Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-96-01326/USCOURTS-caDC-96-01326-0/pdf.json

Parties Involved:
Harter Tomato Products Company
Petitioner
National Labor Relations Board
Respondent

Document Text:

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 11, 1997 Decided January 23, 1998 

No. 96-1326

HARTER TOMATO PRODUCTS COMPANY,

PETITIONER/CROSS-RESPONDENT

v.

NATIONAL LABOR RELATIONS BOARD,

RESPONDENT/CROSS-PETITIONER

On Petition for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

Warren Davison argued the cause for petitioner/crossrespondent. With him on the briefs was Mary E. Bruno.

David A. Seid, Attorney, National Labor Relations Board, 

argued the cause for respondent/cross-petitioner. With him 

on the brief were Linda Sher, Associate General Counsel, 

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Aileen A. Armstrong, Deputy Associate General Counsel, and 

Fred Cornnell, Supervisory Attorney.

Before: WILLIAMS, HENDERSON and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge TATEL.

TATEL, Circuit Judge: After a company which processed 

tomato paste, tomatoes, and other fruits halted operations, 

petitioner leased all of its facilities, continuing only tomato 

paste processing. Applying the successorship doctrine, the 

National Labor Relations Board found that petitioner committed an unfair labor practice by refusing to bargain with 

the union recognized by the predecessor. Agreeing with the 

Board that direct purchase of the predecessor's assets is not a 

prerequisite for successor status and finding that the Board's 

application of the successorship test is supported by substantial evidence, we deny the petition for review and grant the 

Board's cross-application for enforcement.

I

Harter, Inc., the predecessor company, processed industrial 

tomato paste, prunes, canned tomatoes, and canned peaches 

in Yuba City, California. Employing about 1200 people, 

Harter was a member of a multiemployer association that 

entered into a series of collective bargaining agreements with 

the International Brotherhood of Teamsters, an association 

composed of various labor organizations, including Cannery, 

Dried Fruit & Nut Workers' Union, Local 849.

In July 1993, Harter sold its facilities and equipment

including a tomato paste processing plant, a nonoperational 

whole peeled tomato canning plant, a building for processing 

peaches and prunes, and a warehouseto a general partnership which then leased them to petitioner Harter Tomato 

Products Company ("HTPC"), a recently incorporated enterprise previously unrelated to Harter. Through the lease, 

HTPC also obtained the right to use the "Harter" corporate 

name.

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Like its predecessor, HTPC processes tomato paste, using 

the same equipment and production methods previously employed by Harter. Unlike Harter, HTPC processes no tomatoes, peaches, or prunes. During the 1993 season, HTPC 

employed about seventy people, two-thirds of whom had 

previously worked for Harter; it also employed seven former 

Harter managersincluding its general manager, chief financial officer, and tomato processing plant manageras its 

administrative team. Nearly sixty percent of HTPC's customers previously bought tomato paste from Harter. HTPC 

produced almost the same amount of tomato paste, making 

nearly the same amount of money from its tomato paste sales 

as Harter had in the previous year.

About two weeks after HTPC began processing tomato 

paste, the Union asked HTPC to recognize and bargain with 

it as the exclusive representative of HTPC's employees. 

HTPC refused. Instead, it filed a petition for a Boardconducted election. The Board held HTPC's petition in 

abeyance because the day after the company filed it, the 

Union charged HTPC with violating sections 8(a)(1) and (5) of 

the National Labor Relations Act, 29 U.S.C. § 158(a)(1), (5) 

(1994), which prohibit employers from "refus[ing] to bargain 

collectively with the representatives of [their] employees." 

Id. § 158(a)(5). Some two weeks later, HTPC's employees 

signed a petition stating that they no longer wished to be 

represented by the Union.

On May 8, 1995, an Administrative Law Judge found that 

HTPC was a successor to Harter and had therefore violated 

the Act by refusing to bargain with the Union. Appealing to 

the Board, Harter argued that the successorship doctrine 

should not apply when the alleged successor merely leases 

the assets of the predecessor company, that the ALJ failed to 

consider important differences between the two companies in 

finding successor status, and that HTPC believed in good 

faith that a majority of its employees no longer supported the 

Union. The Board rejected all of these arguments. To begin 

with, it held that "the direct transfer of assets to the successor is not a prerequisite to [successor] status" and that HTPC 

was "clear[ly]" a successor employer. Harter Tomato ProdUSCA Case #96-1326 Document #325220 Filed: 01/23/1998 Page 3 of 8
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ucts Co., 321 NLRB 901, 901-902 (1996). In reaching this 

conclusion and analyzing the transition from Harter to HTPC 

from the employees' perspective, the Board found that HTPC 

"took over a distinct segment of Harter Inc.'s business, 

operating it in the same manner using the same equipment 

and the same employees, selling to many of the same customers, with no hiatus in operations." Id. at 903. The Board 

also found that HTPC's election petition and the employees' 

anti-union petition were "tainted by [HTPC's] unfair labor 

practice and ... not reliable indicators of the employees' 

sentiments." Id. at 903 n.16.

