Ameristeel Corp. v. International Brotherhood of Teamsters

Opinions of the United

2001 Decisions States Court of Appeals

for the Third Circuit

9-26-2001

Ameristeel Corp v. Local Union 430

Precedential or Non-Precedential:

Docket 00-3366

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Filed September 26, 2001

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 00-3366

AMERISTEEL CORPORATION

v.

INTERNATIONAL BROTHERHOOD OF

TEAMSTERS, CHAUFFEURS, WAREHOUSEMEN

AND HELPERS OF AMERICA, AFL-CIO,

ARBITRATION ASSOCIATION

International Brotherhood of Teamsters,

Chauffeurs, Warehousemen and Helpers

of America, AFL-CIO, Teamsters Local 430,

Appellant

On Appeal from the United States District Court

for the Middle District of Pennsylvania

(D.C. Civil No. 99-cv-02131)

District Judge: Honorable William W. Caldwell

Argued November 30, 2000

Before: BECKER, Chief Judge, RENDELL,

and MAGILL,* Circuit Judges

(Opinion Filed September 26, 2001)

_________________________________________________________________

* Honorable Frank J. Magill, Senior Judge of the United States Court of

Appeals for the Eighth Circuit, sitting by designation.

Ira H. Weinstock, Esq. [ARGUED]

Joseph P. Milcoff, Esq.

Ira H. Weinstock, P.C.

800 North Second Street, Suite 100

Harrisburg, PA 17102

Counsel for Appellant

John G. Creech, Esq. [ARGUED]

D. Rangle Moody, II, Esq.

Haynsworth, Baldwin, Johnson &

Greaves

918 South Pleasantburg Drive

Greenville, SC 29607

-and-

Mark J. Manta, Esq.

Klett, Rooney, Lieber & Schorling

810 Bear Tavern Road

Mountain View Office Park,

Suite 302

West Trenton, NJ 08628

Counsel for Appellee

OPINION OF THE COURT

RENDELL, Circuit Judge.

I. Introduction

This appeal presents the question whether a successor

employer who has expressly refused to be bound by its

predecessor's collective bargaining agreement may

nonetheless be forced to arbitrate grievances pertaining to

the agreement. Because an unconsenting successor cannot

be bound by the substantive provisions of its predecessor's

agreement, we hold that the successor in this case, appellee

AmeriSteel Corporation, cannot be forced to arbitrate the

extent of its obligations under the agreement. AmeriSteel,

quite simply, has no obligations under the agreement--

and thus no arbitration award for the appellant, Teamsters

2

Local 430, could possibly receive judicial sanction. In such

circumstances, the arbitration forum designated in the

collective bargaining agreement is an inappropriate vehicle

by which to settle the parties' dispute. Therefore, we will

affirm the District Court's order which enjoins the Union

and the American Arbitration Association from including

AmeriSteel as a party in pending arbitration proceedings, or

any other arbitration proceedings involving the collective

bargaining agreement.

Our resolution of this case avoids creating the

incongruous situation in which a successor employer may

be forced to arbitrate the extent of its obligations under its

predecessor's agreement, and yet the arbitrator is powerless

to enforce these obligations because they are not binding

on the successor employer. While we recognize the vital

importance of arbitration as a means of settling labor

disputes, we think it clear that arbitration should not

proceed when ultimately it can serve no purpose.

Furthermore, our decision recognizes the sound principle

that arbitration cannot be used as a means to accomplish

illegitimate ends. More specifically, given that AmeriSteel

has no obligations under the collective bargaining

agreement, any arbitration award to the appellant Union

would necessarily reach beyond the agreement itself and

into the realm of the arbitrator's own notion of industrial

justice, a practice expressly forbidden by the United States

Supreme Court.

II. Facts and Procedural Background

Appellee AmeriSteel is a Florida corporation engaged in

the manufacture and sale of steel products. On April 29,

1999, AmeriSteel purchased various assets of Brocker

Rebar, including a manufacturing facility in York,

Pennsylvania, and AmeriSteel commenced operations at the

York facility on May 3, 1999. Appellant Teamsters Local

430 ("Local 430" or "Union") represents certain employees

at the facility, namely truck drivers, warehousemen,

material handlers, and other helpers. A collective

bargaining agreement ("CBA") existed between Local 430

and Brocker Rebar, effective from December 1, 1996 to

November 30, 1999. The purchase agreement between

3

AmeriSteel and Brocker Rebar included various provisions

expressly stating that AmeriSteel was not to be bound by

the terms of the CBA. In its dealings with the Union,

AmeriSteel has consistently and repeatedly maintained that

it is not bound by the terms of the CBA, and therefore that

it is not bound to arbitrate under the agreement.

AmeriSteel hired roughly 50 employees to work in the

York facility, and all but six members of Local 430 who had

worked for Brocker Rebar were hired by AmeriSteel. In

addition, AmeriSteel retained four Brocker Rebar

executives. Because it had hired a majority of the Local 430

members who had worked for Brocker Rebar, AmeriSteel

was obligated to bargain with the Union. Bargaining with

the Union broke down, however, on May 10, 1999, when

AmeriSteel withdrew recognition of the Union based on a

petition purportedly signed by a majority of the Union

employees, in which they supposedly stated that they no

longer wanted to be represented by Local 430. The Union

then initiated an unfair labor practices action against

AmeriSteel before the NLRB, but that action is not before

us on appeal.

Local 430 filed a grievance on behalf of all its members

against Brocker Rebar and AmeriSteel on April 22, 1999,

challenging unilateral changes that would occur in working

conditions at the York facility when the AmeriSteel

purchase agreement was consummated. Closing under the

purchase agreement occurred on April 29, 1999. In May

1999, after the parties were unable to resolve the grievance,

the Union requested arbitration pursuant to the arbitration

clause in the CBA. AmeriSteel filed a Complaint and motion

for injunctive relief in the United States District Court for

the Middle District of Pennsylvania on December 9, 1999,

seeking to enjoin Local 430 and the American Arbitration

Association from proceeding to arbitration with AmeriSteel

as a party. On March 17, 2000, the District Court granted

AmeriSteel a preliminary injunction, reasoning that

AmeriSteel could not be bound to arbitrate under the pre-

existing CBA because AmeriSteel was not the "alter ego" of

Brocker Rebar, nor had AmeriSteel agreed to abide by the

CBA. App. at 256-57.

4

Local 430 complains on appeal that the District Court

should not have granted the preliminary injunction in the

first place, and that the court compounded its error by, in

effect, granting a permanent injunction without analyzing

the applicable standard for granting a permanent

injunction. Unfortunately, the District Court might have

caused some unnecessary confusion by not explicitly

stating that it was, in fact, granting a permanent

injunction, and not merely a preliminary one. We have in

the past admonished district courts to avoid this type of

oversight. E.g., CIBA-GEIGY Corp. v. Bolar Pharm. Co., 747

F.2d 844, 847 (3d Cir. 1985) (observing that although the

Third Circuit could convert the district court's opinion into

a permanent injunction, "we would much prefer that the

district court recast its own opinion in the language of the

standard it is applying. This would eliminate the possibility

of confusion as to what the district court intended and

would, in the long run, promote judicial economy").

Nonetheless, it is apparent that the District Court

implicitly granted a permanent injunction, and we find no

reversible error in the court's procedure. In its opinion, the

District Court announced a legal standard under which

Local 430 could prevail only if it could prove that

AmeriSteel was the "alter ego" of Brocker Rebar, or that

AmeriSteel had agreed to abide by the CBA. It is

undisputed that AmeriSteel is not the "alter ego"1 of

Brocker Rebar and that AmeriSteel has expressly rejected

the CBA. Thus, there were no triable issues of fact and no

need for a trial on the merits. In other words, AmeriSteel

_________________________________________________________________

1. Under the "alter ego" doctrine, a successor employer "is subject to all

the legal and contractual obligations of the predecessor" when the

successor is a mere "alter ego" of the predecessor, or nothing more than

"a disguised continuance of the old employer." NLRB v. Omnitest

Inspection Servs., 937 F.2d 112, 118 (3d Cir. 1991). An "alter ego"

relationship exists "when there is a mere technical change in the

structure or identity of the old employing entity, frequently to avoid the

effect of the labor laws, without any substantial change in its ownership

or management." Id. As the District Court observed, AmeriSteel's

purchase of Brocker Rebar was a transaction involving two unrelated

parties, and there "has been no suggestion that AmeriSteel is a sham or

alter ego of Brocker Rebar." App. at 255.

5

had already prevailed on the merits, and therefore the

District Court's order, in effect, grants AmeriSteel a

permanent injunction. Any further proceedings in the

District Court would have served no purpose.

Consequently, we are squarely presented with the question

of whether AmeriSteel can be bound to arbitrate under the

CBA.

III. Jurisdiction and Standard of Review

The District Court had jurisdiction over this action

pursuant to 28 U.S.C. S 1331 and 29 U.S.C.S 185. Because

the District Court's order, in effect, grants a permanent

injunction, we have appellate jurisdiction pursuant to 28

U.S.C. S 1291, which provides for appeals of all final

decisions of the federal district courts.

We review a district court's decision to grant or deny a

permanent injunction under an abuse of discretion

standard. E.g., ACLU v. Black Horse Pike Reg'l Bd. of Educ.,

84 F.3d 1471, 1476 (3d Cir. 1996). However, because an

abuse of discretion exists where the district court's decision

"rests upon a clearly erroneous finding of fact, an errant

conclusion of law, or an improper application of law to

fact," id., we apply plenary review to the District Court's

legal conclusions.

