International U., United Auto. A. & A. Imp. Wkrs. v. NLRB

• Decision Date: 17 October 1972
• Docket Number: No. 71-1585.,71-1585.
• Citation: 470 F.2d 422
• Parties: INTERNATIONAL UNION, UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW and its Local 864, UAW v. NATIONAL LABOR RELATIONS BOARD, Respondent, General Motors Corporation, Intervenor.
• Court: U.S. Court of Appeals — District of Columbia Circuit

470 F.2d 422 (1972)

INTERNATIONAL UNION, UNITED AUTOMOBILE AEROSPACE AND AGRICULTURAL IMPLEMENT WORKERS OF AMERICA, UAW and its Local 864, UAW v. NATIONAL LABOR RELATIONS BOARD, Respondent General Motors Corporation, Intervenor.

No. 71-1585.

United States Court of Appeals, District of Columbia Circuit.

Argued June 5, 1972.

Decided October 17, 1972.

Mr. Stephen I. Schlossberg, Detroit, Mich., with whom Messrs. John A. Fillion and Stanley Lubin, Detroit, Mich., were on the brief, for petitioners.

Mr. Julius Rosenbaum, Atty., N. L. R. B., with whom Mr. Marcel Mallet-Prevost, Asst. Gen. Counsel, N. L. R. B., was on the brief, for respondent.

Mr. Edmond J. Dilworth, Jr., Detroit, Mich., with whom Mr. Calvert Thomas, Detroit, Mich., was on the brief, for intervenor.

Before BAZELON, Chief Judge, Justice CLARK,^* of the Supreme Court of the United States, and WILKEY, Circuit Judge.

Mr. Justice CLARK:

The question in this case involves the application of the rule in Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964). Specifically, is a decision made by a manufacturer to convert a self-owned and operated retail outlet into an independently owned and operated franchise dealership a decision subject to the mandatory bargaining requirement of Section 8(a)(5)¹ of the National Labor Relations Act, 29 U.S.C. § 151 et seq.? The Trial Examiner answered the question in the affirmative. However The National Labor Relations Board, appellee, held that General Motors Corporation (GM), intervenor, was not required to so bargain and the International Union, United Automobile, Aerospace and Agricultural Implement Workers of America (UAW), appellant appeals. We agree with the Board and deny the petition for review.

1. In addition to its manufacturing operations GM owns and operates various facilities engaged in the retail sales and servicing of GM trucks and truck parts. One of these facilities, which GM operated from the early 1960's until the inception of this case, was the Houston Truck Center in Houston, Texas. Since 1965 UAW has represented the employees at the Center under collective bargaining agreements effective through November 1970.

In early 1969, pursuant to an established corporate policy of disposing of factory-owned outlets, GM entered into negotiations for the sale of Houston Truck Center to Trucks of Texas, Inc., an independent dealership. Rumors of these negotiations reached UAW in April and union representatives insisted that they be kept informed of the matter and that GM and UAW bargain over it before the decision to sell was made. On May 21 the manager of the Center informed union representatives that a private party had made an offer for the Center but no sale had been consummated. He further advised that "there was no further reason to either discuss the item until such time as GM came to an agreement, or there was an occasion that it would be sold and that it would take place." On the following day, UAW filed this complaint with the Board.

On June 6, GM signed an agreement with Trucks of Texas, Inc. in which it subleased the premises and sold all personal property therein to Trucks for an undisclosed price. Simultaneously, GM awarded a dealership franchise for the sale of GM trucks to Trucks. The latter agreed to operate a full-line dealership at this location and promised to fulfill the truck warranty commitments of the Center. The "selling agreement" provided that if Trucks' dealership was terminated for any reason, either side could immediately terminate the sublease of the premises.

On June 9 Trucks of Texas distributed literature advising the employees that the facility had been sold and that the new management's "personnel requirements will be substantially different from those of your present employer," i. e. that no jobs were available for any of these employees. On the same date, a GM official distributed literature to the Center employees advising them of their eligibility for coverage under certain GM "benefit plans," of their separation rights, etc. and discussed their vacation pay and seniority date to be used in determining the benefits available to them. On June 10 and 11 he met with union representatives and discussed the effect of the sale to Trucks; he offered his personal assistance in locating employment in other GM facilities in the area; and made some concessions that were requested.

The Trial Examiner ordered that the status quo ante be restored. The Board reversed, finding that the transfer amounted to a "sale of the business" and was therefore beyond the terms of the mandatory bargaining requirement of Section 8(a)(5) since the decision was "at the core of entrepreneurial control." UAW seeks review of this decision.

