Court Opinion

ID: 8911132
Source: CourtListenerOpinion
Date Created: 2022-11-27 03:02:28.055833+00
Date Added: 2024-06-11T17:08:32.449279
License: Public Domain

PELL, Circuit Judge,
concurring in part and dissenting in part.
While I agree with and concur in the majority opinion’s disposition set forth in Part III of the opinion, I am unable to do likewise as to Part II as it appears to me that the result reached by the Board and approved by the majority opinion imposes a duty to bargain on a managerial decision lying at the core of entrepreneurial control. This result is contrary not only to most court decisions in similar situations but is indeed contrary to the Board’s decisions in the area. The Board has not purported to change positions on the matter but has attempted to distinguish its own opinions, an effort which I regard as not having been crowned with success in the present case. Accordingly, I respectfully dissent.
At the outset two matters should be noted which should have a bearing on the disposition of this case. First of all, the Board in its order agreed with the Administrative Law Judge (ALJ) that there was insufficient evidence that the conversion of the restaurant to a self-service cafeteria was discriminatorily motivated. Likewise, the Board did not disagree with the ALJ’s finding that the conversion was based solely on economic considerations. A second matter is that the duty to bargain in a situation of the sort here involved has two aspects. First, there is the question of whether the employer must give the union prior notification of the contemplated change and bargain with the union prior to making the change. Secondly, even if the change was properly made pursuant to the inherent freedom of an employer to manage his business, the question remains of whether subsequent to the change there was a duty to bargain with the union about the effects of the decision. While I will discuss the second aspect further hereinafter, I note at this point that Davis concedes that he was obligated under existing law to bargain on demand over the effects of the conversion.
As seems to be frequently the case in litigation involving the present issue, both parties relied to some extent upon Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964). In any event, that case should be the beginning point of our inquiry and the case properly, as has been pointed out in subsequent cases, must be read in the light of the concurring opinion by Justice Stewart. The majority opinion in Fibreboard did indicate that not all actions leading to termination were mandatory subjects of bargaining, but this was made clearer in the concurring opinion, the emphasis of which, as it appears to me, was that the Court was not holding that actions resulting in termination are per se a mandatory subject of bargaining. Thus, Justice Stewart stated, “The Court most assuredly does not decide that every managerial decision which necessarily terminates an individual’s employment is subject to the duty to bargain.” Id. at 218, 85 S.Ct. at 407. His concurring opinion further pointed out that decisions concerning the basic scope of the enterprise are not in themselves primarily about conditions of employment even though the effect of the decision may be necessarily to terminate employment and that management decisions which are fundamental either to the basic direction of a corporate enterprise or which impinge only indirectly upon employment security should be excluded from the limited area subject to the duty of collective bargaining under the National Labor Relations Act. Id. at 223, 85 S.Ct. at 409. In the present case, it appears to me that we have a situation fundamental to the basic direction of the corporate restaurant enterprise.
*1274Finally, the concurring opinion while acknowledging concern with the problems of automation, technical change, job security, and employment stability, concluded as follows:
It is possible that in meeting these problems Congress may eventually decide to give organized labor or government a far heavier hand in controlling what until now have been considered the prerogatives of private business management. That path would mark a sharp departure from the traditional principles of a free enterprise economy. Whether we should follow it is, within constitutional limitations, for Congress to choose. But it is a path which Congress certainly did not choose when it enacted the Taft-Hartley Act.
Id. at 225-26, 85 S.Ct. at 411.
It should be remembered in applying Fi-breboard that all that was involved in that case was “the substitution of one group of workers for another to perform the same task in the same plant under the ultimate control of the same employer.” Id. at 224, 85 S.Ct. at 410. In the case before this court, as was fully discussed in the ALJ’s decision, the revenues derived from the operation of the restaurant had been sharply falling during the course of the previous year despite Davis’ attempts to stimulate sales. I do not regard the substituting of the customer, who carries his or her own tray, as in any way comparable to the situation that was involved in Fibreboard.
