Source: https://openjurist.org/595/f2d/664
Timestamp: 2019-04-20 18:18:52+00:00

Document:
Certiorari Denied Jan. 8, 1979. See 99 S.Ct. 839.
Mozart G. Ratner, Washington, D. C., with whom Plato E. Papps and Denis F. Gordon, Washington, D. C., were on the brief, for petitioner.
Peter Carre, Atty., N.L.R.B., Washington, D. C., with whom John S. Irving, Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, and Robert Sewell, Atty. N.L.R.B., Washington, D. C., were on the brief, for respondent.
Before LEVENTHAL, ROBINSON and WILKEY, Circuit Judges.
Petitioner, International Association of Machinists and Aerospace Workers, AFL-CIO (IAM), complained to the National Labor Relations Board that the Boeing Company, as a successor employer, unlawfully refused to bargain with IAM over the initial terms and conditions of the successor employment. The Board interpreting Supreme Court pronouncements on the subject,1 concluded that Boeing had no clear plan to incorporate as a majority of its own workforce employees of the predecessor employer2 a prerequisite to an obligation to bargain with incumbent employees over initial employment terms3 and the litigation is now before us for review of the decision and order of the Board dismissing IAM's complaint.4 We accept the Board's construction and application of Supreme Court doctrine on the duty of a successor employer to negotiate with an incumbent union before fixing such terms and accordingly affirm.
On June 30, 1970, NASA invited bids for an undertaking to furnish essentially the same installation support services as those previously supplied by TWA.6 The term of the undertaking was to be one year commencing April 1, 1971, subject to extensions for successive one-year terms at NASA's option. In response to the invitations, proposals were submitted to NASA by TWA, Boeing and five other companies. The labor costs specified in Boeing's principal bid were based specifically upon the wage rates and fringe benefits stipulated in its existing national agreement with IAM, which also applied to Boeing's "hardware contracts" with NASA for the Center.7 These costs were substantially below those set by TWA's preexisting agreement with IAM for the installation support service unit.
On November 23, 1970, NASA announced that it had selected Boeing as the party with which it would negotiate a contract to provide the installation support services at the Center. Subsequently, Boeing requested a meeting with IAM to discuss the company's bid, and at the meeting, on December 4, 1970, Boeing emphasized that its proposal to NASA was based on its current "hardware contract" at the Center. At an internal meeting on the next day, IAM officials agreed that they could not accept Boeing's plan to apply its existing contract with IAM to installation support service employees because that would result in a reduction in wages and benefits for such of them as were incumbents.12 IAM promptly communicated its decision to Boeing and NASA, indicating that IAM would insist on perpetuation of the agreement with IAM and TWA for these employees.
Despite vigorous protests by TWA and IAM, NASA contracted with Boeing for the installation support services on March 11, 1971. On the day following, IAM requested recognition by Boeing and again urged adoption of the TWA-IAM collective bargaining agreement. Boeing replied on March 19 that it recognized IAM as the representative of the employees on the assumption that they would become an accretion to the unit already covered by the Boeing-IAM contract rather than a distinct unit.13 Boeing predicted that IAM would lack majority representation of the installation and support service workforce, and indicated that the Boeing-IAM contract would be implemented without change.
On April 1, 1971, Boeing began performance of the contract with a workforce of 970, including 380 TWA incumbents, 138 Boeing employees transferred or recalled from layoff, or formerly Boeing personnel 450 outsiders and two employees unidentified as to source. Each hourly employee arriving for work on and after April 1 was given a copy of the Boeing-IAM agreement.
On May 10, 1973, the Board's General Counsel issued a complaint, upon charges filed by IAM, alleging a violation of Section 8(a)(5) of the National Labor Relations Act15 arising from Boeing's failure to consult IAM on the initial terms and conditions of employment for the installation support services unit.16 An administrative law judge recommended that the complaint be dismissed in its entirety.17 Relying on a number of factors, the judge rejected IAM's contention that Boeing had a "perfectly clear" plan to retain a substantial majority of incumbent employees18 a plan that would have created an obligation on Boeing's part, under the Supreme Court's Burns holding,19 to consult with IAM before setting initial employment terms.20 Although the Board agreed with the administrative law judge's conclusions and adopted his recommended order, it expressly chose to ground its decision solely on the reasons set forth in its Spruce Up opinion21 as applied to the facts of the instant case.22 The Board's order was followed by the petition to this court for review.
