Source: https://supreme.justia.com/cases/federal/us/406/272/
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Justia › US Law › US Case Law › US Supreme Court › Volume 406 › NLRB v. Burns Int'l Security Svcs., Inc.
Burns International Security Services, Inc.
"give retroactive effect to all the clauses of said [Wackenhut] contract and, with interest of 6 percent, make whole its employees for any losses suffered by reason of Respondent's [Burns'] refusal to honor, adopt and enforce said contract."
1. Where the bargaining unit remained unchanged and a majority of the employees hired by the new employer were represented by a recently certified bargaining agent, the NLRB correctly implemented the express mandates of §§ 8(a)(5) and 9(a) of the Act by ordering the new employer, Burns, to bargain with the incumbent union, UPG. Pp. 406 U. S. 277-281.
2. While successor employers may be bound to recognize and bargain with the incumbent union, they are not bound by the substantive provisions of a collective bargaining agreement negotiated by their predecessors but not agreed to or assumed by them. John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543, distinguished. Pp. 406 U. S. 281-291.
3. The NLRB's order for monetary restitution to Burns' employees cannot be sustained on the ground that Burns committed an unfair labor practice by unilaterally changing existing terms and conditions of employment. Burns had no previous relationship to the unit and no outstanding terms and conditions of employment, so that Burns did not change its terms and conditions of employment when it specified the initial basis on which it would hire employees when it inaugurated its protection service at the plant. Pp. 406 U. S. 292-296.
WHITE, J., delivered the opinion for a unanimous Court in No. 71-123, and for the Court in No. 71-198, in which DOUGLAS, STEWART, MARSHALL, and BLACKMUN, JJ., joined. REHNQUIST, J., filed an opinion concurring in No. 71-123 and dissenting in No. 71198, in which BURGER, C.J., and BRENNAN and POWELL. JJ., joined, post, p. 406 U. S. 296.
Burns International Security Services, Inc. (Burns), replaced another employer, the Wackenhut Corp. (Wackenhut), which had previously provided plant protection services for the Lockheed Aircraft Service Co. (Lockheed) located at the Ontario International Airport in California. When Burns began providing security service, it employed 42 guards; 27 of them had been employed by Wackenhut. Burns refused, however, to bargain with the United Plant Guard Workers of America (UPG) which had been certified after a National Labor Relations Board (Board) election as the exclusive bargaining representative of Wackenhut's employees less than four months earlier. The issues presented in this case are whether Burns refused to bargain with a union representing a majority of employees in an appropriate unit and whether the National Labor Relations Board could order Burns to observe the terms of a collective bargaining contract signed by the union and Wackenhut that Burns had not voluntarily assumed. Resolution turns to a great extent on the precise facts involved here.
the Regional Director certified the union as the exclusive bargaining representative for these employees, and, on April 29, Wackenhut and the union entered into a three-year collective bargaining contract.
Meanwhile, since Wackenhut's one-year service agreement to provide security protection was due to expire on June 30, Lockheed had called for bids from various companies supplying these services, and both Burns and Wackenhut submitted estimates. At a pre-bid conference attended by Burns on May 15, a representative of Lockheed informed the bidders that Wackenhut's guards were represented by the union, that the union had recently won a Board election and been certified, and that there was in existence a collective bargaining contract between Wackenhut and the union. App. 4-5, 126. [Footnote 1] Lockheed then accepted Burns' bid, and, on May 31, Wackenhut was notified that Burns would assume responsibility for protection services on July 1. Burns chose to retain 27 of the Wackenhut guards, and it brought in 15 of its own guards from other Burns locations.
it as the bargaining representative of Burns' employees at Lockheed, and that Burns honor the collective bargaining agreement between it and Wachenhut. When Burns refused, the UPG filed unfair labor practice charges, and Burns responded by challenging the appropriateness of the unit and by denying its obligation to bargain.
related to the finding of unlawful assistance of a rival union and the refusal to bargain, but it held that the Board had exceeded its powers in ordering Burns to honor the contract executed by Wackenhut. Both Burns and the Board petitioned for certiorari, Burns challenging the unit determination and the bargaining order and the Board maintaining its position that Burns was bound by the Wackenhut contract, and we granted both petitions, though we declined to review the propriety of the bargaining unit, a question which was presented in No. 71-198. 404 U.S. 822 (1971).
Because the Act itself imposes a duty to bargain with the representative of a majority of the employees in an appropriate unit, the initial issue before the Board was whether the charging union was such a bargaining representative.
