Record and brief — Fall River Dyeing & Finishing Corp. v. NLRB
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'de 35-120P°C FX Title: Fall Piver dyeing & Finishing Corder Petitioner
tatus: GRANTED Ve
; National Labor Relations Soard
‘ocketed: Court: Unites States Court of Aoceals
anuary 16% 1986 for the First Circuit
Counsel for petitioner: DrosinzIra
Counsel for respondent: Solicitor General
ntry Date Note Proceedings anc Orders
1 Jan 16 1955 G Petition for writ of certiorari filea. a
3 Fed 24 1986 Order extending time to file resconse to petition until
March 234 1966.
4 Mar 24 1986 Oraer further extendince time to file response to
cetition until March 21, 1S9F6,
EDITOR'S NOTE 5 Mar 71 1986 Brief of resooncenrt NLR3 in onpdcsition filed.
é Aor 2 198¢e DISTRISUTED. Aoril Isr 1934
THE FOLLOWING PAGES WERE POOR HARD COPY 3 Aor 21 1956 RELISTPIIUTED. Acril 28, 1934
AT THE TIME OF FILMING. IF AND WHEN A S Aor 24 198$ XK Reoly orief of petitioners Fall Piver Dyeina, etc. filec.
BETTER COPY CAN BE OBTAINED, A NEW FICHE 11 May 5 1986 REDISTPSIUTED. “ay 154 19286
WILL BE ISSUED, 13 May 16 1986 PEDISTPIGUTED. May 224 1924
14 May 27 19%. Petition t24NTID,.
REET E ERROR e
146 Jun 23 1926 Order extensing time to file brie*® of petitioner on the
rerits until August 114 19f0.
v7 Auc é& 1986 Srief amicus curi3e of Lesal Foundation of Arerica files.
1¢ Aus 11 19606 Joint apoensix files.
19 4u9 11 1986 Srief of petitioner Fall River Dyeincs etc. filec.
22 Auc 11 1398s Brief amicus curiae of tharcer of Commerce of the UeS.
files.
22 Auc 78 1986 Orjer extending time to file crie* of resnorcent on the
merits until Setonser 114 1926.
27? Oct 11 1986 Brief of resoonsent NL®] filed.
24 Oct 11 13986 Srief amicus curiae of AFL=CIC filed.
25 Oct 22 1986 CIRCULATED.
24 Dec 19 1984 S2T FO® ARIUMENT. Mondays “arch 2 1927. (1st case).
27 Fed 21 1937 X Reoly brief of petitioner Fall River Dyeing, etc. filer.
22 Mar 2 1987 ARGUED.
PETITION
FOR WRIT OF
CERTIORARI
No. f JAN 16 !
( we a;
IN THE
Supreme Court of the United States
Octrosper Term, 1985
FALL RIVER DYEING & FINISHING CORP.,
Petitioner,
— against —
NATIONAL LABOR RELATIONS BOARD,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
InA DrocIN
LEAF STERNKLAR & DROGIN
Attorneys for Petitioner
440 Park Avenue South
New York, New York 10016
(212) 685-8400
QUESTIONS PRESENTED
1. Whether the National Labor Relations Board and the Court
of Appeals have failed to follow Federal labor policy contained
in successorship principles previously enunciated by this Court
and have promoted concepts contrary to the Labor Management
Relations Act, as Amended, under the totality of the circumstances
herein, by finding that there was a substantial continuity in the
employing enterprise, between a collapsed and liquidated
business, Sterlingwale Corp., and a new enterprise, petitioner,
Fall River Dyeing & Finishing Corp., such as to require Fall River
to recognize and bargain with a Union which represented the
production and maintenance employees of the former employer,
Sterlingwale.
2. Whether the National Labor Relations Board and the Court
of Appeals have failed to follow the successorship principles
previously enunciated by this Court and have promoted concepts
contrary to the Labor Management Relations Act, as Amended,
and Federal labor policy, by relying on and applying
simultaneously two Board-promulgated legal concepts, to find
that Fall River Dyeing & Finishing Corp. engaged in unfair labor
practices in violation of Sections 8(a)(1) and (5) of the Act by
refusing to recognize and bargain with Textile Workers of
America, AFL-CIO, Local 292, without a further demand hav-
ing been made by that Union, after Fall River subsequently
employed a substantial and representative complement of
employees, a majority of whom had been employed by a former
employer, Sterlingwale Corp. Those concepts are:
(a) The substantial and representative complement standard
under which the time of determination of whether a new
employer is a successor is postponed until its work force reaches
a substantial complement, representative of the number and type
of employees and job classifications, that will ultimately constitute
the appropriate bargaining unit, without considering whether
under the circumstances of this case, the time when the new
employer reached a full complement of employees and classifica-
tions should have been determinative.
(b) The continuing demand doctrine, whereby in this case, the
Union's demand for recognition and bargaining, once made but
lawfully rejected by Fall River, was nevertheless considered to
be ongoing in nature, for approximately three months thereafter,
until Fall River first employed a substantial and representative
complement of employees, even though, to have accepted the
Union's premature demand theretofore, would have constituted
the unlawfuly recognition of a minority Union in violation of
the Labor Management Relations Act, as Amended.
3. Whether the National Labor Relations Board and the Court
of Appeals, in requiring Fall River to bargain with the Union,
by applying both the continuing demand concept to a premature
bargaining demand and the representative complement standard,
to cause a bargaining obligation to become effective at that time,
have deprived the employees of Fall River of their rights under
the Labor Management Relations Act, as Amended, to bargain
collectively through representatives of their own choosing and
to refrain from any and alli such activities, and have improperly
compelled Fall River to bargain with the Union where a good
faith doubt existed as to the Union’s majority status.
PARTIES TO THE PROCEEDING BELOW
The only other parties to the proceedings below not listed in
the caption are:
1. United Textile Workers of America, AFL-CIO, Local 292.
iv
TABLE OF CONTENTS
QUESTIONS PRESENTED .............0005.:.
PARTIES TO THE PROCEEDING BELOW ....
py ge) gs eee
I ha dis occ tob asa keene eee «
eg Ons we vak's Neus snobs en kes
STATUTORY PROVISIONS INVOLVED .......
STATEMENT OF THE CASE .................
REASONS FOR GRANTING THE WRIT.......
1. THE NLRB HAS IGNORED OR REFUSED
TO FOLLOW IN THIS CASE THE
SUCCESSORSHIP PRINCIPLES
PREVIOUSLY ENUNCIATED BY THIS
2. THE NLRB’S SUBSTANTIAL AND
REPRESENTATIVE COMPLEMENT
STANDARD AS APPLIED IN THIS CASE
CONTRAVENES IMPORTANT
REPRESENTATION RIGHTS
GUARANTEED EMPLOYEES UNDER
THE LABOR MANAGEMENT
RELATIONS ACT, AS AMENDED........
3. THE NLRB’S CONTINUING DEMAND
DOCTRINE AS APPLIED IN THIS CASE
CONTRAVENES THE LABOR
MANAGEMENT RELATIONS ACT, AS
AMENDED, BY IMPROPERLY
COMPELLING THE EMPLOYER TO
BARGAIN WITH A UNION WHERE A
GOOD FAITH DOUBT EXISTED AS TO
THE UNION’S MAJORITY STATUS.......
ao wo wv
EE 5 oes cave owed vanes secihebenes
APPENDIX
Decree of United States Court of Appeals, First
Circuit, entered October 18, 1985 ............
