nursing home. The union, upon learning of petitioner's intention to discharge these employees, requested a delay from petitioner for the purpose of bargaining but petitioner refused to bargain. The union then filed an unfair labor practice charge against petitioner, alleging violation of its duty to bargain in good faith "with respect to wages, hours, and other terms and conditions of employment" under §§ 8(d) and 8(a)(5) of the National Labor Relations Act. The National Labor Relations Board upheld the charge and ordered petitioner, if it agreed to resume the nursing home operations, to reinstate the discharged employees or, if agreement was not reached, to offer the employees equivalent jobs at its other operations. The Court of Appeals enforced the Board's order, holding that while no per se rule could be formulated to govern an employer's decision to close part of its business, § 8(d) creates a presumption in favor of mandatory bargaining over such a decision, which presumption is rebuttable by showing that the purposes of the NLRA would not be furthered by imposing a duty to bargain.

Held : Although required to bargain about the effects of such a decision, petitioner had no duty to bargain over its decision to terminate the nursing home contract. The facts of Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233, distinguished. Pp. 674-6887.

(a) In view of an employer's need for unencumbered decisionmaking in the conduct of its business, bargaining over management decisions that have a substantial impact on the continued availability of employment should be required only if the benefit, for labor-management rela- tions and the collective-bargaining process, outweighs the burden placed on the conduct of the business. Pp. 674-680.

(b) The harm likely to be done to an employer's need to operate freely in deciding whether to shut down part of its business purely for economic reasons outweighs the incremental benefit that might be gained through the union's participation in making that decision. The decision itself is not part of § 8(d)'s "terms and conditions of employment" over which Congress has mandated bargaining. Pp. 680-686.

627 F.2d 596, reversed and remanded.

Argued by Sanford E. Pollack, Hewlett, N.Y., for petitioner.

Norton J. Come, Washington, D.C., for respondent.

Justice BLACKMUN delivered the opinion of the Court.

Must an employer, under its duty to bargain in good faith "with respect to wages, hours, and other terms and conditions of employment," §§ 8(d) and 8(a)(5) of the National Labor Relations Act (Act), as amended, 49 Stat. 452, 29 U.S.C. §§ 158(d) and 158(a)(5), negotiate with the certified representative of its employees over its decision to close a part of its business? In this case, the National Labor Relations Board (Board) imposed such a duty on petitioner with re- spect to its decision to terminate a contract with a customer, and the United States Court of Appeals, although differing over the appropriate rationale, enforced its order.


Petitioner, First National Maintenance Corporation (FNM), is a New York corporation engaged in the business of providing housekeeping, cleaning, maintenance, and related services for commercial customers in the New York City area. It supplies each of its customers, at the customer's premises, contracted-for labor force and supervision in return for reimbursement of its labor costs (gross salaries, FICA and FUTA taxes, and insurance) and payment of a set fee. It contracts for and hires personnel separately for each customer, and it does not transfer employees between locations.1

During the spring of 1977, petitioner was performing maintenance work for the Greenpark Care Center, a nursing home in Brooklyn. Its written agreement dated April 28, 1976, with Greenpark specified that Greenpark "shall furnish all tools, equiptment [sic ], materials, and supplies," and would pay petitioner weekly "the sum of five hundred dollars plus the gross weekly payroll and fringe benefits." App. in No. 79-4167 (CA2), pp. 43, 44. Its weekly fee, however, had been reduced to $250 effective November 1, 1976. Id., at 46. The contract prohibited Greenpark from hiring any of petitioner's employees during the term of the contract and for 90 days thereafter. Id., at 44. Petitioner employed approximately 35 workers in its Greenpark operation.

Petitioner's business relationship with Greenpark, seem- ingly, was not very remunerative or smooth. In March 1977, Greenpark gave petitioner the 30 days' written notice of cancellation specified by the contract, because of "lack of efficiency." Id., at 52. This cancellation did not become effective, for FNM's work continued after the expiration of that 30-day period. Petitioner, however, became aware that it was losing money at Greenpark. On June 30, by telephone, it asked that its weekly fee be restored at the $500 figure and, on July 6, it informed Greenpark in writing that it would discontinue its operations there on August 1 unless the increase were granted.2 Id., at 47. By telegram on July 25, petitioner gave final notice of termination. Id., at 48.

While FNM was experiencing these difficulties, District 1199, National Union of Hospital and Health Care Employees, Retail, Wholesale and Department Store Union, AFL-CIO (union), was conducting an organization campaign among petitioner's Greenpark employees. On March 31, 1977, at a Board-conducted election, a majority of the employees selected the union as their bargaining agent.3 On July 12, the union's vice president, Edward Wecker, wrote petitioner, notifying it of the certification and of the union's right to bargain, and stating: "We look forward to meeting with you or your representative for that purpose. Please advise when it will be convenient." Id., at 49. Petitioner neither responded nor sought to consult with the union.

On July 28, petitioner notified its Greenpark employees that they would be discharged three days later. Wecker immediately telephoned petitioner's secretary-treasurer, Leonard Marsh, to request a delay for the purpose of bargaining. Marsh refused the offer to bargain and told Wecker that the termination of the Greenpark operation was purely a matter of money, and final, and that the 30 days' notice provision of the Greenpark contract made staying on beyond August 1 prohibitively expensive. Id., at 79-81, 83, 85-86, 94. Wecker discussed the matter with Greenpark's management that same day, but was unable to obtain a waiver of the notice provision. Id., at 91-93, 98-99. Greenpark also was unwilling itself to hire the FNM employees because of the contract's 90-day limitation on hiring. Id., at 100-101, 106-107. With nothing but perfunctory further discussion, petitioner on July 31 discontinued its Greenpark operation and discharged the employees. Id., at 110-116.

The union filed an unfair labor practice charge against petitioner, alleging violations of the Act's §§ 8(a)(1) and (5). After a hearing held upon the Regional Director's complaint, the Administrative Law Judge made findings in the union's favor. Relying on Ozark Trailers, Inc., 161 N.L.R.B. 561 (1966), he ruled that petitioner had failed to satisfy its duty to bargain concerning both the decision to terminate the Greenpark contract and the effect of that change upon the unit employees.4 The judge reasoned:

"That the discharge of a man is a change in his conditions of employment hardly needs comment. In these obvious facts, the law is clear. When an employer's work complement is represented by a union and he wishes to alter the hiring arrangements, be his reason lack of money or a mere desire to become richer, the law is no less clear that he must first talk to the union about it. . . . If Wecker had been given an opportunity to talk, something might have been worked out to transfer these people to other parts of [petitioner's] business. . . . Entirely apart from whether open discussion between the parties—with the Union speaking on behalf of the em- ployees as was its right—might have persuaded [petitioner] to find a way of continuing this part of its operations, there was always the possibility that Marsh might have persuaded Greenpark to use these same employees to continue doing its maintenance work, either as direct employees or as later hires by a replacement contractor." 242 N.L.R.B. 462, 465 (1979).5

The Administrative Law Judge recommended an order requiring petitioner to bargain in good faith with the union about its decision to terminate its Greenpark service operation and its consequent discharge of the employees, as well as the effects of the termination. He recommended, also, that petitioner be ordered to pay the discharged employees backpay from the date of discharge until the parties bargained to agreement, or the bargaining reached an impasse, or the union failed timely to request bargaining, or the union failed to bargain in good faith.

The National Labor Relations Board adopted the Administrative Law Judge's findings without further analysis, and additionally required petitioner, if it agreed to resume its Greenpark operations, to offer the terminated employees reinstatement to their former jobs or substantial equivalents;...

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