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Parties Involved:
Deferiet Paper 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 October 26, 2000 Decided December 29, 2000

No. 00-1067

Deferiet Paper Company,

Petitioner

v.

National Labor Relations Board,

Respondent

On Petition for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board

Daniel G. Rosenthal argued the cause for petitioner. With

him on the briefs were Donn C. Meindertsma and D. Scott

Poley.

Deirdre C. Fitzpatrick, Attorney, National Labor Relations

Board, argued the cause for respondent. With her on the

brief were Leonard R. Page, General Counsel, Aileen A.

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Armstrong, Deputy Associate General Counsel, and David

Habenstreit, Supervisory Attorney.

Before: Ginsburg, Randolph, and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: In June 1999, Deferiet Paper

Company purchased the assets of a paper mill in Deferiet,

New York, from Champion International. Champion had

collective-bargaining agreements with two unions representing maintenance employees in the mill. Paper, Allied-Industrial, Chemical and Energy Workers, Locals 45 & 56,

AFL-CIO ("PACE") represented production workers and

those maintenance department workers classified as welders,

masons, oilers, tinsmiths, electricians and instrument mechanics. Local Lodge 1009, District Lodge 65 of the International

Association of Machinists and Aerospace Workers, AFL-CIO

("IAM") represented maintenance employees classified as

millwrights, pipefitters, machinists and shift mechanics. Prior to the sale of the mill, there were 102 employees in

Champion's maintenance department. IAM represented 60

of these employees; PACE represented 42. Of the 82 maintenance workers who remained at the mill after the sale to

Deferiet, 46 had been represented by IAM and 36 had been

represented by PACE. Approximately 300 production employees, who work in the same area of the plant, are represented by PACE.

After Deferiet acquired the mill, each union requested

recognition to bargain on behalf of those maintenance employees it had represented in the past. Deferiet declined to

recognize IAM, claiming that the division between IAM and

PACE maintenance employees was no longer appropriate.

Instead Deferiet recognized PACE as the exclusive collective

bargaining agent for all production and maintenance personnel.

In the resulting unit clarification proceeding, Deferiet argued that the IAM unit should be accreted to the PACE unit

because changes in the work duties of plant employees meant

that the IAM employees no longer had a separate community

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of interest. At Champion, maintenance employees were divided by craft classifications that corresponded to their individual skills (e.g., millwrights, pipefitters). According to Deferiet they did little, if any, crossover work between their

respective areas of expertise. Deferiet canceled the traditional craft-titled classifications and replaced them with categories for craftspersons called "A," "B," "AB" or "AA."

Deferiet also developed a new employee handbook, alerting

employees that they might be required to work in areas other

than their traditional craft assignments. Based largely on

these changes, and on the allegation that the PACE/IAM

distinction was solely the result of an historical accident,

Deferiet sought a determination that the separate units were

no longer appropriate.

The Board's Regional Director determined that Deferiet

had made insufficient changes to the operation of the facility

to render the existing IAM unit inappropriate. She viewed

the reclassification of workers as craftspersons A and B as

largely meaningless, since the only basis for assignment to

one of these positions was the historical craft skill of the

employees. All of the IAM-represented workers became

craftspersons A, and all of the PACE-represented workers

became craftspersons B. She found that employees "perform

various maintenance duties in essentially the same manner as

before the sale," and concluded that Deferiet "did not make

significant changes in the structure and operation of the mill."

The Board denied Deferiet's request for review. When the

company thereafter declined to bargain with IAM, the General Counsel filed a complaint and moved for summary judgment. The Board granted this and issued an order requiring

Deferiet to bargain with the IAM upon request. The company petitioned for review and the Board cross-petitioned for

enforcement of its order.

Board precedent in successor-employer cases favors the

retention of historical bargaining units. "A successor employer is required to recognize and negotiate with the bargaining agent of a predecessor's employees if the bargaining

unit remains appropriate and the successor does not have a

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good faith doubt of the union's continuing majority support."1

Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114 (D.C. Cir.

1996). Deferiet tells us that this precedent, which the Board

invoked here, conflicts with a dictum in NLRB v. Burns

International Security Services, Inc., 406 U.S. 272, 281

(1972).2 The trouble is that Deferiet never made any such

argument during the Board proceedings. We therefore cannot decide whether the Board should have followed the Burns

dictum. See 29 U.S.C. s 160(e) ("No objection that has not

been urged before the Board, its member, agent, or agency,

shall be considered by the court, unless the failure or neglect

to urge such objection shall be excused because of extraordinary circumstances."); Exxel/Atmos, Inc. v. NLRB, 147 F.3d

972, 978 (D.C. Cir. 1998).

Deferiet's fall-back position is that the old IAM unit is not

an appropriate unit despite the presumption in favor of

historical bargaining units. Why? Because creation of the

IAM unit at the mill was an "historical accident"; because

Deferiet substantially restructured the operations of the mill

after its acquisition; and because under the Board's "traditional standards," a separate IAM unit for some maintenance

workers in the newly-acquired mill would be inappropriate.