[Burns] performing plant protection duties as determined in Section 9(b)(3) of the [National Labor Relations] Act at Lockheed, Ontario International Airport, excluding office clerical employees, professional employees, supervisors, and all other employees as defined in the Act."
This determination was affirmed by the Board, accepted by the Court of Appeals, and is not at issue here, because pretermitted by our limited grant of certiorari.
The trial examiner then found, inter alia, that Burns "had in its employ a majority of Wackenhut's former employees," and that these employees had already expressed their choice of a bargaining representative in an election held a short time before. Burns was therefore held to have a duty to bargain, which arose when it selected as its workforce the employees of the previous employer to perform the same tasks at the same place they had worked in the past.
cards for another union, and thereby committing the unfair labor practice of which it was found guilty by the Board. That holding was not challenged here, and makes it imperative that the situation be viewed as it was when Burns hired its employees for the guard unit, a majority of whom were represented by a Board-certified union. See NLRB v. Gissel Packing Co., 395 U. S. 575, 395 U. S. 609, 395 U. S. 610-616 (1969).
much at oral argument. [Footnote 6] But where the bargaining unit remains unchanged and a majority of the employees hired by the new employer are represented by a recently certified bargaining agent, there is little basis for faulting the Board's implementation of the express mandates of § 8(a)(5) and § 9(a) by ordering the employer to bargain with the incumbent union. This is the view of several courts of appeals, and we agree with those courts. NLRB v. Zayre Corp., 424 F.2d 1159, 1162 (CA5 1970); Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025, 1026-1027 (CA7 1969); S.S. Kresge Co. v. NLRB, 416 F.2d 1225, 1234 (CA6 1969); NLRB v. McFarland, 306 F.2d at 220.
"The committee wishes to dispel any possible false impression that this bill is designed to compel the making of agreements or to permit governmental supervision of their terms. It must be stressed that the duty to bargain collectively does not carry with it the duty to reach an agreement, because the essence of collective bargaining is that either party shall be free to decide whether proposals made to it are satisfactory."
which the Act, in itself, does not attempt to compel."
NLRB v. Jones & Laughlin Steel Corp., 301 U. S. 1, 301 U. S. 45 (1937). See also NLRB v. American National Insurance Co., 343 U. S. 395, 343 U. S. 401-402 (1952); Teamsters Local 367 v. NLRB, 365 U. S. 667, 365 U. S. 676-677 (1961).
"the present Board has gone very far, in the guise of determining whether or not employers had bargained in good faith, in setting itself up as the judge of what concessions an employer must make and of the proposals and counter-proposals that he may or may not make. . . . [U]nless Congress writes into the law guides for the Board to follow, the Board may attempt to carry this process still further and seek to control more and more the terms of collective bargaining agreements."
"[W]hile the Board does have power . . . to require employers and employees to negotiate, it is without power to compel a company or a union to agree to any substantive contractual provision of a collective bargaining agreement."
agreement in that same dispute. The Board's remedial powers under § 10 of the Act are broad, but they are limited to carrying out the policies of the Act itself. One of these fundamental policies is freedom of contract."
397 U.S. at 397 U. S. 102, 397 U. S. 108 (citations omitted).
"In none of the previous successorship cases has the Board ever reached that result. The successor has always been held merely to have the duty of bargaining with his predecessor's union. [Footnote 8]"
The Board, however, has now departed from this view, and argues that the same policies that mandate a continuity of bargaining obligation also require that successor employers be bound to the terms of a predecessor's collective bargaining contract. It asserts that the stability of labor relations will be jeopardized, and that employees will face uncertainty, and a gap in the bargained-for terms and conditions of employment, as well as the possible loss of advantages gained by prior negotiations, unless the new employer is held to have assumed, as a matter of federal labor law, the obligations under the contract entered into by the former employer. Recognizing that, under normal contract principles, a party would not be bound to a contract in the absence of consent, the Board notes that, in John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543, 376 U. S. 550 (1964), the Court declared that "a collective bargaining agreement is not an ordinary contract," but is, rather, an outline of the common law of a particular plant or industry. The Court held in Wiley that, although the predecessor employer which had signed a collective bargaining contract with the union had disappeared by merger with the successor, the union could compel the successor to arbitrate the extent to which the successor was obligated under the collective bargaining agreement. The Board contends that the same factors that the Court emphasized in Wiley, the peaceful settlement of industrial conflicts and "protection [of] the employees [against] a sudden change in the employment relationship," id. at 376 U. S. 549, require that Burns be treated under the collective bargaining contract exactly as Wackenhut would have been if it had continued protecting the Lockheed plant.
decision emphasized "[t]he preference of national labor policy for arbitration as a substitute for tests of strength before contending forces," and held only that the agreement to arbitrate, "construed in the context of a national labor policy," survived the merger, and left to the arbitrator, subject to judicial review, the ultimate question of the extent to which, if any, the surviving company was bound by other provisions of the contract. Id. at 376 U. S. 549, 376 U. S. 551.
