Court Opinion

ID: 9458840
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:02:58.274596+00
Date Added: 2024-06-11T17:35:54.652266
License: Public Domain

STEVENS, Circuit Judge
(dissenting in part).
The court holds that Baehrodt committed an unfair labor practice on Monday, November 10, 1969, when he entered into employment arrangements with Zimmerman’s former employees on terms and conditions which differed from those which had been in effect when Zimmerman owned the business. There are three distinct theories which might support the holding.
I.
As a successor to Zimmerman, Bachrodt might have been bound by the terms of his predecessor’s labor contract. This was the theory of the trial examiner and the Labor Board. In the light of the Supreme Court’s opinion in N. L. R. B. v. Burns International Security Services, Inc., 406 U.S. 272, 295, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), however, the Board has now abandoned that theory. Accordingly, Baehrodt did not succeed to Zimmerman’s contract obligations and was free to set new terms when he hired his own personnel after purchasing the automobile agency.
II.
As the new owner of the business, Baehrodt might have hired his employees on Zimmerman’s terms, then, after a duty to bargain with the union arose, changed those terms without consulting the union. That, however, is not what happened.
Bachrodt’s purchase from Zimmerman was closed on Monday, November 10, effective as of midnight on November 9.1 Prior to the closing the relevant personnel were employees of Zimmerman. On Monday, the first day he owned the business, Baehrodt held a meeting of the employees and explained how the conditions of his operation would differ from Zimmerman’s. True, Zimmerman had advised his employees of the pending transaction on the preceding Thursday, and Baehrodt passed out applications for employment on Friday,2 but he did not *971hire any of Zimmerman’s employees until after he became the owner of the business on Monday.3 Since Zimmerman’s labor contract was not binding on Bachrodt as a successor, it is therefore clear that the initial employment relationship between Bachrodt and the former employees of Zimmerman was created on Monday, November 10.
Bachrodt’s duty to bargain arose as a result of the employment of a sufficient number of union members on Monday, November 10. The creation of a bargaining relationship does not in itself impose any contractual obligations upon either party. Since Bachrodt had no obligation of any kind either to the union or to its members until after they became his employees, the duty to bargain cannot have limited Bachrodt’s right to fix the initial terms of employment of the personnel he hired on November 10.4
III.
Finally, as the prospective owner of the business, Bachrodt might have been under a duty to bargain with the union before he hired any of Zimmerman’s former employees; under this theory the initial terms of employment could not be set without either the union’s consent or a bargaining impasse.
In a dictum toward the end of its opinion in Burns, the Supreme Court posited a hypothetical situation in which “a successor employer,” though not bound by his predecessor’s labor contract, might nevertheless be under a duty to “consult with” the union before he fixes the initial terms of employment.5 Whether this obligation to “consult” is the equivalent of an obligation to bargain to impasse is not entirely clear; assuming that it is, however, I do not believe this rather routine purchase of an automobile agency is the kind of exceptional situation the Court envisioned by its dictum.
Ordinarily, as the Court makes clear, a successor employer is “free to set initial terms on which it will hire the employees of a predecessor.” 6 The public interest in preserving this freedom for a new owner provided the underlying rationale for the Court’s rejection of the Board’s contention that the successor was bound by the terms of his predecessor’s labor contract.7 Nevertheless, the Court *972did opine that “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 consult with the employees’ bargaining representative before he fixes terms.” 8 As I read that comment in the context of the entire Burns opinion, I cannot conclude that this is the kind of a case in which the Court intended to require a new owner to come to terms — or to reach a bargaining impasse — with the union in advance of closing.
I recognize that a portion of the Court’s dictum seems to fit this case. Since Bachrodt did pass out job applications to all of Zimmerman’s employees on the Friday before the closing and since he hired almost all of them on Monday, a finding that he had planned to retain all of the employees in the unit might be proper. But no such finding was made by the trial examiner or the Board, and I do not consider it “perfectly clear” that such a finding should have been made.
Prior to the closing, Bachrodt made no commitment to anyone that all, or indeed any, of Zimmerman’s employee’s would be retained. Bachrodt obviously intended to integrate the Freeport agency into his Rockford operation, and to specify different terms of employment than Zimmerman’s. Whether the Zimmerman employees would accept those new terms could not be known until after they were explained on Monday; which of those employees Bachrodt would finally decide to hire could not be known until after each was interviewed. There is no evidence that any employee was essential for the continued operation of the business.
As I read the Court’s dictum in Burns, it must have been “perfectly clear” prior to the closing that all employees in the unit would be retained. Otherwise it would not be “appropriate” — to use the Court’s word — to saddle the new owner with any duty to bargain, or even to consult, with the union before setting initial terms of employment. The employment of union members after the closing may properly give rise to a duty to bargain with the union concerning subsequent changes from the initial terms of employment; I do not believe, however, that such post-closing hiring may retroactively establish a pre-closing duty to bargain.
In short, I consider the brief excerpt from Burns as positing a narrow exception from the ordinary situation in which the successor has complete freedom to set initial terms; I regard this case as one involving an ordinary purchase transaction in which the new owner should not be penalized because he in fact provided jobs for substantially all of his predecessor’s employees.
In my opinion none of the three theories which might support the conclusion that Bachrodt committed an unfair labor practice by setting new terms or conditions when he acquired the business is tenable. The majority agrees that the contract did not survive, but concludes that either Bachrodt’s duty to bargain arose before Monday, November 10, or that the terms he set on that day changed some preexisting arrangement with the employees. In support of this conclusion Part IV of Chief Judge Swygert’s opinion reads Burns as drawing an important distinction between a requirement that Bachrodt honor his predecessor’s contract and a lesser requirement that he merely honor it until the union agrees to change it or his efforts to persuade the union to do so have reached the point of impasse.
As a practical matter I wonder how much difference there is between a holding that the new owner is bound by the terms of the old contract, and a holding that he is bound only until he has bargained to impasse with the union. No doubt there are cases in which the impasse date would arise much sooner than the contract expiration date, but in my judgment the time interval between those dates is not of critical importance in evaluating the policy factors involved. What is most important — and I believe *973Burns makes this clear — is the new owner’s position at the time he takes over the acquired business. In the normal situation the Burns holding encourages the transfer of capital by freeing the purchaser of any obligation to the union, either contractually or in the form of a duty to bargain, until after a new complement of employees has been hired. The Burns decision, in effect, finds greater public benefit in preserving the successor’s ability to make immediate operating changes than in affording maximum job security to the employees of the purchased business. If only the time interval between the impasse date and the expiration date of a pre-existing contract were on one side of the balance, it certainly would not have outweighed the interests of the employees in clearly defined job security.
Since I believe that Part IV of Chief Judge Swygert’s opinion does not give proper effect to the underlying rationale of Burns, I respectfully dissent from that part of his opinion.

