Petition — International Ass'n of Machinists & Aerospace Workers v. National Labor Relations Board

Supreme Court brief1979

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IN THE MIGHAEL AGOAK, 32,

Supreme Court of the United States

OCTOBER TERM, 1978

N° 828-615

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS, AFL-CIO,

Petitioner,

NATIONAL LABOR RELATIONS BOARD,

Respondent,

and

BOEING COMPANY,

Intervenor.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

PLATO E. PAPPS

Machinists Brilding

1300 Connecticut Avenue, N.W.

Washington, D.C. 200386

MOZART G. RATNER

1900 M Street, N.W.

Washington, D.C. 20036

Attorneys for Petitioner

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

aRGEEfoo 00

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a reme Court, U. Sey

FILED

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TABLE OF CONTENTS

Page

Ne necinintecaiones 2

a ater iticneinsinccstosamneinasinieyeecee 2

He i ey | | 2

STATUTORY PROVISIONS INVOLVED |... 2

STATEMENT OF THE CASE ..000.0...........ccccccceeeceoeese- 3

Ea 5

ANTECEDENTS OF THE BURNS EXCEPTION ...... 6

REASONS FOR GRANTING THE WRIT ................... 10

i a De cathe. 17

APPENDIX

Decision of the Court of Appeals -.............0000.0.00..... la

Decision and Order of the Board 20.0.0... .0000....... 24a

Decision of the Trial Examiner ...00 0000000000000... 40a

SUPPLEMENTAL APPENDIX

Antecedents of the Burns “plans to retain” excep-

eed ctdee caenecene 8 ELLA 95a

Chemrock Corporation, 151 NLRB 1074

Sgt 95a

Spruce Up I, 194 NLRB 841 (1972) ee 1l5a

Decision of the Trial Examiner (1971)... 120a

Source of the Board’s construction of the Burns

RS A ... 16la

Spruce Up IT, 209 NLRB 194 (1974) —........... 16la

TABLE OF AUTHORITIES

Cases:

Page

Chemrock Corp., 151 NLRB 1074 (1965) _...... 6, 7, 9, 10,

Labor Board v. Insurance Agents, 361 U.S. 477

14, 16

(ROSS Sse SORES Sul Aas 5 16

NLRB v. Burns Security Services, Inc., 406 U.S.

2. es 2, 5, 7, 8, 9, 10, 13, 14, 15, 16, 17

NLRB v. Hearst Publications, Inc., 322 U.S. 111

Phelps Dodge Corp. v. NLRB, 313 U.S. 177 (1941) .. 14,17

Smith v. Evening News Ass’n, 371 U.S. 195

Saat lee ave el 15

Spitzer Akron, Inc. v. NLRB, 540 F.2d 841 (6 Cir.

1976), cert. denied 429 U.S. 1040 15

Spruce Up I, 194 NLRB 841 (1972) __..__.. 7, 8,9, 14, 16

Spruce Up II, 209 NLRB 194 (1974) _.. 6

Standard Rate & Data Service, Inc. v. United

States Postal Service, No. 77-1848, U.S. App.

seinen 17

Textile Workers v. Lincoln Mills, 353 U.S. 448

I ei an SACRO SE GR a 15

Miscellaneous:

ee 2

National Labor Relations Act, 49 Stat. 452, 61 Stat.

140, 29 U.S.C. §158(a) (1) and (5) and § 159

SR iat on, RE EASELS he OnE Re RO 2

Nash, Peter, Labor Relations Yearbook, 1973

a 10

Nash, Peter, Successorship in the Light of Burns,

+ Ga. L. Rev. O64 (1678) ..................................... 10

IN THE

Supreme Court of the United States

OCTOBER TERM, 1978

No.

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WorRKERS, AFL-CIO,

Petitioner,

NATIONAL LABOR RELATIONS BOARD,

Respondent,

- and

BOEING COMPANY,

Intervenor.

THE

PETITION FOR A WRIT OF CERTIORARI TO

UNITED STATES COURT OF APPEALS FOR

THE DISTRICT OF COLUMBIA CIRCUIT

Petitioner, International Association of Machinists and

Aerospace Workers, AFL-CIO (hereinafter IAM or the

Union) prays that a writ of certiorari issue to review the

judgment of the United States Court of Appeals for the

District of Columbia Circuit affirming an order of the

National Labor Relations Board (hereinafter the Board)

dismissing its General Counsel’s complaint against Boeing

Company (hereinafter Boeing).

OPINIONS BELOW

The opinion of the Court of Appeals (1a-23a), is not

yet officially reported. The decision and order of the

Board (24a-94a), is reported at 214 NLRB 541 (1974).

JUR{SDICTION

The judgment of the Court of Appeals was entered on

June 13, 1978. On September 1, 1978, Mr. Justice Bren-

nan entered an order extending the time for filing a

petition for certiorari until October 11, 1978. The juris-

diction of this Court is invoked under 28 U.S.C. 1254(1).

QUESTION PRESENTED

In NLRB v. Burns Security Services, Inc., 406 U.S.

272, 294-295 (1972), this Court declared that a successor

employer who “plans to retain” his predecessor’s bargain-

ing unit employees must “initially consult with the em-

ployees’ bargaining representative before he fixes terms.”

The question presented is whether that obligation applies

to a plan to retain on inferior terms.

STATUTORY PROVISIONS INVOLVED

The National Labor Relations Act as amended, 49

Stat. 452, 61 Stat. 140, 29 U.S.C. § 158(a) (1) and (5),

and 159(a), provides as follows:

“Sec. 8(a) It shall be an unfair labor practice

for an employer—

‘The symbol “a”, refers to the appendix, infra, in which the

opinions of the court below, the Board and the Administrative Law

Judge are reprinted. The supplemental appendix, infra, in which

decisions constituting the matrix of the “plans to retain” doctrine

are reprinted, is numbered sequentially and similarly designated

“ener

(1) to interfere with, restrain, or coerce em-

ployees in the exercise of the rights guar-

anteed in section 7;

= + * *

(5) to refuse to bargain collectively with the

representatives of his employees, subject to

the provisions of section 9(a).

* * * *

9(a) Representatives designated or selected for

the purposes of collective bargaining by the majority

of the employees in a unit appropriate for such pur-

poses, shall be the exclusive representatives of all

the employees in such unit for the purposes of col-

lective bargaining in respect to rates of pay, wages,

hours of employment, or other conditions of em-

ployment * * *.”

STATEMENT OF THE CASE

The undisputed facts are detailed in the opinion of the

court below (2a-8a).? The essentials, summarized briefly,

are as follows: In 1970, Boeing bid to succeed Trans

World Airlines (TWA) as installation support services

contractor with National Aeronautical and Space Ad-

ministration (NASA) at the Kennedy Space Center.

There were 1,054 TWA employees in the bargaining unit

performing these services, represented by IAM as ex-

clusive bargaining agent. In its formal bid, Boeing made

it abundantly clear that it desired, intended and planned

to retain virtually all “incumbent contractor personnel

(3a-4a), citing the advantages of “continuity * " : effec-

tiveness and economy [to] be achieved by retaining ex-

perienced and qualified incumbent personnel.” (Jd. )

At the same time, Boeing proposed to pay lower wages

and fringe benefits for the same work than TWA had

2 References succeeding a semicolon are to the decision of the

Board or the Administrative Law Judge.

been paying (3a).° Boeing stated that “[wl]hile the

staffing plan is based on retaining approximately 86

percent of the incumbent personnel,” a satisfactory com-

i could be recruited from the local labor market

5a).

Boeing acted unilaterally in preparing and submitting

its bid proposal to pay inferior wages and benefits (61la-

62a). After NASA announced, on November 23, 1970

that Boeing had been selected as successor to TWA ( Ba),

Boeing continued to maintain (n. 3, below) that terms

and conditions of employment in the support services

unit were fixed and governed by its preexisting “hard-

ware contract” (61a). This pretermitted consultation and

negotiation with IAM about initial terms and conditions

of employment in the support services unit (5a). On

March 11, 1971, NASA gave the support services con-

ract to Boeing. Even before that date, Boeing had offered

preferential employment to incumbent TWA employees

on Boeing’s unilaterally established inferior wage and

benefit terms, which many predictabl j

mem Penn y p y rejected (5a-7a,

On TAM’s charges, the Board’s General Counsel issued

a complaint alleging violation of Section 8(a)(5) and

8(a) (1), grounded in Boeing’s failure to consult IAM

before fixing initial terms and conditions of employment

for the installation support services unit (7a).

3’ Boeing based its wage and fringe benefi

terms of its national contract with IAM, chick age hard.

ware contracts” with NASA for the Center (3a). It was Boeing’s

legal theory, subsequently rejected by the Administrative bew

Judge and the Board, that if Boeing obtained the support services

contract, the unit performing those services would constitute an

accretion” to Boeing’s existing “hardware” unit and that terms

and conditions of employment would th

“ ” eref

hardware” contract (6a; 51a-54a). ore be governed by the

DECISIONS BELOW

The court below approved the decision of a three to two

majority of the Board (24a-27a) (Chairman, then Mem-

ber, Fanning and Penello dissenting, 28a-39a), which

adopted, on limited grounds, the recommendation of the

Administrative Law Judge (40a-94a), that the complaint

be dismissed (7a-8a). Dismissal was predicated upon

construction of the Burns “plans to retain” exception

(18a), as excluding plans which are coupled with lower

wage rates or other inferior terms. The theory is that

when the successor’s “offer of employment is coupled with

an announcement of reduced wages and benefits” his

intention “to retain large numbers of his predecessor’s

employees is not likely enough to come to fruition” to

constitute a “plan” within the meaning of Burns (14a,

19a, 26a). This reasoning is grounded on the premise that

the sine qua non of an obligation to bargain under Burns

is a justified claim by the putative bargaining agent “to

represent the larger number of the successor’s prospective

employees” (18a). That is conceived to require “probable

continuity of employment” (id.); assurance of actual

“perpetuation of the incumbent work force” (19a). Ab-

sent such assurance, a successor employer’s plan, desire

or intention to retain the incumbent work force, no

matter how unequivocal, is thought legally insufficient to

ground a pre-takeover obligation to bargain.

On this reasoning, the Board majority and the court

below rejected the literal and natural meaning of Burns.

They bolstered rejection on the premise that to effectuate

this Court’s opinion as written would discourage successor

employers from “commenting favorably upon the em-

ployment prospects of old employees” (15a, 21a-22a).

To avoid this result without totally obliterating the excep-

tion, they transformed the obligation from consulting

before fixing initial terms into an obligation to adhere

to express or implied promises to retain on the same

terms (15a, 19a-20a, 23a, cf. 88a). Thus, the Burns ex-

ception was construed to mean that (23a):

“a successor employer need consult with an incum-

bent union with respect to initial employment terms

prior to fixing them only when he has not evinced

any intention substantially to modify the pre-existing

terms before expressing a willingness to rehire in-

cumbents.”’

The Board, the Administrative Law Judge and the

court below deemed themselves free to devise this policy-

oriented transformation of Burns because they overlooked

the decisional source and history of the exception and

misconceived its function in the mosaic of the Burns

opinion. The Administrative Law Judge asserted (88a):

“the derivation of this statement in Burns is not clear

** *” In Spruce Up II, 209 NLRB 194 (1974), (161a-

210a), upon which the decision in this case is grounded

(8a, 13a-15a, 17a-18a), the Board majority said: “the

precise meaning and application of the Court’s caveat is

not easy to discern” (209 NLRB at 195; 166a). The

court below observed that “[t]he Burns exception * * *

provides minimal guidance” (n. 41, 16a).

ANTECEDENTS OF THE BURNS EXCEPTION

As the court below impliedly recognized (18a-19a),

the Burns exception is addressed to the nature of the

nexus between a prospective successor employer and his

predecessor’s employees adequate to ground a pre-hire

8(a) (5) or (1) bargaining obligation. The Board ad-

dressed precisely that question in Chemrock Corp., 151

NLRB 1074 (1965) ; 95a-114a. It there held that a pros-

pective successor who “indicated a desire to hire” his

predecessor’s drivers, but “only * * * at a [lower wage}

rate” than his predecessor had been paying (id., at 1076,

1085; 97a, 110a-1lla), became the “employer” of the

drivers for 8(a) (5) and (1) purposes, and was required

to recognize and bargain with the drivers’ exclusive bar-

initi ditions of em-

ining agent about initial terms and con

= ott id, at 1076-1081; 98a-104a). The Board ex-

plained (id. at 1080-1081; 103a-104a) :

“It is quite clear that when [the prospective suc-

ah mated the drivers as a group to gyaee

with it about their continuity of ey paper er

rates of pay in the ‘employing industry uP ic :

was succeeding, it was acting im an emp 5 c

pacity, and this is so regardless of whether the em

ployees were yet [the successor’s] employees re :

literal sense. Moreover, the oy te orga a

[the successor] engaged in direct dealings aro :

drivers, though concerned with terms and = i vir

of employment that were not to be applicable :

{the successor] actually took over the plant, cgi

nonetheless matters as to the negotiation of : i :

the employees had a legitimate right and —

to be represented by their bargaining agent. = rd

itself elected during the interim period referre :

above to deal with the employees on eanggahd ~~

erly a subject for collective bargaining, i. Psd

cessor] could not at the same time lawfu y is 8

gard the employees’ statutory right to om “a

through their then currently duly designate

gaining representative.”

* * * ad

oneal’ is case, it is apparent that when [the successor }

invited Hg pred as a group b Dg nal gl basen

yo heeding ": Hymns potter the possibility of taking

pee a unit the entire crew of drivers to gota the same

work they had done in the past.” (Emphasis added. .

The Board affirmed and applied this Chemrock ey

in Spruce Up I, 194 NLRB 841 (115a-160a), .. :

sued on January 5, 1972, shortly before the 1 gad

ment in Burns (January 13, 1972), and more : yet

months before the Burns decision issued (May 1 , sical

In Spruce Up the prospective successor, before take ;

acy offered to retain his predecessor’s barbers, but

he a specified rate of commission, which was in man

wigs less than their existing rate * * *.” 194 NLRB

at 844, col. 1 (126a). The Board adopted the holding

of the Administrati ;

2 (1868). istrative Law Judge that (id., at 846, col.

“where... an emplo i

yer who is about to acqui

— business manifests an intent to Bone. ag

on pesttnen a gs ea they become at that point

ees Tor the purpose of the applicatio

ae ) » and he is obligated to inne oe

. which is the[ir] statutory representative.

el passing the “nion which was the barbers’ exclusive

gaining agent by fixing inferior initia] employment

terms theref i .

a ae ore violated Section 8(a) (5) and (1) of

The language of the Burns i

ng exception (406 U.S. -

295) strikingly parallels the quoted passage from Sora

Up I:

“. .. [when] it is perfect]

( y clear that the -

— plans to retain all of the mecesbiaiaes “4 the

- . . It will be appropriate to have him consult

with [thei ini i

Mi hs oe bargaining representative before he

see ait juxtaposition of timing and the func-

exception in the Burns opinion i

ground for inference that S pce ic

t pruce Up I was its sou

xe bi the preceding paragraph ( lla-12a) and the

ye - ing oo (13a), in the Burns opinion stress

nexistence, normally, of a. pre-takeo ini

Non , - ver bar

iS Ag he the absence of an sutiphaiet-auaihewes

ip. the Union’s right to b

pended upon its representatio a apr gfe

n of a majority of th

cessor’s employees, such right could i as

‘ not arise bef

— employer-employee relationship was established Tf

was an exception, in which a pre-takeover bargain-

ing obligation existed prior to establishment of an actual

employer-employee relation, it was necessary to say SO.

It is but reasonable to infer that in limning the ex-

ception this Court envisioned and adopted that which

already existed in Board law.

Other indicia support that inference. The Burns Court

was aware of but did not disturb Chemrock, 406 US. at

280, n. 5. And while Burns (n. 32, 12a)

“overturned a line of Board decisions requiring a

successor employer always to bargain with the in-

cumbent union before instituting employment terms

different from those prevailing under the prede-

cessor’s contract” (emphasis added),

that “line” conspicuously did not include Chemrock or

Spruce Up I. More specifically, this Court’s mani

disapproval of the Board’s rule insofar as it shackled a

potential successor to his predecessor’s work force and

terms and conditions of employment by operation of law

(406 U.S. at 287-288, 289, 291, cf. 279, n. 3, 280, n. 5),

did not even remotely imply disagreement with the

Chemrock-Spruce Up principle that prospective successors

who are satisfied with the composition of the work force

and voluntarily elect to attempt to retain the incum-

bent employees, thereby treating them “in an employer

capacity” (Chemrock, p. 7, supra), are not simultane-

ously free to divest that work force of the protection of

collective representation. ‘The successor would have no

legitimate complaint about mandatory bargaining in such

circumstances because its necessity is a product of his

own * * *conduct” (n. 14, 21a). For the same reason,

imposition of a duty to bargain based on the successor’s

“voluntar|y]” plan to take over the bargaining unit

“largely intact” (Burns, 406 U.S. at 287), would have

*Chemrock was cited “But cf.” to the proposition that a suc-

cessor employer might voluntarily “assume[]” an obligation to hire

all the predecessor’s employees.

no adverse effect on alienability. Cf. 16a-17a. Of course,

if Chemrock-Spruce Up is the source of the Burns excep-

tion, changing terms unilaterally is not avoidance but

violation of the bargaining obligation.

