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NLRB V. BURNS INT'L SECURITY SVCS., INC., 406 U. S. 272 - Volume 406 - 1972 - Full Text - US Supreme Court Center - USSC Cases - Nolo
US Supreme Court Center > Volume 406 > NLRB V. BURNS INT'L SECURITY SVCS., INC., 406 U. S. 272 (1972) > Full Text
NLRB v. Burns Int'l Security Svcs., Inc., 406 U.S. 272 (1972)
Decided May 15, 1972*
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.
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.
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.
The Board, adopting the trial examiner's findings and conclusions, found the Lockheed plant an appropriate unit and held that Burns had violated §§ 8(a)(2) and 8(a)(1) of the National Labor Relations Act, 49 Stat. 452, as amended, 1 Stat. 140, 29 U.S.C. §§ 158(a)(2), 158(a)(1), by unlawfully recognizing and assisting the AFG, a rival of the UPG; and that it had violated §§ 8(a)(5) and 8(a)(1), 29 U.S.C. §§ 158(a)(5), 158(a)(1), by failing to recognize and bargain with the UPG and by refusing to honor the collective bargaining agreement that had been negotiated between Wackenhut and UPG. [Footnote 2]
Board certification. It has been consistently held that a mere change of employers or of ownership in the employing industry is not such an "unusual circumstance" as to affect the force of the Board's certification within the normal operative period if a majority of employees after the change of ownership or management were employed by the preceding employer. NLRB v. Downtown Bakery Corp., 330 F.2d 921, 925 (CA6 1964); NLRB v. McFarland, 306 F.2d 219, 221 (CA10 1962); NLRB v. Auto Ventshade, Inc., 276 F.2d 303, 307 (CA5 1960); NLRB v. Lunder Shoe Corp., 211 F.2d 284, 286 (CA1 1954); NLRB v. Armato, 199 F.2d 800, 803 (CA7 1952); South Carolina Granite Co., 58 N.L.R.B. 1448, 1463-1464 (1944), enforced sub nom. NLRB v. Blair Quarries, Inc., 152 F.2d 25 (CA4 1945); Northwest Glove Co., 74 N.L.R.B. 1697, 1700 (1947); Johnson Ready Mix Co., 142 N.L.R.B. 437, 442 (1963). [Footnote 3]
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).
It would be a wholly different case if the Board had determined that, because Burns' operational structure and practices differed from those of Wackenhut, the Lockheed bargaining unit was no longer an appropriate one. [Footnote 4] Likewise, it would be different if Burns had not hired employees already represented by a union certified as a bargaining agent, [Footnote 5] and the Board recognized as
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.
of the collective bargaining contract the union had negotiated with Wackenhut, and to which Burns had in no way agreed. Section 8(d) of the Act expressly provides that the existence of such bargaining obligation "does not compel either party to agree to a proposal or require the making of a concession." Congress has consistently declined to interfere with free collective bargaining, [Footnote 7] and has preferred that device, or voluntary arbitration, to the imposition of compulsory terms as a means of avoiding or terminating labor disputes. In its report accompanying the 1935 Act, the Senate Committee on Education and Labor stated:
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).
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.
H. K. Porter Co. v. NLRB, 397 U.S. at 397 U. S. 108.
The Board's position would also raise new problems, for the successor employer would be circumscribed in exactly the same way as the predecessor under the collective bargaining contract. It 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. [Footnote 9] Burns would not have been free to replace Wackenhut's guards with its own except as the contract permitted. Given the continuity of employment relationship, the preexisting
contract's provisions with respect to wages, seniority rights, vacation privileges, pension and retirement fund benefits, job security provisions, work assignments, and the like would devolve on the successor. Nor would the union commit a § 8(b)(3) unfair labor practice if it refused to bargain for a modification of the agreement effective prior to the expiration date of the agreement. [Footnote 10] A successor employer might also be deemed to have
inherited it predecessor's preexisting contractual obligations to the union that had accrued under past contracts and that had not been discharged when the business was transferred. "[A] successor ay well acquire more liabilities as a result of Burn than appear on the face of a contract." [Footnote 11] Finally, a successor will be bound to observe the contract despite good faith doubts about the union's majority during the time that the contract is a bar to another representation election, Ranch-Way, Inc., 183 N.L.R.B. No. 116 (1970). [Footnote 12] For the above reasons, the Board itself has expressed doubt as to the general applicability of its Burns rule. [Footnote 13]
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.
