Court Opinion

ID: 4157274
Source: CourtListenerOpinion
Date Created: 2017-03-31 21:00:18.906664+00
Date Added: 2024-06-11T14:50:13.944268
License: Public Domain

United States Court of Appeals
                      For the First Circuit

No. 15-2398

                  NATIONAL LABOR RELATIONS BOARD,

                            Petitioner,

                                v.

                 LILY TRANSPORTATION CORPORATION,

                            Respondent.

              APPLICATION FOR ENFORCEMENT OF AN ORDER
               OF THE NATIONAL LABOR RELATIONS BOARD

                              Before

                      Kayatta, Circuit Judge,
                    Souter, Associate Justice,*
                     and Selya, Circuit Judge.

     Jared David Cantor, Counsel, with whom Kira Dellinger Vol,
Supervising Attorney, Richard F. Griffin, Jr., General Counsel,
Jennifer Abruzzo, Deputy General Counsel, John H. Ferguson,
Associate General Counsel, and Linda Dreeben, Deputy Associate
General Counsel, were on brief, for petitioner.
     Kay H. Hodge, with whom Alan S. Miller, Katherine D. Clark,
and Stoneman, Chandler & Miller LLP were on brief, for
respondent.

                          March 31, 2017

     * Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
             SOUTER, Associate Justice.                   The         National                Labor

Relations Board applies for enforcement of its bargaining order

against      Lily        Transportation       Corporation.                  We     grant        the

application.

                                            I.

             Pumpernickel Express, Incorporated, carried automotive

parts from warehouses in Mansfield, Massachusetts, to Toyota and

Chrysler dealerships in the region.                    Pumpernickel's drivers were

represented by the International Association of Machinists and

Aerospace Workers, AFL-CIO, District Lodge 15, Local 447.

             In October 2013, Pumpernickel filed for bankruptcy,

and   Lily   subsequently       obtained         the    portion       of     Pumpernickel's

business     that    involved       distributing         parts       for    Toyota.            Lily

hired     many      of     Pumpernickel's         former        employees,             including

drivers,     and    began     operations      in       November      2013.             The    Union

promptly     demanded        that    Lily   recognize           it     as        the    drivers'

bargaining       representative,        but       Lily     refused.               Lily        later

produced     signed       statements   it     allegedly         had    received              from   a

majority of the drivers saying that they no longer wished to be

represented by the Union.

             The Union filed an unfair labor practice charge with

the National Labor Relations Board, claiming that Lily's refusal

to bargain violated Sections 8(a)(1) and 8(a)(5) of the National

                                        - 2 -
Labor Relations Act.1                  After a hearing, the Administrative Law

Judge       found       that    in     distributing         for      Toyota,     Lily   was    a

"successor employer" to Pumpernickel, that is, an employer who

"makes       a    conscious       decision        to     maintain     generally      the    same

business          and   to     hire    a   majority       of   its    employees      from     the

predecessor," Fall River Dyeing & Finishing Corp. v. NLRB, 482
U.S. 27, 41 (1987); accord Asseo v. Centro Médico Del Turabo,

Inc., 900 F.2d 445, 450-51 (1st Cir. 1990).                            The Judge held that

Lily, as a successor, was required under Fall River to recognize

and bargain with the Union, and rejected Lily's position that

its refusal to bargain about terms of employment in the affected

unit        was    justified          by   the     signed      employee        statements      of

repudiation.            Rather, the Judge explained, under the "successor

bar doctrine," as adopted by the Board in UGL-UNICCO Service

Co., 357 N.L.R.B. 801 (2011), an incumbent union is entitled to

represent          a    successor      employer's         employees     for     a   reasonable

period of time for bargaining before its majority status may be

questioned.

