Court Opinion

ID: 6933890
Source: CourtListenerOpinion
Date Created: 2022-07-24 00:20:21.796214+00
Date Added: 2024-06-11T16:07:21.135155
License: Public Domain

NIEMEYER, Circuit Judge,
concurring in part and dissenting in part:
The National Labor Relations Board (the Board) found that Holly Farms Corporation violated sections 8(a)(1) and 8(a)(3) of the National Labor Relations Act (NLRA) in connection with a representation election in the spring and summer of 1989. It also found that after Tyson Foods, Incorporated, acquired all the stock of Holly Farms, both Tyson Foods and Holly Farms violated sections 8(a)(1), 8(a)(3), and 8(a)(5) in connection with Tyson’s disbanding Holly Farms’ transportation operations and integrating Holly Farms’ truck drivers into Tyson’s existing transportation operations. Generally, I agree with the majority’s opinion that the findings of fact by the Administrative Law Judge (ALJ), as affirmed by the Board, are supported by substantial evidence and, therefore, I agree that these factual findings should be affirmed under the appropriate standard of review. See 29 U.S.C. § 160(e).
While I do not take issue with the purely factual findings, I nevertheless believe that the Board erred in two significant respects in applying the law. First, I believe that the
Board erred as a matter of law when it concluded that chicken catchers, fork lift operators, and live-haul drivers were properly included in the bargaining unit. Instead, I would find that these individuals were agricultural employees excluded from coverage by the NLRA. Second, on an issue that has far greater ramifications for our labor law jurisprudence than this first narrow dispute over definitions, the majority opinion significantly misconstrues the law of successorship liability when it refuses to recognize the existence of two separate corporate entities for the two months after the stock purchase by Tyson. I submit that Tyson was not hable as a successor employer when it purchased 100% of the stock of Holly Farms Corporation on July 18, 1989, because Holly Farms Corporation continued as a separate entity and remained as a continuing employer for two months, with no change in its relationship with its employees. Tyson did succeed Holly Farms in September 1989 when it merged Holly Farms’ operation into its own, and thus became a substitute employer of Holly Farms’ former employees. However, even then, Tyson did not incur successor liability under the NLRA, because the restructuring, undertaken for independent and valid economic reasons, was so substantial that an appropriate bargaining unit did not survive. On these two matters, I would grant the employer’s petition for review and deny enforcement of the order to the extent it depends on these erroneous conclusions by the Board. In all other respects, I concur in the majority opinion.
I
Holly Farms Corporation was an integrated poultry business, engaged in raising, processing, and distributing poultry products. As part of its operations, it hatched chickens and placed them with contract farmers to raise them until the chickens were “harvested” by Holly Farms employees. Holly Farms employed 118 chicken catchers, 12 *1373fork lift operators, and 27 live-haul drivers who, as a group, were responsible for driving to the farms, catching chickens, loading them, and transporting them back to the plants for processing. As found by the ALJ, the chicken catchers went
to the farms where the chickens were raised where, under cover of darkness, [they] would continuously catch chickens with their hands and cage them during shifts of indeterminate duration, which continued until the task was completed.
The fork lift operators worked on the farms with the chicken catchers and were responsible for placing steel cages loaded with chickens onto live-haul trucks. The live-haul drivers drove the crew from the plant to the farms and, after the chickens were caught and the cages were loaded, transported the chickens back to the plant for processing. Occasionally, live-haul drivers assisted the chicken catchers in the “harvesting.” All of these employees, I submit, were agricultural employees, as defined by the NLRA, and therefore were excluded from the Act’s coverage.
The NLRA excludes from its definition of “employee” any individual employed as an “agricultural laborer.” 29 U.S.C. § 152(3). Thus, agricultural laborers are not protected by section 8(a)(1), 8(a)(3), or 8(a)(5) of the NLRA. The definition of an agricultural laborer is to be derived from § 3(f) of the Fair Labor Standards Act. See Bayside Enterprises, Inc. v. NLRB, 429 U.S. 298, 300 n. 6, 97 S.Ct. 576, 578 n. 6, 50 L.Ed.2d 494 (1977). The Fair Labor Standards Act defines “agriculture,” in pertinent part, to include:
farming in all its branches and among other things ... the raising of livestock ... or poultry, and any practices ... performed ... on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market.
