DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

Agency decision

Ask Donna

What actually matters in this document.

Text

MV Transportation and Gerald King, Petitioner and

Amalgamated Transit Union, Local 416, Case

33–RD–788

July 17, 2002

DECISION ON REVIEW AND ORDER

BY CHAIRMAN HURTGEN, AND M EMBERS LIEBMAN,

COWEN, AND BART LETT

Cases arising under the National Labor Relations Act

often require the Board to engage in sometimes delicate

but almost always difficult balancing of competing statu

tory policies. This case presents another such example.

The case involves an employee petition to decertify an

incumbent union following the acquisition of the com

pany by a successor employer. The issue is whether the

employees of the acquired company should be allowed

the option to exercise their statutory rights and vote out

the incumbent union, or whether they should be barred

from doing so for some period of time until the incum

bent union has had an opportunity to negotiate a collec

tive-bargaining agreement with the new employer. The

competing statutory policies involved in addressing this

issue are protecting employee freedom of choice on the

one hand, and promoting stability of bargaining relationships on the other.

The issue is not a new one. For decades, with one

brief and unsuccessful deviation, the Board, with court

approval, balanced the competing interests involved in

favor of protecting employee freedom of choice and held

that employees retained their statutory right to vote fol

lowing a change of employers. In 1999, however, in St.

Elizabeth Manor,1 a divided Board abruptly—without

prompting by any amendment to the statute or adverse

court decision, and without inviting the views of the la

bor-management community—reversed course and upset

this balance in favor of maintaining stability of bargain

ing relationships at the expense of employee freedom of

choice. The Board majority justified this reversal on the

ground that the Board’s existing policy had not been ap

plied in certain other circumstances, which the majority

viewed as analogous.

As fully explained in our opinion today, based on our

consideration of the record, including the briefs of the

Union and amici curiae, we find that the majority’s rea

soning in St. Elizabeth Manor was faulty and, in any

event, plainly insufficient to warrant such an abrupt de

parture from longstanding Board and court precedent.

Accordingly, we overrule St. Elizabeth Manor and return

to the previously well-established doctrine that an in

cumbent union in a successorship situation is entitled to

329 NLRB 341.

337 NLRB No. 129

770

—and only to—a rebuttable presumption of continuing

majority status, which will not serve as a bar to an oth

erwise valid decertification, rival union, or employer

petition, or other valid challenge to the union’s majority

status.

I . FACTS

The Employer assumed the operations of Door to

Door, Inc. on July 1, 2001.2 Prior to that date, however,

the Employer3 recognized the Union, which was the bargaining representative of the Door to Door employees, as

the representative of its employees.

Accordingly,

following the Employer’s assumption of operations, the

parties met for bargaining on August 29 and 30. On Oc

tober 10, before the parties had held any additional nego

tiation sessions, the Petitioner filed the decertification

petition.

On October 26, 2001, the Regional Director for Re

gion 14 administratively dismissed the decertification

petition pursuant to the successor bar doctrine enunciated

in St. Elizabeth Manor, Inc., 329 NLRB 341 (1999). The

Petitioner subsequently filed a timely request for review

of the Regional Director’s action. On February 8, 2002,

the Board granted the request for review to consider the

propriety of the application of the successor bar rule, and

the principles underlying its creation. Thereafter, the

Union filed a timely brief on review. In addition, amicus

curiae briefs were submitted by the AFL–CIO and Outrigger Hotels and Resorts.

II . ANALYSIS

A discussion of the evolution of Board precedent in the

successor employer context necessarily begins with the

Supreme Court’s decision in NLRB v. Burns Interna

tional Security Services, Inc., 406 U.S. 272 (1972). In

that case, the Supreme Court approved the Board’s determination that a “successor employer”—an employer

that 1) assumes the operations of another employer,

maintaining substantial continuity with the predecessor’s

operations, and 2) hires a majority of its employee com

plement from among the predecessor’s employees—has

an obligation to recognize and bargain with the union

that was recently certified as the bargaining representa

tive of the predecessor’s employees.4 At the same time,

however, the Court rejected the Board’s conclusion that

All dates are in 2001, unless otherwise indicated.

No party challenged the Regional Director’s implicit finding that

the Employer is a successor employer within the meaning of NLRB v.

Burns Security Services, 406 U.S. 272 (1972).

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

(1987), the Supreme Court reaffirmed its holding in Burns and specifi

cally indicated that its principles were not limited to situations in which

the incumbent union was recently certified as the employees’ bargain

ing representative.

771

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

the successor employer is obligated to adopt the terms of

the collective-bargaining agreement between the prede

cessor and the Union. Id. at 291.

The Board subsequently delineated the effects of the

Burns decision on the rights and obligations of the suc

cessor employer, its employees, and the union represent

ing the predecessor’s/successor’s employees. In Southern Moldings, 219 NLRB 119 (1975), the Board consid

ered the effect of a successorship on the processing of a

decertification petition. Noting that a successor em

ployer “in effect stands in the shoes of the predecessor

vis -à-vis the [u]nion,” the Board found that the Union in

a successorship situation is not entitled to greater rights

with the successor than it had with the predecessor. Ac

cordingly, the Board reasoned that since a union in a

bargaining relationship with a predecessor employer—

assuming the expiration of any certification year and the

absence of a collective-bargaining agreement—is entitled

only to a rebuttable presumption of majority status, a

union in a successor employer situation similarly will be

entitled only to a rebuttable presumption of majority

support. Id. at 119–120. Applying that principle to the

facts of the case, the Board concluded that the union’s

rebuttable presumption of majority status would not op

erate as a bar to a timely filed petition raising a question

concerning representation.5

The Board in Southern Moldings additionally rejected

the union’s contention that the successor employer’s vol

untary recognition of the union gave rise to a recognition

bar6 that precluded the processing of the decertification

petition. In that regard, the Board held that the recogni

tion bar rule is applicable only in an initial organizing

situation, and does not extend to the successor employer

context. Id. at 120.

The Board thereafter adhered to and expounded upon

the principles set forth in Southern Moldings for nearly a

quarter of a century, with a single exception. In Landmark International Trucks, Inc., 257 NLRB 1375 (1981),

The Board’s decision in Southern Moldings was by no means the

first time t he Board had held that there is only a rebuttable presumption

of continued majority status in a successorship situation. The Board

had so held in several cases preceding the Supreme Court’s decision in

Burns. See, e.g., Downtown Bakery Corp., 139 NLRB 1352, 1355

(1962), enfd. in part 330 F.2d 921 (6th Cir. 1964).

In Keller Plastics Eastern, Inc., 157 NLRB 583 (1966), an unfair

labor practice case, the Board held that an employer’s lawful voluntary

recognition of a union based on a showing of majority support entitles

the union to a reasonable period of time for bargaining without chal

lenge to its continued majority status. Thereafter, in Sound Contrac

tors, 162 NLRB 364 (1966), the Board extended its holding in Keller to

representation cases, such that an employer’s lawful voluntary recogni

tion of a majority union will serve as a bar to petitions challenging the

union’s representational status for a reasonable period of time follow

ing the recognition.

an unfair labor practice case, the Board inexplicably retreated from its holding in Southern Moldings. There,

the Board determined that, following the successor em

ployer’s voluntary recognition of the incumbent union,

the employer could not lawfully withdraw recognition

without first affording the Union a reasonable period of

time for bargaining. As support for its application of

voluntary recognition principles in the successor context,

the Board simply remarked that it could “discern no

principle that would support distinguishing a successor

employer’s bargaining obligation based on voluntary

recognition of a majority union from any other em

ployer’s duty to bargain for a reasonable period.” Id. at

1375 fn. 4.