Wiley's limited accommodation between the legislative endorsement of freedom of contract and the judicial preference for peaceful arbitral settlement of labor disputes does not warrant the Board's holding that the employer commits an unfair labor practice unless he honors the substantive terms of the preexisting contract. The present case does not involve a § 301 suit, nor does it involve the duty to arbitrate. Rather, the claim is that Burns must be held bound by the contract executed by Wackenhut, whether Burns has agreed to it or not and even though Burns made it perfectly clear that it had no intention of assuming that contract. Wiley suggests no such open-ended obligation. Its narrower holding dealt with a merger occurring against a background of state law that embodied the general rule that, in merger situations, the surviving corporation is liable for the obligations of the disappearing corporation. See N.Y. Stock Corp. Law § 90 (1951); 15 W. Fletcher, Private Corporations § 7121 (191 rev. ed.). Here, there was no merger or sale of assets, and there were no dealings whatsoever between Wackenhut and Burns. On the contrary, they were competitors for the same work, each bidding for the service contract at Lockheed. Burns purchased nothing from Wackenhut, and became liable for none of its financial obligations. Burns merely hired enough of Wackenhut's employees to require it to bargain with the union as commanded by § 8(a)(5) and § 9(a).
But this consideration is a wholly insufficient basis for implying either in fact, or in law that Burns had agreed, or must be held to have agreed, to honor Wackenhut's collective bargaining contract.
"allowing the Board to compel agreement when the parties themselves are unable to agree would violate the fundamental premise on which the Act is based -- private bargaining under governmental supervision of the procedure alone, without any official compulsion over the actual terms of the contract."
H. K. Porter Co. v. NLRB, 397 U.S. at 397 U. S. 108.
of the labor force, work location, task assignment, and nature of supervision. Saddling such an employer with the terms and conditions of employment contained in the old collective bargaining contract may make these changes impossible, and may discourage and inhibit the transfer of capital. On the other hand, a union may have made concessions to a small or failing employer that it would be unwilling to make to a large or economically successful firm. The congressional policy manifest in the Act is to enable the parties to negotiate for any protection either deems appropriate, but to allow the balance of bargaining advantage to be set by economic power realities. Strife is bound to occur if the concessions that must be honored do not correspond to the relative economic strength of the parties.
In many cases, of course, successor employers will find it advantageous not only to recognize and bargain with the union but also to observe the preexisting contract, rather than to face uncertainty and turmoil. Also, in a variety of circumstances involving a merger, stock acquisition, reorganization, or assets purchase, the Board might properly find as a matter of fact that the successor had assumed the obligations under the old contract. Cf. Oilfield Maintenance Co., 142 N.L.R.B. 1384 (1963). Such a duty does not, however, ensue as a matter of law from the mere fact than an employer is doing the same work in the same place with the same employees as his predecessor, as the Board had recognized until its decision in the instant case. See cases cited supra at 406 U. S. 284. We accordingly set aside the Board's finding of a § 8(a)(5) unfair labor practice insofar as it rested on a conclusion that Burns was required to, but did not, honor the collective bargaining contract executed by Wackenhut.
"give retroactive effect to all the clauses of said [Wackenhut] contract and, with interest of 6 percent, make whole its employees for any losses suffered by reason of Respondent's [Burns'] refusal to honor, adopt and enforce said contract"
"[o]n or about July 1, 1967, Respondent [Burns] unilaterally changed existing wage rates, hours of employment, overtime wage rates, differentials for swing shift and graveyard shift, and other terms and condition of employment of the employees in the appropriate unit . . . ,"
"[t]he obligation to bargain imposed on a successor employer includes the negative injunction to refrain from unilaterally changing wages and other benefits established by a prior collective bargaining agreement even though that agreement had expired. In this respect, the successor employer's obligations are the same as those imposed upon employers generally during the period between collective bargaining agreements."
be sustained on the ground that Burns unilaterally changed existing terms and conditions of employment, thereby committing an unfair labor practice which required monetary restitution in these circumstances.
* Together with No. 71-198, Burns International Security Services, Inc. v. National Labor Relations Board et al., also on certiorari to the same court.
