Opposition Brief — Houston Building Service, Inc. v. National Labor Relations Board

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No. 91-597 | JAN TS 1992

OFFICE GF ThE CLERK

Iu the Supreme Court of the United eri Tes

OCTOBER TERM, 1991

HOUSTON BUILDING SERVICE, INC., PETITIONER

v.

NATIONAL LABOR RELATIONS BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

BRIEF FOR THE

NATIONAL LABOR RELATIONS BOARD

IN OPPOSITION

KENNETH W. STARR

Solicitor General

Department of Justice

Washington, D.C. 20530

202) 514-2217

JERRY M. HUNTER

General Counsel

D. RANDALL FRYE

Acting Deputy Generai Counsel

NORTON J. COME

Deputy Associate General Counsel

LINDA SHER

Assistant General Counsel

National Labor Relations Board

Washington, D.C. 20570

QUESTION PRESENTED

Whether the National Labor Relations Board prop-

erly found that petitioner was a successor employer.

(1)

TABLE OF CONTENTS

Page

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TABLE OF AUTHORITIES

Cases:

California vV. FERC, i110 8. Ct. 2024 (1990) _... os 8

Fall River Dyeing & Finishing Corp. v. NLRB,

ee gc adap anconwhicalenaenenenanee 5, 8,9

Golden State Bottling Co. v. NLRB, 414 U.S. 168

ns cisemnanaenens 9

Hilton v. South Carolina Public Railways Comm’n,

No. 90-848 (Dec. 16, 1991) .................................... 8

NLRB v. Burns Int'l Security Services, Inc., 406

I a astensdioereneios 5, 6,7

Square D Co. v. Niagara Frontier Traffic Bureau,

Se iS | enna eee 8

Universal Camera Corp. Vv. NLRB, 340 U.S. 474

(8 es hn ee RRC Rae Se ital aie enna ee 9

Statutes:

National Labor Relations Act, 29 U.S.C. 151 et

seq.:

TS EN SIRI URI anette yA cae RAB at 5

Deny eae, oe Ue. 1001R) (2)... 8 4,5

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

(IIT)

In the Siaygreme Court of the United States

OCTOBER TERM, 1991

No. 91-597

HOUSTON BUILDING SERVICE, INC., PETITIONER

wv:

NATIONAL LABOR RELATIONS BOARD

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

BRIEF FOR THE

NATIONAL LABOR RELATIONS BOARD

IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-

6a) is reported at 936 F.2d 178. The decision and

order of the National Labor Relations Board (Pet.

App. 7a-48a) is reported at 296 N.L.R.B. No. 101.

JURISDICTION

The judgment of the court of appeals was entered

on July 2, 1991. The petition for a writ of certiorari

was filed on September 30, 1991. The jurisdiction of

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

(1)

2

STATEMENT

1. In 1980, the Unlicensed Division of District

No. 1, MEBA,-NMU, AFL-CIO (Union) became the

recognized collective bargaining representative of a

unit of approximately 30 custodial services employees

working for Nash Janitorial Services, Inc. (Nash).

Nash provided janitorial services for the General

Services Administration (GSA) at three federal

buildings in Austin, Texas. Pet. App. 12a-ld4a. The

service contract was periodically rebid. Between 1980

and 1987, five successive employers assumed responsi-

bility for providing janitorial services for GSA. Each

hired the employees of its predecessor and maintained

a collective bargaining relationship with the Union.

Id. at 14a-15a. The last contractor prior to petitioner,

Housekeepers Maintenance Service and Supply, Inc.

(Housekeepers), had a collective bargaining agree-

ment with the Union effective August 1986 through

October 1989. /d. at 15a.

In 1987, GSA solicited bids for the custodial con-

tract. Pet. App. 15a. Petitioner was the successful

bidder. /d. at 18a. Before winning the bid, a repre-

sentative of petitioner solicited and received from the

Union the current collective bargaining agreement

and an employee seniority list. 7d. at 15a-16a. Peti-

tioner’s president, Jason Yoo, also discussed with

Eugene Darby, the janitorial services manager for

Housekeepers, the possibility of retaining Darby if

petitioner were awarded the contract. Jd. at 16a. Yvo

mentioned to Darby that he desired to hire new em-

ployees. Darby told Yoo that it could take up to a

month to obtain the security clearances needed.’ Yoo

1To be employed in the federal buildings in Austin, each

employee required a security clearance. Pet. App. 16a n.8.

