Petition for Writ of Certiorari — Creative Vision Resources, L.L.C., Petitioner v. National Labor Relations Board

No. 17In the

Supreme Court of the United States

CREATIVE VISION RESOURCES, L.L.C.,

Petitioner,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent.

On Petition for a Writ of Certiorari to the United

States Court of A ppeals for the Fifth Circuit

PETITION FOR A WRIT OF CERTIORARI

Wendy McGuire Coats

Counsel of Record

Fisher & Phillips LLP

One Embarcadero Center, Suite 2050

San Francisco, CA 94111

(415) 490-9000

wcoats@fisherphillips.com

Clyde H. Jacob III

Fisher & Phillips LLP

201 St. Charles Avenue, Suite 3710

New Orleans, LA 70170

June 11, 2018

280688

Counsel for Petitioner

A

(800) 274-3321 • (800) 359-6859

i

Question presented

On first blush, the question appears simple – when

may a successor employer set its own initial terms and

conditions of employment or have to accept the terms of

the predecessor employer. But decades have passed since

this Court addressed the important business and public

subject of mergers, acquisitions, and contract assumptions

involving a successor employer, which hoped to settle

the question. NLRB v. Burns International Security

Services, Inc., 406 U.S. 272 (1942); Fall River Dyeing and

Finishing Corporation v. NLRB, 482 U.S. 27 (1987). This

lengthy time period has bred confusion, conflict, precedent

defiance, misinterpretation, and forum shopping amongst

the federal appellate courts and within the NLRB.

The question presented is:

Whether a bargaining demand is required in both the

“ordinary” successor context and the “perfectly clear”

successor context? Or whether, as the Fifth Circuit held,

in “perfectly clear” successor cases, “the composition of

the successor’s work force” alone is the “‘triggering’ fact

for the bargaining obligation” and no union bargaining

demand is required.

ii

PARTIES TO THE PROCEEDING

Petitioner Creative Vision Resources, L.L.C. was

respondent before the National Labor Relations Board

and petitioner/cross-respondent in the Fifth Circuit.

Respondent National Labor Relations Board was

respondent/cross-petitioner in the Fifth Circuit.

iii

CORPORATE DISCLOSURE STATEMENT

Creative Vision Resources, L.L.C. is a limited liability

corporation established under the laws of the State of

Louisiana. It has no parent corporation and no publicly

held corporation owns 10% or more of its stock.

iv

TABLE OF CONTENTs

Page

Question presented . . . . . . . . . . . . . . . . . . . . . . . . i

PARTIES TO THE PROCEEDING . . . . . . . . . . . . . . . . ii

CORPORATE DISCLOSURE STATEMENT . . . . . . iii

TABLE OF CONTENTS . . . . . . . . . . . . . . . . . . . . . . . . . iv

TABLE OF APPENDICES . . . . . . . . . . . . . . . . . . . . . . . vi

TABLE OF CITED AUTHORITIES . . . . . . . . . . . . . . vii

OPINIONS BELOW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

JURISDICTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . 1

A. The Triggering of a Perfectly Clear

Successor’s Bargaining Obligation Requires

a Union’s Bargaining Demand . . . . . . . . . . . . . . . 4

B. The Administrative Law Judge’s Decision

and the National Labor Relations Board . . . . . . 7

C. The Fifth Circuit Split With a Majority of

Courts and Fifth Circuit Precedent Requiring

a Union Bargaining Demand to Trigger

a Successor’s Bargaining Obligation . . . . . . . . . 10

v

Table of Contents

Page

REASONS FOR GRANTING THE PETITION . . . . 11

A

Clear Conflict Exists Between the Six Circuit

Courts That Have Determined Whether a

Union Bargaining Demand is Required to

Trigger a Successor’s Bargaining Obligation . . 12

B. Never Before Has a Court Held that the

Cancellation or Expiration of a Predecessor’s

Contract, the Day Before a Successor

Assumes the Contract, Triggers a Successor

Employer’s Bargaining Obligation . . . . . . . . . . . 18

C. T he Fi f th Ci rcu it ’s Hold i ng that a

Successor Who Announces its New Initial

Terms on the Day it begins Operations

is Too Late and is Thus a “Perfectly

Clear” Successor, Conf licts Directly

With this Court’s Decision in Burns . . . . . . . . . 20

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

vi

TABLE OF APPENdICEs

Page

A p p endi x A — o p inion of the

united states court of

appeals for the fifth circuit,

filed february 14, 2018 . . . . . . . . . . . . . . . . . . 1a

A p p endi x B — o p inion of the

UNITED STATES COURT OF

APPEALS FOR THE FIFTH CIRCUIT,

FILED September 25, 2017 . . . . . . . . . . . . . . . 38a

A p p endi x C — D E C I S I O N A N D

ORDER of the National L abor

Relations board . . . . . . . . . . . . . . . . . . . . . . . 75a

Appendix D — Denial of rehearing

of the united states court of

appeals for the fifth circuit,

filed March 19, 2018 . . . . . . . . . . . . . . . . . . . . 195a

vii

TABLE OF CITEd AuTHORITIEs

Page

Cases

Aircraft Magnesium, A Division of Grico Corp.,

730 F.2d 767 (9th Cir. 1984), enf’g,

265 NLRB 1344 (1982) . . . . . . . . . . . . . . . . . . . . 3, 6, 16

Ass’n of Machinists & Aerospace Workers,

AFL-CIO v. NLRB,

595 F.2d 664 (D.C. Cir. 1978) . . . . . . . . . . . . . . . . . . . 17

Banknote Corp. of America v. NLRB,

84 F.3d 637 (2d Cir. 1996) . . . . . . . . . . . . . . 6, 10, 11, 17

Briggs Plumingware, Inc. v. NLRB,

877 F.2d 1282 (6th Cir. 1989) . . . . . . . . . . . . . . . 3, 6, 16

Cadillac Asphalt Paving Co.,

349 NLRB 6 (2007) . . . . . . . . . . . . . . . . . . . . 15, 16

Capital Steel & Iron Co.,

299 NLRB 484 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Fall River Dyeing & Finishing Corp. v. NLRB,

482 U.S. 27 (1987) . . . . . . . . . . . . . . . . . . . . . . . . passim

Fremont Ford Sales, Inc.,

289 NLRB 1290 (1988) . . . . . . . . . . . . . . . . . . . . . . . . 18

Nephi Rubber Prods. Corp. v. NLRB,

976 F.2d 1361 (10th Cir. 1992) . . . . . . . . . . . . . . 3, 6, 16

viii

Cited Authorities

Page

NLRB v. Burns International Security Services,

406 U.S. 272 (1972) . . . . . . . . . . . . . . . . . . . . . . . passim

NLRB v. Houston Bldg. Serv., Inc.,

936 F.2d 178 (5th Cir. 1991) . . . . . . . . . . . . . . . . . . 7, 17

Royal Midtown Chrysler Plymouth, Inc.,

296 NLRB 1039 (1989) . . . . . . . . . . . . . . . . . . . . . . . . 18

Williams Enters., Inc. v. NLRB,

956 F.2d 1226 (D.C. Cir. 1992) . . . . . . . . . . . . . . 3, 6, 16

Statutes and Other Authorities

28 U.S.C. § 1254(1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

29 U.S.C. § 151 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

29 U.S.C. § 153(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

29 U.S.C. § 160(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

1

Petitioner Creative Vision Resources L.L.C. (Creative

Vision) respectfully petitions for a writ of certiorari to

review the judgment of the United States Court of Appeals

for the Fifth Circuit.

OPINIONS BELOW

The opinion of the court of appeals on February

14, 2018 is reported at 882 F.3d 510, and reproduced at

Pet.App. 1a-37a. The decision and order of the National

Labor Relations Board is reported at 364 N.L.R.B. No.

91, N.L.R.B., and is reproduced at Pet.App. 75a-127a. The

decision by the administrative law judge is unreported,

but is available at 2013 WL 75068, and is reproduced at

Pet.App. 128a-194a.

JURISDICTION

The judgment of the court of appeals was entered on

February 14, 2018. A petition for rehearing en banc was

denied on March 19, 2018. The jurisdiction of this Court

is invoked under 28 U.S.C. § 1254(1).

STATEMENT OF THE CASE

The case involves a minority owned labor contractor,

Creative Vision Resources, L.L.C., with a unit of 42 to 44

employees. Creative Vision went into business to rectify

the illegal operations of the predecessor employer, Berry

III, who misclassified its employees and failed to properly

pay them, including not deducting federal and state taxes,

social security or child support payments. This petition

asks whether a union bargaining demand is necessary

to trigger a successor employer’s bargaining obligation,

2

whether in both the ordinary successor and “perfectly

clear” successor contexts.

This Court’s successorship doctrine establishes that

when a successor employer takes over assets or a business

of a predecessor employer, the successor employer may

establish its own initial terms of employment. In NLRB

v. Burns International Security Services, 406 U.S. 272

(1972), this Court set forth a narrow exception to the

general “ordinary” successor rule, termed a “perfectly

clear” successor. For a successor employer falling under

the narrow “perfectly clear” successor exception, the

successor must first bargain with the predecessor’s

union before setting its initial terms. But as clarified

by this Court in Fall River Dyeing and Finishing

Corporation v. NLRB, “[t]he successor’s duty to bargain

at the ‘substantial and representative complement’ date

is triggered only when the union has made a bargaining

demand.” 482 U.S. 27, 52.

Fall River Dyeing not only clarified but also echoed

this Court’s directive in Burns that the obligation

to bargain with the union only triggered “when the

union requested” the successor to bargain. 406 U.S.

at 294. Therefore, a union bargaining demand is a

fundamental element of this Court’s successorship

doctrine jurisprudence and a prerequisite to pinpointing

the moment when a successor may have to recognize and

bargain with a union, whether as an ordinary successor

or as a “perfectly clear” successor.

Consistent with the fundamental fairness principles

announced and applied in Fall River Dyeing, a majority of

circuit courts condition a successor employer’s obligation

3

to bargain on (1) a substantial and representative

complement of employees, a majority of whom were

employed by the predecessor; and (2) the existence of

an outstanding demand by the union for recognition or

bargaining. See Nephi Rubber Prods. Corp. v. NLRB, 976

F.2d 1361, 1365 n. 6 (10th Cir. 1992); Williams Enters.,

Inc. v. NLRB, 956 F.2d 1226, 1232 (D.C. Cir. 1992); Briggs

Plumingware, Inc. v. NLRB, 877 F.2d 1282, 1286-87 (6th

Cir. 1989); Aircraft Magnesium, A Division of Grico

Corp., 730 F.2d 767 (9th Cir. 1984), enf’g, 265 NLRB 1344,

1345 (1982).

But the Fifth Circuit abandoned this Court’s firmly

announced bargaining demand requirement in the

“perfectly clear” successor context and joined the outlying

Second Circuit, holding that in “perfectly clear” successor

situations, the “composition of the successor’s work force”

alone is the “’triggering’ fact” for imposing the bargaining

obligation. Pet.App. 71a-72a.

***

Certiorari is warranted to resolve the ongoing circuit

conflict over whether it is permissible to strip the union

demand requirement out of the calculus, when determining

whether the “perfectly clear” successor exception applies

and bars the unilateral setting of new employment terms

and conditions.

The Fifth Circuit’s decision is seriously out of step with

this Court’s guidance, the majority of circuit decisions, and

even its own precedent. By departing from this Court’s

clear guidance, the panel below created a deep conflict

between it and several other circuits, which correctly

4

and collectively rejected similar efforts to undermine the

fundamental requirement of a union demand to trigger a

successor’s bargaining obligation.

Even the procedural path of the case to this petition

highlights the palpable deep conflict. The Administrative

Law Judge found Creative Vision did not have to first

negotiate with the union representing the predecessor’s

employees and thus Creative Vision legally set its initial

terms and conditions of employment. On appeal to the

NLRB by the agency’s General Counsel, the NLRB

reversed in a 2 to 1 split decision. On appeal to the Fifth

Circuit, the panel affirmed the NLRB in a decision which it

later withdrew following a petition for en banc review. The

panel issued a new decision, again affirming the NLRB

and denying the petition.

The practical consequences of the Fifth Circuit’s

failure to adhere to this Court’s precedents are substantial

as other courts will be encouraged to further erode

the fairness protections afforded successor employers,

whether “ordinary” or “perfectly clear.” This Court’s

review is essential to hold fast the safeguards and clear

guidance of Burns and Fall River Dyeing.

A. The Triggering of a Perfectly Clear Successor’s

Bargaining Obligation Requires a Union’s

Bargaining Demand

A successor employer is ordinarily free to set initial

terms of employment when hiring its predecessor’s

employees. NLRB v. Burns International Security

Services, 406 U.S. 272 (1972). Under Burns, a successor

need not accept either its predecessor’s collective-

5

bargaining agreement or its employment terms and

conditions. Similarly, a successor has no obligation to

bargain with the union representing its predecessor’s

employees before it sets its own initial employment

terms and conditions. This Court in Burns, explicitly

rejected the Board’s then-rule that a successor must

in all circumstances bargain with an incumbent union

before instituting employment terms differing from the

predecessor’s collective bargaining contract.

In dictum, Burns identified a “narrow” exception to

the broader general successor rule. Under this narrow

exception, a “perfectly clear” successor must bargain with

the union when “it is perfectly clear that the new employer

plans to retain all of the employees in the unit” and “the

union requested it to do so.” Burns, supra, 406 U.S. at

294-95. Only when both prongs are met must a successor

bargain with the union over terms and may not set its own.

The articulated requirement of a union demand in Fall

River Dyeing followed the Court’s seminal successorship

analysis in Burns, in which it held a successor obligated to

bargain with the union about wages and other terms and

conditions of employment “when the union requested to

do so.” Burns, supra, 406 U.S. at 294. With no bargaining

demand by the union present in Burns, the “perfectly

clear” narrow exception to the general rule could not

apply. Thus, two necessary events combine to trigger both

an ordinary and a perfectly clear successor employer’s

obligation to bargain with the union: (1) the successor’s

employment of a “substantial and representative

complement” of the predecessor’s employees; and (2)

the union’s bargaining demand. Fall River Dyeing &

Finishing Corp. v. NLRB, 482 U.S. 27, 52 (1987). As the

Court explained in Fall River Dyeing,

6

Once the employer has concluded that it has

reached the appropriate complement, then, in

order to determine whether its duty to bargain

will be triggered, it has only to see whether

the union already has made a demand for

bargaining.

Fall River Dyeing, supra, 482 U.S. at 52-53. Like Burns,

Fall River Dyeing began operations and hiring under its

new initial terms before receiving the union bargaining

demand.

Instead of following this Court’s precedent in Burns

and Fall River Dyeing and a majority of the circuits

requiring an initial bargaining demand, the Fifth Circuit

strayed far afieled in Creative Vision Resources, aligning

itself with the Second Circuit and its 1996 decision,

Banknote Corp. of America v. NLRB, 84 F.3d 637 (2d

Cir.1996). In so doing, the Fifth Circuit exacerbated a

clear split within the circuit courts on this issue.

Standing directly contrary to the Fifth and Second

Circuits, four federal courts of appeal have addressed this

issue with all applying Fall River Dyeing to require (1) a

substantial and representative complement of employees, a

majority of whom were employed by the predecessor; and

(2) the existence of an outstanding demand by the union

for recognition or bargaining. See Nephi Rubber Prods.

Corp. v. NLRB, 976 F.2d 1361, 1365 n. 6 (10th Cir. 1992);

Williams Enters., Inc. v. NLRB, 956 F.2d 1226, 1232

(D.C. Cir. 1992); Briggs Plumingware, Inc. v. NLRB, 877

F.2d 1282, 1286-87 (6th Cir. 1989); Aircraft Magnesium,

A Division of Grico Corp., 730 F.2d 767 (9th Cir. 1984),

enf’g, 265 NLRB 1344, 1345 (1982).

7

The Fifth Circuit’s Creative Vision decision not only

departed from the majority of circuits but it also departed

from existing Fifth Circuit precedent requiring a union

bargaining demand to trigger a successor’s bargaining

obligation. See NLRB v. Houston Bldg. Serv., Inc., 936

F.2d 178, 180 (5th Cir. 1991) (Where successor employer

immediately hired all of predecessor’s employees and

the union had made bargaining demand, the obligation

to bargain arises because “a majority of the successor’s

employees had been employed by its predecessor,

assuming that the union has made a bargaining demand.”)

B. The Administrative Law Judge’s Decision and the

National Labor Relations Board

Richard’s Disposal contracts w ith the City of

New Orleans, private business, and industry for trash

collection. Berry III, the predecessor employer of Creative

Vision, had a labor contract with Richard’s Disposal

to provide hoppers. Creative Vision Resources L.L.C.

(Creative Vision) is a labor supply company, created to

supply general labor to the business community, including

hoppers to Richard’s Disposal, Inc. Hoppers ride on

the back of garbage trucks, transferring garbage from

containers to garbage trucks.

Alvin Richard III (Richard) created Creative Vision

Resources to employ the hoppers provided to Richard’s

Disposal and to correct the employment irregularities and

misclassification mistakes with the hoppers’ employment

relationship with Berry III. Ultimately, Richard’s

Disposal cancelled its contract with Berry III and instead

contracted with Creative Vision for its hoppers.

8

The National Labor Relations Board (NLRB or Board)

is an independent agency charged with the administration

of the National Labor Relations Act (NLRA), 29 U.S.C.

§ 151 et seq. Its General Counsel is appointed by the

President with the advice and consent of the Senate. 29

U.S.C. § 153(d). The General Counsel has “final authority”

*** in respect of” the issuance of complaints alleging that

an individual has committed an unfair labor practice. Ibid;

see 29 U.S.C. § 160(b).

1. On June 17, 2011, Local 100, United Labor Unions

(the “Union”) filed an unfair labor practice charge with

the Board against Creative Vision. The Board alleged that

Creative Vision, a successor employer, violated Section

8(a)(1) and (5) of the National Labor Relations Act by

failing to recognize the union as the representative of a

predecessor’s bargaining unit employees (Berry III). The

Board alleged that Creative Vision unilaterally set initial

terms without first bargaining with the union.

