Opinion ID: 185415
Heading Depth: 1
Heading Rank: 2

Heading: analysis

Text: 6 A new employer is a successor to a former employer if there is substantial continuity between the enterprises. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43 (1987). Substantial continuity exists when the new company has 'acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations.'  CitiSteel USA, Inc. v. NLRB, 53 F.3d 350, 353 (D.C. Cir. 1995) (quoting Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 184 (1973)). The essential inquiry is whether operations, as they impinge on union members, remain essentially the same after the transfer of ownership. International Union of Elec., Radio & Mach. Workers (IUEW) v. NLRB, 604 F.2d 689, 694 (D.C. Cir. 1979). The analysis is undertaken with an emphasis on the employees' perspective. Fall River, 482 U.S. at 43. The implied statutory goal is to promote industrial peace. If the employees find themselves in essentially the same jobs after the employer transition and if their legitimate expectations in continued representation by their union are thwarted, their dissatisfaction may lead to labor unrest. Id. at 43-44. Thus the union certified as the collective bargaining representative of the predecessor employer's employees presumptively retains its certification if the majority of employees after the change of ownership worked for the predecessor employer. See NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 279 (1972). 7 We will uphold the Board's successorship determination unless it is not supported by substantial evidence or the Board acted arbitrarily or otherwise erred in applying established law to the facts of the case. CitiSteel, 53 F.3d at 354. To determine whether a substantial continuity exists, courts and the Board consider 8 whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers. 9 Fall River, 482 U.S. at 43 (citations omitted). While the Board does not afford controlling weight to any single factor, [t]he ultimate question is this: Will the employees 'understandably view their job situations as essentially unaltered?'  Harter Tomato Prods. Co. v. NLRB, 133 F.3d 934, 937 (D.C. Cir. 1998) (quotation omitted). 10 When a new employer is a successor, it has an obligation to bargain with the certified union so long as the majority of its employees were employed by its predecessor. Fall River, 482 U.S. at 41. The Board has adopted the substantial and representative complement rule for fixing the moment that the determination as to the composition of the successor's work force is to be made. Id. at 47. In deciding when a substantial and representative complement exists after a change in employer, the Board examines a number of factors: 11 It studies whether the job classifications designated for the operation were filled or substantially filled and whether the operation was in normal or substantially normal production. See Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628 (9th Cir. 1983). In addition, it takes into consideration the size of the complement on that date and the time expected to elapse before a substantially larger complement would be at work ... as well as the relative certainty of the employer's expected expansion. Id. 12 Fall River, 482 U.S. at 49; see Sullivan Indus. v. NLRB, 957 F.2d 890, 896 (D.C. Cir. 1992) (separating out five factors set forth in Fall River). 13 PTTI complains that the Board erred in determining that it was a successor to Cooper and in fixing the date of April 1, 1998 as the moment at which it had hired a substantial and representative complement of employees. It alleges numerous factual discrepancies in the Board's findings and charges that the Board failed to consider evidence that would have led it to reach a different result. We now examine these claims. 14 Successorship analysis is primarily factual in nature and is based upon the totality of the circumstances of a given situation. Fall River, 482 U.S. at 43. Accordingly, we must examine in detail the facts found by the Administrative Law Judge (ALJ) and adopted by the Board. CitiSteel, 53 F.3d at 351. Applying the successorship factors enunciated in Fall River, we conclude that substantial evidence supports the Board's determination that PTTI was a successor to Cooper. First, the business of both employers is essentially the same. In August 1996 PTTI purchased all of Cooper's facilities and assets used in the manufacture of electrical transformers and began production using most of the equipment in January 1997. Although PTTI's workforce is much smaller than Cooper's, it is in the same line of business (transformer production). Like Cooper, PTTI also supplies spare parts for its customers. See Pennsylvania Transformer Tech., Inc., 331 N.L.R.B. No. 151, slip op. at 3 (filed Aug. 25, 2000). 15 Second, although working conditions are somewhat different at PTTI--significantly fewer job classifications and increased employee responsibility and flexibility--employees continue to do the same work. They use the same skills and expertise they used at Cooper and use the same process and equipment, often under the same supervisors (although there are fewer supervisors). Significantly, PTTI did not train workers but instead relied on the experienced workforce left by Cooper. Id. at 4. 