A Burns executive later admitted in the unfair labor practice proceeding that Burns was aware of the union's status, the unit certification, and the collective bargaining contract after the May 15 meeting. App. 105.
"The question before us thus narrows to whether the national labor policy embodied in the Act requires the successor employer to take over and honor a collective bargaining agreement negotiated on behalf of the employing enterprise by the predecessor. We hold that, absent unusual circumstances, the Act imposes such an obligation."
"We find, therefore, that Burns is bound to that contract as if it were a signatory thereto, and that its failure to maintain the contract in effect is violative of Sections 8(d) and 8(a)(5) of the Act."
"[n]o election shall be directed in any bargaining unit or any subdivision within which in the preceding twelve-month period, a valid election shall have been held."
See NLRB v. Gissel Packing Co., 395 U. S. 575, 395 U. S. 599 n. 14 (1969).
Where an employer remains the same, a Board certification carries with it an almost conclusive presumption that the majority representative status of the union continues for a reasonable time, usually a year. See Brooks v. NLRB, 348 U. S. 96, 348 U. S. 98-99 (1954). After this period, there is a rebuttable presumption of majority representation. Celanese Corp. of America, 95 N.L.R.B. 664, 672 (1951). If there is a change of employers, however, and an almost complete turnover of employees, the certification may not bar a challenge if the successor employer is not bound by the collective bargaining contract, particularly if the new employees are represented by another union or if the old unit is ruled an accretion to another unit. Cf. McGuire v. Humble Oil & Refining Co., 355 F.2d 352 (CA2), cert. denied, 384 U.S. 988 (1966). See n5, infra.
"All of the important factors which the Board has used and the courts have approved are present in the instant case: 'continuation of the same types of product lines, departmental organization, employee identity and job functions.' . . . Both Burns and Wackenhut are nationwide organizations; both performed the identical services at the same facility; although Burns used its own supervisors, their functions and responsibilities were similar to those performed by their predecessors; and finally, and perhaps most significantly, Burns commenced performance of the contract with 27 former Wackenhut employees out of its total complement of 42."
441 F.2d 911, 915 (1971) (citation omitted). Although the labor policies of the two companies differed somewhat, the Board's determination that the bargaining unit remained appropriate after the changeover meant that Burns would face essentially the same labor relations environment as Wackenhut: it would confront the same union representing most of the same employees in the same unit.
The Board has never held that the National Labor Relations Act itself requires that an employer who submits the winning bid for a service contract or who purchases the assets of a business be obligated to hire all of the employees of the predecessor though it is possible that such an obligation might be assumed by the employer. But cf. Chemrock Corp., 151 N.L.R.B. 1074 (1965). However, an employer who declines to hire employees solely because they are members of a union commits a § 8(a)(3) unfair labor practice. See K.B. & J. Young's Super Markets, Inc. v. NLRB, 377 F.2d 463 (CA9), cert. denied, 389 U.S. 841 (1967); NLRB v. New England Tank Industries, Inc., 302 F.2d 273 (CA1), cert. denied, 371 U.S. 875 (1962); Piasecki Aircraft Corp. v. NLRB, 280 F.2d 575 (CA3 1960), cert. denied, 364 U.S. 933 (1961); Tri-State Maintenance Corp., 167 N.L.R.B. 933 (1967), enforced with mod. sub nom. Tri-State Maintenance Corp. v. NLRB, 132 U.S.App.D.C. 368, 408 F.2d 171 (1968). Further restrictions on the successor employer's choice of employees would seem to follow from the Board's instant decision that the employer must honor the preexisting collective bargaining contract. See infra at 406 U. S. 288-290.
"Q. But [counsel for the Union], when he argued, said that, even if [Burns] hadn't taken over any [employees of Wackenhut], even if they hadn't taken over a single employee, the legal situation would be the same."
"Mr. Come [for the NLRB]. We do not go that far. We don't think that you have to go that far in --"
"Q. Do you think it has to be a majority?"
"Mr. Come. I wouldn't say that it has to be a majority; I think it has to be a substantial number. It has to be enough to give you a continuity of employment conditions in the bargaining unit."
Tr. of Oral Arg. 64-65.
Two exceptions to this general reluctance to interfere with free collective bargaining are the imposition of compulsory arbitration during wartime, Exec.Order No. 9017 (1942), and, on occasion, in the railroad industry, 77 Stat. 132, 81 Stat. 122. Congress has consistently rejected compulsory arbitration even as a remedy for "national emergency" disputes, however. See Goldberg, The Labor Law Obligations of a Successor Employer, 63 Nw.U.L.Rev. 735, 742-743 (1969).