After an investigation, the Regional Director for

Region 15 of the NLRB, (Region 15), issued a complaint

against Creative Vision on March 30, 2012. Following a

hearing in August and September 2012, Administrative

Law Judge (ALJ) Keltner W. Locke issued a decision on

January 7, 2013.

The ALJ found Creative Vision was an ordinary

successor to the predecessor company, Berry III.

Specifically, the ALJ found that on June 2, 2011, Creative

Vision became an ordinary Burns successor to Berry

III, as this was the date it began operations and hired

a representative complement of employees. Pet.App.

174a-175a.As an ordinary successor, it had an obligation

9

to recognize and bargain with the union but is also

had the right to unilaterally set its own initial terms of

employment. Pet.App. 190a. It was not until June 6, 2011

that the Union sent Creative Vision a bargaining demand

Region 15 filed an exception to the ALJ’s decision with

the NLRB that Creative Vision had the right to set initial

terms and conditions of employment. Creative Vision also

filed an exception to the ALJ’s ruling on the credibility of

a witness. On April 18, 2016, Creative Vision filed another

exception based upon the recent decision of the U.S. Court

of Appeals, District of Columbia Circuit, SW General Inc.

v. NLRB, 796 F.3d 67 (D.C. Cir. 2015), cert. granted, 136

S.Ct. 2489 (2016). The exception was based on the alleged

violation of the Federal Vacancies Report Act (FVRA)

by the NLRB’s former Acting General Counsel serving

without authorization. Thus, the complaint issued was

invalid.

On April 26, 2016, the NLRB’s Office of the Executive

Secretary stated that the exception was untimely and

would not be forwarded to the NLRB for consideration.

The next day, April 27, 2016, the NLRB’s General

Counsel filed a Notice of Ratification, ratifying the alleged

unauthorized complaint.

On August 26, 2016, by a bare majority of two to one,

the NLRB upheld the ALJ’s decision that Creative Vision,

as a successor employer, had to recognize and bargain

with the union. Pet.App. 75a-127a.

2. The NLRB, however, reversed the ALJ’s finding

that Creative Vision was an ordinary successor with the

right to unilaterally set its initial terms. The NLRB failed

to acknowledge this Court’s precedent in Burns, holding

10

that a union bargaining demand is required when applying

the “perfectly clear” successor exception. In reversing, the

NLRB found Creative Vision to have back pay liability.

The dissent agreed with the ALJ’s findings of fact and

decision that Creative Vision was an ordinary successor

with the right to set its initial terms of employment. Pet.

App. 105a-124a.

C. The Fifth Circuit Split With a Majority of Courts

and Fifth Circuit Precedent Requiring a Union

Bargaining Demand to Trigger a Successor’s

Bargaining Obligation

On October 25, 2016, Creative Vision filed a petition

for review of the NLRB’s decision with the Fifth Circuit

Court of Appeals and the NLRB filed a cross application

for enforcement of its decision.

On September 25, 2017, the panel enforced the NLRB’s

decision. On November 7, 2017, Creative Vision filed a

petition for rehearing en banc. On November 22, 2017 the

court ordered the NLRB to respond to the petition. It did

on December 18, 2017. On February 14, 2018, the court

withdrew its September 17, 2017 decision and substituted

a new decision, again enforcing the NLRB’s decision.

The Fifth Circuit held that a union bargaining

demand is not required to trigger a successor employer’s

bargaining obligation when the “perfectly clear” exception

applied. In joining in the reasoning and rationale in the

Second Circuit’ Banknote Corp. decision, the Fifth Circuit

limited Fall River’s bargaining demand requirement

only to the ordinary successor context. Pet.App. 34a-35a.

11

As a consequence, the panel held that the cornerstone

bargaining demand requirement had no application

to determining the trigger date of a “perfectly clear”

successor’s obligation to bargain with the union. The

panel took the collective holdings of Burns and Fall River

and turned them on their heads. Citing Banknote Corp.,

the Fifth Circuit stripped out the bargaining demand

requirement as “superflous” because it concluded that

a “perfectly clear” successor should “easily discern”

that the union will presumptively retain its status as the

bargaining representative of the employees. Pet.App.

35a. In so doing, the Fifth Circuit eliminated one of the

only two requirements necessary to trigger a successor’s

obligation to bargain with a union.

REASONS FOR GRANTING THE PETITION

This case presents the Court the opportunity to

resolve the split of authority over whether a successor

employer – either ordinary or “perfectly clear” – must first

face a union bargaining demand before a duty to bargain

with the union is triggered. By removing the requirement

of a bargaining demand for a successor employer falling

within the narrow “perfectly clear” exception, the Fifth

Circuit abandoned the long-understood guidance of this

Court in Burns and Fall River Dyeing.

This Court could not have been more clear when it

conditioned both an ordinary and a “perfectly clear”

successor employer’s obligation to bargain with the union

on satisfying both prongs: (1) the successor’s employment

of a “substantial and representative complement” of the

predecessor’s employees; and (2) the union’s bargaining

demand. Fall River Dyeing & Finishing Corp. v. NLRB,

482 U.S. 27, 52 (1987).

12

This case presents the perfect vehicle for addressing

the question presented. It arises out of federal court; the

question was directly addressed by both the circuit court

and the NLRB, and there is no dispute in the factual

record that when Creative Vision unilaterally set its

initial terms, there was no bargaining demand asserted.

And finally, the decision below presents a solid departure

from established Supreme Court precedent, a direct split

with a majority of circuit decisions, and an abandoning of

directly on point Fifth Circuit authority.

Review and reversal of the decision below is warranted

to preserve the integrity of this Court’s precedents, to

ensure that the requirements of the ongoing, common

transactions of mergers, acquisitions, and contract

assumptions are understood and followed by the

stakeholders – both large and small, to ensure nationwide

uniformity on a question of fundamental importance to

the regular commercial transactions that are critical to

the national economy.

A

Clear Conflict Exists Between the Six Circuit

Courts That Have Determined Whether a Union

Bargaining Demand is Required to Trigger a

Successor’s Bargaining Obligation

In NLRB v. Burns, this Court overturned a line of

NLRB decisions, requiring a successor employer be bound

to accept the terms of a predecessor employer’s collective

bargaining agreement. 409 U.S. 272. This Court held that

a successor employer may ordinarily set its own initial

terms without bargaining with the incumbent union:

13

Although Burns had an obligation to bargain

with the union concerning wage and other

conditions of employment when the union

requested it to do so, this case is not like a

§ 8(a)(5) violation where an employer unilaterally

changes a condition of employment without

consulting a bargaining representative.

Burns, 409 U.S. at 294.

This Court recognized the difficulty in understanding

how a successor employer could be said to have “unilaterally”

changed any preexisting term or condition of employment

without bargaining “when it had no previous relationship

whatsoever to the bargaining unit.” Id. While the terms

under which Burns hired its employees may have differed

from the predecessor’s CBA, “it does not follow that Burns

changed its terms and conditions of employment when it

specified the initial basis on which the employees were

hired” when it began operations. Burns, 409 U.S. at 294.

Within this context, this Court in Burns articulated in

dicta an exception to the ordinary successor rule:

Although a successor employer is ordinarily

free to set initial terms on which it will hire

the employees of predecessor, there will be

instances in which it is perfectly clear that

the new employer plans to retain all of the

employees in the unit and in which it will be

appropriate to have him initially consult with

the employees’ bargaining unit before he fixes

terms. In other situations, however, it may not

be clear until the successor employer has hired

his full complement of employees that he has

14

a duty to bargain with the union, since it will

not be evident until then that the bargaining

representative represents a majority of the

employees in the unit as required by s 9(a) of

the Act, 29 U.S.C. s 159(a). Here, for example,

Burns’obligation to bargain with the union did

not mature until it had selected its force of

guards late in June.

Burns, 409 U.S. at 294-295.

Following Burns, the Supreme Court issued another

seminal decision in Fall River, 482 U.S. 27. In Fall River,

this Court noted that in Burns, the “triggering fact” for a

successor’s bargaining obligation was the composition of

the successor’s work force. Id. at 46. The Court determined

the “substantial and representative complement” rule

“fix[es] the moment” to determine the composition of the

successor’s workforce. Id. at 47. “If, at this particular

moment, a majority of the successor’s employees had been

employed by the predecessor, then the successor has an

obligation to bargain ...” Id. The employer generally will

know with tolerable certainty when all its job classifications

have been filled or substantially filled, when it has hired a

majority of the employees it intends to hire, and when it

has begun normal production.” Id. at 50. This Court then

held the “successor’s duty to bargain at the substantial

and representative complement is triggered only when

the union has made a bargaining demand.” Id. at 52. This

Court found this requirement placed a minimal burden

upon the successor to simply check, once it reached its

substantial and representative complement, to determine

whether there was a union bargaining demand. Fall River,

482 U.S. at 52-53.

15

Contrary to the Fifth Circuit’s application in Creative

Vision, this Court in Burns and Fall River Dyeing, never

limited the requirement of a union bargaining demand

to its successorship doctrine to the ordinary successor

scenario. It did not require the bargaining demand for only

the ordinary successor and not for the narrow exception

of the “perfectly clear” successor. In fact, both Burns

and Fall River Dyeing were ordinary successors because

of the absence of a bargaining demand at the time they

implemented their initial terms and conditions.

Likewise, the NLRB similarly applied the twopronged Fall River Dyeing requirements in the “perfectly

clear” exception context so a union bargaining demand

was required to trigger a bargaining obligation. Cadillac

Asphalt Paving Co., 349 NLRB 6 (2007). In Cadillac,

the NLRB specifically held:

Having found that LLC is a successor to

Paving, we must determine when LLC’s

bargaining obligation with the Teamsters

matured. LLC’s bargaining obligation matured

when two conditions were met: (1) LLC

had hired a substantial and representative

complement of employees, a majority of whom

had been Teamsters unit employees; and

(2) the Teamsters made an effective demand

for recognition.

Cadillac Asphalt, 349 NLRB at 9.

In Cadillac, the NLRB correctly followed this Court’s

precedent finding that an announcement of new terms

after a union bargaining demand meets the “perfectly

16

clear” exception. Cadillac, 349 NLRB at 9; Fall River,

482 U.S. at 52.

Almost all courts of appeal applying Fall River

Dyeing unequivocally hold that the concurrence of

two circumstances is required to trigger a bargaining

obligation by a successor: (1) the hiring of a substantial

and representative complement of employees, a majority

of whom were employed by the predecessor; and (2) the

existence of an outstanding demand by the union for

recognition or bargaining. See Nephi Rubber Prods.

Corp. v. NLRB, 976 F.2d 1361, 1365 n. 6 (10th Cir. 1992)

(determination of whether successor employer has duty to

bargain requires analysis of whether successor has hired

substantial and representative complement of employees

at time of union’s bargaining demand); Williams Enters.,

Inc. v. NLRB, 956 F.2d 1226, 1232 (D.C. Cir. 1992) (“The

presumption of majority support that creates a successor’s

duty to bargain arises ... only when ... the new employer

has hired a ‘substantial and representative complement’ of

its workforce and a majority of that workforce is composed

of predecessor employees; and the incumbent union has,

at some time, issued a valid bargaining demand to the

new employer.”), decision supplemented by 312 N.L.R.B.

937, 1993 WL 402910 (1993), enf’d, 50 F.3d 1280 (4th Cir.

1995); Briggs Plumingware, Inc. v. NLRB, 877 F.2d

1282, 1286-87 (6th Cir. 1989) (“The concurrence of two

events is necessary to obligate the successor employer

to bargain with the union: the successor’s employment

of a ‘substantial and representative complement’ of the

predecessor’s employees and the union’s demand for

recognition.”) Aircraft Magnesium, A Division of Grico

Corp., 730 F.2d 767 (9th Cir. 1984), enf’g, 265 NLRB

1344, 1345 (1982) (“... well settled that the significant time

17

frame for determining what percentage of a purchaser’s

employees were former employees of a predecessor is

when a demand for bargaining has been made and a

representative complement of an employer’s work force

is on the job.”). See also, an earlier decision of the D.C.

Circuit, predating Fall River which ruled, “But absent a

bargaining demand by the union, the successor can simply

institute the terms on which the employees were hired as

the beginning terms of employment, as was the situation in

Burns.” Ass’n of Machinists & Aerospace Workers, AFLCIO v. NLRB, 595 F.2d 664, 675, fn. 52 (D.C. Cir. 1978).

Even the Fifth Circuit’s precedent in in NLRB v.

Houston Bldg. Serv., Inc., 936 F.2d 178, 180 (5th Cir.

1991), held that when an employer immediately hired all

of its predecessor’s employees and the union had made a

bargaining demand, the successor’s obligation to bargain

arose because “a majority of the successor’s employees

had been employed by its predecessor, assuming that the

union has made a bargaining demand.”

Prior to the Fifth Circuit’s decision in Creative Vision,

the lone outlier in the constellation of successor cases

was the Second Circuit’s Banknote decision, in which

the Second Circuit significantly deviated from the bulk

of authority on the issue and held that the bargaining

demand was not a requirement in every type of Burns

successorship case for the exception to apply. Banknote, 84

F.3d at 645-646. The Second Circuit declined to apply the

two-pronged Fall River rule. And until Creative Vision, its

holding and reasoning rightfully stood alone, unaccepted

by any other circuit.

18

Even the NLRB in its decision and in its brief

neglected to follow its jurisprudence that a bargaining

demand is required for the exception to apply. See Capital

Steel & Iron Co., 299 NLRB 484, 486; Fremont Ford

Sales, Inc., 289 NLRB 1290, 1295 (1988); Royal Midtown

Chrysler Plymouth, Inc., 296 NLRB 1039, 1040 (1989). As

the Board stated in Royal Midtown Chrysler Plymouth:

Successorship does not automatically carry

with it the obligation to bargain with the union

that represented the predecessor’s employees.

Nor does the fact that the union represents

a majority of the successor’s employees in an

appropriate unit operate alone to invoke the

bargaining obligation; and this is so even when

the successor has attained a “substantial and

representative complement” of employees.

The bargaining obligation – albeit potentially

present when successorship and representative

complement are established – must be triggered

by a demand for recognition or bargaining.

296 NLRB at 140. If the NLRB had simply followed its

established precedent built on the foundation of Burns and

Fall River Dyeing when resolving the issue in Creative

Vision, no review would have been necessary.

B. Never Before Has a Court Held that the Cancellation

or Expiration of a Predecessor’s Contract, the Day

Before a Successor Assumes the Contract, Triggers

a Successor Employer’s Bargaining Obligation

Neither this Court nor any other federal appellate

court, before the Fifth Circuit’s decision in Creative

19

Vision, has held that the cancellation or expiration of a

predecessor’s contract, the day before a successor hires a

majority of the predecessor’s employees and commences

operations, triggers a successor’s bargaining obligation.

Rather, this Court has always tied a successor’s

obligation to bargain to the trigger event of satisfaction

of two requirements: the hiring of a majority of a

predecessor’s employees and a union bargaining demand.

And as Burns illustrates, this Court held Burns’

bargaining obligation triggered on July 9, when the union

made its bargaining demand. This Court did not hold that

the bargaining obligation triggered on June 30, the day

Wackenhut’s contract cancelled and the day before Burns

hired Wackenhut’s employees and commenced operations

on July 1.

The NLRB and Fifth Circuit, for the first time in

successorship jurisprudence, held that the date of the

cancellation or expiration of a predecessor’s contract, to

which a successor is succeeding, triggers a successor’s

bargaining obligation -- even without the successor having

hired any of the predecessor’s employees and without a

bargaining demand from the union representing those

employees. Both held at the date of contract cancellation

the intent of a successor like Creative Vision is “perfectly

clear” because it “plans to retain” the employees in the

unit. So, Creative Vision had a duty to bargain with

the union on the day before it knew whether it could

successfully hire Berry III’s hoppers and without any

notification from the union of a bargaining demand.

Stated differently, the last day that Creative Vision was

an ordinary successor with the right to set its initial terms

was the day before the contract was cancelled.

20

This is solidly in error, as employer intent has only been

determinative when a union bargaining demand already

exists and is coupled with the hiring of a substantial and

representative complement, as set forth in Burns and Fall

River Dyeing. Ignoring these two keystones established

by this Court’s successorship doctrine, the Fifth Circuit

has added another keystone -- the date of the predecessor’s

contract expiration, which by itself can now trigger a

successor’s bargaining obligation.

But this unauthorized addition strikes at the heart

of this Court’s precedent and revises this Court’s

successorship doctrine with a heavy hand, by injecting an

independent “intent” test to the doctrine, which supplants

the two requirements set by this Court. In doing this,

the Fifth Circuit and the NLRB diminish the recognized

right of a successor to set its initial terms and elevate the

narrow “perfectly clear” exception to greater stature than

the “ordinary” successor rule.

C. The Fifth Circuit’s Holding that a Successor

Who Announces its New Initial Terms on the Day

it begins Operations is Too Late and is Thus a

“Perfectly Clear” Successor, Conflicts Directly

With this Court’s Decision in Burns

The panel held that Creative’s June 2 announcement

of its terms was untimely because it occurred the same

day the hoppers were hired and operations commenced,

subjecting Creative to the “perfectly clear” exception.

Creative, 2017 WL 4290829 at *8.

This holding conflicts directly with Burns. In Burns,

the predecessor, Wackenhut, had a contract through June

21

30, 1967. On July 1, Burns took over the contract, hired

all the Wackenhut employees, and both announced and

set its new terms of employment. Id. at 284. The Court

found Burns was an “ordinary” successor and timely set

its initial terms even though they were announced on the

same day as the hiring and beginning of operations. Id.

at 294-295.

CONCLUSION

The petition for a writ of certiorari should be granted.

The Court may wish to consider summary reversal.