On review, the Sixth Circuit vacated the decision of

the Board, stating that “there is no reason to treat a

change in ownership of the employer as the equivalent of

a certification or voluntary recognition of a union follow

ing an organization drive.” Landmark International

Trucks, v. NLRB, 699 F.2d 815, 818 (6th Cir. 1983).7

The court reasoned that whereas the employees in a

situation involving voluntary recognition or certification

need an opportunity to assess the union’s effectiveness in

an environment free from any attempts to replace, decer

tify, or otherwise alter the employer-union relationship,

the employees in a successor situation have already had

the opportunity to gauge the union’s effectiveness as a

result of their long-standing relationship. Id.

Responding to the criticisms of the Sixth Circuit, the

Board in a subsequent unfair labor practice case overruled its earlier decision in Landmark , and reiterated and

specifically adopted the reasoning of the Sixth Circuit in

that case. See Harley-Davidson Transportation Co., 273

NLRB 1531 (1985). Accordingly, reaffirming the prem

ise that a union that has been certified for a year or more

enjoys only a rebuttable presumption of majority status,

the Board in Harley-Davidson found that a successor

employer lawfully withdrew recognition from the recog

nized incumbent union based upon evidence that the em

ployees no longer supported the union. Id. at 1531–

1532.

The Supreme Court has endorsed the Board’s position

in Harley-Davidson. In Fall River Dyeing & Finishing

Corp. v. NLRB, 482 U.S. 27 (1987), the Court was called

upon to clarify and define the successorship principles

under the Act. In discussing the union’s presumption of

majority status and the employer’s countervailing right to

The court referenced the absence of precedent supporting the

Board’s decision, deeming inapposite the cases on which the Board

relied. The court found that such cases involved instances of “truly

voluntary recognition during an organizing campaign,” as contrasted

with recognition required by law in successor employer situations.

MV TRANSPORTATION

arrange its business, the Court, citing Harley-Davidson,

said that a successor employer could challenge the un

ion’s majority status “at any time.” 482 U.S. at 41 fn. 8.

Following Harley-Davidson, the principle that the in

cumbent union in a successor employer situation is enti

tled to no greater rights than it otherwise would have

with respect to the predecessor, i.e., that the union

merely is entitled to a rebuttable presumption of continu

ing majority status following the expiration of its certifi

cation year, remained undisturbed for more than 14 addi

tional years. In St. Elizabeth Manor, Inc., 329 NLRB

341 (1999), however, the Board reversed course and

changed decades of precedent.

In St. Elizabeth Manor, the Board majority overruled

Southern Moldings and announced the creation of a

“successor bar,” pursuant to which a successor employer,

by operation of law, incurs an obligation to bargain with

the incumbent union for a reasonable period of time, dur

ing which the union’s majority status is immune to chal

lenge through a decertification effort, an employer peti

tion, or a rival union petition.8 The Board majority, os

tensibly drawing from recognition bar principles, as

serted that there were similarities between successor and

initial recognition situations: In both situations, the em

ployer and union are “embarking on a new relationship,”

which generally poses greater challenges than bargaining

between parties to an established relationship;9 the parties in both situations additionally are undergoing a

“stressful transitional period,” during which the employ

ees may fear that their support for (and employer opposi

tion to) the union could jeopardize their job security or

result in less favorable working conditions, leading ulti

mately to employee disaffection for the union. Id. at

343. The Board majority thus concluded that the union

in a successor situation should be afforded the same irre

buttable presumption of majority status for a reasonable

period of time as that provided to a union following vol

untary recognition by an employer.

Then-Member Hurtgen and former Memb er Brame

dissented. Emphasizing the freedom of choice granted

employees by Section 7 of the Act, they rejected the

The Board in St. Elizabeth Manor indicated that the successor em

ployer’s obligation to recognize the union, and the concomitant bar to

any challenge to the union’s majority status, commences upon the

“occurrence of two events: (1) a demand for recognition or bargaining

by the union; and (2) the employment by the successor employer of a

‘substantial and representative complement’ of employees, a majority

of whom were employed by the predecessor.” Id. at 344 fn. 8.

The Board majo rity acknowledged that the relationship between

the union and the employees was a continuing one—such that the em

ployees would have had the opportunity to assess the union’s effective

ness in representing them—but stressed that the employees would not

have had the opportunity to assess the union’s effectiveness with regard

to the new employer.

772

adoption of a successor bar as an improper incursion on

the employees’ freedom to select or reject a bargaining

representative. Contending that the majority opinion

served to “protect the incumbent [union] from the desires

of those individuals who have firsthand knowledge of,

and experience with, the union’s ability, attentiveness,

and performance,” the dissenters maintained that

“[c]ollective bargaining. . . should flow from employee

choice and not drive it.” St. Elizabeth Manor, 329

NLRB at 349 (dissenting opinion). The dissenters addi

tionally drew upon the prior decisions of the Board in

Southern Moldings and Harley-Davidson and the opinion

of the Sixth Circuit in Landmark , noting that the courts

had not challenged the soundness of the principles articu

lated in those cases. Instead, the dissenters observed, the

Supreme Court and various courts of appeal had cited

with approval the Board’s decision in HarleyDavidson.10 See id. at 348.

After careful consideration, we now conclude, in ac

cord with the dissenting opinion in St. Elizabeth Manor,

that St. Elizabeth Manor represented an unwarranted

departure from well-established Board precedent. Ac

cordingly, we overrule St. Elizabeth Manor and return to

the sound principles articulated in Southern Moldings,

which, we conclude, more appropriately and effectively

serve the purposes of the Act.

It is well established that two of the fundamental pur

poses of the Act are (1) the protection and promotion of

employee freedom of choice—choice with respect to the

initial decision to engage in or refrain from collective

bargaining, and choice regarding the selection of a bargaining representative; and (2) the preservation of the

stability of bargaining relationships. See Stanley Spencer

v. NLRB, 712 F.2d 539, 566 (D.C. Cir. 1983). The first

of these is explicitly set forth in Section 7 of the Act.

The second is a matter of policy and operates with re

spect to those situations where employees have chosen a

bargaining relationship. When these two objectives con

flict, it is the Board’s obligation to strike an appropriate

balance between them. NLRB v. Circle A & W Products

Co., 647 F.2d 924 (9th Cir. 1981). See, e.g., General

Cable Corp., 139 NLRB 1123 (1962)(determining that a

3-year contract bar rule represented the appropriate bal

ance between the competing concerns); Deluxe Metal

Furniture Co., 121 NLRB 995 (1958)(modifying contract-bar policies to “achiev[e] a finer balance between”

the objectives of fostering stability of labor relations and

ensuring employee freedom of choice).

See, e.g., Fall River Dyeing Corp. v. NLRB, 482 U.S 27, 41 fn. 8

(1987); NLRB v. Williams Enterprises, 50 F.3d 1280, 1288 (4th Cir.

1995); Briggs Plumbin gware, Inc. v. NLRB, 877 F.2d 1282, 1288 (6th

Cir. 1989); Textron, Inc. v. NLRB, 965 F.2d 141, 148 (7th Cir. 1992).