3

believed that the clearances could be obtained more

quickly. /d. at 16a & n.8.

Petitioner’s contract obligations commenced on De-

cember 1, 1987. On November 25, petitioner made

conditional job offers to 18 individuals, not members

of the Housekeepers workforce, to work at the federal

buildings, contingent on their obtaining the required

security clearances. Some of those applicants failed

to receive clearances and were never hired by peti-

tioner to work at the federal buildings. Pet. App.

17a-18a & n.11. On December 1, when petitioner be-

gan performing the janitorial services contract, its

entire rank-and-file workforce consisted of the 30

former Housekeepers employees. Darby, as well as

two other former Housekeepers supervisors, also were

hired by petitioner. /d. at 19a.

On December 2 or 3, Darby distributed job applica-

tion forms to the former Housekeepers employees, as

wel] as union authorization forms. The employees

completed and returned the forms. Pet. App. 19a.

Petitioner began to add new employees as they re-

ceived security clearances. The former Housekeepers

employees, however, constituted a majority of its

workforce.” Jd. at 30a-31la.

On December 9, petitioner refused the Union’s re-

quest for recognition and notified GSA that it in-

tended to subcontract its custodial work. Pet. App.

2 One new employee and two new supervisors began work-

ing on December 3 and 4. During the week of December 6

through 12, petitioner’s maximum employee complement in-

cluded the original workforce of 30 employees and 3 holdover

supervisors, plus 10 new employees and 2 new supervisors.

During the week of December 14 through 19, its employee

complement included 16 of the original unit employees, 2 hold-

over supervisors, 11 new employees, and 2 new supervisors.

Pet. App. 23a-24a, 30a-31a.

4

2la-22a. Thereafter, petitioner unilaterally reduced

working hours and terminated all of the night shift

employees. /d. at 23a. Petitioner never bargained

with the Union and failed to make contributions to

employee benefit funds. Jd. at 24a.

2. The Union filed unfair labor practice charges

against petitioner. The Board, upholding the decision

of the administrative law judge (ALJ), found that

petitioner was a successor to Housekeepers and ac-

cordingly obligated to recognize and bargain with the

Union. Pet. App. 9a, 29a. The ALJ found that there

was “substantial continuity” between petitioner and

Housekeepers. Jd. at 28a. The ALJ explained that

petitioner’s ‘operations and functions” were the same

as those of its predecessor. /d. at 29a. On commenc-

ing work, the ALJ noted, petitioner ‘utilized the

exact same workforce performing the same jobs under

the same working conditions and with the same super-

visors that had been utilized by [Housekeepers].”’

ld. at 30a. The ALJ also observed that the services

performed by the employees continued without inter-

ruption. /bid.

The ALJ further found that by December 9, when

the Union requested recognition, petitioner “employed

a full workforce with all job classifications filled.”’

Pet. App. 3la. The ALJ and the Board rejected

petitioner’s assertion that the Housekeepers’ employ-

ees hired by petitioner were temporary employees.

The ALJ and the Board noted that the employees

were never told they were temporary. /d. at 8a n.2,

32a. The ALJ further noted that there was ‘no

known definite or contemplated date for their termi-

nation.” Jd. at 32a.

Based on those findings, the Board concluded that

petitioner violated Sections 8(a)(5) and (1) of the

National Labor Relations Act, 29 U.S.C. 158(a) (5)

o

and (1), by refusing to recognize and bargain with

the Union and by making unilateral changes in work-

ing conditions." Pet. App. 9a, 35a.

3. The court of appeals enforced the Board’s or-

der. Pet. App. 6a. The court concluded that the

Board’s finding that petitioner was a successor to

Housekeepers was supported by substantial evidence.