HTPC now petitions for review of the Board's order. The 

Board cross-applies for enforcement. We review the Board's 

factual conclusions for substantial evidence, Universal Camera Corp. v. NLRB, 340 U.S. 474, 488 (1951), defer to NLRB 

rules if they are "rational and consistent with the Act," Fall 

River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 42 

(1987), and uphold the Board's application of law to facts 

unless arbitrary or otherwise erroneous, Teamsters Local 

Union No. 515 v. NLRB, 906 F.2d 719, 722 (D.C. Cir. 1990).

II

The National Labor Relations Act's overriding purpose is 

the promotion of "industrial peace." Brooks v. NLRB, 348 

U.S. 96, 103 (1954). To achieve this goal, a union certified 

by the Board as a bargaining-unit representative enjoys a 

conclusive presumption of majority status for one year and a 

rebuttable presumption thereafter. NLRB v. Burns Int'l 

Sec. Servs., Inc., 406 U.S. 272, 279 n.3 (1972). An employer 

can rebut this presumption if on the basis of objective evidence, it has a good faith belief that the union no longer 

enjoys majority support. Lee Lumber and Bldg. Material 

Corp. v. NLRB, 117 F.3d 1454, 1458 (D.C. Cir. 1997). Because transitions from one employer to another are particularly threatening to industrial peace, the rebuttable presumption of majority status continues despite a change of 

employers. Fall River, 482 U.S. at 39-41. Moreover, "the 

new employer has an obligation to bargain with [the] union 

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so long as the new employer is in fact a successor of the old 

employer and the majority of its employees were employed 

by its predecessor." Id. at 41.

The successorship question turns on whether, in view of the 

"totality of the circumstances," there is "substantial continuity" between the new and predecessor employers. Id. at 43. 

More specificallyand central to this casethe Board asks 

whether the new company " 'acquired substantial assets of its 

predecessor and continued, without interruption or substantial change, the predecessor's business operations.' " Id.

(quoting Golden State Bottling Co. v. NLRB, 414 U.S. 168, 

184 (1973)). To answer this inquiry, the Board must consider 

"a number of factors," including "whether the business of 

both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same 

working conditions under the same supervisors; and whether 

the new entity has the same production process, produces the 

same products, and basically has the same body of customers." Id. at 43. The ultimate question is this: Will the 

employees "understandably view their job situations as essentially unaltered"? Golden State Bottling, 414 U.S. at 184; see 

also International Union of Petroleum & Indus. Workers. v. 

NLRB, 980 F.2d 774, 779 (D.C. Cir. 1992) ("The fact-intensive 

inquiry into 'substantial continuity' is undertaken with an 

emphasis on the employees' perspective.") (quoting Fall River, 482 U.S. at 43).

Emphasizing Fall River's use of the word "acquired," 

HTPC argues that it cannot be a successor because it only 

leased Harter's assets from a third party rather than purchasing them directly from Harter. Like the Board, we 

disagree. Nothing in the definition of "acquire""to come 

into possession, control, or power of disposal of often by some 

uncertain or unspecified means"excludes leasing as a means 

of obtaining control. WEBSTER'S THIRD NEW INTERNATIONAL 

DICTIONARY OF THE ENGLISH LANGUAGE UNABRIDGED 18 (1993). 

Although we have never squarely addressed this question, 

two of our sister circuits have held that a direct purchase of 

assets is not a prerequisite for successorship. See NLRB v. 

Houston Bldg. Serv., Inc., 936 F.2d 178, 180-81 & n.2 (5th 

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Cir. 1991) (finding successorship when new company took 

over services contract of the predecessor but did not acquire 

predecessor's assets); Saks & Co. v. NLRB, 634 F.2d 681, 687 

(2nd Cir. 1980) ("[W]hile a transfer of assets may be evidence 

of the requisite continuity of business operations, it has not 

been thought to be a necessary condition ...."). HTPC's 

rigid definition of "acquired," moreover, conflicts with Fall 

River's twin holdings that the Board must examine "a number of factors" when determining successorship and that the 

inquiry's touchstone is whether the employees perceive their 

job situations as essentially unchanged. Fall River, 482 U.S. 

at 43. We therefore hold that if other factors demonstrate 

substantial continuity and if employees perceive their new 

jobs as highly similar the fact that the second company leased 

the assets of its predecessor from a third party rather than 

purchasing them directly from the predecessor does not 

preclude the Board from finding successorship status. See 

id. at 44 n.10 ("So long as there are other indicia of 'substantial continuity,' the way in which a successor obtains the 

predecessor's assets is generally not determinative of the 

'substantial continuity' question.").