REASONS FOR GRANTING THE WRIT

1. The uncertainty expressed by those who have

deemed themselves compelled to recast the Burns excep-

tion, p. 6, supra, indicates the necessity for clarifica-

tion. Further, two Board Members and the General

Counsel at the time the Burns exception was initially

considered vigorously disagree with the majority’s con-

struction.

In an official report,’ then General Counsel Peter G.

Nash concluded that

“determination of whether a successor ‘plans to re-

tain all’ within the meaning of Burns rests on an

evaluation of evidence of the successor’s intentions

to employ or not employ unit personnel—e.g.,

their qualifications, experience, and suitability as

employees—apart from its intentions as to the terms

and conditions of their employment. So it was con-

cluded that a successor who manifests a willingness

to accept the unit complement as its employees can-

not avoid an obligation to bargain about initial work-

ing conditions simply by making employment of the

unit dependent upon acceptance of a unilateral estab-

lishment of working conditions. To interpret the

Burns ‘plans to take all’ statement as privileging

the unilateral establishment of the very employment

conditions on which there is a duty of initial con-

sultation would, it seemed to us, make the statement

meaningless.” *

* Labor Relations Yearbook, 1973 (BNA, 1974), pp. 167-168.

° Nash reiterated that position in a subse i

N ‘ quent article, Successor-

ship in the Light of Burns, 7 Ga. L. Rev. 664, 681 (1973):

[Footnote continued on page 11]

PRORES ORen?

The dissenting members in this case replied to the

majority as follows (34a):

“Our colleagues in the majority in effect would

transform an incoming employer’s ‘plans to retain’

his predecessor’s employees, which is the Burns test,

into ‘a commitment to hire or an actual advance hir-

ing of such employees,’ as found by the Administra-

tive Law Judge. [88a]. The latter meaning is wholly

different and is destructive of the ‘plan to retain’

standard. A ‘commitment to hire or an actual advance

hiring’ is an overt entry into a contract of employ-

ment between the employer and employee with noth-

ing left to consummate the engagement except re-

porting for work at a future fixed time. It is, albeit

informal, an offer and acceptance of employment, and

hence a completed contract.”

“A ‘plan to retain,’ on the contrary, necessarily

precedes any ‘commitment to hire or an actual ad-

vance hiring ....’ A plan to retain simply signifies

that the incoming employer proposes to look to the

incumbent emp ouces as the primary source of his

work force. Tuat plan is the stage preliminary to

the employer’s approach to the incumbent. It pre-

cedes, and is independent of, any ensuing commit-

ment to hire or actual advance hiring. Once the sub-

sequent commitment or actual advance hiring is

made, it is no longer a plan; it is a consummated

transaction. It is therefore self-contradictory to

equate the plan with the commitment. The former

6 [Continued]

“(C]londitioning * * * employment [with a successor] merely

upon the acceptance of changed terms and conditions of employ-

ment would not seem to be sufficient for the employer to avoid

the Court’s dictum in Burns. A contrary conclusion would per-

mit an employer to avoid his bargaining obligation concern-

ing initial working conditions simply by making employment

in his unit dependent upon the acceptance of a unilateral estab-

lishment of working conditions. So to interpret Burns would

be to render meaningless the bargaining obligation.”

precedes the latter; it is not coterminous with it.”

| Emphasis added. )

; The dissenters also demonstrated that transforming a

plan to retain” into probable retention destroys the only

statutory purpose the exception could serve (35a-36a) :

“Our separate uissents in Spruce Up, supra, dealt

with the central fallacy of our colleagues’ analysis,

1.e., aS Boeing’s plan to retain the incumbents was

‘simultaneously and inextricably linked in Boeing’s

proposals’ with the lower terms it proposed to offer

them, the existence of the plan did not in the lan-

guage of Burns impose upon Boeing the obligation to

‘Initially consult with the employees’ bargaining rep-

resentative before... . [the incoming employer] fixes

terms.’ In response, it was said then, and we reit-

erate now:

The Court [in Burns] said nothing about a con-

ditional intent to hire. The majority are at-

tempting to revise substantially what the Court

said, for their view, would, in effect, abrogate the

exception, as the only case when a violation

would occur under their test would be the un-

likely situation where a successor says he will

continue the employees under the exact terms

and conditions as existed before the takeover. If

he says that he “plans” to alter the status quo

in any way, while at the same time indicating

a desire to retain the old employees, they would

find this amounts to a conditional intent to hire.

I cannot accept that the Supreme Court would

announce a rule of law that is so restrictive

as to amount to a nullity.

The majority’s contrary construction of this

aspect of the Burns decision leads to the anom-

alous, if not absurd, result that a bargaining

obligation over the establishment of the suc-

cessor’s initial terms and conditions of employ-

ment arises when the successor plans to retain

the former employees at the terms their union

had already established through collective bar-

gaining with the predecessor employer but not

when he plans to retain them at terms different

from those previously established. The majority

would bring to bear ‘the mediatory influence of

negotiation’ where there is no controversy, but

deny its appropriate use where there is contro-

versy. They thus turn the Act on its head,

and to no useful end.” [Footnotes omitted. ]

2. The construction of the majority, approved below,

is incompatible literally with the Burns exception. To

make the existence of a “plan[].to retain” depend on

its prospects of fruition is logically a non-sequitur. The

fallacy is compounded, not aided, by invoking the “per-

fectly clear” qualification (17a), for those words syn-

tactically refer to and modify the existence of a plan,

vel non, not its feasibility. Furthermore, if the Court had

envisioned “probable continuity” (18a) rather than mani-

fest intention as the controlling factor, the draftsman

would undoubtedly have used the words “will probably”

instead of “plans to”.

The approved construction, as the court below admits

(19a), virtually eviscerates the exception for it de-

prives the predecessor’s employees of the benefits of

collective bargaining precisely and only when it is needed

—i.e., when the successor proposes to employ them under

substantially worse terms and conditions than those pre-

vailing—and guarantees collective bargaining only when

it is not needed, —i.e., when the successor proposes no

substantial change.’ In addition, as former General Coun-

sel Nash pointed out, the limitation enables a successor to

evade the obligation to bargain about initial terms for

a work force which he intends to compose mainly out

of his predecessor’s employees merely by coupling his

7 “To be sure, in view of the substantial harmony existent in the

parties’ positions, only minor adjustments in initial terms may then

remain to be negotiated, and it must be acknowledged that com-

pulsory bargaining usually yields greater returns where labor-

management differences are of more appreciable magnitude.” (19a).

announcement of intent to retain them with a unilateral

wage reduction. It is mind boggling to assume that this

Court would have taken pains to draft a virtually self-

defeating exception.

The attempt of the court below (n. 52, 22a) to

minimize the effect of the evisceration: ‘“nonapplica-

bility of the Burns exception does not substantially im-

pair the ability of the incumbent employees to ensure

suitable terms for the successor employment”; “a bypass

of initial-terms bargaining consistent with the Board’s

reading of Burns does not lock indefinitely the carried-

over workers into conditions not to their liking”; “if in-

cumbents are retained they can at that point endeavor

collectively to improve their lot”, is counter-productive

The listed consequences all follow from the sentence

succeeding the exception. If this Court deemed those

protections sufficient, the sentence at issue would not have

been written.

3. The construction of Burns in question here goes to the

heart of Section 2(3) analysis as it applies to Sections

8(a)(5) and (1). In Chemrock and Spruce Up I the

Board followed Phelps Dodge Corp. v. NLRB, 313 U.S. 177

(1941) and NLRB vy. Hearst Publications, 322 US. 111

(1944 , in reasoning that where a prospective successor

recognizes and plans to preserve the incumbent employees’

existing employee status,” the conditions of the relation-

ship are such as to “require [collective bargaining] pro-

tection.” Chemrock, supra, 151 NLRB at 1077-1078 (98a-

104a). In construing Burns to deny protection, the Board

majority and the court below repudiated, sub silentio, the

teachings of Phelps-Dodge and Hearst.

ey Board majority’s approach sends the law galloping

oH In a new, complex and forbidden direction. Instead

of focusing upon the nature of the nexus between the

would-be successor and the incumbent workforce which

triggers the pre-takeover duty to bargain (Spitzer Akron,

Ko gD

hike

Inc. v. NLRB, 540 F.2d 841, 844-845 (6 Cir., 1976), cert.

denied 429 U.S. 1040),* the Board and the courts now

make liability turn on whether the successor violated a

commitment or broke his word. (n. 40, 15a). This line

of analysis would seem to invade the area of enforcement

of promises and protection of “employer-generated ex-

pectations” (19a-20a, n. 52, 22a) which Congress fore-

closed to the Board. Teatile Workers v. Lincoln Mills,

353 U.S. 448, 452-453 (1957); Smith v. Evening News

Ass’n, 371 U.S. 195, 199 (1962).

4, The policy objective of the majority’s construction—

to avoid discouraging “employers from commenting favor-

ably on the employment prospects of old employees” (14a-

15a, 21a-22a)—is based on speculative assumptions which

are in any event irrelevant. In the first place, as this

Court observed in Burns, 406 U.S. at 291:

“In many cases, of course, successor employers

will find it advantageous not only to recognize and

bargain with the union but also to observe the pre-

existing contract rather than to face uncertainty

and turmoil.”

The court below conceded (21a):

“It seems rather evident that in some instances a

new employer desirous of changing prevailing em-

ployment terms may feel compelled to reveal his

retention plans, notwithstanding a resultant obli-

gation to bargain. But, in the Board’s view, as we

understand it, the successor more commonly may

endeavor to conceal, or to at least postpone publicity

on, reemployment objectives in order to avoid the

onus of bargaining during the usually difficult period

of takeover, * * *.” (Emphasis added.)

8 In Spitzer Akron, the court said (id.) :

“We construe Burns as relating to the timing of the changes—

whether they predate or postdate the commencement of the

duty to bargain. As soon as the duty to bargain arises, the

successor company cannot institute changes without consulting

with the union.”

But no probative evidence or Board experience is cited

to support “the view” so imputed to the majority, and

we are aware of none. Indeed, it is more reasonable to

suppose that the instability (cf. 22a), resulting from

“concealment” may so adversely affect the employer’s

interest in retention as to “more commonly” impel dis-

closure. To the extent that the Chemrock-Spruce Up I

rule may deprive employees of “early appraisal of their

retention prospects” (21a), that disadvantage may well

be outweighed by the advantages gained through collec-

tive bargaining over the proposed reduction in wages and

lessening of benefits where retention prospects are

revealed.

In any event, speculations such as these are irrelevant,

for they cannot justify discarding the natural and normal

meaning of the language of this Court. That language

effectuates “[t]he congressional policy manifest in the Act

[which] is to enable the parties to negotiate.” Burns, 406

U.S. at 288. Congress trusted that policy to promote

stabilitv in labor relations. The Board is not licensed

to repudiate that policy to increase the likelihood that

successor employers will issue favorable forecasts of em-

ployment prospects for incumbent employees. The Act is

not “a charter for the National Labor Relations Board

to act at large” (Labor Board v. Insurance Agents, 361

U.S. 477, 490 (1960)) to enhance the economic security

of either employees or employers.

Nor does the brevity of this Court’s statement excuse

deference by the court below to the majority’s miscon-

struction (n. 41, 16a). As another panel of that court

recently stated:

“What is involved in this case is both the meaning

and the effect of the language of a Supreme Court

opinion. We agree with the Third Circuit that the

resolution of this type of question does not require

the same type ana degree of deference to administra-

ee eS ae eee

tive discretion as was involved in American Bible

Society v. Blount. [446 F.2d 588, 596-98 (3d Cir.

1971) }.”

Standard Rate & Data Service, Inc. v. United States

Postal Service, No. 77-1848, U.S. App. D.C., decided July

14, 1978, slip. op. 9.

5. The need for clarification is enhanced by the im-

portance of the issue in the field of successorship law,

to which this Court has devoted so much attention. Both

in principle and in volume of transactions affected, it is

vital to employers, employees and unions, and to the

Board and reviewing courts, to know whether the Phelps-

Dodge-Hearst approach survives Burns. Certiorari should

be granted to resolve that issue.

CONCLUSION

For the foregoing reasons, this petition for writ of

certiorari should be granted.

Respectfully submitted,

PLATO E. PAPPS

Machinists Building

1300 Connecticut Avenue, N.W.

Washington, D.C. 20036

MOZART G. RATNER

1900 M Street, N.W.

Washington, D.C. 20036

Attorneys for Petitioner

APPENDIX

SK lll

UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 75-1056

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS, AFL-CIO, PETITIONER

Vv.

NATIONAL LABOR RELATIONS BOARD, RESPONDENT

BOEING COMPANY, INTERVENOR

Petition for Review of an Order of the

National Labor Relations Board

\ Argued November 1, 1976

Decided June 13, 1978

Mozart G. Ratner, with whom Plato FE. Papps and

Denis Gordon were on the brief, for petitioner.

| Peter Carre, Attorney, National Labor Relations

Board, with whom John S. Irving, General Counsel, E/-

liott Moore, Deputy Associate General Counsel, and Robert

Sewell, Attorney, National Labor Relations Board, were

on the brief, for respondent.

Before LEVENTHAL, ROBINSON and WILKEY, Circuit

Judges.

Opinion for the Court filed by Circuit Judge ROBINSON.

ROBINSON, Circuit Judge: Petitioner, International

Association of Machinists and Aerospace Workers, AFL-

CIO (1AM), complained to the National Labor Rela-

tions Board that the Boeing Company, as a successor

employer, unlawfully refused to bargain with IAM over

the initial terms and conditions of the successor employ-

ment. The Board interpreting Supreme Court pronounce-

ments on the subject,’ concluded that Boeing had no clear

plan to incorporate as a majority of its own workforce

employees of the predecessor employer *—a prerequisite to

an obligation to bargain with incumbent employees over

initial employment terms * and the litigation is now before

us for review of the decision and order of the Board

dismissing IAM’s complaint.‘ We accept the Board’s con-

struction and application of Supreme Court doctrine on

the duty of a successor employer to negotiate with an

incumbent union before fixing such terms and accord-

ingly affirm.

For seven years prior to March 31, 1971, Trans World

Airlines (TWA), pursuant to contract, performed instal-

lation support services for the National Aeronautical and

Space Administration (NASA) at the Kennedy Space

Center. These services included test support management,

plant engineering and maintenance, and logistical func-

tions relating to NASA’s utilization of the Center as a

principal space-launch site. Since February, 1964, TWA

had recognized IAM as the exclusive bargaining rep-

resentative of the employees performing such services at

the Center; and as of March 7, 1971, 1,054 of these em-

ployees were covered by an agreement between IAM

1 See Parts II-III infra.

2 Boeing Co., 214 N.L.R.B. 541 (1974). Members Fanning and

Panello dissented.

* See text infra at note 34.

+ Our jurisdiction rests on § 10(f) of the National Labor Rela-

tions Act, 29 U.S.C. § 160(f) (1970).

and TWA for an effective term extending from January

28, 1970, through the end of 1971. The agreement was

a company-wide contract encompassing all TWA opera-

tions in the Nation and by its terms was governed by

the Railway Labor Act.°

On June 30, 1970, NASA invited bids for an under-

taking to furnish essentially the same installation sup-

port services as those previously supplied by TWA.° The

term of the undertaking was to be one year commencing

April 1, 1971, subject to extensions for successive one-

year terms at NASA’s option. In response to the invita-

tions, proposals were submitted to NASA by TWA, Boeing

and five other companies. The labor costs specified in

Boeing’s principal bid were based specifically upon the

wage rates and fringe benefits stipulated in its existing

national agreement with IAM, which also applied to

Boeing’s “hardware contracts” with NASA for the Cen-

ter.’ These costs were substantially below those set by

TWA’s preexisting agreement with IAM for the installa-

tion support service unit.

NASA’s invitation required bidders to explain their

recruiting plans, including the “approximate number,” by

type, of existing employees to be hired. Boeing proposed

to acquire 85.6% of its total work force for the operation

from incumbent employees. This figure was derived after

545 U.S.C. § 151 et seq. (1970).

® Among other minor changes, mail and distribution services

affecting 51 unit empleyees were eliminated. The assumption of

that work by a new contractor gave rise to other litigation in this

court. JAM v. NLRB, 162 U.S.App.D.C. 138, 498 F.2d 680 (1974).

* Boeing has had various “hardware contracts” with NASA at

the Center dating from 1952. Under these agreements Boeing was

responsible for “launch support services,” usually involving research

and testing, associated with particular missile projects. The pro-

grams overlapped while earlier enterprises were phased out and new

programs initiated. During these transition periods, employees were

trensferred between projects.

computing the number of Boeing employees who would

transfer to the operation, the number to be recalled from

layoff from Boeing employment in the area, and the

number with known talent available in the area for em-

ployment. Boeing stated that its staffing proposal “recog-

nize[d] the desirability of retaining incumbent contractor

personnel to provide continuity of functional support,” *

and reported that its “analysis indicate[d] that effective-

ness and economy can be achieved by retaining experi-

enced and qualified incumbent personnel.”* Boeing’s

proposition repeatedly noted a need for continuity and its

intent to hire incumbent employees,” but observed that

“(while the staffing plan is based on retaining approxi-

8 Boeing Co., supra note 2, 214 N.L.R.B. at 543.

9 Jd.

10 Boeing proposed a lengthy baseline phase-in plan, one criterion

of which was that “Boeing can and will staff the majority of the

total work force from the incumbent contractor.” Jd. Additionally,

Boeing’s industrial relations chief at the Center declared that

Boeing expected to hire a work force of approximately 1,000 em-

ployees, of whom it proposed to recruit “[a]ll” the TWA personnel

“we could get,” id., not less than 86% and “closer to 100 percent,”

id. The proposal outlined detailed selection procedures stressing

retention of incumbents, and Boeing announced to the press its

intention to obtain the bulk of its workforce from incumbent em-

ployees. Newspapers circulating in the county in which the Center

is situated reported that Boeing would hire a “majority” or a

“large percentage” of TWA incumbents, id., and Boeing was quoted

as saying that it “want[ed] to upset the community as little as

possible.” Jd. At Boeing’s first meeting with IAM in late Novem-

ber, 1970, and at their second meeting on December 4, 1970, Boeing

indicated to IAM that it would retain most of the TWA employees.

