Mount Hope Finishing Co. v. National Labor Rel. Bd.

• Decision Date: 15 March 1954
• Docket Number: 6690.,No. 6666,6666
• Citation: 211 F.2d 365
• Parties: MOUNT HOPE FINISHING CO. et al. v. NATIONAL LABOR RELATIONS BOARD. TEXTILE WORKERS UNION OF AMERICA (CIO), v. NATIONAL LABOR RELATIONS BOARD et al.
• Court: U.S. Court of Appeals — Fourth Circuit

211 F.2d 365 (1954)

MOUNT HOPE FINISHING CO. et al. v. NATIONAL LABOR RELATIONS BOARD.

TEXTILE WORKERS UNION OF AMERICA (CIO), v. NATIONAL LABOR RELATIONS BOARD et al.

Nos. 6666, 6690.

United States Court of Appeals Fourth Circuit.

Argued January 5, 1954.

Decided March 15, 1954.

Thornton H. Brooks, Greensboro, N. C. (Gerard D. Reilly, Washington, D. C., Walter G. Powers, Taunton, Mass., C. E. Rhetts and Charles E. Hewes, Washington, D. C., on brief), for the companies and individuals.

Owsley Vose, Attorney, National Labor Relations Board, Washington, D. C. (George J. Bott, General Counsel, David P. Findling, Associate General Counsel, A. Norman Somers, Asst. General Counsel, and Mary E. Williamson, Attorney, National Labor Relations Board, Washington, D. C., on brief), for National Labor Relations Board.

Jacob Minkin, New Bedford, Mass. (Benjamin Wyle, New York City, on brief), for Textile Workers Union of America (CIO).

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

These proceedings bring up for review an order of the N.L.R.B. directed to Mount Hope Finishing Company, a Massachusetts corporation, and to Mt. Hope Finishing Company, Inc., a North Carolina corporation; and to Joseph K. Milliken, Frank L. Daylor and Robert D. Milliken, individuals interested in one or both of the corporations. All of these were respondents to a complaint filed by the Textile Workers Union of America, CIO. The order directed the respondents to cease and desist from discouraging membership in and refusing to bargain with the union, and required the respondents to reinstate certain employees with necessary traveling and moving expenses from Massachusetts to North Carolina, and to make certain employees whole for any loss which they may have suffered from a discharge or lockout by the Massachusetts corporation on September 19, 1951, and also to make whole 65 employees found by the Board to have been laid off on July 31, 1951, in violation of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq. The order was based and the case turns on the finding of the Board that the Massachusetts corporation and the individual respondents closed the plant of that corporation at North Dighton, Massachusetts, and moved the business to Butner, North Carolina, for the purpose of evading their obligation to bargain collectively with the union.

Case No. 6666 embodies the petition of the above named respondents to review and set aside the order of the Board. Case No. 6690 involves the petition of the union to modify the order so as to increase the number of persons found to have been improperly laid off on July 31, 1951 from 65 to 185, and so as to impose the obligation upon the respondents both to offer all employees on the payroll on July 31, 1951 immediate and full reinstatement to their former positions and to make them whole for any loss of pay, and upon request, to bargain collectively with the union as the representative of the employees, without the qualification upon the duty to bargain provided by the Board that the total number of the North Dighton employees who have accepted employment at the Butner plant and the employees at the Butner plant who have joined the union shall constitute a majority of the total employees at that plant.

For fifty years prior to October, 1951, the Massachusetts corporation had its principal office and plant at North Dighton where it was engaged in the dyeing, bleaching and finishing of cotton textiles primarily and synthetic textiles incidentally. It had been established by Joseph K. Milliken and successfully operated by him and his two sons; and the plant was well equipped to carry on the business. In July, 1951 the stock of Joseph K. Milliken, which was held by the Milliken Foundation Trust, amounted to 46.2% of the total issue, while his sons, Joseph K. Milliken, Jr. and Robert D. Milliken, owned 24.8 and 26% of the issue respectively. The officers were Joseph K. Milliken, President and Treasurer, Joseph K. Milliken, Jr., Vice President and Superintendent, and Robert D. Milliken, Assistant Treasurer. At that time Joseph K. Milliken was 76 years of age, and no longer active, and the family business was under the active management and control of his sons. Joseph K. Milliken, Jr. was in bad health and in August, 1951 retired from the business and shortly thereafter sold his stock to his brother and to Frank L. Daylor, who previously had not been a stockholder but had served the business as industrial consultant and participated in policy decisions. Robert D. Milliken and Daylor also acquired the stock of the Milliken Foundation Trust, so that on or about October 31, 1951 Robert D. Milliken held 60% and Daylor held 36% of the stock which he had purchased for the sum of $400,000. The officers of the company then were Joseph K. Milliken, President and Treasurer, Frank L. Daylor, Vice President, and Robert D. Milliken, Assistant Treasurer.