IV. Discussion

This case requires us to navigate the treacherous waters

of the Supreme Court's labor law successorship doctrine,

which has, at times, imposed extra-contractual duties upon

successor employers. Appellant Local 430 argues that

AmeriSteel, as a successor employer to Brocker Rebar,

must arbitrate grievances brought by the Union under the

collective bargaining agreement between the Union and

Brocker Rebar. AmeriSteel counters that it was never a

party to the CBA, expressly rejected it during its asset

purchase negotiations with Brocker Rebar, and has

consistently maintained in its dealings with the Union that

it is not bound by the terms of the CBA, including its

arbitration clause. Accordingly, AmeriSteel argues that it

cannot be compelled to submit to arbitration.

6

As an initial matter, we note that labeling AmeriSteel a

"successor employer" to Brocker Rebar does little to help

resolve the issue in this case. As the Supreme Court has

explained, a new employer, like AmeriSteel, "may be a

successor for some purposes and not for others," and the

question whether AmeriSteel is a successor to Brocker

Rebar "is simply not meaningful in the abstract." Howard

Johnson Co. v. Hotel and Restaurant Employees, 417 U.S.

249, 262 n.9 (1974). Accordingly, the question we must ask

is: what are the legal obligations of AmeriSteel to the

employees of Brocker Rebar? Id. Or more specifically: does

AmeriSteel have a duty to arbitrate with the Union under

the CBA? As the District Court correctly noted, the

resolution of that latter question depends, in large part, on

the proper interpretation of three decisions of the U.S.

Supreme Court: John Wiley & Sons v. Livingston , 376 U.S.

543 (1964), NLRB v. Burns International Security Services,

Inc., 406 U.S. 272 (1972), and Howard Johnson Co. v. Hotel

and Restaurant Employees, 417 U.S. 249 (1974).

While other courts have tried to make sense of these

three opinions, we find no analysis that charts a perfect

course that we can readily follow. Accordingly, we will make

our own way through the progression of the Supreme

Court's reasoning. As the dissent points out, it is

unfortunate that the law in this area is unsettled, and

ultimately, only the Supreme Court can silence the conflict

that exists in the troubled trilogy of Wiley, Burns, and

Howard Johnson. Given the tension that exists in this

trilogy, no approach to reconciling these cases will be

completely satisfying. Nevertheless, we think it significant

that, as discussed below, our ultimate result (and the logic

that underpins it) is supported by the majority of courts

that have articulated the contours of labor law

successorship.

In Wiley, the Court introduced the idea that a successor

employer could be bound by an arbitration clause in a

collective bargaining agreement between the predecessor

employer and its unionized employees. The predecessor

employer, Interscience, had merged with John Wiley &

Sons, and ceased to do business as a separate entity. The

Union then brought suit against Wiley to compel arbitration

7

under the collective bargaining agreement. Wiley , 376 U.S.

at 544-45. The Court posed the legal issue as follows:

"whether Wiley, which did not itself sign the collective

bargaining agreement on which the Union's claim to

arbitration depends, is bound at all by the agreement's

arbitration provision." Id. at 547. The Court answered this

question in the affirmative. Id. at 550-51.

The Court acknowledged that "the principles of law

governing ordinary contracts would not bind to a contract

an unconsenting successor to a contracting party," but

distinguished the case at hand by explaining that"a

collective bargaining agreement is not an ordinary

contract." Id. at 550. The Court grounded this extra-

contractual duty in federal law -- specifically,"the policy of

our national labor laws," id. at 548, which recognized both

the "central role of arbitration" and the importance of

"protect[ing] . . . employees from a sudden change in the

employment relationship," id. at 549. Thus, the Court

explained, "the impressive policy considerations favoring

arbitration are not wholly overborne by the fact that Wiley

did not sign the contract being construed." Id. at 550.

The Court's holding is actually quite limited:

We hold that the disappearance by merger of a

corporate employer which has entered into a collective

bargaining agreement with a union does not

automatically terminate all rights of the employees

covered by the agreement, and that, in appropriate

circumstances, present here, the successor employer

may be required to arbitrate with the union under the

agreement.

376 U.S. at 548.

The Court then went on to note that "[w]e do not hold

that in every case in which the ownership or corporate

structure of an enterprise is changed the duty to arbitrate

survives." Id. at 551. Rather, factors such as lack of

"substantial continuity of identity in the business

enterprise" before and after the change could alter the

result; so could the parties' conduct, if, for instance, the

union fails to continue to make its claims known. Id.

Without continuity, the duty to arbitrate would be

8

"something imposed from without, not reasonably to be

found in the particular bargaining agreement and the acts

of the parties involved." Id. Thus, the"substantial

continuity" concept -- first alluded to by the Court after it

announced its holding -- should properly be viewed as a

necessary but not a sufficient condition for the imposition

of arbitration on an unconsenting successor.

The Court also observed that "[o]f course, the Union may

not use arbitration to acquire new rights against Wiley" that

were not grounded in the collective bargaining agreement

itself. Id. at 555. Whether the Union's demands had merit

was for the arbitrator to decide in light of the facts, yet

arbitration would be inappropriate if "it can be seen in

advance that no award to the Union could receive judicial

sanction." Id. Such was not the case in Wiley -- because

the Union's demands were not "plainly unreasonable" --

and therefore the Court permitted the demands to proceed

to arbitration. Id.

Although the Wiley holding, strictly speaking, addresses

only the duty to arbitrate, we have in the past noted that

a necessary implication of Wiley's holding is that Wiley, the

successor employer, could possibly be bound by the

substantive terms of the CBA. E.g., Local Union No. 249 v.

Bill's Trucking, Inc., 493 F.2d 956, 960 (3d Cir. 1974). This

conclusion "is manifest from the fact that the very question

upon which the successor must, under Wiley, submit to

arbitration, is the extent to which the other terms of the

predecessor's contract are binding on the successor." Id. at

960 n.20. If Wiley could not possibly be bound by the

substantive terms of the CBA, arbitration would be a wholly

pointless exercise. Moreover, if the terms could not possibly

be enforced against Wiley, then no arbitration award to the

Union "could receive judicial sanction," and thus the Wiley

Court would not have permitted the case to proceed to

arbitration in the first place. Wiley, 376 U.S. at 555.

In Burns, the Supreme Court took a very different

approach to the issue of whether a successor employer

could be bound by the substantive terms of its

predecessor's CBA. The predecessor employer, the

Wackenhut Corporation, had provided plant protection

services at a Lockheed Aircraft Service plant for several

9

years before the successor, Burns International Security

Services, took over this task after outbidding Wackenhut

for the security contract. Burns, 406 U.S. at 274-75. A

majority of the employees hired by Burns had been

employed by Wackenhut, but Burns refused to honor the

existing CBA between Wackenhut and these employees. The

Union then filed an unfair labor practice charge with the

NLRB, and the Board ordered Burns to comply with the

CBA executed by Wackenhut. Id. at 275-77.

In reversing the NLRB, the Supreme Court endorsed the

Board's earlier, consistently-held interpretation that

successor employers could not be bound against their will

by the substantive terms of existing CBAs. Id. at 285-91.

Specifically, the Burns Court noted that:

These considerations, evident from the explicit

language and legislative history of the labor laws,

underlay the Board's prior decisions, which until now

have consistently held that, although successor

employers may be bound to recognize and bargain with

the union, they are not bound by the substantive

provisions of a collective-bargaining contract negotiated

by their predecessors but not agreed to or assumed by

them.

Id. at 284 (emphasis added).

In reaching its decision, the Burns Court stated that the

federal labor policy of preventing industrial strife did not

outweigh "the bargaining freedom of employers and

unions." Id. at 287. Therefore Burns, which had "in no way

agreed" to the existing CBA, could not be compelled to

accept contract provisions against its will. Id. at 282, 287.

Moreover, the Court reasoned, forcing either a union or a

successor employer to be bound by the substantive terms

of an old CBA "may result in serious inequities." Id. at 287.

For example, saddling successor employers with the terms

and conditions contained in old CBAs "may discourage and

inhibit the transfer of capital" because many potential

employers will be willing to rescue moribund businesses

only if they can negotiate their own CBAs. Id. at 287-88.

Additionally, a union may have made concessions to a

small or economically-troubled predecessor employer that it

10

would not be willing to make to a large or economically

powerful successor. Id. at 288. In sum, the balance of

bargaining advantage between employers and labor should

"be set by economic power realities," and the federal labor

policy of avoiding industrial strife would be ill-served by

binding either employers or employees to contract terms

that "do not correspond to the relative economic strength of

the parties." Id.

Wiley and Burns, therefore, appear to be in direct

conflict. On the one hand, the holding in Wiley necessarily

implies that unconsenting successor employers may be

bound by the substantive terms of pre-existing CBAs. But

on the other hand, Burns endorses the idea that unwilling

successors cannot be bound by such terms. As the

principal means of distinguishing these two cases, the

Burns Court offered the somewhat unsatisfying distinction

that Wiley arose in the context of a suit to compel

arbitration, whereas Burns involved an unfair labor practice

proceeding in front of the NLRB.2Id. at 285-86. Not

_________________________________________________________________

2. The Burns Court also suggested that Wiley and Burns could be

distinguished on the basis that Wiley involved a merger, which triggered

the general state law rule "that in merger situations the surviving

corporation is liable for the obligations of the disappearing

corporation."

