Court Opinion

ID: 6989938
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:23:07.740739+00
Date Added: 2024-06-11T16:09:34.788024
License: Public Domain

O’SCANNLAIN, Circuit Judge,
concurring in part and dissenting in part:
I concur in Part I of the court’s opinion, granting summary enforcement to the National Labor Relations Board’s (“Board”) order of prospective relief to redress Advanced Stretchforming International, Inc.’s (“ASI”) violations of the National Labor Relations Act (“NLRA”).
I must respectfully dissent, however, from Parts II and III. In my view, the Board’s award of back pay under the terms of the collective bargaining agreement of ASI’s predecessor violates the holding of NLRB v. Burns Int’l Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). This award does nothing to redress ASI’s actual violations and does not restore the status quo ante. It constitutes a penalty well in excess of the Board’s legal authority. In holding that this award is presumptively appropriate, the majority opinion misconstrues and misapplies the so-called “forfeiture doctrine,” transforming it into a broad new exception capable of swallowing the rule set forth in Bums that a successor employer is not bound by its predecessor’s collective bargaining agreement and is ordinarily free to set the initial terms of employment unilaterally. By arming the *1184Board with an unauthorized power to punish, the majority has impermissibly upset the balance of power between management and labor that Congress established in the Act. I respectfully dissent.
I
The majority’s analysis begins innocently enough by restating the general rule from Bums that a successor employer is not bound by its predecessor’s collective bargaining agreement (“CBA”) and is free to set the initial terms of employment for its workers without first consulting with their union. See Bums, 406 U.S. at 287-88, 92 S.Ct. 1571. According to the majority, however, an employer’s “rights under Bums ” to take such unilateral action can be forfeited if the successor “has failed to fulfill its corresponding Bums obligations.” Supra at 1180. The majority reasons that, in the present case, ASI “'blocked the process by which the obligations of a successor are incurred’ ” by telling prospective workers that there would be “no union” at ASI and thus it forfeited its “Bums rights.” Supra at 1181 (quoting the Board’s decision, Advanced Stretchforming Int'l, 323 N.L.R.B. 529, 531 (1997)).
Somewhat surprisingly, the majority does not bother to tell us what exactly ASI’s “Bums obligations” were and why its failure to fulfill such obligations might possibly be remedied by the forfeiture of ASI’s “Bums rights” ordered by the NLRB-namely, an award of back pay under the terms of its predecessor’s CBA. In fact, the reason for the majority’s evasion is clear enough; the forfeiture doctrine is simply inapplicable here. The forfeiture doctrine is premised on the theory that an employer should forfeit its right to set the initial terms of employment only where it evades an actual legal obligation to consult with a union before imposing initial terms. In contrast, ASI was under no such obligation to consult with the UAW prior to imposing its initial terms of employment. In the majority’s hands, the forfeiture doctrine becomes a punishment rather than a remedy.
A
In Bums, the Supreme Court addressed the obligations under the NLRA of successor employers such as ASI. The Court held that when a new employer acquires a business, it is free, generally, to set the initial terms and conditions of employment, and is not bound by its predecessor’s CBA. See id. at 281-82, 287-88, 294-95, 92 S.Ct. 1571. The successor employer is, however, obligated to bargain with the union after setting initial terms. See id. at 281, 92 S.Ct. 1571.
There are three established exceptions to the Bums rule. A successor employer’s right to set initial terms is limited if (1) the successor employer is the “alter ego” of the predecessor, see Sheet Metal Workers Int’l Assoc, v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647, 651 (9th Cir. 1988); (2) the successor employer assumes or adopts the obligations of the predecessor’s CBA, see id.; or (3) if “it is perfectly clear that the new employer plans to retain all of the employees in the [bargaining] unit,” Bums, 406 U.S. at 294-95, 92 S.Ct. 1571 (emphasis added).
The third exception to the Bums rule, the “perfectly clear” exception, requires a successor to consult with an incumbent union before altering the predecessor’s terms and conditions of employment when it is “perfectly clear that the new employer plans to retain all of the employees in the [bargaining] unit.” Burns, 406 U.S. at 294-95, 92 S.Ct. 1571. The Court established this exception in Bums, stating:
Although a successor employer is ordinarily free to set the initial terms on which it will hire the employees of a predecessor, there will be instances in which it is perfectly 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 cm-*1185suit with the employees’ bargaining representative before he fixes terms.