773

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

We conclude that in a successor employer context, the

position articulated by the Board in Southern Moldings

represents the appropriate balance between employee

freedom of choice and the maintenance of stability in

bargaining relationships. Although the Board majority in

St. Elizabeth Manor purported to strike a balance between these two objectives, we find that the successor

bar rule, by providing the union with an irrebuttable pre

sumption of majority status and denying the employees

the opportunity to change or reject their bargaining rep

resentative for a “reasonable period of time,” promotes

the stability of bargaining relationships to the exclusion

of the employees’ Section 7 rights to choose their bargaining representative. Hill Park Health Care Center,

334 NLRB 328, 331 at fn. 7 (dissenting opinion of

Chairman Hurtgen). At a minimum, the successor bar

prohibits the employees’ exercise of their right to select a

bargaining representative for a “reasonable period of

time” as defined by the Board in a particular case. It is

possible , however, that the successor bar could preclude

the employees’ exercise of their Section 7 rights for as

long as several years. For example, a successor employer

could engage in bargaining with the incumbent union

and, prior to the expiration of a “reasonable period of

time,” reach agreement with the union on a new collec

tive-bargaining agreement, which then would serve as a

bar to a representation petition for the duration of the

contract, up to a period of 3 years. Moreover, the incur

sion on the employees’ freedom of choice could be even

more severe (up to 6 years) if the Union and the prede

cessor employer were parties to a collective-bargaining

agreement that served to bar any employee efforts to

remove or replace the Union prior to the successor’s as

sumption of operations.11

In contrast, the rule developed in Southern Moldings

gives proper effect to employee freedom of choice guar

anteed by Section 7 of the Act. Pursuant to Southern

Moldings, an incumbent union in a successor employer

situation is entitled only to a rebuttable presumption of

continuing majority status, which will not operate to bar

an otherwise valid decertification, rival union, or em

ployer petition. Accordingly, the employees, “who have

firsthand knowledge of, and experience with, the union’s

ability, attentiveness and performance,” properly can

determine whether the incumbent union is adequately

representing their interests during the period of transi

tion, or whether another representative or the employees

themselves might be more effective in dealing with their

Thus, we reject as a significant understatement our dissenting col

league’s assertion that the successor bar merely places a temporary

restraint on the employees’ exercise of their Sec. 7 rights.

prospective employer.12 See St. Elizabeth Manor, 329

NLRB at 349 (dissenting opinion). If the employees

determine that the union is not serving their needs, they

can file a decertification petition or attempt to secure

representation by another union. Alternatively, if the

employees feel that they have had an insufficient period

of time to assess the effectiveness of the Union with re

spect to the new successor employer, they can simply

refrain from filing a decertification petition or supporting

a rival union. In either case, it is significant that, in con

trast to a situation in which the successor bar rule is ap

plied, the decision is left to the employees.

At the same time that the Southern Moldings rule preserves employee freedom to select a bargaining represen

tative, it additionally promotes the objective of maintain

ing stability in bargaining relationships, contrary to our

dissenting colleague’s assertions. Although our return to

the principles set forth in Southern Moldings has the ef

fect of removing the irrebuttable presumption of majority

status provided to the union under the successor bar rule,

it does not eliminate the bargaining obligation of the suc

cessor employer. As articulated by the Supreme Court in

Burns, supra, a successor employer becomes obligated to

bargain with the bargaining representative of its prede

cessor’s employees if (1) there is substantial continuity

Rather than relying on the employees’ own judgments, the Board

majority in St. Elizabeth Manor appeared to rely on a paternalistic

assumption that the employees in a successor employer situation need

the protection of an insulated period—free from the potential ill effects

associated with the alleged “stressful transition” to a new employer—to

make an informed decision regarding the effectiveness of their bargain

ing representative. See St. Elizabeth Manor, 329 NLRB at 343 (sug

gesting that, in the absence of an insulated period, employee anxiety

over job security and work conditions as a result of a change of em

ployers could alter the employees’ otherwise favorable attitudes toward

their bargaining representative). We believe such protectionism is

unwarranted. Employees are presumably mature individuals who are

capable of making rational decisions. See Midland National Life In

surance Co., 263 NLRB 127, 132 (1982) (stating, in the context of an

election campaign, that employees are “mature individuals who are

capable of recognizing campaign propaganda for what it is,” such that

the Board need not regulate the veracity of the parties’ campaign state

ments).

Additionally, apart from its questionable factual validity, that as

sumption fails to account for the possibility that the employees could

have made a decision to replace or remove their bargaining representa

tive prior to the change in employers. For example, it is entirely possi

ble that the employees could reach a decision to remove the union

while still employed by the predecessor employer, yet be prevented

from effectuating that decision as a result of an existing collectivebargaining agreement between the predecessor employer and the union.

Further, even after the change in employers, there may be other reasons

why employees would no longer want union representation, none of

which has to do with “stress,” “anxiety,” “uncertainty,” “dislocation,”

or “turmoil”. For example, employees may simply feel that they no

longer need a union in light of the change in the identity of their em

ployer, a change that employees may perceive as improving their overall employment circumstances.

MV TRANSPORTATION

between the predecessor employer’s and the successor

employer’s operations; and (2) the successor employer

hires a majority of its employees from among the prede

cessor’s employee complement. Furthermore, pursuant

to Southern Moldings, the successor employer’s obliga

tion to bargain with the incumbent union continues indefinitely, unless and until the employees exercise their

right to remove or replace the union by filing a decertifi

cation petition or supporting a rival union petition or,

alternatively, the employer rebuts the presumption of the

union’s continuing majority status.13 Accordingly, the

existing bargaining relationship is permitted to continue,

absent some evidence that the employees no longer support that relationship.14

Although the Southern Moldings policy to which we

return today does not completely immunize or protect the

bargaining relationship from disruption or uncertainty,

we conclude that it nevertheless serves to promote labor

stability, and that it does so without abrogating the Sec

tion 7 rights of the employees. Moreover, we believe

that the Southern Moldings standard properly recognizes

and accounts for an important distinction between the

successor employer situation and other situations in

which the employer embarks on a new bargaining rela

tionship with a union. Contrary to the St. Elizabeth

Manor majority’s suggestion that the successor employer

situation is analogous to the voluntary recognition situa

tion, we find, in accordance with the well-reasoned deci

sion of the Sixth Circuit in Landmark , supra, that the two

situations are not equivalent.

In [the case of a voluntary recognition following an or

ganizing drive] the employees must be given an oppor

tunity to determine the effectiveness of the union’s rep

resentation free of any attempts to decertify or otherwise change the relationship. However, where the un

ion has represented the employees for a year or more a

change in ownership of the employer does not disturb

the relationship between employees and the union.

While the relationship between employees and em13

A successor employer can rebut the presumption if it can demon

strate that (1) the union has in fact lost its majority status or (2) that the

employer possesses a good faith uncertainty as to the union’s continued

majority support. The employer may unilaterally withdraw recognition

from the union in the former situation, and may file an RM petition in

the latter situation. See Levitz, 333 NLRB 717 (2001). Members

Cowen and Bartlett were not on Levitz, and find it unnecessary in this

case to express an opinion regarding the analysis set forth in the

Board’s Levitz decision.

If a successor employer were to refuse to bargain with the union in

the absence of evidence that the union had lost its majority status, or

bargain in bad faith, the union could seek recourse with the Board

through the filing of an unfair labor practice charge.

774

ployer is a new one, the relationship between employ

ees and union is one of long standing.

Landmark , 699 F.2d at 818. Therefore, although the in

cumbent union “may not necessarily be familiar with the

new employer, its overall knowledge of the operations and

the specific facility may exceed that of the new owners.

Thus, it can build rapidly on its past experience in handling

workplace issues that particularly concern these unit em

ployees.” St. Elizabeth Manor, 329 NLRB at 349 (dissent

ing opinion). In light of these distinctions, it is reasonable to

maintain different standards that appropriately harmonize

the purposes and policies of the Act.

Our dissenting colleague agrees that protecting em

ployee free choice is a fundamental statutory policy and

therefore properly a Board concern. She also agrees that

a merger or acquisition may cause changes in employee

attitudes about continued representation by the incum

bent union. Finally, our dissenting colleague also agrees

that whether employees should be allowed the opportu

nity to rid themselves of an unwanted union following a

merger or acquisition requires balancing the policy of

protecting employee free choice against the competing

policy of maintaining stability of bargaining relationships. Unlike us, however, our colleague strikes the bal

ance against employee free choice in favor of stability of

bargaining relationships.