2. Interestingly enough, both sides rely on Fibreboard Paper Products Corp. v. N. L. R. B., supra. As we read Fibreboard, however, it is a far cry from this case. In it maintenance work in a large manufacturing plant was contracted out upon the expiration of its collective bargaining with employees who had been performing the same work. The Court found that industrial experience illustrated that the contracting out of maintenance work had been brought within the collective bargaining framework; that it exists in numerous collective bargaining agreements and is the basis of many grievances, citing United Steelworkers v. Warrior & Gulf Nav. Co., 363 U.S. 574, 584, 80 S.Ct. 1347, 4 L.Ed.2d 1409 (1960) and Local 24 Teamsters Union v. Oliver, 358 U.S. 283, 79 S.Ct. 297, 3 L.Ed.2d 312 (1959). But UAW contends that Fibreboard should be read so as to require bargaining whenever a management decision results in termination of employment. The short answer to that is that Fibreboard itself declares: "The Company's decision did not alter the Company's operation . . . To require the employer to bargain about the matter would not significantly abridge his freedom to manage the business . . . 379 U.S. at 213, 85 S.Ct. 398 at 404 We are thus not expanding the scope of mandatory bargaining." Id. 215, 85 S.Ct. 405. What UAW would have us do would turn over the management to it.

Our task is more than the mere parsing of the statutory language. We must make certain that "in each case the interests of the employees and the purpose of the National Labor Relations Act . . . be carefully balanced against the right of an employer to run his business." N. L. R. B. v. Royal Plating & Polishing Co., 350 F.2d 191, 195 (3 Cir. 1965).

In applying the case-by-case approach, the Courts of Appeals have looked to several factors to determine if a decision is one "primarily about the conditions of employment" or is instead "fundamental to the basic direction of a corporate enterprise." If the decision appears to be primarily designed to avoid the bargaining agreement with the union or if it produces no substantial change in the operations of the employer, the courts have required bargaining. International Union, U. A. W. v. N. L. R. B., 127 U.S. App.D.C. 97, 381 F.2d 265 (1967), cert. denied 389 U.S. 857, 88 S.Ct. 82, 19 L. Ed.2d 122 "contracting out" of one step in a two-step car-parking operation previously done by union employees; Weltronic Co. v. N. L. R. B., 419 F.2d 1120 (6 Cir. 1969), cert. denied, 398 U.S. 938, 90 S.Ct. 1841, 26 L.Ed.2d 270 transfer of work from a union plant to a non-union plant three miles away. If the decision resulted in the termination of a substantial portion or a distinct line of the employer's business or involved a major change in the nature of its operations, no bargaining has been required. N. L. R. B. v. Drapery Mfg. Co., 425 F.2d 1026, 1028 (8 Cir. 1970) shut down of a drapery manufacturing division of a company involving "a major shift in capital investment" that was purely economically motivated; N. L. R. B. v. Transmarine Navigation Corp., 380 F.2d 933 (9 Cir.1967) the operation of a terminal moved to another location with the company accepting minority interest in joint venture; N. L. R. B. v. Royal Plating & Polishing Co., supra one of two plants closed down; see also N. L. R. B. v. Dixie Ohio Express Co., 409 F. 2d 10 (6 Cir. 1969) procedures for loading and unloading substantially altered; N. L. R. B. v. Adams Dairy, Inc., 322 F.2d 553 (8 Cir. 1963), remanded in light of Fibreboard, 379 U.S. 644, 85 S.Ct. 613, 13 L.Ed.2d 550 (1965), reaffirmed, 350 F.2d 108 (8 Cir. 1965), cert. denied, 382 U.S. 1011, 86 S.Ct. 619, 15 L.Ed.2d 526 change in distribution method; Machinists v. Northeast Airlines 80 LRRM 2197 airline merger. The difficult cases have been those involving a small but not insubstantial proportion of the employer's business; in these cases, the results have often hinged on hints of anti-union animus. See, e. g., N. L. R. B. v. Johnson, 368 F. 2d 549 (9 Cir. 1966) floor covering company decided to subcontract installation services immediately after the negotiation of a collective bargaining agreement; N. L. R. B. v. American Manufacturing Co., 351 F.2d 74 (5 Cir. 1965) subcontracting of truck delivery portion of business where a clear showing of animosity toward union is present.

3. The Board and GM contend that the transaction is a "sale" since the transfer calls GM the "seller" and Trucks the "buyer." UAW says it is only a franchise agreement because of the considerable interest GM retains in the operation to which Trucks succeeded. UAW emphasizes that GM may terminate Truck's dealership and cancel its sublease at any time; and, in addition, GM retains its marketing position in Houston at the same loacation. Thus, petitioner characterizes the arrangements as a "classical contracting out situation."

While GM's tagging of the contract as a sale is, of course, not decisive we believe that it was properly so characterized. It was succeeded by the execution of a standard GM dealership contract which was in keeping with a national GM policy to switch its remaining manufacturer-owned and operated...