Court Opinion

ID: 9466968
Source: CourtListenerOpinion
Date Created: 2023-08-05 01:34:22.510917+00
Date Added: 2024-06-11T17:40:04.605103
License: Public Domain

KEARSE, Circuit Judge,
concurring in part and dissenting in part:
I must respectfully dissent from so much of the majority’s decision as holds that respondent violated Sections 8(a)(5) and (1) of the National Labor Relations Act (the “Act”), 29 U.S.C. §§ 158(a)(5), 158(a)(1) by refusing to bargain over its decision to close its Greenpark operation, and I would therefore deny enforcement of so much of the NLRB’s order as directs respondent to pay backpay to the employees terminated.
I
There is no question that respondent failed to bargain with the union, nor any question that it was required to bargain over the effects of its decision to terminate *604its operations at Greenpark Care Center (“Greenpark”). See NLRB v. Rapid Bindery, Inc., 293 F.2d 170, 176 (2d Cir. 1961); Morrison Cafeterias Consol. Inc. v. NLRB, 431 F.2d 254 (8th Cir. 1970); NLRB v. Royal Plating & Polishing Co., 350 F.2d 191 (3d Cir. 1965). To this extent I would affirm the Board’s findings that respondent violated the Act.
I cannot agree, however, that respondent violated the Act by refusing to bargain over the decision to terminate. The decision to end services at Greenpark was made in order to stop losing money. This is not a case in which, as the majority states, the respondent “merely asserts” that it was losing money on the Greenpark operation. The record indicated that during the spring of 1977 respondent had repeatedly sought an increase in its fee in order to enable it to continue services at Greenpark, stressing to Greenpark’s management that respondent was losing money. The Administrative Law Judge (“ALJ”) found this assertion to be true: “It is a fact the Respondent was losing money on this job." (Emphasis added.)
Further, in the present case the contract between respondent and Greenpark required Greenpark, in addition to paying a set management fee, to pay respondent’s “gross weekly payroll and fringe benefits” for that facility. It was the amount of the management fee, over and above the labor costs, on which respondent and Greenpark could not agree. Thus, the facts are that respondent was losing money on the Green-park job, that its losses were not due to labor costs,1 and that its solution for these losses was to close down the losing operation.
I do not believe that the carefully limited decision in Fibreboard Paper Prods. Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964), or any other authority, requires the respondent to bargain over its decision to terminate Greenpark in order to halt these losses.2 See Morrison Cafeterias Consol. Inc. v. NLRB, supra. In Fibreboard, the Supreme Court ruled that “the replacement of employees in the existing bargaining unit with those of an independent contractor to do the same work under similar conditions of employment” violated the requirement of § 8(d) of the Act that an employer bargain about “conditions of employment.” Id. 379 U.S. at 215, 85 S.Ct. at 405. Unlike the present case, Fibreboard involved the replacement of employees in an ongoing operation. (And unlike the present case the costs sought to be shaved in Fibreboard were labor costs.) The opinions in Fibreboard are instructive in distinguishing its “contracting out” situation from that of the present case.3 Thus, the majority opinion observed as follows:
*605The facts of the present case illustrate the propriety of submitting the dispute to collective negotiation. The Company’s decision to contract out the maintenance work did not alter the Company’s basic operation. The maintenance work still had to be performed in the plant. No capital investment was contemplated; the Company merely replaced existing employees with those of an independent contractor to do the same work under similar conditions of employment. Therefore, to require the employer to bargain about the matter would not significantly abridge his freedom to manage the business.
The Company was concerned with the high cost of its maintenance operation. It was induced to contract out the work by assurances from independent contractors that economies could be derived by reducing the work force, decreasing fringe benefits, and eliminating overtime payments. These have long been regarded as matters peculiarly suitable for resolution within the collective bargaining framework ....
Id. at 213-14, 85 S.Ct. at 404. Justice Stewart’s concurring opinion stresses that certain managerial decisions, such as the decision to close a business, which obviously will affect employment, do not implicate “conditions of employment” within the meaning of § 8(d):
Nothing the Court holds today should be understood as imposing a duty to bargain collectively regarding such managerial decisions, which lie at the core of entrepreneurial control. Decisions concerning the commitment of investment capital and the basic scope of the enterprise are not in themselves primarily about conditions of employment, though the effect of the decision may be necessarily to terminate employment. If, as I think clear, the purpose of § 8(d) is to describe a limited area subject to the duty of collective bargaining, those management decisions which are fundamental to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from that area.
Id. at 223, 85 S.Ct. at 409-410.
I conclude that the respondent’s decision in this case to conserve its capital by closing a losing operation was a matter of fundamental entrepreneurial discretion and was not “suitable for resolution within the collective bargaining framework.”
II
Respondent has challenged in this Court both the order directing it to reinstate terminated employees and the backpay award. The Board argues that these questions are not properly before the Court because respondent’s letter of exceptions to the ALJ’s decision was “silent on remedy and too general in form to have placed the Board on notice that the Company objected to the remedy in the event its position did not prevail.” (Board brief at 21.) This position has some merit with respect to the Board’s direction that respondent offer to reinstate terminated employees in comparable positions in other facilities served by respondent; that order was properly based on respondent’s failure to bargain over the effects of its termination decision, and I would agree that respondent is barred from attacking that portion of the remedy.
Nevertheless, I would not hold the respondent barred from challenging the back-pay award, because that award is based on the determination that the company violated the Act by failing to bargain over the termination decision itself. Since I find this premise faulty, I find no basis for the backpay award and would deny enforcement of that portion of the Board’s order. NLRB v. Rapid Bindery Inc., supra, 293 F.2d at 177.

. This distinguishes such cases as Ozark Trailers, Inc., 161 N.L.R.B. 561 (1966) in which the company’s actions were prompted in large part because of the cost of labor. Even in a case where a partial closing is due to labor costs, it may be that a labor union’s legitimate interests are adequately protected by the employer’s duty to bargain over the effects of the closing, as distinguished from the decision itself to close. There is no need to reach that question here.

. The majority states that, like the Third Circuit in Brockway Motor Trucks v. NLRB, 582 F.2d 720 (3d Cir. 1978), it recognizes merely a presumption, and not a per se rule, that there is a duty to bargain over a partial closing. Looking at the results of the two cases, however, it appears to me that the majority comes rather near to imposing that per se rule. In Brock-way, the parties had stipulated that the partial closing was based on “economic considerations.” The nature of these considerations was not disclosed in the record, and thus it could not be known whether or not that respondent had actually been losing money on the closed operation. In those circumstances the presumptive duty to bargain was not adequately rebutted. Yet the Brockway court did not grant enforcement, but denied the Board’s petition without prejudice. In the present case, the established facts are considerably less compelling from the Board’s point of view. There is a record on which the ALJ expressly found that in fact respondent was losing money; and the record shows that those losses were not due to labor costs. Yet here, the majority promptly grants enforcement.

. Far from deciding such questions as a decision to terminate an operation altogether, Fibreboard did not purport to reach even “other forms of ‘contracting out’ or ‘subcontracting.’ ” Id. at 215, 85 S.Ct. at 405.