Burns, 406 U.S. at 286. In Wiley, the Court had noted that the union's

argument -- which may well have influenced its specific holding -- was

based on principles of corporate consolidation. Wiley, 376 U.S. at 547-48

("The Union relies on S 90 of the N.Y. Stock Corporation Law, . . . which

provides, among other things, that no `claim or demand for any cause'

against a constituent corporation shall be extinguished by a

consolidation."). In Howard Johnson, the Court again noted this

distinction with approval, Howard Johnson, 417 U.S. at 257, yet the

Court has since downplayed this distinction as determinative of a

successor's labor law obligations, e.g., Fall River Dyeing & Finishing

Corp.

v. NLRB, 482 U.S. 27, 44 n.10 (1987) (noting that "the way in which a

successor obtains the predecessor's assets is generally not

determinative" of the successor's labor law obligations); see also Golden

State Bottling Co. v. NLRB, 414 U.S. 168, 182 n.5 (1973) (observing that

"[t]he perimeters of the labor-law doctrine of successorship" are not

confined by the boundaries of state corporation law, and that "[t]he

refusal to adopt a mode of analysis requiring the Board to distinguish

among mergers, consolidations, and purchases of assets" is due to the

fact that as long as there is "continuity in the employing industry, the

11

surprisingly, in the aftermath of Burns, courts struggled to

reconcile Burns with Wiley, and could do little more than

repeat the Supreme Court's emphasis on the procedural

distinction between the two cases. E.g., Bill's Trucking, 493

F.2d at 961 (noting that "it was specifically emphasized in

Burns that Wiley arose in the context of a . . . suit to

compel arbitration, not in the context of an unfair labor

practice proceeding," and that "Burns, then, cannot be read

to foreclose absolutely the imposition upon a successor

employer of the contract obligations entered into by its

predecessor").

It is against this backdrop that, just two years after

Burns, the Supreme Court took up the issue of labor law

successorship in Howard Johnson. The Court began by

acknowledging the conflicting reasoning of Wiley and

Burns, but rejected the idea that the cases could be

distinguished on the basis of their procedural context,

because distinguishing the cases in this manner would

inappropriately "permit the rights enjoyed by the new

employer in a successorship context to depend upon the

forum in which the union presses its claims." Howard

Johnson, 417 U.S. at 256. With this distinction repudiated,

the Howard Johnson Court appeared to be squarely faced

with an irreconcilable conflict between Wiley and Burns:

either the substantive terms of an existing CBA could be

imposed against an unconsenting successor, as is implicit

in Wiley, or they could not, as stated by Burns.

The Howard Johnson Court, however, chose not to deal

with this conflict, and instead walked a very narrow path.

Rather than deciding "whether there is any irreconcilable

conflict between Wiley and Burns," the Court decided the

case on the ground that "even on its own terms, Wiley does

not support the decision of the courts below," which had

compelled the successor employer, Howard Johnson, to

_________________________________________________________________

public policies underlying the doctrine will be served by its broad

application"). We have ourselves implicitly indicated that no special

significance should be attached to the fact that Wiley involved a merger.

E.g., Bill's Trucking, 493 F.2d at 957-61 (applying Wiley in the context

of

a sale of capital stock).

12

submit to arbitration pursuant to a CBA between its

unionized employees and the predecessor employer, the

Grissoms. Id. at 256. In other words, even on its own

terms, Wiley did not compel the conclusion that Howard

Johnson must proceed to arbitration against its will, and

likewise could not justify imposing the substantive terms of

the CBA against Howard Johnson.

The Howard Johnson Court contrasted the facts of its

case with Wiley, noting that the most important distinction

is that in Wiley, "the surviving corporation hired all the

employees of the disappearing corporation," whereas in

Howard Johnson the successor "hired only nine of the 53

former Grissom employees and none of the Grissom

supervisors." Id. at 258, 260. The Court emphasized that,

because Howard Johnson had hired so few of the Grissom

employees, there was no "substantial continuity in the

identity of the work force across the change in ownership,"

which placed the case outside the realm of Wiley . Id. at

262-63. Wiley had stated that the lack of "substantial

continuity" would remove the situation from the ambit of its

holding, and the lack of substantial continuity thus

dictated the result.

It is important, for the purposes of this appeal, to

appreciate the limited scope of the Court's decision in

Howard Johnson. As explained above, the Court did not

reconcile the conflict between Wiley and Burns. The

Howard Johnson Court simply pointed out that, consistent

with Wiley, and on Wiley's own terms, the lack of

substantial continuity meant that the Court needed to look

no further. Accordingly, Howard Johnson does not bridge

the gap between Wiley and Burns, nor does it establish

broadly applicable guiding principles that should be

implemented when analyzing labor law successorship

problems.3

_________________________________________________________________

3. Our main point of disagreement with our dissenting colleague is in our

view that Howard Johnson's focus on substantial continuity does not

make it the sole basis for finding a continuing duty to arbitrate or

making agreements binding, but, rather, as one sine qua non. There is

a difference: while the existence of substantial continuity is a necessary

ingredient, its presence does not necessarily render the new entity

13

Still, Howard Johnson does give some indication as to the

Court's thinking on the conflict between Wiley and Burns.

Throughout the opinion, the Court downplays the

significance of Wiley, describing its holding as a "guarded,

almost tentative statement," id. at 256, and focusing on the

limited factual context in which Wiley arose, id. at 256-64.

In contrast, the Court takes an expansive view of Burns,

repeatedly extolling its reasoning. Stating at the outset that

"[c]learly the reasoning of Burns must be taken into

account here," id. at 256, the Howard Johnson Court goes

on to observe that "[w]hat the Union seeks here is

completely at odds with the basic principles this Court

elaborated in Burns," id. at 261, and that the reasoning in

Burns "established that Howard Johnson had the right not

to hire any of the former Grissom employees, if it so

desired," id. at 262. In short, the best reading of Howard

Johnson is that it does not resolve the conflict between

Wiley and Burns, but it does much to strengthen and

reaffirm the reasoning of Burns, and certainly does nothing

to call into question Burns' assertion that successor

employers "are not bound by the substantive provisions of

a collective-bargaining contract negotiated by their

predecessors but not agreed to or assumed by them."

Burns, 406 U.S. at 284.

Nevertheless, one might argue (at least in theory) that

Burns has somehow been modified by Howard Johnson,

based on the reasoning that Howard Johnson's emphasis

on "substantial continuity in the identity of the work force"

_________________________________________________________________

bound. (If one is not 35 years of age, one cannot be President of the

United States; this is a sine qua non. However, if one is 35 years of age,

he or she does not necessarily qualify. Being a native-born citizen is

another sine qua non, in fact.) The difficulty, having explored the three

"guiding" cases, is that we must determine what are all the sine qua

nons. We cannot subscribe to the dissent's view that these cases equate

substantial continuity with successorship or "mandates" such a finding

here. Clearly, as Wiley itself indicates, other factors must also be

considered. See Wiley, 376 U.S. at 551. Burns says that contractual

understandings are important, but the dissent discredits that concept.

While we concede that the scope of the directive of Burns may not be

crystal-clear, we suggest that the directives of Wiley and Howard

Johnson are clearly narrower than the dissent's view would allow.

14

necessarily implies that if such "substantial continuity"

does exist, then arbitration under the existing CBA would

be appropriate. And if such arbitration were to go forward,

it follows that the substantive terms of the CBA could be

enforced, and thus Burns cannot survive intact.4

In our view, however, this reading of Howard Johnson

would stretch its carefully circumscribed holding beyond

recognition. As explained above, the holding in Howard

Johnson does nothing more than simply point out that on

the facts of the case, not even Wiley (and certainly not

Burns) could justify forcing Howard Johnson to submit to

arbitration against its will. In other words, because the

Court was able to base its result on the lack of"substantial

continuity," it simply did not reach the issue of whether,

had there been "substantial continuity," the successor

employer would have been forced to arbitrate and

necessarily could have been bound by the substantive

terms of the CBA. Indeed, nothing in the Howard Johnson

opinion calls into question either the reasoning or the

holding of Burns -- as explained above, there is much in

the opinion that reaffirms Burns -- and thus we cannot

accept any interpretation of Howard Johnson that either

explicitly or implicitly modifies Burns' conclusion that a

successor employer cannot be bound against its will by the

substantive provisions of its predecessor's CBA. Here, the

parties specifically agreed that the CBA would not be

binding, and Burns teaches that we must respect that

agreement.

Our reading of Burns and Howard Johnson is confirmed

by the Supreme Court's observations in Fall River Dyeing &

Finishing Corp. v. NLRB, 482 U.S. 27 (1987). In reviewing

the principles of labor law successorship, the Court

reiterated Burns' assertion that "the successor . . . is not

bound by the substantive provisions of the predecessor's

_________________________________________________________________

4. While the dissent does not frame its argument in precisely these

terms, nonetheless this reasoning is implicit in the dissent's conclusion

that "there is sufficient `substantial continuity of identity in the

business

enterprise,' between Brocker Rebar and AmeriSteel to justify holding that

AmeriSteel is bound to the arbitration provision (and possibly to the

substantive provisions) of Brocker Rebar's CBA with Local 430."

Dissenting Op. at 37.

15

collective-bargaining agreement."5 Fall River, 482 U.S. at 40

(citing Burns, 406 U.S. at 284). Significantly, in the very

next sentence, the Court cited Howard Johnson , so it

cannot be argued that the Fall River Court somehow

overlooked Howard Johnson when reaffirming Burns.

Rather, the only conclusion that can be drawn is that after

Howard Johnson, Burns rests on solid ground.

This conclusion, however, serves to illuminate the

perplexing issue presented by this appeal -- namely, that

while the validity of Burns cannot be doubted, Burns

nonetheless conflicts with the implications of Wiley. The

most we can say with assurance regarding this conflict is

that while the contours of Wiley are narrow, and its status

not entirely clear, Burns' language and logic have been

reinforced in later cases. Accordingly, we believe the clear

mandate of Burns -- that an unconsenting successor

employer cannot be bound by the substantive terms of a

CBA negotiated by its predecessor -- provides more

persuasive guidance than the limited holding in Wiley. That

being the case, AmeriSteel cannot be bound by the

substantive terms of the CBA at issue here, which was

negotiated between Brocker Rebar and the Union and

which AmeriSteel's purchase agreement specifically stated

would not be binding on it. And because AmeriSteel cannot

be bound by the substantive terms of the CBA, no

arbitration award to the Union -- which, of course, would

be based on the substantive terms of the CBA -- could

receive judicial sanction, and therefore AmeriSteel cannot

be compelled to submit to arbitration.6 Wiley, 376 U.S. at

555.