Id. (emphasis added). An employer subject to this exception is not bound by its predecessor’s CBA, nor is it required to agree to the terms the union proposes. See Burns, 406 U.S. at 282, 92 S.Ct. 1571. Rather, the successor employer must simply “consult” with the union before setting the initial terms and conditions of employment. See id. at 295, 92 S.Ct. 1571; Kallmann v. NLRB, 640 F.2d 1094, 1102 (9th Cir.1981).
The majority has sensibly abandoned its previous attempt to justify the Board’s award under the Bums perfectly clear exception.1 This is prudent, given that the AL J correctly concluded that the exception is simply not implicated on these facts and the Board itself specifically disavowed any reliance on it, stating that the exception “was not determinative of the legality of [ASI’s] conduct.” Advanced Stretchform-ing, 323 NLRB at 529. Unfortunately, the Bums perfectly clear exception remains lurking in the background. The Board’s award can only be justified if ASI breached a duty to negotiate with the UAW prior to setting the initial terms of employment. Despite its new reliance on the forfeiture doctrine without reference to the perfectly clear exception, the majority (to borrow from its quotation of the Rubaiyat of Omar Khayyam) has failed to “cancel half a Line” or “wash out a Word” of its previous ill-starred attempt to apply the Bums perfectly clear exception to this case.
In actuality, given that the perfectly clear exception does not apply here, ASI’s only obligation under Bums was to negotiate with the UAW after it had unilaterally set initial terms of employment. It is not contested that ASI breached this obligation. Nevertheless, as the majority concedes, the Board’s award of back pay was premised on the notion that “ASI unlawfully and unilaterally changed the employment terms without first bargaining with the union.” See supra at 1179 (citing Advanced Stretchforming Int’l, 323 N.L.R.B. 529, 531 (1997)) (emphasis added). Because ASI was punished for violating an obligation it did not, in fact, have, the Board’s award of back pay should be rejected.
B
In its attempt to justify the Board’s award, the majority invokes the so-called “forfeiture doctrine,” which courts have properly characterized as a “corollary” to the perfectly clear exception. See Capital Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999 (D.C.Cir.1998).
The majority views the doctrine differently. Quoting the Board, the majority describes the forfeiture doctrine as follows:
The fundamental premise for the forfeiture doctrine is that it would be contrary to statutory policy to “confer Bums rights on an employer that has not conducted itself like a lawful Bums successor because it has unlawfully blocked the process by which the obligations and rights of such a successor are incurred.” ... In other words, the Bums right to set initial terms and conditions of employment must be understood in the context of a successor employer that will recognize the affected unit employees’ collective-bargaining representative and enter into good-faith negotiations with that union about those terms and conditions.
See supra at 1180 (quoting Advanced Stretchforming, 323 NLRB 529, 530) (emphasis added). Thus, in the Board’s view, a view which the court today adopts, another exception to the Bums rule exists when a new employer attempts to avoid becoming a successor employer or fails to fulfill its duty to recognize and to bargain with the incumbent union. Apparently, *1186only a successor who complies with all of its obligations under the NLRA can set the initial terms of employment; any unfair labor practice that “block[s] the process by which the obligations and rights of [ ] a successor are incurred,” id., causes the employer to forfeit its rights. Hence, the majority opinion concludes that ASI’s “no union” statement caused ASI to forfeit its right to set initial terms without first bargaining with UAW. The majority has it wrong.
As the majority implicitly acknowledges, see supra at 1181, courts have previously applied the forfeiture doctrine only in cases in which a successor employer dis-criminatorily refused to hire its predecessor’s employees because of their union membership. See Kallmann, 640 F.2d at 1102-03; U.S. Marine Corp., 293 NLRB 669 (1989), enforced, 944 F.2d 1305 (7th Cir.1991). Indeed, courts have held that a successor employer who discriminatorily refuses to hire its predecessor’s employees based on their union membership forfeits its right to set the initial terms of employment. See, e.g., Kallmann, 640 F.2d at 1102-03; U.S. Marine Corp. v. NLRB, 944 F.2d 1305, 1320 (7th Cir.1991); NLRB v. Horizons Hotel Corp., 49 F.3d 795, 806 (1st. Cir.1995); Capital Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999, 1008 (D.C.Cir.1998). The majority now seeks to expand, for the first time, the scope of the forfeiture doctrine outside the discriminatory hiring context.
