Court Opinion

ID: 9490232
Source: CourtListenerOpinion
Date Created: 2023-08-05 13:36:52.452584+00
Date Added: 2024-06-11T17:53:58.099475
License: Public Domain

O’SCANNLAIN, Circuit Judge,
concurring and dissenting in part:
I respectfully dissent from Part V of the court’s opinion, which concludes that the law of the case doctrine is inapplicable to our review of the National Labor Relations Board’s final remedies and requires New Breed Leasing Corporation to restore the status quo ante with respect to wages and terms and conditions of employment. I concur in the remainder of the opinion without reservation.
I
The majority concludes that the law of the case doctrine is inapplicable to our review of the National Labor Relations Board’s (“NLRB” or “Board”) final remedies, because “we have not previously considered or decided the legal issues now before us.” Supra, at 1467. In Aguayo v. New Breed Leasing Corp., 46 F.3d 1138, 1995 WL 7506, *1 (9th Cir.1995) (unpublished disposition), which arises out of the same facts as the instant appeal, indeed it is an earlier stage in this very case, this court reviewed the district court’s grant of an interim injunction in favor of the Regional Director of Region 21 of the NLRB, pursuant to 29 U.S.C. § 160(j). The district court’s injunction required New Breed Leasing Corporation (“New Breed”), inter alia, (1) to recognize and bargain with the unions, (2) to hire all (eleven) of the Maersk employees, and (3) to restore the Maersk employees’ initial wages and conditions of employment, pending resolution of the unfair labor practice charges subject to this appeal. This court upheld the injunction, but remanded to the district court to “provide New Breed an opportunity to establish that fewer than eleven jobs would have been available for former Maersk employees regardless of New Breed’s alleged unfair labor practice and modify the injunction to permit New Breed to set initial wages and conditions of employment.” ' Aguayo, 1995 WL 7506 at *1 (emphasis added). We held in no uncertain terms that the district court erred with respect to its status quo ante remedies:
The district court did err, however, in requiring New Breed to restore the former wages and conditions of employment at the Compton site. Requiring New Breed to set initial wages at the union rate is not necessary to “protect the integrity of the collective bargaining process [or] to preserve the Board’s remedial power.”
Id. (internal citation omitted). I am at a loss to understand how the majority can so easily wipe the procedural slate clean and ignore this court’s earlier holding on the same issue and facts.
The law of the case doctrine indeed precludes our review of the Board’s remedies. See, e.g., Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 1400, 1404 (9th Cir.), cert. denied, 510 U.S. 815, 114 S.Ct. 64, 126 L.Ed.2d 34 (1993) (“Undeniably, the decision of the circuit court in a prior appeal must be followed in all subsequent proceedings in the same ease under the law of the case doctrine.”); Eichman v. Fotomat Corp., 880 F.2d 149, 157 (9th Cir.1989) (“Under the law of the ease doctrine a decision of the court in a prior appeal must be followed in all subsequent proceedings in the same case.”). The majority’s decision on the Board’s remedies simply does not square with this court’s earlier disposition of the case.
II
Assuming arguendo that we are not precluded from reviewing the Board’s remedies under the law of the case doctrine, the majority nonetheless errs in upholding the Board’s status quo ante remedies. A successor employer violates section 8(a) of the National Labor Relations Act (“NLRA” or “Act”) if it makes discriminatory hiring decisions and refuses to employ a predecessor’s employees in order to avoid this obligation. 28 U.S.C. § 158(a). Substantial evidence supports the Board’s conclusion that New *1470Breed was (i) a successor employer who (ii) refused to hire its predecessor’s employees because of their union affiliation and (iii) refused to recognize and bargain with the unions representing the employees. Because New Breed violated section 8(a)(3) and (1) of the Act, the Board may impose a remedial remedy to restore the situation to what it would have been absent the violation. The Board, however, may not impose a remedy that is punitive in nature. New Breed properly maintains that the Board’s order requiring it to restore the wages, hours, and working conditions of the Maersk employees is punitive.
