Court Opinion

ID: 8889143
Source: CourtListenerOpinion
Date Created: 2022-11-26 22:46:12.116934+00
Date Added: 2024-06-11T17:07:06.089304
License: Public Domain

BAZELON, Chief Judge,
dissenting:
This National Labor Relations Board decision announces and applies a rule automatically exempting “sales” of parts of businesses from the mandatory bargaining requirements of section 8(a)(5), / 29 U.S.C. § 158(a)(5) (1970).1 I be-/ lieve that this rule is inconsistent with the National Labor Relations Act.
*426The majority recognizes that our task is to apply the Supreme Court’s decision in Fibreboard Paper Products Corp. v. NLRB.2 There the Board held that an employer violated section 8(a)(5) by “subcontracting” cleaning work theretofore' performed by its employees to an independent firm without bargaining about the action. Following earlier decisions3 that held all matters within section 8(d)’s definition of “collective bargaining” 4 to be mandatory subjects of bargaining under section 8(a)(5), the Supreme Court found that dismissal of employees — a consequence of the decision to contract out the cleaning work— was a “condition of employment” within the meaning of section 8(d).
The Court was aware, however, that this approach might unacceptably sweep every managerial decision onto the bargaining table. Accordingly, it suggested some countervailing factors by specifying what was not involved in Fibre-board-.
The 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 Com-1/ pany 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 v/significantly abridge his freedom to manage the business.5
Y My brethren seem also to recognize6 that the Supreme Court thus requires the Board to weigh the employees’ interests protected by section 8(a)(5) against the effect bargaining will have on the employer’s freedom to conduct his | business.7
In the instant case the Board failed to 'make such an analysis. Rather, it began with the assertion that Fibreboard does not govern because the disputed transaction was a “sale,” not a “subcontract.” It then looked solely to what it perceived as management’s interests in avoiding the strictures of bargaining over decisions to sell, justifying this approach with the unsupported assertion that “the ! courts” have adopted this rationale in “closely related cases:”
[Djecisions such as this, in which a significant investment or withdrawal of capital will affect the scope and ultimate direction of an enterprise, are matters essentially financial and managerial in nature. They thus lie ah the very core of entrepreneurial con*427trol, and are not the types of subjects which Congress intended to encompass within “rates of pay, wages, hours of employment, or other conditions of employment.” [sic] Such managerial decisions ofttimes require secrecy as well as the freedom to act quickly and decisively. They also involve subject areas as to which determinative financial and operational considerations are likely to be unfamiliar to the employees and their representatives.8
Presenting nothing beyond these broad, and purely speulative, assertions, the Board held that, since the transaction here in question was a “sale,” there was no duty to bargain about it. The Board di'd not determine the interest's” of this particular employer in avoiding bargaining over either this particular decision ~or the alleged general policy of disposing of its retail outlets; the Board similarly failed”'to take account of employee interests in bargaining, either in this particular case or in so-called “sales” cases generally. Thus, viewed as an application of Fibreboard, the Board’s holding was that whenever an employer “sells” part of his operation, his interests in not bargaining about the decision always outweigh the interests of his employees in bargaining.
The Board may adopt an appropriate general rule governing the duty to bargain, but this one is unacceptable.9 Whether a particular transaction constitutes a “sale” is a legal conclusion which defines the property rights of the parties to that transaction.10 Even where Congress has explicitly attached additional consequences to that conclusion, as in income taxation, limitation and redefinition of the term have been deemed necessary because the interests involved differ.11 And the term “sale” has not been incorporated into the National Labor Relations Act for good reason:12 Whether an agreement constitutes a “sale” as a matter of property law may have little or nothing to do with the rel*428ative importance of the interests of management and employees in bargaining about the decision.
The approach of the Board in this case amply demonstrates this point. It based its holding that the instant transaction was a “sale” on four findings of fact: (1) the document used the words “buyer” and “seller;” (2) day-to-day management passed to the buyer; (3) title to the property passed to the buyer; and (4) “there was an arm’s length withdrawal of capital by Respondent and a corresponding investment by the Buyer.”13 Having thus found a “sale,” the Board applied its automatic rule and concluded that the employer had no duty to bargain.
These findings of fact, however, have only the most tenuous connection with the existence in a given case of the kinds of employer interests that the Board itself argued would justify a blanket exemption.14 The employer’s duty to bargain may cost him time and it may threaten the confidentiality of his negotiations; these problems exist whether he is negotiating a subcontract, a sale, or a franchise. But these costs can hardly be said to increase because “title” passes, because day-to-day management changes hands, because he used the words “buyer” and “seller,” or even necessarily because capital is withdrawn by the employer and invested by the “buyer.”
And, if Fibreboard’s analysis is applied, these findings of fact are even less adequate. They omit many facts neeessary to a determination of the employer’s interests, and they shed no light at all on the employees’ interests. Indeed, the most significant difference between this case and Fibreboard is probably the choice of forms made by the draftsmen who prepared the documents.15
I think the Board’s action under review amounts virtually to an invitation to employers to circumvent Fibreboard. I therefore respectfully dissent from this Court’s affirmance of that action.

