National Labor Relations Board v. Bildisco and Bildisco

Bildisco and Bildisco (Bildisco) (defendant) was a general partnership. In April 1980, Bildisco filed a voluntary petition for Chapter 11 bankruptcy. The bankruptcy court permitted Bildisco to operate the business as a debtor-in-possession. Approximately 40–50 of Bildisco’s employees were represented by a union (plaintiff) and worked under a collective-bargaining agreement (CBA) set to expire in 1982. In December 1980, Bildisco, which had already failed to meet some of its CBA obligations, asked the bankruptcy court to allow it to reject the CBA pursuant to 11 U.S.C. § 365. In support of its request, one of Bildisco’s general partners testified that rejecting the CBA would save Bildisco $100,000 in 1981. The bankruptcy court granted Bildisco’s request. The union appealed that decision to the United States Court of Appeals for the Third Circuit. Meanwhile, the union filed a complaint with the National Labor Relations Board (NLRB) (plaintiff), which concluded that Bildisco committed an unfair labor practice by unilaterally rejecting or modifying the CBA before formally rejecting it in bankruptcy court. The NLRB issued an order requiring Bildisco to comply with certain provisions of the CBA and filed a petition with the Third Circuit to enforce its order. The Third Circuit consolidated the NLRB’s petition and the union’s appeal. The Third Circuit ruled for Bildisco in both cases. The union and the NLRB appealed.