During phase-in of the project, Boeing’s employment supervisor

told IAM “that we desire[] to employ in essence most of our re-

quired employees from the ranks of the incumbent contractor,”

id., and Boeing informed TWA at a meeting on November 30, 1970,

that “most of [the TWA employees] would be hired,” id. TWA

officials reported that Boeing “hoped to hire the majority[;] ...

[it] desired to hire as many TWA people as possible,” id., and on

December 1, 1970, TWA advised its employees that “Boeing is inter-

ested in hiring the majority of [TWA] employees” at the Center.

Id.

mately 86 percent of the incumbent personnel, [Florida

State Employment Service] data indicated that the local

labor market is sufficient in both skills and number to

provide the staffing requirements of this contract.”

On November 23, 1970, NASA announced that it had

selected Boeing as the party with which it would ne-

gotiate a contract to provide the installation support

services at the Center. Subsequently, Boeing requested

a meeting with IAM to discuss the company’s bid, and at

the meeting, on December 4, 1970, Boeing emphasized

that its proposal to NASA was based on its current

“hardware contract” at the Center. At an internal meet-

ing on the next day, IAM officials agreed that they could

not accept Boeing’s plan to apply its existing contract

with IAM to installation support service employees be-

cause that would result in a reduction in wages and

benefits for such of them as were incumbents.” IAM

promptly communicated its decision to Boeing and NASA,

indicating that IAM would insist on perpetuation of the

agreement with IAM and TWA for these employees.

Despite vigorous protests by TWA and IAM, NASA

contracted with Boeing for the installation support serv-

11 Jd. at 549 (decision of administrative law judge). Boeing con-

sulted the Florida State Employment Service and was notified in

August, 1970, that qualified personnel in the desired classifications

could readily be obtained from available manpower in the county.

To survey the local market, Boeing advertised in a local newspaper

on July 26 and August 7 for applicants for employment on the

project and received numerous affirmative responses.

12 After occurrence of the events leading to this litigation, the

Service Contract Act, 41 U.S.C. §§ 351 et seq. (1970), was amended

to provide that no sucecssor government contractor may pay its

employees less than the wages and fringe benefits set forth in the

previous contractor’s collective bargaining agreement. Service Con-

tract Act Amendments of 1972, Pub. L. No. 92-473, § 3(b), 86 Stat.

789, 41 U.S.C. § 353(¢) (Supp. II 1972); see Boeing Co. v. IAM,

504 F.2d 307, 311-312 & n.7 (5th Cir. 1974), cert. denied, 421 U.S.

913, 95 S.Ct. 1570, 43 L.Ed.2d 779 (1975). The amendment was not

made retroactive. Id.

ices on March 11, 1971. On the day following, IAM

requested recognition by Boeing and again urged adoption

of the TWA-IAM collective bargaining agreement. Boeing

replied on March 19 that it recognized IAM as the rep-

resentative of the employees on the assumption that they

: would become an accretion to the unit already covered

by the Boeing-IAM contract rather than a distinct unit.’

Boeing predicted that IAM would lack majority repre-

sentation of the installation and support service work-

force, and indicated that the Boeing-IAM contract would

be implemented without change.

On April 1, 1971, Boeing began performance of the

contract with a workforce of 970, including 380 TWA

incumbents, 138 Boeing employees—transferred or re-

called from layoff, or formerly Boeing personnel—450

outsiders and two employees unidentified as to source.

Each hourly employee arriving for work on and after

April 1 was given a copy of the Boeing-IAM agreement.

As the Boeing-IAM national agreement was to expire

on October 1, Boeing and IAM commenced negotiations

on or about August 3, 1971 for a replacement. On No-

vember 12, 1971, the parties entered into a new nation-

wide agreement effective from December 13, 1971, through

October 1, 1974, with a provision for automatic yearly

renewal. Throughout the negotiations, each side main-

tained its legal position on the applicability of the TWA-

13In adjudicating IAM’s claim of unlawful unilateral successor

conduct, the administrative law judge observed that if, as Boeing

maintained, the appropriate unit were to consist of the installation

support service employees in combination with employees already

engaged pursuant to Boeing’s current hardware contracts with

NASA, terms and conditions for all such employees would have

been governed by the existing Boeing-IAM agreement; but the

judge regarded the accretion principle inapplicable in the circum-

stances of the case. Boeing Co., supra note 2, 214 N.L.R.B. at 558-

559 (decision of administrative law judge).

IAM contract to the installation support service unit at

the Center.**

On May 10, 1973, the Board’s General Counsel issued

a complaint, upon charges filed by IAM, alleging a viola-

tion of Section 8(a) (5) of the National Labor Relations

Act” arising from Boeing’s failure to consult IAM on

the initial terms and conditions of employment for the

installation support services unit.** An administrative law

judge recommended that the complaint be dismissed in

its entirety.” Relying on a number of factors, the judge

rejected IAM’s contention that Boeing had a “perfectly

clear” plan to retain a substantial majority of incum-

bent employees *—a plan that would have created an

obligation on Boeing’s part, under the Supreme Court’s

Burns holding,” to consult with IAM before setting

initial employment terms.”” Although the Board agreed

with the administrative law judge’s conclusions and

147AM filed grievances and sought to compel Boeing to arbitrate

under the IAM-TWA agreement. The issue was resolved against

IAM in a suit under § 301 of the Labor Management Relations

Act of 1947, 29 U.S.C. § 185 (1970), filed by Boeing for a declara-

tory judgment that it was not bound by that agreement. Boeing

Co. v. IAM, supra note 12. In IAM v. Hodgson, 169 U.S.App.D.C.

142, 515 F.2d 373 (1975), LAM failed in its suit for damages under

the Service Contract Act of 1965, 41 U.S.C. § 351 et seq. (1970 &

Supp. II 1972), as amended by Act of Apr. 21, 1976, Pub. L. No.

94-273, § 29, 90 Stat. 380, and Act of Oct. 13, 1976, Pub. L. No.

94-489, §§ 1-2, 90 Stat. 2358.

15 29 U.S.C. § 158(a) (5) (1970).

16 The complaint also asserted violations of §§ 8(a)(1) and (3),

29 U.S.C. §§ 158(a) (1), (3) (1970), which are not pertinent here.

17 The decision of the administrative law judge is appended to

that of the Board. Boeing Co., supra note 2, 214 N.L.R.B. at 545.

18 Id. at 559-560.

1° NLRB v. Burns Int'l Security Servs., Inc., 406 U.S. 272, 92

S.Ct. 1571, 32 L.Ed.2d 61 (1972).

2° See Part II infra.

adopted his recommended order, it expressly chose to

ground its decision solely on the reasons set forth in its

Spruce Up opinion * as applied to the facts of the instant

case. The Board’s order was followed by the petition

to this court for review.

An employer’s collective bargaining obligation derives

from Section 8(a) (5) of the National Labor Relations

Act, which makes it an unfair labor practice for an em-

ployer “to refuse to bargain collectively with the rep-

resentatives of his employees, subject to the provisions

of section [9(a)] of [the Act].”** Section 9(a) provides

in pertinent part that “[r]epresentatives designed or

selected for the purpose of collective bargaining by the

majority of the employees in a unit appropriate for

such purposes, shall be the exclusive representatives of all

the employees in such unit for the purposes of collective

bargaining. . . .”** By conjunctive operation of these

two sections, a union representing a majority of the em-

ployees in an appropriate bargaining unit may compel

the employer to negotiate with respect to the terms and

conditions of employment applicable to that unit.

In Burns, the Supreme Court considered the impact

of employer succession on the bargaining status of a un-

ion previously selected by the predecessor employer’s labor

force. Like the case before us, Burns involved a succes-

sion to duties under a service contract; Burns Interna-

*1 Spruce Up Corp., 209 N.L.R.B. 194 (1974), enforced per

curiam on other grounds, 90 L.R.R.M. 2525 (4th Cir. Sept. 16,

1975).

22 Boeing Co., supra note 2, 214 N.L.R.B. at 541 (with Members

Fanning and Panello dissenting).

23 Supra note 15.

2429 U.S.C. § 159(a) (1970).

25 NLRB v. Burns Int’l Security Servs., Inc., supra note 19.

tional Security Services, Inc., had replaced Wackenhut

Corporation, which for five years had provided piant-

protection services for Lockheed Aircraft Service Com-

pany at an airport. Burns retained 27 of the Wackenhut

guards and completed its workforce with 15 of its own

transferrees [sic] from other Burns locations. Burns re-

fused to deal with the United Plant Guard Workers of

America (UPG), which less than four months earlier had

been certified after a Board-supervised election as the ex-

clusive bargaining representative of Wackenhut’s em-

ployees. UPG demanded that Burns recognize it as the

representative of the Burns workforce at the airport and

that Burns honor the UPG-Wackenhut collective bargain-

ing agreement.

Addressing Burns’ alleged duty to negotiate with the

union,” the Court held that when a bargaining unit is

left undisturbed by employer succession and a majority

of the unit’s employees hired by the new employer are

already represented by a union as the recently certified

bargaining agent, an order directing the employer to

bargain with the union implements wholesomely the ex-

press mandates of Sections 8(a) (5) ** and 9(a) ** of the

Act.” But, the Court held, assumption of Wackenhut’s

26 Whether a new employer must assume the responsibilities of

his predecessor will depend on what obligations are at issue. A

new employer may be a “successor” for some purposes and not for

others. See Howard Johnson Co. v. Hotel & Restaurant Employees,

417 U.S. 249, 262-263 n.9, 94 S.Ct. 2236, 2243-2244 n.9, 41 L.Ed.2d

46, 56-57 n.9 (1974); IAM v. NLRB, 134 U.S.App.D.C. 239, 244,

414 F.2d 1135, 1140, cert. denied, 396 U.S. 889, 90 S.Ct. 174, 24

L.Ed.2d 163 (1969) (concurring opinion); Boeing Co. v. IAM,

supra note 12, 504 F.2d at 317.

27 Quoted in text supra at note 23.

28 Quoted in text supra at note 24.

2° 406 U.S. at 279, 92 S.Ct. at 1577, 32 L.Ed.2d at 68. Reading

§§ 8(a)(5) and 9(a) together, the Court ruled that the incumbent

union could have compelled Burns, the successor employer, to negoti-

ate if indeed the union had been the representative of a majority

10a

collective bargaining contract did not follow from any

duty on Burns’ part to bargain since by the express terms

of Section 8(d) of the Act a bargaining obligation “does

not compel either party to agree to a proposal! or require

the making of a concession.” * That result was rein-

forced, the Court said, by the practical importance of

allowing a successor employer to alter the structure of a

of the employees in an appropriate unit. Jd. at 277, 281, 92 S.Ct.

at 1577, 1579, 32 L.Ed.2d at 67, 69; see, e.g., Golden State Bottling

Co. v. NLRB, 414 U.S. 168, 184 n.6, 94 S.Ct. 414, 425 n.6, 38

L.Ed.2d 388, 402 n.6 (1973) (“because the purchaser is not obligated

by the Act to hire any of the predecessor’s employees [citing Burns |

the purchaser, if it does not hire any or a majority of those em-

ployees, will not be bound by an outstanding order to bargain issued

by the Board against the predecessor or by any order tied to the

continuance of the bargaining agent in the unit involved [citing

Burns|”); NLRB vy. Band-Age, Inc., 534 F.2d 1, 3 (1st Cir.), cert.

denied, 429 U.S. 921, 97 S.Ct. 318, 50 L.Ed.2d 288 (1976) (Burns

identified as a significant factor in determining a successor’s duty to

bargain “the permissibility of assuming the continued existence of

a union majority”) ; NLRB v. Daneker Clock Co., 516 F.2d 315, 316

(4th Cir. 1975) (“more than half of Daneker’s production employees

had worked for its predecessor”); Toma-A-Hawk Transit, Inc. Vv.

NLEB, 419 F.2d 1025, 1027 (7th Cir. 1969) (successor began opera-

tions with 24 drivers and maintenance employees, 14 of whom had

worked for the predecessor); Pacific Hide & Fur Depot, Ine. Vv.

NLRB, 553 F.2d 609, 611 (9th Cir. 1977) (“absent a refusal to hire

because of anti-union animus, a majority of the work force of the

purchasing employer in the unit [must] be former employees of

the seller in that unit”).

Despite the intimation in Golden State Bottling Co., supra, that

Burns recognizes a successor’s duty to bargain only when he hires

a majority of his predecessor's employees, the relevant ratio—

suggested by the language in Burns itself, see text infra at note 33

and 406 U.S. at 277, 281, 92 S.Ct. at 1577, 1579, 32 L.Ed.2d at 67,

69—is not the percentage of the predecessor’s employees enrolled

by the successor but the percentage of the successor’s work force

populated by those employees. See cases cited supra. This is true

because the question to be resolved in light of §9(a) is whether

the incumbent union represents a majority of the successor’s em-

ployees. See text supra at notes 24-25; Boeing Co. v. IAM, supra

note 12, 504 F.2d at 319 & n.18, 320 & n.20, 321.

% 406 U.S. at 282, 92 S.Ct. at 1579, 32 L.Ed.2d at 70, quoting

§ 8(d), 29 U.S.C. § 158(d) (1970).

lla

moribund business beyond the confines of a predecessor’s

labor agreement, as well as by the corresponding value to

a union of an unshackled ability to negotiate a new con-

tract with a more prosperous successor firm.*

The Court then proceeded to hold that ordinarily a suc-

cessor employer may set his initial terms and conditions

of employment without bargaining with the incumbent

union:

Although Burns had an obligation to bargain

with the union concerning wages and other condi-

31406 U.S. at 287-289, 92 S.Ct. at 1582-1583, 32 L.Ed.2d at 72-74.

The Court observed that if the successor were inhibited by the

former employer’s contract with the union,

[i]t would seemingly follow that employees of the predecessor

would be deemed employees of the successor, dischargeable

only in accordance with provisions of the contract and subject

to the grievance and arbitration provisions thereof. Burns

would not have been free to replace Wackenhut’s guards with

its own except as the contract permitted.

Id. at 288, 92 S.Ct. at 1582-1583, 32 L.Ed.2d at 73 (ootnote

omitted).

We note, however, that if the successor employer refuses to hire

his predecessor’s employees because of their union membership

or activity, or to avoid recognition of the union, he violates § 8(a)

(3), 29 U.S.C. § 158(a)(3) (1970). See Howard Johnson Co. Vv.

Hotel & Restaurant Employees, supra note 26, 417 U.S. at 262 n.8,

94 S.Ct. at 2243 n.8, 41 L.Ed.2d at 56 n.8; NLRB v. Burns Int'l

Security Servs., supra note 19, 417 U.S. at 280-281 n.5, 92 S.Ct. at

1578-1579 n.5, 32 L.Ed.2d at 69 n.5; Tri State Maintenance Corp. Vv.

NLRB, 132 U.S.App.D.C. 368, 408 F.2d 171 (1968); K. B. & J.

Young’s Super Mkts. v. NLRB, 377 F.2d 463 (9th Cir.), cert. denied,

389 U.S. 841, 88 S.Ct. 71, 19 L.Ed.2d 105 (1967) (mass discharge

of unit personnel to evade bargaining obligations with incumbent

union held to violate § 8(a) (3), and refusal to bargain with union

held to violate § 8(a)(5); Barrington Plaza & Tragniew, Inc., 185

N.L.R.B. 962 (1970) (discriminatory refusal to hire incumbent em-

ployees held to violate §§ 8(a)(1) and (3) ; because purpose under-

lying refusal to hire was to evade a bargaining relationship and old

employees would have constituted a majority of new work force,

refusal also held to violate §8(a)(5) and bargaining obligation

imposed) .

12a

tions 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 rep-

resentative. It is difficult to understand how Burns

could be said to have changed unilaterally any pre-

existing term or condition of employment without

bargaining when it had no previous relationship

whatsoever to the bargaining unit and, prior to

July 1, no outstanding terms and conditions of em-

ployment from which a change could be inferred.

The terms on which Burns hired employees for

service after July 1 may have differed from the

terms extended by Wackenhut and required by the

collective-bargaining contract, but it does not follow

that Burns changed its terms and conditions of em-

ployment when it specified the initial basis on which

employees were hired on July 1.*

But, to the general rule that a successor employer may

specify initial employment terms without first conferring

with the union, the Court articulated an exception—on

the applicability of which the present litigation turns—

for circumstances in which a duty to bargain will arise

early enough in the predecessor-successor transition to

necessitate union involvement in designation of those

terms:

82 Id. at 294, 92 S.Ct. at 1585, 32 L.Ed.2d at 76-77. The Court

thus overturned a line of Board decisions requiring a successor

employer always to bargain with the incumbent union before insti-

tuting employment terms different from those prevailing under the

predecessor’s contract, whether or not the successor was bound

by that contract. See, e.g., Emerald Maintenance, Inc., 188 N.L.R.B.