29 U.S.C. § 203(f).
In this case, the work of chicken catchers and fork lift operators was performed “on a farm as incident to or in conjunction with such farming operations” and therefore clearly qualifies these individuals as “agricultural laborers.” Moreover, all these chicken catchers, fork lift operators, and live-haul drivers were involved in “preparation for market” and “delivery to storage or to market.” Because they were engaged as agricultural laborers, these employees are not covered by the National Labor Relations Act. See Coleman v. Sanderson Farms, Inc., 629 F.2d 1077, 1081 (5th Cir.1980). But see, at least as to live-haul drivers, NLRB v. Hudson Farms, Inc., 681 F.2d 1105 (8th Cir.), cert. denied, 459 U.S. 1069, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982).
ÍI
With respect, to the second error of law committed by the Board, the facts were stipulated by the parties. Tyson acquired 100% of the stock of Holly Farms on July 18,1989, but Holly Farms nevertheless continued in business for two months without change, under the same management and with the same employees. The two corporations remained separate corporations, and the only change Holly Farms experienced was in stock ownership. These facts were recognized by the Board. It stated, “[F]or 2 months following the purchase nothing changed for the former Holly Farms employees, all of whom were retained on the payroll under their existing wages, hours, and terms and conditions of employment.” (Emphasis added.) Thus, from the employees’ point of view, they still worked for Holly Farms under the same conditions that existed before the stock purchase.
Necessarily following from these acknowledged facts is the fact that Holly Farms alone retained the obligation to bargain with the union, and it did so. Correspondingly, Tyson, as the sole stockholder of Holly Farms, which at the time had implemented no changes in Holly Farms’ operations, had no obligation to bargain. It was a separate corporation and therefore had not succeeded to any obligation of Holly Farms to bargain simply by buying Holly Farms’ stock. As was stated by the Seventh Circuit in Esmark, Inc. v. NLRB, 887 F.2d 739 (1989):
The successorship doctrine is simply inapplicable to a stock sale transaction. In the *1374successor context, the question is whether two different corporate entities, one succeeding to the other’s business, are bound .in like measure by a contract executed by only one of them; however “the stock transfer involves no break or hiatus between two legal entities, but is, rather, the continuing existence of a legal entity, albeit under new ownership.” The successorship doctrine is therefore of no relevance to the present case, which involves a transfer of stock ownership in the employing corporation from one party to another.
Id. at 751 (footnote omitted). This statement from Esmark is simply a restatement of the successorship doctrine established by the Supreme Court in NLRB v. Burns International Security Services, 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972). In Bums, the Court concluded that a corporation that succeeded another corporation as the employer of a specific work force may have the obligation to bargain with the union certified when the employees were employed by the previous corporation. The obligation arises for the successor corporation “when it select[s] as its work force the employees of the previous employer to perform the same tasks at the same place they had worked in the past.” Id. at 278, 92 S.Ct. at 1577 (emphasis added). There must be a change of employer so that one supplants the other. Obviously, if the previous corporation continues in its existing form as the employer, no succession occurs. Consequently, when Tyson became stockholder, but not employer, and Holly Farms continued as employer, Tyson would have no obligation to bargain because it had not yet succeeded Holly Farms. The Board has in the past subscribed to these statements of the law. For example, in Hendricks-Miller Typographic Co., 240 N.L.R.B. 1082, 1083 n. 4 (1979), the Board stated:
The concept of “successorship” as considered by the United States Supreme Court in N.L.R.B. v. Burns International Security Services, Inc., et al., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), and its progeny, contemplates the substitution of one employer for another, where the predecessor employer either terminates its existence or otherwise ceases to have any relationship to the ongoing operations of the successor employer.