When the union that has signed a collective bargaining contract is decertified, the succeeding union certified by the Board is not bound by the prior contract, need not administer it, and may demand negotiations for a new contract, even if the terms of the old contract have not yet expired. American Seating Co., 106 N.L.R.B. 250 (1953); Farmbest, Inc., 154 N.L.R.B. 1421, 1453-1454 (1965), enf. with mod. sub nom. Farmbest, Inc. v. NLRB, 370 F.2d 1015 (CA8 1967); see also Modine Mfg. Co. v. International Association of Machinists, 216 F.2d 326 (CA6 1954). The Board has declined to overturn its "longstanding" American Seating rule after Burns. General Dynamics Corp., 184 N.L.R.B. No. 71 (1970).
The vast majority of collective bargaining agreements specify the procedures to be used in choosing employees for available jobs, and approximately 92% of all such contract place some limitations on the right to discharge. Collective Bargaining Negotiations and Contracts §§ 40:1, 60:11 (BNA 1971). Under the Board's theory, if a successor refused to hire or fired any of the predecessor's employees without going through applicable grievance procedures, it might be guilty of a § 8(a)(5) refusal to bargain. See NLRB v. Strong, 393 U. S. 357, 393 U. S. 359 (1969); NLRB v. Hutti Sash & Door Co., 377 F.2d 964, 968-969 (CA8 1967).
"[W]here there is in effect a collective bargaining contract covering employees in an industry affecting commerce, the duty to bargain collectively shall also mean that no party to such contract shall terminate or modify such contract, unless the party desiring such termination or modification --"
"(4) continues in full force and effect, without resorting to strike or lock-out, all the terms and conditions of the existing contract for a period of sixty days after such notice is given or until the expiration date of such contract, whichever occurs later:"
"The duties imposed upon employers, employees, and labor organizations by paragraphs (2)-(4) of this subsection . . . shall not be construed as requiring either party to discuss or agree to any modification of the terms and conditions contained in a contract for a fixed period, if such modification is to become effective before such terms and conditions can be reopened under the provisions of the contract."
Doppelt, Successor Compagnies: The NLRB Limits the Options -- and Raises Some Problems, 20 DePaul L.Rev. 176, 191 (1971).
The Board imposes this contract-bar rule for the term of a collective bargaining of "reasonable duration," a period the Board now defines as three years. General Cable Corp., 139 N.L.R.B. 1123 (1962). Also during this time, an employer cannot use doubt about a union's majority as a defense to a "refusal to bargain" charge. Oilfield Maintenance Co., 142 N.L.R.B. 1384, 1387 (1963); Hexton Furniture Co., 111 N.L.R.B. 342 (1955). Prior to Burns, the Board had held that a successor was barred by the contract of the predecessor from requesting a representation election during the term of the contract only if it had assumed the contract. Jolly Giant Lumber Co., 114 N.L.R.B. 413 (1955); General Extrusion Co., 121 N.L.R.B. 1 165 (1958); MV Dominator, 162 N.L.R.B. 1514 (1967). Moreover, such assumption had to be by an express written agreement. American Concrete Pipe of Hawaii, Inc., 128 N.L.R.B. 720 (1960). The Board had also permitted a non-assuming successor to raise a good faith doubt as to the union's majority as a defense to a "refusal to bargain" charge during the term of the old contract. Randolph Rubber Co., 152 N.L.R.B. 496 (1965); Mitchell Standard Corp., 140 N.L.R.B. 496 (1963).
"[t]his case suggests the hazards of enforcing the contracts of one employer against a successor where annual rebidding normally produces annual changes in contractor identity. These circumstances might encourage less arm's-length collective bargaining whenever the employer had reason to expect that it would not be awarded the next succeeding annual service contract."
"(a) Refusing to bargain collectively, upon request, with the Union as the exclusive bargaining representative of its employees in the above-described unit."
"(b) Refusing to adopt, honor and enforce its contract with the Union, as successor of Wackenhut."
"(c) Assisting or recognizing AFG as the representative of its employees for the purposes of collective bargaining, unless and until said labor organization shall have been certified as the exclusive bargaining representative of said employees in an appropriate unit."
"(d) Interfering with representation of its employees through labor organizations of their own choosing."
"(e) In any like or related manner interfering with, restraining, or coercing its employees in the exercise of their rights to join or assist the Union or otherwise engage in activities protected by the Act."