876 (1971); Valleydale Packers, Inc., 162 N.L.R.B. 1486 (1967)

enforced, 402 F.2d 768 (5th Cir. 1968), cert. denied, 396 U.S. 825 90

S.Ct. 66, 24 L.Ed.2d 75 (1969); Overnite Transp. Co., 157 N.L.B.B.

1185 (1966), enforced, 372 F.2d 765 (4th Cir.), cert. denied, 389

U.S. 383, 88 S.Ct. 59, 19 L.Ed.2d 101 (1967).

13a

Although a successor employer is ordinarily free to

set initial terms on which it will hire the employees

of a 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 representative 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 a duty

to bargain with a union, since it will not be evident

until then that the bargaining representative repre-

sents a majority of the employees in the unit as re-

quired by $9(a) of the Act, 29 U.S.C. § 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.*

Ill

In the case at bar, the Board dealt with the Burns

exception by referring to the principles established in its

Spruce Up decision.** The Board observed that even if

83 406 U.S. at 294-295, 92 S.Ct. at 1585-1586, 32 L.Ed.2d at 77

(emphasis supplied).

34 Spruce Up Corp., supra note 21. In an earlier decision in Spruce

Up Corp., 194 N.L.R.B. 841 (1972), the Board had held:

[W]here, as here, an employer who is about to acquire a going

business manifests an intent to retain his predecessor’s em-

ployees they become at that point his employees for the purpose

of the application of Section 8(a)(5), and he is obligated to

bargain with a union which is the statutory representative of

such employees.

Id. at 846. While the Board’s original order was pending before

the Fourth Circuit for enforcement, the Supreme Court decided

Burns, and at the Board’s request the case was remanded to the

Board for reconsideration in light of Burns. See Spruce Up Corp.,

supra note 21, 209 N.L.R.B. at 194. On remand the Board modified

its earlier decision and enunciated the principles at issue in the

present case.

l4a

Boeing “intended” to hire all or sub;tantially all® of

TWA’s employees, those “intentions” were from the out-

set tied to the terms and conditions specified in the

Boeing-IAM nationwide agreement. Quoting from its

opinion in Spruce Up, the Board reasoned:

When an employer who has not yet commenced opera-

tions announces new terms prior to or simultaneously

with his invitation to the previous work force to ac-

cept 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.*? The

possibility that the old employees may not enter into

an agreement relationship with the new employer is

ayrealone... .*

Thus the Board theorized that a successor employer’s in-

tention to retain large numbers of his predecessor’s em-

ployees is not likely enough to come to fruition when his

offer of employment is coupled with an announcement of

reduced wages and benefits, and in such instances no duty

to bargain over initial terms and conditions of employ-

ment would arise.

In its Spruce Up opinion, the Board maintained that a

construction of the Burns caveat emphasizing simply the

85 The Board has construed the Court’s term “all,” see text supra

at note 33, to mean “all or substantially all” of the incumbents.

Boeing Co., supra note 2, 214 N.L.R.B. at 541. Of course, when

the successor plans to expand the total work complement such that

even if all incumbents were employed they would constitute only a

minority, a presumption that the extant union will represent most

of the new employees cannot follow from the successor’s intention

to retain incumbents.

86 Td,

37 See text supra at note 33.

38 Boeing Co., supra note 2, 214 N.L.R.B. at 541, quoting Spruce

Up Corp., note 21, 209 N.L.R.B. at 195.

- SOS Lee ee oe

15a

employer’s manifested intentions, rather than the proba-

bility of employee acceptance of jobs with the successor,

would discourage employers from commenting favorably

on the employment prospects of old employees.*® Sensitive

to that concern, the Board interpreted the Burns exception

to apply only to situations in which a successor employer

has misled employees into believing that all would be

retained on the basis of existing wages, hours and condi-

tions of employment, or at least to instances in which 4

successor employer has failed to make plain an intention

to alter terms and conditions prior to offering employ-

ment to incumbent employees.*°

39 Spruce Up Corp., supra note 21, 209 N.L.R.B. at 195.

40 Id. The Board has consistently adhered to this interpretation.

See, e.g., Virginia Sportswear, Inc., 226 N.L.R.B. 1296 (1976);

C.M.E., Inc., 225 N.L.R.B. 514 (1976); Nazareth Regional High

School, 222 N.L.R.B. 1052 (1976), enforcement granted in part and

denied in part, 549 F.2d 873 (2d Cir. 1977); United Maintenance

& Mfg. Co., 214 N.L.R.B. 529 (1974) ; Henry M. Hald High School

Ass’n, 213 N.L.R.B. 415 (1974); Anita Shops, 211 N.L.R.B. 501

(1974); Ranch-Way, Inc., 203 N.L.R.B. 911 (1973).

The Sixth and Seventh Circuits have each imposed a requirement

of preliminary bargaining consistent with the Spruce Up rule. In

Spitzer Akron, Inc. v. NLRB, 540 F.2d 841 (6th Cir. 1976), cert.

denied, 429 U.S. 1040, 97 S.Ct. 739, 50 L.Ed.2d 752 (1977), a suc-

cessor employer expressed his intention to retain the old employees

and indicated to them that the operation “would carry on as usual.”

The court voiced its view that “the facts in the instant case are

sufficient . . . to establish that the employees were misled by ‘tacit

inference’ into believing they would be retained without change

from the condition of employment.” Jd. at 846, quoting Brotherhood

of Ry. Clerks v. REA Express, Inc., 523 F.2d 164, 171 (2d Cir.),

cert. denied, 423 U.S. 1017, 96 S.Ct. 451, 46 L.Ed.2d 388 (1975).

In NLRB v. Bachrodt Chevrolet Co., 468 F.2d 963 (7th Cir. 1972),

vacated and remanded, 411 U.S. 912, 93 S.Ct. 1547, 36 L.Ed.2d 304,

un remand, 205 N.L.R.B. 784 (1973), enforced, 515 F.2d 512 (7th

Cir.), cert. denied, 423 U.S. 927, 96 S.Ct. 274, 46 L.Ed.2d 255

(1975), the court approved the Board’s determination of unlawful

unilateral action when an employer manifested a purpose to hire

his predecessor’s employees without contemporaneously advising

them of plans to change working corditions and thereafter fixed

working conditions different from those of the predecessor. See also,

16a

We think the Board’s construction of the Burns excep-

tion reasonably implements the considerations reflected in

Burns as a whole.** The Burns Court accorded much im-

portance to a successor employer’s freedom to alter—even

Zimm’s Foodliner, Inc. v. NLRB, 495 F.2d 1131, 1142-1144 (9th

Cir.), cert. denied, 419 U.S. 838, 95 S.Ct. 66, 42 L.Ed.2d 65 (1974).

In Nazareth Regional High School v. NLRB, supra, the Second

Circuit invoked Spruce Up to deny a bargaining obligation where a

successor employer proposed new employment terms after earlier

communicating to the incumbent employees its intention to hire

the entire incumbent staff without committing itself to adoption

of the old terms. The Board had contended that because Nazareth

failed to indicate in an initial announcement of intent to rehire

all of the employees that new terms would be imposed, Spruce Up

was distinguishable, and that a finding of a duty to bargain at that

point was justified. 549 F.2d at 881. Rejecting that thesis, the court

proclaimed that “[{t]he important consideration in determining

whether it is perfectly clear that a successor intends to retain all of

the employees is whether they have been promised reemployment

on the existing terms.” Jd. (emphasis supplied). We have no occasion

to consider the restriction thus imposed.

‘1 When the case summons an interpretation, not of statutory

language itself, but of Supreme Court pronouncements of controlling

statutory principles, deference to the Board may ordinarily be less

appropriate. The Burns exception, however, provides minimal guid-

ance, which is supplemented only generally by the policy considera-

tions manifested in the decision. That the proviso can and should

be construed with sensitivity to conflicting policies is evident from

its terms; the exception envisions preliminary bargaining in “in-

stances in which. . . it [is] appropriate to have [the successor]

initially consult with the employees’ bargaining representative.”

See text supra at note 33. NLRB v. Bachrodt Chevrolet, Inc., supra

note 40, 468 F.2d at 972 (dissenting opinion). Balancing competing

interests to effectuate national labor policy, particularly in the suc-

cessorship context, is a delicate responsibility committed primarily

to the Board. See JAM v. NLRB, supra, note 26, 134 U.S.App.D.C.

at 245, 414 F.2d at 1141 (concurring opinion). Compare NLRB vy.

Local 103, Ironworkers Int’l, 46 U.S.L.W. 4081, 4085 (U.S. Jan.

17, 1978). We are inclined, then, to yield deference to the Board’s

construction once assured of its compatibility with the spirit as

well as the language of the Burns opinion.

ee .

17a

remake—the acquired enterprise. Certainly that in-

cludes the ability ordinarily to set initial employment

terms and conditions without preliminary bargaining

with an incumbent union.** The exception to the succes-

sor’s normal prerogative is narrow: initial-terms bargain-

ing, in the Supreme Court’s words, need occur only in

“instances in which it is perfectly clear that the new em-

ployer plans to retain all of the employees in the unit and

in which it [is] appropriate to have him initially consult

with the employees’ bargaining representative.”

IAM insists that the Burns “plans to retain all” excep-

tion unambiguously mandates initial-terms negotiations

whenever a successor employer manifests an intention to

hire substantially all of the incumbent workforce, whether

or not that objective is conditioned on acceptance of sub-

stantially reduced benefits. From the Board’s viewpoint,

however, the difficulty in that position is that an employ-

er’s readiness to hire only those incumbents who agree to

less favorable terms may fall far short of a “perfectly

clear” plan to perpetuate the old workforce as the major-

ity in the new.** Recruitment objectives thus conditioned,

#2 406 U.S. at 287-289, 92 S.Ct. at 1582-1583, 32 L.Ed.2d at 72-74.

43 The Burns decision restricted prevailing Board doctrine under

which initial-terms bargaining was the rule rather than the ex-

ception. See note 32 supra. Burns made the bargaining obligation

ordinarily conditional on actual hiring of the predecessor’s em-

ployees, thus leaving the successor usually free to fix unilaterally

the terms of the hiring. Of course, once recruitment has been com-

pleted, the chosen representative of a majority of the new em-

ployees may insist that the successor negotiate with respect to

terms and conditions of employment. See note 52 infra.

44 See text supra at note 33.

45 See Spruce Up Corp., supra note 21, 209 N.L.R.B. at 195:

When an employer who has not yet commenced operations an-

nounces new terms prior to or simultaneously with his invita-

tion to the previous workforce 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

18a

says the Board, negate an inference of probable con-

tinuity of employment “* and, we might add, without more

the incumbent union cannot fairly claim to represent the

larger number of the successor’s prospective employees.

In such circumstances, as the Court observed in Burns,

‘ft may not be clear until the successor employer has

hired his full complement of employees that he has a duty

to bargain with the union, since it will not be evident until

then that the bargaining representative represents the

majority of the employees in the unit as required by Sec-

tion 9(a) of the Act... .”*

that phrase was intended by the Supreme Court. The possibility

that the old employees may not enter into an employment re-

lationship with the new employer is a real one, as illustrated

by the present facts. Many of the former employees here did

not desire to be employed by the new employer under the terms

set by him—a fact which will often be operative, and which

any new employer must realistically anticipate. Since that is

so, it is surely not “perfectly clear” to either the employer or to

us that he can “plan to retain all of the employees in the unit”

under such a set of facts.

Since the relevant factor is the degree of likelihood that incum-

bents will work for the successor, in some circumstances a specifica-

tion of terms might refute the clarity of retention plans even though

the offered terms are comparable to those afforded by the predecessor

employer. Thus, in United Maintenance & Mfg. Co., supra-note 40,

the Board declined to hold unlawful a refusal to bargain over initial

terms when the employer proposed to continue existing terms but

the circumstances made it plain that those terms were unacceptable

to incumbent employees. On the other hand, a worsening of terms

conceivably may not, in some contexts, foredoom substantial reten-

tion.

46 See note 45 supra.

47 NLRB v. Burns Int'l Security Servs., Inc., supra note 19, 406

U.S. at 295, 92 S.Ct. at 1586, 32 L.Ed.2d at 77; see Pacific Hide &

Fur Depot, Inc. v. NLRB, supra note 29, 553 F.2d at 612:

The Burns sentence implies that when a new employer hires

only part of the old unit, together with others who were never

part of the unit, any decision regarding the employer’s duty to

bargain with the union affects the new employer, the old em-

ployees whom he has hired, and the new employees who were

not previously represented by the union. The rights of all three

eit HBAS HS) lament e 6

19a

We think, then, that the Board may with ample reason

conclude that only when an employer has indicated a

purpose to retain incumbents, but has not concomitantly

proposed substantial reductions in benefits, can it “be

evident” that the incumbent union “represents a majority

of the employees in the [successor] unit” prior to actual

induction of the predecessor employees, and that only

then may the union demand a say about initial terms of

successor employment. To be sure, in view of the sub-

stantial harmony existent in the parties’ positions, only

minor adjustments in initial terms may then remain to be

negotiated, and it must be acknowledged that compulsory

bargaining usually yields greater returns when labor-

management differences are of more appreciable magni-

tude. It cannot be gainsaid, however, that some affiliation

between employer and employee must be at least pre-

sumable as a threshold matter before an obligation to

bargain arises. So long as perpetuation of the incumbent

workforce remains highly speculative, that precondition

is not met.

Even when Burns is read, as the Board does, to limit

compulsory initial-terms bargaining to situations wherein

the successor has indicated that incumbents will be re-

tained and has not concurrently announced downward

changes in employment terms, predecessor-employees are

afforded an important measure of protection. Once the

duty to bargain has thus attached, the successor is

obliged to consult the incumbent union before institution

of less satisfactory terms. That is significant because

unconditional retention-announcements engender expecta-

must be considered. Basic to this consideration is § 9(a) of

the Act, ... which places in the hands of the majority of the

employees in the unit the decision whether to be represented

or not by the union. That majority’s right is paramount. The

“full complement” standard of Burns attempts to define when

the makeup of the controlling majority is to be determined.

Compare note 29 swpra and accompanying text.

20a

tions, ofttimes critica! to employees, that prevailing em-

ployment arrangements will remain essentially unaltered.

Even when incumbents are not affirmatively led to believe

that existing terms will be continued,** unless they are

apprised promptly of impending reductions in wages or

benefits, they may well forego the reshaping of personal

affairs that necessarily would have occurred but for antici-

pation that successor conditions will be comparable to

those in force.

The Board was hardly at liberty to ignore these con-

cerns, and its construction of Burns is responsive to them.

On the one hand, incumbents informed of the availability

of employment with the successor entity but contempora-

neously notified of substantial changes in the conditions

thereof are not lulled into a false sense of security. When,

on the other hand, the announcement of job-availability is

unaccompanied by any such warning, incumbents may

resolve to cast their lot with the successor, secure in the

knowledge that they can invoke the aegis of collective

bargaining should alterations in the terms of the employ-

ment be proposed.‘

48In Spruce Up, the Board did not read Burns as restricting

bargaining to only those situations in which employees are affirm-

atively led to expect continuation of existing employment terms.

Rather, by the Board’s interpretation, initial-terms bargaining is

mandatory in “circumstances in which the new employer has either

actively or, by tacit inference, misled employees into believing they

would all be retained without change in their wages, hours, or

conditions of employment, [citing Howard Johnson Co., 198

N.L.R.B. 763 (1972); Good Foods Mfg. & Processing Corp., 200

N.L.R.B. 623 (1972)] or [in] circumstances where the new em-

ployer ... has failed to clearly announce its intent to establish

a new set of conditions prior to inviting former employees to accept

employment.” Spruce Up Corp., supra note 21, 209 N.L.R.B. at 195

(emphasis supplied). See also Nazareth Regional High School, supra

note 40; C.M.E., Inc., supra note 40.

*° When the employment offer and a subsequent announcement of

changed terms both occur prior to actual hiring, the announcement

could deter some employees from accepting, notwithstanding that it

is made some time after the successor first makes known his plan to

WRB et om

2la

Moreover, the Board has observed, a contrary con-

struction of the Burns proviso could dissuade successor

employers from favorable forecasts on the employment

outlook for incumbent employees.’ It seems rather evi-

dent that in some instances a new employer desirous of

changing prevailing employment terms may feel compelled

to reveal his retention plans, notwithstanding a resultant

obligation to bargain. But, in the Board’s view, as we

understand it, the successor more commonly may en-

deavor to conceal, or to at least postpone publicity on, re-

employment objectives in order to avoid the onus of bar-

gaining during the usually difficult period of takeover,

and incumbent employees may thereby be deprived of

early appraisal of their retention prospects.*' Given that,

we cannot say that the Board was unreasonable in its

stand that reading Burns expansively with the object of

retain incumbents. If, for example, the successor indicates that he

intends to reemploy his predecessor’s workforce a month hence, and

when employees arrive to submit applications two weeks later he

informs them that substantially different terms will be instituted,

some incumbents may decide to look for work elsewhere. Neverthe-

less, a duty to bargain with respect to the proposed changes could

possibly be properly imposed on either of two grounds. For lack

of sufficient time to rearrange their affairs, incumbents might be

forced to continue in the jobs they held under the successor em-

ployer, notwithstanding notice of diminished terms, and perpetua-

tion of the workforce—and as well the representational status of the

incumbent union—may be assured. Even were that less plain, a bar-

gaining obligation may be essential to protect the employees from

imposition resulting from lack of prompt notice. Thus a prospective

employment relationship may be presumed when a successor has

boldly declared an intention to retain incumbents but has not

concurrently proposed substantially reduced benefits. And such an

inference may be left undisturbed by revelation of employment

terms after the employer’s initial announcement but before actual

hiring commences. The successor would have no legitimate com-

plaint about mandatory bargaining in such circumstances because

its necessity is a product of his own misleading conduct.

