Principles in collision: The right of workers to unionize v. the right of an employer to 2 close the business

Autor:Barry Winograd
Cargo:Arbitrator and mediator in Oakland, California. Adjunct law school faculty of the University of California, Berkeley, and the University of Michigan

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In 1956, hundreds of textile workers lost their jobs at the Darlington Manufacturing Company when the employer closed its plant immediately after the workers voted to unionize. Nine years later, a unanimous U.S. Supreme Court decided that the company was free to close the business even if it was motivated by anti-union hostility.1Few cases in U.S. legal history so sharply illuminate the colliding interests of workers seeking to unionize, and owners seeking to avoid unionization.

Darlington Manufacturing Company was a textile maker in South Carolina. The corporation was part of an interlocking web of nearly two dozen corporations in the textile industry that were controlled by the Milliken family. The Textile Workers Union began an organizing drive at the Darlington plant early in 1956, hoping to expand its base. In the preceding decade, many companies in the industry transferred textile mills from the widely unionized New England area in the Northeastern U.S., to the mostly non-union Southeast.

The company resisted the union’s organizing drive. However, the company lost an election for union representation in September 1956. Within days, Darlington’s board of directors decided to liquidate the corporation. Plant operations ended in November, and the equipment and machinery were sold by December. Over 500 workers lost their jobs. The small mill town in which the plant was located was devastated.

Based on unfair labor practice charges filed by the union, a complaint was issued by the National Labor Relations Board (NLRB). The NLRB is the agency that oversees enforcement of the National Labor Relations Act (NLRA), a statute passed by the U.S. Congress in 1935. The NLRA was intended to authorize and protect union organizational activity in the private sector of the U.S. economy.2

As relevant here, after an administrative hearing the NLRB concluded that the company violated

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Sections 8(a)(1) and 8(a)(3) of the NLRA.3In addition, the NLRB determined that the corporation was part of a single, integrated enterprise. Alternatively, the Board stated that the plant closure was part of the larger business, and was done for discriminatory reasons.

The NLRB’s remedy did not include an order, as proposed by the union, that the enterprise be reopened and jobs restored. Instead, the NLRB directed that the former employees be paid what they would have earned, until equivalent employment was found. The NLRB also ordered that employees be given preferential hiring status at other plants within the far-flung Milliken domain.

The company resisted the NLRB’s order, and sought appellate review. An intermediate court of appeals declined to enforce the NLRB’s decision. The appellate court determined that an employer has a right to close all or part of its business, even if anti-union hostility is the cause.

On review, the unanimous ruling of the U.S. Supreme Court held that, "an employer has the absolute right to terminate his entire business for any reason he pleases."4The court cautioned, however, that an employer cannot close part of its business, "if motivated by a purpose to chill unionism in any of the remaining plants of the single employer and if the employer may reasonably have foreseen that such closing would likely have that effect."5

Ever since, the juxtaposition of these reasons has prompted labor law analysts to express concern about the logic of the court’s decision. Regarding the issue of interference with employee rights under Section 8(a)(1) of the NLRA, the court asserted that the closing of an entire plant is one of those employer decisions that, "are so peculiarly matters of management prerogative that they would never constitute a violation of 8(a)(1), whether or not they involved sound business judgment...."6In a footnote to this portion of the case, the court argued that, "the ambiguous act of...

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