The Board’s order reads, in relevant part:
I shall order Respondent to offer the former Maersk unit employees in writing immediate, full, and unconditional employment in the unit positions they occupied when employed by Maersk, terminating unit employees not formerly employed by Maersk as necessary, if such positions no longer exist, they shall be offered substantially equivalent positions, without prejudice to their seniority and other rights and privileges they would have enjoyed if initially hired at the commencement of Respondents operations, and to make them whole for any loss of earnings and bene-fits____
I shall also order Respondent, on the Unions’ request, to restore the status quo ante with respect to each unit, to rescind the unilateral changes, including all initial terms and conditions of employment different from those in place under Maersk’s agreement with the Unions, in unit employees’ wages, hours, and terms and conditions of employment implemented on and before April 1, 1994, and subsequently; and to make all affected unit employees whole for losses they incurred by virtue of its unilateral changes in their wages, fringe benefits, and other terms and conditions of employment....
The majority’s decision is contrary to the weight of authority construing the Board’s remedial power.
A
First, the majority’s holding is not supported by the United States Supreme Court’s decision in NLRB v. Burns Int’l Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), where the Court first examined whether a successor employer is bound by its predecessor’s collective bargaining agreement. The Supreme. Court held that requiring a successor to accept its predecessor’s agreement goes beyond remediation, because the successor’s only obligation is to bargain with the predecessor’s employees. The “parties need not make any concessions as a result of Government compulsion and ... they are free from having contract provisions imposed upon them against their will.... [Hjolding ... [the] employer bound to the substantive terms of an old collective-bargaining contract may result in serious inequities.” Burns, 406 U.S. at 287, 92 S.Ct. at 1582. The Supreme Court carved out the “perfectly clear” exception to its rule when it is perfectly clear that all or substantially all of the predecessor’s employees will be rehired. The exception only imposes a duty on the successor to “consult” with the union before it sets the initial terms and conditions of employment. The duty to consult however does not imply an obligation to accept the old terms of employment. See also Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 36-42, 107 S.Ct. 2225, 2232-35, 96 L.Ed.2d 22 (1987) (discussing and reaffirming Burns).
B
Second, this, court has consistently held that a successor employer is free to set the initial terms and conditions of employment. New England Mechanical, Inc. v. Laborers Local Union 294, 909 F.2d 1339, 1342 (9th Cir.1990); Sheet Metal Workers Int’l Ass’n Local No. 359 v. Arizona Mechanical & Stainless, Inc., 863 F.2d 647, 651 (9th Cir. 1988); NLRB v. World Evangelism, Inc., 656 F.2d 1349, 1355 (9th Cir.1981); Kallmann v. NLRB, 640 F.2d 1094, 1103 (9th Cir.1981); NLRB v. Edjo, Inc., 631 F.2d 604, 606 (9th Cir.1980); NLRB v. Dent, 534 F.2d 844, 847 (9th Cir.1976). The majority seeks to avoid the application of these precedents by reframing the issue into an issue of first impression. However, its reasoning is not persuasive because our circuit has already determined that a successor employer has a *1471duty to consult with the union before unilaterally changing the terms of employment but has no obligation to accept its predecessor’s labor agreement.
Under Kallmann, in particular, New Breed should not be required to restore the wages, hours, and working conditions of the Maersk employees. This court held in no uncertain terms that a successor has no obligation to accept its predecessor’s labor agreement and reinstate the predecessor’s terms and conditions of employment. Contrary to the majority’s pronouncement, Kall-mann states that such an order indeed constitutes a penalty.
Nevertheless, we disagree with the extent of the remedial order. Even though under the facts of this ease Kallmann had a duty to consult with the union before unilaterally charging the terms of employment, as a successor employer he had no obligation to accept his predecessor’s labor agreement. The effect of the Board’s order is to force Kallmann to abide by the terms of his predecessor’s contract with the employees for the entire period of time Kallmann has owned the enterprise.
