American Ship Building Co. v. National Labor Relations Board
380 U.S. 300 (1965)
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Rule of Law:
An employer does not commit an unfair labor practice under §§ 8(a)(1) or 8(a)(3) of the National Labor Relations Act by temporarily locking out employees after a bargaining impasse has been reached for the sole purpose of applying economic pressure in support of a legitimate bargaining position.
Facts:
- The American Ship Building Company was primarily engaged in repairing ships on the Great Lakes, a highly seasonal business concentrated in the winter months.
- Since 1952, the company had negotiated five contracts with a group of eight unions, and each negotiation had been preceded by a strike.
- In 1961, negotiations for a new contract began before the current one expired on August 1.
- By August 9, after weeks of negotiations, the parties reached a bargaining impasse over substantial economic issues and separated without any specific plans for further meetings.
- The company was consistently apprehensive of a strike, fearing the unions would time it to cause maximum economic harm, such as when a ship was in the yard or during the busy winter season.
- On August 11, two days after the impasse, the company laid off employees at two of its yards, notifying them that the layoff was due to the unresolved labor dispute.
- Negotiations resumed shortly after the lockout began, and a new two-year contract was agreed upon on October 27, at which point the employees were recalled.
Procedural Posture:
- The unions filed unfair labor practice charges against American Ship Building Company with the National Labor Relations Board (NLRB).
- The NLRB General Counsel issued a complaint alleging violations of §§ 8(a)(1), (3), and (5) of the National Labor Relations Act.
- An NLRB trial examiner conducted a hearing and concluded that the company's actions were economically justified and did not violate the Act.
- On review, a three-to-two majority of the full NLRB reversed the trial examiner, finding that the lockout constituted an unfair labor practice under §§ 8(a)(1) and (3).
- The United States Court of Appeals for the District of Columbia Circuit enforced the NLRB's order.
- The American Ship Building Company (petitioner) successfully petitioned the U.S. Supreme Court for a writ of certiorari to review the appellate court's decision.
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Issue:
Does an employer commit an unfair labor practice under §§ 8(a)(1) and (3) of the National Labor Relations Act by temporarily locking out its employees for the sole purpose of bringing economic pressure to bear in support of its legitimate bargaining position, after a bargaining impasse has been reached?
Opinions:
Majority - Mr. Justice Stewart
No. An employer's use of a temporary lockout after a bargaining impasse solely as a means to bring economic pressure in support of its bargaining position is not an unfair labor practice under §§ 8(a)(1) or 8(a)(3) of the NLRA. The Court's reasoning is that a lockout does not inherently interfere with the right to bargain collectively or the right to strike. The employer's intention was to influence the outcome of negotiations, not to destroy or frustrate the collective bargaining process. The right to strike is the right to cease work; it does not grant the union exclusive control over the timing of all work stoppages. To find a violation of § 8(a)(3), which prohibits discrimination to discourage union membership, there must be evidence of an anti-union motive. The lockout in this case was not 'inherently destructive' of employee rights, and its purpose was to achieve a favorable settlement, not to discourage union membership. The National Labor Relations Board does not have the authority to act as an arbiter of economic weapons by denying the lockout to employers because it believes it gives them 'too much power'.
Concurring - Mr. Justice White
No. While concurring in the judgment to reverse the Board's order, this opinion argues the majority decided an issue not presented by the facts. The layoff was a justifiable response to a lack of work, not an offensive bargaining lockout. The trial examiner found that because the employer and its customers feared a strike, customers were reluctant to bring ships to the yard, leading to a lack of work. An employer is free to shut down for legitimate business reasons. The Board and the Court's majority improperly ignored these findings and instead created a broad, new rule legalizing offensive bargaining lockouts, which was unnecessary to resolve this case.
Concurring - Mr. Justice Goldberg
No. This opinion concurs in the judgment because the employer’s lockout was a justifiable defensive measure, not an offensive tactic. The record clearly demonstrates that the employer had a reasonable basis to fear a strike would be strategically timed by the unions to inflict maximum economic damage. This situation falls within the Board's own pre-existing exception that permits lockouts to safeguard against economic loss where a strike is reasonably threatened. The Court should have resolved the case on these narrow, fact-specific grounds rather than announcing a broad new principle on the legality of all purely offensive bargaining lockouts.
Analysis:
This landmark decision significantly altered the landscape of labor relations by legitimizing the 'offensive' or 'bargaining' lockout as an employer's economic weapon, parallel to the union's right to strike. Prior to this case, lockouts were generally permitted only in limited defensive situations. The ruling curtailed the NLRB's perceived authority to balance the economic power between labor and management, establishing that the NLRA protects the bargaining process but does not regulate the economic weapons parties may use after an impasse, absent anti-union animus. This has had a lasting impact on collective bargaining strategy, providing employers with a powerful tool to pressure unions into accepting contract terms.
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