The majority justifies its application of the forfeiture doctrine here because ASI’s violation of the NLRA by making “no union” statements is “similar” to the discriminatory hiring practices of employers such as Kallmann. This is simply not the case. The discriminatory hiring cases are distinguishable because the “fundamental premise” behind the forfeiture doctrine in the discriminatory hiring cases is that but for the successor employer’s discriminatory refusal to hire its predecessor’s employees, the employer would have come within the perfectly clear exception to the Bums rule, and thus would have been obligated to consult the union before setting the initial terms of employment. See U.S. Marine, 944 F.2d at 1320 (“Where all or substantially all of the predecessor’s employees would have been retained but for the successor’s unlawful discrimination, the successor loses the right to set initial terms and conditions of employment and violates the [NLRA] if it unilaterally alters the predecessor’s terms without first consulting with the union!... But for its unlawful conduct, U.S. Marine would have hired substantially all of [its predecessor’s] employees and therefore would have been obligated to consult with the Union before setting the terms and conditions of employment.”); Capital Cleaning, 147 F.3d at 1008 (“[B]ecause Capital refused to hire the Ogden employees based upon their union membership, the Board properly presumed that but for such discrimination Capital would have hired a majority of the Ogden employees from the outset. Accordingly, Capital had a duty to bargain with Local 32 and therefore did not have the right Unilaterally to set the terms and conditions upon which it offered employment.”).
Applying the forfeiture doctrine in these types of cases prevents the successor employer from avoiding the perfectly clear exception through his “unlawful conduct.” See Kallmann, 640 F.2d at 1102-03 (holding that the Board correctly found that the perfectly clear exception applied because “any uncertainty regarding whether substantially all the former employees would have been retained had to be resolved against [the successor employer] because he could not benefit from his ... [discriminatory] conduct” (footnote omitted)). More precisely, because the employers in such cases never would have had the right unilaterally to set the initial employment terms absent their discriminatory hiring, holding that they forfeit their right to set the initial terms of employment simply restores the status quo ante. Cf. Sure-Tan, Inc. v. NLRB, 467 U.S. 883, 900, 104 S.Ct. 2803, 81 L.Ed.2d 732 (1984) (noting *1187that the Board’s remedial authority includes the ability “to restore the situation ‘as nearly as possible, to that which would have obtained’ but for” any unfair labor practice (quoting Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194, 61 S.Ct. 845, 85 L.Ed. 1271 (1941))).
Such rationale, however, does not justify holding that ASI forfeited its right to set initial terms. The majority falls far short in explaining how the application of the forfeiture doctrine here restores the situation to the status quo ante. But for ASI’s unlawful conduct, i.e., its “no union” statement, it still would not have been subject to the “perfectly clear” exception and hence did not have any duty to consult with UAW before setting the initial terms of employment. Thus, the majority’s “hypothesis,” see supra at 1182, that ASI might have bargained to impasse before setting initial terms had it not made the “no union” statement is patently unreasonable.
Clearly, then, because the rationale underlying the forfeiture doctrine is inapplicable to this case, the discriminatory hiring cases provide absolutely no authority for the court’s argument that ASI should be held to have forfeited its right to set initial hiring terms. The remedy that the Board misapplied in this case is one specifically designed to redress an employer’s violation of the obligation created by the “perfectly clear” exception, nothing more. The majority utterly fails to justify extending its application here.
C
Given this close link between the forfeiture doctrine and the perfectly clear exception of Bums, could it be that, despite its disclaimer in footnote 3, the majority has persisted in its attempt to apply the perfectly clear exception to the instant case, this time sub silentio? The majority justifies its application of the forfeiture doctrine thus:
Here, no discriminatory hiring practices prevented ASI’s “perfectly clear” obligation from arising. Instead, the “no union” statement chilled the invocation of that obligation once it had arisen. Having been informed when invited to apply for work with ASI that there would be no union at the new company, Aero’s workers may well have believed that employment with ASI was contingent on abstaining from union representation, including insistence on the right to bargain before ASI imposed initial terms.