51 See id.

22a

assuring greater stability for employees might well pro-

duce the inverse result.™

52 Significantly, nonapplicability of the Burns exception does not

substantially impair the ability of incumbent employees to ensure

suitable terms for the successor employment. Once incumbents are

actually rehired in sufficient number to constitute a majority of

the successor’s employees, their organizational representative is

then in position to insist that the employer bargain with respect

to the conditions of the new employment; as in Burns the Court

observed, “Burns had an obligation to bargain with the union con-

cerning wages and other conditions of employment when the union

requested it to do so.” See text supra at note 27. And that obligation

would arise immediately upon completion of hiring, notwithstanding

that operations have not yet commenced. The employer would be

free, however, to impose the terms he originally envisioned after

consulting in good faith with the union. Thus the Burns Court

remarked :

If the union had made a request to bargain after Burns had

completed its hiring and if Burns had negotiated in good faith

and had made offers to the union which the union rejected,

Burns could have unilaterally initiated such proposals as the

opening terms and conditions of employment on July 1 [the

first day of operations] without committing an unfair labor

practice. Cf. NLRB v. Katz, 369 U.S. 736 n.12 (1962); NLRB

v. Fitzgerald Mills Corp., 313 F.2d 260, 272-273 (CA2) cert.

denied, 375 U.S. 834 (1963); NLRB v. Southern Coach & Body

Co., 336 F.2d 214, 217 (CA5 1964).

406 U.S. at 295, 92 S.Ct. at 1586, 32 L.Ed.2d at 77. But absent

a bargaining aemand by the union, the successor can simply insti-

tute the terms on which the employees were hired as the beginning

terms of employment, as was the situation in Burns.

The Burns exception concerns only the period prior to actual

hiring. The thrust of the exception, as construed by the Board, is to

forestall unilateral designation of initial terms only when it seems

clear that the predecessor’s employees will be retained or when

necessary to safeguard employer-generated expectations that incum-

bents will be rehired on terms comparable to those already in vogue.

See text supra at notes 41-43. It should be evident that a bypass

of initial-terms bargaining consistent with the Board’s reading of

Burns does not lock indefinitely the carried-over workers into con-

ditions not to their liking. Though Burns affords successor em-

ployers appreciable freedom in effectuating the successorship transi-

tion, the initial adjustment of rights between the employer and

incumbents is largely temporal, and if incumbents are retained they

can at that point endeavor collectively to improve their lot.

28a

We are constrained, then, to sustain the Board in its

conclusion that a successor employer need consult with an

incumbent union with respect to initial employment terms

prior to fixing them only when he has not evinced any

intention substantially to modify the pre-existing terms

before expressing a willingness to rehire incumbents. We

are persuaded, too, that the Board’s construction of Burns

was applied properly to the situation at bar. From the

outset, Boeing’s decision to retain TWA employees was

inseparable from its decision to cling to a scale of dimin-

ished wages and benefits. Indeed, Boeing’s contract bid

to NASA was premised importantly on labor costs reflect-

ing a reduction in the rate of remuneration earned under

its predecessor’s regime, and all concur that the terms

Boeing stipulated fell appreciably short of those prevail-

ing under TWA’s auspices. Moreover, Boeing’s inability

to attract enough incumbents to compromise a majority of

the new workforce tellingly evidences the inhibitive effect

of the reemployment terms.**

On these facts, the Board could reasonably determine

that Boeing lacked a sufficiently clear retention plan to

activate the Burns exception. It follows that Boeing’s

failure to negotiate with IAM over initial employment

terms did not trespass upon the statutory obligation “to

bargain collectively with the representatives of [Boeing’s]

employees.” ** The order of the Board dismissing the

General Counsel’s complaint must accordingly be

Affirmed.

53 The administrative record discloses that incumbents declined

employment with Boeing because of the proposed reduction in

wages. Boeing Co., supra note 2, 214 N.L.R.B. at 561 n.62 (decision

of administrative law judge).

54 § 8(a)(5), 29 U.S.C. § 158(a)(5) (1970).

24a

214 NLRB 541 (1974)

MFJKP

D—8957

Kennedy Space Center, Fla.

UNITED STATES OF AMERICA

BEFORE THE NATIONAL LABOR

RELATIONS BOARD

Case 12—CA—5141

THE BOEING COMPANY

and

INTERNATIONAL ASSOCIATION OF MACHINISTS

AND AEROSPACE WORKERS, AFL-CIO

DECISION AND ORDER

On January 21, 1974, Administrative Law Judge Ben-

jamin B. Lipton issued the attached Decision in this pro-

ceeding. Thereafter, the General Counsel, the Charging

Party, and the Respondent filed exceptions and support-

ing briefs, the Respondent filed an answering brief, and

the National Aeronautics and Space Administration filed

an amicus curiae brief.

The Board has considered the record and the attached

Decision in light of the exceptions and briefs and has de-

cided to affirm the rulings, findings,’ and conclusions of

1 We hereby correct the following inadvertent errors in the De-

cision of the Administrative Law Judge which in no way affect his

Decision or our adoption thereof: In the first sentence of the first

paragraph of sec. IiIl, E, November 13 should be changed to No-

vember 23; in the third sentence of the same paragraph, February

26 should be changed to March 1; in the first sentence of the second

paragraph of sec. III, E, “31” should be deleted; in the first chart

in the fourth paragraph of sec. III, F, the number of Boeing “Ac-

cepts” should be 25 rather than 26; in the second chart in the same

paragraph the number of “Other” “Applications Received” should

be 2,279 rather than 279, and the number of “Other” “Extended”

- =o

eh lawned ae oe

25a

the Administrative Law Judge, as modified herein, and to

adopt. his recommended Order.’

The Administrative Law Judge rejected the contention

of the General Counsel and the Charging Party that

Respondent had a “perfectly clear” plan to retain a sub-

stantial majority of the TWA incumbents so as to create

an obligation on the part of Respondent, as set forth by

the Supreme Court in Burns,’ to consult with the Union

before it set its initial terms and conditions of employ-

ment. In so concluding, the Administrative Law Judge

relied on a number of factors. |

Although we agree with his conclusion, we rely solely

on the reasons set forth in the majority opinion in Spruce

Up Corporation, 209 NLRB No. 19 (1974), as applied

hereafter to the facts of this case. Thus it is undisputed,

and our dissenting colleagues do not deny, that even if it

should be 586 rather than 580; in the first sentence of the fourth

paragraph in sec. III, J, “immediately” should be deleted and “On

March 1, 1971” should be added after “furnished’’; the sentence

in the last paragraph of sec. III, J, should read: “The ultimate

fact established is that on April 1, Boeing had 970 employees on its

installation support services payroll, divided among 380 TWA

incumbents, 138 Boeing employees (transferred, recalled from lay-

off, former), 450 outsiders and 2 employees unidentified as to

source”; in the first sentence of the quoted contract in the first

paragraph of sec. III, M, “its” should be “this.”

The Respondent has excepted to certain credibility findings made

by the Administrative Law Judge. It is the Board’s established

policy not to overrule an Administrative Law Judge’s resolutions

with respect to credibility unless the clear preponderance of all of

the relevant evidence convinces us that the resolutions are incorrect.

Standard Dry Wall Products, Inc., 91 NLRB 544, enfd. 188 F.2d

362 (C.A. 3). We have carefully examined the record and find no

basis for reversing his findings.

2 The Charging Party’s request for oral argument is hereby de-

nied as the record, exceptions, and briefs adequately present the

positions and arguments of the parties.

3 N.L.R.B. v. Burns International Security Services, Inc., 406

U.S. 272 (1972).

26a

can be said that Respondent “intended” to hire all or sub-

stantially all of the incumbents, Respondent’s “intentions”

were from the outset tied to the lower rates and benefits

of the Boeing-IAM contract. In these circumstances, as

we said in Spruce Up:

When an employer who has not yet commenced op-

erations announces new terms prior to or simul-

taneously 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 em-

ployer “plans to retain all of the employees in the

unit,” as that phrase was intended by the Supreme

Court. The possibility that the old employees may

not enter into an employment relationship with the

new employer is a real one... .*

* Spruce Up Corporation, supra, 11th par. of Board opinion.

Member Kennedy concurred in this unding of the majority in

Spruce Up Corporation. He notes that the dissenters in this case

have misinterpreted the recent holding of the Supreme Court in

Howard Johnson Company v. Detroit Local Joint Executive Board

Hotel and Restaurant Employees and Bartenders International

Union, AFL-CIO, 94 §8.Ct. 2236, 2244 (1974). The Court there

stated:

This continuity of identity in the business enterprise neces-

sarily includes, we think, a substantial continuity in the iden-

tity of the work force across the change in ownership. The

Wiley Court seemingly recognized this, as it found the requisite

continuity present there in reliance on the “wholesale transfer’

of Interscience employees to Wiley. /i¢. This view is reflected

in the emphasis most of the lower courts have placed on whether

the successor employer hires a majority of the predecessor's

employees in determining the legal obligations of the successor

in § 301 suits under Wiley. [Footnote omitted.] This interpre-

tation of Wiley is consistent also with the Court’s concern with

affording protection to those employees who are in fact retained

in “the transition from one corporate organization to another”

from sudden changes in the terms and conditions of their em-

ployment, and with its belief that industrial strife would be

avoided if these employees’ claims were resolved by arbitration

eB BB AE a

See ete

27a

Accordingly, for these reasons we shall order that the

complaint be dismissed in its entirety.

ORDER

Pursuant to Section 10(c) of the National Labor Re-

lations Act, as amended, the National Labor Relations

Board adopts as its Order the recommended order of

the Administrative Law Judge and orders that the com-

plaint be, and it hereby is, dismissed in its entirety.

Dated, Washington, D.C., Nov. 1, 1974.

EDWARD B. MILLER, Chairman

HOWARD JENKINS, JR., Member

RALPH E. KENNEDY, Member

NATIONAL LABOR RELATIONS BOARD

(SEAL)

rather than by “the relative strength ... of the contending

forces.” [Emphasis supplied.]

Thus Member Kennedy believes that the dissenters misread the

Supreme Court’s decision in Howard Johnson when they suggest

that successorship does not turn on whether the successor’s em-

ployees constitute more than half or less than half of the predeces-

sor’s employees. In his view there can be no substantial continuity

in the identity of the work force when fewer than 50 percent of the

predecessor’s employees are hired by the new employer.

Th dissenters’ concern that an incoming employer can control

his status under the Act ignores the holding of the Supreme Court

in both Burns and Howard Johnson that the former employees have

no legal right to continued employment with the new employer who

has the right not to hire any of the former employees, if it so

desires.

28a

MEMBERS FANNING AND PENELLO, dissenting:

Contrary to our colleagues, for the reasons set forth in

our separate dissents in Spruce Up Corporation, supra,

and herein, we find that Boeing is a successor employer

to Trans World Airlines (TWA) concerning the em-

ployment of the Installation Support Services (ISS) em-

ployees at Kennedy Space Center (KSC) and was there-

fore obligated to recognize and bargain with International

Association of Machinists and Aerospace Workers, AFL-

CIO (IAMAW), as the representative of said employees

on that basis from the time of its takeover on April 1,

1971. We further find that Boeing had a clear plan to

hire all or substantially all of its required work force

from ISS incumbent employees, publicly announced same,

and implemented that plan to the extent possible. There-

fore, under the Burns decision, supra, we conclude that

Boeing had an immediate bargaining obligation to recog-

nize IAMAW and to consult and negotiate with IAMAW

upon sole selection of Boeing on November 23, 1970, to

negotiate with the National Aeronautics and Space

Agency (NASA) for a contract award before setting

wages and conditions of the involved employees.

Concerning whether Boeing succeeded to TWA’s bar-

gaining obligation, the Administrative Law Judge proper-

ly concluded that NASA awarded Boeing the same ISS

operation as administered by the predecessor contractor,

TWA, with only minor variations in terms of bargaining

unit employees. Thus, he found that there was a con-

tinuation of the same relations with NASA, the cus-

tomer, and of essentially the same services, plant ma-

chinery, equipment, and job functions. In addition, he

found that *here were no material differences between

Boeing’s method of performing the ISS contract and

TWA’s method and that there is no evidence that the

duties of Boeing’s supervisors are different from those who

worked for TWA. However, despite all the foregoing

No el drs eal Te ia nal ih sini le eae eta

29a

positive factors pointing to the “substantial continuity

of identity in the business operation before and after a

change” in employer,’ the Administrative Law Judge

failed to find that Boeing was a successor to TWA be-

cause a majority of its ISS unit employees at the take-

over on April 1, 1971, did not consist of TWA incum-

bents, and he found this failure of a majority could not

be attributed to unlawful unilateral reduction of wages

by Boeing. While, as set forth hereafter, we disagree

with the latter finding, without regard to how one de-

termines the pretakeover bargaining issue, we do not

for the reasons articulated in the separate dissents in

Spruce Up, supra, find the lack of majority to be fatally

deficient in establishing the successorship of Boeing.

In Spruce Up we agreed:

Successorship does not depend on the employment of

a majority of the predecessor’s employees, but on

whether a legally significant portion of the succes-

sor’s employment force consists of employees previ-

ously employed in the bargaining unit. In making

that determination, the question of whether employ-

ees of the predecessor actually predominate over

other employees can hardly be the acid test of suc-

cessorship, although it may be an important factor in

determining whether the successor employer has a

basis for doubting the Union’s majority status.°

The fallacy of insistence upon majority population is

fundamental. Whether or not an employer has the status

of a successor cannot turn in any part on its own decision

to populate its work force with more than half or less

5 John Wiley & Sons v. Livingston, 376 U.S. 543, 551 (1964).

6 Spruce Up Corporation, supra p. 34 at par. 10 of Member Fan-

ning’s separate opinion subscribed to by Member Penello at fn. 48;

Polytech, Incorporated, 186 NLRB 984 (1970), enfd. 469 F.2d 1226

(C.A. 8, 1972).

30a

than half of the predecessor’s employees. Otherwise an in-

coming employer can control too readily its own status

under our Act. It can so severely undertake the existing

employment terms that, should one less than a majority

of the predecessor’s employees wish employment with it,

by that act alone the employer can guarantee denial of

the protection which it is the objective of the successor-

ship doctrine to confer.’

Applying these principles to the facts herein, it is clear

that as of April 1, 1971, when Boeing took over the per-

formance of the ISS work, it had 970 employees on its

payroll within this class, divided among 380 TWA in-

cumbents, 138 Boeing employees (transferred, recalled

from layoff, and former), 450 outside employees, and 2

employees unidentified as to source. In this breakdown,

the TWA incumbents comprised more than 39 percent of

Boeing’s employees. In our view these figures amply

support a finding that the TWA employees constituted

a “legally significant portion of the successor’s employ-

ment force” and a “stable nucleus” of Boeing’s work

force. Accordingly, we conclude, given all of the other

aforementioned positive factors, that Boeing is a succes-

sor to TWA, Boeing succeeded to TWA’s bargaining obli-

gation on and after April 1, 1971, and Boeing violated

Section 8(a) (5) by failing and refusing to recognize and

bargain with the Union pursuant to its demand of March

12, 1974.

In Burns, supra, the Court held that in general a suc-

cessor is free to set the initial conditions of employment

7 Howard Johnson Company, supra, wherein the Court referred to

“a substantial continuity in the identity of the work force.” (Em-

phasis supplied.) Members Fanning and Penello disagree with

Member Kennedy that successor status depends on whether a ma-

jority of the predecessor’s employees are retained by the successor.

See their separate dissents in Spruce Up Corporation, supra; fn. 21

in United Maintenance & Manufacturing Co., Inc., 214 NLRB No.

31; Polytech, Incorporated, supra.

3la

upon which rehiring is conditioned without bargaining

with the union, since prior to hiring a substantial pro-

portion of his predecessor’s employees it will not be clear

that he has a duty to bargain with the union. However,

the Court also said that the duty to bargain may precede

the formal rehiring of employees where “it is perfectly

clear that the new employer plans to retain all of the

employees in the unit... .”* The Court then went on

to say:

In other situations, however, it may not be clear

until the successor employer has hired his full com-

plement of employees that he had a duty to bargain

with a union, since it will not be evident until then

that the bargaining representative represents a ma-

jority of the employees in the unit... .”

Concerning the question of whether Boeing was obli-

gated to bargain with the Union over the fixing of its

initial terms and conditions of employment, it seems to us

entirely clear that Boeing did plan to retain all or sub-

stantially all of the former TWA employees. Thus, the

request for proposal issued by NASA required offerors to

submit a basic staffing proposal, explaining in depth how

the offeror would obtain competent personnel, including

a statement of its plans regarding the employment of

incumbent workers. In response, Boeing stated that “In

order to maintain continuity of support approximately

86 percent of the proposed organization will be staffed

by qualified incumbents.” This representation that it

would retain about 86 percent of the incumbent work

force was repeated throughout its response. Boeing ex-

plained that its staffing proposal “recognizes the desir-

ability of retaining incumbent contractor personnel to

provide continuity of functional support.” It further

8 Burns, supra at 294-295.

9 [bid.

32a

stated that its “analysis indicates that effectiveness and

economy can be achieved by retaining experienced and

qualified incumbent personnel.”

Boeing’s constant theme in its written proposal was

the acknowledgement of need for continuity and Boeing’s

intended use of incumbent contractor personnel. Thus,

Boeing proposed a detailed 62-page baseline phase-in plan.