Decision of United States Court of Appeals,
First Circuit, dated October 18, 1985.........
Decision of National Labor Relations Board,
and Order, dated October 19, 1984 ..........
Decision and recommended Order of
Adminitrative Law Judge Burton S. Kolko,
Gee DUR TT, TRG oa oc ccc cree se geacnes
Rt er ator Rata Sree upon e me al ene Der
Page
A-44
vi
TABLE OF AUTHORITIES
Page
Aircraft Magnesium, A Division of Grico Corp.,
265 NLRB 1344 (1982), enf. 730 F.2d 767 (CA
PD cis eet Geet eeu eaa uate a ea abt 10, 14, 18
Atlantic Technical Services Corp., 202 NLRB 169
(1973), enf. 498 F.2d 680 (C.A.D.C., 1974) ... 13
Cagle’s Inc., 218 NLRB 603 (1975) ............. 13
Co-op Trucking Co., 209 NLRB 829 (1974)...... 13
Galis Equipment Co., 194 NLRB 799 (1972)..... 13
Georgetown Stainless Manufacturing Co., 198
i Sit chee eee ene eee aakee.s 13
Hedstrom Company v. NLRB, 558 F.2d 1137 (CA
3, 1977), cert denied, 450 U.S. 996 (1981)..... 20, 22
Howard Johnson Company v. Detroit Local Joint
Exeuctive Board Hotel and Restaurant
Employees Union, 417 U.S. 249 (1974)........ 8
International Association of Machinists and
Aerospace Workers, AFL-CIO (Boeing
Company) v. NLRB, 595 F.2d 664 (C.A.D.C.,
1978), cert. denied, 439 U.S. 1070 (1979) ..... 9
John Wiley & Sons, Inc. v. Livingston, 376 U.S.
Rt i a Ld tet a ieenhs haere 6 $05) 16
Lincoln Private Police, 189 NLRB 717 (1971) .... 13
NLRB v. Alamo White Truck Services, 273 F.2d
eo, cer ddv ahi bese sees 12
NLRB v. Band-Age, Inc., 534 F.2d 1 (CA 1),
cert. denied, 429 U.S. 921 (1976) ............ 8, 9, 17
vii
NLRB v. Burns International Security Services,
Inc., 406 U.S. 272 (1972) ..............
NLRB v. Hudson River Aggregates, Inc., 246
NLRB 192 (1978), enf. 639 F.2d 865 (CA2,
"TRAST aRiieeien ah AOS Canaan
NLRB wv. Middleboro Fire Apparatus, Inc., 590
fof SE re ;
Premium Foods, Inc., 260 NLRB 708 (1983), -
709 F.2d 623 (CA 9, ARR ee
Radiant Fashions, Inc., 202 NLRB 938 (1973)....
STATUTES
29 U.S.C. §158(a)(1) .... 0... c eee cece ce eeee
20 U.S.C. $15B(aMM) ............. 02. e cn eees
99 U.S.C. §158(a)(5) ... 0... eee cece cece eee ee
RR re ey ee rey eee ee
Page
8, 15,
16, 17,
19
10
8, 10
No.
IN THE
Supreme Court of the United States
Octoser TerRM, 1986
FALL RIVER DYEING & FINISHING CORP.,
Petitioner,
— against —
NATIONAL LABOR RELATIONS BOARD,
Respondent.
PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
Petitioner, Fall River Dyeing & Finishing Corp., respectful-
ly prays that a writ of certiorari issue to review the judgment
and opinion of the United States Court of Appeals for the First
Circuit entered in this proceeding on October 18, 1985, enfor-
cing an Order of the National Labor Relations Board
(hereinafter “NLRB”) requiring Fall River Dyeing & Finishing
Corp. (hereinafter “Employer” or “Fall River”) to recognize and
bargain with United Textile Workers of America, AFL-CIO,
Local 292, as the exclusive representative of all the production
and maintenance employees of the Employer’s piant in Fall
River, Massachusetts.
OPINION BELOW
The opinion of the Court of Appeals enforcing an order of
the NLRB, made on October 19, 1984, is reported at ___ F.2d
____ (Ist Cir. 1985), 120 LRRM 2825, and____ CCH ____..
The Decision and Order of the three-member panel of the
National Labor Relations Board, dated October 19, 1984, adop-
ting the Decision and Order of Administrative Law Judge Bur-
ton S. Kolko, issued January 27, 1984, is reported at 272 NLRB
No. 127, 117 LRRM 1436, 84-5 CCH 4 16780.
The Court of Appeals and administrative law decisions ap-
pear in the Appendix to this Petition.
JURISDICTION
The judgment of the Court of Appeals, granting enforcement
of the NLRB Order was entered on October 18, i985. This
Court's jurisdiction is invoked under 28 U.S.C. Section 1254 (1).
STATUTORY PROVISIONS INVOLVED
This case concerns the provisions of the Labor Management
Relations Act, as Amended, 29 U.S.C. Sections 151, et seq. For
the Court’s convenience, the following sections are set forth in
the Appendix to this Petition:
Section 8(a) (1), 29 U.S.C. Section 158(a) (1) - App. p. A-44
Section 8(a) (2), 29 U.S.C. Section 158(a) (2) - App. p. A-44
Section 8(a) (5), 29 U.S.C. Section 158(a) (5) - App. p. A-44
Section 9(a), 29 U.S.C. Section 159(a) - App. p. A-44
STATEMENT OF THE CASE
On February 12, 1982, Sterlingwale Corp. (hereinafter “Sterl-
ingwale”), a corporation owned by the Ansin family for 30 years,
began an immediate voluntary liquidation, shutting down its
textile dyeing and finishing operation in Fal! River,
Massachusetts, and indefinitely laying off all of its production
and maintenance employees. “he closing was the result of un-
questionable dire economic circumstances, involving the loss
of millions of dollars. The Sterlingwale employees had been
represented since 1968 by United Texti'e Workers Union of
America, AFL-CIO, Local! 292 (hereinafter “Union”), under a
series of collective bargaining agreements, the last of which was
due to, and did, expire April 1, 1982. The collective bargain-
ing agreements contained standard Union security provisions
permitted by Section 8(a) (3) of the Labor Management Rela-
tions Act, as Amended (the “Act”).
During the liquidation, Sterlingwale retained 2 skeleton crew
to maintain the equipment and ship out pending orders.
However, in the summer of 1982, all business activity ceased,
an outside liquidator was brought in and an assignment for the
benefit of creditors was made, and a foreclosure was held at
public auction on the premises occupied by Sterlingwale. The
petitioner Employer acquired most of Sterlingwale’s machinery,
furniture and fixtures and part of Sterlingwale’s remainaing in-
ventory and materials, all at public auction. Sterlingwale’s real
property was acquired in late August, 1982 by Marcamy Sales
Corporation, the parent corporation of Fall River Dyeing &
Finishing Corp., which leased from its parent part of the real
property formerly occupied by Sterlingwale.