"2. Take the following affirmative action which is necessary to effectuate the policies of the Act: "
"(a) Withdraw and withhold recognition from AFG until or unless it is certified as bargaining representative of Respondent's employees in an appropriate unit."
"(b) Bargain collectively, upon request, with the Union and, if any understanding is reached, embody such understanding in a signed agreement."
"(c) Honor, adopt and enforce the contract between Respondent, as successor to Wackenhut, and the Union and give retroactive effect to all the clauses of said contract and, with interest of 6 percent, make whole its employees for any losses suffered by reason of Respondent's refusal to honor, adopt and enforce said contract."
"(d) Post at its Lockheed, Ontario, California, operations copies of the notice attached hereto as 'Appendix.' Copies of said notice, to be furnished by the Regional Director for Region 31, shall after being signed by Respondent's authorized representative, be posted by it immediately upon receipt thereof and be maintained by it for a period of 60 consecutive days in conspicuous places, including all places where notices to employees are customarily posted. Reasonable steps shall be taken to insure that such notices are not altered, defaced or covered by any other material."
"(e) Notify said Regional Director, in writing, within 20 days from the date of the receipt of this Recommended Order what steps Respondent has taken to comply herewith."
Although the Court studiously avoids using the term "successorship" in concluding that Burns did have a statutory obligation to bargain with the union, it affirms the conclusions of the Board and the Court of Appeals to that effect which were based entirely on the successorship doctrine. Because I believe that the Board and the Court of Appeals stretched that concept beyond the limits of its proper application, I would enforce neither the Board's bargaining order nor its order imposing upon Burns the terms of the contract between the union and Wackenhut. I therefore concur in No. 71-123, and dissent in No. 71-198.
"[r]epresentatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes. . . ."
The union must establish its status as a majority representative either by one of the methods discussed in NLRB v. Gissel Packing Co., 395 U. S. 575 (1969), or because its certification as a representative of the employees of another employer binds Burns as a "successor."
The Court concludes that, because the trial examiner and the Board found the Lockheed facility to be an appropriate bargaining unit for Burns' employees, and because Burns hired a majority of Wackenhut's previous employees who had worked at that facility, Burns should have bargained with the union, even though the union never made any showing to Burns of majority representation. There is more than one difficulty with this analysis.
First, it is by no means mathematically demonstrable that the union was the choice of a majority of the 42 employees with which Burns began the performance of its contract with Lockheed. True, 27 of the 42 had been represented by the union when they were employees of Wackenhut, but there is nothing in the record before us to indicate that all 27 of these employees chose the union as their bargaining agent even at the time of negotiations with Wackenhut. There is obviously no evidence whatever that the remaining 15 employees of Burns, who had never been employed by Wackenhut, had ever expressed their views one way or the other about the union as a bargaining representative. It may be that, if asked, all would have designated the union. But they were never asked. Instead, the trial examiner concluded that, because Burns was a "successor" employer to Wackenhut, it was obligated, by that fact alone, to bargain with the union.
Wackenhut and the union. [Footnote 2/1] One of the reasons asserted by Burns for declining to recognize the union was its belief that the single Lockheed facility was not an appropriate bargaining unit. This was more than a colorable claim. Unlike Wackenhut, Burns had never bargained with a union consisting of its employees in a single job location. One of the reasons for this difference was that Burns made a practice of transferring employees from one job to another, on a temporary or permanent basis. Both Burns and Wackenhut had numerous security guard jobsites in Southern California; for administrative purposes, Wackenhut treated each jobsite as a separate unit, while Burns treated large numbers of them together.
as to bargaining unit and the bargaining order -- the finding of successorship.
Thus, in a situation where there was no evidence at the time as to the preference of a majority of the employees at the Lockheed facility a to a bargaining agent, and there was no independent finding that the employees at that facility were an appropriate unit as to Burns, the Board nonetheless imposed the duty to bargain. This result is sustainable, if at all, only on the theory that Burns was a "successor" to Wackenhut. [Footnote 2/2] The imposition of successorship in this case is unusual, because the successor, instead of purchasing business or asset from or merging with Wackenhut, was in direct competition with Wackenhut for the Lockheed contract. I believe that a careful analysis of the admittedly imprecise concept of successorship indicates that important rights of both the employee and the employer to independently order their own affairs are sacrificed needlessly by the application of that doctrine to this case.
appeals to impose upon the successor employer a duty to bargain with representatives of the employees of his predecessor, NLRB v. Auto Ventshade, Inc., 276 F.2d 303, 304 (CA5 1960); Makela Welding, Inc. v. NLRB, 387 F.2d 40, 46 (CA6 1967), to support a finding of unfair labor practices from a course of conduct engaged in by both the predecessor and the successor, NLRB v. Blair Quarries, Inc., 152 F.2d 25 (CA4 1945), and to require the successor to remedy unfair labor practices committed by a predecessor employer, United States Pipe & Foundry Co. v. NLRB, 398 F.2d 544 (CA5 1968). The consequences of the application of the "successor" doctrine in each of these cases has been that the "successor" employer has been subjected to certain burdens or obligations to which a similarly situated employer who is not a "successor" would not be subject.