(Emphasis added).*
Under the stipulated facts here, the truck drivers in Holly Farms’ transportation operations remained employed with Holly Farms for two months after Tyson’s stock purchase. Their responsibilities and conditions of employment remained unchanged for those two months. When two separate corporate entities continue in separate form, as they did here, we must conclude - that there was no succession for purposes of the successorship doctrine. See Esmark, 887 F.2d at 751.
In EPE, Inc. v. NLRB, 845 F.2d 483 (4th Cir.1988), we examined a case strikingly similar to this in which one company, Echlin, purchased 100% of the stock of EPE, Inc. Other than the change of ownership from the stock sale, however, there were no changes in the organization or operations of EPE’s Fredericksburg plant. In that case, we declined to find successorship and held that EPE was a “continuing employer” still liable under its collective bargaining agreement. We emphasized that:
There was no termination of operations or employees at the Fredericksburg *1375plant.... Simply put, the Frédericksburg workers both went to work on the morning of Tuesday, October 22, and returned home later that afternoon as EPE employees. During that same time there occurred not a substitution of one employer for another, but a change in the ownership of a continuing employer.
EPE was a continuing employer. Operations at the plant were essentially unaffected by the stock transfer.
Id. at 488. We held that EPE was a “continuing employer” after the stock sale and that there was no successor employer of the Fredericksburg workers after the sale.
The situation at Holly Farms for the two months after the July 18 stock sale was no different from that at EPE after it sold its stock. There was no succession of Tyson as a new employer; rather, there was only “a change in the ownership of a continuing employer.” Id. While I acknowledge that our holding in EPE “is a narrow one,” I fail to see any fact that distinguishes the employment relationships at Holly Farms for the two months after July 18 from the situation we examined in EPE.
The majority opinion concludes, erroneously I believe, that when Tyson purchased the stock of Holly Farms on July 18, it became a successor to Holly Farms because Holly Farms continued as a.corporate entity without any significant changes in its operations. Indeed, the majority acknowledges:
For two months after the purchase, Tyson made no significant- changes in Holly Farms’ operations. Holly Farms — under Tyson’s ownership — continued to engage in the same business operations at the same locations, selling the same products to the same customers, and it retained all of its employees under the.same supervision and the same wages, hours, and working conditions.
Those facts, establish substantial continuity between Holly Farms and Tyson.
Op. at 1367. The problem with the majority’s opinion is that it failed to recognize that the termination of the previous employment relationship must be established and that a determination of this requirement should “precede[] the inquiry into the ‘substantial continuity’ that must be shown for. a new employer to be found a successor.” EPE, 845 F.2d at 489. I agree with the factual observations made by the majority opinion, but its conclusion that these facts give rise to successor liability is. simply a misinterpretation of the law. For the two months during which Holly Farms’ operations continued unchanged, but with a different stockholder, both Tyson Foods, Inc. and Holly Farms Coiporation remained separate corporations, and Tyson’s ownership was simply a stock ownership position. By continuing in existence, Holly Farms retained its obligations to negotiate and bargain with exclusive representatives of the unit, duly elected. Holly Farms also retained its obligations to adhere to the specific terms of the collective bargaining agreement already in place with its employees. In sum, the employees’ relationship with Holly Farms remained the same, and in those circumstances it is well-established that the successor liability doctrine does not apply. See Esmark, 887 F.2d at 751; Hendricks-Miller, 240 N.L.R.B. at 1083 n. 4.
Without any obligation to bargain during the two months following its acquisition of Holly Farms’ stock, Tyson could not have violated the labor laws for refusing to bargain. The Board’s order imposing such a duty thus constitutes error.