The Employer did not acquire any other assets of Sterl-
ingwale, such as its trade name, good will, or customer lists,
nor did it assume any of Sterlingwale’s liabilities. The Employer
did not obtain any personnel records or employee lists of Ster!-
ingwale’s former employees.
In September, 1982, the Employer publicly advertised for
employees in local newspapers. By September 20, 1982, it had
hired six or eight employees and commenced preliminary start-
up operations in one of three former Sterlingwale buildings. The
preliminary operations involved cleaning, relocating and repair-
ing machines for about four to six weeks, and thereafter, work-
ing on experimental production to ensure that everything was
in order.
The Employer planned to engage solely in commission work
which consists of the dyeing and finishing of fabric belonging
to others for a commission. In contrast, Sterlingwale had been
primarily a “converter” whose business consisted of approximate-
ly sixty to seventy percent processing of its own fabric and thir-
ty to forty percent commission finishing. At the time of its
demise, Sterlingwale employed in excess of 150 production and
maintenance employees who worked three shifts.
Fall River’s production plan was to commence operation with
a single shift of fifty-five to sixty employees and then to expand
fully to a two 10-hour shift operation employing 106 to 109
employees by April, 1983. Such a two-shift operation is almost
essential to the production process because the fabrics emerge
from the process wet, and the entire operation, including dry-
ing, cannot be completed in eight hours.
On October 19, 1982, the Union sent the Employer a letter,
stating that “pursuant to the agreement between Sterlingwale”
and the Union, the Union demanded recognition. The letter also
stated that on October 28, 1982, a Union representative would
call upon the Employer “for the purpose of negotiating a col-
lective bargaining agreement.” The agreement referred to
by the Union had expired by its own terms April 1, 1982, and
Sterlingwale had ceased normal production operations on
February 12, 1982:
' This was the only request or bargaining demand made by the Union up un-
til the decision of the National Labor Relations Board Administrative Law
Judge on January 27, 1984.
At the time of the Union’s request and bargaining demand,
the Employer employed 21 employees, 18 of whom were former
Sterlingwale employees.
On October 21, 1982, the Employer's counsel wrote to the
Union, advising that the Employer did “not intend to comply
with [the Union’s] request; and further . . . that there was no
legal basis for same.”
On November 1, 1982, the Union filed an unfair labor prac-
tice charge against the Employer claiming that the Employer had
violated Sections 8(a) (1) and (5) of the Act. By mid-November,
the Employer had hired employees in virtually all job classifica-
tions. They were engaged in start-up operations, cleaning and
repairing machines for the first four to six weeks, and for the
next four to five weeks, they engaged in experimental produc-
tion on old Sterlingwale inventory.
On December 21, 1982, the Regional Director of the National
Labor Relations Board, Region 1, issued a complaint charging
the Employer with violating Sections 8(a) (1) and (5) of the Act
because “on or about October 21, 1982, and at all times thereafter,
respondent did refuse and continue to refuse to meet and bargain
collectively, with the Union as the exclusive representative of all
a in the unit.” A hearing was scheduled for May 2,
The Employer answered the complaint on January 4, 1983,
in substance denying that it was a successor employer to Sterl-
ingwale, or that it had violated Sections 8(a) (1) and (5) of the Act.
In mid-January, 1983, the first shift was in full operation and
a second shift was begun, with a total complement of fifty-five
employees, approximately thirty-six of whom were former Sterl-
ingwale employees. Some eight to twelve former supervisors of
Sterlingwale were employed by the Employer as supervisors, and
Herbert Chace, the Vice President of Sterlingwale, basically in-
volved with its sales until its demise in February, 1982, was rehired
as the Employer's Vice President running the plant and labor
relations. Alfred Canuel, the Plant Manager of Sterlingwale, was
not rehired. Arthur Friedman, the President of the Employer,
takes no part in the production or labor relations aspects of the
Employer and is involved with the financial end of the business.
The Employer continued to hire and expand until it reached
the goal of a full complement of employees in mid-April, 1983,
consisting of 106 to 109 employees working two 10-hour shifts.
By March 24, 1983, former Sterlingwale employees were a minori-
ty of the employees in the production and maintenance unit. By
the time of the hearing, over one-half of the dollar volume of
the Employer's business came from the same customers with
which Sterlingwale had at some time done business.
The hearing began on April 2, 1983. In his Decision, the Ad-
ministrative Law Judge held that the Employer had violated Sec-
tions 8(a) (1) and (5) by refusing to recognize and bargain with
the Union on January 15, 1983. He held that the Employer was
a successor to Sterlingwale, and that the Union's October 19, 1982
bargaining demand was premature when rejected by the
Employer on October 21, 1982 since the Employer did not have
a representative complement of employees, but that the demand
was a continuing one, that the Employer was bound to comply
with at such time as its operations reached a “representative com-
plement, not a full complement.” He then ruled that the
Employer’s duty to bargain with the Union attached in mid-
January, 1983, and he ordered the Employer to bargain with the
Union, “apon request of the Union.”
The National Labor Relations Board by a vote of two to one
adopted the Decision in toto. The dissenting member, Hunter,
pointed out that at the time the Union made the demand on Oc-
tober 19, and the Employer refused it on October 21], the
Employer did not employ a representative complement of unit
employees, and, since the Union did not renew its bargaining
demand at a time when the Employer had reached a represen-
tative complement — mid-January, 1983, he could find no
bargaining obligation. Member Hunter, in essence, rejected the
“continuing demand” concept of the majority, under the assump-
tions of the case.
The National Labor Relations Board petitioned the Court of
Appeals, First Circuit, for enforcement under Section 10(e) of
the Act, as Amended, 29 U.S.C. 160(e), which was granted by
a divided Court with one judge dissenting. The issues involved
were of first impression in the First Circuit, and are of nation-
wide importance to both labor and management, and it is believ-
ed have not been passed upon by the Supreme Court.
REASONS FOR GRANTING THE WRIT
THE NLRB HAS IGNORED OR REFUSED TO
FOLLOW IN THIS CASE THE SUCCESSORSHIP
PRINCIPLES PREVIOUSLY ENUNCIATED BY THIS
COU &T
This case imvelves important questions involving rights of both
employees and employers in the area of successorship where there
presently exists considerable uncertainty. In large measure this
uncertainty has been caused by the NLRB which has disregard-
ed the decisions and precepts of the Supreme Court relating to
successorship and is promoting concepts that are clearly contrary
to the Labor Management Relations Act. It is respectfully urged
that the Supreme Court grant certiorari and review the cir-
cumstances of this case as well as the NLRB’s substantial and
representative complement and continuing demand concepts, so
that the Court can provide the guidance necessary to the NLRB
and resolve questions that are of great importance to large
numbers of workers and prospective employers.
(1)
The traditional test for determining successorship is whether
there is substantial continuity between the employing enterprises.
NLRB v. Burns International Security Services, Inc., 406 U.S.
272 (1972). In making this determination, it is necessary to analyze
whether there has been a change in the essential nature of the
enterprise. NLRB v. Band-Age, Inc., 534 F.2d 1 (CA 1), cert.
denied, 429 U.S. 921 (1976); NLRB v. Middleboro Fire Apparatus,
590 F.2d 4 (CA 1, 1978). This question is highly fact specific. As
this Court noted in Howard Johnson Company v. Detroit Local
Joint Executive Board Hotel and Restaurant Employees Union,
417 U.S. 249, 256 (1974), “...in light of the difficulty of the suc-
cessorship question ... emphasis on the facts of each case as it
arises is especially appropriate.”