_________________________________________________________________

5. The dissent attempts to downplay the significance of this statement by

characterizing it as a "cryptic piece of dicta." Dissenting Op. at 36 n.2.

While it is arguably dicta, there certainly is nothing "cryptic" about it.

This is a simple, straightforward statement that makes a general

observation about successors, taken almost word-for-word from Burns.

The dissent would re-write the statement as referring to only "Burns-type

successors," but we see no reason to believe that the Fall River Court

meant anything other than what it said.

6. In reaching this conclusion, we are not, as the dissent appears to

indicate, overstepping our authority as a lower federal court by

"emasculat[ing] Wiley." Dissenting Op. at 28. Rather, when faced with a

16

While there is no directly controlling authority in our

Circuit, nonetheless we think the result that we reach here

flows logically from our existing Circuit precedent. For

example, in Stardyne, Inc. v. NLRB, 41 F.3d 141 (3d Cir.

1994), we observed that a successor has an obligation to

recognize and bargain with the union that represented its

predecessor's employees, but that a successor is"not

bound by its predecessor's collective bargaining agreement."

Id. at 145 n.3. Similarly, in Pick-Mt. Laurel Corp. v. NLRB,

625 F.2d 476 (3d Cir. 1980), we noted that when analyzing

labor law successorship, the Supreme Court has held"that

a successor does not stand in the same shoes as its

predecessor because it will not be bound to the previously

bargained for terms, [and] the Court construed the relevant

policies to prevent imposing on the successor an obligation

to be bound by past events and arrangements." Id. at 484.

And, as explained above, if AmeriSteel cannot be bound by

these "past events and arrangements" in the form of

Brocker Rebar's CBA, then it necessarily follows that

arbitration under the CBA is inappropriate because no

award for the Union "could receive judicial sanction."7

Wiley, 376 U.S. at 555.

_________________________________________________________________

body of Supreme Court precedent that is, as the dissent points out,

"discordant in [ ] overall tone and approach," id. at 24, we are simply

choosing what we believe to be the best interpretation. And in so doing,

we are performing our appropriate role as a federal appellate tribunal in

the most basic sense. (The dissenting opinion arguably emasculates

Burns in similar fashion when it urges that the sales agent expressly

repudiating the CBA is "irrelevant to the analysis." Dissenting Op. at

32.)

Moreover, we do not agree that our result in this case necessarily

emasculates Wiley, or relegates it "to the dustbin of history," Dissenting

Op. at 30, although we do decline to give Wiley as broad a reading as

does Chief Judge Becker. We suggest that one who reads Wiley on its

own, start to finish, would be struck by its careful and restrictive

analysis, which leads to its equally narrow holding, which we quoted

above, that collective bargaining agreement provisions do not

automatically go by the wayside when a corporate consolidation occurs.

Wiley, 376 U.S. at 548.

7. Several other cases in our Circuit have addressed the labor law

successorship doctrine, but we find these decisions of limited utility.

For

17

Moreover, we find it significant that our resolution of this

case is supported by the decisions of our sister circuit

courts of appeals. Indeed, in the time since Fall River, every

one of our sister circuits that has addressed the issue has

concluded that an unconsenting successor employer cannot

be bound by the substantive terms of an existing CBA.8

_________________________________________________________________

example, in Local Union No. 249 v. Bill's Trucking, Inc., 493 F.2d 956 (3d

Cir. 1974), we addressed Wiley and Burns , but we distinguished the two

cases based on their procedural distinction. Id. at 961. As explained

above, the Court has since rejected this means of distinguishing the

cases. Supra p. 13. In American Bell Inc. v. Federation of Telephone

Workers, 736 F.2d 879 (3d Cir. 1984), we touched upon the

successorship doctrine, but ultimately did not reach the issue because

we concluded that the doctrine did not apply. Id. at 888. And in

Teamsters Local Union No. 430 v. Cement Express, Inc., 841 F.2d 66 (3d

Cir. 1988), we construed Burns somewhat narrowly, but we think it

unwise to place any particular emphasis on this case. As a case

primarily concerned with the imposition of Rule 11 sanctions, Cement

Express did not give labor law successorship a thorough treatment, as

evidenced by the fact that in our discussion, we did not mention Howard

Johnson or Fall River. Id. at 69. Moreover, in distinguishing Wiley and

Burns, we relied on the procedural distinction between the two cases

that the Court has repudiated. Id.

In concluding that AmeriSteel had no duty to arbitrate, the District

Court appeared principally to rely upon our decision in NLRB v. Phoenix

Pipe & Tube, 955 F.2d 852 (3d Cir. 1991), which the District Court

characterized as standing for the proposition that"by retaining the

workforce of a prior employer, a subsequent employer becomes obligated

to bargain with a union, but not to abide by the collective bargaining

agreement." App. at 257. This is a puzzling statement, however, because

Phoenix Pipe does not support this proposition, and the District Court

included no supporting citation to the case. Given that Phoenix Pipe says

nothing regarding a successor's obligations under its predecessor's CBA,

we conclude that the case is not relevant to the issues presented by this

appeal. Accordingly, while we agree with the District Court's ultimate

conclusion that AmeriSteel cannot be compelled to arbitrate, we disagree

with the reasoning that the District Court employed to arrive at that

result.

8. The dissent states that the case law from other courts of appeals "cuts

in both directions," Dissenting Op. at 38, but, we cannot agree. It

references only two appellate cases that supposedly cut in its favor, id.

at 38 n.4, but neither case is particularly relevant. Boeing Co. v.

18

E.g., Local 7-517 v. Uno-Ven Co., 170 F.3d 779, 781 (7th

Cir. 1999) (stating that when a successor purchases a

predecessor's business, the successor "would not be bound

by the collective bargaining contract"); NLRB v. Hosp. San

Rafael, Inc., 42 F.3d 45, 50 (1st Cir. 1994) (observing that

"[w]here, for example, a unionized business is acquired by

a new owner unaffiliated with the old one, the new

employer may not be bound by a collective bargaining

agreement with the old one"); Southward v. S. Cent. Ready

Mix Supply Corp., 7 F.3d 487, 495 (6th Cir. 1993) (asserting

that the Supreme Court has "repeatedly recognized that a

successor corporation may be bound by the substantive

terms of its predecessor's CBA only if the successor is the

alter ego of the predecessor or the successor has expressly

or impliedly assumed the obligations of its predecessor's

contract"); Sullivan Indus. v. NLRB, 957 F.2d 890, 895 (D.C.

Cir. 1992) (noting that "[w]hile a successor has a duty to

bargain with an incumbent union, it is not bound by the

substantive terms of the previously negotiated collective-

bargaining agreement"); New England Mech., Inc. v. Local

Union 294, 909 F.2d 1339, 1342 (9th Cir. 1990) (explaining

that a successor employer "is not bound by its

predecessor's collective bargaining agreement," and that

"the Supreme Court has continually indicated that a

successor employer is only bound to bargain with a union

which had a CBA with the predecessor"). District courts in

our Circuit have come to the same conclusion. E.g.,

_________________________________________________________________

International Association of Machinists and Aerospace Workers, 504 F.2d

307 (5th Cir. 1974), predates Fall River, and therefore is of limited

utility.

And in Stotter Division of Graduate Plastics Co. v. District 65, 991 F.2d

997 (2d Cir. 1993), the court based its determination that Stotter was a

successor employer not only on continuity, but also on the fact that the

obligations at issue arose before the transfer, and the fact that Stotter

had "entered into an agreement with the Union which adopted (with

immaterial exceptions) the provisions of the [CBA]." Id. at 1002. Thus,

Stotter is not persuasive on this issue. The dissent can cite no post-Fall

River case in our sister circuits that has bound an unconsenting

successor employer to the substantive provisions of an existing CBA. We

submit there are none. Indeed, were the dissent's interpretation to

prevail, it would place us squarely at odds with every court of appeals to

consider this issue, as noted above.

19

Philadelphia Joint Bd. v. After Six, Inc., No. 92-4294, 1992

WL 202166, at *2 (E.D. Pa. Aug. 6, 1992) (maintaining that

"if an employer takes over another business, the employer

is not bound by its predecessor's collective bargaining

agreements. At most, the employer will be required to

bargain with any unions that the predecessor employer had

recognized."); Local Union No. 4 v. Owens-Illinois, Inc., 758

F.Supp. 962, 973 (D.N.J. 1991) (observing that "[u]nder

Wiley and Burns, although [the successor] had an

obligation to recognize and bargain with the Union .. . [the

successor] could not be required to assume [the

predecessor's] labor contract"). Additionally, many

commentators are in accord. E.g., Burton F. Boltuch,

Workplace Closures and Company Reorganizations:

Enforcing NLRB, Contract and Noncontract Claims and

Obligations, 7 Lab. Law. 53, 78 (1991) (explaining that

"[c]ourts and arbitrators since Burns do not hold the

`unconsenting' successor to the CBA"); Claiborne Barksdale,

Successor Liability Under the National Labor Relations Act

and Title VII, 54 Tex. L. Rev. 707, 711 (1976) (arguing that

a "successor will not be bound . . . by the substantive

terms of the predecessor's contract with the employees

unless it either explicitly or impliedly ratifies the

agreement"); Wilson McLeod, Rekindling Labor Law

Successorship in an Era of Decline, 11 Hofstra Lab. L.J.

271, 308-09 (1974) (explaining that "courts are firmly

opposed" to enforcing the substantive terms of a

predecessor's CBA against a successor, and that if the

Burns holding rests on solid footing, then "there is no

principled reason why successors should be forced to

arbitrate at all").