Respectfully submitted,

Wendy McGuire Coats

Counsel of Record

Fisher & Phillips LLP

One Embarcadero Center, Suite 2050

San Francisco, CA 94111

(415) 490-9000

wcoats@fisherphillips.com

Clyde H. Jacob III

Fisher & Phillips LLP

201 St. Charles Avenue, Suite 3710

New Orleans, LA 70170

Counsel for Petitioner

June 11, 2018

APPENDIX

1a

APPENdIx A — Appendix

OPINIONAOF THE uNITEd

sTaTEs COuRT OF aPPEaLs FOR THE FIFTH

CIRCuIT, FILEd FEBRuaRy 14, 2018

IN THE UniteD StAtes COuRt OF AppeALs

FOR the FiFth CiRcuit

No. 16-60715

CREATIVE VISION RESOURCES, L.L.C.,

Petitioner Cross-Respondent

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent Cross-Petitioner

February 14, 2018, Filed

On Petitions for Review and Cross-Application

for Enforcement of an Order of the

National Labor Relations Board.

Before KING, PRADO, and SOUTHWICK, Circuit

Judges.

KING, Circuit Judge:

The opinion previously issued in this case is withdrawn,

and the following opinion is substituted therefor:

2a

Appendix A

Creative Vision Resources, L.L.C., succeeded another

company as the staffing provider for garbage trucks in

New Orleans. It set its own initial terms and conditions

of employment instead of bargaining with the incumbent

union. The union filed an unfair-labor-practice charge

against Creative, alleging violations under Section 8(a)

of the National Labor Relations Act. The administrative

law judge concluded, among other things, that Creative

was not a “perfectly clear” successor and accordingly

was within its right to set initial terms and conditions.

The National Labor Relations Board reversed. Creative

petitions this court for review, while the Board seeks

enforcement of its order. We deny Creative’s petition and

grant the Board’s petition to enforce.

I. FACTUAL AND PROCEDURAL BACKGROUND1

Richard’s Disposal is a trash-collection company in the

greater New Orleans area. Since 2007, Local 100, United

Labor Unions has represented the “hoppers” who ride on

the back of Richard’s Disposal’s garbage trucks and pick

up trash cans. Until early June 2011, the hoppers were

employed by a labor-supply company called Berry III.

Dissatisfied with Berry III’s management practices,

Richard’s Disposal’s vice president, Alvin Richard III,

decided to form Creative Vision Resources, L.L.C.

(“Creative”), to become the new hopper supplier. These

unsatisfactory practices, according to the Board’s

1. We draw most of our discussion of the history of the dispute

from the decisions of the Board and the administrative law judge.

See Creative Vision Res., LLC, 364 N.L.R.B. No. 91 (2016).

3a

Appendix A

decision, included Berry III’s “treatment of the hoppers

as independent contractors,” which meant “Berry III paid

the hoppers a flat rate of $103 per day with no overtime,

and made no deductions for taxes or social security.”

To prepare for the transition from Berry III to

Creative, which was scheduled to take place on May 20,

2011, Richard prepared an employee handbook and safety

manual. He also put together employment applications,

which, along with federal and state tax forms, were to be

distributed to current Berry III hoppers. Richard then

personally distributed these applications along with tax

forms to about 20 hoppers. He informed them that joining

Creative would mean changes in the terms and conditions

of their employment, including $11-per-hour pay with

overtime and the deduction of taxes and social security

from their paychecks.

Richard also asked a Berry III hopper named Eldridge

Flagge to help him pass out applications. Flagge passed

out approximately 50 applications and tax forms between

mid-May and June 1. Richard testified that he told Flagge

of the new terms and conditions; Flagge denied he was told

and testified he did not tell the hoppers of the changes in

the prospective terms of employment.

Regardless, some of the hoppers learned of the

changed terms. One hopper, Anthony Taylor, testified

that the hoppers knew of the new pay rate before June 2

because “we all congregate out there in the morning. We

been knowing that.” A Union official also testified that at

least one hopper asked her about the $11-per-hour pay

4a

Appendix A

rate. When she asked who told them about the pay cut,

“they said they just hear it. They had not heard from any

authorized personnel.”

Relevant here, Creative’s employee-selection process

was not rigorous. Once Berry III hoppers filled out the

application and tax forms, they were hired. Creative did

not interview candidates, review qualifications, or check

references. Rather, Richard acknowledged that he (and

thus Creative) intended to offer a job to any Berry III

hopper who applied.

No transition occurred on May 20 because Creative

had not received enough applications to fully staff its

operations. By June 1, though, Creative had about 70

completed applications from the Berry III hoppers. At this

point, Richard’s Disposal cancelled its contract with Berry

III. Creative was to start as the new hopper supplier the

next day. As the Board found, Creative directly told the

hoppers about the new terms on the morning of June 2:

At approximately 4 a.m., the hoppers assembled

in the yard as usual, to await assignment to

a truck. They were met by former Berry III

supervisor, Karen Jackson, whom Richard had

hired on June 1. Jackson informed all of the

hoppers present that “[t]oday is the day you

start working under Creative Vision.” Jackson

then explained to them the terms under which

they would be working, including, among other

things, the $11-per-hour pay rate, the deduction

of Federal and State taxes, and a number of new

5a

Appendix A

employment standards and safety rules. Some

of the hoppers refused to work upon learning of

the new terms. A sufficient number of hoppers

remained, however, to staff the trucks. Thus,

on its first day of operations, [Creative] supplied

44 hoppers to Richard’s Disposal, all of whom

were formerly employed by Berry III.

Two days later, on June 4, Creative distributed an

employee handbook setting out new rules and employment

standards. Then, on June 6, after learning that Creative

had replaced Berry III and retained the incumbent

employees, the Union hand delivered a letter to Creative

demanding that it recognize the Union as the hoppers’

exclusive representative for collective-bargaining

purposes. Creative did not reply.

Shortly thereafter, the Union filed an unfair-laborpractice charge against Creative. Acting on behalf of

the Board’s Acting General Counsel, a Board Regional

Director investigated and issued a complaint in March

2012. The dispute proceeded to a two-day trial, after

which the administrative law judge (“ALJ”) concluded

that Creative violated subsections 8(a)(1) and (5) of the

National Labor Relations Act (the “Act”) by refusing to

recognize the Union. He also concluded that Creative was

not a perfectly clear successor because it “did not fail to

communicate candidly with the hoppers” about its intent

to set initial terms. As such, Creative did not violate the

Act by setting initial terms.

6a

Appendix A

In making this determination, the ALJ relied on

the fact that Richard communicated the initial terms of

employment to approximately 20 hoppers in May and that

a rumor spread among the hoppers that Creative would

be paying $11 per hour. The ALJ also heavily relied on

Creative’s June 2 announcement of initial terms to the

hoppers who were assembled for work and were awaiting

assignment.

The Board disagreed with the ALJ in part. It

upheld the ALJ’s finding that Creative was a successor

and therefore violated subsections 8(a)(1) and (5) by

refusing to recognize and bargain with the Union. It also

concluded that Creative was a perfectly clear successor

and had violated the Act by unilaterally imposing initial

terms and conditions of employment. In its analysis, the

Board looked only to Creative’s communications on or

before June 1, concluding the June 2 announcement was

untimely. The Board concluded that Creative’s pre-June

2 communications—Richard’s communication of new

terms to 20 hoppers, the rumors that reached an unknown

number of hoppers, and the inclusion of tax forms with

the applications—were insufficient. The Board concluded

that the limited notice from these communications “did not

negate the inference of probable continuity of employment

of the remaining 50 Berry III hopper applicants, who

lacked knowledge that their wages and benefits would be

reduced.”

One Board member dissented. He concluded that the

hoppers were not formally hired until June 2, when they

boarded the trucks, so he would have “examine[d] what

7a

Appendix A

[Creative] communicated to the hoppers on or before June

2.” To him, then, the 4:00 a.m. June 2 meeting was enough

to give notice of new terms of employment. Even if it were

not, though, the tax forms attached to the applications

were sufficient in his view because the hoppers did not

pay income taxes when employed by Berry III. Finally,

Creative’s bargaining obligation was not triggered, and it

could therefore unilaterally set new terms of employment,

until June 6, the date the Union made its bargaining

demand.

Creative now petitions this court for review, while

the Board seeks to have its order enforced. Creative

does not contest the Board’s holding that Creative

violated subsections 8(a)(1) and (5) of the Act by refusing

to recognize and bargain with the Union. “[W]hen an

employer does not challenge a finding of the Board, the

unchallenged issue is waived on appeal, entitling the

Board to summary enforcement.” Sara Lee Bakery Grp. v.

NLRB, 514 F.3d 422, 429 (5th Cir. 2008). Thus, the Board

is entitled to summary enforcement of the uncontested

parts of its order.

II. DISCUSSION

Creative makes three main arguments, two of

which relate to the applicability of the perfectly clear

successor doctrine. Creative first argues the Board erred

by concluding Creative was a perfectly clear successor

and thus could not set initial terms and conditions of

employment without bargaining with the Union. Creative

next argues that it did not violate its bargaining obligation

8a

Appendix A

because at the time Creative unilaterally set terms, the

Union had not sent a bargaining demand. Finally, it

argues that the complaint against it, issued on behalf of

the Board’s former Acting General Counsel, was invalid.

We review the Board’s “legal conclusions de novo

and its ‘factual findings under a substantial evidence

standard.’” Flex Frac Logistics, L.L.C. v. NLRB, 746

F.3d 205, 207 (5th Cir. 2014) (quoting Sara Lee Bakery,

514 F.3d at 428). “Substantial evidence is that which is

relevant and sufficient for a reasonable mind to accept as

adequate to support a conclusion. It is more than a mere

scintilla, and less than a preponderance.” El Paso Elec.

Co. v. NLRB, 681 F.3d 651, 656 (5th Cir. 2012) (emphasis

removed). “We may not reweigh the evidence, try the case

de novo, or substitute our judgment for that of the Board,

‘even if the evidence preponderates against the [Board’s]

decision.’” Id. (quoting Brown v. Apfel, 192 F.3d 492, 496

(5th Cir. 1999)). This does not mean our review is pro

forma (i.e., it is not merely a “rubber stamp”). NLRB v.

Arkema, Inc., 710 F.3d 308, 314 (5th Cir. 2013). We must

find the supportive evidence to be substantial. Id. at 314-15.

On the law, the Board’s “interpretation of the NLRA will

be upheld ‘so long as it is rational and consistent with the

Act.’” D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 349 (5th

Cir. 2013) (quoting Litton Fin. Printing Div. v. NLRB,

501 U.S. 190, 201, 111 S. Ct. 2215, 115 L. Ed. 2d 177 (1991)).

a. “Perfectly Clear” Successor

We begin our analysis of whether Creative was a

perfectly clear successor with the relevant statutory

9a

Appendix A

language. Section 8(a) of the Act provides that “[i]t shall

be an unfair labor practice for an employer . . . to interfere

with” or “restrain” protected union and organization

rights or “to refuse to bargain collectively with the

representatives of his employees.” 29 U.S.C. § 158(a)(1),

(5). The employees’ representative is determined by a

“majority of the employees” in the appropriate bargaining

unit. Id. § 159(a). Under the Act, when an employer

qualifies as a “successor” to another, it is “bound to

recognize and bargain with the union” that represented

its predecessor’s employees. NLRB v. Burns Int’l Sec.

Servs., Inc., 406 U.S. 272, 284, 92 S. Ct. 1571, 32 L. Ed.

2d 61 (1972).

That bargaining obligation, though, does not mean

every successor must abide by its predecessor’s terms and

conditions of employment. The Supreme Court in Burns

rejected a Board rule requiring just that, instead holding

that “a successor employer is ordinarily free to set initial

terms on which it will hire the employees of a predecessor.”

Id. at 294. No obligation to bargain before setting initial

terms arises in most situations because it will normally

not be evident whether the union will retain majority

status until after the successor has hired a full complement

of employees. Id. at 295. Further, the Court expressed

concern that “[s]addling” a successor “employer with

the terms and conditions of employment contained in the

old collective-bargaining contract may make [beneficial]

changes impossible and may discourage and inhibit the

transfer of capital.” Id. at 288. The Board’s rejected rule

would have been inconsistent with “[t]he congressional

policy manifest in the Act,” which “is to enable parties to

10a

Appendix A

negotiate for any protection either deems appropriate, but

to allow the balance of bargaining advantage to be set by

economic power realities.” Id.

The Burns Court also identified a narrow exception

to that rule, which applies when “it is perfectly clear that

the new employer plans to retain all of the employees in

the [bargaining] unit and in which it will be appropriate

to have [it] initially consult with the employees’ bargaining

representative before [it] fixes terms.” Id. at 294-95.

Thus, two types of successors emerged from Burns: an

“ordinary” successor, who is “free to set initial terms on

which it will hire the employees of a predecessor,” and a

“perfectly clear” successor, who must bargain with the

employees’ union before changing terms to which its

predecessor had agreed. See id.

Shortly after Burns, the Board decided Spruce Up,

where it tried to set boundaries for the perfectly clear

exception. See Spruce Up Corp., 209 N.L.R.B. 194, 195

(1974), enforced, 529 F.2d 516 (4th Cir. 1975). In Spruce

Up, the Board focused not only on whether the successor

intended to retain its predecessor’s employees, but also

on whether the incumbent employees would accept the

successor’s offer of employment. See id. Critical to whether

the incumbent employees would accept, and thus allow the

union to retain majority status, are the successor’s terms

of employment. Id. As the Board explained:

When an employer who has not yet commenced

operations announces new terms prior to

or simultaneously with his invitation to the

11a

Appendix A

previous work force to accept employment

under those terms, we do not think it can fairly

be said that the new employer “plans to retain

all of the employees in the unit,” as that phrase

was intended by the Supreme Court.

Id. The Board cautioned that a broader reading of Burns,

which focused only on whether the successor intended to

retain the employees, would cause successors “to refrain

from commenting favorably at all upon employment

prospects of old employees” so as to retain their “right to

unilaterally set initial terms, a right to which the Supreme

Court attache[d] great importance in Burns.” Id. Instead,

under Spruce Up’s test, what a new employer must avoid

is misleading employees or otherwise failing to provide

notice of changing employment terms:

[T]he caveat in Burns . . . should be restricted

to circumstances in which the new employer

has either actively, or by tacit inference, misled

employees into believing they would all be

retained without changes in their wages, hours,

or conditions of employment, or at least to

circumstances where the new employer . . . has

failed to clearly announce its intent to establish

a new set of conditions prior to inviting former

employees to accept employment.

Id. (footnote omitted).

We have summarized the holdings of Burns and

Spruce Up as follows: While “a successor employer is

12a

Appendix A

ordinarily free to set initial terms on which it will hire

its predecessor’s employees, when a successor evinces

a ‘perfectly clear’ intention to retain the predecessor’s

employees, it must consult w ith their bargaining

representative before fixing its own terms.” Adams &

Assocs., Inc. v. NLRB, 871 F.3d 358, 2017 WL 4079063,

at *8 (5th Cir. Sept 15, 2017). A successor set on retaining

its predecessor’s employees may dispel this “perfectly

clear” intention by giving employees “prior notice of its

intention” to institute its own initial terms or by “hold[ing]

itself” as if it will not adhere to the terms of the previous

collective-bargaining agreement (“CBA”). NLRB v. Hous.

Bldg. Servs., Inc., 128 F.3d 860, 864 n.6 (5th Cir. 1997)

(per curiam).

Creative does not dispute that it is a successor, so we

focus on whether it was a “perfectly clear” one. The key

question here is whether Creative provided sufficient and

timely notice of its intent to change the hoppers’ terms

and conditions of employment, thereby clarifying that it

was an ordinary rather than perfectly clear successor.

The Board held that Creative was a perfectly clear

successor. To the Board, June 1 rather than June 2 was

the date by which Creative had to give notice of its intent

to offer employment on different terms, so Creative’s

June 2 announcement was irrelevant. As to the pre-June

2 communications, the Board concluded: (1) Richard

did not tell Flagge about the new terms of employment

and therefore Flagge did not tell those terms to the 50

Berry III hoppers he gave applications to; (2) Richard’s

communication of new terms to approximately 20 Berry

13a

Appendix A

III hoppers and the subsequent word-of-mouth spread

of those new terms were insufficient to put a majority of

Creative’s hoppers on notice; and (3) inclusion of tax forms

“without explanation, let alone an express announcement

that taxes would be withheld from the hoppers’ pay,

was too ambiguous” for “a reasonable employee in like

circumstances [to] understand that continued employment

[was] conditioned on acceptance of materially different

terms.” Creative Vision Res., LLC, 364 N.L.R.B. No. 91,

slip op. at 4-6 & n.12 (2016).

Creative disputes each of these conclusions. It argues

that its June 2 announcement of new terms was timely

because the announcement preceded the formal hiring

of Berry III’s hoppers. Creative also argues that its preJune 2 communications with the hoppers were sufficient to

put them on notice. First, the Board erred by improperly

substituting its credibility determinations for the ALJ’s

over whether Richard told Flagge of the new terms of

employment. Second, the Board erred by rejecting the

credited evidence of the word-of-mouth communications

between the hoppers. Finally, Creative argues that the

Board’s conclusion about the ambiguity of the tax forms

“demeans the hoppers,” as any American worker would

realize that a tax form indicating that the employer will

deduct taxes means the employer intends to do just that.

We consider each of these arguments in turn.

14a

Appendix A

i. The June 2 Announcement

The Board’s conclusion that Creative’s June 2

announcement was untimely is well founded. To reach

this conclusion, the Board summarized its past decisions

as holding that a successor employer may unilaterally

set initial terms of employment if it “clearly announce[s]

its intent to establish a new set of conditions prior to, or

simultaneously with, its expression of intent to retain the

predecessor’s employees.” Id. at 3. But after the successor

expresses its intent to retain the predecessor’s employees,

an announcement of new terms, “even if made before

formal offers of employment are extended or the successor

commences operations, will not vitiate the bargaining

obligation.” Id. The Board’s justification for this prior-orsimultaneous-announcement requirement is as follows:

[A] new employer that expresses an intent to

retain the predecessor’s work force without

concurrently revealing to a majority of the

incumbent employees that different terms

will be instituted, improperly benefits from

the likelihood that those employees, lacking

knowledge that terms and conditions will

change, will choose to stay in the positions they

held with the predecessor, rather than seeking

employment elsewhere.