                  The Board affirmed, agreeing with the Administrative

Law Judge that insofar as Lily was a successor employer, it was

        1
       Section 8(a)(1) makes it an unfair labor practice for an
employer "to interfere with, restrain, or coerce employees in
the exercise of [their organizational] rights."     29 U.S.C. §
158(a)(1). Under Section 8(a)(5) it is an unfair labor practice
for an employer "to refuse to bargain collectively with the
representatives of his employees." Id. § 158(a)(5).

                                                 - 3 -
obligated to bargain with the Union, and that UGL barred Lily

from challenging the Union's majority status until a reasonable

period    of    time    for    bargaining          had    elapsed.           The    Board

accordingly     ordered    Lily       to    recognize     and     bargain     with    the

Union.

           The Board now asks this Court to enforce its order

over Lily's objection.            Lily submits that the Board erred in

relying   on    UGL's   successor          bar    doctrine      and   that   we    should

instead   substitute      only    a    rebuttable        presumption     of    majority

union support under the rule of MV Transportation, 337 N.L.R.B.
770 (2002), of the kind the Board adopted and enforced prior to

its rejection in UGL.         Lily also says that it has rebutted that

presumption with its documentary evidence that a majority of the

affected drivers no longer support the Union.

                                            II.

           Lily's objection to the successor bar implicates some

doctrinal history.         The National Labor Relations Act provides

neither   bar    nor    presumption         to     address      the   unstable      labor

climate that can develop in successor employment, a silence the

Board has seen as leaving a statutory gap needing to be filled.

In 1999, it adopted a successor bar partially resembling its

present iteration, in St. Elizabeth Manor, Inc., 329 N.L.R.B.
341   (1999).     There,      the     Board       held   that    "once   a    successor

employer's obligation to recognize an incumbent union attaches

                                           - 4 -
[under Fall River], the union is entitled to a reasonable period

of   time     for    bargaining          without   challenge         to   its     majority

status."       Id.     at     341.       The    Board    recognized       that     it   was

overruling     its     previous         decision   of    some        twenty-four    years

earlier in Southern Moldings, Inc., 219 N.L.R.B. 119 (1975),

which   had     held        that   at     the   beginning       of    a   successorship

situation a union generally enjoys only a rebuttable presumption

of continuing majority membership support.                      St. Elizabeth Manor,
329 N.L.R.B. at 341.

             Just three years later, though, in MV Transportation,

337 N.L.R.B. 770, the Board overturned St. Elizabeth Manor in

favor of the rebuttable presumption.                     The Board declared that

the presumption represented the appropriate balance between the

two "fundamental purposes" of the National Labor Relations Act,

that is, "employee freedom of choice and the maintenance of

stability in bargaining relationships."                      Id. at 772-73.       In some

circumstances,         it     said,      the    successor      bar     could      preclude

employees from making a choice of representation "for as long as

several years," id. at 773, and as an example it cited the

possible combination of the successor bar and a bar running for

three   years       from     the     execution     of    a    collective        bargaining

agreement, id.         One Board member dissented, however, citing the

dramatic      increase       in    the    number    of       corporate    mergers       and

acquisitions        over     the   previous     twenty-five      years,     and    taking

                                           - 5 -
that as a reason to argue that "the interest of stability should

be given greater . . . weight in shaping national labor policy."

Id. at 776-77 (Member Liebman, dissenting).

            Nine years afterwards, in UGL, 357 N.L.R.B. 801, the

Board    changed   course      again,       citing    the    figures        from    the    MV

Transportation     dissent          along    with     current       statistics.            It

observed that successorship situations had become increasingly

common     owing   to     a    rising       level     of    corporate         merger      and

acquisition activity, id. at 801 & n.4, 805 & n.17, and held

that the bar "better achieves the overall policies of the Act,

in   the    context      of     today's        economy,"          than    a    rebuttable

presumption    does,     id.    at    801.      The       Board    did    not,     however,

merely reinstate the St. Elizabeth Manor bar, which it modified

in   two    respects.          It     defined       the    previously         unspecified

"reasonable period" of time for bargaining after the successor's

arrival as being between six months and a year, depending on the

circumstances.          Id.   at     808-09.        The    Board     also     provided      a

special variant of the bar for successorship situations that

involve    successorship       followed        by    execution       of   a    collective

bargaining agreement.          It reduced that latter bar's duration to

two years, so as to mitigate the limitation on employee choice

(or other challenges) that could previously have resulted from

adding the contract and successor bars together.                              Id. at 810.