The Regional Director rejected the company's claims after

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1 Deferiet concedes that it is a successor employer. It does not

contest the majority support of IAM within a unit comprised of

employees in the crafts this union previously represented, but the

company denies that majority support exists for IAM within the

larger unit of all production and maintenance workers.

2 Burns held that a successor employer has an obligation to

bargain with the union if the bargaining unit remained unchanged

and a majority of the employees hired by the new employer are

represented by "a recently certified bargaining agent," id. To this

the Supreme Court added: "It would be a wholly different case if

the Board had determined that because [the successor's] operational structure and practices differed from those of [the predecessor

employer] and the ... bargaining unit was no longer an appropriate

one." Id. at 280. This sentence, according to Deferiet, precludes

the Board from adopting a presumption in favor of historical

bargaining units.

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examining each of its alleged post-acquisition changes, and

asking whether the change significantly altered the former

IAM unit. But the proper inquiry was not simply whether

the evidence showed "significant changes in the operation of

the mill since [Deferiet] has assumed control." Neither the

decisions of this court nor those of the Board sanction a

purely comparative inquiry. See Trident Seafoods, 101 F.3d

at 118 (collecting standards); Indianapolis Mack Sales &

Serv., 288 N.L.R.B. 1123, 1126 (1988); Crown Zellerbach

Corp., 246 N.L.R.B. 202, 203 (1979). Although "the Board

places a heavy evidentiary burden on a party attempting to

show that historical units are no longer appropriate," this

burden can be met if "historical units no longer conform

reasonably well to other standards of appropriateness." Trident Seafoods, 101 F.3d at 118 (internal quotations and

citations omitted).

In determining whether a unit is appropriate, the Board

exercises wide discretion. Packard Motor Car Co. v. NLRB,

330 U.S. 485, 491 (1947). Determinations of this sort take

into account a variety of factors, and often focus on whether

the unit represents a "community of interest." See Robert A.

Gorman, Basic Text on Labor Law 68-74 (1976); Theodore

Kheel, Labor Law s 14.03 (2000) (listing various factors

taken into account by the Board). In the context of a

successor employer, the appropriateness inquiry is not the

same inquiry the Board would conduct when certifying a unit

for the first time. Trident Seafoods, 101 F.3d at 118. We

wrote in Trident Seafoods: "In most cases, a historical unit

will be found appropriate if the predecessor employer recognized it, even if the unit would not be appropriate under

Board standards if it were being organized for the first

time,"3 id.--by which we meant that the Board will sustain

the historical unit even if it is not the most appropriate one.

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3 We do not believe the court in Trident Seafoods meant to say

that in successorship cases, the Board approves improper bargaining units. In support of the sentence quoted in the text, the court

cited the Board's decision in Indianapolis Mack. The Board there

ruled that a change in ownership of a facility will not automatically

uproot historical units, "as long as they remain appropriate." 288

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This is not to say that a historical unit will always be

upheld in the face of "compelling evidence" of inappropriateness. Crown Zellerbach Corp., 246 N.L.R.B. at 204; Met

Elec. Testing Co., 331 N.L.R.B. No. 106, 2000 WL 1058928, at

*1 (July 27, 2000). The most common way for a successor to

meet its burden is to show that it has made significant

revisions in plant operations and employee duties. See Firestone Synthetic Fibers Co., 171 N.L.R.B. 1121, 1123 (1968)

(finding that similarities in working conditions outweighed the

historic unit). Even if the successor implements no significant changes, we held in Trident Seafoods that an historical

unit may still be found inappropriate if it fails to "conform

reasonably well to other standards of appropriateness." 101

F.3d at 119-20. On occasion, both pre-acquisition factors and

post-acquisition changes in plant operation will combine to

render an historical unit inappropriate. Rock-Tenn Co., 274

N.L.R.B. 772 (1985); see also Banknote Corp. of Am. v.

NLRB, 84 F.3d 637, 649 (2d Cir. 1996) (presumption in favor

of historical units inappropriate when there is evidence that

units had been rendered obsolete by industry shifts or

changes in the operation of the predecessor). A unit might,

for instance, be only marginally appropriate prior to the

transaction, in which event relatively small changes following

the transfer of ownership could push it into the category of an

inappropriate unit. Whether this describes the situation in

the Deferiet paper mill is for the Board, not us, to say. The

question is--does the IAM unit "conform reasonably well to

other standards of appropriateness"? Indianapolis Mack

Sales & Serv., 288 N.L.R.B. at 1123 n.5. The Board never

answered this question. Its Regional Director failed to consider the appropriateness of the unit as such. Her review

was purely comparative--were Deferiet's changes so significant, or so major, or so fundamental that the old unit had

been replaced by a new and different one. She did not go

further and determine whether Deferiet had shown by "com-

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N.L.R.B. at 1126. Properly viewed, the sentence in Trident Seafoods conveys the idea that because the burden falls upon the

employer to demonstrate inappropriateness, the Board may wind up

certifying a less-than-ideal unit.

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pelling evidence" that the old unit no longer conformed to the

Board's contemporaneous standards of appropriateness.

We therefore deny enforcement of the Board's order, set

aside its decision that Deferiet committed unfair labor practices when it refused to recognize the IAM, and remand the

case to the Board for further proceedings.

So ordered.

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