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

482 U.S. 27 (1987), and NLRB vy. Burns Int'l Secu-

rity Services, Inc., 406 U.S. 272 (1972), the court

noted that the Board properly takes into account “the

totality of the circumstances” in determining whether

there has been “substantial continuity” between the

old and new employers. Pet. App. 3a-4a. The court

observed that one of the ‘“‘most significant” factors in

determining successorship “is the overlap of work-

forces between the two entities.” /d. at 4a. The court

rejected petitioner’s assertion that, because it ac-

quired no assets from Housekeepers, there could be

no finding of successorship. The court explained that

“{t]ransfer of ownership of assets * * * is only one

factor” to be considered in determining whether “the

second corporation basically has continued the busi-

ness and workforce of the first.” 7d. at 6a n.2. On

the facts of this case, the court of appeals observed

that, when the Union made its bargaining demand,

all of petitioner’s employees “were former House-

keepers workers who were performing identical work

to that which they had done under Housekeepers. The

3 Section 8(a) (5), 29 U.S.C. 158(a) (5). makes it an unfair

labor practice for an employer “to refuse to bargain collec-

tively with the representatives of his employees.” Section

8(a) (1), 29 U.S.C. 158 (a) (1), makes it unfair labor practice

for ar employer to “restrain, coerce, or interfere with” the

exercise of rights protected by Section 7 of the Act, 29 U.S.C.

157.

6

working conditions, production process, and custom-

ers remained unchanged.” Jd. at 5a.

The court of appeals rejected petitioner’s assertion

that under the Board’s ruling, petitioner was pre-

cluded from hiring its own permanent workforce.

The court explained that, if petitioner had C-sired to

hire its own employees and to treat the original unit

employees as a temporary workforce, it could have

simply told those employees that their status was

temporary. Instead, the court noted, petitioner gave

the employees job applications and union cards, thus

misleading the employees into believing that their

status was permanent. Petitioner “did nothing to

combat the impression that any reasonable employee

would have in these circumstances that the ‘new’ job

merely was a continuation of the old.” Jd. at 5a-6a.

ARGUMENT

1. Petitioner contends (Pet. 7-8) that the Board

misapplied the successorship doctrine in this case by

finding that petitioner was a successor firm even

though it did not acquire the assets of its predecessor.

That contention is foreclosed by NLRB v. Burns Int'l

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

In Burns, the Court sustained the Board’s determi-

nation that Burns, as the successful bidder to a con-

tract previously performed by Wackenhut Corpora-

tion to furnish guard services, was required to bar-

gain with the union that had represented Wacken-

hut’s employees. 406 U.S. at 277-281." The Court

‘The Court rejected the Board’s position that the successor

was required to assume the predecessor’s collective agreement.

406 U.S. at 291. The Court held instead that a successor who

retains the predecessor’s workforce is required to consult

with the collective bargaining representative of those em-

7

concluded that imposing a bargaining obligation is

appropriate when the new employer maintains sub-

stantial continuity in the operation of its predeces-

sor’s business so that “the bargaining unit remains

unchanged” and “a majority of employees after the

change of ownership or management were employed

by the preceding employer.” J/d. at 279, 281. The

dissent in Burns argued that the successorship doc-

trine should not apply since there had been no trans-

fer of assets. 406 U.S. at 296-310 (Rehnquist, J.,

dissenting). The Court, however, refused to accept

that principle. Instead the Court quoted with ap-

proval the court of &peals’ finding that “[a]l! of the

important factors which the Board has used and the

courts have approved are present in the instant case:

‘continuation of the same types of product lines, de-

partmental organization, employee identity and job

functions.’ ”’ Jd. at 280 n.4.°

Petitioner does not dispute that, under the Court’s

decision in Burns, a finding of successorship is war-

ranted in this case; it simply urges (Pet. 8-9) adop-

tion of the dissenters’ view in Burns that the suc-

cessorship doctrine should not apply in the absence

of some transfer of assets. Petitioner, however, has

advanced no reason why the Court should depart from

the doctrine of stare decisis. Burns has been settled

ployees before changing their terms and conditions of employ-

ment. Jd. at 294-295.

5 The Court added that the Board had found that both Burns

and Wackenhut “performed the identical services at the same

facility; although Burns used its own supervisors, their func-

tions and responsibilities were similar to those performed by

their predecessors; and finally * * ~ Burns commenced per-

formance of the contract with 27 former Wackenhut employ-

ees out of its total complement of 42.” 406 U.S. at 280 n.4.