Id. at 6. After stating the legal standard it would apply, the

Board found that Creative expressed an intent to retain

Berry III’s employees between mid-May and June 1.

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This court has briefly spoken twice about the timing

of an announcement of new terms and its effect on notice.

We recently observed in Adams & Associates that a

communication of new employment terms through offer

letters and employment agreements was untimely because

the communication occurred after the successor evinced

an intent to retain its predecessor’s employees. Adams &

Assocs., 871 F.3d 358, 2017 WL 4079063, at *8. In Houston

Building Services, we opined that a successor may not

set its own initial terms if it fails to give “prior notice

of its intention” and it “holds itself as if it will adhere to

the terms of the previous CBA.” Hous. Bldg. Servs., 128

F.3d at 864 n.6. We turn to our sister circuits for further

guidance.

The D.C. Circuit explicated the rationale for prior or

simultaneous announcement of new terms in International

Ass’n of Machinists & Aerospace Workers, AFL-CIO v.

NLRB, 595 F.2d 664, 193 U.S. App. D.C. 279 (D.C. Cir.

1978). There, the D.C. Circuit approved of Spruce Up’s

qualification of Burns’s perfectly clear exception. Id. at

674. Recall that the Spruce Up Board held that it is not

“perfectly clear” that a successor “plans to retain all” the

predecessor’s employees when it also plans to impose new

terms on those employees. Spruce Up, 209 N.L.R.B. at

195. The successor can reasonably anticipate that some

incumbents will balk at and decline the new terms. See id.

This qualification, while sensible, generates an additional

problem, one the D.C. Circuit identified:

[I]n the Board’s view . . . the successor . . . may

endeavor to conceal, or at least postpone

16a

Appendix A

publicity on, reemployment objectives in order

to avoid the onus of bargaining during the

usually difficult period of takeover, and the

incumbent employees may thereby be deprived

of early appraisal of their retention prospects.

Int’l Ass’n of Machinists, 595 F.2d at 675. To provide an

“important measure of protection” against this possibility,

the Board adopted and the D.C. Circuit approved a prioror-simultaneous-announcement requirement. Id. at 674.

Such a requirement ensures that incumbent employees will

not be “lulled into a false sense of security” by a successor’s

announcement that it intends to retain the incumbents. Id.

at 675; see also S & F Mkt. St. Healthcare LLC v. NLRB,

570 F.3d 354, 359, 386 U.S. App. D.C. 444 (D.C. Cir. 2009)

(“[A]t bottom the ‘perfectly clear’ exception is intended

to prevent an employer from inducing possibly adverse

reliance upon the part of employees it misled or lulled into

not looking for other work.”). The D.C. Circuit went on to

note that even when a subsequent announcement of new

terms occurs before actual hiring, incumbent employees

may “lack . . . sufficient time to rearrange their affairs.”

Int’l Ass’n of Machinists, 595 F.2d at 675 n.49. In those

situations, they may “be forced to continue in the jobs

they held under the successor employer, notwithstanding

notice of diminished terms.” Id.

The Seventh Circuit has found this reasoning

persuasive. In Canteen Corp., it approved the Board’s

rejection of the view “that the obligation to bargain only

arose when the employer had failed to announce the initial

employment terms prior to, or simultaneously with, the

17a

Appendix A

extension of unconditional job offers to the predecessor

employees.” Canteen Corp. v. NLRB, 103 F.3d 1355, 1360,

1364-65 (7th Cir. 1997). Similarly, the Sixth Circuit, in

DuPont Dow, held that the announcement of new terms

before operations commenced but after formal offers

were made and accepted came too late. See DuPont Dow

Elastomers, L.L.C. v. NLRB, 296 F.3d 495, 506 (6th Cir.

2002).

We are persuaded by the Board’s and D.C. Circuit’s

reasoning of the wisdom of the prior-or-simultaneousannouncement requirement. We apply it here and find,

after careful examination of the record and the Board’s

inferences drawn therefrom, that substantial evidence

supports the Board’s conclusion that Creative evinced a

“perfectly clear” intention to retain the Berry III hoppers

by June 1. Thus, Creative’s announcement of new terms

on June 2 was untimely.

The record reflects that the shift from Berry III to

Creative would be abrupt, so Creative needed to ensure it

had hoppers lined up in advance. Creative distributed 70

applications to Berry III hoppers and made no efforts to

hire hoppers from other sources. 2 Creative had no reason

2. Creative argues that it sought applicants from sources other

than Berry III’s hoppers. It did not, however, file an exception to the

ALJ’s finding to the contrary, and therefore the Board found that

Creative was procedurally foreclosed from raising the issue. Under

the circumstances, we will not consider this question. See 29 U.S.C.

§ 160(e) (“No objection that has not been urged before the Board, its

member, agent, or agency, shall be considered by the court, unless

the failure or neglect to urge such objection shall be excused because

18a

Appendix A

to do so. Richard knew the quality of the hoppers’ work, and

his dissatisfaction was not with the hoppers but with Berry

III’s management. Further, finding and training new

hoppers would have been a major undertaking, delaying

what was supposed to be a rapid transition. Richard did not

interview any applicants or perform reference checks on

them, and he testified that he was agreeing to hire Berry

III hoppers who submitted applications. The distributed

applications also contained W-4s—a tax form that is, as

the Board noted, typically filled out after an employee is

hired. From these facts, the Board inferred that the hiring

process was a formality and that Creative sought to hire

the Berry III hoppers en masse. And that is just what

happened. On June 1, when Creative had enough Berry

III applicants, Richard cancelled Berry III’s contract with

Richard’s Disposal. All 44 hoppers Creative employed on

the first day of operations were previously employed by

Berry III. A reasonable mind could accept such evidence

and inferences as sufficient to support the conclusion that

by June 1, Creative had evinced a “perfectly clear” intent

to retain the Berry III hoppers.

Creative defends using June 2 as the cutoff date,

arguing that its whole hiring process was “in flux” up

until June 2 when the hoppers hopped on the trucks. It

was only at that point that the hoppers were formally

hired and it became “perfectly clear” how many would

accept Creative’s new terms. Creative relies on Emerald

of extraordinary circumstances.”); Woelke & Romero Framing, Inc.

v. NLRB, 456 U.S. 645, 665, 102 S. Ct. 2071, 72 L. Ed. 2d 398 (1982)

(stating that § 160(e) precludes a court of appeals from reviewing

claims not raised to the Board).

19a

Appendix A

Maintenance, Inc. v. NLRB, 464 F.2d 698 (5th Cir. 1972),

to argue that the delay caused by insufficient hopper

applications and uncertainty over how many hoppers

would accept the new terms indicates that the Union’s

majority status was not clear “until after the work force

had been assembled” on June 2. See id. at 701. There,

Emerald required the incumbent employees to reapply

for their jobs and refused to recognize the union’s referral

slips. Id. at 700. This refusal contravened its predecessor’s

CBA, which required the predecessor to fill all its positions

with union members. Id. Emerald built up its workforce

after commencing operations and hired a significant

number of non-incumbents. Id. This court found that

Emerald was not a perfectly clear successor because

“it was not clear that a majority of Emerald employees

were union members until after the work force had been

assembled.” Id. at 701.

Emerald differs in key ways from this case. Unlike

Creative’s application process, Emerald’s was not pro

forma—it hired a significant number of non-incumbents

and refused to hire union members simply because they

were union. Emerald indicated from the outset that it

intended to set its own terms by refusing to follow the

terms of the CBA during the application process. Emerald

built its workforce after it commenced operations and did

so gradually (unlike Creative), making it less evident that

the incumbent union’s majority status would continue.

Finally, the procedural posture of Emerald informs

our understanding of it. There, we considered the case

without owing deference to a Board finding of perfectly

clear successorship. (Remember that Burns was decided

20a

Appendix A

in the interim between the Board’s decision in Emerald

and ours. Id. at 699-700.) Here, by contrast, the Board has

found that Creative is a perfectly clear successor, and we

do not review de novo but for substantial evidence.

Admittedly, Creative did not expressly announce that

it intended to retain the hoppers. Its conduct, however,

spoke volumes. We agree with the Board, that in limited

circumstances, a successor’s plan to retain the incumbents

will be perfectly clear from its actions and not its words.

See Cadillac Asphalt Paving Co., 349 N.L.R.B. 6, 10-11

(2007). That was the case in Cadillac Asphalt, where,

similarly to here, all the incumbents received applications

(with attached W-4s), which were purely for recordkeeping

purposes. See id. There as well, the successor made no

effort to hire non-incumbents. See id. at 10. The successor

did announce that it was entering into a joint venture with

the predecessor. See id. at 7, 10-11. But it did not announce

that it planned to retain the incumbents. See id. Rather,

the Cadillac Asphalt Board found that the successor’s

“perfectly clear” intent to retain the incumbents was

evinced by its pro forma and closed application process.

See id. at 10-11.

Finally, we note that the facts of this case make it

unnecessary for us to consider whether there are some

situations where a subsequent announcement of new terms

before formal hiring or commencement of operations will

be timely. In this case, the June 2 announcement clearly

was untimely. The announcement occurred the same day

the hoppers were formally hired and Creative’s operations

commenced. This same-day announcement gave the

21a

Appendix A

hoppers insufficient time to rearrange their personal

affairs.

ii. Pre-June 2 Communications

Having concluded that Creative’s June 2 announcement

of new terms was untimely, we turn now to whether Creative

gave notice of its intent to establish new terms on or before

June 1. In analyzing this issue, we consider the cumulative

effect of three pre-June 2 communications from Creative

to the hoppers: (1) Richard’s alleged communication to

Flagge about the new terms of employment; (2) Richard’s

communication of the new terms to about 20 hoppers

and the subsequent word-of-mouth exchanges among the

hoppers; and (3) the inclusion of tax withholding forms

with the job applications. We conclude that all three

combined did not provide a majority of Creative’s hoppers

with sufficient notice of the new terms.

We turn first to Richard’s alleged conversations with

Flagge. Recall that Flagge, a hopper, spoke to Richard and

passed out about 50 applications to other hoppers. There

is a dispute about what Richard told Flagge. Richard

claimed he told Flagge about the new terms. Flagge

denied this. The Board ultimately sided with Flagge,

concluding that “Richard did not inform Flagge of the new

terms and conditions of employment and, consequently,

Flagge did not inform any of the hoppers to whom he gave

applications that their terms and conditions would change

under [Creative].” Creative, 2016 NLRB LExIS 637 at*4.

22a

Appendix A

Creative argues that the Board erred by siding with

Flagge. In Creative’s view, the ALJ credited Richard as

“a sincere and meticulous witness,” and thus necessarily

credited Richard’s testimony that he told Flagge the new

terms. By reaching the opposite credibility finding than

the ALJ, who actually saw the witnesses, the Board’s

credibility choice was unsupported by substantial

evidence.

In making this argument, Creative mischaracterizes

the ALJ’s and Board’s findings. The Board could not have

erred in dismissing the ALJ’s credibility determination

over what Richard told Flagge because the ALJ did not

make a credibility determination over what Richard

told Flagge. While ALJ “credibility determinations are

binding except in rare instances,” Adams & Assocs.,

871 F.3d 358, 2017 WL 4079063, at *8, no relevant ALJ

credibility determination was made here. In order to see

why, a detailed review of the ALJ’s decision is necessary.

The ALJ began his analysis of Richard’s testimony

by stating that Richard said that he told Flagge about the

new terms. The ALJ then noted that “Flagge’s testimony

squarely contradicts Richard . . . on this point.” Creative,

2016 NLRB LExIS 637 at *85 (ALJ op.). Flagge said that

Richard did not tell him anything about the new terms.

The ALJ then moved to a separate issue in Richard’s

testimony regarding how he had passed out applications

to about 20 other hoppers and told them about the new

terms. Regarding this testimony, the ALJ noted that the

hoppers did not corroborate Richard’s testimony. But the

ALJ also noted that other factors made Richard appear

23a

Appendix A

credible, such as Richard’s appearance as a meticulous

witness. Thus, the ALJ was confronted with whether to

credit Richard’s testimony about two different purported

communications: (1) what Richard told Flagge, and (2)

what Richard told the 20 hoppers.

Given this context, the ALJ’s finding becomes clear.

The ALJ credited Richard’s testimony only with respect

to what he told the 20 hoppers, not with respect to what

he told Flagge. Specifically, the ALJ’s credibility finding

on this point was the following:

This finding, that hoppers working for Berry

III learned some information about [Creative]

from Jackson, does not contradict Richard[‘s]

. . . testimony that he informed hoppers about

[Creative’s] initial terms of employment.

A lthough Richa rd[‘s] . . . t esti mony is

uncorroborated, it is also uncontradicted.

Moreover, it is consistent with the fact that at

least some hoppers knew about the contemplated

$11-per-hour wage rate.

F u r t her, a s d i sc u s sed above , R icha rd

. . . appeared to be a sincere and meticulous

w itness. For these reasons, I credit his

testimony that he told some of the hoppers—

those to whom he gave employment application

forms—that [Creative] would be paying an

$11-per-hour wage, would guarantee 8 hours

of employment per day, would pay overtime

for hours worked in excess of 40 per week, and

24a

Appendix A

would withhold taxes from their paychecks.

Based on Richard[‘s] . . . credited testimony,

I also find that he told these hoppers that

[Creative] guaranteed four holidays.

2016 NLRB LExIS 637 at *94.

As the emphasized portion highlights, the ALJ’s

credibility finding relates only to Richard’s testimony that

he told the 20 hoppers about the new terms. How could the

ALJ credit Richard’s testimony about his communications

with Flagge as “uncontradicted” when the ALJ explicitly

described that testimony earlier as being “squarely

contradict[ed]?” Instead, the ALJ’s finding should be

read to mean what it says: the ALJ credited Richard’s

uncorroborated and uncontradicted testimony about what

he told the 20 hoppers, not the contradicted testimony

about what he told Flagge.

And this reading makes sense. This is not a case

where the ALJ implicitly but necessarily resolved a

credibility dispute. In the ALJ’s eyes, Richard telling 20

hoppers about the new terms was sufficient (among other

circumstances, including the June 2 communications) to

evade the perfectly clear exception. The ALJ therefore

had no reason to decide whether Richard or Flagge was

being truthful with respect to their conversation because

the ALJ’s conclusion did not hinge on that determination.

Finally, we note that the Board’s reading of the ALJ’s

decision appears to match our own. The Board never stated

that it was dismissing an ALJ credibility determination.

In fact, with regard to the ALJ’s credibility findings, the

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Appendix A

Board expressly stated that it found no basis for reversing

the findings. 2016 NLRB LEXIS 637 at *2 n.1.

We are left with a situation in which the ALJ did

not make a credibility finding for this dispute and the

Board found that “Richard did not inform Flagge of the

new terms and conditions of employment.” 2016 NLRB

LExIS 637 at *4. Under these circumstances—where

(1) the ALJ did not resolve the factual dispute raised

by the conflicting testimony (Richard’s and Flagge’s

competing versions of their conversation); (2) there is a

clear Board finding (Richard did not tell Flagge about the

new terms); and (3) the ALJ credited both witnesses with

respect to other conversations (Richard’s uncontradicted

testimony about what he told the 20 hoppers, and Flagge’s

uncontradicted testimony about what he did not tell the

other hoppers)—we will not disturb the Board’s finding

under the substantial evidence standard of review.

But even if the ALJ made a credibility determination

that the Board overrode, the credibility choice is

ultimately irrelevant. Both the ALJ and the Board agree

that Flagge never communicated the new terms to the

hoppers. Because Flagge never passed along Richard’s

message, no additional employees were put on notice of

the new terms. See Adams & Assocs., 871 F.3d 358, 2017

WL 4079063, at *8 n.6 (observing that the notice inquiry

“is conducted from the employees’ perspective” (citing

Fall River Dyeing & Furnishing Corp. v. NLRB, 482

U.S. 27, 43-44, 107 S. Ct. 2225, 96 L. Ed. 2d 22 (1987);

NLRB v. Hous. Bldg. Serv., Inc., 936 F.2d 178, 180 n.1

(5th Cir. 1991))).

26a

Appendix A

We next consider Richard’s communication of new

terms to about 20 hoppers (plus the subsequent informal

word-of-mouth exchanges between the hoppers). These

communications were insufficient to put a majority of

Creative’s workforce on notice of the new terms. Although

the Burns Court and Spruce Up Board spoke in terms

of a plan “to retain all of the employees in the unit,” the

Board and lower courts have subsequently recognized

that the relevant inquiry is whether the successor planned

to retain enough of the predecessor’s employees so that

the union’s majority status will continue. 3 Such a rule is

sensible, and the Board’s reasoning shows why. Here, the

Board reasoned that allowing a successor to communicate

its new terms to a minority of its incumbent employees

would invite abuse. A new employer “would be encouraged

to announce changes in preexisting terms only to a select

few incumbent employees, while allowing the majority of

3. See Galloway Sch. Lines, 321 N.L.R.B. 1422, 1427 (1996)

(“To summarize, the duty to bargain may not arise when initial

employment terms are set because it may not be evident at that time

that the union’s majority status in the old work force will continue in

the new one. However, in other situations, it may be apparent from

the new employer’s hiring plan that the union’s majority status will

continue, and then the new employer is required to bargain over

initial terms.”); see also DuPont Dow, 296 F.3d at 500-01 (“But where

it is ‘perfectly clear’ that the new employer intends to retain the

unionized employees of its predecessor as a majority of its own work

force under essentially the same terms as their former employment,

the new employer becomes a ‘perfectly clear successor’ and must

bargain with the union.” (emphasis added)); Canteen Corp., 103 F.3d

at 1361-62 (“The Court thus established that a successor would be

required to bargain with the union before setting its initial terms

of hiring when it was clear that it intended to hire a majority of the

predecessor’s workforce.” (emphasis added)).