One of the criteria established in writing the plan was

“Boeing can and will staff the majority of the total work

force from the incumbent contractor.” Boeing also averred

that, “After incumbent employees have been reviewed

and those selected given an opportunity for employment

with Boeing, qualified local hires will be hired to fill the

remaining vacancies.” (Emphasis supplied.) In addi-

tion, Boeing’s industrial relations chief at the KSC, John

A. Sutherland, admitted that with respect to the ISS

work performed by the TWA incumbent employees rep-

resented by IAMAW, Boeing expected to hire a work

force of about 1,000 employees, of whom it proposed to

recruit “All we could get” from the TWA incumbents,

no less than 86 percent and “closer to 100 percent... .”

Detailed, selective procedures for incumbents were de-

vised and presented which gave prominence to selection

of incumbents.

As to existing collective-bargaining agreements, Boeing

expressed its disbelief that the IAMAW-TWA agreement

“can be legally applied” to Boeing. The IAMAW-Boeing

agreement, it stated, “could cover the people performing

the work.”

Boeing began an immediate implementation of its plan

to use all or substantially all incumbents by extensive

public announcements. Boeing told the press; and news-

papers in circulation in Brevard County, Florida, wherein

the KSC is located, reported that Boeing would hire a

“majority” or a “large percentage” of TWA incumbents.

Boeing was quoted as saying that “we want to upset the

PDR in SA ce

33a

community as little as possible.’ Indeed, Boeing assured

IAMAW, during their first meeting in late November

1970 and then at their second meeting on December 4,

1970, that it would retain most of the TWA incumbents

in employment. As admitted by Clifford W. McGee, Jr.,

Boeing’s employment supervisor during the Phase-in of

the ISS project, he told IAMAW “that we desired to

employ in essence most of our required employees from

the ranks of the incumbent contractor.” At a meeting on

November 30, 1970, Boeing informed TWA that “most

of them [TWA employees] would be hired.” As TWA

Director of Industrial Relations Keil recalled, Boeing

stated it “expected to hire between 80 to 90 percent”

of the TWA incumbents. Moreover as Harry Orlander,

TWA’s staff vice president, operations and _ services,

stated, Boeing indicated it “hoped to hire the majority ....

[it] desired to hire as many TWA people as possible.”

In addition, on December 1, 1970, TWA informed its

employees that “Boeing is interested in hiring the ma-

jority of TWA/KSC employees.”

Boeing further implemented its plan to use the in-

cumbents by putting into effect initial procedures de-

signed to hire the majority of the incumbents. Thus,

by December 4, 1970, Boeing and TWA agreed upon a

detailed procedure by which TWA incumbents desirous

of employment with Boeing would apply for a job. Even

when hampered by the effective strike action of Local

773, Boeing did all it could do in seeking to obtain the

incumbents. Boeing conducted early interviews of in-

cumbents. Boeing offered jobs early to incumbents. Boe-

ing substituted job offers to incumbents at the last mo-

ment in place of offers already made up for “others,”

at least for required skilled leadmen and journeymen

incumbents, who were, of course, essential to run the

operation efficiently. Reviewing fully, as we have just

done, what Boeing was required to plan for, what Boeing

34a

proposed, what Boeing publicly announced, and what

Boeing did, we can only conclude that Boeing planned

to retain all or substantially all of the incumbent’s work

force within the meaning of the aforementioned Burns

language.

Our colleagues in the majority in effect would trans-

form an incoming employer’s “plans to retain” his prede-

cessor’s employees, which is the Burns test, into ‘a com-

mitment to hire or an actual advance hiring of such em-

ployees,” as found by the Administrative Law Judge.

The latter meaning is wholly different and is destructive

of the “plan to retain” standard. A “commitment to hire

or an actual advance hiring” is an overt entry into a

contract of employment between the employer and em-

ployee with nothing left to consummate the engagement

except reporting for work at a future fixed time. It is,

albeit informal, an offer and acceptance of employment,

and hence a completed contract.

A “plan to retain,” on the contrary, necessarily pre-

cedes any “commitment to hire or an actual advance

hiring... .” A plan to retain simply signifies that the

incoming employer proposes to look to the incumbent em-

ployees as the primary source of his work force. That

plan is the stage preliminary to the employer’s approach

to the incumbent. It precedes, and is independent of,

any ensuing commitment to hire or actual advance hir-

ing. Once the subsequent commitment or actual advance

hiring is made, it is no longer a plan; it is a consum-

mated transaction. It is therefore self-contradictory to

equate the plan with the commitment. The former pre-

cedes the latter; it is not coterminous with it.

Our colleagues agree with us that Burns does not con-

dition the obligation to consult initially with a union be-

fore fixing employment terms on a showing of the succeed-

ing employer’s intention to retain all unit employees. In-

stead, an employer has a duty of initial consultation

Cn tN wi A AT Et ESS eT PL.

lll

35a

when it becomes evident that he, in fact, will retain a

sufficient number of his predecessor’s employees so that

the incumbent bargaining representative will continue as

the 9(a) majority representative of the successor’s em-

ployees.

Support for this view is found in the Court’s quoted

Burns language. The Court followed its “plans to take

all” language in the very next sentence of its opinion by

stating that “in other situations, however,” it may not be

clear whether a succeeding employer must bargain until

he has hired his full work complement. When the two

sentences are read together, it appears that the Court has

compared the situation where the representative status of

the union is clear with the situation where the union’s

representative status and the consequent employer bar-

gaining obligation is not evident until after the full

complement is hired. The “plans to retain all” sentence

is therefore to be viewed as referring to the obvious,

rather than to the sole situation in which the employer’s

bargaining obligation arises. Equally apparent, from the

Court’s language, a successor employer’s initial bargain-

ing obligation can be said to arise also in a situation

where, as here, he plans to retain sufficient unit em-

ployees to continue the union’s majority status, and that,

consequently, a planned “substantial retention” gives rise

to the bargaining obligation.

Our separate dissents in Spruce Up, supra, dealt with

the central fallacy of our colleagues’ analysis, i.e., as

Boeing’s plan to retain the incumbents was “simultan-

eously and inextricably linked in Boeing’s proposals” with

the lower terms it proposed to offer them, the existence

of the plan did not in the language of Burns impose

upon Boeing the obligation to “initially consult with the

employees’ bargaining representative before... . [the

incoming employer] fixes terms.” In response, it was said

then, and we reiterate now:

36a

The Court [in Burns] there said nothing about a

conditional intent to hire. The majority are attempt-

ing to revise substantially what the Court said, for

their view, would, in effect, abrogate the exception,

as the only case when a violation would occur under

their test would be the unlikely situation where a

successor says he will continue the employees under

the exact terms and conditions as existed before the

takeover. If he says that he “plans” to alter the

status quo in any way, while at the same time in-

dicating a desire to retain the old employees, they

would find this amounts to a conditional intent to

hire. I cannot ac-ept that the Supreme Court would

announce a rule of law that is so restrictive as to

amount to a nullity.’

The majority’s contrary construction of this as-

pect of the Burns decision leads to the anamalous,

if not absurd, result that a bargaining obligation

over the establishment of the successor’s initial terms

and conditions of employment arises when the suc-

cessor plans to retain the former employees at the

terms their union had already established through

collective bargaining with the predecessor employer

but not when he plans to retain them at terms dif-

ferent from those previously established. The ma-

jority would bring to bear “the mediatory influence

of negotiation” where there is no controversy, but

deny its appropriate use where there is controversy.

They thus turn the Act on its head, and to no useful

end.”

Therefore, we conclude that Boeing’s unilateral fixing

of ISS wage conditions at a wage rate substantially be-

low those rates which prevailed under TWA was in

10 Spruce Up, supra at par. 4 of Member Penello’s separate opinion.

11 Jbid. at par. 14 of Member Fanning’s separate opinion.

a lh Lim CN a nant ant ANE NN Oh we eM ws Ua oy

ete Net eee en eee

Soe et ee eee ee ee

eee

37a

violation of its duty to bargain and was unlawful under

Section 8(a) (5). We also find for the reasons below that

TWA employees acted concertedly and under the guidance

of Local 773, starting in December 1970, in refraining

from sending employment applications to Boeing because

of the unilaterally reduced wage rates. These employees

became unfair labor practice strikers of Boeing protest-

ing Boeing’s unilateral action.

Thus, TWA employees acted concertedly and under the

guidance of Local 773, starting in December 1970, and

refrained from sending employment applications to Boeing

because of the unilaterally reduced wage rates. Local

773 first determined what TWA proposed to do. It

then went to Washington, D.C., to ascertain what was

happening; and while there, alerted IAMAW of TWA’s

ISS employees’ basic interest in preserving their wage

rates. It visited NASA. It learned that Boeing was pro-

posing not to pick up any part of its contract. It formu-

lated demands which included a position of preserving

its rates. These demands became known to Boeing. Local

773 acquiesced initially to a few applications being sent

to Boeing through Keil’s office with cover letter sufficient

to preserve its position on rates; and sufficient to give

Boeing the message that Boeing was going to have to

consider the position of Local 773 if Boeing wanted co-

operation in the orderly transition of incumbents. There-

after, Local 773 guided employees in withholding applica-

tions; brought pressure on Boeing thereby; and conse-

quently restricted interviews. It publicly demonstrated.

Local 773 pursued its position until it got a meeting

with Boeing and IAMAW on February 19, 1971, at which

time the strikers through the IAMAW unconditionally

requested reinstatement and offered to begin work for

Boeing and to submit whatever forms were required.

The Administrative Law Judge relates there was con-

fusion over a number of items and that it is speculative

PE i + + + ~~

38a

as to why incumbent employees reacted and did not sub-

mit applications. Such an approach at best mixes vary-

ing reasons for support of a local union’s position with

the fact that a local union action was taken. It makes

no difference that the International did not authorize the

strike action. The issue is whether Local 773 called for

said action and incumbent employees in responding en-

gaged in protected concerted activity. The withholding

of applications was the recommended action. The local

announced it in meetings. Members were so notified by

mail in a letter under signature of.the local union presi-

dent. It is enough if the local union told incumbent em-

ployees not to turn in applications; or even as later that

the local preferred they not do so. The acts taken were

believed by the local at the time as acts taken in the

best interest of the membership and the employees by

following such directed actions agreed.

Accordingly, Boeing was under an immediate obliga-

tion to reinstate the strikers as of the time Boeing be-

gan operations on April 1, 1971, replacing, if necessary,

employees already hired. Boeing’s failure to accept them

was itself violative of Section 8(a)(1) and (3) of the

Act. Had Boeing not unlawfully refused to reinstate these

strikers clearly the majority, if not fully 85.6 percent,

of the work force would have been obtained from the

eventual 944 who applied. Furthermore, employees who

were entitled to reinstatement but not reinstated should

be reinstated and made whole for any loss of pay suffered

or status lost.

In conclusion, for the reasons stated above, we would

find Respondent violated Section 8(a) (5), (3), and (1)

acral

ee eee

Pit sale . Penden oe +

39a

of the Act, and would order Respondent to take appropri-

ate action to remedy these violations.

Dated, Washington, D.C., Nov. 1, 1974.

JOHN H. FANNING, Member

JOHN A. PENELLO, Member

NATIONAL LABOR RELATIONS BOARD

40a

J D-22-74

Kennedy Space

Center, Fla.

UNITED STATES OF AMERICA

BEFORE THE

NATIONAL LABOR RELATIONS BOARD

DIVISION OF JUDGES

WASHINGTON, D.C.

Case No. 12-CA-5141

THE BOEING COMPANY

and

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AEROSPACE WORKERS, AF'L-CIO

Robert G. Romano, Esq., for the General Counsel.

Alley, Rock and Dinkel, of Miami, Fla., by James M.

Blue, Esq., and Scott Charlton, Esq., for the Respond-

ent or Boeing.

Bernard Dunau, Esq., of Washington, D.C., for the

Charging Party or the IAM.

DECISION

Statement of the Case

BENJAMIN B. LIPTON, Administrative Law Judge:

From July 24 through 27, 1973, this proceeding was

heard before me in Tampa, Florida. The charge was filed

and served on April 1, 1971, and the complaint thereon

was issued by the General Counsel on May 10, 1973.

Alleged are certain violations of Section 8(a) (1), (3)

and (5) of the Act, more specifically defined below. Com-

prehensive main and authorized reply briefs‘ were filed

1 Received October 1, 1973.

0 - ™

;

4la

by the General Counsel, Respondent and Charging Party;

and by special leave, a brief amicus curiae was submitted

by the National Aeronautics and Space Administration,

herein called NASA.

Upon the entire record,? and from my observation of

the witnesses who testified before me, I make the follow-

ing:

Findings of Fact

I. The Business of Respondent; Jurisdiction

The Boeing Company, herein called the Respondent or

Boeing, with its principal office and place of business in

Seattle, Washington, is generally engaged in the manu-

facture of aircraft and aerospace equipment. In Brevard

County, Florida, at the Kennedy Space Center, herein

called KSC, Respondent provides test support manage-

ment, plant engineering and maintenance, and other

services pursuant to a contract with NASA effective

from April 1, 1971. The latter operations are particu-

larly involved in this proceeding. During the year pre-

ceding issuance of the complaint, Respondent received

goods and materials directly in interstate commerce at

its KSC facility valued in excess of $50,000. I find that

Respondent is engaged in commerce within the meaning

of the Act.*

2 At the instant hearing, the parties stipulated the authenticity

and admission into evidence of various documents and exhibits,

including transcripts of depositions and appended exhibits taken in

another proceeding before the U.S. District Court, Orlando (Flor-

ida) District. However, each of the parties reserved the right to

argue the materiality and relevancy of all these documents. The

stipulated material provides the major portion of all the evidence.

The complete record thus made comprises the equivalent of some

7,000 transcript size pages and briefs consist of about 400 pages.

3 Certain contentions of Respondent contesting the Board’s juris-

diction are considered and rejected infra, following a description

of the underlying issues.

42a

II. The Labor Organization Involved

International Association of Machinists and Aerospace

Workers, AFL-CIO, hereinafter called the Union or the

IAM, is a labor organization within the meaning of the

Act.

III. The Alleged Unfair Labor Practices

A. The Pleadings; the Issues Broadly Defined

In essence, the complaint alleges:

Par. 5. All employees at KSC performing installation

support services, herein called ISS, constitute an appro-

priate bargaining unit.

Par. 6. From March 9, 1964, to March 31, 1971, Trans

World Airlines, herein called TWA, performed the ISS

operation pursuant to contract with NASA.

Par. 7. Since February 1964, and continuing to date,

the IAM has been the exclusive bargaining representative

of the employees in the appropriate unit, above.

Par. 8(a). Since February 1964, TWA has recognized

and had successive contracts with the IAM covering the

employees in the above appropriate unit,—the last such

contract containing an effective term from January 28,

1970, through December 31, 1971.

Par. 8(b). By letter dated March 19, 1971, Respond-

ent formally recognized the IAM as the exclusive rep-

resentative of the employees in the appropriate unit,

above. (This allegation is more properly to be noted in

chronological context, infra.)

Par. 9(a). On June 30, 1970, NASA issued a request

for proposal (RFP) from contractors to perform the ISS

operation at KSC commencing April 1, 1971.

Par. 9(b). On August 19, 1970, Respondent submitted

its contract proposal to NASA which stated that 85.6

ee ee ene Teens

43a

percent would come from the complement of TWA em-

ployees then performing the ISS work at KSC.

Par. 9(c). On November 23, 1970, Respondent was

designated as the bidder with whom NASA would nego-

tiate a contract for such services; and on March 11,

1971, such a final contract was negotiated and executed

between Respondent and NASA to commence performance

on April 1, 1971.

Par. 10(a). In meetings on November 24 and Decem-

ber 4, 1970, Respondent notified the IAM that the em-

ployees it would hire to perform the ISS work, including

the TWA incumbents, would receive wages and benefits

under the terms of Respondent’s existing national con-

tract with the IAM, rather than the wages and benefits

provided in the current agreement between the IAM and

TWA. The IAM requested Respondent to bargain about

“this imposed lesser wage scale” (as specified in Respond-

ent’s contract proposal to NASA).

Par. 10(b). On December 5, 1970, the IAM notified

Respondent that it objected to Respondent’s refusal to

continue the employment terms set forth in the TWA-

IAM agreement.

Par. 11. From December 5, 1970, to February 19,

1971, a majority of the TWA incumbents, in protest of

Respondent’s “announced intent to institute unilateral

changes in wages, hours, and working conditions” be-

ginning April 1, 1973, concertedly withheld submission of

their individual applications for employment with Re-

spondent.

Par. 12. Such concerted withholding of applications

“constituted a strike” against Respondent which was

caused and/or prolonged by the unfair labor practices

of Respondent in unlawfully announcing and scheduling

unilateral changes in employment conditions affecting the

ISS employees.

44a

Par. 13. On January 15, 1971, the IAM again pro-

tested to Respondent the unilateral action of establishing

different wages and conditions and requested that Re-

spondent “hire all TWA incumbents under the terms” of

the TWA-IAM contract.

Par. 14. On February 19, 1971, the IAM notified

Respondent that “all” TWA incumbents uncondition-

ally requested continuation of their employment with

Respondent beginning April 1, 1971, and would now sub-

mit applications for employment to Respondent.

Par. 15. Despite the foregoing “unconditional offer

on behalf of all” TWA incumbents, Respondent since

February 19, 1971, has failed and refused to offer em-

ployment “to a majority of the TWA installation sup-

port employees, the exact identity and number of which

employees are not now known.”