Given the prevailing case law supporting our view, and

given the teachings of Wiley and Burns that expose the

futility and inappropriateness of arbitration when the

substantive terms of the bargaining agreement cannot be

binding on the new entity, we are curious as to what

purpose is to be served by arbitration? How can we hold, as

the dissent would, that such a pointless exercise is

mandated, especially given the fact that the specific

contractual provisions between the parties did in fact not

merely "shed" the prior agreement containing the

20

arbitration provisions, but specifically contracted them

away?

Finally, we think it is important to note that our decision

in this case does not overlook the vital importance of

arbitration as a means of settling labor disputes. We have

in the past observed that federal labor law elevates labor

arbitrators "to an exalted status," Ludwig Honold Mfg. Co.

v. Fletcher, 405 F.2d 1123, 1126 (3d Cir. 1969), and that

"courts play an extremely limited role in resolving labor

disputes," News Am. Publ'n, Inc. v. Newark Typographical

Union, Local 103, 918 F.2d 21, 24 (3d Cir. 1990). Moreover,

an arbitration award must be enforced "[a]s long as the

arbitrator has arguably construed or applied the contract,"

News Am., 918 F.2d at 24 (emphasis in original), which is

in accord with the Supreme Court's instruction that an

arbitration award is legitimate as long as it "draws its

essence from the collective bargaining agreement," United

Paperworkers Int'l Union v. Misco, Inc., 484 U.S. 29, 36

(1987).

What distinguishes this case, however, is that because

AmeriSteel cannot be bound by the substantive terms of

the CBA between Brocker Rebar and the Union, there

simply is no contract for the arbitrator to construe. While

we must respect the vital role that arbitration plays in

settling labor disputes (and the correspondingly broad

authority granted to arbitrators), we think it goes without

saying that courts should not compel parties to submit to

arbitration when there is nothing to arbitrate. To hold

otherwise would create the paradoxical situation in which

AmeriSteel would be forced to arbitrate the extent of its

obligations under the CBA, and yet, because it has no such

obligations, the arbitrator would be powerless to enforce

these obligations.

One might argue that even though AmeriSteel has no

obligations under the CBA, this case should still proceed to

arbitration on the theory that an arbitrator could

conceivably grant an award to the Union based on some

general sense of equity or fairness. Even granting this

possibility, such an award would be illegitimate because it

would "simply reflect the arbitrator's own notions of

industrial justice" and would not "draw its essence from the

21

contract" itself. Misco, 484 U.S. at 38. As Chief Judge

Becker has highlighted, an arbitrator's authority is quite

broad, but it is not unlimited, because courts cannot

"permit[ ] the arbitrator to transform the contractual

arbitration into an equitable dispensation of his own brand

of industrial justice, an endeavor expressly forbidden by the

Supreme Court's decision in United Paperworkers Int'l

Union v. Misco, Inc., 484 U.S. 29 (1987)." News Am. Publ'n,

Inc. v. Newark Typographical Union, Local 103, 921 F.2d 40,

41 (3d Cir. 1990) (Becker, J., dissenting from denial of

rehearing en banc).

Our decision here recognizes the sound principle that

arbitration, while critically important to settling labor

disputes, nonetheless cannot be used as a means to

achieve illegitimate ends. Were we to permit this case to

proceed to arbitration, we would be guilty of "wav[ing] a

wand" over the arbitration proceedings by engaging in the

fiction that an arbitrator could legitimately grant an award

for the Union. Id. at 42. But when arbitration is placed

within its proper limits, there is no escaping the conclusion

that AmeriSteel, which is not bound by the substantive

terms of the CBA, cannot be compelled to submit to

arbitration because no arbitration award to the Union could

receive judicial sanction.

Accordingly, the March 17, 2000 order of the District

Court will be AFFIRMED.

22

BECKER, Chief Judge, dissenting.

It is surprising that thirty-seven years after John Wiley &

Sons v. Livingston, 376 U.S. 543 (1964), in which the

Supreme Court first tackled the issue of successorship

liability in labor cases, the law in this area is still unsettled.

Wiley established that the notion of "substantial continuity

in the identity of the business enterprise" is the principal

criterion for determining successorship liability, and held

that, in appropriate circumstances, successor employers

can be required to arbitrate with their employees' union

under the terms of the collective bargaining agreement

(CBA) that the union had with the predecessor employer.

Id. at 548, 551.

In NLRB v. Burns International Security Services, Inc., 406

U.S. 272 (1972), and Howard Johnson Co. v. Hotel and

Restaurant Employees, 417 U.S. 249 (1974), the Court

considered how the Wiley doctrine applied in different

factual contexts. In American Bell, Inc. v. Federation of

Telephone Workers of Pennsylvania, 736 F.2d 879, 888 (3d

Cir. 1984), this Court used Wiley and Howard Johnson as

the basis for developing a six-factored test for determining

whether substantial continuity in the identity of the

business enterprise is present: (i) continuity of work force,

(ii) continuity of business operations, (iii) continuity of

supervisory personnel, (iv) continuity of physical plant and

location, (v) continuity in the nature of the product or

services, and (vi) continuity in the methods of production,

sales, or inventorying.

As counsel for AmeriSteel had to concede at oral

argument, the record in this case is crystal clear that in the

transition of ownership of the York plant from Brocker

Rebar to AmeriSteel, there has been not only substantial

continuity but utterly no change in any of the American Bell

factors except possibly for the methods of sales, which

AmeriSteel's counsel represented had changed (although he

was unclear as to how and to what degree). In other words,

after closure for a three-day weekend, a new business

appeared at 1700 Seventh Avenue in York that was the

exact same enterprise as the one that had been there four

days before in virtually all respects. Despite these

uncontroverted facts and their close similarity to those in

23

Wiley, the majority holds that the successor corporation,

AmeriSteel, is not bound by the arbitration provision of its

predecessor's CBA.

Judge Rendell's thoughtful opinion makes clear that

resolving this case requires an analysis of Wiley, Burns,

and Howard Johnson, the Supreme Court's cases

addressing when a successor can be bound to the terms of

a predecessor's CBA. Her opinion also demonstrates the

difficulty of reconciling those cases and, implicitly at least,

underscores the problems with choosing one path of

reconciliation over another. I cannot join the majority's

opinion because I believe that the case before us is

controlled by the Supreme Court's decision in Wiley, which

involved a fact pattern that is similar in all relevant aspects

to the facts in the case at bar, just as the other key cases

involved quite different facts. While I do not suggest that

AmeriSteel is duty-bound to accept the CBA that Brocker

Rebar signed with Teamsters Local 430 (the union

representing Brocker's employees), I do believe that Wiley

mandates that we hold that AmeriSteel is bound to

arbitrate with the union as to whether it is bound by any

of the CBA's provisions.

In other circumstances, the foregoing might well suffice

for a dissenting opinion. But Wiley, Burns, and Howard

Johnson are difficult to harmonize if not discordant in their

overall tone and approach, and I disagree with the

majority's attempt to fit these opinions together. I believe

that the Supreme Court would do well to revisit this area

which remains unclear twenty-seven years after Howard

Johnson, the latest of the trilogy. Under these

circumstances, I think it useful to explain my disagreement

with the majority in some detail.

I.

In Wiley, a publishing firm, Interscience, entered into a

CBA with a union that represented its employees.

Interscience then merged with another publishing firm,

John Wiley & Sons, and ceased to do business as a

separate entity. The union and Wiley were unable to agree

what effect the merger had on the CBA, so the union

24

brought an action to compel arbitration under the CBA in

order to determine the effect. Wiley pointed out that it did

not sign the CBA, and argued that it therefore should not

be bound by the CBA's arbitration clause. The Court,

however, ultimately held that "in appropriate

circumstances, present here, the successor employer may

be required to arbitrate with the union under the

agreement." Wiley, 376 U.S. at 548. As the majority rightly

points out, Wiley also states that to send the case to

arbitration (as it did), the union's demands under the

substantive terms of the CBA must not be "so plainly

unreasonable that . . . it can be seen in advance that no

award to the Union could receive judicial sanction." Id. at

555. Wiley nonetheless holds that "in appropriate

circumstances," a successor employer can be held bound to

the arbitration clause of its predecessor's CBA, and

possibly can be held bound to the substantive terms of the

CBA as well--despite the fact that (like AmeriSteel) the

successor never agreed to be so bound and was not the

alter ego of the predecessor.

The key question for our purposes is what are these

"appropriate circumstances" in which a CBA can be

enforced against a successor employer. Wiley is brief in its

description of these circumstances, but it does state that

there must be "relevant similarity and continuity of

operation across the change in ownership" so that there is

"substantial continuity of identity in the business

enterprise before and after [such] a change." Id. at 551. In

Wiley, this continuity of identity and operation of the

business enterprise was "adequately evidenced by the

wholesale transfer of Interscience employees to the Wiley

plant, apparently without difficulty." Id.

The Court did not address the notion of "substantial

continuity of identity in the business enterprise," in the

next case in the trilogy, Burns, because it was clear in that

case that there was absolutely no continuity between the

predecessor and the successor. See Burns, 406 U.S. at 286

("Here there was no merger or sale of assets, and there were

no dealings whatsoever between Wackenhut and Burns.").

In Howard Johnson, however, the Court elaborated on that

concept. In that case, the Grissom family ran a Howard

25

Johnson's restaurant and motor lodge and entered into a

CBA with the union representing their employees. The

Grissoms thereafter sold to the Howard Johnson Company

all of the personal property that they had been using to run

the restaurant and lodge. By the terms of the sale

agreement, Howard Johnson assumed four specific

contracts relating to the operation of the restaurant and

lodge but specifically declined to assume the CBA. Howard

Johnson then hired its own workforce to staff the

restaurant and lodge; it hired forty-five employees, only

nine of whom had previously been working for the

Grissoms at the restaurant (the Grissoms had had fifty-

three employees), but hired none of the Grissoms'

supervisory employees. See Howard Johnson, 417 U.S. at

250-52.

