Court Opinion

ID: 6985379
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:00:04.512309+00
Date Added: 2024-06-11T16:09:25.374053
License: Public Domain

O’SCANNLAIN, Circuit Judge,
dissenting:
The court’s opinion frames the issue before us as “whether a successor employer has a duty to bargain with an incumbent union before unilaterally imposing terms when the employer hires its initial workforce from the ranks ... of its predecessor.” Supra at 804. With respect, I suggest it.is the wrong question. Worse yet, the majority compounds the error by giving the wrong answer to that question.
I
The National Labor Relations Board (“NLRB” or “Board”) has applied to this court for the enforcement of its order, which declares in- part that Advanced Stretchforming International (“ASI”) violated the National Labor Relations Act (the “Act”) by “unilaterally changing wages and benefits” without first bargaining with the union that had previously represented the individuals whom ASI ultimately hired. The Board based this element of its order on its conclusion that ASI had “forfeited” its othenvise ungues-*812tioned right to set the initial terms and conditions of employment by peremptorily and impermissibly stating that there would be “no union” at its workplace. Naturally, the Board urges the enforcement of its order on this score; ASI is opposed. The majority agrees with the conclusion of the Board but does not endorse its logic.
The majority substitutes its own argument for that of the Board on the issue of whether ASI’s imposition of novel terms and conditions of employment was unlawful. ASI’s new terms and conditions violated the Act, the majority holds, not because ASI made its impermissible “no union” statement but because ASI had made it “perfectly clear” that it intended to man its workforce with the employees of its predecessor. See supra at 808 (“Because we find that the perfectly clear exception to the Bums rule applies in this case, we need not take up the Board’s application of the forfeiture doctrine .... ”). The majority’s reliance on its own argument is plainly impermissible, for, as the Supreme Court has “often held, the validity of an agency’s determination must be judged on the basis of the agency’s stated reasons for making that determination.” Industrial Union Dept., AFL-CIO v. American Petroleum Institute, 448 U.S. 607, 631 n. 31, 100 S.Ct. 2844, 65 L.Ed.2d 1010 (1980).
The majority asserts that the scope of our review need not be limited to determining the validity of the grounds actually advanced in the Board’s order, because the majority can affirm the order with the “ ‘interpretation of a federal statute,’ ” supra at 809 (quoting Railway Labor Executives’Ass’n v. ICC, 784 F.2d 959, 968 (9th Cir.1986)), which is not a type of determination that the Board “ ‘alone is authorized to make,’” id. (quoting SEC v. Chenery Corp. (Chenery II), 332 U.S. 194, 196, 67 S.Ct. 1575, 91 L.Ed. 1995 (1947)). I must disagree. The majority is administering the Act-not interpreting it-with the unilateral declaration that ASI committed an “unfair labor practice” when it set the initial terms of employment and shortly thereafter hired eight of its predecessor’s employees. If this were not the sort of determination that the Board is uniquely authorized to make, I would be hard pressed to conceive of what is.1
*813This court is constrained, therefore, to consider the validity of the Board’s stated reasons for concluding that ASI’s conduct violated the Act. Because the court has not done so, it would be improvident for the court now to remand the Board’s order for findings on the sustainability of the Board’s desired remedy.
II
Considerations of administrative law aside, the court’s holding practically eviscerates the rule of NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). In Bums, the Supreme Court established that a new employer is presumptively free to set the initial terms and conditions of employment without negotiating with a union, even if the new employer is the “successor” of an organization whose employees were represented by that union. Id. at 294, 92 S.Ct. 1571 (noting that, even though the successor employer’s terms differed from those of the old employer, “it does not follow that [the successor employer] changed its terms and conditions of employment when it specified the initial basis on which employees were hired” (emphasis added)). The Court has underscored that this presumption will be overborne only in “exceptional situation[s].” Fall River Dyeing and Finishing Corp. v. NLRB, 482 U.S. 27, 47 n. 14, 107 S.Ct. 2225, 96 L.Ed.2d 22 (1987).
