The opinion
United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued October 26, 2000 Decided December 29, 2000
No. 00-1067
Deferiet Paper Company,
Petitioner
v.
National Labor Relations Board,
Respondent
On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board
Daniel G. Rosenthal argued the cause for petitioner. With
him on the briefs were Donn C. Meindertsma and D. Scott
Poley.
Deirdre C. Fitzpatrick, Attorney, National Labor Relations
Board, argued the cause for respondent. With her on the
brief were Leonard R. Page, General Counsel, Aileen A.
Armstrong, Deputy Associate General Counsel, and David
Habenstreit, Supervisory Attorney.
Before: Ginsburg, Randolph, and Tatel, Circuit Judges.
Opinion for the Court filed by Circuit Judge Randolph.
Randolph, Circuit Judge: In June 1999, Deferiet Paper
Company purchased the assets of a paper mill in Deferiet,
New York, from Champion International. Champion had
collective-bargaining agreements with two unions represent-
ing maintenance employees in the mill. Paper, Allied-Indus-
trial, Chemical and Energy Workers, Locals 45 & 56,
AFL-CIO ("PACE") represented production workers and
those maintenance department workers classified as welders,
masons, oilers, tinsmiths, electricians and instrument mechan-
ics. Local Lodge 1009, District Lodge 65 of the International
Association of Machinists and Aerospace Workers, AFL-CIO
("IAM") represented maintenance employees classified as
millwrights, pipefitters, machinists and shift mechanics. Pri-
or to the sale of the mill, there were 102 employees in
Champion's maintenance department. IAM represented 60
of these employees; PACE represented 42. Of the 82 main-
tenance workers who remained at the mill after the sale to
Deferiet, 46 had been represented by IAM and 36 had been
represented by PACE. Approximately 300 production em-
ployees, who work in the same area of the plant, are repre-
sented by PACE.
After Deferiet acquired the mill, each union requested
recognition to bargain on behalf of those maintenance em-
ployees it had represented in the past. Deferiet declined to
recognize IAM, claiming that the division between IAM and
PACE maintenance employees was no longer appropriate.
Instead Deferiet recognized PACE as the exclusive collective
bargaining agent for all production and maintenance person-
nel.
In the resulting unit clarification proceeding, Deferiet ar-
gued that the IAM unit should be accreted to the PACE unit
because changes in the work duties of plant employees meant
that the IAM employees no longer had a separate community
of interest. At Champion, maintenance employees were di-
vided by craft classifications that corresponded to their indi-
vidual skills (e.g., millwrights, pipefitters). According to De-
feriet they did little, if any, crossover work between their
respective areas of expertise. Deferiet canceled the tradi-
tional craft-titled classifications and replaced them with cate-
gories for craftspersons called "A," "B," "AB" or "AA."
Deferiet also developed a new employee handbook, alerting
employees that they might be required to work in areas other
than their traditional craft assignments. Based largely on
these changes, and on the allegation that the PACE/IAM
distinction was solely the result of an historical accident,
Deferiet sought a determination that the separate units were
no longer appropriate.
The Board's Regional Director determined that Deferiet
had made insufficient changes to the operation of the facility
to render the existing IAM unit inappropriate. She viewed
the reclassification of workers as craftspersons A and B as
largely meaningless, since the only basis for assignment to
one of these positions was the historical craft skill of the
employees. All of the IAM-represented workers became
craftspersons A, and all of the PACE-represented workers
became craftspersons B. She found that employees "perform
various maintenance duties in essentially the same manner as
before the sale," and concluded that Deferiet "did not make
significant changes in the structure and operation of the mill."
The Board denied Deferiet's request for review. When the
company thereafter declined to bargain with IAM, the Gener-
al Counsel filed a complaint and moved for summary judg-
ment. The Board granted this and issued an order requiring
Deferiet to bargain with the IAM upon request. The compa-
ny petitioned for review and the Board cross-petitioned for
enforcement of its order.
Board precedent in successor-employer cases favors the
retention of historical bargaining units. "A successor em-
ployer is required to recognize and negotiate with the bar-
gaining agent of a predecessor's employees if the bargaining
unit remains appropriate and the successor does not have a
good faith doubt of the union's continuing majority support."1
Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114 (D.C. Cir.
1996). Deferiet tells us that this precedent, which the Board
invoked here, conflicts with a dictum in NLRB v. Burns
International Security Services, Inc., 406 U.S. 272, 281
(1972).2 The trouble is that Deferiet never made any such
argument during the Board proceedings. We therefore can-
not decide whether the Board should have followed the Burns
dictum. See 29 U.S.C. s 160(e) ("No objection that has not
been urged before the Board, its member, agent, or agency,
shall be considered by the court, unless the failure or neglect
to urge such objection shall be excused because of extraordi-
nary circumstances."); Exxel/Atmos, Inc. v. NLRB, 147 F.3d
972, 978 (D.C. Cir. 1998).
Deferiet's fall-back position is that the old IAM unit is not
an appropriate unit despite the presumption in favor of
historical bargaining units. Why? Because creation of the
IAM unit at the mill was an "historical accident"; because
Deferiet substantially restructured the operations of the mill
after its acquisition; and because under the Board's "tradi-
tional standards," a separate IAM unit for some maintenance
workers in the newly-acquired mill would be inappropriate.