The union filed suit, seeking an order to compel Howard

Johnson to arbitrate the extent of its obligations to the

former Grissom employees under the terms of the CBA. The

Court ruled against the union, holding that the substantial

continuity between the predecessor and successor

corporations that was present in Wiley was missing in the

case before it. See id. at 264-65. In particular, the Court

noted that in Wiley the successor corporation hired all of

the predecessor's employees and did not make substantial

changes in its operation of the enterprise, as Interscience's

former employees "continued to perform the same work on

the same products under the same management at the

same work place as before the change in the corporate

employer." Id. at 258 (quoting Interscience Encyclopedia,

Inc., 55 Lab. Arb. 210, 218 (1970) (the arbitrator's opinion

in Wiley)). In contrast, Howard Johnson selected and hired

its own independent work force to run the restaurant and

lodge.

The case before us involves the same sort of "substantial

continuity of identity in the business enterprise" that was

present in Wiley but missing in Howard Johnson. The

predecessor corporation, Brocker Rebar, negotiated a CBA

with Local 430. Brocker Rebar then sold substantially all of

its assets to AmeriSteel, including "the Business as a going

concern and all of the assets, properties, and rights of the

Sellers constituting the Business or used by the Sellers

26

therein, of every type and description, real and personal,

tangible and intangible, wherever located." Asset Purchase

Agreement between AmeriSteel and Brocker Rebar at 3. The

assets purchased included Brocker Rebar's steel plant and

equipment located at 1700 Seventh Avenue in York, where

Local 430's members worked, along with all of Brocker

Rebar's contracts and leases, except the CBA and

individual employment contracts.

Instead of selecting and training its own work force (as

the successor did in Howard Johnson), AmeriSteel hired all

but six of Brocker Rebar's former employees to work at the

same plant (50 workers are needed to run the plant), doing

the same jobs that they performed before the sale.

AmeriSteel also hired Brocker Rebar's top supervisory

personnel at the plant (again in contrast to Howard

Johnson, where the successor hired none of the

predecessor's supervisors). The York plant is situated in

exactly the same location where it was before and produces

the exact same product using the same inventory, the same

equipment, the same physical set-up, and the same

production methods that it did when it was Brocker Rebar's

plant. In short, insofar as the plant's workers were

concerned, virtually nothing changed at the plant when

AmeriSteel took over except for the name on the door.

In my view, this almost total continuity in Brocker

Rebar's and AmeriSteel's operation of the York plant brings

this case under Wiley's rule binding a successor

corporation to the arbitration clause in its predecessor's

CBA when there is almost total continuity of the business

enterprise. As was the case in Wiley, the employees in the

case at bar " `continue[ ] to perform the same work on the

same products under the same management at the same

work place as before the change in the corporate

employer.' " Howard Johnson, 417 U.S. at 258 (quoting

Interscience Encyclopedia, Inc., 55 Lab. Arb. at 218).

Moreover, as the majority recognizes, the Supreme Court

has held that the one potentially relevant difference

between this case and Wiley--in Wiley the predecessor was

merged into the successor, while here there was no merger

but a purchase of assets--is irrelevant in the context of

successor liability. See Maj. Op. at 11 n.2; see also Fall

27

River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 44

n.10 (1987); Golden State Bottling Co. v. NLRB , 414 U.S.

168, 182 n.5 (1973).

One implication of Wiley is that a successor that is

bound by the arbitration clause of its predecessor's CBA

may end up being bound by (at least some of) the

substantive provisions of the CBA as well. The majority is

concerned that a potential problem with such a regime is

that corporations may be hesitant to purchase the assets of

other corporations if they thought they might be saddled

with the other corporations' labor agreements. I share that

concern. However, Wiley struck a balance between

corporate freedom and the protection of workers,

recognizing that arbitration was an important means of

maintaining labor peace and that "employees who are in

fact retained in `[t]he transition from one corporate

organization to another' " need to be afforded protection

"from sudden changes in the terms and conditions of their

employment." Howard Johnson, 417 U.S. at 264 (quoting

and describing Wiley). The implication of the majority

opinion is that Wiley is virtually a dead letter confined to its

specific facts, essentially overruled. But it is not within our

power to emasculate Wiley--only the Supreme Court can do

that. See State Oil Co. v. Khan, 522 U.S. 3, 20 (1997)

(holding that the Court of Appeals was correct to apply a

Supreme Court precedent despite the precedent's

"infirmities, [and] its increasingly wobbly, moth-eaten

foundations," because "it is this Court's prerogative alone to

overrule one of its precedents") (internal quotation marks

omitted).1

_________________________________________________________________

1. The majority attempts to refine its position with the argument that the

"substantial continuity" concept in Wiley "should properly be viewed as

a necessary but not a sufficient condition for the imposition of

arbitration on an unconsenting successor." Maj. Op. at 9; see also Maj.

Op. at 13-14 n.3. It adds, "Clearly, as Wiley itself indicates, other

factors

must also be considered." Maj. Op. at 14 n.3. With all respect, I believe

that this reading of Wiley conflicts with Howard Johnson's treatment of

Wiley. In Howard Johnson, the Supreme Court applied the analytical

precepts of Wiley, interpreting Wiley as making "substantial continuity

in

the identity of the business enterprise" the centerpiece of the analysis

of

when a successor can be bound to arbitrate under a predecessor's CBA.

28

II.

Turning to a global analysis of the majority's decision, it

is based upon the following two premises: (1) a successor

corporation cannot be bound to the substantive terms of a

predecessor's CBA unless it agrees to be so bound or is an

"alter ego" of the predecessor; and (2) a successor

corporation that is not bound by the substantive terms of

a CBA should not be bound by an arbitration provision in

that CBA either, because any decision by the arbitrator

enforcing the CBA could not "receive judicial sanction" and

thus arbitration could "serve no purpose." Maj. Op. at 3, 9,

16. Because it is undisputed that AmeriSteel did not agree

to be bound by the CBA and there is no evidence that

AmeriSteel is the alter ego of Brocker Rebar, the majority

concludes that AmeriSteel cannot be bound by the

arbitration provision in Brocker Rebar's CBA with Local

430. However, a simple exercise in deductive logic reveals

that premises (1) and (2) lead inexorably to the conclusion

that an arbitration clause of a CBA can never be enforced

against a successor corporation unless the successor

_________________________________________________________________

The Court held in Howard Johnson that the successor corporation was

not bound to arbitrate under the predecessor's CBA because there was

insufficient substantial continuity in the business enterprise, and the

clear implication of the opinion is that, if there had been such

substantial continuity, then the successor would have been so bound. I

see nothing in Howard Johnson that would lead me to the conclusion

that the Court would have held that the successor was not bound to

arbitrate even if there had been such substantial continuity, because the

"other factors" present in Wiley were missing there. See Howard

Johnson, 417 U.S. at 264-65 ("Since there was plainly no substantial

continuity of identity in the work force hired by Howard Johnson with

that of the Grissoms, and no express or implied assumption of the

agreement to arbitrate, the courts below erred in compelling the

Company to arbitrate the extent of its obligations to the former Grissom

emloyees."); see also id. at 258 (" Even more important, in Wiley the

surviving corporation hired all of the employees of the disappearing

corporation.") (emphasis added); id. at 263 (noting that the Court's

holding "is reflected in the emphasis most of the lower courts have

placed on whether the successor employer hires a majority of the

predecessor's employees in determining the legal obligations of the

successor in S 301 suits under Wiley").

29

agreed to be bound by the CBA or is the predecessor's alter

ego. I cannot accept the majority's reasoning because its

logical consequence flatly contradicts the holding of Wiley,

see supra Part I.

Although the majority denies that it has relegated Wiley

to the dustbin of history, it is abundantly clear from its

opinion that it is doing just that. In order to get around the

fact that Wiley's holding is implicated in the case at bar

because of the very close similarity of fact patterns in this

case and Wiley, the majority concludes that (1) Wiley is in

"direct" and "irreconcilable conflict" with Burns because

"Burns endorses the idea that unwilling successors cannot

be bound" by "the substantive terms of pre-existing CBAs";

(2) Howard Johnson "downplays the significance of Wiley"

while "tak[ing] an expansive view of Burns," thus strongly

reaffirming Burns while casting Wiley into doubt; so (3)

Burns's dicta rather than Wiley's holding provides the

relevant rule for this case because Burns's dicta provides

"more persuasive guidance" than Wiley's "limited holding,"

whose "status [is] not entirely clear." Maj. Op. at 11, 12, 14,

16. I disagree with all three steps in this analysis.

A.

First, the majority's finding of an irreconcilable conflict

between Wiley and Burns depends upon its erroneous

characterization of Burns as establishing"the clear

mandate . . . that an unconsenting successor employer

cannot be bound by the substantive terms of a CBA

negotiated by its predecessor." Maj. Op. at 16. The majority

relies on the following language in Burns:

These considerations, evident from the explicit

language and legislative history of the labor laws,

underlay the Board's prior decisions, which until now

have consistently held that, although successor

employers may be bound to recognize and bargain with

the union, they are not bound by the substantive

provisions of a collective-bargaining contract negotiated

by their predecessors but not agreed to or assumed by

them.

Burns, 406 U.S. at 284.

30

When this passage is considered in its entirety, it

becomes clear that this is not Burns's holding and that to

read it as establishing a "clear mandate" is a

misinterpretation of Burns. As I read Burns, its holding is

much more narrow, constrained by the Court's caution that

its "[r]esolution [of the case] turns to a great extent on the

precise facts involved here." Id. at 274. Unlike in Wiley, the

Court in Burns did not recite an explicit holding; rather, the

Court's actual conclusions in Burns are narrowly tailored to

the particular facts of that case and carefully avoid any

broad, sweeping statements of what the law is in this area.