27a

Appendix A

employees to be lulled by its silence into not seeking other

work.” Creative, 2016 NLRB LEXIS 637 at *21. Like the

Board, we conclude that such a result would be at odds

with Burns and Spruce Up.

The word-of-mouth spread of the new terms to some

hoppers does not change this result. Both the ALJ and the

Board found that “the record affords no way of quantifying

how many of the hoppers had learned about the $11 per

hour wage rate or the other terms and conditions of

employment before they reported for work . . . on June 2.”

Id. Neither witness who testified that the hoppers knew

of the new pay rate before June 2 said how many hoppers

were privy.4 It was reasonable for the Board to conclude

4. The ALJ, relying on the testimony of one hopper, Kumasi

Nicholas, also found that Creative notified some other hoppers about

the new terms in advance of the June 2 meeting. The Board found that

Nicholas’s testimony did not support a finding that the hoppers were

told of the new terms in advance. On direct examination, Nicholas

was asked, “[W]hat happened on the very first day that [Creative]

began operations[?]” Nicholas responded, “Well, they told us ahead

of time—Mrs. Jackson told us ahead of time, you know, might be

switching over to another little company where—you know, a pay

rate, and she just let us know ahead of time, and then that’s when,

you know, they started off.” An effort to clarify whether Nicholas

learned about the pay rate before the June 2 meeting produced the

response, “I’m not sure. It’s been about a year. . . . I know she told me

that, but I’m not sure.” Creative, 2016 NLRB LExIS 637 at *19 n.13.

We will not disturb the Board’s conclusion. We acknowledge

that when “the Board disagrees with the ALJ’s findings, this court

examines the findings of the Board more critically than it would

have done had the Board agreed with the ALJ.” Tex. World Serv.

Co., Inc. v. NLRB, 928 F.2d 1426, 1430 (5th Cir. 1991). “But this court

still sustains the Board’s findings if the record taken as a whole

28a

Appendix A

that a majority of the incumbent hoppers were not put on

notice through Richard’s communication of new terms to

about 20 hoppers and subsequent word of mouth.

The Board also found that, from the hoppers’

perspective, the new pay rate was unsubstantiated

rumor or gossip and therefore could not constitute a clear

announcement of the new terms. Taylor, the hopper who

testified that he learned about the new pay rate before

June 2, could not identify his source of information. The

Union official, who received a call from hoppers claiming

they heard Creative would pay only $11 per hour, said the

hoppers could not confirm where their information came

from. We will not disturb the Board’s reasonable conclusion

that, as rumor and gossip with no clear source, the new

terms were not clearly announced. Such a conclusion makes

sense given that the purpose of a clear announcement is

to give incumbent employees an opportunity to reshape

their personal affairs. It is reasonable to conclude that an

employee would not reshape his or her personal affairs

(i.e., begin searching for new work) because he or she

overhears uncorroborated rumors.

contains substantial evidence to support those findings.” Id. at 1431.

“Provided substantial evidence exists, this court cannot reverse the

Board’s decision when the Board and the ALJ merely draw different

inferences from established facts.” Id. Here, the Board merely drew

a different inference (that Nicholas learned of the new terms at the

June 2 meeting) from facts the ALJ and Board shared. Based on the

ambiguity of Nicholas’s response and the uncertainty with which he

delivered it, we find that substantial evidence supports the Board’s

finding.

29a

Appendix A

Turning lastly to the tax withholding forms, we

conclude that the Board’s decision, finding these forms

insufficient to put the hoppers on notice, is supported by

substantial evidence. Certainly, the tax forms conspicuously

note that their purpose is to allow an employer to withhold

taxes and social security. Creative argues that such a

withholding would fundamentally change the hoppers’

terms of employment, as (so the argument goes) it would

convert them from independent contractors to employees.

Creative further argues that with this information, the

hoppers should have deduced that the forms signaled a

change in their terms of employment.

While Creative’s argument is reasonable, the Board’s

finding is even more so. The Board concluded that the

inclusion of the tax forms was too ambiguous to constitute

sufficient notice. In doing so, the Board pointed out that

it was unclear whether the hoppers filled out tax forms

for Berry III. Had they previously done so, Creative’s

inclusion of tax forms would not clearly signal a change

in employment terms. Further, the Board observed

that no evidence existed that the hoppers considered

themselves independent contractors rather than

employees. Absent knowledge of their alleged original

status as independent contractors, the hoppers would be

unable to deduce that a tax withholding would change

that status. Finally, a number of hoppers wrote that they

were exempt from paying taxes on the forms, indicating

that the tax forms did not signal to the hoppers that a

change in tax collection practices was imminent. Indeed,

none of the hoppers testified that they understood that

Creative planned to deduct taxes from their pay before

30a

Appendix A

the June 2 announcement. Given both the ambiguity of the

announcement and the multistep deductions required for

an employee to identify the change in employment terms,

we determine that the Board’s conclusion that the tax

forms did not put the hoppers on notice is supported by

substantial evidence. See Rosdev Hosp., Secaucus, LP &

La Plaza, Secaucus, LLC, 349 N.L.R.B. 202, 207 (2007)

(ALJ op.) (“[T]o the extent an employer’s pretakeover

announcement contains ambiguities regarding the terms

and conditions of employment offered to employees, such

ambiguities will be resolved against the employer.”).

The two cases Creative cites to support its argument

that the inclusion of tax forms was sufficient notice—

S & F Market and Ridgewell’s—in fact demonstrate the

reasonableness of the Board’s position. Both present

situations in which the notice at issue explicitly stated

the new terms. No multistep deductions were required

on the part of the employees. In S & F Market, the new

employer included a cover letter with each job application

that promised “significant operational changes,” identified

various pre-employment checks and tests to be passed, and

required the applicant to affirm his or her understanding

that the employment offered would be temporary and at

will. S & F Mkt., 570 F.3d at 356. The panel concluded

that “the employees had every indication—from S &

F’s job applications, interviews, and letters offering

employment—that S & F intended to institute new terms

of employment.” Id. at 360 (emphasis added). Similarly,

in Ridgewell’s, the new employer announced to the union

during a meeting that it would change the workers’ statuses

from employees to independent contractors. Ridgewell’s

31a

Appendix A

Inc., 334 N.L.R.B. 37, 37 (2001). The announcement

“clearly signaled that the [new employer’s] initial terms

and conditions of employment would differ.” Id.

To be clear, a new employer need not produce an

itemized list of changes to employment terms. But the

inclusion of tax forms in this case falls well short of the

simple and direct announcements in S & F Market (via

a cover letter with the job application) and Ridgewell’s

(during a meeting with the union).

We acknowledge that this case does not present

facts indicating that Creative endeavored to create an

impression that it would keep Berry III’s terms. This

case is therefore slightly dissimilar from DuPont Dow

and Elf Atochem, two opinions the Board cites to support

its decision. In DuPont Dow, a single sentence in a

memorandum distributed to the employees stated that the

new employer would set initial terms. DuPont Dow, 296

F.3d at 503. This single sentence was not “sufficiently clear

and definite to overcome the impression carefully created

by the Company that the terms and conditions would

remain the same.” Id. Similarly, in Elf Atochem, the new

employer told the employees it would offer “comparable”

terms and conditions and then reneged. Elf Atochem N.

Am., Inc., 339 N.L.R.B. 796, 808 (2003).

But while the case before us is distinguishable

from DuPont Dow and Elf Atochem, the distinction is

not dispositive. The Spruce Up Board did not limit the

perfectly clear exception to situations where employees are

actively misled. Rather, the Board warned that employees

32a

Appendix A

could be misled merely through “tacit inference.” Spruce

Up, 209 N.L.R.B. at 195. Indeed, even when employees

“are not affirmatively led to believe that existing terms

will be continued,” the expression of intent to retain

the incumbents can, by itself, “engender expectations,”

causing employees to “forego the reshaping of personal

affairs.” Int’l Ass’n of Machinists, 595 F.2d at 674.

b. Necessity of a Bargaining Demand

Creative’s next argument is that it did not violate

its bargaining obligation because at the time Creative

unilaterally set terms, the Union had not sent a bargaining

demand. It relies on Fall River Dyeing & Furnishing

Corp v. NLRB, to argue that all successors are free to

set initial terms before the union demands bargaining.

Creative’s duty to bargain was therefore not triggered

until the Union’s demand on June 6, four days after

Creative announced its initial terms.

We find this argument meritless. As the Board

pointed out, Fall River’s demand rule “developed in a very

different context,” namely the ordinary successor context.

Creative, 2016 NLRB LExIS 637 at *25. The Board

concluded that nothing in the language or the reasoning

of Fall River supports the demand rule’s extension to the

perfectly clear successor context. A full digression into

Fall River and cases interpreting it shows why.

In Fall River, the Supreme Cour t addressed

when an ordinary successor’s obligation to bargain

with an incumbent union attaches. See Fall River, 482

33a

Appendix A

U.S. at 30. The successor in that case restarted its

predecessor’s operations following a seven month hiatus

and gradually built its workforce. Id. at 32-33, 45. As

a result of this gradual buildup, the percentage of the

successor’s workforce composed of its predecessor’s

employees fluctuated. See id. at 47. Due to this ongoing

fluctuation, the Court was tasked with setting the proper

moment to check to see if the majority of the successor’s

workforce was composed of its predecessor’s employees.

See id. To set this moment, the Court adopted the

“substantial and representative complement” rule. Id.

A successor’s bargaining obligation is triggered when

it hires a “substantial and representative complement”

of its workforce, a majority of which had previously

been employed by its predecessor. Id. But a bargaining

obligation only triggers at this moment if the union has

made a bargaining demand. Id. at 52. The Court reasoned

that the combination of the “substantial and representative

complement” rule as well as the demand rule would avoid

placing “an unreasonable burden” on the employer to

determine when its bargaining obligation attaches. See

id. at 50. “Once the employer has concluded that it has

reached the appropriate complement, then, in order to

determine whether its duty to bargain will be triggered,

it has only to see whether the union already has made a

demand for bargaining.” Id. at 52-53.

Importantly, however, the Fall River Court suggested

that in some situations the composition of the employer’s

workforce alone may trigger a duty to bargain. The Fall

River Court observed that the “‘triggering’ fact for the

bargaining obligation” in Burns was the “composition of

34a

Appendix A

the successor’s work force.” Id. at 46. The Court noted that

in Burns the predecessor’s “contract expired on June 30

and [the successor] began its services with a majority of

[the predecessor’s] guards on July 1.” Id. at 47; see Burns,

406 U.S. at 275. There was no “start-up period by the

new employer while it gradually buil[t] its operations and

hire[d] employees.” Fall River, 482 U.S. at 47.

No case Creative cites has extended the demand

requirement that Fall River established for ordinary

successors to perfectly clear successors. 5 Tellingly, not

all courts even extend the demand requirement to all

ordinary successor cases. The Second Circuit in Banknote

Corp., limited the demand rule to factual circumstances

analogous to Fall River—i.e., where there is a “gradual or

staggered hiring” or “a significant hiatus in operations.”

Banknote Corp. of Am. v. NLRB, 84 F.3d 637, 646 (2d

Cir. 1996). In those cases, a bargaining demand has an

important function as there “may be considerable doubt as

to whether a union that enjoyed the support of a majority

of a predecessor’s bargaining unit continues to do so

under the successor’s operation.” Id. at 645. But when

5. Cadillac Asphalt, the one case Creative cites as applying

the demand rule in the perfectly-clear-successor context, actually

supports the contention that a perfectly clear successor’s obligation

to bargain over initial terms may arise before a union demand. In

Cadillac Asphalt, the union’s demand came after Cadillac changed

its terms and conditions. See Cadillac Asphalt, 349 N.L.R.B. at 7-8.

Cadillac stopped contributing to its employee’s union benefit fund on

July 16. Id. at 7. The union’s response came two days later, on July 18.

Id. Nevertheless, the Board held that Cadillac was a perfectly clear

successor and ordered it to make employees whole for its failure to

make benefit fund payments starting on July 16. Id. at 13.

35a

Appendix A

the successor engages in “a rapid transition period with

the immediate hiring of a full employee complement,” the

rationale for the demand rule dissipates. Id. at 646. In

those cases, the successor will be able to “easily discern

its obligation to presume that the [union] continued to

enjoy majority status.” Id. at 645-46.

While this court has indicated that a union bargaining

demand is required to trigger a bargaining obligation in

the ordinary successor context, see Hous. Bldg. Serv., 936

F.2d at 180, we find Banknote’s reasoning persuasive for

the perfectly clear successor context. Self-evident as it

may be, the perfectly clear exception only applies when

it is “perfectly clear” that the union’s majority status will

survive the transition from predecessor to successor.

See Burns, 406 U.S. at 294-95. Accordingly, sending a

bargaining demand to a perfectly clear successor would

be superfluous because the new employer would be

able to “easily discern” from the outset that the union

will presumptively retain its majority status during

the transition. See Banknote Corp., 84 F.3d at 645-46.

We therefore decline to require a union bargaining

demand to trigger a perfectly clear successor’s duty

not to unilaterally set initial terms of employment. In

perfectly clear successor cases, the “composition of the

successor’s work force” alone is the “‘triggering’ fact for

the bargaining obligation.” See Fall River, 482 U.S. at 46.

c. Validity of the Complaint

Finally, Creative argues the Board’s complaint was

void because it was issued on behalf of Acting General

36a

Appendix A

Counsel Lafe Solomon, who at the time was serving in

violation of the Federal Vacancies Reform Act (“FVRA”).

The Board contends we lack jurisdiction to hear this

argument because Creative was untimely in making it.

Even if we have jurisdiction, the Board contends that the

later General Counsel ratified the complaint, effectively

curing any defect.

“[T]he FVRA prevents a person who has been

nominated for a vacant PAS [Presidential nomination and

Senate confirmation] office from performing the duties of

that office in an acting capacity.” NLRB v. SW Gen., Inc.,

137 S. Ct. 929, 938, 197 L. Ed. 2d 263 (2017). Solomon’s

nomination was pending in the Senate from January 2011

to January 2013. Id. at 937. During that time, Solomon was

serving as Acting General Counsel. See id. The FVRA

prohibited him from doing so. Id. at 944. The complaint

in this case was filed in March 2012 while Solomon was

serving as Acting General Counsel in violation of the

FVRA. Creative thus argues that the complaint was void

and “may not be ratified.” See SW Gen., Inc. v. NLRB,

796 F.3d 67, 71, 78, 418 U.S. App. D.C. 67 (D.C. Cir. 2015),

aff’d, 137 S. Ct. 929, 197 L. Ed. 2d 263 (2017).6

6. Creative’s argument relies on the general rule that actions

taken in violation of the FVRA are void ab initio. The FVRA,

however, expressly exempts “the General Counsel of the National

Labor Relations Board” from this rule. 5 U.S.C. § 3348(e)(1). The D.C.

Circuit has left open whether the actions of an improperly serving

Acting General Counsel are voidable or instead “wholly insulate[d]

. . . even in the event of an FVRA violation.” SW Gen., 796 F.3d at

79. We express no view on that question.

37a

Appendix A

The Board responds by arguing the NLRA precludes

our consideration of this issue. It relies on Section

10(e), which provides: “No objection that has not been

urged before the Board, its member, agent, or agency,

shall be considered by the court, unless the failure or

neglect to urge such objection shall be excused because

of extraordinary circumstances.” 29 U.S.C. § 160(e).

Creative did not challenge Solomon’s authority when it

filed its exceptions to the ALJ’s decision in February

2013. Creative did not object until April 2016, and the

Board concluded the objection was untimely. See 29 C.F.R.

§ 102.2(d)(1); see also id. § 102.46(f). Creative does not

now argue that its exceptions were timely or that it has

shown extraordinary circumstances. See Indep. Elec.

Contractors of Hous., Inc. v. NLRB, 720 F.3d 543, 550-52

(5th Cir. 2013). Such arguments are forfeited. See SEC v.

Life Partners Holdings, Inc., 854 F.3d 765, 784 (5th Cir.

2017). We have held untimely objections to be waived under

Section 10(e). See Hallmark Phx. 3, L.L.C. v. NLRB, 820

F.3d 696, 712-13 (5th Cir. 2016). Because Creative did not

timely object to Solomon’s authority to file the complaint,

our review of any such argument is barred. See 29 U.S.C.

§ 160(e); Hallmark, 820 F.3d at 713.

III. CONCLUSION

For the foregoing reasons, we deny Creative’s petition

and grant enforcement of the Board’s order.

38a

APPENdIx B — Appendix

OPINIONBOF THE uNITED

sTATEs COuRT OF APPEALs FOR THE FIFTH

CIRCuIT, FILED sEPTEMbEr 25, 2017

IN THE UNITED STATES COURT OF

AppEALS FOR THE FIFTH CIRCUIT

No. 16-60715

CREATIVE VISION RESOURCES, L.L.C.,

Petitioner Cross-Respondent,

v.

NATIONAL LABOR RELATIONS BOARD,

Respondent Cross-Petitioner.

September 25, 2017, Filed

On petition for Review and Cross-Application

for Enforcement of an Order of the National

Labor Relations Board.

Before KING, pRADO, and SOUTHWICK, Circuit

Judges.

KING, Circuit Judge:

Creative Vision Resources, L.L.C., succeeded another

company as the staffing provider for garbage trucks in

New Orleans. It set its own initial terms and conditions

of employment instead of bargaining with the incumbent

union. The union filed an unfair-labor-practice charge

39a

Appendix B

against Creative, alleging violations under Section 8(a)

of the National Labor Relations Act. The administrative

law judge concluded, among other things, that Creative

was not a “perfectly clear” successor and accordingly

was within its right to set initial terms and conditions.

The National Labor Relations Board reversed. Creative

petitions this court for review, while the Board seeks

enforcement of its order. We deny Creative’s petition and

grant the Board’s petition to enforce.