The various decisions that have applied the successor doctrine exhibit more than one train of reasoning in support of its application. There is authority for the proposition that it rests, in part, at least, upon the need for continuity in industrial labor relations, and the concomitant avoidance of industrial strife that presumably follows from such continuity. NLRB v. Colten, 105 F.2d 179 (CA6 1939); Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025 (CA7 1969). On examination, however, this proposition may more accurately be described as a statement of the result of a finding of successorship, rather than a reason for making that finding.
doubted that a determination as to successorship will vary with different fact situations, some general concept of the reason for the successorship doctrine is essential in order to determine the importance of the various factual combinations and permutations that may or may not call for its application.
"The objectives of national labor policy, reflected in established principles of federal law, require that the rightful prerogative of owners independently to rearrange their businesses and even eliminate themselves as employers be balanced by some protection to the employees from a sudden change in the employment relationship. The transition from one corporate organization to another will, in most cases, be eased, and industrial strife avoided, if employees' claims continue to be resolved by arbitration, rather than by 'the relative strength . . . of the contending forces.' . . ."
make a duty to arbitrate something imposed from without, not reasonably to be found in the particular bargaining agreement and the acts of the parties involved."
376 U.S. at 376 U. S. 551.
with insuring that the parties approach the bargaining table with this attitude [good faith]. But, apart from this essential standard of conduct, Congress intended that the parties should have wide latitude in their negotiations, unrestricted by any governmental power to regulate the substantive solution of their differences."
And this Court has recently held that the Board itself may not compel one of the parties in the collective bargaining process to agree to any particular proposal of the other. H. K. Porter Co. v. NLRB, 397 U. S. 99 (1970). Conceivably, the imposition of a system of compulsory arbitration, or the granting of authority to the Board to insist that the parties at some point agree on particular terms of a potential contract, would lessen the risk of industrial strife. But Congress has plainly been unwilling to purchase industrial peace at the price of substantial curtailment of free collective bargaining by the freely chosen representatives of the employees with their employer.
embodied in the Labor Management Relations Act either requires or permits many of these constraints. But quite reasonable expectations of the employees in a particular collective bargaining unit may be disappointed by a voluntary change in the condition of the employer that is quite incapable of being remedied by any rational application of the successorship doctrine. An employer is free to cease doing business, even though he chooses to do so wholly because of anti-union animus. Textile Workers v. Darlington Mfg. Co., 380 U. S. 263 (1965). An employer may adamantly refuse, at the expiration of the period covered by a collective bargaining agreement, to again consent to a particular term of the agreement that the employees regarded as significant. NLRB v. American National Insurance Co., 343 U. S. 395 (1952). These examples of permissible employer conduct for which the Labor Management Relations Act provides no remedy, notwithstanding that the conduct results in the disappointment of legitimate expectations of employees, suggest that the successorship principle, like every other principle of law, has limits beyond which it may not be expanded.
"ownership or corporate structure of an enterprise" connotes, at the very least, that there is continuity in the enterprise, as well as change; and that that continuity be at least in part on the employer's side of the equation, rather than only on that of the employees. If we deal with the legitimate expectations of employees that the employer who agreed to the collective bargaining contract perform it, we can require another employing entity to perform the contract only when he has succeeded to some of the tangible or intangible assets by the use of which the employees might have expected the first employer to have performed his contract with them.
Phrased another way, the doctrine of successorship in the federal common law of labor relations accords to employees the same general protection against transfer of assets by an entity against which they have a claim as is accorded by other legal doctrines to non-labor-related claimants against the same entity. Non-labor-related claimants in such transfer situations may be protected not only by assumption agreements resulting from the self-interest of the contracting parties participating in a merger or sale of assets, but also by state laws imposing upon the successor corporation of any merger the obligations of the merged corporation (see, e.g., § 90 of the N.Y. Stock Corp.Law (1951), cited in Wiley, supra), and by bulk sales acts found in numerous States. [Footnote 2/6] These latter are designed to give the non-labor-related creditor of the predecessor entity some claim, either as a matter of contract right against the successor or as a matter of property right to charge the assets that pass from the predecessor to the successor. The implication of Wiley is that the federal common law of labor relations accords the same general type and degree of protection to employees claiming under a collective bargaining contract.
