Think Twice Before Closing the Shop Doors
In a recent 2-1 decision in Quickway Transportation, Inc., 372 NLRB No. 127 (2023), the National Labor Relations Board (the “Board”) reversed the Administrative Law Judge and ordered a trucking company to re-open its terminal and restore the status quo ante when it held that the company’s decision to terminate all of its recently unionized truck drivers and close the terminal violated sections 8(a)(3) and 8(a)(5) of the National Labor Relations Act (the “Act”). While this decision does not overturn existing Board precedent, as might be expected given the spate of recent decisions that we previously reported and discussed here, here, here, and here, but it is significant because it demonstrates the current Board’s willingness to rigorously sift through and interpret every aspect of the employer’s conduct to infer union animus and to rely on that inference even in the absence of direct evidence.
Factual Background
In this matter, the employer Quickway Transportation, Inc. (“Quickway”), through its affiliates, has terminals with trucking operations throughout the United States, including a terminal in Louisville, Kentucky that only provided services for a national grocery chain. Other than its Louisville and Indianapolis terminals, Quickway is the primary carrier at every one of its terminals that service this grocery chain. At the Louisville terminal, however, two other trucking companies provide the majority of services. Teamsters Local 89 (the “Union”) represents the drivers from these other two trucking companies at the Louisville terminal and started trying to organize Quickway’s drivers there in June 2019. The contentious campaign generated several unfair labor practice complaints that Quickway settled without admitting liability, and the Union won an election for a stipulated unit of truck drivers.
Quickway took all available legal avenues to contest the election, but those efforts ended unsuccessfully when the Board denied review on October 26, 2020. Quickway then promptly agreed to bargain with the Union. Even though wages and other economics were not discussed at the first session, several tentative agreements were reached. The Union did suggest they would expect Quickway to agree to “maintain area standards,” which referred to the collective bargaining agreement (“CBA”) terms of the other two trucking companies at the terminal. The area standards were incompatible with Quickway’s preferred business model that was in effect at all its terminals. A second bargaining session was scheduled a few weeks later on December 10.
Days before the second session, the Quickway drivers met and voted in favor of a strike if the company did not agree to all their proposals on December 10. At the meeting, the Union confirmed that the other two trucking companies would honor any picket line at the terminal. The contemplated strike and any sympathy strike would shut down all operations at the Louisville terminal because the other trucking companies’ CBAs would not allow Quickway to engage in any mitigation efforts, such as a reserved gate or dedicated lane for drivers. Quickway only learned about this two days before the December 10 bargaining session, when a local TV station forwarded them an unattributed email with this information. Quickway did not take any steps to assess or investigate the email’s source or its veracity.
Quickway instead concluded that the economic consequences of these threatened strikes would be financially catastrophic based on its assessment that Quickway would be liable for: (1) replacing all its own striking drivers (up to 62 drivers); (2) replacing all the striking drivers for the other two trucking companies (up to 800 drivers); (3) any spoiled, perishable cargo caused by Quickway drivers abandoning their loads; and (4) any spoiled, perishable cargo caused by the other two trucking companies abandoning their loads. In total, Quickway estimated these liabilities at $2-4M on day one and $1M+ every day thereafter. Quickway immediately sought to be released from its contractual obligations with the grocery chain, and reached agreement to do so on December 9. Quickway notified the Union and its Louisville drivers that Quickway was ceasing all Louisville terminal operations effective 11:00 p.m. on December 9, and that the drivers should not report to work.
On December 10, Quickway and the Union met for their second bargaining session. They did not agree to bargain then or in the future because the Union only wanted to bargain for a CBA, and Quickway was only willing to bargain over the effects of its decision to cease business at the Louisville terminal. That same day, Quickway removed its forty-four trucks from the Louisville terminal and either sold them or transferred them to other terminals. Quickway then subleased the terminal to a third party for the remaining lease term.
The Board Decision
All the Board members agreed that Quickway’s decision to close the Louisville terminal was a partial business closure, and that even if that decision was based on union animus, the closure would only violate section 8(a)(3) of the Act if it was “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” as set forth in Textile Workers Union of America v. Darlington Mfg. Co., 380 U.S. 263, 373-74 (1965). Where the Board members differed is on the required factual showing to satisfy these key elements.
The Board majority conceded there was “no credited evidence” that Quickway “had actual knowledge of an active union campaign at any of its other terminals” when it decided to close its Louisville terminal. Without any direct evidence, the Board majority relied upon language from the subsequent Darlington Board opinion, after the case was remanded from the Supreme Court. That opinion noted that in the absence of actual knowledge an inference may be warranted “if the evidence establishes a strong employer belief that the union is intending imminently to organize the employees in his other operations.” Darlington Mfg. Co., 165 NLRB 1074, 1084 (1967) (emphasis added).
