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NLRB Orders Company to Reopen Plant Despite Lost Demand

The National Labor Relations Board (NLRB) is once again dictating how and when a company can close a facility, magnified in the recent case Gunderson Rail Service, LLC issued June 23, 2016 by the NLRB.  The Board ordered a Tucson, Arizona employer to restore its operations there on the grounds that it failed to bargain over the relocation decision with the union representing its employees. In September 2013, Gunderson Rail Services, a nationwide railcar repair company, announced its plans to close its facility in Tucson, Arizona because TTX, Gunderson’s largest customer, decided to send its work to a different facility. Due to the demand loss in Tucson, Gunderson decided to close its plant. At the time of its announcement, Gunderson offered employees the opportunity to work at other Gunderson sites outside of Arizona. However, a majority of the employees at the Tucson facility previously authorized Sheet Metal Workers’ International Association (“the union”) to represent them in collective bargaining. The union sued Gunderson, arguing that Gunderson should have negotiated the plant’s closure. On June 23, 2016, the NLRB ordered Gunderson to reopen its facility in Tucson, Arizona and reinstate its employees because Gunderson failed to negotiate the plant’s closing with the union. The NLRB based its order on several findings. First, it found that Gunderson retained enough work in Tucson to keep a handful of employees. Because Gunderson had enough work for a few employees, the NLRB believed Gunderson could have negotiated running the Tucson plant as a smaller operation. Second, it found that Gunderson’s business was not fundamentally changed by the plant’s closure. The NLRB reasoned that because Gunderson continued doing the same kind of work as it did before the shutdown, Gunderson could have continued to operate in Tucson despite the loss of demand. Based on these findings, the NLRB ordered Gunderson to reopen the plant, reinstate its employees, and begin bargaining with the union. This case highlights the continuing importance the NLRB places on negotiating with a union before making major decisions of this nature.  The company could have closed the Tucson facility in this case, but it was unlawful to do so without first bargaining with the union over the decision, illustrating the importance of utilizing experienced labor counsel to guide a company through the decision-making process.