An employer's collective bargaining obligation derives from Section 8(a)(5) of the National Labor Relations Act, which makes it an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of his employees, subject to the provisions of section (9(a)) of (the Act)."23 Section 9(a) provides in pertinent part that "(r)epresentatives designated or selected for the purpose of collective bargaining by the majority of the employees in a unit appropriate for such purposes, shall be the exclusive representatives of all the employees in such unit for the purposes of collective bargaining . . .."24 By conjunctive operation of these two sections, a union representing a majority of the employees in an appropriate bargaining unit may compel the employer to negotiate with respect to the terms and conditions of employment applicable to that unit.
In Burns,25 the Supreme Court considered the impact of employer succession on the bargaining status of a union previously selected by the predecessor employer's labor force. Like the case before us, Burns involved a succession to duties under a service contract; Burns International Security Services, Inc., had replaced Wackenhut Corporation, which for five years had provided plant-protection services for Lockheed Aircraft Service Company at an airport. Burns retained 27 of the Wackenhut guards and completed its workforce with 15 of its own transferees from other Burns locations. Burns refused to deal with the United Plant Guard Workers of America (UPG), which less than four months earlier had been certified after a Board-supervised election as the exclusive bargaining representative of Wackenhut's employees. UPG demanded that Burns recognize it as the representative of the Burns workforce at the airport and that Burns honor the UPG-Wackenhut collective bargaining agreement.
Thus the Board theorized that a successor employer's intention to retain large numbers of his predecessor's employees is not likely enough to come to fruition when his offer of employment is coupled with an announcement of reduced wages and benefits, and in such instances no duty to bargain over initial terms and conditions of employment would arise.
We think, then, that the Board may with ample reason conclude that only when an employer has indicated a purpose to retain incumbents, but has not concomitantly proposed substantial reductions in benefits, can it "be evident" that the incumbent union "represents a majority of the employees in the (successor) unit" prior to actual induction of the predecessor employees, and that only then may the union demand a say about initial terms of successor employment. To be sure, in view of the substantial harmony existent in the parties' positions, only minor adjustments in initial terms may then remain to be negotiated, and it must be acknowledged that compulsory bargaining usually yields greater returns when labor-management differences are of more appreciable magnitude. It cannot be gainsaid, however, that some affiliation between employer and employee must be at least presumable as a threshold matter before an obligation to bargain arises. So long as perpetuation of the incumbent workforce remains highly speculative, that precondition is not met.
Even when Burns is read, as the Board does, to limit compulsory initial-terms bargaining to situations wherein the successor has indicated that incumbents will be retained and has not concurrently announced downward changes in employment terms, predecessor-employees are afforded an important measure of protection. Once the duty to bargain has thus attached, the successor is obliged to consult the incumbent union before institution of less satisfactory terms. That is significant because unconditional retention-announcements engender expectations, ofttimes critical to employees, that prevailing employment arrangements will remain essentially unaltered. Even when incumbents are not affirmatively led to believe that existing terms will be continued,48 unless they are apprised promptly of impending reductions in wages or benefits, they may well forego the reshaping of personal affairs that necessarily would have occurred but for anticipation that successor conditions will be comparable to those in force.
Despite the intimation in Golden State Bottling Co., supra, that Burns recognizes a successor's duty to bargain only when he hires a majority of his Predecessor's employees, the relevant ratio suggested by the language in Burns itself, see text Infra at note 33 and 406 U.S. at 277, 281, 92 S.Ct. at 1577, 1579, 32 L.Ed.2d at 67, 69 is not the percentage of the predecessor's employees enrolled by the successor but the percentage of the Successor's work force populated by those employees. See cases cited Supra. This is true because the question to be resolved in light of § 9(a) is whether the incumbent union represents a majority of the successor's employees. See text Supra at notes 24-25; Boeing Co. v. IAM, supra note 12, 504 F.2d at 319 & n. 18, 320 & n. 20, 321.