HTPC next argues that the Board misapplied the successorship test, claiming that the agency " 'effectively disregarded' the substantial continuity prong of the successorship 

analysis." Again, we disagree. Drawing its factual findings 

from the parties' joint stipulation of facts, the Board faithfully 

applied Fall River's multifactored successorship test, analyzing the results from the perspective of HTPC's employees. 

The Board found many factors weighing in favor of successorship: HTPC leased Harter's facilities, used its equipment, 

engaged in tomato paste processing, employed the same 

production method as Harter, hired Harter's management 

team for similar positions, and sold to Harter's customers. A 

majority of HTPC's employees previously worked for Harter, 

and HTPC began its operation shortly after Harter went out 

of business. Harter Tomato, 321 NLRB at 902-03. Given 

these many similarities, we find the Board's successorship 

conclusion supported by substantial evidence and neither 

unreasonable nor arbitrary.

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Pointing to differences in size, wages, benefits, training, 

customer base, managerial philosophy, and supplier contracts, 

among others, HTPC argues that the two companies are 

substantially dissimilar and that HTPC's employees would 

perceive a material difference between the two. Though 

plausible, this argument is unresponsive to the question we 

face. We ask not whether HTPC's view of the facts supports 

its version of what happened, but rather whether the Board's 

interpretation of the facts is " 'reasonably defensible.' " 

Pittsburgh Press Co. v. NLRB, 977 F.2d 652, 654 (D.C. Cir. 

1992) (quoting Ford Motor Co. v. NLRB, 441 U.S. 488, 497 

(1979)). If so, the case is over, even if HTPC's version might 

support a contrary result. Because we find that the Board 

reached a reasonable conclusion based on evidence in the 

record, we need not consider HTPC's alternative interpretation. See International Union of Elec., Radio & Mach. 

Workers v. NLRB, 604 F.2d 689, 694-95 (D.C. Cir. 1979) 

(internal organizational alterations do not preclude successorship finding when other factors are present).

III

HTPC argues that, even if it were a successor, it had no 

obligation to recognize the Union (and that its election petition should proceed) because it had a good faith belief that 

the Union no longer enjoyed majority support among its 

employees. According to the Board, the employees' antiunion petition, on which HTPC primarily relies for its assertion of good-faith, was tainted by HTPC's refusal to bargain. 

Harter Tomato, 321 NLRB at 903 n.16. We have specifically 

upheld the Board's presumption that an employer's unlawful 

refusal to bargain taints a subsequent anti-union petition. 

Lee Lumber, 117 F.3d at 1458-59. We have also upheld its 

ruling that an employer can rebut this presumption only by 

showing that employee disaffection arose after it resumed 

recognition of the union and bargained for a reasonable time 

without committing additional unfair practices adversely affecting the bargaining, id. at 1458, a situation quite unlike this 

case.

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Relying on the Board's holding that the rebuttable presumption will not operate in "unusual circumstances," Lee 

Lumber and Bldg. Material Corp., 322 NLRB 175, 178 & n.24 

(1996), aff'd in part and remanded in part, 117 F.3d 1454 

(D.C. Cir. 1997), HTPC argues that the presumption should 

not apply here because, among other reasons, "the size of the 

bargaining unit fluctuated radically within a short time." But 

HTPC failed to present this argument to the Board. Although the Board issued Lee Lumber approximately three 

weeks after its decision in this case, HTPC could have filed a 

petition for rehearing. Having failed to do so, it cannot 

present its argument here. 29 U.S.C. § 160(e) (1994) ("No 

objection that has not been urged before the Board ... shall 

be considered by [a reviewing] court [absent] extraordinary 

circumstances."); Woelke & Romero Framing, Inc. v. NLRB,

456 U.S. 645, 666 (1982).

HTPC's final argument, that it had a good faith belief in 

the Union's nonmajority status because it leased Harter's 

assets and because its workforce was smaller than Harter's, 

suffers from the same defect. Although advancing this argument to the Board in general terms, HTPC never identified 

specific reasons for its good faith belief, contending only that 

it rested on "objective evidence" and "objective factors." 

Because HTPC failed to present this argument to the Board 

clearly enough, we cannot consider it now. Consolidated 

Freightways v. NLRB, 669 F.2d 790, 793 (D.C. Cir. 1981) 

("Cases interpreting section 10(e) look to whether a party's 

exceptions are sufficiently specific to apprise the Board that 

an issue might be pursued on appeal.").

We deny the petition for review and grant the Board's 

cross-application for enforcement.

So ordered.

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