Opinion ID: 539798
Heading Depth: 2
Heading Rank: 1

Heading: Refusal to Recognize and Bargain with the Union

Text: 24 Section 8(a)(5), 29 U.S.C. Sec. 158(a)(5), makes it an unfair labor practice for an employer to refuse to recognize and bargain with the collective bargaining representative of its employees. Under this standard, an employer is obligated to recognize and bargain with the union representing its predecessor's employees if: (1) the new employer is a successor to the old, i.e., if there is substantial continuity between the two employing entities; and (2) a majority of the successor's employees previously were employed by the predecessor. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43-52, 107 S.Ct. 2225, 2236-41, 96 L.Ed.2d 22 (1987). If these criteria are satisfied, a rebuttable presumption of majority status arises, leading to a consequent duty to bargain in good faith. The successor employer, however, may defeat that presumption by demonstrating either that the union has lost majority support, or that it has sufficient objective evidence of a good faith doubt of majority status.
25 The determination of whether a new company is a successor to the old is largely factual in nature. In making its inquiry, it is well settled that the Board (or the court, where it is the factfinder) must direct its attention to the question of whether the new company has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations. Golden State Bottling Co. v. NLRB, 414 U.S. 168, 182, 94 S.Ct. 414, 424, 38 L.Ed.2d 388 (1973). See also NLRB v. Burns International Security Services, 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). From these vague beginnings, the standard has developed into one with more definitive parameters: 26 [T]he focus is on whether there is substantial continuity between the enterprises. Under this approach, the Board examines a number of factors: 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. 27 Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 43, 107 S.Ct. at 2236 (citations omitted). Given the emphasis of the law on furthering industrial peace, these factors must be weighed in light of whether those employees who have been retained will understandably view their job situations as essentially unaltered. Id. See Golden State Bottling Co., 414 U.S. at 184, 94 S.Ct. at 425. 28 Although application of a balancing test is always a delicate proposition, after careful analysis we are unable to say that the district court was clearly wrong in concluding that Turabo was indeed a successor to San Rafael. While we think it unnecessary to parrot each of the district court's findings, upon review, we find that it was not clear error for the district court to hold that the $1,000,000 payment for the License Surrender Agreement, which was necessary for Turabo even to operate a hospital in Caguas, together with the purchase of $242,602 worth of equipment, and the lease of an X-ray unit, constitute the acquisition by Turabo of substantial assets of San Rafael. That this may have represented only a small portion of its total investment in Turabo is not dispositive--the focus is upon San Rafael. 29 The remaining criteria for successorship merit little discussion. It can scarcely be contested that Turabo is engaged in the same business of providing health care services to substantially the same community as had San Rafael. Moreover, it cannot be clear error to have concluded that the former San Rafael technical unit employees perform substantially the same functions at HIMA as they formerly did at San Rafael--indeed, appellant never argues otherwise. We also think that it is significant that the corporate management of Turabo and San Rafael are substantially identical, particularly with regard to key management personnel. Consequently, after careful analysis, we find that there is reasonable cause to believe that Turabo is the legal successor to San Rafael.
30 Having established that Turabo is San Rafael's successor, our inquiry next shifts to the district court's determination that the Union enjoyed majority status. As the Supreme Court has made clear, a union's majority status is measured at the time the successor has hired a substantial and representative complement of its employees. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 47, 107 S.Ct. at 2238. If, at this particular moment, a majority of the successor's employees had been employed by its predecessor, then the successor has an obligation to bargain with the union that represented these employees. Id. 31 While we cannot say that, had we been sitting as the district court or as the Regional Director of the Board, we would have chosen November 19, 1988 as the date by which HIMA had reached a substantial and representative complement of employees, neither can we say that the district court or the Regional Director were clearly wrong for so choosing. And our role as an appellate court is merely to review the district court's findings, not to make new ones. 32 An employer has hired a substantial and representative complement of employees when it has filled or substantially filled the job classifications designated for the operation, and it is engaged in normal or substantially normal production. Id. at 49, 107 S.Ct. at 2239. See also Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628 (9th Cir.1983). In making this determination, the Board must consider 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. Premium Foods, Inc. v. NLRB, 709 F.2d at 682 (cited in Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 49, 107 S.Ct. at 2239). 33 The district court concluded that there was reasonable cause to believe that Turabo had reached substantially normal operation and substantially filled its job classifications by November 19, 1988. By November 19, Turabo was operating 50 beds, and was providing a substantially full range of services. Although 50 beds represented only 1/3 of the beds contemplated under Phase I operation, in light of the fact that it was providing all of the health services which it would ultimately supply (except Intensive Care), albeit on a smaller scale, the district court's conclusion was not clearly erroneous. See Briggs Plumbingware v. NLRB, 877 F.2d 1282 (6th Cir.1989) (substantially normal operations achieved where all steps of production process were in operation). Thus, on November 19, Turabo had also substantially filled the unit employee complement that it expected to hire upon reaching full Phase I operation. See, e.g., NLRB v. Hudson River Aggregates, 639 F.2d 865 (2d Cir.1981). 34 Since, on November 19, 1988, 74% of the technical employees were former members of San Rafael's technical unit, the district court acted reasonably in concluding that the Union could be presumed to have majority support among those employees. The fact that Turabo might ultimately hire many more employees is not dispositive, given that expansion beyond the Phase I 150-bed level was contingent on the existence of a demand for additional beds. Compare Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. at 52, 107 S.Ct. at 2240 (since employer's intent to expand to two shifts was contingent upon growth of business, projected size of second shift was irrelevant). 1 35 The presumption created by this prima facie demonstration of majority support, however, is only a rebuttable one. It can be overcome with a showing of: (1) actual loss of majority support, or (2) objective considerations sufficient to support a reasonable good faith doubt of the Union's continued majority. Id. at 41, n. 8, 107 S.Ct. at 2235, n. 8 (citing Harley-Davidson Transp. Co., 273 NLRB 1531 (1985)). 36 Appellant never argues that there was an actual loss of majority support, although it does contend that it had a good faith doubt as to the Union's majority status. In so arguing, it relies upon a decertification petition filed on January 11, 1988, and signed by 35 of the 79 technical unit employees at San Rafael. That petition, however, had previously been dismissed by the Board, because of the pendency of unfair labor practice proceedings. As the district court stated, the Board, in similar cases, has held that petitions filed under these circumstances do not constitute sufficient objective evidence to deny recognition to the certified bargaining agent. See, e.g., Dresser Industries, 264 NLRB 1088 (1982); Massey-Ferguson, Inc., 184 NLRB 640, 641 (1970), enforced Massey-Ferguson, Inc. v. NLRB, 78 LRRM (BNA) 2289, 1971 WL 2981 (7th Cir.1971). We do not find the district court's reliance on the procedures of the Board misplaced. 37 Given that the Union demanded recognition on October 27, 1988, and again on November 23 and December 19, and that those demands were rejected by Turabo, we affirm the district court's conclusion that there is reasonable cause to believe that Sec. 8(a)(1), 29 U.S.C. Sec. 158(a)(1) and Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5), were violated when Turabo refused to recognize the Union after November 19, 1988, and thus that the Regional Director's position was supported by the record.