Textile Workers Union of America v. Darlington Manufacturing Company National Labor Relations Board v. Darlington Manufacturing Company

• Decision Date: 29 March 1965
• Docket Number: 41,Nos. 37,s. 37
• Citation: 13 L.Ed.2d 827,380 U.S. 263,85 S.Ct. 994
• Parties: TEXTILE WORKERS UNION OF AMERICA, Petitioner, v. DARLINGTON MANUFACTURING COMPANY et al. NATIONAL LABOR RELATIONS BOARD, Petitioner, v. DARLINGTON MANUFACTURING COMPANY et al
• Court: U.S. Supreme Court

380 U.S. 263

85 S.Ct. 994

13 L.Ed.2d 827

TEXTILE WORKERS UNION OF AMERICA, Petitioner,

v DARLINGTON MANUFACTURING COMPANY et al.

NATIONAL LABOR RELATIONS BOARD, Petitioner,

v. DARLINGTON MANUFACTURING COMPANY et al.

Nos. 37, 41.

Argued Dec. 9, 1964.

Decided March 29, 1965.

[Syllabus from pages 263-264 intentionally omitted] Dominick L. Manoli, Washington, D.C., and Irving Abramson, New York City, for petitioners.

Sam J. Ervin, Jr., for respondents.

Mr. Justice HARLAN delivered the opinion of the Court.

We here review judgments of the Court of Appeals setting aside and refusing to enforce an order of the National Labor Relations Board which found respondent Darlington guilty of an unfair labor practice by reason of having permanently closed its plant following petitioner union's election as the bargaining representative of Darlington's employees.

Darlington Manufacturing Company was a South Carolina corporation operating one textile mill. A majority of Darlington's stock was held by Deering Milliken, a New York 'selling house' marketing textiles produced by others. ¹ Deering Milliken in turn was controlled by Roger Milliken, president of Darlington, and by other members of the Milliken family.² The National Labor Relations Board found that the Milliken family, through Deering Milliken, operated 17 textile manufacturers, including Darlington, whose products manufactured in 27 different mills, were marketed through Deering Milliken.

In March 1956 petitioner Textile Workers Union initiated an organizational campaign at Darlington which the company resisted vigorously in various ways, including threats to close the mill if the union won a representation election. ³ On September 6, 1956, the union won an election by a narrow margin. When Roger Milliken was advised of the union victory, he decided to call a meeting of the Darlington board of directors to consider closing the mill. Mr. Milliken testified before the Labor Board:

'I felt that as a result of the campaign that had been conducted and the promises and statements made in these letters that had been distributed (favoring unionization), that if before we had had some hope, possible hope of achieving competitive (costs) * * * by taking advantage of new machinery that was being put in, that this hope had diminished as a result of the election because a majority of the employees had voted in favor of the union * * *.' (R. 457.)

The board of directors met on September 12 and voted to liquidate the corporation, action which was approved by the stockholders on October 17. The plant ceased operations entirely in November, and all plant machinery and equipment were sold piecemeal at auction in December.

The union filed charges with the Labor Board claiming that Darlington had violated §§ 8(a)(1) and (3) of the National Labor Relations Act by closing its plant,⁴ and § 8(a)(5) by refusing to bargain with the union after the election.⁵ The Board, by a divided vote, found that Darlington had been closed because of the antiunion animus of Roger Milliken, and held that to be a violation of § 8(a)(3).⁶ The Board also found Darlington to be part of a single integrated employer group controlled by the Milliken family through Deering Milliken; therefore Deering Milliken could be held liable for the unfair labor practices of Darlington.⁷ Alternatively, since Darlington was a part of the Deering Milliken enterprise, Deering Milliken had violated the Act by closing part of its business for a discriminatory purpose. The Board ordered back pay for all Darlington employees until they obtained substantially equivalent work or were put on preferential hiring lists at the other Deering Milliken mills. Respondent Deering Milliken was ordered to bargain with the union in regard to details of compliance with the Board order. 139 N.L.R.B. 241.

On review, the Court of Appeals, sitting en banc, set aside the order and denied enforcement by a divided vote. 325 F.2d 682. The Court of Appeals held that even accepting arguendo the Board's determination that Deering Milliken had the status of a single employer, a company has the absolute right to close out a part or all of its business regardless of antiunion motives. The court therefore did not review the Board's finding that Deering Milliken was a single integrated employer. We granted certiorari, 377 U.S. 903, 84 S.Ct. 1170, 12 L.Ed.2d 175, to consider the important questions involved. We hold that so far as the Labor Relations Act is concerned, an employer has the absolute right to terminate his entire business for any reason he pleases, but disagree with the Court of Appeals that such right includes the ability to close part of a business no matter what the reason. We conclude that the cause must be remanded to the Board for further proceedings.

