[Petitioner, First National Maintenance Corporation (FNM), supplies its customers a contracted-for labor force and supervision in return for reimbursement of its labor costs plus a management fee. FNM terminated a part of its business, that of performing maintenance work at the Greenpark Care Center, a nursing home in Brooklyn, New York, solely for economic reasons, and the 35 FNM employees working there were discharged. The NLRB held that FNM had a duty to bargain under Sections 8(a)(5) and 8(d) with the certified representative of its employees over the decision to close a part of its business, the maintenance operation at the Greenpark Care Center, and the court of appeals enforced the Board's order.] BLACKMUN, J....
The Court of Appeals' decision in this case appears to be at odds with decisions of other Courts of Appeals, some of which decline to require bargaining over any management decision involving "a major commitment of capital investment" or a "basic operational change" in the scope or direction of an enterprise, and some of which indicate that bargaining is not mandated unless a violation of § 8(a)(3) (a partial closing motivated by antiunion animus) is involved.... Because of the importance of the issue and the continuing disagreement between and among the Board and the Courts of Appeals, we granted certiorari. ...
The present case concerns a ... type of management decision, one that had a direct impact on employment, since jobs were inexorably eliminated by the termination, but had as its focus only the economic profitability of the contract with Greenpark, a concern under these facts wholly apart from the employment relationship. This decision, involving a change in the scope and direction of the enterprise, is akin to the decision whether to be in business at all, "not in [itself] primarily about conditions of employment though the effect of the decision may be necessarily to terminate employment." Cf. Textile Workers v. Darlington Co., 380 U.S. 263 (1965) ("an employer has the absolute right to terminate his entire business for any reason he pleases").
At the same time, this decision touches on a matter of central and pressing concern to the union and its member employees: the possibility of continued employment and the retention of the employees' very jobs. Petitioner contends it had no duty to bargain about its decision to terminate its operations at Greenpark. This contention requires that wedetermine whether the decision itself should be considered part of petitioner's retained freedom to manage its affairs unrelated to employment.* ...
Management must be free from the constraints of the bargaining process to the extent essential for the running of a profitable business. It also must have some degree of certainty beforehand as to when it may proceed to reach decisions without fear of later evaluations labeling its conduct an unfair labor practice. Congress did not explicitly state what issues of mutual concern to union and management it intended to exclude from mandatory bargaining. Nonetheless, in view of an employer's need for unencumbered decision making, 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 relations and the collective bargaining process, outweighs the burden placed on the conduct of the business....
Both union and management regard control of the decision to shut down an operation with the utmost seriousness. As has been noted, however, the Act is not intended to serve either party's individual interest, but to foster in a neutral manner a system in which the conflict between these interests may be resolved.
It seems particularly important, therefore, to consider whether requiring bargaining over this sort of decision will advance the neutral purposes of the Act. A union's interest in participating in the decision to close a particular facility or part of an employer's operations springs from its legitimate concern over job security. The Court has observed: "The words of [§ 8(d)] ... plainly cover termination of employment which ... necessarily results" from closing an operation. The union's practical purpose in participating, however, will be largely uniform; it will seek to delay or halt the closing. No doubt it will be impelled, in seeking these ends, to offer concessions, information, and alternatives that might be helpful to management or forestall or prevent the termination of jobs.
It is unlikely, however, that requiring bargaining over the decision itself, as well as its effects, will augment this flow of information and suggestions. There is no dispute that the union must be given a significant opportunity to bargain about these matters of job security as part of the "effects" bargaining mandated by § 8(a)(5). And, under § 8(a)(5), bargaining over the effects of a decision must be conducted in a meaningful manner and at a meaningful time, and the Board may impose sanctions to ensure its adequacy. A union, by pursuing such bargaining rights, may achieve valuable concessions from an employer engaged in a partial closing. It also may secure in contract negotiations provisions implementing rights to notice, information, and fair bargaining.
Moreover, the union's legitimate interest in fair dealing is protected by § 8(a)(3), which prohibits partial closings motivated by antiunion animus, when done to gain an unfair advantage. Textile Workers v. Darlington Co., 380 U.S. 263, 58 LRRM 2657 (1965). Under § 8(a)(3) the Board may inquire into the motivations behind a partial closing. An employer may not simply shut down part of its business and mask its desire to weaken and circumvent the union by labeling its decision "purely economic." Thus, although the union has a natural concern that a partial closing decision not be hastily or unnecessarily entered into, it has some control over the effects of the decision and indirectly may ensure that the decision itself is deliberately considered.
It also has direct protection against a partial closing decision that is motivated by an intent to harm a union. Management's interest in whether it should discuss a decision of this kind is much more complex and varies with the particular circumstances. If labor costs are an important factor in a failing operation and the decision to close, management will have an incentive to confer voluntarily with the union to seek concessions that may make continuing the business profitable. At other times, management may have great need for speed, flexibility, and secrecy in meeting business opportunities and exigencies. It may face significant tax or securities consequences that hinge on confidentiality, the timing of a plant closing, or a reorganization of the corporate structure.
The publicity incident to the normal process of bargaining may injure the possibility of a successful transition or increase the economic damage to the business. The employer also may have no feasible alternative to the closing, and even good faith bargaining over it may be both futile and cause the employer additional loss. There is an important difference, also, between permitted bargaining and mandated bargaining. Labeling this type of decision mandatory could afford a union a powerful tool for achieving delay, a power that might be used to thwart management's intentionsin a manner unrelated to any feasible solution the union might propose....
We conclude that 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 the decision, and we hold that the decision itself is not part of § 8(d)'s "terms and conditions," over which Congress has mandated bargaining. The judgment of the Court of Appeals, accordingly, is reversed and the case is remanded to that court for further proceedings consistent with this opinion. It is so ordered. JUSTICE BRENNAN, with whom JUSTICE MARSHALL joins, Dissenting ...
The Court bases its decision on a balancing test. It states that "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 relations and the collective bargaining process, outweighs the burden placed on the conduct of the business." I cannot agree with this test, because it takes into account only the interests of management; it fails to consider the legitimate employment interests of the workers and their Union. This onesided approach hardly serves "to foster in a neutral manner" a system for resolution of these serious, two-sided controversies. Apparently, the Court concludes that the benefit to labor-managment relations and the collective bargaining process from negotiation over partial closings is minimal, but it provides no evidence to that effect.
The Court acknowledges that the Union might be able to offer concessions, information, and alternatives that might obviate or forestall the closing, but it then asserts that "[i]t is unlikely, however, that requiring bargaining over the decision ... will augment this flow of information and suggestions." Recent experience, however, suggests the contrary. Most conspicuous, perhaps, were the negotiations between Chrysler Corporation and the United Auto Workers, which led to significant adjustments in compensation and benefits, contributing to Chrysler's ability to remain afloat. Even where labor costs are not the direct cause of a company's financial difficulties, employee concessions can often enable the company to continue in operation-if the employees have the opportunity to offer such concessions....
Case Questions
1. Why did the Supreme Court decide to hear the case?
2. State the test the Court applied in determining whether the partial closing was a mandatory subject of bargaining.
3. Did the Court conclude that the partial closing was a mandatory subject of bargaining?
4. Under the FNM decision, may an employer shut down part of its business in order to weaken a union's position at the employer's other operations by labeling the decision as "purely economic"?
5. Did FNM have a mandatory obligation to bargain about the "effects" of its decision to stop work at Greenpark?