The Regional Director rejected the company's claims after
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1 Deferiet concedes that it is a successor employer. It does not
contest the majority support of IAM within a unit comprised of
employees in the crafts this union previously represented, but the
company denies that majority support exists for IAM within the
larger unit of all production and maintenance workers.
2 Burns held that a successor employer has an obligation to
bargain with the union if the bargaining unit remained unchanged
and a majority of the employees hired by the new employer are
represented by "a recently certified bargaining agent," id. To this
the Supreme Court added: "It would be a wholly different case if
the Board had determined that because [the successor's] operation-
al structure and practices differed from those of [the predecessor
employer] and the ... bargaining unit was no longer an appropriate
one." Id. at 280. This sentence, according to Deferiet, precludes
the Board from adopting a presumption in favor of historical
bargaining units.
examining each of its alleged post-acquisition changes, and
asking whether the change significantly altered the former
IAM unit. But the proper inquiry was not simply whether
the evidence showed "significant changes in the operation of
the mill since [Deferiet] has assumed control." Neither the
decisions of this court nor those of the Board sanction a
purely comparative inquiry. See Trident Seafoods, 101 F.3d
at 118 (collecting standards); Indianapolis Mack Sales &
Serv., 288 N.L.R.B. 1123, 1126 (1988); Crown Zellerbach
Corp., 246 N.L.R.B. 202, 203 (1979). Although "the Board
places a heavy evidentiary burden on a party attempting to
show that historical units are no longer appropriate," this
burden can be met if "historical units no longer conform
reasonably well to other standards of appropriateness." Tri-
dent Seafoods, 101 F.3d at 118 (internal quotations and
citations omitted).
In determining whether a unit is appropriate, the Board
exercises wide discretion. Packard Motor Car Co. v. NLRB,
330 U.S. 485, 491 (1947). Determinations of this sort take
into account a variety of factors, and often focus on whether
the unit represents a "community of interest." See Robert A.
Gorman, Basic Text on Labor Law 68-74 (1976); Theodore
Kheel, Labor Law s 14.03 (2000) (listing various factors
taken into account by the Board). In the context of a
successor employer, the appropriateness inquiry is not the
same inquiry the Board would conduct when certifying a unit
for the first time. Trident Seafoods, 101 F.3d at 118. We
wrote in Trident Seafoods: "In most cases, a historical unit
will be found appropriate if the predecessor employer recog-
nized it, even if the unit would not be appropriate under
Board standards if it were being organized for the first
time,"3 id.--by which we meant that the Board will sustain
the historical unit even if it is not the most appropriate one.
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3 We do not believe the court in Trident Seafoods meant to say
that in successorship cases, the Board approves improper bargain-
ing units. In support of the sentence quoted in the text, the court
cited the Board's decision in Indianapolis Mack. The Board there
ruled that a change in ownership of a facility will not automatically
uproot historical units, "as long as they remain appropriate." 288
This is not to say that a historical unit will always be
upheld in the face of "compelling evidence" of inappropriate-
ness. Crown Zellerbach Corp., 246 N.L.R.B. at 204; Met
Elec. Testing Co., 331 N.L.R.B. No. 106, 2000 WL 1058928, at
*1 (July 27, 2000). The most common way for a successor to
meet its burden is to show that it has made significant
revisions in plant operations and employee duties. See Fire-
stone Synthetic Fibers Co., 171 N.L.R.B. 1121, 1123 (1968)
(finding that similarities in working conditions outweighed the
historic unit). Even if the successor implements no signifi-
cant changes, we held in Trident Seafoods that an historical
unit may still be found inappropriate if it fails to "conform
reasonably well to other standards of appropriateness." 101
F.3d at 119-20. On occasion, both pre-acquisition factors and
post-acquisition changes in plant operation will combine to
render an historical unit inappropriate. Rock-Tenn Co., 274
N.L.R.B. 772 (1985); see also Banknote Corp. of Am. v.
NLRB, 84 F.3d 637, 649 (2d Cir. 1996) (presumption in favor
of historical units inappropriate when there is evidence that
units had been rendered obsolete by industry shifts or
changes in the operation of the predecessor). A unit might,
for instance, be only marginally appropriate prior to the
transaction, in which event relatively small changes following
the transfer of ownership could push it into the category of an
inappropriate unit. Whether this describes the situation in
the Deferiet paper mill is for the Board, not us, to say. The
question is--does the IAM unit "conform reasonably well to
other standards of appropriateness"? Indianapolis Mack
Sales & Serv., 288 N.L.R.B. at 1123 n.5. The Board never
answered this question. Its Regional Director failed to con-
sider the appropriateness of the unit as such. Her review
was purely comparative--were Deferiet's changes so signifi-
cant, or so major, or so fundamental that the old unit had
been replaced by a new and different one. She did not go
further and determine whether Deferiet had shown by "com-
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N.L.R.B. at 1126. Properly viewed, the sentence in Trident Sea-
foods conveys the idea that because the burden falls upon the
employer to demonstrate inappropriateness, the Board may wind up
certifying a less-than-ideal unit.
pelling evidence" that the old unit no longer conformed to the
Board's contemporaneous standards of appropriateness.
We therefore deny enforcement of the Board's order, set
aside its decision that Deferiet committed unfair labor prac-
tices when it refused to recognize the IAM, and remand the
case to the Board for further proceedings.
So ordered.