The facts in this case are not disputed, but the NLRB has ig-
nored the standards set forth by the Court in NLRB v. Burns,
supra, and other leading cases and has arranged the facts and
weighted them in such a way as to ignore, or give little or no
weight to certain facts while at the same time stressing other facts
which are not dispositive of the issue whether there has been
substantial continuity between employing enterprises.
It is submitted that the circumstances herein clearly
demonstrate an essential change in the employing enterprise,
which precludes Fall River from being considered a successor,
and that substantial changes between Sterlingwale, the collaps-
ed employer, and Fall River’s new operation exist and have been
overlooked by the NLRB. In effect, the NLRB has not evaluated
Fall River’s new operation taking into account the totality of the
circumstances.
In light of the importance of the need to know all of the rele-
vant facts to reach a successorship determination, the Court must
examine the nature of the new and old employing enterprises
in order to interpret the principles of successorship which it has
previously enunciated, and not automatically defer to the NLRB’s
expertise in labor matters. See International Association of
Machinists and Aerospace Workers, AFL-CIO (Boeing Company)
v. NLRB, 595 F.2d 664, 673 n.41 (C.A.D.C., 1978), cert. denied,
439 U.S. 1070 (1979) where the Court stated, in successorship
cases, “deference to the Board may ordinarily be less appropriate.”
See also NLRB v. Band-Age, Inc., supra, at p. 1.
The traditional criteria considered by the Courts for the test
for determining whether there is a substantial continuity in the
employiny enterprise include:
1. Business operations;
2. Whether the same physical plant is used;
3. Whether the same or substantially the same work force is
used;
4. Whether the same jobs exist under similar working
conditions;
5. Whether the same supervisors are employed;
10
6. Whether the same machinery, equipment and methods of
production are used; and
7. Whether the same product is manufactured or the same ser-
vices offered.
See Aircraft Magnesium, a Division of Grico Corp., 265 NLRB
1344 (1982), enf. 730 F.2d 767 (CA 9, 1984)(table); Premium
Foods, Inc., 260 NLRB 708, enf. 709 F.2d 623 (CA 9, 1983);
NLRB wv. Middleboro Fire Apparatus, Inc., supra.
Prior Court cases anu applicable NLRB law have established
that not one of the foregoing traditional factors by itself is deter-
minative of the question whether there has been a substantial
continuity in the employing enterprise. ng v. pecs gh ire
ratus, Inc., ; NLRB v. Hudson River Aggregates, Inc.,
MLD 192 (1978), enf. 639 F.2d 865 (CA 2, 1981). The NLRB
must weigh the singular facts relating to the enterprise and deter-
mine if there is a continuity of employing enterprise.
It is undisputed that Fall River ceased operation and went out
of business for economic reasons. It is also undisputed that Fall
River is a separate legal entity than Sterlingwale with different
ownership, financing, etc. The NLRB does not claim, nor is there
any evidence, that Fall River’s business operation is an alter ego
of Sterlingwale, or has any ownership links to the failed company.
Significantly, Fall River acquired neither the trade name, good
will nor other assets from Sterlingwale. It oo 3 ed a of Ster!-
ingwale’s liabilities. There was no transfer of employee person-
sr between Sterlingwale and Fall River, no direct transfer
of any employees or personnel, and there was no expectation by
Sterlingwale’s employees of employment by Fall River. It is sub-
mitted that the employment of individuals who formerly work-
ed for Sterlingwale resulted from factors unique to a small town
with a shrinking industrial base. Many of the employees who had
been permanently laid off by Sterlingwale in February, 1982,
eagerly applied for positions at a new mill opening in their city.
Production and maintenance employees were all hired on the
open market from advertisements. Their employment started after
11
a minimum of seven months had passed since their termination
by Sterlingwale; in some cases, 11 months had passed since in-
definite layoff by Sterlingwale.
In the instant case, Fall River began its operation by leasing
only one of Sterlingwale’s three buildings from a company which
had purchased the real property from the defunct firm at
foreclosure sale. Although Fall River uses machinery and equip-
ment which at one time may have belonged to Sterlingwale, it
too was purchased on the open market at a foreclosure sale. Thus,
the fact that the physical plant and equipment once were a part
of Sterlingwale’s operation should be totally irrelevant to the suc-
cessorship determination. Furthermore, with regard to the issue
of workforce, a textile business, whether operating on a converter
or a commission basis, will have employees working in similar
job classifications. This is not a controlling factor considering the
nature of any textile operation. However, there remains a sub-
santial dissimilarity in working conditions and operations not fac-
tually disputed, but not referred to or commented upon by the
NLRB. This disparity in working conditions has to do with the
shifts. Rather than operating on the basis of three shifts a day,
Fall River intended to run its plant when at full complement,
with only two 10-hour shifts. The new firm also employed no
sales force.
It is submitted that the nature of Fall River's business is fun-
damentally different from that of Sterlingwale’s. While the former
operation depended largely on converting, Fall River's operation
relies solely on commission work. A commission business does
not require the capital necessary to purchase fabrics or the need
for a sales force or a retail outlet to sell them. Fall River operates
in a significantly different mode than Sterlingwale. It has a
smaller manufacturing plant, substantially less employees
(workers and supervisors), fewer work shifts and longer work-
ing hours.
Furthermore, there has been no transfer of customer lists or
customers between Sterlingwale and Fall River which might
justify the NLRB’s conclusion there was a substantial continuity
12
of business operations. It is submitted that many former Sterl-
ingwale customers who also became Fall River customers were
acquired by competing for them in the open market. Although
the NLRB considered that in dollar volume over one-half of Fall
River’s Customers had been customers of Sterlingwale, the NLRB
ignored the fact that one of the major customers is Fall River's
parent company, Marcamy Sales. If its purchases are considered,
the portion of continuing customers drops to one-third.
The NLRB, in making its analysis of the factors needed to find
successorship, has entirely neglected the differences in concept
between the two operations. The NLRB has taken too narrow
a view of the business operation as a factor in the overriding ques-
tion of whether there is substantial continuity in the employing
enterprise. See NLRB v. Alamo White Truck Services, 273 F.2d
238 (CA 5, 1959). The services offered by Sterlingwale were essen-
tially in the conversion process, although admittedly some com-
mission work was done as it became short of cash to purchase
textiles to convert for its own account. In contrast, finishing work
is the exclusive business of Fall River. Fall River’s sole intention
is to earn commissions as a finisher where Sterlingwale failed
in a business involving primarily converting. There was no basis
for the Administration Law Judge and NLRB to ignore the basic
differences in the textile industry with regard to finishing work
and make a finding based on dollar volume alone that ~...a
substantial part of Respondent’s business is linked with Sterl-
ingwale.” (App p.37)
The alleged links between the two enterprises are too tenuous
to support the NLRB’s finding of successorship. As demonstrated
above, there is a substantial difference in the scale and nature
of operations which precludes the finding of successorship in the
circumstances of this case.