I. FACTuAL AND PROCEDuRAL BACKGROuND1

Richard’s Disposal is a trash-collection company in the

greater New Orleans area. Since 2007, Local 100, United

Labor Unions has represented the “hoppers” who ride on

the back of Richard’s Disposal’s garbage trucks and pick

up trash cans. Until early June 2011, the hoppers were

employed by a labor-supply company called Berry III.

Dissatisfied with Berry III’s management practices,

Richard’s Disposal’s vice president, Alvin Richard III,

decided to form Creative Vision Resources, L.L.C.

(“Creative”), to become the new hopper supplier. These

unsatisfactory practices, according to the Board’s

decision, included Berry III’s “treatment of the hoppers

as independent contractors,” which meant “Berry III paid

the hoppers a flat rate of $103 per day with no overtime,

and made no deductions for taxes or social security.”

1. We draw most of our discussion of the history of the dispute

from the decisions of the Board and the administrative law judge.

See Creative Vision Res., LLC, 364 N.L.R.B. No. 91 (2016).

40a

Appendix B

To prepare for the transition from Berry III to

Creative, which was scheduled to take place on May 20,

2011, Richard prepared an employee handbook and safety

manual. He also put together employment applications,

which, along with federal and state tax forms, were to be

distributed to current Berry III hoppers. Richard then

personally distributed these applications along with tax

forms to about 20 hoppers. He informed them that joining

Creative would mean changes in the terms and conditions

of their employment, including $11-per-hour pay with

overtime and the deduction of taxes and social security

from their paychecks.

Richard also asked a Berry III hopper named Eldridge

Flagge to help him pass out applications. Flagge passed

out approximately 50 applications and tax forms between

mid-May and June 1. Richard testified that he told Flagge

of the new terms and conditions; Flagge denied he was told

and testified he did not tell the hoppers of the changes in

the prospective terms of employment.

Regardless, some of the hoppers learned of the

changed terms. One hopper, Anthony Taylor, testified

that the hoppers knew of the new pay rate before June 2

because “we all congregate out there in the morning. We

been knowing that.” A Union official also testified that at

least one hopper asked her about the $11-per-hour pay

rate. When she asked who told them about the pay cut,

“they said they just hear it. They had not heard from any

authorized personnel.”

Relevant here, Creative’s employee-selection process

was not rigorous. Once Berry III hoppers filled out the

41a

Appendix B

application and tax forms, they were hired. Creative did

not interview candidates, review qualifications, or check

references. Rather, Richard acknowledged that he (and

thus Creative) intended to offer a job to any Berry III

hopper who applied.

No transition occurred on May 20 because Creative

had not received enough applications to fully staff its

operations. By June 1, though, Creative had about 70

completed applications from the Berry III hoppers. At this

point, Richard’s Disposal cancelled its contract with Berry

III. Creative was to start as the new hopper supplier the

next day. As the Board found, Creative directly told the

hoppers about the new terms on the morning of June 2:

At approximately 4 a.m., the hoppers assembled

in the yard as usual, to await assignment to

a truck. They were met by former Berry III

supervisor, Karen Jackson, whom Richard had

hired on June 1. Jackson informed all of the

hoppers present that “[t]oday is the day you

start working under Creative Vision.” Jackson

then explained to them the terms under which

they would be working, including, among other

things, the $11-per-hour pay rate, the deduction

of Federal and State taxes, and a number of new

employment standards and safety rules. Some

of the hoppers refused to work upon learning of

the new terms. A sufficient number of hoppers

remained, however, to staff the trucks. Thus,

on its first day of operations, [Creative] supplied

44 hoppers to Richard’s Disposal, all of whom

were formerly employed by Berry III.

42a

Appendix B

Two days later, on June 4, Creative distributed an

employee handbook setting out new rules and employment

standards. Then, on June 6, after learning that Creative

had replaced Berry III and retained the incumbent

employees, the Union hand delivered a letter to Creative

demanding that it recognize the Union as the hoppers’

exclusive representative for collective-bargaining

purposes. Creative did not reply.

Shortly thereafter, the Union filed an unfair-laborpractice charge against Creative. Acting on behalf of

the Board’s Acting General Counsel, a Board Regional

Director investigated and issued a complaint in March

2012. The dispute proceeded to a two-day trial, after

which the administrative law judge (“ALJ”) concluded

that Creative violated subsections 8(a)(1) and (5) of the

National Labor Relations Act (the “Act”) by refusing to

recognize the Union. He also concluded that Creative was

not a perfectly clear successor because it “did not fail to

communicate candidly with the hoppers” about its intent

to set initial terms. As such, Creative did not violate the

Act by setting initial terms.

In making this determination, the ALJ relied on

the fact that Richard communicated the initial terms of

employment to approximately 20 hoppers in May and that

a rumor spread among the hoppers that Creative would

be paying $11 per hour. The ALJ also heavily relied on

Creative’s June 2 announcement of initial terms to the

hoppers who were assembled for work and were awaiting

assignment.

43a

Appendix B

The Board disagreed with the ALJ in part. It

upheld the ALJ’s finding that Creative was a successor

and therefore violated subsections 8(a)(1) and (5) by

refusing to recognize and bargain with the Union. It also

concluded that Creative was a perfectly clear successor

and had violated the Act by unilaterally imposing initial

terms and conditions of employment. In its analysis, the

Board looked only to Creative’s communications on or

before June 1, concluding the June 2 announcement was

untimely. The Board concluded that Creative’s pre-June

2 communications—Richard’s communication of new

terms to 20 hoppers, the rumors that reached an unknown

number of hoppers, and the inclusion of tax forms with

the applications—were insufficient. The Board concluded

that the limited notice from these communications “did not

negate the inference of probable continuity of employment

of the remaining 50 Berry III hopper applicants, who

lacked knowledge that their wages and benefits would be

reduced.”

One Board member dissented. He concluded that the

hoppers were not formally hired until June 2, when they

boarded the trucks, so he would have “examine[d] what

[Creative] communicated to the hoppers on or before June

2.” To him, then, the 4:00 a.m. June 2 meeting was enough

to give notice of new terms of employment. Even if it were

not, though, the tax forms attached to the applications

were sufficient in his view because the hoppers did not

pay income taxes when employed by Berry III. Finally,

Creative’s bargaining obligation was not triggered, and it

could therefore unilaterally set new terms of employment,

until June 6, the date the Union made its bargaining

demand.

44a

Appendix B

Creative now petitions this court for review, while

the Board seeks to have its order enforced. Creative

does not contest the Board’s holding that Creative

violated subsections 8(a)(1) and (5) of the Act by refusing

to recognize and bargain with the Union. “[W]hen an

employer does not challenge a finding of the Board, the

unchallenged issue is waived on appeal, entitling the

Board to summary enforcement.” Sara Lee Bakery Grp. v.

NLRB, 514 F.3d 422, 429 (5th Cir. 2008). Thus, the Board

is entitled to summary enforcement of the uncontested

parts of its order.

II. DIsCussION

Creative makes three main arguments, two of

which relate to the applicability of the perfectly clear

successor doctrine. Creative first argues the Board erred

by concluding Creative was a perfectly clear successor

and thus could not set initial terms and conditions of

employment without bargaining with the Union. Creative

next argues that it did not violate its bargaining obligation

because at the time Creative unilaterally set terms, the

Union had not sent a bargaining demand. Finally, it

argues that the complaint against it, issued on behalf of

the Board’s former Acting General Counsel, was invalid.

We review the Board’s “legal conclusions de novo

and its ‘factual findings under a substantial evidence

standard.’” Flex Frac Logistics, L.L.C. v. NLRB, 746

F.3d 205, 207 (5th Cir. 2014) (quoting Sara Lee Bakery,

514 F.3d at 428). “Substantial evidence is that which is

relevant and sufficient for a reasonable mind to accept as

45a

Appendix B

adequate to support a conclusion. It is more than a mere

scintilla, and less than a preponderance.” El Paso Elec.

Co. v. NLRB, 681 F.3d 651, 656 (5th Cir. 2012) (emphasis

removed). “We may not reweigh the evidence, try the case

de novo, or substitute our judgment for that of the Board,

‘even if the evidence preponderates against the [Board’s]

decision.’” Id. (quoting Brown v. Apfel, 192 F.3d 492, 496

(5th Cir. 1999)). This does not mean our review is pro

forma (i.e., it is not merely a “rubber stamp”). NLRB v.

Arkema, Inc., 710 F.3d 308, 314 (5th Cir. 2013). We must

find the supportive evidence to be substantial. Id. at 314-15.

On the law, the Board’s “interpretation of the NLRA will

be upheld ‘so long as it is rational and consistent with the

Act.’” D.R. Horton, Inc. v. NLRB, 737 F.3d 344, 349 (5th

Cir. 2013) (quoting Litton Fin. Printing Div. v. NLRB,

501 U.S. 190, 201, 111 S. Ct. 2215, 115 L. Ed. 2d 177 (1991)).

a. “Perfectly Clear” successor

We begin our analysis of whether Creative was a

perfectly clear successor with the relevant statutory

language. Section 8(a) of the Act provides that “[i]t shall

be an unfair labor practice for an employer . . . to interfere

with” or “restrain” protected union and organization

rights or “to refuse to bargain collectively with the

representatives of his employees.” 29 U.S.C. § 158(a)(1),

(5). The employees’ representative is determined by a

“majority of the employees” in the appropriate bargaining

unit. Id. § 159(a). Under the Act, when an employer

qualifies as a “successor” to another, it is “bound to

recognize and bargain with the union” that represented

its predecessor’s employees. NLRB v. Burns Int’l Sec.

46a

Appendix B

Servs., Inc., 406 U.S. 272, 284, 92 S. Ct. 1571, 32 L. Ed.

2d 61 (1972).

That bargaining obligation, though, does not mean

every successor must abide by its predecessor’s terms and

conditions of employment. The Supreme Court in Burns

rejected a Board rule requiring just that, instead holding

that “a successor employer is ordinarily free to set initial

terms on which it will hire the employees of a predecessor.”

Id. at 294. No obligation to bargain before setting initial

terms arises in most situations because it will normally

not be evident whether the union will retain majority

status until after the successor has hired a full complement

of employees. Id. at 295. Further, the Court expressed

concern that “[s]addling” a successor “employer with

the terms and conditions of employment contained in the

old collective-bargaining contract may make [beneficial]

changes impossible and may discourage and inhibit the

transfer of capital.” Id. at 288. The Board’s rejected rule

would have been inconsistent with “[t]he congressional

policy manifest in the Act,” which “is to enable parties to

negotiate for any protection either deems appropriate, but

to allow the balance of bargaining advantage to be set by

economic power realities.” Id.

The Burns Court also identified a narrow exception

to that rule, which applies when “it is perfectly clear that

the new employer plans to retain all of the employees in

the [bargaining] unit and in which it will be appropriate

to have [it] initially consult with the employees’ bargaining

representative before [it] fixes terms.” Id. at 294-95.

Thus, two types of successors emerged from Burns: an

47a

Appendix B

“ordinary” successor, who is “free to set initial terms on

which it will hire the employees of a predecessor,” and a

“perfectly clear” successor, who must bargain with the

employees’ union before changing terms to which its

predecessor had agreed. See id.

Shortly after Burns, the Board decided Spruce Up,

where it tried to set boundaries for the perfectly clear

exception. See Spruce Up Corp., 209 N.L.R.B. 194, 195

(1974), enforced, 529 F.2d 516 (4th Cir. 1975). In Spruce

Up, the Board focused not only on whether the successor

intended to retain its predecessor’s employees, but also

on whether the incumbent employees would accept the

successor’s offer of employment. See id. Critical to whether

the incumbent employees would accept, and thus allow the

union to retain majority status, are the successor’s terms

of employment. Id. As the Board explained:

When an employer who has not yet commenced

operations announces new terms prior to

or simultaneously with his invitation to the

previous work force to accept employment

under those terms, we do not think it can fairly

be said that the new employer “plans to retain

all of the employees in the unit,” as that phrase

was intended by the Supreme Court.

Id. The Board cautioned that a broader reading of Burns,

which focused only on whether the successor intended to

retain the employees, would cause successors “to refrain

from commenting favorably at all upon employment

prospects of old employees” so as to retain their “right to

48a

Appendix B

unilaterally set initial terms, a right to which the Supreme

Court attache[d] great importance in Burns.” Id. Instead,

under Spruce Up’s test, what a new employer must avoid

is misleading employees or otherwise failing to provide

notice of changing employment terms:

[T]he caveat in Burns . . . should be restricted

to circumstances in which the new employer

has either actively, or by tacit inference, misled

employees into believing they would all be

retained without changes in their wages, hours,

or conditions of employment, or at least to

circumstances where the new employer . . . has

failed to clearly announce its intent to establish

a new set of conditions prior to inviting former

employees to accept employment.

Id. (footnote omitted).

We have summarized the holdings of Burns and

Spruce Up as follows: While “a successor employer is

ordinarily free to set initial terms on which it will hire

its predecessor’s employees, when a successor evinces

a ‘perfectly clear’ intention to retain the predecessor’s

employees, it must consult w ith their bargaining

representative before fixing its own terms.” Adams

& Assocs., Inc. v. NLRB, No. 16-60333, 871 F.3d 358,

2017 U.S. App. LExIS 17917, 2017 WL 4079063, at *8

(5th Cir. Sept 15, 2017). A successor set on retaining

its predecessor’s employees may dispel this “perfectly

clear” intention by giving employees “prior notice of its

intention” to institute its own initial terms or by “hold[ing]

49a

Appendix B

itself” as if it will not adhere to the terms of the previous

collective-bargaining agreement (“CBA”). NLRB v. Hous.

Bldg. Servs., Inc., 128 F.3d 860, 864 n.6 (5th Cir. 1997)

(per curiam).

Creative does not dispute that it is a successor, so we

focus on whether it was a “perfectly clear” one. The key

question here is whether Creative provided sufficient and

timely notice of its intent to change the hoppers’ terms

and conditions of employment, thereby clarifying that it

was an ordinary rather than perfectly clear successor.

The Board held that Creative was a perfectly clear

successor. To the Board, June 1 rather than June 2 was

the date by which Creative had to give notice of its intent

to offer employment on different terms, so Creative’s

June 2 announcement was irrelevant. As to the pre-June

2 communications, the Board concluded: (1) Richard

did not tell Flagge about the new terms of employment

and therefore Flagge did not tell those terms to the 50

Berry III hoppers he gave applications to; (2) Richard’s

communication of new terms to approximately 20 Berry

III hoppers and the subsequent word-of-mouth spread

of those new terms were insufficient to put a majority of

Creative’s hoppers on notice; and (3) inclusion of tax forms

“without explanation, let alone an express announcement

that taxes would be withheld from the hoppers’ pay,

was too ambiguous” for “a reasonable employee in like

circumstances [to] understand that continued employment

[was] conditioned on acceptance of materially different

terms.” Creative Vision Res., LLC , 364 N.L.R.B. No. 91,

2016 NLRB LExIS 637, at *17 & n.12 (2016).

50a

Appendix B

Creative disputes each of these conclusions. It argues

that its June 2 announcement of new terms was timely

because the announcement preceded the formal hiring

of Berry III’s hoppers. Creative also argues that its preJune 2 communications with the hoppers were sufficient to

put them on notice. First, the Board erred by improperly

substituting its credibility determinations for the ALJ’s

over whether Richard told Flagge of the new terms of

employment. Second, the Board erred by rejecting the

credited evidence of the word-of-mouth communications

between the hoppers. Finally, Creative argues that the

Board’s conclusion about the ambiguity of the tax forms

“demeans the hoppers,” as any American worker would

realize that a tax form indicating that the employer will

deduct taxes means the employer intends to do just that.

We consider each of these arguments in turn.

i. The June 2 Announcement

The Board’s conclusion that Creative’s June 2

announcement was untimely is well founded. To reach

this conclusion, the Board summarized its past decisions

as holding that a successor employer may unilaterally

set initial terms of employment if it “clearly announce[s]

its intent to establish a new set of conditions prior to, or

simultaneously with, its expression of intent to retain the

predecessor’s employees.” 2016 NLRB LExIS 637 at *13.

But after the successor expresses its intent to retain the

predecessor’s employees, an announcement of new terms,

“even if made before formal offers of employment are

extended or the successor commences operations, will

51a

Appendix B

not vitiate the bargaining obligation.” Id. The Board’s

justification for this prior-or-simultaneous-announcement

requirement is as follows:

[A] new employer that expresses an intent to

retain the predecessor’s work force without

concurrently revealing to a majority of the

incumbent employees that different terms

will be instituted, improperly benefits from

the likelihood that those employees, lacking

knowledge that terms and conditions will

change, will choose to stay in the positions they

held with the predecessor, rather than seeking

employment elsewhere.

2016 NLRB LExIS 637 at *22. After stating the legal

standard it would apply, the Board found that Creative

expressed an intent to retain Berry III’s employees

between mid-May and June 1.

This court has briefly spoken twice about the timing

of an announcement of new terms and its effect on notice.

We recently observed in Adams & Associates that a

communication of new employment terms through offer

letters and employment agreements was untimely because

the communication occurred after the successor evinced

an intent to retain its predecessor’s employees. Adams &

Assocs., 2017 U.S. App. LExIS 17917, 2017 WL 4078063,

at *8. In Houston Building Services, we opined that a

successor may not set its own initial terms if it fails to

give “prior notice of its intention” and it “holds itself as if

it will adhere to the terms of the previous CBA.” Hous.

52a

Appendix B

Bldg. Servs., 128 F.3d at 864 n.6. We turn to our sister

circuits for further guidance.

The D.C. Circuit explicated the rationale for prior or

simultaneous announcement of new terms in International

Ass’n of Machinists & Aerospace Workers, AFL-CIO v.

NLRB, 595 F.2d 664, 193 U.S. App. D.C. 279 (D.C. Cir.

1978). There, the D.C. Circuit approved of Spruce Up’s

qualification of Burns’s perfectly clear exception. Id. at

674. Recall that the Spruce Up Board held that it is not

“perfectly clear” that a successor “plans to retain all” the

predecessor’s employees when it also plans to impose new

terms on those employees. Spruce Up, 209 N.L.R.B. at

195. The successor can reasonably anticipate that some

incumbents will balk at and decline the new terms. See id.