The majority opinion seems to have made the full circle back to a per se rule although this is contrary to the clear lesson of Fibre-board. Thus the majority opinion refers to the traditional position of the Board as being that in all circumstances, except where an employer has decided to eliminate itself as an employer and completely shuts down a discrete line of business, the decision to terminate a portion of the business is the subject of mandatory bargaining. The majority opinion then cites Ozark Trailers Inc., 161 NLRB 561 (1966). The Board’s brief filed in this court makes it clear, however, that the Board’s decision in this case did not rely upon the sweeping principle enunciated in Ozark Trailers.
Courts have made it clear that the holding in Ozark Trailers is not an acceptable one. Thus in Royal Typewriter Co. v. NLRB, 533 F.2d 1030, 1039 (8th Cir. 1976), Judge Webster writing for the court with reference to the holding in Ozark Trailer stated:
We squarely rejected that holding in NLRB v. Drapery Manufacturing Co., supra, 425 F.2d [1026] at 1027-28, and reaffirmed our adherence to the view set forth in NLRB v. Adams Dairy, Inc., 350 F.2d 108, 110-13 (8th Cir. 1965), cert. denied, 382 U.S. 1011, 86 S.Ct. 619, 15 L.Ed.2d 526 (1966), that absent union animus, a company has no legal duty to bargain with a union over the decision to partially shut down its operations because of economic reasons. See also Morrison Cafeterias Consolidated, Inc. v. NLRB, 431 F.2d 254, 257 (8th Cir. 1970). [Footnote omitted.]
In International Union v. NLRB, 152 U.S.App.D.C. 274, 276-77, 470 F.2d 422, 424-25, Justice Clark, sitting by designation in the D.C. Circuit, reviewed the cases of which Fibreboard was the avant-courier. The decision first emphasized the distinctions between Fibreboard and the case before the court, including the very significant element not present in the case before this court that the contracting out of maintenance work involved in Fibreboard had been brought within the collective bargaining framework and that it existed in numerous collective bargaining agreements and was the basis of many grievances. The opinion then referred to the fact that the courts of appeals had used a case-by-case approach. Some of the points noted are as follows:
If the decision appears to be primarily designed to avoid the bargaining agreement with the union or if it produces no substantial change in the operations of the employer, the courts have required bargaining. ... If the decision resulted in the termination of a substantial portion or a distinct line of the employer’s *1275business or involved a major change in the nature of its operations, no bargaining has been required. . . . The difficult cases have been those involving a small but not insubstantial proportion of the employer’s business; in these cases, the results have often hinged on hints of anti-union animus. [Citations omitted.]
In the case before this court, as has already been noted, there is no contention that there was discriminatory conduct or anti-union animus and while the expenditure of capital in making the change may not have been a substantial one in terms of dollars, the very fact that Davis found himself in dire economic straits insofar as the operation of the restaurant was concerned would have eliminated the realistic possibility of a major capital expenditure. Instead he took a course yhich did in my opinion constitute a major change in the nature of the operation, in which case, under the established authority of the court cases, no bargaining on the decision to change should be required.
The Board in the present case, although not purporting to overrule its own precedents, has nevertheless failed to follow them. In Summit Tooling Co., 195 NLRB 479 (1972), enf’d sub nom. N.L.R.B. v. Summit Tooling Co., 83 LRRM 2044 (7th Cir. 1973), the Board disagreeing with the trial examiner, held that there was no violation of the duty to bargain on the part of the employer in closing a manufacturing operation without giving the union an opportunity to bargain concerning the decision to close. The Board conceded that this could be characterized as a partial plant closing but said that the practical effect was to take the employer out of the business of manufacturing certain products. “We do not believe that the Act contemplated eliminating the prerogative of an employer, as here, to eliminate itself as an employer, [footnote omitted].” Id. at 480. In the case before us the employer did not eliminate himself from the service of food but eliminated himself as a restaurant at which people could come in and sit down and have their orders taken by waitresses and in lieu thereof they became participants in a cafeteria line. It takes no expert testimony to realize that the clientele which patronizes a waitress-served restaurant is frequently quite different from that which goes to the cafeteria type of establishment. An immediately apparent, yet significant to the diner, difference between the two methods of operation is that the patron at the cafeteria is relieved of the necessity of adding to his bill for food a gratuity which ordinarily averages in today’s restaurant market fifteen percent of the bill. As anyone who has had to meet the increasingly high cost of food knows, the amount of the tip added to the cost of the meal is no longer an inconsequential item. This was a major change of operation brought about solely for economic purposes.