"All rights tend to declare themselves absolute to their logical extreme. Yet all, in fact, are limited by the neighborhood of principles of policy which are other than those on which the particular right is founded, and which become strong enough to hold their own when a certain point is reached."
"Respondent, moreover, has operated as an entirely new and independent business enterprise. It obtained its own operating capital, purchased new uniforms, vehicles, and equipment, and occupied different premises than Industrial. Additionally, there is no indication that there has been any carryover of supervisory personnel from Industrial to Respondent."
as it is here, and the reasonable expectations of the employees equally attenuated, the application of the successorship doctrine is not authorized by the Labor Management Relations Act.
This is not to say that Burns would be unilaterally free to mesh into its previously recognized Los Angeles County bargaining unit a group of employees, such as were involved here, who already have designated a collective bargaining representative in their previous employment. Burns' actions in this regard would be subject to the commands of the Labor Management Relations Act, and to the regulation of the Board under proper application of governing principles. The situation resulting from the addition of a new element of the component workforce of an employer has been dealt with by the Board in numerous cases, and various factors are weighed in order to determine whether the new workforce component should be itself a separate bargaining unit, or whether the employees in this component shall be "accreted" to the bargaining unit already in existence. See, e.g., NLRB v. Food Employers Council, Inc., 399 F.2d 501 (CA9 1968); Northwest Galvanizing Co., 168 N.L.R.B. 26 (1967). Had the Board made the appropriate factual inquiry and determinations required by the Act, such inquiry might have justified the conclusion that Burns was obligated to recognize and bargain with the union as a representative of its employees at the Lockheed facility.
But the Board, instead of applying this type of analysis to the union's complaints here, concluded that, because Burns was a "successor," it was absolutely bound to the mold that had been fashioned by Wackenhut and its employees at Lockheed. Burns was thereby precluded from challenging the designation of Lockheed as an appropriate bargaining unit for a year after the original certification. 61 Stat. 144, 29 U.S.C. § 159(c)(3).
"While a broader unit might have been appropriate, I find a unit of guards limited to a single facility as an appropriate unit. Here, the certification was pursuant to a consent election agreement."
Trial Examiner's decision, App. 22.
"Trial Examiner: I am not concerned with whether or not there was a hearing. The Regional Director approved of the consent election and stipulation, and the election having taken place, I would find that the Regional Director's action was properly conducted in due course. . . ."
Proceedings before the NLRB, App. 68.
The Court's emphasis, ante at 406 U. S. 275-276, on the Board's determination that Burns committed unfair practices by aiding the AFC cannot be taken as any support for the bargaining order. It merely supports the cease and desist order directing Burns to stop such practices, which has not been challenged here by Burns.
International Assn. of Machinists v. NLRB, 134 U.S.App.D.C. 239, 243, 414 F.2d 1135, 1139 (1969) (Leventhal, J., concurring).
"Except in isolated instances, . . . Congress and the Supreme Court have refused to compel, or even to allow, that form of governmental compulsion of economic decisions which has come to be called 'compulsory arbitration.'"
Jones, Compulsion and the Consensual in Labor Arbitration, 51 Va.L.Rev. 369 (1965).
"In dealing with the problem of the direct settlement of labor disputes, the committee has considered a great variety of the proposals ranging from compulsory arbitration, the establishment of factfinding boards, creation of an over-all mediation tribunal, and the imposition of specified waiting periods. . . . [W]e do not feel warranted in recommending that any such plans become permanent legislation."
S.Rep. No. 105, 80th Cong., 1st Sess., 13 (1947). See also the speech by Senator Taft, during debate on the Taft-Hartley Act, 93 Cong.Rec. 3835-3836, cited in Bus Employees v. Wisconsin Board, 340 U. S. 383, 340 U. S. 395 n. 21 (1951).
The General Accounting Office has recognized that bidders for a cost-plus fee subcontract to NASA, who dealt with different unions, could be evaluated by NASA on the basis of varying costs that collective bargaining itself might generate. 76 Lab.Rel.Rep. 230 (1971).
Uniform Commercial Code §§ 101 to 111.
A finding of successorship has been upheld, on the other hand, by one court of appeals where there were no contractual dealings between the two employers and the successor employer merely replaced the predecessor as a successful bidder for a transit franchise. Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025 (CA7 1969).

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