                                        - 6 -
It is the successor bar thus doubly modified that is at stake

here.

                                      III.

               Lily attacks the Board's reliance on UGL's successor

bar on two grounds: (1) that a bar to challenging the union's

support,       as   distinguished     from    a   rebuttable   presumption,

deserves no judicial deference under Chevron U.S.A. Inc. v. Nat.

Res. Def. Council, Inc., 467 U.S. 837 (1984), because it flatly

violates employees' rights under Section 7 of the National Labor

Relations Act to choose or reject union representation;2 and (2)

that the Board's irregularity in successor cases, switching back

and forth between rebuttable presumption and bar rules, most

recently in the St. Elizabeth Manor, MV Transportation, and UGL

sequence, independently disentitles the current bar rule to the

judicial deference that an otherwise lawful administrative rule

of decision would deserve if consistently applied.

        2   Section 7 provides that
        [e]mployees shall have the right to self-organization,
        to form, join, or assist labor organizations, to
        bargain collectively through representatives of their
        own choosing, and to engage in other concerted
        activities for the purpose of collective bargaining or
        other mutual aid or protection, and shall also have
        the right to refrain from any or all of such
        activities except to the extent that such right may be
        affected by an agreement requiring membership in a
        labor organization as a condition of employment as
        authorized [elsewhere in] this title.
29 U.S.C. § 157.

                                      - 7 -
               The claim of a Section 7 violation on these facts is

untenable.          To be sure, we can imagine bars on challenges to

unions so patently arbitrary as to run afoul of the Section 7

guarantee; a ten-year bar following certification, say.                                    The bar

choice here, however, is for a newly limited period (alone or in

tandem with the contract bar), a fact that Lily disregards on

the    apparent       absolutist       theory     that      duration       is       not     of   the

essence:       in   its     view,    any   bar,     no    matter     its    length,             would

unlawfully burden Section 7 rights.                       But the assumption that a

bar    per     se     patently       trespasses        on      Section     7        while        some

rebuttable presumptions would not does not survive scrutiny.                                      If

we compare a two-year bar with a two-year presumption, we may

easily suspect that the burdens of the bar on employees' Section

7     rights    would       be      demonstrably         the    heavier         of        the     two

alternatives          and     require        a    comparatively            more           powerful

justification         to    fall     within      the     zone   of   reasonable             agency

action.      But if the comparison is between a six-month bar and a

rebuttable presumption for the same period, the bar could turn

out to be the lighter of the two, given the added burden of

rebuttal       that    would     come      with   the       presumption,            which       could

increase litigation time and expense, as against a proceeding

free of the presumption.                Thus, Lily's argument that any bar is

forbidden because it burdens the exercise of Section 7 rights is

in    tension       with     its     favored      alternative        of         a    rebuttable

                                            - 8 -
presumption, which does the same and could be the more onerous

of the two depending on the time period involved.

             The     Board       is     thus       within    the     zone    of     reason       in

rejecting     a     neat,        categorical          distinction         between       the     two

species      of     rules.            Each     serves       the     obviously       legitimate

objective of stability in labor and management relations during

a period in which the entrance of new management can destroy the

prior modus operandi among union, employer, and employees.                                     See

Fall River, 482 U.S. at 39-40.                         In those circumstances, for

example, there may well be a risk that employees will, rightly

or    wrongly,      blame       the     incumbent       union       for     the     demise       or

departure of the old employer, or will fear that support for a

union will jeopardize jobs with the new boss.                               See id.           Thus,

some limited discouragement of an unduly hasty reexamination of

a    prior   Section       7    choice       serves    to    provide      time     for    second

thoughts, a subject the statute does not directly address in

successor         cases,       but     which       falls     within       its     "underlying

purpose."         Brooks v. NLRB, 348 U.S. 96, 103 (1954); accord NLRB

v. Beverly Enters.-Mass., Inc., 174 F.3d 13, 32 (1st Cir. 1999).

