Court Opinion

ID: 185415
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:31:42+00
Date Added: 2024-06-11T09:06:02.378752
License: Public Domain

254 F.3d 217 (D.C. Cir. 2001)
Pennsylvania Transformer Technology, Inc., Petitionerv.National Labor Relations Board, RespondentUnited Steelworkers of America, Intervenor
No. 00-1388
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 17, 2001Decided June 29, 2001

[Copyrighted Material Omitted][Copyrighted Material Omitted]
On Petition for Review and Cross-Application for Enforcement of an Order of the  National Labor Relations Board
Clare M. Gallagher argued the cause for the petitioner. Patrick L. Abramowich and Brian Seth Roman were on brief  for the petitioner.
Eric D. Duryea, Attorney, National Labor Relations  Board, argued the cause for the respondent.  Leonard R.  Page, General Counsel, John H. Ferguson, Associate General  Counsel, Aileen A. Armstrong, Deputy Associate General  Counsel, and Charles P. Donnelly, Attorney, National Labor  Relations Board, were on brief.
David R. Jury argued the cause for the intervenor.  David  I. Goldman entered an appearance.
Before:  Henderson, Tatel and Garland, Circuit Judges.
Opinion for the court filed by Circuit Judge Henderson.
Karen LeCraft Henderson, Circuit Judge:

1
The petitioner,  Pennsylvania Transformer Technology, Inc. (PTTI), petitions  the court for review of a decision and order of respondent  National Labor Relations Board (NLRB or Board), reported  at 331 N.L.R.B. No. 151 (Aug. 25, 2000).  In that decision, the  Board affirmed and adopted, with modifications, the decision  of the Administrative Law Judge (ALJ), who held that PTTI  violated section 8(a)(1) and 8(a)(5) of the National Labor  Relations Act (NLRA or Act), 29 U.S.C. 158(a)(1) & (5), by  refusing to recognize the United Steel Workers of America,  AFL-CIO (Union) as the collective-bargaining representative  of PTTI's production and maintenance employees pursuant to  a recognition request made on March 30, 1998.  PTTI maintains that the Board erred in determining that it was a  successor to Cooper Industries, Inc. (Cooper) and that it had  hired a substantial and representative complement of employees as of April 1, 1998.  The Board cross-applies for enforcement.  For the reasons set forth below, we deny PTTI's  petition for review and grant the Board's application for  enforcement.

I. Background

2
Beginning in 1985, Cooper owned and operated a plant in  Canonsburg, Pennsylvania where it produced core electric  transformers and shell form transformers.  Cooper also sold  spare parts to customers.  In 1994 Cooper employed between  750 and 880 employees.  Its employees were represented by different locals of the Union in three separate collectivebargaining units.  In April 1994 Cooper announced to the  Union that it planned to close the facility unless a purchaser  could be found by the end of 1994.  Although the Union and  its three locals formed a committee to find a buyer, none was  found and on November 22, 1994 the plant closed.  Cooper  and the Union entered into a "closing agreement" that provided for recognition of the Union in the event Cooper  reopened within two years.  Cooper retained a skeleton crew  to maintain the facility and to provide spare parts to its utility  customers.  Several former union presidents, state and local  officials and members of the local Chamber of Commerce  formed a new search committee to find a buyer.  Ultimately  the committee helped to bring about the sale of the plant to  Ravindra Nahl Rahangdale.

3
In 1995 Rahangdale began negotiations to acquire Cooper's  plant and equipment.  On August 9, 1996 he acquired all of  the assets of the Canonsburg plant, which he combined with  another company he owned to form PTTI.  PTTI commenced  operations in August 1996 and hired its first employees on  September 1, 1996.  In January 1997 the company produced  its first transformers, utilizing about one-half of the plant  space previously used by Cooper and most of the same  equipment.  PTTI obtained its employees from Bedway Temporary Services (Bedway), which had also assisted Cooper  with staffing.  Applicants for employment were interviewed  by PTTI personnel but hired by Bedway.  Employees worked  under the supervision of PTTI as probationary employees for  three to six months, at which time they were eligible to  become permanent employees of PTTI.