16 Third, PTTI has a similar production process, produces similar products and retains many of the same customers. Although PTTI uses only 45 per cent of Cooper's floor space and although it sold or removed two ovens, two winding machines and one or two drill presses used by Cooper, it uses the same transformer production process to make transformers. Id. at 4. It made few improvements to the physical plant, which nowhere near approached the $25 million spent by the alleged successor in CitiSteel (a case on which PTTI relies) to refurbish and modernize the CitiSteel plant, transforming it from a steel mill to a minimill. 53 F.3d at 352. While at the time of the hearing PTTI had not yet begun production of shell transformers and had produced few large core transformers (the bread and butter of Cooper's production), PTTI affirmed that it planned to aggressively pursue both product lines. And although PTTI did not acquire Cooper's customer or vendor lists, a majority of PTTI's customers are former Cooper patrons. See Pennsylvania Transformer Tech., Inc., 331 N.L.R.B. No. 151, slip op. at 4. As the Board found, the company [had] filled a vacuum in a market left by Cooper and [was] in the process of rapidly expanding in the manufacture and sale of the same products. Id. at 1. 17 Most of the differences noted by PTTI--differences in size, facilities, work force, managerial philosophy, customer base-were rejected by this court in Harter, which decision explained that [p]ointing to differences in size, wages, benefits, training, customer base, managerial philosophy, and supplier contracts, among others, ... is unresponsive to the question we face. We ask not whether [the petitioner's] view of the facts supports its version of what happened, but rather whether the Board's interpretation of the facts is 'reasonably defensible.'  133 F.3d at 938 (quotation & citation omitted). Although the differences PTTI points to may support its view on successorship, we conclude that substantial evidence supports the Board's successorship determination. We arrive at this conclusion notwithstanding the two-year hiatus between the time Cooper ceased manufacturing transformers and PTTI began production. 1 A hiatus in operations is relevant only when there are other indicia of discontinuity. Fall River, 482 U.S. at 45; see United Food & Commercial Workers Int'l Union (UFCW) v. NLRB, 768 F.2d 1463, 1472 (D.C. Cir. 1985). In CitiSteel we found abundant other indicia of discontinuity to make the impact of the hiatus on the workers' expectation of rehire relevant. 53 F.3d at 356. We do not find such abundant indicia here. 2 Unlike in CitiSteel, there were no significant changes to the facility and, although PTTI's production process and customer bases have differences, they are not as significant as the total reformation (e.g., extensive plant renovation, formal job training, changed production process and new customer base) that occurred in CitiSteel. Most importantly, unlike the union in CitiSteel, which closed its union hall and foresaw dim possibilities at best for the plant's reopening, id. at 355-56, here the union actively participated in finding a purchaser to reopen the facility. 3 Based on all the evidence, we conclude that the Board reasonably determined that, despite the lengthy hiatus, employees had legitimate expectations in continued representation by their union. Fall River, 482 U.S. at 43. 18 Having concluded that substantial evidence supports the Board's successorship determination, we now review the Board's application of the substantial and representative complement rule. Substantial evidence also supports the Board's finding that PTTI had hired a substantial and representative complement of employees as of April 1, 1998. PTTI had hired workers for both of its job classifications--transformer technician and apprentice--as of the date of the recognition demand. See Pennsylvania Transformer Tech., Inc., 331 N.L.R.B. No. 151, slip op. at 2. PTTI had also begun substantially normal production as of April 1, 1998. It had produced its first transformer in late April 1997 and between August 1997 and June 1998 PTTI's monthly sales figures showed signs of relative stability. JA 382. Although PTTI predicted significant growth between 1999 and 2001, 4 the August 1997-June 1998 sales figures indicate that the size of workforce was sufficiently large to enable the company to begin normal production of electric transformers. As the court acknowledged in Fall River in rejecting a full complement standard, the expansionist dreams of many entrepreneurs necessitate that the court fix the moment in time when a business has begun its normal production. 482 U.S. at 51. Accordingly, we affirm the Board's finding that PTTI had hired a substantial and representational complement of employees by April 1, 1998. Because as of that date a majority of PTTI's employees were former Cooper employees, PTTI had an obligation to recognize the Union as the collective bargaining representative of its employees. By not doing so, it violated section 8(a)(1) and (a)(5) of the NLRA.