(i)t would seemingly follow that employees of the predecessor would be deemed employees of the successor, dischargeable only in accordance with provisions of the contract and subject to the grievance and arbitration provisions thereof. Burns would not have been free to replace Wackenhut's guards with its own except as the contract permitted.
Id. at 288, 92 S.Ct. at 1582-1583, 32 L.Ed.2d at 73 (footnote omitted).
We note, however, that if the successor employer refuses to hire his predecessor's employees because of their union membership or activity, or to avoid recognition of the union, he violates § 8(a)(3), 29 U.S.C. § 158(a)(3) (1970). See Howard Johnson Co. v. Hotel & Restaurant Employees, supra note 26, 417 U.S. at 262 n. 8, 94 S.Ct. at 2243 n. 8, 41 L.Ed.2d at 56 n. 8; NLRB v. Burns Int'l Security Servs., supra note 19, 406 U.S. at 280-281 n. 5, 92 S.Ct. at 1578-1579 n. 5, 32 L.Ed.2d at 69 n. 5; Tri State Maintenance Corp. v. NLRB, 132 U.S.App.D.C. 368, 408 F.2d 171 (1968); K. B. & J. Young's Super Mkts. v. NLRB, 377 F.2d 463 (9th Cir.), Cert. denied, 389 U.S. 841, 88 S.Ct. 71, 19 L.Ed.2d 105 (1967) (mass discharge of unit personnel to evade bargaining obligations with incumbent union held to violate § 8(a)(3), and refusal to bargain with union held to violate § 8(a)(5); Barrington Plaza & Tragniew, Inc., 185 N.L.R.B. 962 (1970) (discriminatory refusal to hire incumbent employees held to violate §§ 8(a)(1) and (3); because purpose underlying refusal to hire was to evade a bargaining relationship and old employees would have constituted a majority of new work force, refusal also held to violate § 8(a)(5) and bargaining obligation imposed).
(W)here, as here, an employer who is about to acquire a going business manifests an intent to retain his predecessor's employees they become at that point his employees for the purpose of the application of Section 8(a)(5), and he is obligated to bargain with a union which is the statutory representative of such employees.
Id. at 846. While the Board's original order was pending before the Fourth Circuit for enforcement, the Supreme Court decided Burns, and at the Board's request the case was remanded to the Board for reconsideration in light of Burns. See Spruce Up Corp., supra note 21, 209 N.L.R.B. at 194. On remand the Board modified its earlier decision and enunciated the principles at issue in the present case.
The Sixth and Seventh Circuits have each imposed a requirement of preliminary bargaining consistent with the Spruce Up rule. In Spitzer Akron, Inc. v. NLRB, 540 F.2d 841 (6th Cir. 1976), Cert. denied, 429 U.S. 1040, 97 S.Ct. 739, 50 L.Ed.2d 752 (1977), a successor employer expressed his intention to retain the old employees and indicated to them that the operation "would carry on as usual." The court voiced its view that "the facts in the instant case are sufficient . . . to establish that the employees were misled by 'tacit inference' into believing they would be retained without change from the condition of employment." Id. at 846, quoting Brotherhood of Ry. Clerks v. REA Express, Inc., 523 F.2d 164, 171 (2d Cir.), Cert. denied, 423 U.S. 1017, 96 S.Ct. 451, 46 L.Ed.2d 388 (1975). In NLRB v. Bachrodt Chevrolet Co., 468 F.2d 963 (7th Cir. 1972), Vacated and remanded, 411 U.S. 912, 93 S.Ct. 1547, 36 L.Ed.2d 304, On remand, 205 N.L.R.B. 784 (1973), Enforced, 515 F.2d 512 (7th Cir.), Cert. denied, 423 U.S. 927, 96 S.Ct. 274, 46 L.Ed.2d 255 (1975), the court approved the Board's determination of unlawful unilateral action when an employer manifested a purpose to hire his predecessor's employees without contemporaneously advising them of plans to change working conditions and thereafter fixed working conditions different from those of the predecessor. See also Zim's Foodliner, Inc. v. NLRB, 495 F.2d 1131, 1142-1144 (9th Cir.), Cert. denied, 419 U.S. 838, 95 S.Ct. 66, 42 L.Ed.2d 65 (1974).