This qualification, while sensible, generates an additional

problem, one the D.C. Circuit identified:

[I]n the Board’s view . . . the successor . . .

may endeavor to conceal, or at least postpone

publicity on, reemployment objectives in order

to avoid the onus of bargaining during the

usually difficult period of takeover, and the

incumbent employees may thereby be deprived

of early appraisal of their retention prospects.

Int’l Ass’n of Machinists, 595 F.2d at 675. To provide an

“important measure of protection” against this possibility,

the Board adopted and the D.C. Circuit approved a prioror-simultaneous-announcement requirement. Id. at 674.

Such a requirement ensures that incumbent employees will

not be “lulled into a false sense of security” by a successor’s

53a

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announcement that it intends to retain the incumbents. Id.

at 675; see also S & F Mkt. St. Healthcare LLC v. NLRB,

570 F.3d 354, 359, 386 U.S. App. D.C. 444 (D.C. Cir. 2009)

(“[A]t bottom the ‘perfectly clear’ exception is intended

to prevent an employer from inducing possibly adverse

reliance upon the part of employees it misled or lulled into

not looking for other work.”). The D.C. Circuit went on to

note that even when a subsequent announcement of new

terms occurs before actual hiring, incumbent employees

may “lack . . . sufficient time to rearrange their affairs.”

Int’l Ass’n of Machinists, 595 F.2d at 675 n.49. In those

situations, they may “be forced to continue in the jobs

they held under the successor employer, notwithstanding

notice of diminished terms.” Id.

The Seventh Circuit has found this reasoning

persuasive. In Canteen Corp., it approved the Board’s

rejection of the view “that the obligation to bargain only

arose when the employer had failed to announce the initial

employment terms prior to, or simultaneously with, the

extension of unconditional job offers to the predecessor

employees.” Canteen Corp. v. NLRB, 103 F.3d 1355, 1360,

1364-65 (7th Cir. 1997). Similarly, the Sixth Circuit, in

DuPont Dow, held that the announcement of new terms

before operations commenced but after formal offers

were made and accepted came too late. See DuPont Dow

Elastomers, L.L.C. v. NLRB, 296 F.3d 495, 506 (6th Cir.

2002).

We are persuaded by the Board’s and D.C. Circuit’s

reasoning of the wisdom of the prior-or-simultaneousannouncement requirement. We apply it here and find,

54a

Appendix B

after careful examination of the record and the Board’s

inferences drawn therefrom, that substantial evidence

supports the Board’s conclusion that Creative expressed

an intent to retain the Berry III hoppers by June 1. Thus,

Creative’s announcement of new terms on June 2 was

untimely.

The record reflects that the shift from Berry III to

Creative would be abrupt, so Creative needed to ensure it

had hoppers lined up in advance. Creative distributed 70

applications to Berry III hoppers and made no efforts to

hire hoppers from other sources. 2 Creative had no reason

to do so. Richard knew the quality of the hoppers’ work, and

his dissatisfaction was not with the hoppers but with Berry

III’s management. Further, finding and training new

hoppers would have been a major undertaking, delaying

what was supposed to be a rapid transition. Richard did not

interview any applicants or perform reference checks on

them, and he testified that he was agreeing to hire Berry

III hoppers who submitted applications. The distributed

applications also contained W-4s—a tax form that is, as

2. Creative argues that it sought applicants from sources other

than Berry III’s hoppers. It did not, however, file an exception to

the ALJ’s finding to the contrary, and therefore the Board found

that Creative was procedurally foreclosed from raising the issue.

Under the circumstances, we will not consider this question. See

29 U.S.C. § 160(e) (“No objection that has not been urged before

the Board, its member, agent, or agency, shall be considered by

the court, unless the failure or neglect to urge such objection shall

be excused because of extraordinary circumstances.”); Woelke

& Romero Framing, Inc. v. NLRB, 456 U.S. 645, 665, 102 S. Ct.

2071, 72 L. Ed. 2d 398 (1982) (stating that § 160(e) precludes a

court of appeals from reviewing claims not raised to the Board).

55a

Appendix B

the Board noted, typically filled out after an employee is

hired. From these facts, the Board inferred that the hiring

process was a formality and that Creative sought to hire

the Berry III hoppers en masse. And that is just what

happened. On June 1, when Creative had enough Berry

III applicants, Richard cancelled Berry III’s contract with

Richard’s Disposal. All 44 hoppers Creative employed on

the first day of operations were previously employed by

Berry III. A reasonable mind could accept such evidence

and inferences as sufficient to support the conclusion that

by June 1, Creative had expressed an intent to retain the

Berry III hoppers.

Creative argues that its whole hiring process was

“in flux” up until June 2 when the hoppers hopped on the

trucks. It was only at that point that the hoppers were

formally hired and it became “perfectly clear” how many

would accept Creative’s new terms. Creative relies on

Emerald Maintenance, Inc. v. NLRB, 464 F.2d 698 (5th

Cir. 1972), to argue that the delay caused by insufficient

hopper applications and uncertainty over how many

hoppers would accept the new terms indicates that the

Union’s majority status was not clear “until after the

work force had been assembled” on June 2. See id. at

701. There, Emerald required the incumbent employees

to reapply for their jobs and refused to recognize the

union’s referral slips. Id. at 700. This refusal contravened

its predecessor’s CBA, which required the predecessor to

fill all its positions with union members. Id. Emerald built

up its workforce after commencing operations and hired a

significant number of non-incumbents. Id. This court found

that Emerald was not a perfectly clear successor because

56a

Appendix B

“it was not clear that a majority of Emerald employees

were union members until after the work force had been

assembled.” Id. at 701.

Emerald differs in key ways from this case. Unlike

Creative’s application process, Emerald’s was not pro

forma—it hired a significant number of non-incumbents

and refused to hire union members simply because they

were union. Emerald indicated from the outset that it

intended to set its own terms by refusing to follow the

terms of the CBA during the application process. Emerald

built its workforce after it commenced operations and did

so gradually (unlike Creative), making it less evident that

the incumbent union’s majority status would continue.

Finally, the procedural posture of Emerald informs

our understanding of it. There, we considered the case

without owing deference to a Board finding of perfectly

clear successorship. (Remember that Burns was decided

in the interim between the Board’s decision in Emerald

and ours. Id. at 699-700.) Here, by contrast, the Board has

found that Creative is a perfectly clear successor, and we

do not review de novo but for substantial evidence.

Creative is also wrong to assume that an expression

of intent to retain the incumbent workforce is limited to

express announcements or formal hiring. Canteen Corp. is

particularly instructive in this regard. There, the Seventh

Circuit refused to disturb the Board’s determination that,

based on the “totality of Canteen’s conduct,” Canteen

formed an intent, “albeit unannounced,” to retain its

predecessor’s employees. Canteen Corp., 103 F.3d at

1363. This was in spite of the fact that Canteen “never

57a

Appendix B

announced an intention to employ the predecessor’s

employees” and never “state[d] that they would be hired

under the predecessor’s terms and conditions.” Id. at 1362.

Reviewing the totality of Canteen’s conduct, the Board

and the court found particularly relevant that Canteen

“neglected to take serious steps to recruit from other

sources.” Id. at 1363. Here, we similarly find substantial

evidence to support the Board’s finding that, based on

the totality of Creative’s conduct (and in particular its

failure to take serious steps to recruit outside of Berry

III’s workforce), Creative intended to retain Berry III’s

hoppers by June 1.

Finally, we note that the facts of this case make it

unnecessary for us to consider whether there are some

situations where a subsequent announcement of new terms

before formal hiring or commencement of operations will

be timely. 3 In this case, the June 2 announcement clearly

was untimely. The announcement occurred the same day

the hoppers were formally hired and Creative’s operations

3. The Second Circuit indicated as much in Nazareth

Regional High School v. NLRB when it read Spruce Up as:

limited to those situations where employees are led

at the outset by the successor-employer to believe

that they will have continuity of employment on

pre-existing terms and as not applying where the

new employer dispels any such impression prior

to or simultaneously with its offer to employ the

predecessor’s work force.

549 F.2d 873, 881 (2d Cir. 1977) (quoting Bhd. of Ry. Clerks v. REA

Express, Inc., 523 F.2d 164, 171 (2d Cir. 1975)).

58a

Appendix B

commenced. This same-day announcement gave the

hoppers insufficient time to rearrange their personal

affairs.

ii. Pre-June 2 Communications

Having concluded that Creative’s June 2 announcement

of new terms was untimely, we turn now to whether Creative

gave notice of its intent to establish new terms on or before

June 1. In analyzing this issue, we consider the cumulative

effect of three pre-June 2 communications from Creative

to the hoppers: (1) Richard’s alleged communication to

Flagge about the new terms of employment; (2) Richard’s

communication of the new terms to about 20 hoppers

and the subsequent word-of-mouth exchanges among the

hoppers; and (3) the inclusion of tax withholding forms

with the job applications. We conclude that all three

combined did not provide a majority of Creative’s hoppers

with sufficient notice of the new terms.

We turn first to Richard’s alleged conversations with

Flagge. Recall that Flagge, a hopper, spoke to Richard and

passed out about 50 applications to other hoppers. There

is a dispute about what Richard told Flagge. Richard

claimed he told Flagge about the new terms. Flagge

denied this. The Board ultimately sided with Flagge,

concluding that “Richard did not inform Flagge of the new

terms and conditions of employment and, consequently,

Flagge did not inform any of the hoppers to whom he gave

applications that their terms and conditions would change

under [Creative].” Creative, 2016 NLRB LExIS 637 at *5.

59a

Appendix B

Creative argues that the Board erred by siding with

Flagge. In Creative’s view, the ALJ credited Richard as

“a sincere and meticulous witness,” and thus necessarily

credited Richard’s testimony that he told Flagge the new

terms. By reaching the opposite credibility finding than

the ALJ, who actually saw the witnesses, the Board’s

credibility choice was unsupported by substantial

evidence.

In making this argument, Creative mischaracterizes

the ALJ’s and Board’s findings. The Board could not have

erred in dismissing the ALJ’s credibility determination

over what Richard told Flagge because the ALJ did not

make a credibility determination over what Richard

told Flagge. While ALJ “credibility determinations are

binding except in rare instances,” Adams & Assocs.,

2017 U.S. App. LExIS 17917, 2017 WL 4079063, at *8, no

relevant ALJ credibility determination was made here. In

order to see why, a detailed review of the ALJ’s decision

is necessary.

The ALJ began his analysis of Richard’s testimony

by stating that Richard said that he told Flagge about the

new terms. The ALJ then noted that “Flagge’s testimony

squarely contradicts Richard . . . on this point.” Creative,

2016 NLRB LExIS 637 at *85 (ALJ op.). Flagge said that

Richard did not tell him anything about the new terms.

The ALJ then moved to a separate issue in Richard’s

testimony regarding how he had passed out applications

to about 20 other hoppers and told them about the new

terms. Regarding this testimony, the ALJ noted that the

hoppers did not corroborate Richard’s testimony. But the

60a

Appendix B

ALJ also noted that other factors made Richard appear

credible, such as Richard’s appearance as a meticulous

witness. Thus, the ALJ was confronted with whether to

credit Richard’s testimony about two different purported

communications: (1) what Richard told Flagge, and (2)

what Richard told the 20 hoppers.

Given this context, the ALJ’s finding becomes clear.

The ALJ credited Richard’s testimony only with respect

to what he told the 20 hoppers, not with respect to what

he told Flagge. Specifically, the ALJ’s credibility finding

on this point was the following:

This f inding, that hoppers work ing for

Berry III learned some information about

[Creative] from Jackson, does not contradict

Richard[’s] . . . testimony that he informed

hoppers about [Creative’s] initial terms of

employment. Although Richard[’s] . . . testimony

is uncorroborated, it is also uncontradicted.

Moreover, it is consistent with the fact that at

least some hoppers knew about the contemplated

$11-per-hour wage rate.

Further, as discussed above, Richard . . .

appeared to be a sincere and meticulous witness.

For these reasons, I credit his testimony that

he told some of the hoppers—those to whom

he gave employment application forms—that

[Creative] would be paying an $11-per-hour

wage, would guarantee 8 hours of employment

per day, would pay overtime for hours worked in

61a

Appendix B

excess of 40 per week, and would withhold taxes

from their paychecks. Based on Richard[’s] .

. . credited testimony, I also find that he told

these hoppers that [Creative] guaranteed four

holidays.

2016 NLRB LExIS 637 at *94.

As the emphasized portion highlights, the ALJ’s

credibility finding relates only to Richard’s testimony that

he told the 20 hoppers about the new terms. How could the

ALJ credit Richard’s testimony about his communications

with Flagge as “uncontradicted” when the ALJ explicitly

described that testimony earlier as being “squarely

contradict[ed]?” Instead, the ALJ’s finding should be

read to mean what it says: the ALJ credited Richard’s

uncorroborated and uncontradicted testimony about what

he told the 20 hoppers, not the contradicted testimony

about what he told Flagge.

And this reading makes sense. This is not a case

where the ALJ implicitly but necessarily resolved a

credibility dispute. In the ALJ’s eyes, Richard telling 20

hoppers about the new terms was sufficient (among other

circumstances, including the June 2 communications) to

evade the perfectly clear exception. The ALJ therefore

had no reason to decide whether Richard or Flagge was

being truthful with respect to their conversation because

the ALJ’s conclusion did not hinge on that determination.

Finally, we note that the Board’s reading of the ALJ’s

decision appears to match our own. The Board never stated

that it was dismissing an ALJ credibility determination.

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Appendix B

In fact, with regard to the ALJ’s credibility findings, the

Board expressly stated that it found no basis for reversing

the findings. 2016 NLRB LEXIS 637 at *5 n.1.

We are left with a situation in which the ALJ did

not make a credibility finding for this dispute and the

Board found that “Richard did not inform Flagge of the

new terms and conditions of employment.” 2016 NLRB

LExIS 637 at *5. Under these circumstances—where

(1) the ALJ did not resolve the factual dispute raised

by the conflicting testimony (Richard’s and Flagge’s

competing versions of their conversation); (2) there is a

clear Board finding (Richard did not tell Flagge about the

new terms); and (3) the ALJ credited both witnesses with

respect to other conversations (Richard’s uncontradicted

testimony about what he told the 20 hoppers, and Flagge’s

uncontradicted testimony about what he did not tell the

other hoppers)—we will not disturb the Board’s finding

under the substantial evidence standard of review.

But even if the ALJ made a credibility determination

that the Board overrode, the credibility choice is

ultimately irrelevant. Both the ALJ and the Board agree

that Flagge never communicated the new terms to the

hoppers. Because Flagge never passed along Richard’s

message, no additional employees were put on notice of

the new terms. See Adams & Assocs., 2017 U.S. App.

LExIS 17917, 2017 WL 4079063, at *8 n.6 (observing

that the notice inquiry “is conducted from the employees’

perspective” (citing Fall River Dyeing & Furnishing Corp

v. NLRB, 482 U.S. 27, 43-44, 107 S. Ct. 2225, 96 L. Ed. 2d

22 (1987); NLRB v. Hous. Bldg. Serv., Inc., 936 F.2d 178,

180 n.1 (5th Cir. 1991))).

63a

Appendix B

We next consider Richard’s communication of new

terms to about 20 hoppers (plus the subsequent informal

word-of-mouth exchanges between the hoppers). These

communications were insufficient to put a majority of

Creative’s workforce on notice of the new terms. Although

the Burns Court and Spruce Up Board spoke in terms

of a plan “to retain all of the employees in the unit,” the

Board and lower courts have subsequently recognized

that the relevant inquiry is whether the successor planned

to retain enough of the predecessor’s employees so that

the union’s majority status will continue.4 Such a rule is

sensible, and the Board’s reasoning shows why. Here, the

Board reasoned that allowing a successor to communicate

its new terms to a minority of its incumbent employees

would invite abuse. A new employer “would be encouraged

4. See Galloway Sch. Lines, 321 N.L.R.B. 1422, 1427 (1996)

(“To summarize, the duty to bargain may not arise when initial

employment terms are set because it may not be evident at that

time that the union’s majority status in the old work force will

continue in the new one. However, in other situations, it may be

apparent from the new employer’s hiring plan that the union’s

majority status will continue, and then the new employer is

required to bargain over initial terms.”); see also DuPont Dow,

296 F.3d at 500-01 (“But where it is ‘perfectly clear’ that the

new employer intends to retain the unionized employees of its

predecessor as a majority of its own work force under essentially

the same terms as their former employment, the new employer

becomes a ‘perfectly clear successor’ and must bargain with the

union.” (emphasis added)); Canteen Corp., 103 F.3d at 1361-62

(“The Court thus established that a successor would be required

to bargain with the union before setting its initial terms of

hiring when it was clear that it intended to hire a majority of the

predecessor’s workforce.” (emphasis added)).

64a

Appendix B

to announce changes in preexisting terms only to a select

few incumbent employees, while allowing the majority of

employees to be lulled by its silence into not seeking other

work.” Creative, 2016 NLRB LEXIS 637 at *21. Like the

Board, we conclude that such a result would be at odds

with Burns and Spruce Up

The word-of-mouth spread of the new terms to some

hoppers does not change this result. Both the ALJ and the

Board found that “the record affords no way of quantifying

how many of the hoppers had learned about the $11 per

hour wage rate or the other terms and conditions of

employment before they reported for work . . . on June 2.”

Id. Neither witness who testified that the hoppers knew

of the new pay rate before June 2 said how many hoppers

were privy. 5 It was reasonable for the Board to conclude

5. The ALJ, relying on the testimony of one hopper, Kumasi

Nicholas, also found that Creative notified some other hoppers

about the new terms in advance of the June 2 meeting. The Board

found that Nicholas’s testimony did not support a finding that

the hoppers were told of the new terms in advance. On direct

examination, Nicholas was asked, “[W]hat happened on the very

first day that [Creative] began operations[?]” Nicholas responded,

“Well, they told us ahead of time—Mrs. Jackson told us ahead of

time, you know, might be switching over to another little company

where—you know, a pay rate, and she just let us know ahead of

time, and then that’s when, you know, they started off.” An effort

to clarify whether Nicholas learned about the pay rate before

the June 2 meeting produced the response, “I’m not sure. It’s

been about a year. . . . I know she told me that, but I’m not sure.”