Par. 16. Respondent’s unlawful announcement and

unilateral establishment of lower wages and different

conditions of employment for the employees “it would

employ at KSC, caused many TWA installation support

employees (the exact identity and number of whom are

not now known) to fail to submit a timely application

for employment with Respondent, thereby causing less

than a majority of the TWA employees to be employed

by Respondent and causing the majority to suffer loss of

their employment.”

Par. 17. Since November 23, 1970, Respondent has

been “the designated successor employer to TWA with

regard to” the ISS operation at KSC, and since April 1,

1971, has performed the same services for the same cus-

tomer, NASA, as did the predecessor contractor, TWA.

Par. 18. Consistent with its prior unilateral announce-

ment, since April 1, 1971, Respondent has “unilaterally

imposed the terms, wages, hours and working conditions”

of its national agreement with the IAM upon the em-

ployees in the appropriate unit, “and has thereby caused

45a

employees to forfeit employment and/or to suffer loss

of wages” by reason of the lower wage rate schedule

of such national agreement.

In his brief, General Counsel requests the remedies

that Boeing be ordered (a) to reinstate with backpay

the TWA employees it did not hire (about 600), and

(b) to recognize the bargain with the IAM “for the em-

ployees performing the work.”

Respondent denied essentially all the foregoing allega-

tions, except those in Paragraphs 6, 8(a), 9(a), and (c).

Respondent’s formal answer to the complaint contains 55

separate defenses, including a lengthy statement of facts;

and at the hearing it filed 6 additional separate defenses.

As already noted, the evidence taken at the hearing

consists mainly of voluminous stipulated material, as

supplemented by further testimony and exhibits.* In this

context, questions were not raised, nor rulings made, as to

the propriety of Respondent’s 61 separate defenses. Many

of these defenses merely present extended argument and

are not truly affirmative defenses properly asserted in a

pleading; and many, in my opinion, are frivolous, and

unduly burden the record.’ Therefore, the general ruling

is made that only those separate defenses which were

specifically brought out at the hearing or in Respond-

ent’s briefs are appropriately presented for considera-

tion.

‘ 4 Respondent’s motions to strike, and various objections to, testi-

mony cited in the briefs of che General Counsel and IAM are denied.

Authenticity of the evidence has been stipulated; the materiality of

its use, particularly in briefs, involve questions of weight to be

assigned. Exh. 14(H) to Jt. Exh. 1 was stipulated subject to the

parties’ agreement as to its completeness. Jt. Exh. 3 was reserved

for such agreement after the hearing. Having been advised post-

hearing that agreement was not reached, I have placed Exh. 14(H)

with the rejected exhibits.

5 Concerning the filing of an answer, see Sec. 102.21 of the Board’s

Rules and Regulations, and Rules 8(e)(1) and 11 of U.S. District

Court Rules of Civil Procedure.

46a

Particularly in view of the manner in which this record

was made by the parties and the wide range of argu-

ments and counterarguments in the briefs, it is important

to maintain a close focus on the actual issues for de-

cision in this proceeding.

The principal issues presented within the framework

of the complaint fall into two broad segments:

(1) Whether Respondent is a successor employer and

whether, as such, it breached its obligation to bargain

with the IAM by unilaterally changing the terms and

conditions of employment which existed under the prede-

cessor employer, TWA. On these issues pertaining to

the successorship doctrine under the Act, the more re-

cent opinion of the Supreme Court in the Burns case,°

and the Board’s subsequent applications of this case, are

of controlling significance. The complaint does not allege

that Respondent generally refused to recognize and bar-

gain with the IAM’ or that Respondent violated Section

8(a)(5) in respects other than the alleged unilateral

actions. Indeed, Paragraph 8(b) of the complaint spe-

cifically asserts that on March 19, 1971, Respondent for-

mally recognized the IAM as the exclusive representative

in the contended appropriate unit of the ISS employees,

(an allegation validly disputed by Respondent). Respond-

ent advances various arguments that it, Boeing, is not

legally a successor to TWA in the performance of the

ISS operation at KSC, and that, even assuming such

successorship and a duty to bargain, Respondent ful-

filled its bargaining obligation under the Act. Further,

it should be indicated that Respondent adopted a major

position when it submitted its competing bid to NASA

to assume the contractorship for the services,—a position

* N.L.R.B. Vv. Burns International Security Service, Inc., 406 U.S.

272 (May 1972).

7 Although such an allegation is expressly set forth in the charge

filed by the IAM on April 1, 1971.

Set kabel Neth RMN = ee eee

a erent

47a

to which it has consistently adhered. Thus, Respondent

maintains that the incumbent IAM-represented ISS em-

ployees properly constituted an accretion to a unit of

employees performing other services for Respondent at

KSC who were embraced in a preexisting national agree-

ment between Boeing and the IAM.

(2) Whether certain of the TWA incumbents, from

about December 5, 1970, through February 19, 1971,

engaged in a concerted activity, cognizable and protected

under the Act either as unfair labor practice or economic

“strikers,’—by withholding their employment applica-

tions to Respondent prior to Respondent’s takeover of

the NASA contract on April 1, 1971. Assuming an

affirmative finding to the latter question, a further issue

is whether such TWA incumbents abandoned their con-

certed activity on February 19, 1971, so notifying Re-

spondent, and “unconditionally requested reinstatement” *

by Respondent to their status and rights which existed

prior to the “strike”; and whether any of such TWA

incumbents after February 19, 1971, were deprived by

Respondent of employment or other rights because of

their protected concerted activity. As reasonably con-

strued, the complaint does not allege violation of Section

8(a) (3) on the basis of deliberate and motivated dis-

crimination by Respondent in failing to employ any of

the TWA incumbents. Nor, apart from the formalized

complaint, has such a contention been clearly advanced

to my notice and properly attempted to be substantiated

in the litigation. The complaint itself, which is not fur-

ther clarified in the arguments, describes the alleged

violations of Section 8(a)(1) and (3) as stemming

directly from the alleged denial of protected rights re-

® The theory presented is that these TWA incumbents occupied

the same legal status under the Act as unfair labor practice or

economic strikers who submit unconditional applications to the

employer for reinstatement to their jobs.

a a CCC CY

48a

lated to the withholding of employment applications, and

as a consequence of the alleged unilateral actions.°

Despite the voluminous evidence introduced and argued

on all sides at great length, the facts immediately es-

sential to this decision are virtually undisputed. How-

ever, the narrative which follows is not intended as

findings that all such facts are considered to be material

but to provide a sufficiently rounded context within which

the issues and arguments of the parties may be compre-

hended and evaluated.

B. The IAM and Its Subordinate Units

(1) The IAM, as an International, was the recognized

and contracting party in the two collective bargaining

agreements, with TWA and with Respondent Boeing,

which existed during the material time of the bidding

and award of the ISS contract at KSC.

(2) District Lodge 142 confines its membership to

employees of TWA and Ozark Airlines at KSC and

other locations.

(3) Local Lodge 773, with membership consisting of

TWA employees at KSC, was a subordinate unit of

District Lodge 142 until April 1, 1971, (the takeover

®* Respondent’s motion to dismiss the complaint on the basis of

Section 10(b) is denied. Those violations alleged which preceded

the limitation period, beginning October 1, 1970, were continuing

in nature. The contention that prosecution is barred by laches is

rejected. N.L.R.B. v. J. H. Rutter-Rex Mfg. Co., 396 U.S. 258 is

applicable. The jurisdictional defense that Boeing is exempt from

the Act as a joint employer with NASA has no merit. It is clear

that Boeing exercises effective control over the employment condi-

tions of its employees at KSC and is competent to bargain coilec-

tively within the requirements of the Act. See, e.g., Atlantic Tech-

nical Services Corp., 202 NLRB No. 13; Herbert Harvey, Inc., 171

NLRB 238, 239, enfd. 42 F.2d 770, 778 (C.A.D.C.). Indeed, Boeing

has been subject to the Board’s jurisdiction in an election pro-

ceeding in 1955 (infra) involving its employees working on the

Bomarc project at KSC.

49a

date by Boeing) and assisted in administering the IAM

contract with TWA. In April 1971, Local Lodge 773

also became affiliated with District Lodge 166, and has

since assisted in dealing with Boeing with respect to the

ISS employees.

(4) District Lodge 166 assists in the negotiation and

administration of contracts with employers operating at

KSC and elsewhere.

(5) Local Lodge 2061 is a subordinate unit of Dis-

trict Lodge 166 and assists in the negotiation and ad-

ministration of the contract with Respondent as it applies

to KSC.

C. History of TWA and Boeing at KSC;

Contracts with the IAM

From March 9, 1964, through March 31, 1971, TWA

operated the ISS project for NASA pursuant to a cost-

plus-award-fee contract and successive extentions there-

of. This operation, sometimes referred to as “house-

keeping” services, included test support management,

plant engineering and maintenance, and logistical func-

tions relating to NASA’s utilization of KSC as a princi-

pal launch site for space vehicles. Under subcontracts

from TWA, certain other firms performed guard, fire,

janitorial, training and documentation services. As of

March 7, 1971, there were 1054 ISS employees em-

braced under contract between the IAM and TWA, for

an effective term from January 28, 1970, through De-

cember 31, 1971. For the most part, these covered em-

ployees performed various mechanical and craft functions.

The agreement described a single unit encompassing

all airline and other operations of TWA in the nation,

and was expressly to be governed by the Railway Labor

Act. The parties had successive contracts of similar con-

tent dating from February 17, 1964. On such date, the

ISS employees were brought within the coverage of the

50a

company-wide contract between TWA and IAM, which

specifically identified the “KSC Operation” at Merritt

Island, Florida.

Since 1952, Respondent Boeing has had various “hard-

ware” contracts with NASA at KSC involving particular

missile projects, e.g., Bomare, Minuteman and Saturn-

Apollo 5. In these contracts Boeing was responsible for

“launch support services,” generally in the areas of re-

search and testing, including structural work.” There

were periods of overlap in each missile program, while

earlier projects were reduced or phased out, and em-

ployees were transferred between different projects. Boe-

ing’s total payroll at KSC peaked at 809 employees in

1968, and sharply declined thereafter.

In November 1955, following a consent election,” the

IAM was certified for an appropriate unit (as described

in the stipulation) of “all maintenance and production

employees in Brevard County, in the State of Florida,

employed by the employer. .. .”” About 280 employees were

affected by the certification who were then engaged

under the Bomare contract with NASA. Thereafter,

the IAM and Boeing consummated successive bargaining

contracts which specify, as part of their national agree-

ment, a separate unit in the language of the Board

certification, above. As of the RFP and ISS award by

NASA, the existing Boeing-IAM contract had a term

from October 2, 1968, through October 1, 1971. On April

1, 1971, when it took over the ISS operation, Boeing

had 287 IAM-represented employees working on its pend-

ing missile or hardware projects at KSC.

10 On certain of the missiles, Boeing performed production, main-

tenance, testing and research development at many locations other

than KSC.

11 Pursuant to a Stipulation for Certification upon Consent Elec-

tion.

—

eS ee

5la

D. NASA’s RFP and Boeing’s Proposal

on the ISS Contract

On June 30, 1970,* NASA issued Request for Proposal

(RFP) for the ISS operation at KSC under a cost-

plus-award-bid contract for 1 year commencing April 1,

1971, with options by NASA to extend the contract for

successive 1 year terms. An overlapping period, from

February 1 through March 31, was specifically contem-

plated to phase out the incumbent and phase in the new

contractor. In extensive detail, the RFP described the

services to be peformed, as well as types and qualifica-

tions of personnel. The ISS work involved was essentially

the same as that performed by the incumbent, TWA,

with relatively minor differences.* The prospective

offerors were required to explain their recruiting plans,

including the “type and estimate” of local and nonlocal

personnel; the “approximate number” by type of incum-

bent employees to be hired; their understanding of ex-

isting union agreements; and which employees were to

be represented by “bargaining labor.” In addition, NASA

stated:

1. The NLRB has held that when an employer as-

sumes the operations of another employer without

change in employees, jobs or methods, the suc-

cessor-employer is obligated to bargain with the

Union before changing wages and other condi-

12 Hereinafter, all dates are sequentially in 1970 and 1971 unless

otherwise specified.

13 Mail and distribution services affecting 51 unit employees were

deleted. Other miscellaneous functions involving 70 unit employees

were added, e.g., a staffing increase in “Logistics”; elevator main-

tenance, pad lighting and some heavy equipment operations pre-

viously performed by Bendix Corporation. Also newly included

were “Documentation Support Services and Training” having little

effect on the represented employees. That the ISS operations were

basically the same for both of these contractors was deposed by

officials of TWA, Boeing and NASA.

52a

tions of employment. Under a recent series of

cases, the NLRB has held that the successor-

employer must assume the predecessor’s collec-

tive bargaining agreement. It is NASA’s posi-

tion that the offerors make themselves familiar

with the NLRB cases covering this issue, namely,

The William J. Burns International Detective

Agency, Inc., 74 LRRM 1098; Chemrock Corp.,

58 LRRM 1582; John Wiley & Sons v. Livings-

ton, U.S. Sup. Ct., 66 LRRM 2769.

2. The offeror will have to apply the NLRB’s reason-

ing in the previously mentioned cases to the scope

of the RFP in relation to method in which the

work has been performed and to its own intended

mode of operation.

On August 19, 1970, in response to the RFP, 8 pro-

posals were submitted to NASA by 7 companies, including

TWA and Boeing,—the latter having two bids. All the

proposals were treated as confidential documents by

NASA, not revealed to the competing bidders, the em-

ployees, unions, or general public. As to Boeing’s princi-

pal proposal, it needs emphasis that the labor costs sub-

mitted were based specifically upon the wage rates and

fringe benefits contained in its existing national agree-

ment with the IAM, applicable to its KSC hardware

contracts.* In staffing the total contract (including

guards, firemen, supervisory, professional and clerical

personnel), Boeing proposed:

Boeing Local 67 3.5%

Boeing other locations 5 --

Incumbent contractors 1779 85.6%

Local Hires 227 10.9%

2078 100 %

14 These costs were substantially below the labor costs submitted

by TWA based on the wage rates and benefits in its existing agree-

ment with the IAM for the ISS unit.

” 1 a.

53a

It was deposed by a Boeing official that the 85.6 percent

resulted after calculating the number of its present em-

ployees that would transfer to the ISS operation, the

number that would be recalled from layoff from Boeing

employment in the area, and the number of known talents

in the area available for employment. In the proposal

itself, there is no clear breakdown of the number of IAM-

represented TWA incumbents Boeing proposed to hire.”

Boeing’s proposal included an “alternate staffing’ plan,

in which it was stated: “While the staffing plan is based

on retaining approximately 86 percent of the incumbent

personnel, FSES data indicated that the local labor mar-

ket is sufficient in both skills and number to provide the

staffing requirements of this contract.” ** Elsewhere in

its proposal, the statement was made that—“After incum-

bent employees have been reviewed and those selected

given an opportunity for employment with Boeing, quali-

fied local hires will be hired to fill the remaining vacan-

cies.” In response to NASA’s queries regarding union

contracts, Boeing stated in its bid, as follows:

Boeing does not believe that the collective bargaining

agreement between District 142 of the IAM, and

TWA, covering the operations and maintenance em-

ployees of TWA can be legally applied to The Boeing

Company. However, Boeing has in effect a collective

15 In a deposition taken on November 17, 1971, an industrial rela-

tions official of Boeing indicated that the company expected to hire

“the majority,” meaning “all we could get,” of the TWA incumbents

to staff a force of about 1,000 production and maintenance em-

ployees. The approximate date or time period of such expectation

was not shown in the course of the hiring process, infra.

16In July 1970, Boeing consulted the Florida State Employment

Service, and it was advised, in August, that there would be no

difficulty in obtaining qualified personnel in the desired classifica-

tions from available manpower in the county. On July 26 and August

1, as a means of surveying the local market, Boeing advertised in a

newspaper of general circulation seeking applicants for employment

on the ISS work and received numerous affirmative responses.

54a

bargaining agreement with Local Lodge 2061 of

District Lodge 166 of the IAM&AW which covers

our production and maintenance employees in Bre-

vard County, Florida. . . . Since the Local and Dis-

trict lodge lodges involved are all part of the same

International Union, Boeing sees no reason for them

to generate any labor dispute accruing from these

issues.

Boeing’s other, alternative, proposal was eliminated

early in the bidding procedures. The wage rates or other

content of this bid are not revealed. The record and the

decision herein are confined to Boeing’s main and suc-

cessful proposal.

On November 23, 1970, NASA announced that it had

selected Boeing “for negotiations leading to an award of

a contract to provide installation and technical support

services” at KSC."’ The contract, estimated at $20 million

for the first year, would extend from April 1, 1971,

through March 31, 1972, with provision for four 1-year

extensions. On April 1, 1971, Boeing undertook perform-

ance of the ISS contract, without the phase-in period

contemplated in NASA’s RFP and Boeing’s proposal, and

proceeded to apply the terms of its “hardware” contract

with the IAM, notwithstanding the lzetter’s opposition.

Relating to the prospective and actual award of the

NASA contract to Boeing,—the events developed along

several concurrent courses: formal and other protests of

NASA’s action; meetings and communications within the

IAM; meetings and communications between Boeing and

the IAM apprising each other of their opposing positions;

and the recruitment of ISS personnel by Boeing.

17On November 25, 1970, the Orlando Sentinel reported that—

“Boeing officials said that the firm would hire about ninety percent

of the TWA employees and subcontractor employees.”