Our dissenting colleague premises her conclusion on

two essential propositions. First, she notes correctly that

the transition to a successor employer is potentially destabilizing.15 Second, and incorrectly, she posits that

permitting a challenge to the union’s continued majority

status adds to the instability. In reality, if a large per

centage (or majority) of the employees support a petition

to decertify or change the bargaining representative, the

situation has reached maximum instability, and to fail to

resolve the issue with a Board-conducted election simply

aggravates the instability further. Instability is, in fact,

preserved and increased rather than relieved. The dissent

seems to recognize this reality by the statement in footnote 16 that “[a]s a practical matter, however, it seems

unlikely that a successor employer would reach an

agreement with a union that lacked majority support:

there would rarely be an incentive to do so.” To what

purpose, then, do we require bargaining during the insu

lated period?16

While it is frequently disconcerting to employees, successorships

also save failing businesses and jobs and are then a cause for celebra

tion, not despair.

Contrary to our dissenting colleague, we are not suggesting that

collective bargaining “guarantees” that a contract will be reached. We

recognize that collective bargaining may, or may not, result in a contract. We simply observe that it is unlikely that a successor employer

775

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

Our dissenting colleague also correctly observes that

the incidence of successorship in our economy has sig

nificantly increased since Southern Moldings. We fail to

see how this macroeconomic phenomenon should re quire, in any given successorship, that a particular unit of

employees lose their right to choose to be represented or

not. The same economic forces that precipitate succes

sorship require employers to be more efficient, adaptable,

and expedient. Employees should not lose their right to

representation by reason of these dynamics; neither,

however, should they lose their right to change or elimi

nate a bargaining representative.

Contrary to the suggestion of the dissent, we do not

link “efficiency, adaptability and experience” with the

elimination of the union as representative. We simply

say that employees should not lose their freedom of

choice by reason of these qualities.

We acknowledge the possibility that a change in cor

porate ownership or other restructuring might engender

anxiety or stress among those affected by the change.

Our difficulty lies not with the recognition of that possi

bility but, rather, with the unsupported leap to the as

sumption that such anxiety would render the employees

incapable of making an informed decision regarding un

ion representation, or that it would cause them to “shun”

the union. Indeed, it is equally possible, if not more

plausible, that the employees—faced with an environ

ment of uncertainty and anxiety—would turn to, and

place a greater value on representation by, their bargain

ing representative.

As noted above, we recognize that a change of em

ployers can cause instability, and this in turn may cause

stress for the employees. However, the impact of such

instability on employees is uncertain. The impact may

be that the employees become stronger adherents of the

union; they may become weaker adherents or nonadherents of the union; or there may be no effect at all on

their union views. What is certain, however, is that, un

der the Act, these matters are to be decided by the em

ployees. Our colleague would take away that choice for

an undefined period of time. By contrast, in other contexts where economic changes cause stress (e.g., reces

sions or layoffs), no one suggests that the economic

changes and stress are reasons to postpone the exercise

of employee free choice. Contrary to the suggestion of

our colleague, we are not saying that “broader economic

developments should have no bearing” on Board rules.

We simply observe that the fundamental statutory policy

would reach agreement with a non-majority union, and there would be

no incentive to do so.

of employee free choice has paramount value, even in

times of economic change.

By creating a bar to employees’ exercise of their free

dom of choice and awarding the union an irrebuttable

presumption of majority status, our dissenting col

league’s position additionally results in an unwarranted

extension of the Supreme Court’s holdings in Burns and

Fall River, supra.17 The Burns principle, affirmed in Fall

River, affords stability in the context of a change of em

ployers. It does so by continuing the union’s representa

tive status and by the presumption that the union retains

majority support. However, the price of stability becomes too high if we say that the presumption cannot be

rebutted, i.e., that the employees cannot reject the union

if they so choose. Indeed, although the Supreme Court in

Burns and Fall River discussed the propriety of a con

tinuing presumption of majority status in light of the po

tential negative effects of a change in corporate ownership, the Court also specifically emphasized “the rightful

prerogative of owners independently to rearrange their

businesses,” as well as the successor’s right to withdraw

recognition from the Union at any time if it loses its ma

jority status. Fall River, supra at 40–41 (citations omit

ted).

Our dissenting colleague’s attempt to justify the exis

tence of an insulated period in a successorship situation

through reliance on other contexts in which the Board

has deemed appropriate the creation of an insulated pe

riod (during which the union’s majority status cannot be

challenged) is unavailing. None of those contexts is ap

plicable here. In an initial certification case, the employ

ees have recently exe rcised their Section 7 right to

choose a union. As the newly-elected representative, the

union needs time to learn the ropes and prove its worthi

ness. The same is true of a voluntary extension of lawful

recognition. In a case involving an unlawful withdrawal

of recognition, the insulated period is necessary to rem

edy unlawful employer conduct and to allow the union

time to get back on its feet. In a Section 8(a)(5) settle

ment case, the employer has promised to bargain in order

to remedy an alleged violation. It would be contrary to

the remedial aspect of the settlement to allow a hasty

withdrawal of recognition. By contrast, the union in the

instant situation has been the representative of employees

for a long time. The employer has committed no unfair

labor practices, and has not agreed to any remedial set

tlements.

Finally, we have emphasized throughout the principles

of industrial democracy and emp loyee free choice. Our

By contrast, the Southern Moldings policy to which we return

properly adheres to and reflects the Supreme Court’s mandate in those

cases.

776

MV TRANSPORTATION

colleague speaks of the “destabilizing effects of an elec

tion.” In response, we believe that a democracy, by its

nature, undergoes the turmoil of frequent elections. But

that is a price that we gratefully pay for a free society.

Incumbent public officials are subject to elections at pe

riodic intervals. Incumbent unions are not. Thus, to al

low for free choice, we subject unions to challenge at

certain times when employees objectively indicate that

they no longer desire representation by the union.18 Our

colleague would take away that choice for an undefined

period of time.

For all the foregoing reasons, we reject our dissenting

colleague’s criticisms of the well-reasoned principles of

Southern Moldings.

Application of Southern Moldings principles

Having determined that the principles set forth in

Southern Moldings best effectuate the purposes and poli

cies of the Act, we turn now to the application of those

principles to the facts of the instant case. Several months

after the Employer’s assumption of the predecessor’s

operations, the Petitioner filed a decertification petition.

Relying on the successor bar doctrine established in St.

Elizabeth Manor, the Regional Director administratively

dismissed the petition, finding that the Employer and the

Union had not had a reasonable period of time to bargain

before the petition was filed. Since the Regional Direc

tor’s dismissal of the petition was based on the Board’s

decision in St. Elizabeth Manor, which we have overruled today, we will reverse the Regional Director’s ac

tion and remand the proceeding to him for processing of

the petition. In so doing, we note that the facts of this

case clearly illustrate the wisdom of the Southern Mold

ings principles. As the Petitioner contends in his request

for review, the employees felt that the incumbent union

was not effectively representing their interests with re

spect to their employment with the Employer.19 Whereas

the successor-bar rule would have negated the employ

ees’ ability to reject their bargaining representative, the

Southern Moldings policy permits the employees to ex

ercise their freedom of choice.

ORDER

The Regional Director’s administrative dismissal of

the decertification petition is reversed, and the case is

remanded to the Regional Director for further appropriate

action consistent with this decision.

Contrary to the dissent, this objective indication is more than a

drop in poll numbers.

Indeed, the Petitioner’s request for review recites a multitude of

complaints concerning the Union’s representation, including allegations

of preferential treatment of certain employees, inadequate communica

tion, and retaliation against employees who were opposed to the Union.

M EMBER LIEBMAN, dissenting.

Corporate mergers and acquisitions have proliferated

during the past quarter century. These transactions have

consequences for employees in the workplace. Under

current labor law successorship principles, employers

enjoy substantial flexibility to restructure their businesses

and transfer capital, unhampered by the rights and bene

fits union members may have won through collective

bargaining. Unions, in turn, must struggle to safeguard

employees’ gains, including their jobs, all of which may

be jeopardized. This case poses the question whether

during the throes of the corporate transition—with its

attendant uncertainties and dislocations—the union’s

representational status should be subject to challenge.