The overarching focus of the Court's reasoning in Burns is

to show that Wiley does not control in Burns's fact situation

because of the differences in the predecessor-successor

relationships and in the legal claims made by the unions.

See id. at 285-87, 291 (setting out the Court's own

conclusions, which center on distinguishing Wiley). In sum,

Burns does not "clear[ly] mandate . . . that an unconsenting

employer cannot be bound by the substantive terms of a

CBA negotiated by its predecessor." Maj. Op. at 16.

The majority further concludes that if a predecessor and

successor explicitly agree that the predecessor's CBA will

not be binding on the successor, "Burns teaches that we

must respect that agreement." Maj. Op. at 15. I do not

understand Burns to support this conclusion, and in fact

this reading of Burns conflicts with the majority's own

characterization of the law in this area. As the majority

itself observes, Wiley recognized that "an unconsenting

successor" can owe an "extra-contractual duty," grounded

in " `the policy of our national labor laws,' " to arbitrate with

a union under the predecessor's CBA. Maj. Op. at 8

(quoting Wiley, 376 U.S. at 548). It is clear that this duty,

if implicated, is owed by the successor to the union, since

the duty requires the successor to arbitrate with the union

and the union can sue the successor to enforce the duty.

However, the majority seems to believe that the successor's

extra-contractual duty to the union can be abrogated by an

express contractual provision in an agreement between the

successor and its predecessor, with which the union was in

no way involved. See Maj. Op. at 17, 20 ("[T]he specific

contractual provisions between [AmeriSteel and Brocker

Rebar] did in fact not merely `shed' the prior agreement

31

containing the arbitration provisions, but contracted them

away[.]"). I find no support in either Supreme Court

precedent or legal reasoning for the position that an extra-

contractual duty owed to an entity can be nullified by a

contract to which that entity is not a party. Therefore, I

believe that the provision in the AmeriSteel-Brocker Rebar

sales agreement expressly repudiating the CBA is irrelevant

to the analysis.

B.

The majority's treatment of Howard Johnson is similarly

flawed because it is based on the view that Howard

Johnson "downplays the significance of Wiley," and "takes

an expansive view of Burns." Maj. Op. at 14. On this basis,

the majority implicitly holds that Burns effectively overruled

Wiley. See Maj Op. at 16 ("[W]hile the validity of Burns

cannot be doubted, Burns nonetheless conflicts with the

implications of Wiley. . . . Accordingly, we believe the clear

mandate of Burns -- that an unconsenting successor

employer cannot be bound by the substantive terms of a

CBA negotiated by its predecessor -- provides more

persuasive guidance than the limited holding in Wiley."). I

cannot agree with this reasoning.

The majority concedes that the centerpiece of Howard

Johnson's analysis involved applying the precepts of Wiley

to the facts before the Court. See Maj. Op. at 13. I note that

this is hardly consistent with the view that Howard

Johnson "downplays the significance of Wiley."

Furthermore, if Burns effectively overruled Wiley, then why

would Howard Johnson (decided after Burns) use Wiley's

analytical structure to reach its decision? If the majority's

analysis is correct, then surely the Howard Johnson Court

would have simply stated that Burns overruled Wiley and

then based its decision on Burns's "holding" that

unconsenting successor employers (who are not an alter

ego of the predecessor) are never bound by the substantive

terms of a predecessor's CBA. The Supreme Court has not

been reluctant to overrule its own decisions when satisfied

that they were wrong or based on outdated or anachronistic

reasoning. See, e.g., State Oil Co. v. Khan, 522 U.S. 3, 20

(1997). Tellingly, however, Howard Johnson did not do this,

32

but instead rested its decision upon Wiley's analytical

structure. The clear implication of this, I believe, is that the

Howard Johnson Court did not understand Burns to have

overruled Wiley. I thus cannot understand how the majority

now purports to hold implicitly that Wiley is overruled.

Moreover, Howard Johnson's description of Wiley's

holding as a "guarded, almost tentative statement," see

Maj. Op. at 14 (quoting Howard Johnson, 417 U.S. at 256)

is not made in the context of downplaying the Wiley's

significance, but instead is actually a laudatory comment

praising Wiley's careful reasoning. This description of

Wiley's holding is made in the course of the Court's

observation that, in every case in this area (including Burns

and Howard Johnson itself), "we must necessarily proceed

cautiously, in the traditional case-by-case approach of the

common law. . . . [E]mphasis on the facts of each case as

it arises is especially appropriate." Howard Johnson, 417

U.S. at 256. Howard Johnson then reaffirms Burns's

statement that Burns's decision " `turn[ed] to a great extent

on the precise facts involved here' " (hardly an "expansive

view" of Burns), and concludes that this sentiment applies

equally well to all cases in this area of the law. Id. (quoting

Burns, 406 U.S. at 274) Howard Johnson interprets Wiley's

"guarded, almost tentative statement of its holding" as

demonstrating that the Wiley Court was properly aware of

the need for the Court to constrain its holding to the

particular facts of the case. Id. In short, Howard Johnson

does not bury Wiley, but praises it.

Finally, Howard Johnson specifically notes that its

interpretation of Wiley (based on the notion of "substantial

continuity of identity in the business enterprise," see supra

Part I) preserved for Wiley a substantial role in the

protection of union members' rights:

This interpretation of Wiley is consistent also with the

Court's concern with affording protection to those

employees who are in fact retained in "[t]he transition

from one corporate organization to another" from

sudden changes in the terms and conditions of their

employment, and with its belief that industrial strife

would be avoided if these employees' claims were

33

resolved by arbitration rather than by "the relative

strength . . . of the contending forces."

Id. at 264 (quoting Wiley, 376 U.S. at 549). I think the

above passage clearly communicates the Court's intention

in Howard Johnson that Wiley should continue to protect

employees from "sudden changes in the terms and

conditions of their employment" in situations like the one

before us--where there is a change in corporate ownership

but the employees and the running of the business remain

overwhelmingly the same. Again, this is just not consistent

with an interpretation of Howard Johnson as"downplay[ing]

the significance of Wiley." Maj. Op. at 14.

III.

I think that a much better reconciliation of the trilogy can

be developed from a passage in Howard Johnson discussing

the concept of successorship that the majority quotes early

in its opinion but then promptly ignores. See Maj. Op. at 7.

In this passage, Howard Johnson states that the lower

court's division of issues into (1) whether Howard Johnson

was a successor employer, and (2) whether a successor is

required to arbitrate under its predecessor's CBA, was

artificial and unhelpful, because "successor" is not a

monolithic concept.

The question whether Howard Johnson is a "successor"

is simply not meaningful in the abstract. Howard

Johnson is of course a successor employer in the sense

that it succeeded to operation of a restaurant and

motor lodge formerly operated by the Grissoms. But

the real question in each of these "successorship"

cases is, on the particular facts, what are the legal

obligations of the new employer to the employees of the

former owner or their representative? The answer to

this inquiry requires analysis of the interests of the

new employer and the employees and of the policies of

the labor laws in light of the facts of each case and the

particular legal obligation which is at issue, whether it

be the duty to recognize and bargain with the union,

the duty to remedy unfair labor practices, the duty to

arbitrate, etc. There is, and can be, no single definition

34

of "successor" which is applicable in every legal context.

A new employer, in other words, may be a successor

for some purposes and not for others.

Howard Johnson, 417 U.S. at 262 n.9 (emphasis added). In

my view, this passage, along with Burns's admonition that

its decision "turns to a great extent on the precise facts

involved here," 406 U.S. at 274, serves as a clear warning

to lower courts not to read these opinions as providing

expansive rules about successors in general; instead, the

rules of these cases should always be understood in the

context of the facts of the particular case. The majority

appears to recognize this point when it quotes from the

above passage and states that "labeling AmeriSteel a

`successor employer' to Brocker Rebar does little to help

resolve the issue in this case." Maj. Op. at 7. But the

majority then ignores its own direction when it interprets

Burns as making a general pronouncement that successors

are never bound by the substantive terms of their

predecessors' CBAs, thus treating all successorship

situations as legally identical.

I think the best reconciliation of the Wiley-Burns-Howard

Johnson trilogy is that the cases set out a"sliding scale" for

what types of burdens can be imposed on what types of

successors. That is, the successorship relationships in

these three cases were very different, and the burdens

imposed on the successors varied with the corresponding

strength of the successor relationship, thus providing an

outline for deciding future cases. In Burns, there was a very

weak relationship of succession between the corporations--

as the Court noted, "there was no merger or sale of assets,

and there were no dealings whatsoever between Wackenhut

[the predecessor] and Burns [the successor]," Burns, 406

U.S. at 286; the successor merely took over the security job

that the predecessor had performed and hired a portion of

guards who had been employed by the predecessor. In a

situation with such a weak succession relationship, the

Court held that the successor corporation only had the

duty to bargain with the union representing the employees,

and was not bound by the substantive terms of the

predecessor's CBA.

35

In Wiley, there was a very strong relationship of

succession between the corporations--the predecessor

merged into the successor--so the Court held that the

successor was bound by the arbitration provision of the

predecessor's CBA, and, as the majority recognizes,

implicitly recognized that the successor corporation could

be bound by the substantive terms of the predecessor's

CBA as well (if the arbitrator were to so decide). The

relationship of succession in Howard Johnson was not as

strong as in Wiley--while there was a sale of assets by the

predecessor to the successor, there was not nearly as much

continuity of business operations as there was in Wiley (or

here)--so the Court held that the successor was not bound

to arbitrate under the predecessor's CBA.2

_________________________________________________________________

2. This approach to interpreting the trilogy has the added benefit of

clarifying a cryptic piece of dicta on the successorship issue in Fall

River

Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987). Fall River

addressed the question whether Burns's holding that a successor

corporation has a duty to bargain with the union that represents the

predecessor's employees extended to a situation in which the union had

been certified by the employees long before the transition in ownership.