Since neither of the competing means to further this legitimate

objective, then, is categorically forbidden, the only remaining

question     in     this       case    goes    to     the    adequacy       of    the    Board's

justification        for       deciding       to   impose     the    newly       adjusted       bar

rule, with particular attention to Lily's claim that the Board

                                               - 9 -
has undercut its entitlement to deference by blowing hot and

cold in its choices of successor rules.

               This inconsistency challenge to UGL calls to the fore

the Supreme Court's recent leading case on agency reversal of

prior       interpretive    doctrine,    FCC     v.    Fox     Television      Stations,

Inc., 556 U.S. 502 (2009); see also Encino Motorcars, LLC v.

Navarro, 136 S. Ct. 2117, 2125-26 (2016) (discussing Fox).3                           The

Court in Fox was unanimous in its acceptance of the view, often

expressed, that an agency is not forever bound by an earlier

resolution of an interpretive issue, but that a change must be

addressed       expressly,     at   least      by      the     agency's     articulate

recognition that it is departing from its precedent.                           See Fox,
556 U.S. at 514-15; id. at 535 (Kennedy, J. concurring); id. at

549   (Breyer,      J.,    dissenting);     see       also    Nat'l    Ass'n    of   Home

Builders v. EPA, 682 F.3d 1032, 1038 (D.C. Cir. 2012) (stating

that the "core requirement that Fox makes clear an agency must

meet when changing course" is to "'provide reasoned explanation

for its action,' which 'would ordinarily demand that it display

awareness that it is changing position'" (quoting Fox, 556 U.S.

at 515)).       There was disagreement between majority and dissent,

however,       on   the    detail   necessary         to     justify   an   overruling

decision, compare Fox, 556 U.S. at 514-16, with id. at 549-50

        3
       Because the authorities on which Lily rests for its
inconsistency challenge to UGL antedate Fox, there is no need to
discuss their holdings.

                                        - 10 -
(Breyer, J., dissenting), with Justice Kennedy's view (generally

in   the    majority)         taking    the     position       that    reversing        course

requires         reasoned      explanation,           id.    at     535    (Kennedy,         J.,

concurring).            Nonetheless, all views were in accord that an

about-face        on     a    rule     owing     to     facts       changed      from    those

underlying        the    prior       view   requires         that    the    new    facts      be

addressed explicitly by reasoned explanation for the change of

direction.        See id. at 515-16 (majority opinion); id. at 535-36

(Kennedy,         J,     concurring);          id.      at     550-51       (Breyer,         J.,

dissenting); see also Modesto Irrigation Dist. v. Gutierrez, 619
F.3d 1024, 1034 (9th Cir. 2010) (describing Fox as holding that

"an agency [must] provide a greater justification for changing a

policy" when the new policy rests upon changed facts).

             This is such a case.                     Changes from the significant

factual bases of the earlier rule were essential to the Board's

departure from precedent in UGL, where two such developments

received attention.

             The first concerned corporate business activity, as

the Board in UGL emphasized the fact stressed by the dissenting

Board      member       in    MV   Transportation:           merger       and    acquisition

activity     was       much   increased        from    the    quieter      heyday       of   the

presumption rule of Southern Moldings.                            UGL, 357 N.L.R.B. at

801.        In    UGL,       the   Board      majority       brought       the    supporting

statistics up to date, and showed, in this respect, that the

                                            - 11 -
volume    of    mergers     and     acquisitions       had   not       substantially

declined since the MV Transportation majority ignored them.                        Id.

