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the more ambitious legislation has been overturned. While the Supreme Court
upheld a Maine law in Halifax Packing Co. v. Coy?ie (i987) that required severance
payments to victims of a plant closing calculated by a fixed formula based
on years of service, other courts have thrown-out more complex and ambitious
statutes: a Massachusetts law that required severance for layoffs after any change
in control (Simas v. Quaker Fabric Corp, 1993), and a Hawaiian law that compelled
severance for virtually any layoff that could be connected to some structural
change in the business {Akau v. Tel-A-Com, 1990)
In a parallel fashion. Federal WARN legislation requiring notification of
employees of impending layoffs has become accepted as part of the business
IRRELE\^NCE OF FIDUCIARY DUTIES TO SHAREHOLDERS 285
landscape, in part because of its many exceptions and loopholes in case of a
business emergency. On the other hand, courts have generally refused to find
age discrimination when older unionized employees are discarded in favor of
operating newer plants staffed by younger non-union employees (Allen v.
Dierbold, 1994). The court reasoned that if a company wishes to replace more
expensive unionized employees with cheaper non-unionized ones by switching
production to another plant, it is not discriminating merely because the average
age IS significantly higher in the first group.
A similar spectrum is evident in cases centered on community responsibility
of corporations that accept government aid. The more specific the requirement,
the easier it is to enforce. In a case involving development bonds, issued by the
State of Minnesota with the exphcitly stated intention to help investors buy
troubled firms in order to preserve jobs, a court found for the state and against
an investor who used the subsidies of these bonds to buy and dismantle a factory
in order to ship its assets to North Carolina (In re Duluth, 1989). On the other
hand, although the City of Yonkers condemned some land to enable Otis Elevator
to expand and stay in the city, this deal did not require Otis to continue
investing and manufacturing in Yonkers when Otis Elevator could show a few
years later that this particular plant was becoming increasingly unprofitable to
operate (Yonkers v. Otis Elevator. 1988). Similarly, the Michigan Supreme Court
would not hold General Motors to its promise to perpetually manufacture a particular
automobile model in Ypsilanti Township in return for tax benefits (Hattari, 1994).
Unions are certainly one stakeholder group recognized by law as entitled to
exercise power m limiting employer discretion regarding compensation, working
conditions, and work rules. However, a Supreme Court decision twelve years
ago. First Maintenance v. NLRB (1981). denies unions any legal right to participate
in other kinds of corporate decision making, including some categories that
directly affect employees. As a result, unions have little pressure to exert regarding
mergers, downsizing, layoffs, or contracting out work previously
performed by union members unless they can show that such acts were committed
out of an anti-union animus. It is long established law that unions can not
prevent a company from abandoning a plant in the middle of a contract period in
favor of another more profitable site, and even concessions granted in the middle
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