Supra at 1181-82 (emphasis added). The majority misses the point. Because none of the exceptions to the Bums rule applies here, Aero’s workers had, in fact, no right to union bargaining before ASI imposed initial terms. While the majority now explicitly disclaims any reliance on the Bums “perfectly clear” exception, it nonetheless denies that ASI had the right unilaterally to set its initial terms of employment. The latter simply cannot be true.
II
The majority’s application of the forfeiture doctrine is not only fundamentally inconsistent with the doctrine’s underlying rationale, it is irreconcilable with Bums itself. In that case, Burns, as a successor employer, had violated the NLRA by unlawfully assisting a union which was a rival of its predecessor’s employees’ union and failing to recognize and to bargain with the incumbent union. See 406 U.S. at 276, 92 S.Ct. 1571. However, the Court rejected the Board’s finding that Burns was bound by its predecessor’s CBA or that it had violated the NLRA by setting initial employment terms. See id.
The Court viewed a successor’s duty to bargain and the right to set initial terms as separate issues:
Although Burns had an obligation to bargain with the union concerning wages and other conditions of employment when the union requested it to do so, ... [i]t is difficult to understand how Bums could be said to have changed *1188unilaterally any pre-existing terms or condition of employment without bargaining when it had no previous relationship whatsoever to the bargaining unit and, prior to [the date Burns began operations], no outstanding terms and conditions of employment from which a change could be inferred.
Id. at 294, 92 S.Ct. 1571 (italics in original) (emphasis added). Thus, the Court rejected the Board’s position that Burns violated the NLRA by setting the initial terms of employment, even though Burns can be said to have attempted to “block[ ] the process by which the obligations and rights of [ ] a successor are incurred,” see supra at 1180, by refusing to bargain with the incumbent union and by unlawfully assisting a rival union. See Burns, 406 U.S. at 295-96, 92 S.Ct. 1571.
Bums directly controls this case. In Bums, the employer violated the NLRA by failing to bargain with the incumbent union and interfering with its employees’ organizational rights by assisting a rival union, and yet the Court held that Burns retained the right to set initial hiring terms. See 406 U.S. at 294, 92 S.Ct. 1571. Here, ASI similarly violated the NLRA by failing to bargain with the incumbent union and by interfering with its employees’ organizational rights through its “no union” statement. Yet, contrary to Bums, the court today holds that ASI forfeited the right to set initial hiring terms. The court appears to confuse a successor employer’s obligations under the NLRA, and its right to set the initial terms of employment. Bums made clear that these issues are not inter-linked.
Ill
The Board has only remedial power and does not have the power to impose punishment for violations of the NLRA. See Phelps Dodge, 313 U.S. at 194, 61 S.Ct. 845. This limitation, on the Board’s authority “at a minimum ... encompasses the requirement that a proposed remedy be tailored to the unfair labor practice it is intended to redress.” Sure-Tan, Inc., 467 U.S. at 900, 104 S.Ct. 2803. The majority has not even come close to explaining how forfeiture of ASI’s right unilaterally to establish employment terms redresses ASI’s unlawful “no union” statements. ASI never had, and never would have had, an obligation to consult with the UAW prior to imposing initial terms. The appropriate remedy for ASI’s “no union” statement is an order directing ASI to cease and to desist telling potential applicants that ASI intends to operate with no union. The Board’s order does so in this case. To add that ASI forfeited its right to set the initial terms of employment because of this unfair labor practice is “a penalty by another name — and not a much different name at that.” U.S. Marine, 944 F.2d at 1328 (Easterbrook, J., dissenting). Indeed, a synonym of forfeit is “penalty.” See Webster’s Ninth New Collegiate Dictionary 484 (1987) (defining forfeit as “something forfeited or subject to being forfeited ... PENALTY”).
This court cannot authorize the Board to impose penalties. I respectfully dissent.

. The majority affirmed the Board’s award on the basis of the perfectly clear exception in a now-withdrawn opinion. See NLRB v. Advanced Stretchforming Int’l, Inc., 208 F.3d 801 (9th Cir.2000).