Resolving this question requires the Board to decide an

important question of labor policy: how best to balance

the National Labor Relations Act’s goals of workplace

stability and employee free choice, in the context of suc

cessor bargaining relationships. My colleagues today

resurrect the old doctrine of Southern Moldings, Inc., 219

NLRB 119 (1975), and overrule St. Elizabeth Manor,

Inc., 329 NLRB 341 (1999), a case in which the Board,

only 3 years ago, took an initial step in striking a balance

that fits today’s economy. By providing a limited period

of repose during which a question of representation may

not be raised, St. Elizabeth Manor preserves stability and

promotes collective bargaining, without sacrificing em

ployee free choice. I dissent from the Board’s abandon

ment of a framework that best accommodates the eco

nomic realities of the 21st Century.

I . THE CURRENT ECONOMIC CONTEXT OF

SUCCESSORSHIP LAW

“Regulatory agencies do not establish rules of conduct

to last forever; they are supposed, within the limits of the

law and of fair and prudent administration, to adapt their

rules and practices to the Nation’s needs in a volatile

changing economy. They are neither required nor supposed to regulate the present and the future within the

inflexible limits of yesterday.” American Trucking Assns.

v. Atchison T. & S.F. Ry. Co., 387 U.S. 397, 416 (1967).

The economy, and the workplace with it, have changed

radically in the past 25 years . Under Southern Moldings,

decided in 1975, a challenge to the incumbent union’s

majority status may be raised at any time, even immedi

ately upon the start of the successor business. But in

1975, mergers and acquisitions—business events that

typically create successorships—were, in a relative

sense, blips on the radar screen of economic activity.

Since then, our economy has experienced a many-fold

increase in merger and acquisition activity. The numbers

777

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

are illuminating.1 In 1975, merger and acquisition an

nouncements numbered 2,297. In the year 2000, there

were 9,566. The dollar value of this activity is even

more pronounced. In 1975, the total dollar value paid in

these transactions was $11.8 billion. In 2000, it was $1.3

trillion. In terms of dollar value as a percentage of gross

domestic product (GDP), mergers and acquisition activ

ity has gone from about 1% of GDP to a striking, nearly

14% level in 2000.

With the efficiencies that most consolidations are ex

pected to achieve, layoffs are a routine fact of merger

activity.2 Even for employees who survive the transac

tion, fear, anger, and insecurity will almost inevitably

arise. Whether employees are uncertain about their con

tinued prospects for employment or disturbed by the

clash of corporate cultures, their loyalties certainly are

strained. One pair of commentators has described the

effect of mergers on employees this way:

Mergers affect cultural patterns. . . . First, there is the

look-over-your-shoulder effect. Personnel try to figure

out where cuts will be made. Second, there is the win

ners-and-losers effect. One party to the deal almost al

ways wins, and the other, usually the acquired, almost

always loses as jobs in the new entity are allocated.

Third, and most important, there is the cultural isolation

effect. It occurs when survivors discover that the com

pany that they now work for is significantly different

from the one they worked for before.

Terrence E. Deal & Allan A. Kennedy, The New Cor

porate Cultures 121–122 (1999).

All of these effects are likely to destabilize relations

not only between both labor and management, but between a union and the workers it represents . The union,

after all, will have failed in sparing workers from

dislocation. Successorship law, as I will explain, directly

contributes to the union’s precarious position, a fact the

Supreme Court implicitly recognized in Fall River Dye

ing & Finishing v. NLRB, 482 U.S. 27 (1987).

Meanwhile, the merger craze shows little or no sign of

abating.3 Thus, “[a]t the end of the 1980s, corporations

were selling off divisions and companies and buying new

ones at a rapid rate” and “[w]hile the pace of mergers and

acquis itions slowed somewhat during the early 1990s, it

See Paul A. Pautler, Evidence on Mergers and Acquisitions, Fed

eral Trade Commission Bureau of Economics Working Paper 243, at

58, 60 (Table 1 & Figure 2) (Sept. 25, 2001) (available at

www.ftc.gov/be/econwork.htm). See Appendix A and Appendix B.

See, e.g., Peter Cappelli, The New Deal at Work 79–80 (1999).

See, e.g., Deal & Kennedy, supra, at 111; William C. Symonds &

Peter Coy, Corporate America Braces for the Shakeout, Business Week

(Oct. 15, 2001).

has accelerated since then.”4 These transactions may

benefit corporate executives handsomely, but for the rank

and file, they seriously upset settled expectations and

surely complicate, even frustrate, collective bargaining.5

One implication of these dramatic economic changes is

that old regulatory doctrines may no longer be appropri

ate. In contrast to the old Southern Moldings rule, the

contemporary St. Elizabeth Manor framework fits the

demands of changed circumstances. In an economy in

which rapid corporate transformation regularly brings

uncertainty, even turmoil, to the workplace, the rule of

St. Elizabeth Manor affords some measure of stability.

St. Elizabeth Manor strikes the right balance in newlycreated successor relationships, by creating an insulated

period during which a union’s majority support may not

be challenged. The decis ion calls for the parties to bargain for a reasonable period of time, free of the kind of

challenges that would undermine the bargaining relationship before it had any real chance to flourish. The major

ity’s approach, in contrast, unnecessarily ni trudes on

collective bargaining and destabilizes an already uncer

tain situation for employees, labor unions, and employ

ers. The timing is unfortunate. In a volatile economy

marked by mergers, acquisitions, and takeovers, the in

terest of stability should be given greater—not less—

weight in shaping national labor policy. I take issue,

then, with my colleagues’ apparent suggestion that

broader economic developments should have no bearing

on the rules the Board necessarily applies in individual

workplaces.

II . THE LEGAL CONTEXT OF THE ST. ELIZABETH MANOR

INSULATED PERIOD

St. Elizabeth Manor was a sound, logical outgrowth of

current successorship law, which seeks to reconcile the

sometimes competing interests of employers and em

ployees in the context of changes in corporate ownership.

As the Supreme Court observed in its first labor-law suc

cessorship decision, the “objectives of national labor

policy . . . require that the rightful prerogative of own

ers independently to rearrange their businesses . . . be

balanced by some protection to the employees from a

sudden change in the employment relationship.” John

Wiley & Sons v. Livingston, 376 U.S. 543, 549 (1964).

Cappelli, supra, at 79–80.

Compare Andrew Ross Sorkin, Those Sweet Trips to the Merger

Mall, New York Times (April 7, 2002), with N. R. Kleinfeld, The

Downsizing of America: In the Workplace, Musical Chairs; The Com

pany as Family, No More, New York Times (March 4, 1996). Al

though the question is debatable, some economists have argued that “an

important source of … gains [from corporate acquisitions] comes sim

ply from breaking long-term employment relationships, particularly

those which implicitly deferred compensation.” Cappelli, supra, at 79.

See Pautler, supra, at 7–8 (surveying economic literature).

MV TRANSPORTATION

See also Howard Johnson Co., v. Detroit Local Joint

Executive Board , 417 U.S. 249, 264 (1974) (discussing

balancing of interests in John Wiley). The Supreme

Court has recognized that a successorship case “requires

analysis of the interests of the new employer and the em

ployees 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. . . .” Howard Johnson Co., Inc., supra,

417 U.S. at 262 fn. 9. Within the broader framework

established by the Court, the Board must in turn develop

subsidiary rules that further the goals of the Act—and

that necessarily seek to reconcile competing interests.

NLRB v. Burns Services, 406 U.S. 272 (1972), sets out

the basic rules of successorship.6 Under Burns, the in

cumbent union that represented the predecessor’s em

ployees is the presumptive bargaining representative of

the successor’s employees, when the latter’s work force

comprises a majority of the predecessor’s former em

ployees and when there is substantial continuity between

the enterprises in the employing industry. If these crite

ria are satisfied, the incumbent union follows the em

ployees, as their bargaining representative, in the succes

sor workplace.