(2)
While there is no single factor which will prevent a finding
of successorship, the following factors when combined have
defeated such a finding:
13
1. A long hiatus in the resumption of operations;
2. A difference of location at the resumed operation;
3. A changeover of the supervisory hierarchy;
4. The absence of a carryover of customers or markets sup-
plied; and
5. A difference in the scale of the operations and the products
produced and in the method of production, etc.
See Radiant Fashions, Inc., 202 NLRB 938 (1973); Galis Equip-
ment Co., 194 NLRB 799 (1972); Georgetown Stainless
Manufaturing Corp., 198 NLRB 234 (1972); Cagie’s Inc., 218
NLRB 603 (1975); Atlantic Technical Services Corp., 202 NLRB
169 (1973), enf. 498 F.2d 680 (C.A.D.C., 1974); Lincoln Private
Police, 189 NLRB 717 (1971); Co-op Trucking Co., 209 NLRB
829 (1974).
The NLRB has found the continuity of the employing enter-
prise destroyed where the continuity, other than that of the work
force, consisted primarily of the acquisition of a portion of the
customers of a moribund company solicited in the open market.
Co-op Trucking, supra; Lincoln Private Police, Inc., supra.
In the case at bar, we find a major changeover in the super-
visory hierarchy. The number of supervisors has been substan-
tially reduced from 18 to 12, including employment of 4 new
supervisors who had not been previously employed by Sterl-
ingwale. The former plant manager has been terminated and
not rehired by Fall River. Likewise, as noted above, there is a
substantial change in the firm’s market, suppl.. rs and customers.
The market is no longer the conversion and sale of goods owned
by the processor. The market now consists of processing the goods
of others as a commission dye house and not direct sale of its
own product line. With regard to customers, only about one-third
of Sterlingwale's customers are serviced by the Employer exclusive
of Fall River's parent corporation. Furthermore, as a result of
14
a hiatus in any production of at least 7 months, there was not
any carryover or transference of customers that might justify link-
ing the two employers.
Finally, Sterlingwale’s employees had no reasonable basis for
anticipating that their employment might resume at the same
location after their indefinite layoff began in February, 1982. The
substantial hiatus in any operations from mid-February, 1982 until
mid-September, 1982, as well as the foreclosure sale on the
physical plant and equipment, negates any reasonable expecta-
tion by former Sterlingwale employees that they would resume
their old jobs. Their union contract expired in April, 1982, and
their Union made no effort to renew it.
It is submitted that the NLRB has erred in ignoring the
significance of the lengthy hiatus on the employees’ expectation
of rehire. In Aircraft Magnesium, a Division of Grico Corpora-
tion, supra, a case involving a hiatus between the prior operator
and a new employer, the NLRB held, at p. 1346: “Further, the
significance of a hiatus to successorship status is its effect on the
employees’ expectation of rehire.” Unlike the present case, in Air-
craft Magnesium the employer desired in reality to continue in
the predecessor’s business. In that case, after a bankruptcy and
a layoff of bargaining unit employees, there was a hiatus of opera-
tions of less than one month during which Aircraft Magnesium
purchased not only all the physical assets of its predecessor, but
its books and records, including customer lists, invoices and
operating permits. There was a stipulation that a majority of the
customers and suppliers remained the same. The new company
expressed interest in rehiring all of the predecessor's employees
the day after the purchase was complete and subsequently car-
ried out that intention by hiring them.
In the instant case, such an intent is totally absent. The record
here shows no intent to hire former employees; the Employer ran
a newspaper ad in the community paper in order to begin staff-
ing the new enterprise.
15
The facts underscore that the employees who responded to
newspaper advertisements and applied for a job with Fall River
were in actuality applying for a new job, under new manage-
ment at a different mill serving different customers and a changed
market. In light of the substantial changes in the employing enter-
prise discussed above, this Court should determine that the
NLRB’s cursory review incorrectly applied the law to the facts.
It is respectfully submitted that this Court should grant certiorari
and review whether or not the successorship principles enunciated
by this Court in Burns, supra, and other cases have been follow-
ed by the NLRB, or whether they have been ignored or
misapplied.
16
THE NLRB’S SUBSTANTIAL AND REPRESEN.
TATIVE COMPLEMENT STANDARD AS APPLIED
IN THIS CASE CONTRAVENES IMPORTANT
REPRESENTATION RIGHTS GUARANTEED
EMPLOYEES UNDER THE LABOR MANAGEMENT
RELATIONS ACT, AS AMENDED
In finding Fall River to be a successor employer in this case
and thereby bound to recognize and bargain with a Union which
represented employees of a former employer, without allowing
those employees the right to express their choice of bargaining
representative, the Board and the Court of Appeals have stret-
ched the successorship concept to an unreasonable extreme. This
Court, in John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543
(1964), gave as a basis for a finding of successorship obligations
the need to grant some protection to employees from a sudden
transformation of their employer’s business, which leaves intact
significant elements of that business, but which results in the
substitutign-af a new legal entity, not bound by the collective
bargaining agreement under principles of contract law. Another
consideration frequently advanced by this Court for the applica-
tion of the successorship doctrine has been the need for continuity
in industrial labor relations and the concomitant avoidance of
industrial strife, which presumably follows from such a continuity.
Thus, the successorship doctrine presents a conflict between the
preservation of industrial peace and the right of the majority of
employees to determine their bargaining agent, which right the
Act was cesigned to preserve. In the case at bar, where the rela-
tionship between the first employer and the second employer is
as attenuated as it is here and the employees of the first employer
had no reasonable expectation to ever again become employed
by Sterlingwale, which had a bargaining relationship with the
Union at the time of their termination, the right of free choice
of bargaining representative guaranteed those employees by the
Act is undercut by the res:It reached here by the NLRB and Court
of Appeals.
In NLRB v. Burns International Security Services, Inc., supra,
the Court held that if after a change in ownership, the essential
17
nature of the entity remains unchanged, and a majority of the
new firm’s employees or management were employed by the
predecessor company, the new employer is considered the old
employer's “successor”. As such, the new employer must recognize
an incumbent union which demands recognition and dea! with
it as the bargaining representative of the employees. See also,
NLRB v. Band-Age, Inc., supra.
In a successorship situation, the bargaining obligation can nor-
mally be determined at the time of transfer of ownership or when
actual operations began. In other instances, such as this case,
where the Employer is slowly hiring its work force as produc-
tion begins, or where an employer is attempting to start a new
business operation, a delay in making the determination may be
appropriate. Thus, this Court stated in NLRB v. Burns Interna-
tional Security Services, Inc., supra, at p. 295:
“In other situations, however, it may not be clear un-
til the successor employer has hired his full comple-
ment of employees that he has a duty to bargain with
a Union, since it will not be evident until then that
the bargaining representative represents a majority of
the employees as required by Section 9(a) of the Act...”
It is respectfully submitted that this “full complement” prin-
ciple for determining the critical measuring date has been treated
as dicta by the majority of the Court of appeals (App. p. A-11),
which stated that fixing the appropriate date “involves balanc-
ing the objective of insuring maximum employee participation
in the selection of a bargaining agent against the goal of per-
mitting employees to be represented as quickly as possible” (App.
p. A-10), and then, without examining the rationality of its ap-
plication to the facts of this case, and engaging in no balancing
at all, or analysis of any attempt by the NLRB to engage in balan-
cing, simply stated that “These interests are effectively reconcil-
ed in the “substantia! and representative complement” standard
applied by the Board in this case.” (App. p. A-10).