at 805 n.17.        The UGL Board noted that, in 1975, merger and

acquisition      announcements       numbered      2,297,    with      transactions

valued   at    $11.8     billion;    that   in    2000,   two    years    before     MV

Transportation was decided, the numbers had increased to 9,566

and $1.3 trillion; and, finally, that following a drop after

2000, the numbers had "ris[en] again, peaking in 2007, before

another decline, which now seems over."                   Id.      The Board also

cited    an    article    claiming    that    conditions        were    ripe   for   a

"[b]oom" in mergers and acquisitions in 2011, the year in which

the UGL Board was writing.           Id. (citing Frank Aquila, Conditions

are Ripe for an M&A Boom in 2011, Bloomberg Business Week (Dec.

22, 2010)).

              Lily tries to disparage the Board's reliance on these

statistics by asking what they are supposed to prove.                     But we do

not think the decision gets a failing grade for dereliction in

spelling out the point the Board was making, since it seems

clear enough that the corporate activity in question carries

significant consequences under the Fall River successor rule.

The greater the number of mergers and acquisitions, the greater

the number of those that will produce a Fall River successor

employer.      The greater the number of successor situations with

unionized      employees,    the    greater      the   potential    volatility       in

                                      - 12 -
union-management relationships across the national labor market.

The   greater   the   level   of   that   instability,   the     greater    the

likelihood of precipitate disruption in litigation challenging

union support during the unsettled period with the new employer.

This risk would not only affect the actual employment relations

in the market overall owing to the quantity of successorships,

but by the same token would also portend a heavier burden on the

administrative    law   machinery,    including   the    Board    itself,    in

administering the National Labor Relations Act.

           These obviously apparent consequences answer not only

Lily's objection to the reliance on the statistics, but its

attempt to distance this case from their threat by pointing out

that its own successor status follows neither a merger nor an

acquisition.     But how the fact of successor employment comes

about is not to the point.            What does matter is simply the

probable volume of hasty challenges to union support.                  It is

this that makes the merger and acquisition facts relevant in

reexamining the MV Transportation rule and in concluding that a

bar would serve stability in labor relations better in a market

likely to be fraught with higher numbers of upsets than in the

world of forty years ago.4

      4We are mindful of the Supreme Court's observation in
Encino Motorcars that a reviewing court passes on the adequacy
of an agency's reasoning, without authority to inject new
reasons of its own. 136 S. Ct. at 2127 (citing Motor Vehicle

                                   - 13 -
            The UGL Board relied on another set of changed facts

in justifying its return to a successor bar.                 These facts are

notable    in    that    they   were    actually   subject   to   the   Board's

control, which the Board exercised by modifying its own rules in

respects        not     independently     challenged    here.           The   MV

Transportation majority justified its rejection of a bar rule by

showing how long a period of union immunity to challenge might

stretch out if the St. Elizabeth Manor successor bar period of a

"reasonable" but unspecified time was combined with other bars.

The MV Transportation Board explained in this way:

     It is possible . . . that the successor bar could
     preclude the employees' exercise of their Section 7
     rights for as long as several years.    For example, a
     successor employer could engage in bargaining with the
     incumbent union and, prior to the expiration of a
     "reasonable period of time," reach agreement with the
     union on a new collective-bargaining agreement, which
     then would serve as a bar to a representation petition
     for the duration of the contract, up to a period of 3
     years.    Moreover, the incursion on the employees'
     freedom of choice could be even more severe (up to 6
     years) if the union and the predecessor employer were
     parties to a collective-bargaining agreement that
     served to bar any employee efforts to remove or
     replace the Union prior to the successor's assumption
     of operations.

Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 43 (1983)); see also River St. Donuts, LLC v. Napolitano,
558 F.3d 111, 115 (1st Cir. 2009) ("This Court cannot 'attempt
to supply a reasoned basis for the action that the agency itself
has not given.'" (quoting Citizens Awareness Network v. U.S.
Nuclear Regulatory Comm'n, 59 F.3d 284, 291 (1st Cir. 1995))).
We regret that the Board did not do a more extensive job
spelling out what it meant, but because we think that the point
of its reliance on statistical fact justification is so obvious,
we hold the explanation merely laconic, not inadequate.