As a practical matter, however, Burns sharply limits

the authority and status of the employees’ bargaining

representative in crucial respects. The Burns Court

stressed that employers enjoy substantial flexibility to

restructure their businesses and that successor employers

are free to make substantial changes in their operation of

the enterprise. It decided that holding a new employer

bound to the substantive terms of the preexisting labor

contract might inhibit the free transfer of capital. Thus,

if there was formerly a governing bargaining agreement

with the predecessor, that contract no longer governs the

workplace in the future. It is abrogated, unless the suc

cessor chooses to assume its oblig ations.

Further, the incumbent union typically has no bargain

ing authority with respect to the initial terms and condi

tions of employment preferred by the successor employer

for its new workforce. Those working conditions may be

unilaterally implemented by the successor.7 Perhaps

most significantly, the incumbent union’s authority to

represent employees, as a threshold matter, is essentially

determined by the successor employer. Thus, the union’s

representative status depends virtually entirely on the

Rules for changes in ownership resulting from the mere transfer of

stock shares do not raise successorship issues. See TKB International

Corp ., 240 NLRB 1082, 1083, fn. 4 (1979).

Under Burns, the successor must consult with the incumbent union

about initial terms of employment only when it is “perfectly clear” that

it intends to retain the predecessor’s work force. E.g., Spruce Up

Corp., 209 NLRB 194 (1974).

778

vagaries of the successor’s hiring process and decisionmaking. It is no wonder, then, that employees may ask

whether union representation is worthwhile.8

In Fall River Dyeing & Finishing, supra, its most recent successorship decision, the Court focused on the

impact that corporate transactions have on employees

and their unions. While Fall River reaffirmed the propo

sition that employers are free to restructure their busi

nesses and hire a workforce unhampered by the prede

cessor’s collective bargaining agreement, the Court also

held that a successor’s obligation to bargain is not lim

ited to situations where the union has been recently certi

fied. In observations that bear directly on the issue posed

today, the Court underscored the difficult circumstances

facing the employees’ incumbent union:

During a transition between employers, a union is in a

peculiarly vulnerable position. It has no formal and es

tablished bargaining relationship with the new em

ployer, is uncertain about the new employer’s plans,

and cannot be sure if or when the new employer must

bargain with it. While being concerned with the future

of its members with the new employer, the union also

must protect whatever rights still exist for its members

under the collective-bargaining agreement with the

predecessor employer.

482 U.S. at 39 (footnote omitted).

At the same time, the Fall River Court observed, suc

cessorship also affects the way in which employees per

ceive their union and their rights under Section 7 of the

Act:

If the employees find themselves in a new enterprise

that substantially resembles the old, but without their

chosen bargaining representative, they may well feel

that their choice of a union is subject to the vagaries of

an enterprise’s transformation. This feeling is not con

ducive to industrial peace. In addition, after being

hired by a new company following a layoff from the

old, employees initially will be concerned primarily

with maintaining their new jobs. In fact, they might be

inclined to shun support for their former union, espe

cially if they believe that such support will jeopardize

their jobs with the successor or if they are inclined to

blame the union for their layoff and problems associ

ated with it.

482 U.S. at 39–40 (emphasis added; footnote omitted).

With these considerations in mind, the Court in Fall

River emphasized, as it had in Burns, the “interest of the

For an argument that successorship law itself makes unions less attractive to workers, see Wilson McLeod, Rekindling Labor Law Suc

cessorship in an Era of Decline, 11 Hofstra Labor L. J. 271, 276–286

(1994).

779

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

employees in continued representation by the union” and

reiterated that the “new employer has an obligation to

bargain with that union so long as the new employer is in

fact a successor of the old employer and the majority of

its employees were employed by its predecessor.” 482

U.S. at 41.9

III . THE RATIONALE OF ST. ELIZABETH MANOR

St. Elizabeth Manor created a framework for succes

sorship bargaining that gives substance to the notion of

continuity underlying both Burns and Fall River. When

an employer, exercising its freedom to select employees

of its lawful choosing, hires its workforce and becomes a

Burns successor, it must honor an incumbent union’s

request to bargain, and it must bargain in good faith for a

reasonable period of time.

This rule avoids the scenario posed, for exa mple, in

Hampton Lumber Mills-Washington, 334 NLRB 195

(2001), enfd. No. 01-1276 (D.C. Cir. May 17, 2002) (un

published judgment order), where a successor employer

began operations on November 4, received a petition

from employees repudiating the incumbent union on De

cember 8, declined to recognize the union that same day,

and filed a petition with the Board on December 9. The

number of bargaining sessions before the challenge to the

union’s incumbency was exactly zero. In a case like that,

the presumption of majority status flowing from Burns is

rendered entirely illusory, as is the notion, endorsed by

Fall River, that the presumption should facilitate the in

cumbent union’s development of a relationship with the

successor. Yet that is what the majority’s approach al

lows.

In contrast, St. Elizabeth Manor puts first things first.

The issue of successorship has been settled and meaning

ful bargaining should proceed. It leaves for another day

a re-testing of the incumbent union’s majority status,

while delaying that inquiry for only a “reasonable” time.

This frees the union from what the Supreme Court has

called “exigent pressure to produce hot-house results or

be turned out.” Brooks v. NLRB, 348 U.S. 96, 100

(1954) (approving bar to election for one year after certi

fication of union). At the same time, the employer -–who

must bargain in good faith for a reasonable time—is

freed of the temptation to avoid good faith bargaining in

the hope that, by delay, it can undermine the union’s

The majority contends that the Fall River Court “endorsed” the re

buttable nature of the Burns presumption by its citation to HarleyDavidson Co ., 273 NLRB 1531 (1985), in which the Board found that a

successor employer lawfully withdrew from bargaining based on a

good faith doubt of the union’s majority status. But, as the St. Eliza

beth Board explained (329 NLRB at 344, fn. 7), the Court’s reference

to the Harley-Davidson rebuttable presumption was simply a reflection

of Board law at the time of the Court’s decision.

support among employees. Id . See, e.g., Chelsea Indus

tries v. NLRB, 285 F.3d 1073, 1076 (D.C. Cir. 2002)

(citing Brooks in upholding Board’s certification-year

bar). Finally, as do other insulated periods adopted, the

rule of St. Elizabeth Manor allows the employer and the

incumbent union to bargain without the uncertainty and

disruption that might be caused by organizing cam

paigns, including the effort of a rival union, a potential

destabilizing factor. See, e.g., Deluxe Metal Furniture,

121 NLRB 995, 998–1001 (1958) (discussing contractbar rule). As the St. Elizabeth Manor Board explained,

the rationale for a successor bar—that employees should

have a reasonable opportunity to determine the effective

ness of the union’s representation—parallels the rationale

for the well-established insulated period following an

employer’s voluntary recognition of a union. 329 NLRB

at 342–343. See also Keller Plastics Eastern, Inc., 157

NLRB 583 (1966) (establishing recognition bar doctrine).

Of course, preserving industrial stability and promo t

ing collective bargaining are not the Board’s only con

cerns; so is protecting employee free choice. But St.

Elizabeth Manor does this, too. As to employees who do

not desire union representation—notwithstanding the

Burns presumption that the bargaining unit as a whole

supports the Union—they must wait temporarily before

they can invoke the Board’s election processes. Their

right of free choice is not denied, but merely delayed

pending a reasonable period for bargaining.10 This delay

may occur in every situation where the Board has, for

decades, created insulated periods. As the Fall River

Court observed, those rules are not based on judgments

about employees’ likely sentiments or their fitness to act

on them, but rather on a compelling policy interest, the

need to promote industrial peace, that comes into play.