55a

E. The Protests and Challenges

On November 13, formal protests with the U.S. Comp-

troller General were immediately lodged by TWA* and

Pan Am (Airlines). The IAM supported this challenge.

On February 26, 1971, when TWA’s protest was rejected,

the IAM itself formally filed with the Comptroller Gen-

eral a challenge to the Boeing award disputing the

claimed applicability of the Boeing—IAM agreement

to the ISS operation. (This was ultimately denied in June

1971.) TWA sought an injunction against NASA in the

Federal District Court (D.C.D.C.), which was denied on

March 10. Then, on March 11, NASA announced that

Boeing was given the final award of the ISS contract.

Various other suits were filed in the Federal courts seek-

ing to set aside Boeing’s selection, and for other relief.’

18 On the basis, in part, that the purchasing power of the Govern-

ment was being used as an instrument to deprive employees of the

wages and benefits gained through collective bargaining with an

incumbent contractor.

19 E.g.: In April 1971, the IAM filed a grievance with Boeing

that, in violation of the IAM-TWA agreement, Boeing failed to

retain at least 602 incumbent employees on and after the takeover

on April 1, that it treated the incumbents that it retained as new

hires, and that it failed to observe the terms of the IAM-TWA

agreement. The IAM then requested arbitration. In May 1971,

Boeing brought action in a Federal District Court seeking a de-

claratory judgment that it “is not a successor to [TWA] and is

not bound” by the TWA agreement; and the IAM counterclaimed

seeking enforcement of its arbitration demand. After April 1,

Boeing placed in escrow and refused to remit to the IAM the dues

it deducted from the employees’ wages pursuant to their individual

authorizations. As part of its counterclaim, the IAM requested

turnover of the dues. In October 1972, the Court found that “Boe-

ing is not a successor and is not bound by the collective-bargaining

agreernent between TWA and IAM,” and denied enforcement of

the arbitration demand,—basing its decision on Boeing’s failure

to employ a majority of the TWA incumbents. The Court also

ordered Boeing to remit the dues to the IAM. Boeing v. IAM, 351

F.Supp. $13 (D.C.M.D. Orlando, Fla.). Appeals by the IAM and

Boeing are pending before the Fifth Circuit Court of Appeals.

In 1971, the IAM filed suit against the Secretary of Labor, NASA,

56a

On January 31, 1971, at roadway entrances to KSC,

placards in the name of Local 773 were exhibited stating

protests, e.g., “Is NASA Involved in Wage Busting?”

Boeing was not named. On February 27, 1971, U.S. Sen-

ator Lawton Chiles held a public meeting in a theater at

Merritt Island, Florida, attended by officials of IAM,

Boeing and NASA, and a large audience at which the

controversy was aired concerning the ISS contract at

KSC. And generally, following Boeing’s selection in No-

vember 1970, various forms of protest against NASA’s

actions were communicated to U.S. Senators, Representa-

tives and Congressional committees.

Directly related to NASA’s award of the ISS contract

at KSC,” the Service Contract Act was amended on

October 9, 1972, by the addition of a new Section 4(c),

in substance providing that a succeeding contractor sub-

ject to that statute shall pay its service employees no less

than the wages and fringe benefits specified in the col-

lective-bargaining agreement with the predecessor em-

ployer.”

and Boeing contesting the award to Boeing on the ground that it

was made without compliance with the Service Contract Act of

1965; it sought vacation of the award to Boeing, resolicitation of

the NASA contract, and indemnification of the employees for the

loss they sustained in receiving less than the minimum wages and

fringe benefits prevailing in the locality. In November 1973, the

suit was dismissed. JAM v. Hodgson, et al., 21 W. H. Cases 344

(D.C.D.C.).

20 Senate Report No. 92, and Hearings before Subcommittee on

Labor, Senate Labor Committee, on S. 3827, H.R. 15376, 92d Conx.,

2d Sess. (1972); Hearings before Special Subcommittee on Labor,

House Labor Committee, on H.R. 6244, 6245, and Report of Special

Subcommittee on Labor, House Labor Committee, “The Plight of

rect Workers Under Government Contracts,” 92d Cong., 1st Sess.

1971).

21“No contractor or subcontractor under a contract, which suc-

ceeds a contract subject to this Act and under which substantially

the same services are furnished, shall pay any service employee

under such contract less than the wages and fringe benefits .. .

—

57a

F. Staffing the ISS

Following its selection by NASA on November 23,

1970, Boeing proceeded with arrangements for staffing

the ISS operation on the contingency that it would later

be awarded a firm contract. In contemplation of the

phase-in provisions of the RFP, Boeing’s proposal speci-

fied certain recruitment procedures to be implemented

in consultation with NASA and with the concurrence of

the existing contractor, TWA. These included the estab-

lishment of an on-site employment office; review of per-

sonnel folders furnished by TWA and preparation of a

list of incumbents recommended for hire; and use of

selected TWA supervisors reporting to nearby offices in

work areas to interview incumbent candidates. An em-

ployment schedule, prepared in November 1970, projected

that 1,500 offers in all categories would be extended by

February 1, and 2,500 offers by March 1. And it was

expected that staffing would be completed by March 3,

although all employees would not be on Boeing’s payroll

until March 31. However, the proposed procedures were

sharply altered. On November 30, 1970, an initial meet-

ing took place between high officials of TWA and Boeing.

TWA objected to on-site recruitment by Boeing because

it would interfere with TWA’s operations in the remain-

ing period of its contract with NASA. Instead, Boeing

accepted TWA’s proposal that TWA undertake to dis-

provided for in a collective-bargaining agreement . . . to which

such service employees would have been entitled if they were em-

ployed under the predecessor contract: Provided, That ... such

obligations shall not apply if the Secretary finds after a hearing...

that such wages and fringe benefits are substantially at variance

with those which prevail for services of a character similar in the

locality.” Pub. ™.. 92-473. Of course, the Service Contract. Act and

the National Labor Relations Act are separate statutes with entirely

different purposes. The contention of the IAM that, as to the issues

herein, the N.L.R.A. “must be interpreted compatibly with the

public policy enunciated by Congress” in the foregoing amendment

of the Service Contract Act has no validity.

58a

tribute the employment applications, collect the completed

forms, and return them to Boeing. TWA refused to make

available the incumbent personnel folders. Thereafter dis-

cussions continued between officials of TWA and Boeing.

On December 1, in general meetings and by letter,

TWA informed its employees of procedures concerning

their employment after the Boeing takeover. A “‘Declara-

tion of Interest” form was distributed which the employ-

ees were asked to complete and return to their supervisor.

On this form, the employee was requested to indicate

certain che’ es: (1) employment by the successor con-

tractor, ~ ved, (2) consideration for a TWA position

at a sp cation, (3) consideration for a job at any

TWA loc (4) exercising union security rights under

the TWA-1AM contract to displace another TWA em-

ployee, and (5) seeking employment elsewhere. Only

those employees who indicated such an interest received

from TWA forms of employment application with Boeing.

However, it also appears that some of the incumbents

were able to obtain applications from other sources and

by direct request from TWA; and some personally made

application at Boeing’s off-site employment office. TWA

also conveyed the information to the employees that Boe-

ing had indicated a desire to employ a large percentage

of the incumbents.

As of December 18, TWA advised Boeing that about

500 incumbents had indicated on their Declaration of

Interest forms that they desired to work for Boeing.

TWA specifically advised the employees of its formal

protest with the Comptroller General against NASA’s

selection of Boeing and that, failing in its protest, it

would do everything that it could to assist employees in

finding other employment. On January 8, it stated in a

bulletin to employees that it was strongly convinced of the -

validity of its claims, and it intended to pursue the pro-

test to an ultimate conclusion. On January 7, 8, and 9,

59a

newspaper ads were placed by Boeing seeking applicants

for the ISS work. Boeing’s reason was that, until then,

it had received an insufficient number of applications

from incumbents to satisfy its schedule for staffing. It

also hoped that, when the incumbents saw the ad, they

would get their applications in expeditiously. In response

to the ads, Boeing received numerous applications from

nonincumbent sources in all position categories. As of

January 11, Boeing had received applications from 263

TWA hourly employees. These were more than half of

the IAM-represented employees who had earlier indicated

to TWA an interest in such employment; and they com-

prised 26 percent of Boeing’s ultimate requirement of

hourly employees. In other categories,—general office,

professional-technical, and management,—most of the

TWA incumbents had already applied by this date. On

January 11, Boeing’s daily status report shows that 59

TWA hourly employees had been interviewed, of whom 20

received offers, and that 112 former Boeing employees

had been interviewed for hourly jobs, of whom 11 re-

ceived offers. In mid-January, NASA requested that

Boeing halt further offers of employment until the com-

pletion of an Apollo space launch scheduled for January

31. During the interim period, Boeing continued all

aspects of its recruitment procedures, except the placing

of prepared offers in the mail,—which in fact were mailed

after the launch on January 31. In this process, “quite

a few” offer letters already prepared for nonincumbents

were withdrawn and sent instead to incumbents. As of

February 2, a cumulative total of 851 offers had been

extended for hourly jobs, of which 227 went to TWA

employees, 78 to former Boeing employees, 39 to current

Boeing employees, and 507 to “other” applicants.”

22 The offers were made contingent upon final award by NASA,

with the work scheduled to start on April 1. In offers made to laid-

off employees elsewhere in the Boeing system, they were advised

that failure to accept the offer would result in change from layoff

status to terminated.

60a

As of February 19, a critical date in the complaint,”

Boeing’s status report shows the following figures in the

recruitment of hourly employees:

Applications Inter- Offers Sign-

Received views Extended Accepts Rejects ups

Former

Boeing 168 171 128 116 12 51

Boeing 0 0 46 26 0 0

TWA 435 354 273 205 4 81

WAC* 359 1 52 0 0 0

Other 1771 614 547 464 67 264

* Wackenhut Corp., apparently refiecting the employment of guards,

outside the IAM bargaining unit.

As of March 20, applications had been received from 626

TWA employees, of whom 467 had been interviewed, with

403 offers extended. The earlier targeted dates for com-

pletion of the hiring process for hourly employees and the

originally planned phase-in period prior to April 1—had

been abandoned.* As of Boeing’s takeover on April 1, the

final data as to hourly employees indicate: *°

Applications Inter- Offers Sign-

Received views Extended Accepts Rejects ups

Former

Boeing 242 175 143 124 19 124

Boeing 0 0 46 41 5 41

TWA 944 472 454 403 48 402

WAC 401 1 318 309 9 309

Other 279 629 580 467 119 467

23 Le., the allegation that on February 19 an unconditional request

for reinstatement was made upon termination of a “strike” which

commenced about December 5.

24 After January 31, Boeing had an “accept target line” of about

12 days, estimated as the average time lag from the offer to an

acceptance.

*° Reference has been made to the daily status reports (Comp.

Exh. 2-1 to Exh. 14-B of Jt. Exh. 1) which include numbers of

applications received. Another exhibit (Exh. 13 to Jt. Exh. 1) re-

flects comparable but not materially different figures, e.g., that 380

TWA employees were hired as of April 1.

6la

G. The Duncan Question

Respondent contends that it relied on a verbal agree-

ment from the IAM in preparing its bid to NASA predi-

cated upon the Boeing-I[AM hardware contract and the

lower wage rates and benefits contained therein. In the

entire record it is evident that, in seeking to obtain the

award from NASA and in its dealings with the IAM

thereafter, Boeing maintained a fixed position that its

hardware contract with the IAM was applicable to the

ISS project. Concededly, it had advice of counsel from

the outset. In preparing its bid, it did not attempt te

communicate directly with the International, nor seek to

obtain from the IAM anything in writing on this subject,

because it felt that the Boeing-IAM contract was “very

plain” on its face. The verbal assurances which it sought

from the IAM was deemed to be “insurance.” Thus it

appears that, in July 1970, and thereafter, Respondent’s

industrial relations manager, John Sutherland, had dis-

cussions with Robert Duncan, business representative of

District Lodge 166.*° Sutherland told Duncan that, in

submitting its ISS proposal to NASA, Boeing was plan-

ning to use the rates in the existing IAM (hardware)

contract. Duncan was asked to get an opinion from IAM

Vice President George Watkins and from IAM General

Counsel Plato Papps. On several occasions, Duncan com-

municated with these and other sources in the Interna-

tional. I credit Duncan’s firm denial that he advised

Sutherland of any agreement to apply the Boeing-IAM

contract,—on the part of Duncan personally, or from the

offices of Watkins or Papps. Duncan related to Sutherland

the substance of his talks with the International sources *’

—that no decision had been made on how the IAM would

26 Duncan’s term of office expired on December 31, 1970, following

a union election.

27 In his deposition taken on November 18, 1971, Duncan clearly

stated that, among others, he spoke with Watkins.

62a

go, particularly in view of the numerous bidders on the

ISS contract, but that the IAM “did feel that whoever got

the contract was going to have to pay the wages, at least,

that TWA was paying.” There was no mention of such

purported verbal agreement with the IAM in Boeing’s ISS

proposal to NASA, or in its later exchanges directly with

the IAM top officials on the question of which of the exist-

ing contracts, TWA or Boeing, was applicable. In sum, I

reject this contention of Respondent as completely spe-

cious.** However, what is significant from all this evi-

dence is the early and clear indication to the IAM that

Respondent was proceeding, in its bid for the ISS work

and in implementing the NASA award, on the basis of

the Boeing hardware contract, with the provisions for

substantially lower wages and benefits.?°

H. Internal IAM Activity

About December 3,*° and again in January 1971, there

were trips to Washington by a delegation of officials from

Local 773 (whose membership consisted of TWA incum-

bents) to discuss with the IAM International, NASA,

and various sources in Congress;—NASA’s selection of

Boeing to negotiate the ISS contract. The delegations

28 In addition, Respondent appears to rely on a December 30, 1970,

letter from Duncan, wherein he agreed to apply to ISS employees

certain classifications under the Boeing-IAM contract. This letter

can scarcely be found to constitute an agreement by the IAM that

the Boeing contract would apply if Boeing obtained (as it later

did) the final ISS award from NASA.

2° At the instant hearing, Duncan testified there was a continuing

desire by Boeing to determine the IAM’s position, and that he

thinks he talked to Watkins personally. In his deposition on

January 21, 1972, Watkins did not recall a discussion on this sub-

ject with Duncan (“it could well have been”), but he “could pot

say” he was aware prior to December 1970, that Boeing was going

to bid the wage rates of the Boeing-IAM contract. In any event,

I find it inconceivable on this evidence that the IAM leadership was

not put on notice as a result of Sutherland’s early overtures.

* Depositions of IAM Vice Presidents Winpisinger (p. 46) and

West (p. 38).

63a

were led by the local president, Darryl D’Andrea. He

testified that, in the beginning, there was a lack of policy

coordination between Local 773 and the International,

apprehension of possible collusion between the IAM and

Boeing, and general confusion.

IAM Vice President Winpisinger deposed as to the dis-

cussions with the D’Andrea delegations. He assured them

that the IAM would do everything legally in its power to

defend their jobs and the negotiated wages and condi-

tions regardless of who their employer would be. He

assigned a coordinator, Frank Waldner, to guide Local

773 in resolving its problems and to see that the policies

of the International were carried out. Waldner would

have the assistance of James Fowler or William Dinkel-

meyer from District Lodge 142 present at KSC. Par-

ticularly in view of questions raised by Local 773, Win-

pisinger, with the concurrence of other high officials, had

formulated the policy concerning the Boeing employment

applications: The members were to be told to fill out

the applications and give them to Fowler, who would then

transmit them with a cover letter reserving the rights of

the applicants under the TWA-IAM contract. Instructions

from the International were firmly and repeatedly con-

veyed to Local 773 officers to carry out this policy.”

According to Fowler, there was some resistance, not so

much from the membership, but from three men on the

grievance committee who did not wish any applications

to be turned in. Fowler deposed that at KSC he told the

officers of the Local “‘they were not to stop people from

31 John Peterpaul, an International officer, deposed that Waldner

kept him informed of the developments at KSC respecting the ac-

tivities of Local 773, particularly in the matter of filing Boeing

applications. He indicated that the Local had six or ten officers

with different opinions as to courses of action in protecting the

TWA jobs and wages. He stated that the Loca! officers were given

instructions from the International which they were unquestionably

obligated to fulfill.

64a

turning in applications.” On December 22, Fowler sent

John Keil, TWA’s manager of industrial relations, the

following letter:

Enclosed herewith are printed forms regarding em-

ployee data as requested by the Boeing Company.

Please be advised this information is being provided

under protest and is in no way to be construed as an

acceptance of any lesser rate of pay, hours of em-

ployment, working conditions, or other employee bene-

fits as are now, or will be in effect under the terms

of the present collective bargaining agreement be-

tween the International Association of Machinists and

Trans World Airlines.

ce: V. P. Winpisinger

Thereafter, from time to time in December and January,

completed forms were hand carried by Fowler to TWA

for delivery to Boeing. It is noted that, as of January

11, Boeing had received from TWA hourly employees

some 263 applications for employment.** However, also

on December 22, D’Andrea of Local 773 mailed a letter

to the membership, in part as follows:

Dear sisters and brothers:

I am writing with regard to the applications for

employment. It appears that a great deal of con-

fusion has arisen as to what the union wants done.

We have been advised by the International Head-

quarters that we should not turn these applications

in. It is their feeling that the Company is attempt-

ing to divide the ranks and thereby undermine our

position that our wages, hours and working condi-

tions will remain in effect.

*2 Undoubtedly, many of these applications were turned in by the

employees to TWA o

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