8

law for nearly twenty years, and its reasoning was

recently reaffirmed and applied by this Court in Fall

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

27, 36-41 (1987). There is no justification for re-

visiting that statutory issue. See Hilton y. South

Carolina Public Railways Comm’n, No. 90-848 (Dee.

16, 1991), slip op. 4 (“Time and again, this Court

has recognized that ‘the doctrine of stare decisis is

of fundamental importance to the rule of law.’ * * .

Adherence to precedent promotes stability, predict-

ability, and respect for the judicial authority.’’) ;

California v. FERC, 110 S. Ct. 2024 (1990) ; Square

D Co. y. Niagara Frontier Traffic Bureau, Inc., 476

U.S. 409 (1986).

29 Nor is there merit to petitioner’s suggestion

(Pet. 11) that Fall River requires the Board to ‘focus

on whether the new company has ‘acquired substan-

tial assets of its predecessor and continued, without

interruption or substantial changes, the predecessor's

business operations.’”’ On the contrary; the Court in

Fall River reiterated that, “[i]f the new employer

makes a conscious decision to maintain generally the

same business and to hire a majority of its employees

from the predecessor, then the bargaining obligation

of [Section] 8(a) (5) is activated.” 482 U.S. at 41.

The Court went on to state that Burns had approved

“the approach taken by the Board and accepted by

courts with respect to determining whether a new

company was indeed the successor to the old,” and

that this approach “is primarily factual in nature

and is based upon the totality of the circumstances

of a given situation.” Jd. at 45. “Under this ap-

proach, the Board examines a number of factors,”

such as “whether the business of both employers is

essentially the same” and “whether the employees of

the new company are doing the same jobs in the same

9

working conditions under the same supervisors.”

Ibid.

While the Court in Fall River noted that the Board

will also examine “whether the new company has

‘acquired substantial assets of its predecessor,’ ” 452

U.S. at 43, quoting Golden State Bottling Co. v.

NLRB, 414 U.S. 168, 184 (1973), it was not suggest-

ing that this factor is essential to a finding of suc-

eessorship. Rather, the statement merely reflects the

fact that the acquisition of assets, which occurred in

Fall River and Golden State, is a factor to be con-

sidered in determining whether there is “substantia!

continuity” between the old company and the new one.

Fall River stated, however, that the essential question

is whether “those employees who have been retained

will understandably view their job situations as es-

sentially unaltered.” 482 U.S. at 43.

Here, as in Burns, while there was no assets ac-

quisition, the other indica of continuity were sufficient

to justify the Board in concluding that the employees

would “view their job situations as essentially un-

altered.” As the court of appeals noted, petitioner

“chose to rehire a workforce that had grown accus-

tomed to new owners adopting the collective bargain-

ing arrangements of former employers”; petitioner

“not only rehired those same workers, but did so in

a manner which would indicate that the same prac-

tice was continuing”; and the “operations * *. > Te

main[ed] essentially the same after the transfer of

ownership.” Pet. App. 6a. The court of appeals’ de-

termination that the Board’s order is supported by

substantial evidence warrants no review here. Uni-

versal Camera Corp. v. NLRB, 340 U.S. 474, 491

(1951).°

6 Petitioner’s statement of the questions presented (Pet. i)

appears to raise the issue of whether successorship can be

10

CONCLUSION

The petition for a writ of certiorari should be

denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor General

JERRY M. HUNTER

General Counsel

D. RANDALL FRYE

Acting Deputy General Counsel

NORTON J. COME

Deputy Associate General Counsel

LINDA SHER

Assistant General Counsel

National Labor Relations Board

JANUARY 1992

found when employment of the predecessor’s employees is

“forced” and “temporary” as a result of the government’s

failure to grant security clearances quickly. Petitioner does

not argue that point in the body of the petition, and it raises

at most a fact specific issue that does not warrant this

Court’s review. In any event, the Board, upheld by the court

of appeals, found that petitioner never told the predecessor’s

employees that their employment was temporary, but instead

treated them as permanent employees. Pet. App. 5a-6a.

Accordingly, this case does not present any issue of forced

temporary hiring.

WU. S. GOVERNMENT PRINTING OFFICE; 1992 312324 45258