482 U.S. at 38–39.

Fall River explains why, during a corporate transition,

unions are particularly vulnerable to employee dissatis10

That employees who oppose union representation may be required

to wait to express their views, as a means of furthering the Act’s other

policies, is neither unreasonable, nor unfair. See NLRB v. Gissel Pack

ing Co., 395 U.S. 575, 613 (1969) (upholding bargaining order based

on employer’s unfair labor practices). In the words of the Gissel Court:

There is . . . nothing permanent in a bargaining order. . . . [A]s we

pointed out long ago, in finding that a bargaining order involved no

“injustice to employees who may wish to substitute for the particular

union some other . . . arrangement,” a bargaining relationship “once

rightfully established must be permitted to exist and function for a rea

sonable period in which it can be given a fair chance to succeed,” after

which the “Board may . . . upon a proper showing, take steps in rec

ognition of changed situations which might make appropriate changed

bargaining relationships.”

395 U.S. at 613, quoting Frank Bros. Co. v. NLRB, 321 U.S. 702,

705–706 (1944).

780

MV TRANSPORTATION

faction and why employees simultaneously may feel par

ticular pressure to shun the Union. These effects, as we

have seen, are in significant part a result of successorship

law itself, which gives employers great flexibility and

which gives employees and unions comparatively little

security. The volatile nature of this transitional period

makes it appropriate, as a matter of policy, to establish a

period of repose with respect to changes in union repre

sentation. To say that employees must have free choice

in the selection of their representatives (or in their deci

sion to forgo representation) is not to say that an incum

bent union must be prepared to survive a confidence-vote

at all times—even when employees, for no fault of the

union’s, “might be inclined to shun support” in the words

of the Fall River Court.

An insulated period ensures that employees will be

free to decide on representation after the union has a fair

chance to prove itself in its dealings with a new em

ployer. It ensures, as well, that the union will not be re

quired to expend resources to defend its representational

status, as opposed to protecting the interests of employ

ees during the transition to a new employer. Obviously,

important employee interests are at stake, and the union’s

role—following, not before, successorship—may be cru

cial. As the John Wiley Court observed:

Employees, and the union which represents them, ordi

narily do not take part in negotiations leading to a

change in corporate ownership. The negotiations will

ordinarily not concern the wellbeing of the employees,

whose advantage or disadvantage, potentially great,

will inevitably be incidental to the main considerations.

376 U.S. at 549.

In turn, no one familiar with union-representation

campaigns—which employers often contest vigorously

(and sometimes unlawfully)— can doubt that they con

sume the resources of unions and employers, while dis

rupting ordinary workplace activities.11 As vital as elec

tions are to the Act, permitting challenges to a union’s

status even during the transition from one employer to

another, elevates employee free choice to the exclusion

of other statutory goals.

Finally, while this case involves a petition seeking a

decertification election, under the majority’s approach—

which extols the virtues of employee free choice—

successor employers would be permitted to unilaterally

withdraw recognition from unions even without an elec11

See, e.g., Commission on the Future of Labor-Management Rela

tions (Dunlop Commission), Final Report 40 (1994) (www.ilr.cornell.

edu/library/e_archive/gov_reports/dunlop). My colleagues do not give

sufficient weight to the destabilizing effects of an election, in which

employers may use entirely lawful means t o undermine a union’s sup

port —and thus generate instability in the workplace.

tion.12 Even if defended in terms of employee free

choice, the majority’s approach certainly coincides with

the interests of those employers who wish to rid themselves of unions unilaterally. Indeed, the majority’s per

spective is telling in linking the asserted need of succes

sor employers to be “more efficient, adaptable, and ex

pedient”—goals that are not, in fact, incompatible with

union representation—to the elimination of bargaining

representatives. While the rule of St. Elizabeth Manor

forecloses an election, it also prevents employers from

withdrawing recognition unilaterally, a not uncommon

event that often leads to litigation before the Board.

IV. THE MAJORITY’S APPROACH IN AN ERA OF RAPID

CORPORATE TRANSFORMATION

In short, St. Elizabeth Manor was sound policy, consis

tent with the Act, and fairly adapted to “needs in a vola

tile, changing economy.” American Trucking Assns.,

supra, at 416. It reflected an attempt by the Board to

carry out its responsibility “to adapt the Act to changing

patterns of industrial life.” NLRB v. J. Weingarten, Inc.,

420 U.S. 251, 266 (1975). The Board may, of course,

change its policies, but it must justify the change with a

“reasoned explanation.” Micro Pacific Dev., Inc. v.

NLRB, 178 F.3d 1325, 1336 (D.C. Cir. 1999). Here, in

one of its first undertakings (review was granted on Feb

ruary 8, 2002), the Board’s newly-constituted majority

reverses course needlessly and without institutional ex

perience under the previous rule.13 In less than 3 years—

Of course, the withdrawal of recognition would have to be consis

tent with the Board’s recent decision in Levitz, 333 NLRB 717 (2001),

requiring proof that the union has in fact lost majority status. I note,

however, that Chairman Hurtgen dissented in Levitz and that Members

Cowen and Bartlett expressly state no view on the merits of that deci

sion.

The majority asserts that the Southern Moldings principles actu

ally precede t he issuance of that case in 1975. But in D & F Super

Market, 208 NLRB 891, 892 (1974), which issued a year prior to

Southern Moldings, the Board stated that, under then-prevailing Board

law, a successor must bargain for a reasonable period of time free from

challenges to its majo rity under the doctrine of Keller Plastics Eastern,

Inc., 157 NLRB 583 (1966), citing Fed-Mart, 165 NLRB 202 (1967).

As the majority points out, however, other cases preceding Southern

Moldings permitted successors to show a good-faith doubt of the un

ion’s majority status, and seem to treat the presumption as rebuttable, at

least in an unfair labor practice context. See Southerland’s Tennessee

Co., 102 NLRB 1178 (1953). The uncertain status of the Board’s law

is illustrated by the classic treatise on the National Labor Relations Act,

The Developing Labor Law. It notes that until the issuance of HarleyDavidson, 273 NLRB 1531 (1985), which returned to the rule of Southern Moldings, the Board had “applied the contract -bar principle of

Keller Plastics Eastern , that following lawful recognition the parties

may be given a ‘reasonable’ time in which to conclude an agreement

undisturbed by challenges to the incumbent’s bargaining status,” citing

D & F Super Market and Fed-Mart, supra, cases from the 1960s and

early 1970s. American Bar Association, Section of Labor & Employ

ment Law, The Developing Labor Law 1144 (Patrick Hardin & John E.

781

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

and with no empirical evidence whatsoever that the deci

sion failed to further statutory policy interests—the ma

jority casts St. Elizabeth Manor aside for an older and, to

my eyes, far less appealing alternative. After all, admin

istrative agencies are not “supposed to regulate the present and the future within the inflexible limits of yester

day.” American Trucking Assns., supra, at 416.

One might ask in what respect St. Elizabeth Manor has

failed in practice. My colleagues supply no answer.

Rather, they assert simply that the decision is “paternalis

tic.” They focus on whether employees are “capable” of

making in formed decisions about union representation.

Obviously, employees are. But that is not the issue here.

The question, rather, is whether it is sound policy to reinstate a rule that permits representation questions to be

raised during corporate transitions, and so places further

strains on unsettled workplaces.

That rule had its origin in a very different time, before

the phenomenal growth of corporate takeovers beginning

in the 1980s.14 In today’s era of accelerating corporate

transformation, encouraging continuity in the workplace

serves important policy objectives. By providing a pe

riod of repose, St. Elizabeth shielded unions from prema

ture and perhaps unreliable confidence votes, prevented

unwarranted intrusions on collective bargaining, afforded

some protection for retained employees from sudden

changes in their employment relationship, and thereby

eased the transition from one corporate organization to

another. The majority, however, consistently ignores

business realities and the dislocations that they cause.

The majority also mistakenly subordinates the need for

stability to the goal of employee free choice, a step that

has no statutory justification, despite the majority’s im

plication to the contrary .15 While the majority purports

to take into account the need for stability, it is difficult to

Higgins eds., 4th ed. 2001). Cf. Paramount Paper Products Co ., 154

NLRB 1064 (1965).