. Prior to this 3-to-2 decision, 191 NX. R.B. No. 149 (1971) (Members Fanning and Brown, dissenting), the Board had engaged in easc-by-case examinations of the conflicting interests of the employees and management. Bee Ozark Trailers, 161 N.L.K.B. 561 (1966).

. 379 U.S. 203. 85 S.Ct. 398, 13 L.Ed.2d 233 (1964).

. E.g., NLRB v. American Insurance Co., 343 U.S. 395, 72 S.Ct. 824, 96 L.Ed. 1027 (1952).

. For the purposes of this section, to bargain collectively is the performance of the mutual obligation ... to meet . . . and confer in good faith with respect to wages, hours, and other terms and conditions of employment.
National Labor Relations Act § 8(d), 29 U.S.C. § 158(d) (1970).

. 379 U.S. at 213, 85 S.Ct. at 404.

. Majority opinion at 424 (quoting NLRB v. Royal Plating & Polishing Co., 350 F.2d 191 (3d Cir. 1965)).

) Striking this balance, in favor of an '"employer in a recent ease, the Supreme Court reaffirmed the propriety of the approach, suggesting as it did so that employee interests remain a weighty factor :
This is not to say that application of Oliver and Fibreboard turns only on the impact of the. third-party matter on employee interests. Other considerations, such as the effect on the employer’s freedom to conduct his business, may be equally important. See Fibreboard Corp. v. NLRB, supra, 379 U.S. at 217, [85 S.Ct. 398, at 406] (Stewart, J., concurring). But we have no occasion in this case to consider what, if any, those considerations may be.
Allied Chemical & Alkali Workers of America v. Pittsburgh Plate Glass Co., 404 U.S. 157, 179 n. 19, 92 S.Ct. 383, 398 n. 19, 30 L.Ed.2d 341, 358 (1971).

. 191 N.L.R.B. No. 149 (1971).

. A perceptive analysis of the problem, including proposals for a general rule that would take account of more of the relevant factors, is Schwarz, Plant Relocation or Partial Termination — The Duty to Bargain, 89 Fordham L.Rev. 81 (1970).

/ This x>oint also emerges from the Board’s own brief:
“ ‘Sale’ is a word of precise legal iml>ort. It means at all times, a contract between parties, to give and to pass rights of property for money, which the buyer pays or promises to pay to the seller for the thing bought and sold.” Williamson v. Berry, 49 U.S. 495, 544, 8 How. 508, 558 [12 L.Ed. 1170] (1850); Union Stock-Yards & Transit Co. v. Western Land & Cattle Co., 59 F. 49, 53 (C.A. 7, 1893); Helvering v. Nebraska Bridge Supply & Lumber Co., 115 F.2d 288, 290 (C.A. 8, 1940).
Brief for Appellant at 23 n. 8.

. See, e. g., Int.Rev.Code of 1954, §§ 165, 267, 1002. It further appears that the Board may have used at least a part of the tax-related definitions by importing the concept of an “arm’s-length” transaction. See text accomimnying note 13 infra.

. A “total closing” is an entirely distinct matter, as a result of the Sui)reme Court’s decision in Darlington Manufacturing Co. v. NLRB, 380 U.S. 263, 85 S.Ct. 994, 13 L.Ed.2d 827 (1965). Darlington involved an alleged violation of § 8(a) (3), 29 U.S.C. § 158(a) (3) (1970), which prohibits discrimination in terms of employment that is intended to discourage the exercise of rights guaranteed by tlie National Labor Relations Act.
Reversing a Fourth Circuit holding that the closing of one plant in a multi-plant company is entirely within the prerogative of an employer, and thus does not constitute any unfair labor practice, the Supreme Court spoke more broadly than § 8(a)(3) violations:
We hold here only that when an employer closes his entire business, even if the liquidation is motivated by vindictiveness toward the union, such action is not an unfair labor practice.
380 U.S. at 273-274, 85 S.Ct. at 1001 (dictum). Having held, however, that “partial closings” could, under certain circumstances, constitute violations of § 8(a) (3), the Court did not consider such actions under the other prohibitions of § 8(a). See id. at 367 n. 5, 85 S.Ct. 994.

. 191 N.L.R.B. No. 149 (1971).
These findings raise an additional problem, less important only because it is limited to the case before us. The last three are only questionably supported by the record, which in relevant part consists solely of the “agreement” — which establishes a close symbiotic relationship between GM and the retailer — with all prices deleted. Joint Appendix 240-63. The agreement includes a franchise agreement, a sublease of the real property, and a sale of the personal property. If the franchise is removed, the sublease may be cancelled by either party, see Joint Appendix 243, and the franchisee may exercise his option to sell the personal property back to GJ1. Joint Appendix 252.

. See text accompanying note 8 supra.

. In Fibreboard the Court found it unnecessary to discuss the precise nature of the agreement — thus suggesting the insignificance of this factor. But one may speculate as to whether the cleaning equipment formerly used by the company employees was conditionally leased or sold to the subcontractor. Compare that possibility with the instant arrangement, set forth in note 13 supra.