In Nazareth Regional High School v. NLRB, supra, the Second Circuit invoked Spruce Up to deny a bargaining obligation where a successor employer proposed new employment terms after earlier communicating to the incumbent employees its intention to hire the entire incumbent staff without committing itself to adoption of the old terms. The Board had contended that because Nazareth failed to indicate in an initial announcement of intent to rehire all of the employees that new terms would be imposed, Spruce Up was distinguishable, and that a finding of a duty to bargain at that point was justified. 549 F.2d at 881. Rejecting that thesis, the court proclaimed that "(t)he important consideration in determining whether it is perfectly clear that a successor intends to retain all of the employees is whether they have been Promised re-employment on the existing terms." Id. (emphasis supplied). We have no occasion to consider the restriction thus imposed.
When an employer who has not yet commenced operations announces new terms prior to or simultaneously with his invitation to the previous workforce to accept employment under those terms, we do not think it can fairly be said that the new employer "plans to retain all of the employees in the unit," as that phrase was intended by the Supreme Court. The possibility that the old employees may not enter into an employment relationship with the new employer is a real one, as illustrated by the present facts. Many of the former employees here did not desire to be employed by the new employer under the terms set by him a fact which will often be operative, and which any new employer must realistically anticipate. Since that is so, it is surely not "perfectly clear" to either the employer or to us that he can "plan to retain all of the employees in the unit" under such a set of facts.
Since the relevant factor is the degree of likelihood that incumbents will work for the successor, in some circumstances a specification of terms might refute the clarity of retention plans even though the offered terms are comparable to those afforded by the predecessor employer. Thus, in United Maintenance & Mfg. Co., supra note 40, the Board declined to hold unlawful a refusal to bargain over initial terms when the employer proposed to continue existing terms but the circumstances made it plain that those terms were unacceptable to incumbent employees. On the other hand, a worsening of terms conceivably may not, in some contexts, foredoom substantial retention.
The Burns sentence implies that when a new employer hires only part of the old unit, together with others who were never part of the unit, any decision regarding the employer's duty to bargain with the union affects the new employer, the old employees whom he has hired, and the new employees who were not previously represented by the union. The rights of all three must be considered. Basic to this consideration is § 9(a) of the Act, . . . which places in the hands of the majority of the employees in the unit the decision whether to be represented or not by the union. That majority's right is paramount. The "full complement" standard of Burns attempts to define when the makeup of the controlling majority is to be determined.
Compare note 29 Supra and accompanying text.
If the union had made a request to bargain after Burns had completed its hiring and if Burns had negotiated in good faith and had made offers to the union which the union rejected, Burns could have unilaterally initiated such proposals as the opening terms and conditions of employment on July 1 (the first day of operations) without committing an unfair labor practice. Cf. NLRB v. Katz, 369 U.S. 736 n.12, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962); NLRB v. Fitzgerald Mills Corp., 313 F.2d 260, 272-273 (CA2) cert. denied, 375 U.S. 834, 84 S.Ct. 47, 11 L.Ed.2d 64 (1963); NLRB v. Southern Coach & Body Co., 336 F.2d 214, 217 (CA5 1964).
406 U.S. at 295, 92 S.Ct. at 1586, 32 L.Ed.2d at 77. But absent a bargaining demand by the union, the successor can simply institute the terms on which the employees were hired as the beginning terms of employment, as was the situation in Burns.
The Burns exception concerns only the period prior to actual hiring. The thrust of the exception, as construed by the Board, is to forestall unilateral designation of initial terms only when it seems clear that the predecessor's employees will be retained or when necessary to safeguard employer-generated expectations that incumbents will be rehired on terms comparable to those already in vogue. See text Supra at notes 41-43. It should be evident that a bypass of initial-terms bargaining consistent with the Board's reading of Burns does not lock indefinitely the carried-over workers into conditions not to their liking. Though Burns affords successor employers appreciable freedom in effectuating the successorship transition, the initial adjustment of rights between the employer and incumbents is largely temporal, and if incumbents are retained they can at that point endeavor collectively to improve their lot.

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