In Stanley Oil Co. Inc., 213 NLRB 219 (1974), the Board adopted the opinion of the AU whose decision, following the lead of General Motors Corp., 191 NLRB 951 enf’d sub nom. International Union v. NLRB, supra, and Summit Tooling Co., supra, found that there was no duty to bargain on the closing of the servicing department as the employer took itself out of the business of servicing and severed completely its function as an employer of service employees. Here, of course, the employer severed his function as an employer of waitresses who served food to the class of patrons which class apparently was on the minimal side, and in doing so exercised his prerogative as an employer.
In Vegas Vic Inc., 213 NLRB 841 (1974), enf’d, 546 F.2d 828 (9th Cir. 1976), cert. denied, 434 U.S. 818, 98 S.Ct. 57, 54 L.Ed.2d 74 the employer, without consulting the union, changed the operation of its bar from that of a sitdown bar to that of a service bar and a few months later, again without consulting the union, reversed its policy and changed the operation of its service bar back to a sitdown bar. This case more nearly than the previous cases parallels the situation of the case before this court. The ALJ found that the first change affected the terms and conditions of employment and even though the change was not discriminatorily motivated, the requirement *1276upon the part of the employer to consult the union before making the change was not altered. A three member panel of the Board summarily disagreed with the ALJ:
The Administrative Law Judge found that Respondent violated Section 8(a)(5) of the Act by changing its method of operation from a “sit-down” bar to a “service” bar without consulting the Union. We do not agree. The Act does not require bargaining in advance over such changes in method of operation. Rather, the Act’s intent was to leave business management decisions of this kind to the employer, .

Id.

The majority opinion attempts to distinguish Vegas Vic from the present case on the basis that the Board found that the change required a considerable capital expenditure for installing a new bar in a different part of the premises. It is true that the ALJ, in determining a different question, i. e., whether the change in operation was motivated by an attempt to undermine the majority status of the union, referred to the fact that there was a considerable capital expenditure for installing a new bar, and concluded that because the sitdown bar had been operated at a loss that the change was made solely for economic reasons and not because of anti-union animus. The important factor for our present purposes is that there is no indication whatsoever, that I can discern, that the Board gave any significance in its opinion disagreeing with the ALJ to the fact of the expenditure of capital. The only reference was to a “change” in method operation. This, it seems to me, is purely and simply a business management decision.
The majority opinion rests heavily upon Brockway Motor Trucks v. NLRB, 582 F.2d 720 (3rd Cir. 1978). While it is true that the scholarly majority opinion in Brockway lends some support to the position taken in the majority opinion in the present case, I do not regard Brockway as mandating the result reached by the majority opinion in our case. As the court noted in Brockway on the subject of partial closings, “it seems fair to say that the NLRB has taken a pro-bargaining stance that is at odds with the results reached by — and the language in — the opinions of several courts.” Id. at 731. The Brockway opinion, while pointing out factors militating in favor of a duty to bargain before implementing a decision to close or change in the present area, nevertheless declined to enforce the Board’s order relating to an unfair labor practice by Brockway because “the precise nature of the conditions leading to Brockway’s decision is not known, we do not have the desirable, firm factual underpinning necessary to utilize the balancing approach enunciated in this opinion.” Id. at 739-40.
In the case before this court we do not have the unspecified economic considerations adverted to in the Brockway decision. Here we have an undisputed clear and continuing economic loss situation. Further, I find Brockway, insofar as it does lend any support to the majority opinion in the present case, weakened by the vigorous dissent of Judge Rosenn who pointed out that the majority opinion departs from the principles of the Third Circuit’s landmark decision in NLRB v. Royal Plating & Polishing Co., 350 F.2d 191 (3rd Cir. 1965), “and of views prevailing in a majority of federal appellate courts.” Id. at 741. As Judge Rosen pointed out, “[a] further hearing by the Board would be merely an irrelevant inquiry into the degree and circumstances of the economic considerations which impelled the closing.” Id. at 750. There is no necessity for such further hearing in the present case as the economic considerations are clear.