The Bums rule derives from the well-established principle that an employer’s duty to bargain with a union does not arise until it transpires that a majority of the employer’s workforce has chosen to be represented by that union. See id. at 295, 92 S.Ct. 1571 (noting that the duty to bargain does not mature before it is “evident ... that the bargaining representative represents a majority of the employees in the unit”). See generally NLRB v. Local Union No. 103, Int’l Ass’n of Bridge, Structural, and Ornamental Iron Workers, 434 U.S. 335, 344, 98 S.Ct. 651, 54 L.Ed.2d 586 (1978) (noting “the generally prevailing statutory policy that a union should not purport to act as the collective-bargaining agent for all unit employees, and may not be recognized as such, unless it is the voice of the majority of the employees in the unit”). Because the preference for union representation amongst the. majority of employees cannot be determined before the composition of the workforce is established, the composition of the workforce generally cannot be established before the employees are hired, and employees cannot be hired without the employer’s stating the initial terms of employment, it is pure syllogism that the employer cannot generally be held to negotiate with a union before the employer has set the initial terms of employment.
As the Court noted in Bums, however, there are some circumstances in which the composition of an employer’s workforce can be established before the employees are hired. In these circumstances, the foregoing syllogism breaks down. One such circumstance arises when “it is perfectly clear that the new employer plans to retain all of the employees [of its predecessor].” Burns, 406 U.S. at 295, 92 S.Ct. 1571. When the new employer’s plan is “perfectly clear,” the preference for union representation of the employer’s future workforce is equally clear. Hence, the new employer can fairly be required to negotiate with the union before setting the initial terms of employment. This is the “perfectly clear” exception to the Bums rule.
The critical element of the “perfectly clear” exception is that of timing: When *814can an employer be said to have known of the composition of its future workforce and thus of its duty to bargain with a union? See Burns, 406 U.S. at 294, 92 S.Ct. 1571 (“[T]here is no evidence that Burns ever unilaterally changed the terms and conditions of employment it had offered to potential employees in June after its obligation to bargain with the union became apparent.” (emphasis added)). Nothing in our case law suggests that the issue of timing has lost its relevance. Indeed, courts applying the “perfectly clear” exception continue to rely explicitly on the fact that the successor employer plainly intended-prospectively-to retain the predecessor’s employees before setting the initial terms of employment. See, e.g., Canteen Corp. v. NLRB, 103 F.3d 1355, 1363 (7th Cir.1997) (noting that the NLRB had found that “ ‘the [new employer] had effectively and clearly communicated to the Union its plan to retain the predecessor employees’” (emphasis added)); Bellingham Frozen Foods, Inc. v. NLRB, 626 F.2d 674, 679 (9th Cir.1980) (noting that the statements of the new employer’s president supported the NLRB’s conclusion “that it was ‘perfectly clear’ that [the employer] intended to staff the plant with a sufficient number of [predecessor] employees to trigger a bargaining obligation” (emphasis added)).
Applying the “perfectly clear” exception to this case thus requires evidence establishing that ALI planned-before setting the initial terms of employment-to hire at least the majority of its employees from the workforce of its predecessor, Aero Stretch, Inc. (“Aero”). See Bellingham, 626 F.2d at 678-79. Neither the Board nor the administrative law judge (“ALJ”) found such evidence.2 Nevertheless, the majority does. See supra at 808 (“The circumstances surrounding the takeover in this case strongly indicate ASI’s intent to hire its initial workforce from the ranks of its predecessor.”) The evidence on which the majority relies, however, falls far short of establishing the existence of ASI’s plan. The majority first observes that an agent of ASI told Aero’s employees that they should report to the plant on the first day of ASI’s operation if they wanted to apply to work for ASI. An invitation to apply for work, however, is far from a statement of the employer’s intention to hire the applicant. The majority also notes that ASI’s agent stated that “ASI intended to hire some Aero workers immediately, and others as work became available.” See supra at 808. Because ASI’s intent to hire some Aero workers cannot establish that former Aero workers would constitute the majority of ASI’s workforce, this evidence, too, is irrelevant. Cf. Bellingham, 626 F.2d at 679 (relying on the successor employer’s statement that it would “employ all but ‘some’ of the [predecessor’s] employees” (emphasis added)). The majority also relies on the fact that “there is no evidence that ASI interviewed any non-Aero employees” immediately. See supra at 808. That no evidence of such interviews appears in the record hardly establishes that such interviews did not occur. Furthermore, the majority’s reliance on a lack of evidence for ASI’s position suggests-wrongly-that a successor, barring evidence to the contrary, is presumed to have made “perfectly clear” a plan to hire most of its employees from its predecessor.