                                       - 14 -
337 N.L.R.B. at 773.            The Board in UGL treated this as a serious

objection, see 357 N.L.R.B. at 808, to which it responded by

decreeing the following modifications of bar rules as previously

imposed.     First, as to the successor bar, the Board tightened

the formerly undefined "reasonable period" of time, setting it

at a six-month minimum but no longer than a year, depending on

circumstances.       Id. at 808-09.            Second, the Board modified the

contract bar doctrine, holding that where a first contract is

reached between the successor employer and the incumbent union

within the successor bar's newly specified reasonable time, and

where there was no open period permitting the filing of a union

challenge    petition      during       the    final   year    of   the   predecessor

employer's bargaining relationship with the union, the contract-

bar period would be a maximum of two years, instead of three.

Id. at 810.

             Thus, in responding to the MV Transportation majority

objection, the Board changed the consequences the earlier rules

might   produce.           It     did    not    merely    revert      back   to    the

interpretive regime imposed or assumed by St. Elizabeth Manor,

but devised a new scheme to produce a shorter period of union

protection     and     a        correspondingly        earlier      opportunity     to

challenge    the     ensconced      union,      whether   by     employees    in   the

                                         - 15 -
exercise of Section 7 rights, or by the successor or a competing

union.

            In    sum,       we    find     that    the       Board    has   explained         its

reason    for    changing          course     and    has       marshalled         new    factual

support for its doctrinal move.                       It brought up to date the

commercial reality ignored by the MV Transportation majority and

changed    the     factual         consequences          of    the     successor         bar     by

modifying the terms on which the bar was previously imposed.

The   result      is    an        adequately       explained          interpretive        change

reflecting the Board's judgment of a reasonable balance between

the Section 7 right of employee choice and the need for some

period of stability to give the new relationships a chance to

settle down.

            The    need       to     strike    such       a    balance       is    not    itself

challenged, and hardly could be.                    We see no cause to doubt that

the Board's position taken here is within the scope of reasoned

interpretation         and    thus     subject      to     judicial       deference           under

Chevron, 467 U.S. at 842-45.

                                              IV.

            Lily       raises        three     additional             challenges         to     the

successor bar, and we reject them.                        Lily contends that the bar

is inconsistent with references to a presumption rule in Fall

River and NLRB v. Burns International Security Services, Inc.,

406 U.S. 272 (1972).               But the language in those cases on which

                                            - 16 -
Lily relies simply describes the legal landscape at the time.

See Fall River, 482 U.S. at 41 & n.8; Burns, at 278-79, 279 n.3.

Neither case holds that a rebuttable presumption, rather than a

bar, is required in a successorship situation.                    Second, Lily

argues that the bar is inconsistent with the Act's requirement,

in Section 10, that the Board support its factual findings with

"substantial evidence on the record," 29 U.S.C. § 160(e)-(f).

The   successor    bar,   however,    is    a   legal    rule,   not   a   factual

finding, and therefore the substantial evidence requirement is

not on point.      Finally, Lily argues that the bar (and, in fact,

any bar) is inconsistent with this court's holding in Big Y

Foods,    Inc.    v.   NLRB,   651 F.2d 40   (1st    Cir.   1981).      That

argument, too, fails, as Big Y concerned the Act's requirement,

not at issue here, that the Board determine the appropriate

bargaining unit "in each case."             Id. at 45-46 (quoting 29 U.S.C.

§ 159(b)).

                                       V.

             Because we see no error in the Board's adherence to

UGL's successor bar doctrine, we need not reach Lily's arguments

that it would prevail if that doctrine were rejected in favor of

a rebuttable presumption of majority support for the Union.                   The

Board's   application     for   enforcement       of    its   bargaining     order

against Lily is granted.

                                     - 17 -