The Quickway Board majority’s inference was based on their finding that Quickway closed the Louisville terminal for “antiunion reasons” and further opined this “indicates a disposition toward a second antiunion purpose.” Then, as to Quickway’s other terminals, the Board majority relied upon their conclusion that (1) drivers at its Indianapolis terminal had failed to elect a union over a year ago and were no longer time-barred from petitioning for a new election; (2) an email from a former employee stating the Union was “coming for” the Hebron terminal (the dissent notes the terminal is beyond the Union’s geographical jurisdiction); and (3) Quickway’s decision before the election to re-route any Murfreesboro terminal drivers from picking up loads at its Louisville terminal to prevent the Murfreesboro drivers from being “infect[ed].” For the second Darlington element, that it was reasonably foreseeable that the closure would have the effect of chilling unionization efforts, the Board majority relied on the Louisville terminal closing and found that it in turn ended renewed unionization efforts at the Indianapolis terminal, because two of the three drivers stopped working with a union organizer stating “[t]here goes our campaign.” The Board majority also concluded it was reasonably foreseeable that other terminals would learn that the Louisville terminal had closed, through their on-site drivers or mechanics.
Although Quickway contended that economic necessity forced it to close the Louisville terminal, the Board majority rejected that argument because Quickway (1) did not investigate the veracity of the strike information; (2) did not investigate other alternatives; and (3) based the decision on unreasonable assumptions that all drivers would strike and would have to be replaced by Quickway and that Quickway would be responsible for all spoiled, perishable goods. The Board majority did not – as the dissent noted – consider whether there was an economic necessity if the anticipated consequences were limited to only the 62 Quickway drivers (versus all 800+ drivers) and only to perishable goods transported by the Quickway drivers.
Practical Considerations
To understand how the current Board is likely to find an inference under Darlington, that an employer chilled unionism and it was reasonably foreseeable that the partial business closure would have that effect, it is helpful to compare the Quickway factual analysis to that in the Darlington Board decision. After the Supreme Court remanded the Darlington case, an evidentiary hearing was held, and the Board relied on an inference to find the partial closure was improper. The case centered around one textile mill in Darlington, South Carolina, which – along with 25 other mills in the South and New England – was owned and controlled by the Milliken family through Roger Milliken, who was the President and active manager for each mill. The Darlington mill was the only mill in over 10 years that voted to be represented by a union. A few days after the vote, Roger Milliken held a board meeting to liquidate the Darlington mill for economic reasons. He told the board that the mill’s financial picture had changed (even though it had stable for years) because of unspecified “promises” made by the union that would have unspecified consequences. The stockholders (Roger Milliken owned 72% of the stock) also voted to liquidate the mill’s assets. A state senator urged Milliken to reconsider and presented a petition to disavow the union signed by 83% of the mill employees. Roger Milliken stood firm because “[a]s long as there are seventeen percent of the hard core crowd here, I refuse to run the mill.” One month after the union vote, Roger Milliken also reached out to the other 20-plus mills the family owned and sent each mill treasurer an article decrying unions with a cover memorandum that asked the treasurers to review the article and carefully consider the steps they are taking at their mill because the unions will be making a “tremendous drive all through this area.”
The factual support for the inference in the Darlington Board decision is linked to the union vote, is contemporaneous with the union vote, and the remaining mills owned and controlled by the Milliken family were informed of impending union activity. By comparison, the Quickway inference includes events that were not contemporaneous with the union vote (e.g., pre-election events) or were not tied to the union vote (e.g., time bar ended to petition for new election), or were outside the union’s jurisdiction (e.g., the Hebron terminal).
In light of this, employers contemplating a partial business closure should be cognizant of the likelihood that the current Board would evaluate the Darlington factors as they did in Quickway, particularly because the Board has the ability to impose sweeping relief that can have significant economic and operational impact. In Quickway, the Board required the company to reopen and restore its business at the Louisville terminal as it existed the date it closed, even though almost three years had passed, Quickway had: ceased all operations and was released from its contract with the grocery chain, disposed of the terminal’s 44 trucks, and subleased the terminal facility to a third party. Quickway was also ordered to offer reinstatement to all discharged employees and make them whole, not just for the prior years’ lost earnings and benefits, but also for any direct or foreseeable pecuniary harm, including moving expenses and ameliorating any tax penalties for lump sum payments.