In discussing the background of the successorship doctrine, the Court

said the following about Burns:

We observed in Burns that, although the successor has an

obligation to bargain with the union, it "is ordinarily free to set

initial terms on which it will hire the employees of a

predecessor,"

and it is not bound by the substantive provisions of the

predecessor's collective-bargaining agreement.

Id. at 40 (citations omitted).

The first thing to note about this passage is that it clearly plays no

part in Fall River's holding; it is simply a description of Burns

contained

in a general discussion of the development of successorship law, so it

must be understood in that context. Although the majority contends that

the statement it relies on from Fall River is only "arguably" dicta, Maj.

Op. at 16, n.5, the majority fails to explain how this statement from Fall

River was necessary to the decision in that case and therefore fails to

offer any argument that it is not dicta.

Some courts have interpreted this passage as standing for the

proposition that a successor may never be held bound to the substantive

terms of a predecessor's CBAs unless the successor consents or is the

alter ego of the predecessor, see, e.g., Southward v. South Cent. Ready

36

The question before us, then, is which type of successor,

Wiley, Burns, or Howard Johnson , is AmeriSteel most like?

As I argued in Part I, I believe that AmeriSteel is much

more like a Wiley successor than a Howard Johnson

successor. In other words, in my view there is sufficient

"substantial continuity of identity in the business

enterprise," between Brocker Rebar and AmeriSteel to

justify holding that AmeriSteel is bound to the arbitration

provision (and possibly to the substantive provisions) of

Brocker Rebar's CBA with Local 430. Howard Johnson, 417

U.S. at 259 (quoting Wiley, 376 U.S. at 551).

Unfortunately, we derive no assistance from our own

jurisprudence in resolving this dispute. The cases from

within this circuit that interpret the Supreme Court case

law can best be described as "dueling dicta": as I describe

in the margin, no Third Circuit case has issued a square

holding on this issue, although several have espoused one

view or the other in passing.3

_________________________________________________________________

Mix Supply Corp., 7 F.3d 487, 493 (6th Cir. 1993), and in fact the

majority cites to this passage as support for its view. See Maj. Op. at

15-16. I think it preferable to read the passage as making an observation

about Burns-type successors particularly (i.e., these types of successors

are not bound to the substantive terms of their predecessors' CBAs),

rather than a point about all successors generally, because such a

reading more closely fits with the carefully circumscribed reasoning and

overall approach of the Wiley-Burns-Howard Johnson trilogy. Given that

the Court was so careful to limit the holdings of each case in the trilogy

to "the precise facts involved here," Howard Johnson, 417 U.S. at 256

(quoting Burns, 406 U.S. at 274), it would seem incongruous to read Fall

River as effecting, via dicta, an expansion of the holding of one of the

trilogy beyond its "precise facts" into a general rule that covers all

successors in the abstract--despite Howard Johnson's clear admonition

that the concept of "a `successor' is simply not meaningful in the

abstract." Id. at 262 n.9. Interpreting Fall River as effecting such an

expansion would do violence to the principles and approach that

underlie the Wiley-Burns-Howard Johnson trilogy.

3. Compare Shaffer v. Mitchell Transp., Inc. , 635 F.2d 261, 266 (3d Cir.

1980) ("The successorship doctrine simply allows the court to imply

certain contractual duties from the predecessor's collective bargaining

agreement and impose them on the successor."), Local Union No. 249 v.

Bill's Trucking, Inc., 493 F.2d 956, 960 (3d Cir. 1974) ("Analysis of the

37

I thus agree with the majority's conclusion that no

previous Third Circuit case controls our decision in this

case, see Maj. Op. at 17, and that our decision must be

based on an in-depth interpretation of the Supreme Court

trilogy rather on an earlier panel's off-the-cuff musing on

this issue. And because our cases are contradictory on the

issue of a successor's liabilities on a predecessor's CBA, I

cannot agree with the majority that its decision"flows

logically from our existing Circuit precedent." Maj. Op. at

17. The case law cuts both ways, so a decision on this

issue must stand solely on the substance of the analysis of

the Wiley-Burns-Howard Johnson trilogy.

The case law from other courts of appeals also cuts in

both directions, likewise noted in the margin.4 None of the

_________________________________________________________________

Burns opinion convinces us, however, that its significance is largely

limited to the particular facts of that case. . . . That there is no

absolute

bar to the enforcement of labor agreements against`successor' employers

in section 301 actions, such as this, is amply illustrated by the decision

in John Wiley and Sons, Inc. v. Livingston."), and Teamsters Local Union

No. 430 v. Cement Express, Inc., 841 F.2d 66, 69 (3d Cir. 1988) ("Burns

did not deal with the question of when successorship doctrine may bind

a transferee of assets to the procedural duty to submit to arbitration the

question of whether the successor has somehow assumed any of the

obligations of the old bargaining agreement."), with Stardyne, Inc. v.

NLRB, 41 F.3d 141, 145 n.3 (3d Cir. 1994) (stating that a "successor [is]

not bound by its predecessor's collective bargaining agreement"), NLRB v.

Rockwood Energy and Mineral Corp., 942 F.2d 169, 174 (3d Cir. 1991)

("[A] successor is not bound by the substantive terms of its predecessor's

labor agreement."), and United Steelworkers of Am. v. New Jersey Zinc

Co., 828 F.2d 1001, 1010 (3d Cir. 1987) ("[A] successor employer is not

automatically required to adopt its predecessor's collectively bargained

agreements, see NLRB v. Burns.").

4. Compare Stotter Div. of Graduate Plastics Co. v. District 65, 991 F.2d

997, 1001 (2nd Cir. 1993) (holding that a successor corporation had a

duty to arbitrate the extent of its obligations under its predecessor's

CBA

because there was substantial continuity in the business enterprise),

and Boeing Co. v. Int'l Ass'n of Machinists and Aerospace Workers, 504

F.2d 307, 314-16 (5th Cir. 1974) (stating that "[w]e are confident,

however, that even at the most Burns has not overruled the principles of

Wiley," which give broad protection to employees "against sudden

changes in the employment relationship" by enforcing against successors

38

cases from other circuits that the majority cites in support

of its decision engages in the detailed, in-depth analysis of

the troubled trilogy that this case calls for. Additionally,

none of the cases from other Circuits recognizes, as the

majority does, that Wiley's holding necessarily means that,

_________________________________________________________________

the duty to arbitrate under a predecessor's CBA), with Southward v.

South Cent. Ready Mix Supply Corp., 7 F.3d 487, 493 (6th Cir. 1993)

(stating that Burns and Fall River support the view that a successor is

not bound to the substantive terms of its predecessor's CBA).

Although the majority seeks to distinguish Stotter by the fact that the

successor employer "entered into an agreement with the Union which

adopted (with immaterial exceptions) the provisions of the [CBA]," Maj.

Op. at 19 n.8, it is the prior CBA (coupled with successorship status),

not the new CBA, that informs the ratio decidendi:

[The successor employer] asserts that it could not be made a party

to the arbitration because it was not a party to the contract with

the

Union until May 29, 1990. . . . This argument essentially merges

with the broader question whether the arbitrator correctly

determined that GPC was a "successor" to Stotter.

In Wiley, the Supreme Court held that the surviving corporation

of a merger was obliged to arbitrate disputed issues under a

collective bargaining agreement between the merged (and no longer

existing) corporation and the union that represented the merged

corporation's employees, even though the surviving corporation had

not signed the contract and the contract did not contain an express

provision binding successors.

Stotter, 991 F.2d at 1001. Stotter then undertook an extensive

"substantial continuity of identity in the business enterprise" analysis,

and based its decision on its finding that "such continuity clearly

exists"

between the predecessor and the successor. See id.; see also Chartier v.

3205 Grand Concourse Corp., 100 F. Supp. 2d 210, 213 (S.D.N.Y. 2000)

("[T]he Supreme Court has made it clear that one who succeeds to the

business of an employer that was a party to a CBA, in appropriate

circumstances, may be held to have succeeded also to its obligation to

arbitrate under a CBA irrespective of any intention to do so.").

The majority also argues that Boeing is"of limited utility" because it

predates Fall River. Maj. Op. at 19, n.8. As I argue supra note 2, the

language from Fall River that the majority relies on is not only dicta,

but

ambiguous dicta. Therefore, in this case I believe that it is Fall River

that

is of limited utility.

39

in the right circumstances, some substantive terms of a

predecessor's CBA may be imposed on an unconsenting,

non-alter-ego successor corporation. I add only that,

whatever the viability of the preceding proposition, this case

involves only arbitrating the applicability of the CBA, and in

the thirty-seven years since Wiley, one area of doctrine that

has grown stronger in that period is the Supreme Court's

recognition of the importance of arbitration in a number of

fields, including labor.

IV.

It is manifest from my dispute with the majority that, in

its current state, the federal common law on this issue--in

particular the Wiley-Burns-Howard Johnson trilogy--does

not provide a clear answer in certain cases. If Wiley has

been implicitly overturned by later Supreme Court cases,

the Court should say so; but if, as I believe, it still plays a

viable role in protecting the rights of "those employees who

are in fact retained in `[t]he transition from one corporate

organization to another' from sudden changes in the terms

and conditions of their employment," Howard Johnson, 417

U.S. at 264 (quoting Wiley, 376 U.S. at 549), the Court

should reaffirm that fact. I hope that the Supreme Court

will clarify the law in this area. In the meantime, I believe

that the better interpretation of Supreme Court precedent is

that the rule of Wiley is still in force and that rule should

be applied to the case at bar to enforce the arbitration

provision of the CBA against AmeriSteel. Indeed, if Wiley

has continuing viability, its rule would apply here if it

applied anywhere. I would reverse the judgment of the

District Court and remand with directions to order this

matter to proceed to arbitration. For the foregoing reasons,

I respectfully dissent.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

for the Third Circuit

40