In the earlier years and for a substantial period the Massachusetts corporation had prospered. From a modest beginning in 1901 it had developed into an enterprise employing 1300 persons, with a capacity of processing five million yards of goods per week. In 1951, however, prevailing economic conditions, which had caused the heart of the textile industry to seek locations in the South, were unfavorable to the Milliken business in Massachusetts. In January it was operating at less than 50% of capacity; and consequently in April it was decided to reduce the work week to three or four days. Business conditions continued to deteriorate and by July the plant was processing less than 20% of its capacity, and early in the week commencing July 23rd it was decided that 120 employees, who constituted 20% of the working force then employed, should be laid off. On July 30th it was decided to lay off 65 additional employees and on the next day 185 workers were laid off in accordance with these decisions. The labor force which remained was entirely adequate to operate the business.

The unfavorable conditions which reached a climax in 1951 had been the subject of earnest study by the owners of the business for a long time. For more than a year Daylor had been advising them to close the plant and they had been considering the advisability of opening a plant somewhere in the South in order to do the finishing of synthetic material more advantageously closer to the source of supply. During the first five months of 1951 the three Millikens and Daylor each made trips to different locations in the South and examined them as possible sites for a plant. Joseph K. Milliken, Jr. reached the opinion that nothing should be done in this direction; but Robert D. Milliken and Daylor agreed to establish such a plant even if the others would not go along. They tried unsuccessfully in January, 1951 to buy a plant in Greensboro, North Carolina; the site of the Premier Worsted Mill was investigated before March, 1951, and in May the site at Butner, North Carolina, which was finally selected, was strongly recommended to the Millikens by Daylor. On September 23rd Robert D. Milliken expressed his intention to acquire this site and on September 28th secured an option on a lease which was exercised on October 31st.

In the meantime the transactions took place which, as we have seen, led to the acquisition by Robert D. Milliken and Daylor of practically all of the stock of the Massachusetts corporation. In order to conduct the business in North Carolina a new corporation was organized in that State in October, 1951 by attorneys acting for Robert D. Milliken. It was first called the Creedmore Company, but its name was changed in December to Mount Hope Finishing Company, Inc. A nominal issue of only five shares of stock was made, two each in the name of Robert D. Milliken and Daylor, and one in the name of a third person; but the certificates were endorsed and turned back to the attorneys of Robert D. Milliken. It is clear from the record, as the Board found, that Robert D. Milliken became and remains the sole owner of the North Carolina business, and that Daylor has made no investment therein. The following officers of the corporation were elected: Joseph K. Milliken, President, Frank L. Daylor, Vice President, and Robert D. Milliken, Treasurer.

Since January 1952, the Butner plant has been engaged in the finishing of synthetic fibers. It has been operated by the use of machinery and equipment worth $100,000 and supplies worth $750,000 which were sent to North Carolina from the plant of the Massachusetts corporation. These assets are carried on the books of the North Carolina corporation as purchases on open account from the Massachusetts corporation. Similarly the North Carolina corporation had agreed to buy on open account and make use of the trade marks and good will of the Massachusetts corporation. It also employs a subsidiary of the Massachusetts corporation as a sales agent and does finishing work for some of the former customers of the Massachusetts corporation. Certain employees were sent from Massachusetts to North Carolina to set up and install the Butner plant.

On October 20th the Massachusetts plant was shut down after processing of grade goods then in production, and unfinished gray goods were either returned to customers or sent to other finishing plants. Some of the office supplies on hand were sold back to the suppliers at a loss and the remainder was sent to North Carolina. On November 12th the Massachusetts corporation appointed an agent to sell all of the machinery, equipment and inventory, except such as were sent to North Carolina, and by June, 1952 40% of the assets had been sold and 20% sent to North Carolina. The real estate, except so much as was needed for the storage of the remaining 20% was leased to another corporation. Unquestionably the plant was closed because its continued operation would have entailed a loss. A factor in...