Creative, 2016 NLRB LExIS 637 at *19 n.13.

We will not disturb the Board’s conclusion. We acknowledge

that when “the Board disagrees with the ALJ’s findings, this court

65a

Appendix B

that a majority of the incumbent hoppers were not put on

notice through Richard’s communication of new terms to

about 20 hoppers and subsequent word of mouth.

The Board also found that, from the hoppers’

perspective, the new pay rate was unsubstantiated

rumor or gossip and therefore could not constitute a clear

announcement of the new terms. Taylor, the hopper who

testified that he learned about the new pay rate before

June 2, could not identify his source of information. The

Union official, who received a call from hoppers claiming

they heard Creative would pay only $11 per hour, said the

hoppers could not confirm where their information came

from. We will not disturb the Board’s reasonable conclusion

that, as rumor and gossip with no clear source, the new

terms were not clearly announced. Such a conclusion makes

sense given that the purpose of a clear announcement is

to give incumbent employees an opportunity to reshape

their personal affairs. It is reasonable to conclude that an

employee would not reshape his or her personal affairs

examines the findings of the Board more critically than it would

have done had the Board agreed with the ALJ.” Tex. World Serv.

Co., Inc. v. NLRB, 928 F.2d 1426, 1430 (5th Cir. 1991). “But this

court still sustains the Board’s findings if the record taken as a

whole contains substantial evidence to support those findings.” Id.

at 1431. “provided substantial evidence exists, this court cannot

reverse the Board’s decision when the Board and the ALJ merely

draw different inferences from established facts.” Id. Here, the

Board merely drew a different inference (that Nicholas learned

of the new terms at the June 2 meeting) from facts the ALJ and

Board shared. Based on the ambiguity of Nicholas’s response and

the uncertainty with which he delivered it, we find that substantial

evidence supports the Board’s finding.

66a

Appendix B

(i.e., begin searching for new work) because he or she

overhears uncorroborated rumors.

Turning lastly to the tax withholding forms, we

conclude that the Board’s decision, finding these forms

insufficient to put the hoppers on notice, is supported by

substantial evidence. Certainly, the tax forms conspicuously

note that their purpose is to allow an employer to withhold

taxes and social security. Creative argues that such a

withholding would fundamentally change the hoppers’

terms of employment, as (so the argument goes) it would

convert them from independent contractors to employees.

Creative further argues that with this information, the

hoppers should have deduced that the forms signaled a

change in their terms of employment.

While Creative’s argument is reasonable, the Board’s

finding is even more so. The Board concluded that the

inclusion of the tax forms was too ambiguous to constitute

sufficient notice. In doing so, the Board pointed out that

it was unclear whether the hoppers filled out tax forms

for Berry III. Had they previously done so, Creative’s

inclusion of tax forms would not clearly signal a change

in employment terms. Further, the Board observed

that no evidence existed that the hoppers considered

themselves independent contractors rather than

employees. Absent knowledge of their alleged original

status as independent contractors, the hoppers would be

unable to deduce that a tax withholding would change

that status. Finally, a number of hoppers wrote that they

were exempt from paying taxes on the forms, indicating

that the tax forms did not signal to the hoppers that a

67a

Appendix B

change in tax collection practices was imminent. Indeed,

none of the hoppers testified that they understood that

Creative planned to deduct taxes from their pay before

the June 2 announcement. Given both the ambiguity of the

announcement and the multistep deductions required for

an employee to identify the change in employment terms,

we determine that the Board’s conclusion that the tax

forms did not put the hoppers on notice is supported by

substantial evidence. See Rosdev Hosp., Secaucus, LP &

La Plaza, Secaucus, LLC, 349 N.L.R.B. 202, 207 (2007)

(ALJ op.) (“[T]o the extent an employer’s pretakeover

announcement contains ambiguities regarding the terms

and conditions of employment offered to employees, such

ambiguities will be resolved against the employer.”).

T he t wo cases Creative cit es t o suppor t its

argument that the inclusion of tax forms was sufficient

notice — S & F Market and Ridgewell’s —in fact

demonstrate the reasonableness of the Board’s position.

Both present situations in which the notice at issue

explicitly stated the new terms. No multistep deductions

were required on the part of the employees. In S & F

Market, the new employer included a cover letter with

each job application that promised “significant operational

changes,” identified various pre-employment checks

and tests to be passed, and required the applicant to

affirm his or her understanding that the employment

offered would be temporary and at will. S & F Mkt., 570

F.3d at 356. The panel concluded that “the employees

had every indication—from S & F’s job applications,

interviews, and letters offering employment—that S &

F intended to institute new terms of employment.” Id. at

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Appendix B

360 (emphasis added). Similarly, in Ridgewell’s, the new

employer announced to the union during a meeting that

it would change the workers’ statuses from employees to

independent contractors. Ridgewell’s Inc., 334 N.L.R.B.

37, 37 (2001). The announcement “clearly signaled that

the [new employer’s] initial terms and conditions of

employment would differ.” Id.

To be clear, a new employer need not produce an

itemized list of changes to employment terms. But the

inclusion of tax forms in this case falls well short of the

simple and direct announcements in S & F Market (via

a cover letter with the job application) and Ridgewell’s

(during a meeting with the union).

We acknowledge that this case does not present

facts indicating that Creative endeavored to create an

impression that it would keep Berry III’s terms. This

case is therefore slightly dissimilar from DuPont Dow

and Elf Atochem, two opinions the Board cites to support

its decision. In DuPont Dow, a single sentence in a

memorandum distributed to the employees stated that the

new employer would set initial terms. DuPont Dow, 296

F.3d at 503. This single sentence was not “sufficiently clear

and definite to overcome the impression carefully created

by the Company that the terms and conditions would

remain the same.” Id. Similarly, in Elf Atochem, the new

employer told the employees it would offer “comparable”

terms and conditions and then reneged. Elf Atochem N.

Am., Inc., 339 N.L.R.B. 796, 808 (2003).

69a

Appendix B

But while the case before us is distinguishable

from DuPont Dow and Elf Atochem, the distinction is

not dispositive. The Spruce Up Board did not limit the

perfectly clear exception to situations where employees are

actively misled. Rather, the Board warned that employees

could be misled merely through “tacit inference.” Spruce

Up, 209 N.L.R.B. at 195. Indeed, even when employees

“are not affirmatively led to believe that existing terms

will be continued,” the expression of intent to retain

the incumbents can, by itself, “engender expectations,”

causing employees to “forego the reshaping of personal

affairs.” Int’l Ass’n of Machinists, 595 F.2d at 674.

b. Necessity of a Bargaining Demand

Creative’s next argument is that it did not violate

its bargaining obligation because at the time Creative

unilaterally set terms, the Union had not sent a bargaining

demand. It relies on Fall River Dyeing & Furnishing

Corp v. NLRB, to argue that all successors are free to

set initial terms before the union demands bargaining.

Creative’s duty to bargain was therefore not triggered

until the Union’s demand on June 6, four days after

Creative announced its initial terms.

We find this argument meritless. As the Board

pointed out, Fall River’s demand rule “developed in a very

different context,” namely the ordinary successor context.

Creative, 2016 NLRB LExIS 637 at *25. The Board

concluded that nothing in the language or the reasoning

of Fall River supports the demand rule’s extension to the

perfectly clear successor context. A full digression into

70a

Appendix B

Fall River and cases interpreting it shows why.

In Fall River, the Supreme Cour t addressed

when an ordinary successor’s obligation to bargain

with an incumbent union attaches. See Fall River, 482

U.S. at 30. The successor in that case restarted its

predecessor’s operations following a seven month hiatus

and gradually built its workforce. Id. at 32-33, 45. As

a result of this gradual buildup, the percentage of the

successor’s workforce composed of its predecessor’s

employees fluctuated. See id. at 47. Due to this ongoing

fluctuation, the Court was tasked with setting the proper

moment to check to see if the majority of the successor’s

workforce was composed of its predecessor’s employees.

See id. To set this moment, the Court adopted the

“substantial and representative complement” rule. Id.

A successor’s bargaining obligation is triggered when

it hires a “substantial and representative complement”

of its workforce, a majority of which had previously

been employed by its predecessor. Id. But a bargaining

obligation only triggers at this moment if the union has

made a bargaining demand. Id. at 52. The Court reasoned

that the combination of the “substantial and representative

complement” rule as well as the demand rule would avoid

placing “an unreasonable burden” on the employer to

determine when its bargaining obligation attaches. See

id. at 50. “Once the employer has concluded that it has

reached the appropriate complement, then, in order to

determine whether its duty to bargain will be triggered,

it has only to see whether the union already has made a

demand for bargaining.” Id. at 52-53.

71a

Appendix B

Importantly, however, the Fall River Court suggested

that in some situations the composition of the employer’s

workforce alone may trigger a duty to bargain. The Fall

River Court observed that the “‘triggering’ fact for the

bargaining obligation” in Burns was the “composition of

the successor’s work force.” Id. at 46. The Court noted that

in Burns the predecessor’s “contract expired on June 30

and [the successor] began its services with a majority of

[the predecessor’s] guards on July 1.” Id. at 47; see Burns,

406 U.S. at 275. There was no “start-up period by the

new employer while it gradually buil[t] its operations and

hire[d] employees.” Fall River, 482 U.S. at 47.

No case Creative cites has extended the demand

requirement that Fall River established for ordinary

successors to perfectly clear successors.6 Tellingly, not

all courts even extend the demand requirement to all

ordinary successor cases. The Second Circuit in Banknote

Corp., limited the demand rule to factual circumstances

analogous to Fall River—i.e., where there is a “gradual or

staggered hiring” or “a significant hiatus in operations.”

Banknote Corp. of Am. v. NLRB, 84 F.3d 637, 646 (2d

6. Cadillac Asphalt, the one case Creative cites as applying

the demand rule in the perfectly-clear-successor context, actually

supports the contention that a perfectly clear successor’s obligation

to bargain over initial terms may arise before a union demand.

In Cadillac Asphalt, the union’s demand came after Cadillac

changed its terms and conditions. See Cadillac Asphalt Paving

Co., 349 N.L.R.B. 6, 7-8 (2007). Cadillac stopped contributing to

its employee’s union benefit fund on July 16. Id. at 7. The union’s

response came two days later, on July 18. Id. Nevertheless, the

Board held that Cadillac was a perfectly clear successor and

ordered it to make employees whole for its failure to make benefit

fund payments starting on July 16. Id. at 13.

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Appendix B

Cir. 1996). In those cases, a bargaining demand has an

important function as there “may be considerable doubt as

to whether a union that enjoyed the support of a majority

of a predecessor’s bargaining unit continues to do so

under the successor’s operation.” Id. at 645. But when

the successor engages in “a rapid transition period with

the immediate hiring of a full employee complement,” the

rationale for the demand rule dissipates. Id. at 646. In

those cases, the successor will be able to “easily discern

its obligation to presume that the [union] continued to

enjoy majority status.” Id. at 645-46.

While this court has indicated that a union bargaining

demand is required to trigger a bargaining obligation in

the ordinary successor context, see Hous. Bldg. Serv., 936

F.2d at 180, we find Banknote’s reasoning persuasive for

the perfectly clear successor context. Self-evident as it

may be, the perfectly clear exception only applies when

it is “perfectly clear” that the union’s majority status will

survive the transition from predecessor to successor.

See Burns, 406 U.S. at 294-95. Accordingly, sending a

bargaining demand to a perfectly clear successor would

be superfluous because the new employer would be

able to “easily discern” from the outset that the union

will presumptively retain its majority status during

the transition. See Banknote Corp., 84 F.3d at 645-46.

We therefore decline to require a union bargaining

demand to trigger a perfectly clear successor’s duty

not to unilaterally set initial terms of employment. In

perfectly clear successor cases, the “composition of the

successor’s work force” alone is the “‘triggering’ fact for

the bargaining obligation.” See Fall River, 482 U.S. at 46.

73a

Appendix B

c. Validity of the Complaint

Finally, Creative argues the Board’s complaint was

void because it was issued on behalf of Acting General

Counsel Lafe Solomon, who at the time was serving in

violation of the Federal Vacancies Reform Act (“FVRA”).

The Board contends we lack jurisdiction to hear this

argument because Creative was untimely in making it.

Even if we have jurisdiction, the Board contends that the

later General Counsel ratified the complaint, effectively

curing any defect.

“[T]he FVRA prevents a person who has been

nominated for a vacant pAS [presidential nomination and

Senate confirmation] office from performing the duties of

that office in an acting capacity.” NLRB v. SW Gen., Inc.,

137 S. Ct. 929, 938, 197 L. Ed. 2d 263 (2017). Solomon’s

nomination was pending in the Senate from January 2011

to January 2013. Id. at 937. During that time, Solomon was

serving as Acting General Counsel. See id. The FVRA

prohibited him from doing so. Id. at 944. The complaint

in this case was filed in March 2012 while Solomon was

serving as Acting General Counsel in violation of the

FVRA. Creative thus argues that the complaint was void

and “may not be ratified.” See SW Gen., Inc. v. NLRB,

796 F.3d 67, 71, 78, 418 U.S. App. D.C. 67 (D.C. Cir. 2015),

aff’d, 137 S. Ct. 929, 197 L. Ed. 2d 263 (2017).7

7. Creative’s argument relies on the general rule that actions

taken in violation of the FVRA are void ab initio. The FVRA,

however, expressly exempts “the General Counsel of the National

Labor Relations Board” from this rule. 5 U.S.C. § 3348(e)(1). The

D.C. Circuit has left open whether the actions of an improperly

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Appendix B

The Board responds by arguing the NLRA precludes

our consideration of this issue. It relies on Section

10(e), which provides: “No objection that has not been

urged before the Board, its member, agent, or agency,

shall be considered by the court, unless the failure or

neglect to urge such objection shall be excused because

of extraordinary circumstances.” 29 U.S.C. § 160(e).

Creative did not challenge Solomon’s authority when it

filed its exceptions to the ALJ’s decision in February

2013. Creative did not object until April 2016, and the

Board concluded the objection was untimely. See 29 C.F.R.

§ 102.2(d)(1); see also id. § 102.46(f). Creative does not

now argue that its exceptions were timely or that it has

shown extraordinary circumstances. See Indep. Elec.

Contractors of Hous., Inc. v. NLRB, 720 F.3d 543, 550-52

(5th Cir. 2013). Such arguments are forfeited. See SEC v.

Life Partners Holdings, Inc., 854 F.3d 765, 784 (5th Cir.

2017). We have held untimely objections to be waived under

Section 10(e). See Hallmark Phx. 3, L.L.C. v. NLRB, 820

F.3d 696, 712-13 (5th Cir. 2016). Because Creative did not

timely object to Solomon’s authority to file the complaint,

our review of any such argument is barred. See 29 U.S.C.

§ 160(e); Hallmark, 820 F.3d at 713.

III. CONCLusION

For the foregoing reasons, we deny Creative’s petition

and grant enforcement of the Board’s order.

serving Acting General Counsel are voidable or instead “wholly

insulate[d] . . . even in the event of an FVRA violation.” SW Gen.,

796 F.3d at 79. We express no view on that question.

75a

AppendixAND

C ORDER oF THE

APPENdIx C — DECIsION

NaTIoNaL LaBor RELaTIoNs Board

NATIOnAL LABOR RELATIOnS BOARD

CREATIVE VISIOn RESOURcES, LLC

AnD LOcAL 100, UnITED LABOR UnIOnS

Case 15-CA-020067

August 26, 2016

DECIsION AND ORDER

by chaIrMan Pearce and MeMbers

MIscIMarra and HIrozaWa

On January 7, 2013, Administrative Law Judge Keltner

W. Locke issued the attached decision. The General Counsel

filed exceptions and a supporting brief, the Respondent

filed an answering brief, and the General Counsel filed a

reply brief. The Respondent filed cross-exceptions and a

supporting brief, the General Counsel filed an answering

brief, and the Respondent filed a reply brief.

The National Labor Relations Board has delegated

its authority in this proceeding to a three-member panel.

The Board has considered the decision and the record

in light of the exceptions, cross-exceptions, and briefs

and has decided to affirm the judge’s rulings, findings,1

1. There are no exceptions to the judge’s finding that the

Respondent did not violate Sec. 8(a)(5) and (1) by unilaterally

changing the way unit employees are assigned to trucks. Accordingly,

we affirm the judge’s dismissal of that allegation.

76a

Appendix C

and conclusions only to the extent consistent with this

Decision and Order, to amend his remedy, and to adopt

the recommended Order as modified and set forth in full

below. 2

We adopt the judge’s findings, as to which there are

no exceptions, that Creative Vision Resources, LLC (the

Respondent), was a legal successor to single employer M &

B Services, Milton Berry, and Berry Services, Inc. (Berry

III or the predecessor) , and that it violated Section 8(a)

(5) and (1) of the Act by failing to recognize and bargain

in good faith with the incumbent employees’ bargaining

representative, Local 100, United Labor Unions (the

Union). For the reasons set forth below, however, we also

find, contrary to the judge, that the Respondent was a

“perfectly clear” successor and that it violated Section

8(a)(5) and (1) of the Act by failing to provide the Union

with notice or an opportunity to bargain before imposing

initial terms and conditions of employment for the unit

employees.

The Respondent has excepted to some of the judge’s credibility

findings. The Board’s established policy is not to overrule an

administrative law judge’s credibility resolutions unless the clear

preponderance of all the relevant evidence convinces us that they

are incorrect. Standard Dry Wall Products, 91 NLRB 544 (1950),

enfd. 188 F.2d 362 (3d Cir. 1951). We have carefully examined the

record and find no basis for

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