. A. 198.

. “Q When Baehrodt Chevrolet took over on November 10th, what if anything did you do with regard to the men who had worked for Zimmerman with regard to taking applications or anything else? Just tell us what you did that day.
“A Before we took the place over we handed out applications to everybody. They were filled out and turned back in to us, and at that time we looked over each and then each man was interviewed. We decided whether [to] hire them, or they could make a decision on *971whether they wanted to work for me.” A. 143.

. The general counsel never contended otherwise. All of his exhibits use November 10, 1969, as the starting date for Bachrodt’s employees. See G.C. Ex. 13, 14, and 15 (A. 192-94).

. As in Burns, it was not clear until after Bachrodt hired his full complement of employees that he had a duty to bargain with the union. Accordingly, the Court’s language squarely fits this case:
“It is difficult to understand how Burns could be said to have changed unilaterally any pre-existing term or condition of employment without bargaining when it had no previous relationship whatsoever to the bargaining unit and, prior to July 1, no outstanding terms and conditions of employment from which a change could be inferred. The terms on which Burns hired employees for service after July 1 may have differed from the terms extended by Wackenhut and required by the collective-bargaining contract, but it does not follow that Burns changed its terms and conditions of employment when it specified the initial basis on which employees were hired on July 1.” N.L.R.B. v. Burns Int’l Security Servs., Inc., 406 U.S. 272, 294, 92 S.Ct. 1571, 1585.

. “Although a successor employer is ordinarily free to set 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 consult with the employees’ bargaining representative before he fixes terms.” Ibid.

. Ibid.

. “A potential employer may be willing to take over a moribund business only if he can make changes in corporate structure, composition of the labor force, work location, task assignment, and nature of supervision. Saddling such an employer with the terms and conditions of employment contained in the old collective-bargaining contract may make these changes impossible and may discourage and inhibit the transfer of capital.” Id. at 287, 92 S.Ct. at 1582.

. Id. at 294, 92 S.Ct. at 1586.