must be set aside. [Footnote 14] We
clear that the new employer plans to retain all of the employees in the unit, and in which it will be appropriate to have him initially consult with the employees' bargaining representative before he fixes terms. In other situations, however, it may not be clear until the successor employer has hired his full complement of employees that he has a duty to bargain with a union, since it will not be evident until then that the bargaining representative represents a majority of the employees in the unit, as required by § 9(a) of the Act, 29 U.S.C. § 159(a). Here, for example, Burns' obligation to bargain with the union did not mature until it had selected its force of guards late in June. The Board quite properly found that Burns refused to bargain on July 12, when it rejected the overtures of the union. It is true that the wages it paid when it began protecting the Lockheed plant on July 1 differed from those specified in the Wackenhut collective bargaining agreement, but there is no evidence that Burns ever unilaterally changed the terms and conditions of employment it had offered to potential employees in June after its obligation to bargain with the union became apparent. 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 without committing an unfair labor practice. Cf. ~ NLRB v. Katz, 369 U. S. 736, 369 U. S. 745 n. 12 (1962); NLRB v. Fitzgerald Mills Corp., 313 F.2d 260, 272-273 (CA2) cert. denied, 375 U.S. 834 (1963); NLRB v. Southern Coach & Body Co., 336 F.2d 214, 217 (CA5 1964). The Board's order requiring Burns to make whole its employees for any losses suffered by reason of Burns' refusal to honor and enforce the contract, cannot, therefore,
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.
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.
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).
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.
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.
It has been aptly observed that the doctrine of "successor" employer in the field of labor law is "shrouded in somewhat impressionist approaches." [Footnote 2/3] In John Wiley & Sons, Inc. v. Livingston, 376 U. S. 543 (1964), we employed a form of the "successor" doctrine to impose upon an employer an obligation to arbitrate disputes under an arbitration clause in an agreement entered into between a predecessor employer and the bargaining representative of the latter's employees. The doctrine has been applied by the Board and by the courts of
376 U.S. at 376 U. S. 549. But other language in Wiley makes it clear that the considerations favoring the continuity of existing bargaining relationships are not without their limits:
376 U.S. at 376 U. S. 551.
The conflicting implications in these portions of the opinion in Wiley suggest that employees are indeed entitled to a measure of protection against change in the employing entity where the new employer continues to make use of tangible or intangible assets used in carrying on the business of the first employer. They also make clear that the successorship doctrine, carried to its ultimate limits, runs counter to other equally well established principles of labor law. Industrial peace is an important goal of the Labor Management Relations Act. But Congress has time and again refused to sacrifice free collective bargaining between representatives of the employees and the employer for a system of compulsory arbitration. [Footnote 2/4] As the Court said in NLRB v. Insurance Agents, 361 U. S. 477, 361 U. S. 488 (1960):
There is also a natural tension between the constraints imposed on employers by the Labor Management Relations Act and the right of those employers in competition with one another "independently to rearrange their businesses and even eliminate themselves as employers." Wiley, 376 U.S. at 376 U. S. 549. An employer's ability to compete in his market is affected, of course, by the terms of whatever collective bargaining agreement he negotiates with the representative of his employees. Aside from the direct influence on price brought about by the terms of a collective bargaining agreement, the collective bargaining process itself presents a certain cost factor that may affect competition between employers in the market. [Footnote 2/5] The national commitment to collective bargaining
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.
Cases from the courts of appeals have found successorship, consistently with these principles, where the new employer purchases a part or all of the assets of the predecessor employer, NRLB v. Interstate 66 Corp., 453 F.2d 269 (CA6 1971); where the entire business is purchased by the new employer, NLRB v. McFarland, 306 F.2d 219 (CA10 1962); and where there is merely a change in the ownership interest in a partnership that operates the employing entity, NLRB v. Colten, 105 F.2d 179 (CA6 1939). Other courts of appeals have, equally consistently with these principles, refused to find successorship where there have been no contractual dealings between the two employers, and all that has taken place is a shift in employees. Tri-State Maintenance Corp. v. NLRB, 132 U.S.App.D.C. 368, 408 F.2d 171 (1968); International Assn. of Machinists v. NLRB, 134 U.S.App.D.C. 239, 414 F.2d 1135 (1969). [Footnote 2/7]
industrial peace, step by step, to a point where the only connection between the two employing entities is a naked transfer of employees. Justice Holmes, in Hudson Water Co. v. McCarter, 209 U. S. 349, 209 U. S. 355 (1908), summarized the general problem this way:
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.
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).
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