NLRB Finds Business Closure Illegal But Backs Off Order to Reopen

Dec 23, 2023

In RAV Truck & Trailer Repairs, Inc., 372 NLRB No. 25 (Dec. 14, 2022), the National Labor Relations Board (NLRB) issued a supplemental decision in a case that will have implications for employers seeking to close shop, especially those operating in multiple locations.

In March 2020, the NLRB adopted an administrative law judge's holding that RAV Truck & Trailer Repairs, Inc. ("RAV Truck") had violated Sections 8(a)(1) and (3) of the National Labor Relations Act (the "Act") by laying off and discharging two employees who had signed union authorization cards, and by closing down its facility in May 2018 with a purpose of chilling union activity of its employees and of employees at its other facility, Concrete Express of NY, LLC ("Concrete Express").2 Concrete Express shared space with RAV Truck and was a joint employer. The NLRB relied upon unfair labor practices found against Concrete Express in a corresponding case as evidence of RAV Truck's purported anti-union motive. The NLRB ordered RAV to reopen and restore its business operations as they existed in 2018, to reinstate the two employees, and to bargain with the union.

On appeal, the D.C. Circuit agreed with the NLRB that RAV Truck committed unfair labor practices by discharging and laying off the employees who had signed union authorization cards, but sent the case back to the NLRB for further consideration of how closing the facility violated the Act, particularly with regard to the "chilling effect" that the closure had on Concrete Express employees.2 The appellate court noted that in Textile Workers v. Darlington, 380 U.S. 263 (1965), the Supreme Court held that an employer has the right to terminate its entire business even if the closing is motivated by anti-union animus. At the same time, the decision held that a partial closing could be an unfair labor practice if it was intended to chill unionism at a remaining location, and the employer could reasonably foresee that the closing would have this effect. The D.C. Circuit noted that in RAV Truck the Board's reasoning did not fully address under the Darlington standard whether there had been any chilling effect at the second facility. The appellate court also remanded the Board's order that RAV Truck reopen and restore the business operation that existed in May 2018, noting that the NLRB had not explained how such a remedy even remained possible.

On December 14, 2022, in a supplemental decision issued by a three-member panel including two Republican appointees, the NLRB reaffirmed its holding that RAV Truck's closure was motivated by employees’ union organizing activity at its other facility, Concrete Express, and violated the Act. The Board said the company "reasonably could have been foreseen" that RAV Truck's closure would have a chilling effect on union activity at Concrete Express, where it was reasonably foreseeable that Concrete Express employees would fear that their own jobs would be at risk if they continued union activity. In finding RAV Truck acted with "chilling intent," the NLRB cited to contemporaneous union activity at Concrete Express, the fact that RAV Truck was closed prior to the resolution of postelection proceedings at Concrete Express, the geographic proximity of the two facilities, which shared a single, contiguous garage space with employees of both facilities frequently communicating during the work day, and the strong likelihood that Concrete Express employees would learn of the "unlawful" circumstances surrounding RAV Truck's closure. The NLRB again relied upon unfair labor practices found against Concrete Express in a separate case where Concrete Express employees were told the business would close if they voted in the union. The Board did concede the D.C. Circuit's point about remedies, however, concluding that restoration of RAV Truck's business operations was no longer a feasible remedy. It would be unduly burdensome, the Board said, given that four years had passed since RAV Truck's initial closure and that its lease had expired, leaving no place it could lawfully operate.

The NLRB's decision to step back from its prior remedial order highlights the effect protracted litigation may have on the feasibility of Board remedies, particularly orders to reopen closed facilities or resume ceased business operations. For employers operating multiple facilities, the NLRB's decision highlights the potential risks of closing one location—perhaps even a location that has no current union activity—if doing so could be viewed as having a chilling effect on union activity at a different location. RAV Truck reminds employers contemplating a plant closure of the associated risks and legal obligations, including that closing one location could be found to have a chilling effect on union activity at another location. At the same time, the decision suggests that remedial measures in unfair labor practice cases involving such decisions should be limited to those that are legally permissible, feasible, necessary, and not unduly burdensome.

1 RAV Truck & Trailer Repairs, Inc., 369 NLRB. No. 36 (2020).

2 RAV Truck & Trailer Repairs Inc. v. NLRB, 997 F.3d 314 (D.C. Cir. 2021).