In mid-September 1989, Tyson determined, for sound business reasons, to end Holly Farms’ transportation operations. While the Board acknowledged that the decision was a legitimate business decision, I note further that Tyson’s decision was economically compelling. Before Tyson’s acquisition of Holly Farms’ stock, Holly Farms transported its poultry products to its customers through its own transportation operation. It often dispatched drivers and trucks to customers with no load available for the return trip because the customer network was not so vast as to' supply that need. While Holly Farms made an express effort to lower its transportation costs by securing additional back-haul business, its efforts were largely unsuccessful. Indeed, the evidence shows that 50% of Holly Farms return miles were “dead head,” where the trucks returned empty, resulting in an estimated annual loss *1376to Holly Farms of approximately $5 to $6 million.
In contrast, Tyson’s transportation operations were organized substantially differently, and they were profitable. Tyson hauled only 35% of. its products through its own transportation, system, making only those deliveries where back-haul business would routinely be available. Because it delivered only 35% of its products through its own operations, the remaining transportation needs were filled through common carriers. Thus, in contrast to Holly Farms’ 50% ratio, Tyson’s dead-head ratio was in the range of 7-1/2%. to 12%.
In order to eliminate the large losses resulting from Holly Farms’ transportation operations, Tyson decided to disband Holly Farms’ operations and restructure its own to serve the combined customer báse in the manner that Tyson had profitably established for its own customers. Tyson implemented this decision on September 22, 1989, at which time Holly Farms’ drivers were terminated, but with an offer to work in Tyson’s operation, subject to Tyson’s more efficient methods.
When Tyson disbanded Holly Farms’ transportation operations and merged those drivers into its own fleet, Tyson became a substitute employer. At that time, the suc-cessorship principles of Bums might have required Tyson to bargain with the union if Tyson had continued with the same employees under a similar structure. But Tyson would only have a duty to recognize a preexisting bargaining unit if Tyson’s structure and practices mirrored those of Holly Farms. See Burns, 406 U.S. at 280, 92 S.Ct. at 1578. In such circumstances, Tyson would be required to bargain with the union, but Tyson would not be required to accept the terms and agreements of Holly Farms’ collective bargaining agreement with the union because “a successor employer is ordinarily- free to set initial terms on which it will hire the employees of a predecessor.” Burns, 406 U.S. at 294, 92 S.Ct. at 1585-86,
In this case, when Tyson terminated the Holly Farms transportation operation and hired its truck drivers, the new operational structure and practices differed substantially from those of Holly Farms. Thus, the inherited bargaining unit was no longer an appropriate one. Moreover, the drivers assimilated from Holly Farms only constituted a. portion of Tyson’s long-haul trucker group. In those circumstances, the Holly Farms bargaining unit did not remain intact and would not be the appropriate unit with which Tyson was required to bargain.
Deriving unfair labor practices from these circumstances would imply that Tyson, as an acquiring and thereafter successor corporation, must carry the burden of an inefficient structure and inappropriate bargaining unit previously established by Holly Farms. The jurisprudence of Bums, and the circuit court decisions- interpreting it, do not require this result. See, e.g., NLRB v. Security-Columbian Banknote Co., 541 F.2d 135, 139-40 (3d Cir.1976). Therefore, I would deny enforcement of the Board’s order as it relates to Tyson’s conduct in acquiring and restructuring Holly Farms.
For these reasons, I dissent.

 The majority opinion has glossed over-factual and legal distinctions between (1) the situation where a corporation continues in business, after its stock changes hands, without any change in its relationship with employees, and (2) the situation where a corporation moves through corporate and factual changes so that in effect a new employer substitutes for that of the former and exercises the "employer's authority” of the former. In the first situation, the employing corporation continues to have an obligation to bargain with its employees, notwithstanding the change in stock ownership which is irrelevant, and the stockholder does not become a substitute employer. In the second situation, successor liability imposes a duty to bargain on the successor employer. The majority collapses this distinction into an inquiry into a nebulous subscription to labor policy, stating:
Whatever terms we use — whether we call Tyson a "successor,” or a "new stockowner,” or a "joint employer” — substantial evidence and the policies of the labor laws support the Board’s finding here that Tyson came under a duty to bargain with the Union when it purchased Holly Farms.
Op. at 1366. Such an approach is clearly foreclosed by Burns, Esmark, and Hendricks-Miller.