The NLRB made no attempt to engage in any balancing of
the aforementioned objectives. The NLRB Administrative Law
18
Judge, without analysis, and relying upon the sole authority of
the NLRB’s decision in Aircraft Magnesium, a Division of Grico
Corp., supra, mechanically stated, “However, the standard to be
used indicated by the Board is representative complement, not
full complement.” (App. p. A-38).
Hence the NLRB has completely ignored any attempt to
balance the objectives of insuring maximum employee participa-
tion in the selection of a bargaining agent against the goal of
permitting employees to be represented as quickly as possible.
Apparently the NLRB has utterly disregarded this Court’s con-
cern in a successorship case, that there are situations where a duty
to bargain may not attach until a full complement has been hired,
and the bargaining agent represents a majority of the employees.
In this case, the distinction between the substantial and
representative complement date and the full complement date
is critical because the Union did not represent a majority at the
full complement date, but did represent a majority at the substan-
tial complement date. This determination must be based on a
reasoned analysis and not an arbitrary statement that the substan-
tial complement date is to be applied without any consideration
being given to applying a full complement date.
In the case at bar, the NLRB has arbitrarily fixed January 15,
1983 as the date to determine whether the Employer's work force
is composed of a majority of former Sterlingwale production and
maintenance employees. It selected the date by mechanically
following the substantial and representative complement prin-
ciple applied by the NLRB in the Aircraft Magnesium case. In
Aircraft Mangesium, supra, at p. 1345, the NLRB stated:
“It is wel] settled that the significant time frame for
determining what percentage of a purchaser's
employees were former employees of a predecessor is
when a demand for bargaining has been made and
a representative complement of an employer’s work
force is on the job.”
19
No such standard has been formulated or approved by this
Court. The last word on the critical measuring date was in the
Burns case in which the Court expressed its concern that there
are situations when the measuring time frame should be at a point
when there is a full complement of workers.
We submit that there is no justification in the case at bar to
ignore the clear concern of the Supreme Court for the represen-
tation rights of employees. The instant case is precisely one of
the situations referred to by the Court in Burns, particularly when
we consider the substantial differences between Burns and Fall
River that militate in favor of Fall River and demonstrate a good
faith doubt with regard to the Union's majority status. Those ma-
jor differences are, the lack of any expression of union preference
by the employees for many years (Fall River) versus a recent elec-
tion and certification (Burns), the nonexistence of a labor con-
tract (Fall River) in contrast to one in effect (Burns), the start
up of a new business entity after a substantial hiatus following
the liquidation of the original employer (Fall River) versus a con-
tinuity of operations (Burns).
The NLRB has not, under the circumstances of this case,
followed the policies contained in Section 9(a) of the Act, by im-
posing the Union on the employees of Fall River, a minority of
whom were represented by the Union while employed by Ster!-
ingwale as of the full complement date, by mechanically asser-
ting that the substantial and representative complement date is
effective to determine majority representation.
20
THE NLRB'S CONTINUING DEMAND DOCTRINE
AS APPLIED IN THIS CASE CONTRAVENES THE
LABOR MANAGEMENT RELATIONS ACT, AS AM-
MENDED, BY IMPROPERLY COMPELLING THE
EMPLOYER TO BARGAIN WITH A UNION WHERE
A GOOD FAITH DOUBT EXISTED AS TO THE
UNION’S MAJORITY STATUS.
There is no basis for finding that Fall River unlawfully refus-
ed to recognize the Union in violaton of the Act. This is so because
Fall River did not reject the Union’s request for recognition at
a time when the Employer would have been obliged to honor
such a request either under successorship principles or under the
Act.
The original demand for recognition on October 19, 1982 was
undisputedly premature. The Administative Law Judge in his
decision stated that the demand for bargaining by the Union
claiming to represent a majority of former ernployees must be
made when the new employer is operating at a “representative
capacity” (App. p. A-38). However, he went on to hold that if
the new employer is not at that capacity at the time of the de-
mand, the demand is of a “continuing nature”, and once the
employer reaches a representative capacity, the bargaining obliga-
tion will attach (App. p. A-38). The NLRB’S construction and
the Court of Appeals’ affirmance have retroactively transform-
ed the Employer’s good faith rejection of the Union’s demand
into proscribed conduct under Sections 8 (a)(1) and (5) of the Act.
It is not denied by the NLRB that the Union’s original demand
for recognition and bargaining, which was made on October 19,
1982, and rejected by the Employer on October 21, 1982, was
in effect an illegal demand. At that time, there was neither a
representative, nor a full complement of workers hired by Fall
River. If the Employer had acceded to the premature recogni-
tion demand, it would have been a violation of Section 8(a) (2)
of the Act since the Employer would be recognizing a non-
majority union. Hedstrom Company v. NLRB, 558 F.2d 1137 (CA
3, 1977), cert. denied, 450 U.S. 996 (1981). The same is also true
21
on November 1, when the Union filed its charge, and on
December 21, when a complaint was issued by the Regional
Director, and even on January 4, 1983, when Fall River answered
the complaint.
The Administrative Law Judge found that the duty to bargain
with the Union attached for the Employer in mid-January, 1983
at the time the plant was running one shift at full capacity. It
should be noted that no new demand was made in January, 1983
or at any time after the initial one.
It is this very same illegal demand in violation of Section
8(a)(2), that the NLRB and Court of Appeals have retroactively
condoned by using a continuing demand concept. Judge Torruella
noted the irrationality of the continuing demand concept under
the facts of this case in his dissent in the court of Appeals. He
stated:
“By what logic or reasoning can events that took place
therafter retroactively be made to transform these good
faith rejections by Fall River into illegal conduct? At
best the Board’s ambiguous criteria create an unaccep-
table uncertainty in the standard of conduct required
of successors.” (App. p. A-29).
The Administrative Law Judge and the NLRB claim that since
the original demand on October 19 was made at such time that
the new Employer was not operating at a representative capaci-
ty, the demand automatically continues. “Once the employer
reaches a representative capacity, the bargaining obligation will
attach.” (App. p. A-38). However, neither the Administrative Law
Judge in his decision, nor the NLRB majority in their decision,
cited any authority or gave any explanation or rationale for the
principle that a bargaining demand in a successorship situation
made by a union at a time when the employer is not operating
at a representative capacity is of a continuing nature and con-
tinues until such time as the new employer reaches a represen-
tative capacity, at which time a bargaining obligation will at-
tach to the new employer.
22
The uncertainty of such a rule will undoubtedly act to deter
employers from investing in the assets of defunct businesses. If
an entrepreneur seeks to start a new business using assets pur-
chased on the open market, months earlier, from the “estate” of
a failed business. he should not have to worry that at some in-
definite time in the future, he can be found to have violated the
Act, retroactively. In this respect, the NLRB’s continuing demand
concept, if applied in conjunction with the representative com-
plement standard, might deter new investments which would pro-
vide new jobs for laid off workers.