As one student of merger and acquisition activity has written re

cently:

[M]arkets for corporate assets were remarkably active over the

last twenty years, with major merger waves occurring in the

1980s and 1990s . . . . This new 1990s wave took asset transfer

activity to levels not seen before.

Pautler, supra, at 55 (footnote omitted).

The majority acknowledges, but then seems to ignore, the admoni

tion of the Supreme Court in Auciello Iron Works, Inc. v. NLRB, 517

U.S. 781, 784 (1996), that the “object of the National Labor Relations

Act is industrial peace and stability, fostered by collective-bargaining

agreements providing for the orderly resolution of labor disputes between workers and employers.” Our task is to strike an appropriate

balance between stable labor management relations, the encouragement

of the practice of collective bargaining (Sec. 1 of our Act), and employ

ees’ freedom of choice in deciding whether they want to engage in

collective-bargaining and whom they wish to represent them. See

Stanley Spencer v. NLRB, 712 F.2d 539, 566 (D.C. Cir. 1984).

see how stability is furthered by permitting a challenge to

the union’s majority status shortly after the creation of

the new relationship—indeed, before bargaining has

even begun.

The majority contends that the rapid rise in mergers

and acquisitions, and the uncertainties created by such

activity, may cause changes in employee attitudes about

existing unionization sufficient to warrant quick elections

upon successorship. As I have pointed out, however,

changes in employee sentiment are very likely bound up

with the legal rules that make it difficult for unions to

protect employee interests in the context of successorship. Moreover, the Board’s law on representation ques

tions, which incorporates several insulated periods, is not

based on the premise that an election is warranted whenever it might reasonably be expected to produce a change

in representation. Indeed, in the successorship context, it

is precisely the vulnerability of employees and unions

that makes a period of repose appropriate.

The majority claims that an insulated period actually

contributes to workplace instability, at least where em

ployees wish to end union representation, but are prevented from achieving that goal. In principle, that criti

cism would apply to any of the long-established insulated

periods, but it lacks force especially in the successorship

context. As explained, there is good reason to suspect

that in such situations, the decline in support for the un

ion may be a function of the successorship itself.

Instability, then, is likely to diminish over time, as the

union continues to represent employees and to make pro

gress in good-faith collective bargaining, and as employ

ees continue to shape their representative’s policies in

light of new realities in the changed workplace. The

majority asks what purpose an insulated period serves, if

there is no guarantee that a collective-bargaining agree

ment will be reached. The answer is that, in the interest

of employees, unions should be given an opportunity to

demonstrate their effectiveness before being put to the

test. An insulated period thus is akin to a term of office

for a public official, who is not required to run for reelection whenever his poll numbers drop. In or out of the

workplace, democracy does not demand a perpetual

campaign.

In any case, the majority’s approach turns Burns on its

head. If Burns stood for the proposition that protecting

employee free choice was of overriding concern during

corporate transitions, then the Supreme Court would not

have conferred on incumbent unions a presumption of

majority status of any kind. On the contrary, Burns is

predicated on the notion that, once continuity is estab

lished, it is presumed that employees still desire union

representation—and not that a question concerning rep-

MV TRANSPORTATION

resentation, for election purposes, is created by the inevi

table uncertainties and anxieties endemic to most succes

sorship situations.

Underlying my colleagues’ position is the idea that the

insulated period established by St. Elizabeth Manor is

unnecessary, because Burns recognizes the concept of

successorship and provides for continuity of representa

tion across changes in corporate ownership, at least in

some circumstances and at least so long as the union can

survive a challenge to its status. They suggest that in the

successorship context, the insulated period of St. Eliza

beth Manor somehow gives the incumbent union

“greater rights than it otherwise would have with respect

to the predecessor.” But this is clearly not the case. As

explained, a union that survives a corporate transaction

often will lose important rights that it had with respect to

the predecessor: the ability to require the employer to

honor any preexisting collective-bargaining agreement,

as well as an irrebuttable presumption of majority support for the duration of that contract, up to 3 years.

In today’s economy, corporate transitions are an in

creasingly common feature of the workplace. Burns cer

tainly did not foreclose the Board from developing rules,

consistent with the Act and with the Supreme Court’s

decisions, which address the destabilizing effects of suc

cessorship. St. Elizabeth Manor addresses those effects

while representing a genuine balancing of statutory inter

ests, unlike the majority’s approach. The majority here

sees no need to adopt a rule that furthers stability when it

is clearly jeopardized.

In contrast, the St. Elizabeth Manor Board recognized

the need to protect employee free choice and gave it

proper weight. Thus, the insulated period that the deci

sion created was necessarily temporary. As the Board

emphasized:

The rule extends for a “reasonable period,” not in per

petuity. It is intended neither to give the incumbent un

ion an unfair advantage nor to fix a permanent bargain

ing relationship requiring the employer to bargain with

a designated union forever, without regard to new

situations that may develop. After a reasonable period

has elapsed, the Board may, in a proper proceeding and

upon a proper showing, take steps in recognition of

changed situations that might make appropriate

changed bargaining relationships.

329 NLRB at 346.

For employees, their statutory right to choose a bargaining representative, or not, is fulfilled. The bar to an

election is temporary. If no bargaining agreement is

reached after a reasonable period of time for bargaining

has elapsed, employees may petition for an election.

782

In some instances, certainly, the parties will reach a

bargaining agreement. My colleagues worry that in such

a case, an opportunity for the expression of free choice

could effectively be blocked for a long period, based on

the adding together of different insulated periods, imme

diately before and after the successorship.16 The Board

never had occasion to consider that case. And had my

colleagues in the majority truly been interested in strik

ing an appropriate balance of policy interests, they could

have proposed a refinement to St. Elizabeth Manor to

address that scenario. For example, we could have con

sidered whether the application of the customary 3-year

contract bar rule would have been appropriate in that

case, or whether some other framework for achieving

reasonable and periodic access to the election process

would better serve statutory interests.17

Instead, my colleagues jettison St. Elizabeth Manor before it has had a chance to succeed. The decision was a

first step toward addressing a recurring workplace issue.

Rather than move forward and refine our law to better

confront the changing demands that our economy makes

on employers, employees, and unions in this era of un

precedented merger, acquisition, and takeover activity,

the majority moves backwards.

Conclusion

The issue that we consider today requires a sensitive

balance of competing policy interests. Instead, the ma

jority’s approach champions one interest at the complete

expense of the other. Our responsibility is to make deci

sions that promote longstanding statutory aims in the

context of current economic realities. Abandoning the

rule of St. Elizabeth Manor, which endorses a reasonable

period for bargaining, does not advance this mandate. I

fail to see how that rule is contrary to the statute, incon

sistent with federal labor policy, or unreasonable in any

respect. Accordingly, I dissent.

For example, a contract bar might have been in place for nearly 3

years before the successorship, the successorship would then lead to an

insulated period under St. Elizabeth Manor, and finally, the successor

employer and the union might reach an agreement, resulting in a second

contract bar. As a practical matter, however, it seems unlikely that a

successor employer would reach an agreement with a union that lacked

majority support: there rarely would be an incentive to do so.

Had the majority not decided to abandon St. Elizabeth Manor in

its entirety, a number of issues ult imately might have been decided

under its rubric, such as: (1) whether a 3-year contract bar, or something less, is appropriate if a bargaining agreement is reached during a

“reasonable period of bargaining;” (2) whether recent “open periods”

during the predecessor employer’s reign are sufficient to satisfy the

need for periodic access by represented employees to the Board’s elec

tio n processes; and (3) whether the duration of the predecessor’s viti

ated contract should be a factor in determining the timing of future

access to the Board’s election processes.

MV TRANSPORTATION

Appendix A

783

784

DECISIONS OF THE NATIONAL LABOR RELATIONS BOARD

Appendix B

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.