4
In a letter dated March 30, 1998, the Union requested  PTTI to recognize and bargain with it as the exclusive  bargaining representative of the company's employee units. As of that time, approximately 82 production employees  worked at the plant, 58 of whom, or 72 per cent, were former  Cooper employees.  Of the 68 production workers on the  company's payroll, 54 were former Cooper employees.  PTTI  refused to recognize the Union, prompting the Union to file  an unfair labor practice charge.  The Board subsequently issued a complaint alleging that, beginning April 1, 1998,  PTTI had unlawfully refused to recognize and bargain with  the Union in violation of sections 8(a)(1) and 8(a)(5) of the  Act.  By the time of the hearing, which was held on July 7,  1998, PTTI had hired approximately 100 production and  maintenance employees, a majority of whom were former  Cooper employees.

5
On September 30, 1998 the ALJ issued his findings of fact  and conclusions of law, finding, in pertinent part, that PTTI  was a successor employer under the Act.  The ALJ ordered  PTTI to recognize the Union, to bargain collectively with the  Union and to post an appropriate notice.  PTTI filed timely  exceptions to the ALJ's decision.  On December 10, 1998  PTTI also filed a motion to reopen the record to introduce  evidence that it had 130 production and maintenance employees, only 62 of whom were former Cooper employees and that  former members of the Cooper production and maintenance  unit became a minority of PTTI's production workers as of  October 29, 1998.  JA 409.  The Board's General Counsel  filed limited cross exceptions challenging the ALJ's failure to  find specifically that as of April 1, 1998 PTTI had hired a  substantial and representative complement of employees. The Board denied PTTI's exceptions and its motion to reopen  the record, adopted the ALJ's findings, rulings and order  with slight modifications and corrections and granted the  General Counsel's cross-exceptions.  The Board held that (1)  PTTI was a successor to Cooper, (2) PTTI had hired a  substantial and representative complement of employees as of  April 1, 1998 and (3) PTTI violated the Act by refusing to  recognize and bargain with the Union.  PTTI challenges all  three determinations.

II. Analysis

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.

III. Conclusion

19
In sum, substantial evidence supports the Board's determination that PTTI was a successor to Cooper and that PTTI  had hired a substantial and representational complement of  employees by April 1, 1998.  Accordingly, we deny PTTI's  petition for review and grant the Board's cross-petition for  enforcement.

20
So ordered.

Notes:

1
 During the hiatus, however, a skeleton crew made the necessary  repairs and supplied parts to former customers.  Id. at 4.

2
 The facts here are more similar to those in UFCW than those in  CitiSteel. In UFCW, there was an eighteen-month hiatus after  which the successor employer invested $1.3 million in capital improvements, purged most of the former upper management, made  changes to the production process, attracted new customers and lost  others, contracted with new suppliers, and down-sized its operation,  using only a portion of the former facility.  Nonetheless we held  that the new employer was a successor because "[t]he focus of the  analysis ... is not on the continuity of the business structure in  general, but rather on the particular operations of the business as  they affect the members of the relevant bargaining unit."  UFCW,  768 F.2d at 1470. There, employees used the same skills and worked  under essentially the same conditions.  Id. at 1474.  We reach the  same conclusion here.

3
 PTTI points to a Union press release urging its members to  seek other employment or remain in school while the Union continued its efforts to find a purchaser for the plant. While the press  release shed light on whether the Union thought the plant would  reopen, it also recognized the Union's efforts to recruit prospective  purchasers, lobby representatives of the Commonwealth of Pennsylvania for assistance, persuade Cooper to sell the facility to a  purchaser that would resume operations, assist PTTI in obtaining  financing and encourage its members to apply for employment  while at the same time it kept the community and news media  informed about its campaign.  See JA 24-33, 376-79.

4
 PTTI refers to non-record material throughout the portion of it  brief, see, e.g., Pet. Br. 15 & n.4, 16-18, yet it did not challenge the  Board's denial of its motion to reopen the record.  We also deny  PTTI's motion to supplement the record with a Union pamphlet; assuming arguendo its materiality, PTTI failed to adduce the  evidence before the Board.