In Hedstrom v. NLRB, supra, the Court of Appeals for the
Third Circuit disagreed with the NLRB-promulgated concept
of “continuing demand”, also in an unfair labor practice con-
text, reasoning that if it were adopted, the employer might be
forced to violate Section (8)(a) (2) of the Act by recognizing a
minority union. The Court held, at p. 1148:
“We canot accept any concept of continuing demand
which requires an employer either to recognize a
minority status union, or to risk a § 8(a) (5) violation
in the event the minority union attains majority status
sometime after the demand, unless it gives renewed
notices to the employer that it has attained majority
status since the last demand. If an employer were to
recognize and bargain with a union which does not
represent a majority of the employees in the ap-
propriate unit, it commits an unfair labor practice in
violation of § 8(a) (2) which prohibits an employer
from aiding any minority union. International Ladies’
Garment Workers’ Union, AFL-CIO v. NLRB, 366 U.S.
731, 48 LRRM 2551 (1961).”
This Court is respectfully urged to correct the NLRB’s conti-
nuing demand concept which has been misapplied in the suc-
cessorship context by the NLRB and the Court of Appeals. The
Employer did not violate the bargainng obligations set forth in
the Act.
23
CONCLUSION
For the foregoing reasons, a writ of certiorari should issue to
review the judgment of the United States Court of Appeals for
the First Circuit.
Respectfully submitted,
Lear STERNKLAR & DROGIN
440 Park Avenue South
New York, New York 10016
(212) 685-8400
Attorneys for Petitioner
Fall River Dyeing & Finishing Corp.
Dated: January 15, 1986
APPENDIX
A-l
Ynited States Court of Appeals
for the
First Circuit
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
FALL RIVER DYEING « FINISHING CORP.
Respondent.
DECREE
Entered: October 18, 1985
This cause came on to be heard on application for enforce-
ment of an order of the National Labor Relations Board, and
was argued by Counsel.
Upon consideration whereof, It is now here ordered, adjudg-
ed and decreed as follows: The application for enforcement is
granted and the order of the National Labor Relations Board
is hereby affirmed and enforced.
By the Court,
Francis P. Scigliano
Clerk.
A True Copy
Attest:
Clerk
(Cert. cc: N.L.R.B. and Messrs. Bernstein and Drogin; and
ec: Mr. Fuchs, Regional Director]
United States Court of Appeals
for the
First Circuit
No. 85-1019
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
FALL RIVER DYEING « FINISHING CORP.,
Respondent.
ON APPLICATION FOR ENFORCEMENT OF AN ORDER
OF THE NATIONAL LABOR RELATIONS BOARD
Before
Bownes, Rubin* and Torruella,
Circuit Judges.
Ira Drogin with whom Leaf, Sternklar 4 Drogin was on brief
for respondent.
William M. Bernstein with whom Elinor Hadley Stillman,
Rosemary M. Collyer, General Counsei, John E. Higgins, Jr. ,
Deputy General Counsel, Robert E. Allen, Associate General
Counsel, and Elliott Moore, Deputy Associate General Counsel.
were on brief for petitioner.
October 18, 1985
*Of the Fifth Circuit, sitting by designation.
A-3
RUBIN, Circuit Judge. The National Labor Relations Board
found that Fall River Dyeing & Finishing Corporation (the
Company) was the successor to Sterlingwale Corporation, most
of whose assets the Company acquired when Sterlingware
became insolvent and was liquidated. The Board also found that
a premature demand for collective bargaining made by the
Union that had represented Sterlingwale’s employees continued
in force and became effective against Fall River upon its employ-
ment of a representative complement of Sterlingwale employees.
Because Fall River, upon reaching its representative comple-
ment of employees, did not recognize and bargain with the
Union, the Board found that it had violated Section 8(b) (5)
and (1) of the National Labor Relations Act. We enforce the
Board’s order, finding that substantial evidence on the record
as a whole supports the Board’s conclusions and the legal prin-
ciples it applied do not violate the Act.
I.
For more than thirty years before 1982, Sterlingwale, which
was owned by the Ansin family, operated a plant at Fall River.
Massachusetts, in which it engaged primarily in dyeing and
finishing textiles. Sterlingwale bought unfinished fabrics for its
own account, dyed and finished them, then offered the fabrics
for sale to apparel manufacturers. This business is known in
the trade as “converting.” Sterlingwale also dyed and finished
fabrics owned by other customers to the customers’ specifica-
tions, a business known as “commission finishing.” In 1981, sixty
to seventy percent of Sterlingwale’s volume was converting and
the rest commission finishing.
The process for dyeing and finishing fabrics is the same
whether the work is done for resale or on commission. However,
the financing and customer relations aspects of the two types
of businesses are different. Converting requires capital to buy
merchandise and a sales force. Several major national firms are
engaged in this business, and it is intensely competitive. Com-
mission finishing serves a different market and involves supply-
ing only the services designated by the customer.
A-4
Adverse economic conditions and foreign competition afflicted
the textile industry in the 1970’s. Sterlingwale’s business became
unprofitable but Ansin, its president and principal stockholder,
tried to stay in business because he thought that he “owed that
to the community” and to the company’s employees, many of
whom had been employed by it for over twenty-five years. Early
in 1982, after years of losses amounting to millions of dollars,
Sterlingwale ran out of cash and could no longer buy fabric for
its converting business. Consequently, Ansin ceased normal! pro-
duction operations and began to liquidate the company, lay-
ing off employees and selling its inventory. In July 1982, Ster]-
ingware employed a professional liquidator to sell the firm’s re-
maining assets. Sterlingwale then executed an assignment of its
assets for the benefit of its creditors.
Through another company, Arthur Friedman, who is now
the President of Fall River, acquired Sterlingwale’s equipment
and the real property formerly used by it at a mortgage
foreclosure sale. Friedman’s company conveyed the equipment
and leased part of the original Sterlingwale plant to Fall River
Dyeing & Finishing.
Fall River, operating out of one of the three former Sterl-
ingwale buildings, began hiring employees on September 20,
1982. The employees then spent approximately four to six weeks
on start-up operations, cleaning, relocating and repairing
machines. They spent the next four to five weeks on experimen-
tal production to ensure that everything was in working order.
Following the start-up stage, employees did much the same work
they had done for Sterlingwale. The Company conducted all
of its operations in what had been Sterlingwale’s production
building, using the same machinery and the same basic pro-
cess. It did commission work, as Sterlingwale had done, but
did no converter work.
By a letter dated October 19, the union demanded that Fall
River recognize it as its employees’ collective bargaining agent.
The Company replied that it did not intend to comply with the
A-5
request. At that time, the Company was still engaged in start-
up operations, and, as the Board found, did not have a represen-
tative complement of employees.
The Company’s initial production goal was to have one full
shift operation employing fifty-five to sixty employees. Upon
reaching that goal, the Company intended to “see how business
would be,” and planned to expand to a two-shift operation by
April 1983. Such a sixteen-hour operation is desirable, indeed
almost essential to the production process because the fabrics
emerge from the process wet and the entire operation, including
drying, cannot be completed in eight hours.
By November 1982, employees had been hired in virtually
all job classifications. In mid-January 1983, the first shift was
in full operation and the Company had begun a second shift.
At that time, the Company had hired at least fifty percent of
those it would ultimately employ in the majority of existing job
classifications and 55 of the 106-109 employees it was to employ
in April, the month in which the Company reached its an-
ticipated employee complement. Of the fifty-five employees
hired by mid-January, approximately thirty-six were former
Sterlingwale employees. Eight of the Company’s twelve super-
visors were former Sterlingwale supervisors and three of the
other four were former Sterlingwale employees. Over half of
the dollar volume of the Company’s business came from former
customers of Sterlingwale.