Id. (citations omitted) (emphasis added). The majority’s attempt at distinguishing Kallmann on these facts is unavailing.
C
And finally, the Second, Fourth and District of Columbia Circuits have held that successors may set their own terms and conditions. Saks & Co. v. NLRB, 634 F.2d 681, 687-88 (2d Cir.1980); Nazareth Reg’l High Sch. v. NLRB, 549 F.2d 873, 881-82 (2d Cir.1977);1 NLRB v. Spruce Up Corp., 529 F.2d 516 (4th Cir.1975); International Ass’n of Machinists & Aerospace Workers v. NLRB, 595 F.2d 664, 672-76 (D.C.Cir.1978). The majority, however, concludes that the Seventh Circuit’s reasoning in U.S. Marine Corp. v. NLRB, 944 F.2d 1305 (7th Cir.1991) (enbanc) is persuasive and should be adopted in the instant ease. The Seventh Circuit held that where a successor employer illegally refused to bargain with a predecessor’s union, the Board’s order to reinstate the contract in effect under the predecessor was a proper status quo ante remedy. It concluded that this was appropriate because, under the “perfectly clear” exception delineated in Bums, a successor that would have retained all or substantially all of its predecessor’s employees, absent its discriminatory hiring practice, “loses the right to set the initial terms and conditions of employment and violates the Act if it unilaterally alters the predecessor’s terms without first consulting the union.” Id. at 1320.
In reaching its decision, the court split six to five. I cast my lot with the Seventh Circuit dissenters because (i) the majority’s interpretation of the “perfectly clear” exception is inconsistent with the rationale in Bums; and (ii) the status quo ante remedy contravenes certain policies embedded within the NLRA regarding successor ownership. In his dissent, Judge Easterbrook properly argued that a bona fide sale of a business enables the successor to impose its own terms. He emphasized that the forfeiture of a successor’s privilege to set the initial terms and conditions of employment is contrary to such policies as freedom of contract and the need to resuscitate ailing business.
They have received wages from U.S. Marine to compensate them for the elimination of the antique manning tables and work rules. Now they receive a third salve, in back pay, for the loss of the work rules they enjoyed when Chrysler ran the plant, and U.S. Marine must use those rules from now on. None of this is remedial, and as a penalty it is not only too high but also interferes with the future operation of the plant. How much cleaner if the Board could levy a hefty fine, distribute the money to the workers, and be done. Instead, the Board’s pretense of “remedy” has produced an order that may make profitable production impossible. By approving this masquerade we preserve *1472featherbedding, increase the risks of taking over foundering firms, and frustrate the revival of aging plants. Neither American workers nor American consumers will welcome this consequence.
Id. at 1331.
Here, the remedy for discriminating against the eleven Maersk employees would be an order to hire them. It goes beyond mere remediation to impose the prior contract becáuse New Breed would have had the right to set its own terms and conditions had it hired those employees initially. Because New Breed violated its obligation as a successor to bargain, the proper remedy is a bargaining order, not reinstatement of the contract that existed under Maersk.
Ill
Because the majority’s decision is contrary to the weight of authority construing both the law of the case doctrine and the Board’s remedial power, I dissent from that part of the court’s opinion which orders the status quo ante remedy.

. The majority relies on NLRB v. Staten Island Hotel Ltd. Partnership, 101 F.3d 858 (2d Cir.1996), for the proposition that imposing a predecessor's employment agreement is remedial rather than punitive. However, Staten Island is distinguishable: "[T]he requirement that the Company pay former employees at the prior rates was plainly intended to be remedial, for it is temporally limited: (the Board's order requires payment at the prior rates only until the Company negotiates in good faith with the Union, either to agreement or to impasse.") Id. at 862 (emphasis added).