While the two opinions in Brockway provide much helpful background and, indeed, interesting reading, upon ultimate analysis they do not appear to me to require a different result than that which the Board so summarily reached in Vegas Vic.
In sum, the majority opinion in the present case contrary to the majority view does significantly abridge the employer’s freedom to manage his business. It seems a fair conclusion from the Board’s position in this case that while it is not here purport*1277ing to adopt the rule of Ozark Trailers, nevertheless its clear direction is toward a per se rule that even though the motivation for suspending an operation of a business, in whole or in part, is because of economic factors and even though there is no discriminatory conduct nor anti-union animus involved, the employer must give notice to the union and negotiate on the discontinuance before taking any action thereon even though there is thereby a significant abridgement of the employer’s freedom to manage his own business. There can be very few if any discontinuances of operations which will not affect the pay of employees. The Board now seems to be saying, without disavowing cases such as Vegas Vic, that notice and negotiation must precede the implementation of the decision. I think this is beyond the “limited area subject to the duty of collective bargaining” referred to in Justice Stewart’s concurrence in Fibreboard, supra, as being prescribed by the Congressional Act. 379 U.S. at 223, 85 S.Ct. at 410.
The outcome of the present phase of this litigation would not be determined finally, however, even if we were to hold, as I think we should, that under the circumstances of this case there was no duty to bargain prior to the change of the method of operation. Earlier herein I referred to the second aspect of the subject, that of the duty, subsequent to the change of method of operation, to bargain, on demand, over the effects of the conversion. Davis concedes that this was his duty. It is clear from the record, however, that no appropriate demand was ever made subsequent to the changeover. It is essential under the authorities that there be some sort of a request or proposal to bargain over the effect on the employees. The union representatives were informed by employees about September 19 that the facility was closed and employees laid off. Moreover, union representatives were present at the facility for an arbitration hearing when the cafeteria opened on September 24. The union remained silent and did not seek either to discuss the changeover or test Davis’ willingness to bargain over its effect. Neither the union nor the employees raised the issue until around four months later when the facility had been leased to K-P Associates and their negotiations to end the strike had failed.
In International Offset Corp., 210 NLRB 854, 855 (1974), in the decision and order of the Board it was stated that the record revealed in that case that the unions knew or should have known at least by July 1972 that a shutdown was imminent, but there was no evidence that the union either requested or proposed to bargain over the effects on employees. The only position the unions took vis-a-vis the company was, rather, that the transactions which resulted in a large scale transfer of machinery were not actual sales but represented a relocation of plant and work. The Board held that the failure of both unions to seek bargaining over the decision and its effects on employees foreclosed a finding of a section 8(a)(5) violation. As stated by the Board, “[a]s neither Local 119 nor Local 1 requested bargaining, [the company’s] willingness to bargain has never been tested and having never been tested, [the company’s] conduct may not be found violative of the Act.” Id. at 855. [Footnote omitted].
The same result was reached in Stanley Oil Co., Inc., supra at 225 and in Vegas Vic, supra at 841. In the latter case the Board, after stating its disagreement with the ALJ on the matter of the duty to bargain in advance of the change in method of operation, then referred to the second aspect of the question dealing with the “effect” as follows:
but where such a decision has some adverse effect on the employees, they may grieve or request negotiations on the subject of what corrective action the employees desire in order to cure any inequity to the employees which may have resulted from the change. Since the change had an effect on the employees’ earnings, because it apparently resulted in the employees’ receiving less tips from customers, there was a duty to bargain, upon request, about the effects of the change, i. e., whether additional economic benefits should be provided to compen*1278sate the employees for the loss of tips which allegedly resulted from the change. But here no such request was ever made. Accordingly, we will dismiss this allegation of the complaint relating to the change in method of operation, and delete that portion of the remedial order relating thereto.
Id. [Emphasis added].
In any event, therefore, it would appear in the present case that a back pay order for wages lost subsequent to the changeover should not have been ordered.
For the reasons stated herein, it is my opinion that the Board’s order should be denied enforcement in toto.