All the “evidence” marshaled by the majority, then, boils down to ASI’s actual recruitment practices. See supra at 808 (“ASI then hired all eight of its initial unit employees from Aero’s ranks.”). That an employer ultimately did something, however, does not establish that what the employer would do was “perfectly clear.” See Burns, 406 U.S. at 295, 92 S.Ct. 1571 (“[I]t may not be clear until the successor employer has hired his full complement of employees that he has a duty to bargain with a union.” (emphases added)). The *815majority attempts to sidestep this embarrassingly elementary point by noting that we relied in Bellingham on an employer’s ultimate hiring practices in evaluating the earlier transparency of its plans. See supra at 808 (citing Bellingham, 626 F.2d at 679). Bellingham posed a different issue, however. In that case, we were called upon to determine whether substantial evidence supported the Board’s conclusion that an employer’s hiring plans had been “perfectly clear.” We were not conducting de novo review, and we did not state that we would have reached the same conclusion as the Board if we were. Moreover, the facts in Bellingham presented other probative evidence in addition to the employer’s ultimate recruitment practices. The majority here marshals no additional probative evidence whatsoever.
The majority sets the standard for applying the “perfectly clear” exception so low that the exception can only swallow the rule. This outcome does not merely flout the decision of the Supreme Court in Burns. It also invites every successor employer to discriminate against the employees of its predecessor. Anything else would only increase the successor employer’s risk of being found to have plainly intended to hire its predecessor’s employees all along-and the concomitant risk of having retroactively forfeited its presumptive (and valuable) right to set the initial terms and conditions of employment.
The majority ignores basic tenets of administrative law, flouts Supreme Court precedent, and worsens the plight of American workers facing the insecurity of a failed employer. I respectfully dissent.

. By way of contrast, our decision in Railway Labor Executives exemplifies the type of statutory interpretation that we may undertake in considering a novel basis on which to affirm an agency's order. In that case, an order of the ICC was challenged because the ICC refused to impose certain labor protections as a condition of its approval of the sale of a railroad line. See 784 F.2d at 961. A third party attempted to justify the ICC’s refusal by arguing that Congress had not given the ICC any discretion to impose such protections. See id. at 969. Even though the ICC had not attempted to defend its action in this way, we noted that we could consider the third party's proposed justification for the ICC’s order, because the issue of whether the ICC had the discretion at issue involved only the "interpretation of a federal statute.” Id. Quite unlike the grounds advanced by the majority here, the novel basis we considered in Railway Labor Executives in no way involved the application of substantive terms of a statute for reasons not adopted by the agency in the order under review.
The majority's attempt to analogize the substitution of its own reasons for those of the NLRB in this case to the Fourth Circuit’s decision in North Carolina Commission of Indian Affairs v. United States Department of Labor, 725 F.2d 238 (4th Cir.1984), is unavailing. In that case, as in Railway Labor Executives, the reasoning at issue related to the scope of the agency's power under a federal statute. See id. at 240. As the Fourth Circuit took pains to note, "[t]he interpretation [was] wholly different from what it is in the case where Congress specifically entrusts an administrative agency, because of its special competence, with the task of ... setting up standards or rules of conduct.” Id. (quoting Milk Transport v. ICC, 190 F.Supp. 350, 355 (D.Minn.1960)). In this case, however, the majority is, in fact, applying a "rule[ ] of conduct”: A successor employer may not unilaterally set the initial terms of employment "when it hires its initial complement of workers entirely from the ranks of a represented unit.” Supra at 810.
The majority is on no more solid footing in suggesting that its alternative reasoning is merely meant to avoid the conversion of " 'judicial review of agency action into a ping-pong game.’ ” Supra at 810 (quoting NLRB *813v. Wyman-Gordon Co., 394 U.S. 759, 766 n. 6, 89 S.Ct. 1426, 22 L.Ed.2d 709 (1969)). There is no basis for the majority’s asserted confidence that the Board would, on remand, reach the same result that the majority now embraces, for the Board has repeatedly and notably declined to rely on the "perfectly clear” exception as a basis for its order-and there are good reasons for the Board’s hesitation. See infra.

. This alone, of course, should foreclose our consideration of the matter, for, as an appellate court, we are generally not authorized to find facts at this stage.