Preliminarily is should be observed that both petitioners argue that the Darlington closing violated § 8(a)(1) as well as § 8(a)(3) of the Act. We think, however, that the Board was correct in treating the closing only under § 8(a)(3).⁸ Section 8(a)(1) provides that it is an unfair labor practice for an employer 'to interfere with, restrain, or coerce employees in the exercise of' § 7 rights.⁹ Naturally, certain business decisions will, to some degree, interfere with concerted activities by employees. But it is only when the interference with § 7 rights outweighs the business justification for the employer's action that § 8(a)(1) is violated. See, e.g., National Labor Relations Board v. United Steelworkers, 357 U.S. 357, 78 S.Ct. 1268, 2 L.Ed.2d 1383; Republic Aviation Corp. v. National Labor Relations Board, 324 U.S. 793, 65 S.Ct. 982, 89 L.Ed. 1372. A violation of § 8(a)(1) alone therefore presupposes an act which is unlawful even absent a discriminatory motive. Whatever may be the limits of § 8(a)(1), some employer decisions are so peculiarly matters of management prerogative that they would never constitute violations of § 8(a)(1), whether or not they involved sound business judgment, unless they also violated § 8(a)(3). Thus it is not questioned in this case that an employer has the right to terminate his business, whatever the impact of such action on concerted activities, if the decision to close is motivated by other than discriminatory reasons.¹⁰ But such action, if discriminatorily motivated, is encompassed within the literal language of § 8(a)(3). We therefore deal with the Darlington closing under that section.

I.

We consider first the argument, advanced by the petitioner union but not by the Board, and rejected by the Court of Appeals, that an employer may not go completely out of business without running afoul of the Labor Relations Act if such action is prompted by a desire to avoid unionization.¹¹ Given the Board's findings on the issue of motive, acceptance of this contention would carry the day for the Board's conclusion that the closing of this plant was an unfair labor practice, even on the assumption that Darlington is to be regarded as an independent unrelated employer. A proposition that a single businessman cannot choose to go out of business if he wants to would represent such a startling innovation that it should not be entertained without the clearest manifestation of legislative intent or unequivocal judicial precedent so construing the Labor Relations Act. We find neither.

So far as legislative manifestation is concerned, it is sufficient to say that there is not the slightest indication in the history of the Wagner Act or of the Taft-Hartley Act that Congress envisaged any such result under either statute.

As for judicial precedent, the Board recognized that '(t)here is no decided case directly dispositive of Darlington's claim that it had an absolute right to close its mill, irrespective of motive.' 139 N.L.R.B., at 250. The only language by this Court in any way adverting to this problem is found in Southport Petroleum Co. v. National Labor Relations Board, 315 U.S. 100, 106, 62 S.Ct. 452, 86 L.Ed. 718, where it was stated:

'Whether there was a bona fide discontinuance and a true change of ownership—which would terminate the duty of reinstatement created by the Board's order—or merely a disguised continuance of the old employer, does not clearly appear * * *.'

The courts of appeals have generally assumed that a complete cessation of business will remove an employer from future coverage by the Act. Thus the Court of Appeals said in these cases: The Act 'does not compel a person to become or remain an employee. It does not compel one to become or remain an employer. Either may withdraw from that status with immunity, so long as the obligations of any employment contract have been met.' 325 F.2d at 685. The Eighth Circuit, in National Labor Relations Board v. New Madrid Mfg. Co., 215 F.2d 908, 914, was equally explicit:

'But none of this can be taken to mean that an employer does not have the absolute right, at all times, to permanently close and go out of business * * * for whatever reason he may choose, whether union animosity or anything else, and without his being thereby left subject to a remedial liability under the Labor Management Relations Act for such unfair labor practices as he may have committed in the enterprise, except up to the time that such actual and permanent closing * * * has occurred.'¹²

The AFL-CIO suggests in its amicus brief that Darlington's action was similar to a discriminatory lockout, which is prohibited "because designed to frustrate organizational efforts, to destroy or undermine bargaining representation, or to evade the duty to bargain."¹³ One of the purposes of the Labor Relations Act is to prohibit the discriminatory use of economic weapons in an effort to obtain future benefits. The discriminatory lockout designed to destroy a union, like a 'runaway shop,' is a lever which has been used to discourage collective employee activities in the future. But a complete liquidation of a business yields no such future...