The Board found that, as of January 15, 1983, the Company
had employed a representative complement of employees in an
appropriate unit and that at that time the Company was a suc-
cessor employer to Sterlingwale. The Board further found that
the Union's bargaining request constituted a continuing demand
for recognition and bargaining and that the Company violated
Section 8(a) (5) and (1) of the National Labor Relations Act'
' 29 U.S.C. § 158(a) (5) & (1).
A-6
by refusing to recognize and bargain with the Union once its suc-
cessor bargaining obligation arose.
Member Hunter dissented on the ground that the Company
did not have a representative complement of unit employees at
the time of the Union's October 19 recognition demand and the
Company’s October 22 refusal. Absent a renewed Union bargain-
ing demand at a time when the Company had reached a represen-
tative complement, Member Hunter would find no bargaining
obligation.
Il.
“[A] mere change of employers or of ownership in the employ-
ing industry,” the Supreme Court held in NLRB v. Burns Inter-
national Security Services, Inc.,? does not affect the Board’s cer-
tification of a bargaining unit. The successor employer's obliga-
tion to bargain is founded on the mandate of Sections 8(a)(5)
and 9(a) of the Act? — an employer must bargain with “[rJepresen-
tatives designated or selected for the purposes of collective
bargaining by the majority of the employees in a unit appropriate
for such purposes.”* The successor employer's obligation also arises
from ‘he rule that a mere change in ownership does not destroy
the presumption of continuing employee support for a certified
union.‘ “The basic rationale is that a mere change in ownership,
without an essential change in working conditions, would not
be likely to change employee attitudes toward representation.”*
? 406 U.S. 272, 279, 92 S.Ct. 1571, 1577, 32 L.Ed.2d 61, —— £%
> 29 U.S.C. §§ 158(a)(5) & 159(a).
* Id. § 159(a).
* See NLRB v. Burns Int’! Sec. Servs., 406 U.S. at 277-279, 92 S.Ct. at 1577,
32 L.Ed.2d at ____; see also Aircraft Magnesium, 265 N.L.R.B. 1344, 1345
(1982), enforced, 730 F.2d 767 (9th Cir. 1984) (table).
* Premium Foods, Inc. v. NLRB, 709 F.2d 623, 627 (9th Cir. 1983) (emphasis
in original); see NLRB v. Band-Age, Inc., 534 F.2d 1, 6 (Ist Cir. 1976), cert.
denied, 429 U.S. 921, 97 S.Ct. 318, 50 L.Ed.2d 288 (1976).
A-7
If, after a change in ownership, the essential nature of the enter-
prise remains unchanged, and a majority of the “new” firm’s
employees or management were employed by the predecessor
company, the new employer is considered the old employer's “suc-
cessor.” As such, the new employer must recognize the incum-
bent union and deal with it as the bargaining representative of
the employees.’
In determining whether an employer must recognize and
bargain with a union that has represented the empluyees of the
former employer, “the Board looks to the totality of the cir-
cumstances to determine whether there has been a substantial
and material alteration in the employing enterprise.” In mak-
ing this determination, the Board considers various factors, among
them the percentage of employees who were employed by the
previous employer, the extent to which their former supervisors
have been retained, the indentity of skills used and functions per-
formed by the employees, the continuation of the business in the
same physical facility with the same or similar equipment, the
continuity of products sold or services rendered, and the identi-
ty of the customers.’ Significant changes in the scope of the new
employer's business are to be considered, but alone they do not
negate the possible successorship status of the new business.” The
critical inquiry is whether any changes in operation have
significantly altered the employees’ working conditions, the
” NLRB v. Burns Int'l Sec. Servs., 406 U.S. at 279-81, 92 S.Ct. at 1577-79, 32
L.Ed.2d at ___; NLRB v. Band-Age, Inc., 534 F.2d at 3.
* NLRB v. Boston Needham Indus. Cleaning Co., Inc., 526 F.2d 74, 77 (Ist Cir.
1975).
* See NLRB v. Burns Sec. Servs., Inc., 406 U.S. at 279-80 n.4; 92 S.Ct. at 1578
n.4; 32 L.Ed.2d at ____ n.4; NLRB v. Middleboro Fire Apparatus, Inc., 590
F.2d 4, 7-8 (Ist Civ. 1978); NLRB v. Band-Age, Inc., 534 F.2d at 3-4, 6 (Ist Cir.
1976).
NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 463, 465-66 (9th Cir. 1985);
NLRB v. Hudson River Aggregates, Inc. 639 F.2d 865, 869 (2d Cir. 198).
A-8
employment relationship, and correspondingly, the employees’
expectations and needs with regard to representation."
The seven-month hiatus between the cessation of production
at Sterlingwale and the commencement of the Company's opera-
tions is to be considered, but it is similarly not dispositive” A
hiatus does not of itself preclude a successorship finding because
the inquiry focuses on employee expectations of rehire in the light
of indications during this interim of plans to resume plant opera-
tions under new management. The interim period may be viewed
as part of “the normal concomitants of a new management and
a new approach to a failing business, not a break in the con-
tinuity of the employing industry.”
Because the enterprise-continuity determination is based on
the totality of circumstances, decisions turn “to a great extent
on the precise facts involved.”"* A reviewing court's inquiry is
limited to whether the Board’s findings are supported by substan-
tial evidence, viewing the record as a whole.
The Board’s finding in this case that the Company was substan-
tially continuous to Sterlingwale is supported by substantial
evidence in the record, considered as a whole, as the evidence
" See NLRB v. Band-Age, Inc., 534 F.2d at 6; NLRB v. Boston Needham Indus.
Cleaning Co., Inc., 526 F.2d at 77; NLRB v. Jeffries Lithograph Co., 752 F.2d
at 464.
* NLRB v. Band-Age, Inc., 534 F.2d at 5.
*° NLRB v. Middleboro Fire Apparatus, 590 F.2d at 8.
“ Howard Johnson Co. v. Detroit Local Joint Executive Bd., 417 U.S. 249, 256,
94 S.Ct. 2236, 2240, 41 L.Ed.2d 46, ____ (1974) (quoting NLRB v. Burns Int'l
Sec. Servs., 406 U.S. 272, 274, 92 S.Ct. 1571, 1575, 32 L.Ed.2d 61, (1972)).
See also International Union of Elec., Radio & Mach. Workers v. NLRB, 604
F.2d 689, 694 (D.C. Cir. 1979).
* Universal Camera Corp. v. NLRB, 340 U.S. 474, 490, 71 S.Ct. 456, 466, 95
L.Ed. 456, (1951); NLRB v. Middleboro Fire Apparatus, Inc., 590 F.2d
at 6; NLRB v. Boston Needham Indus. Cleaning Co., Inc., 526 F.2d at 76.
A-9
summarized above demonstrates. The Company did not assume
Sterlingwale's liabilities or acquire its trade name but these facts
do not preclude a finding of successorship.* Although the Com-
pany operated exclusively as a commission dyer and finisher and
did not continue the converter work performed by Sterlingwale,
this change did not alter the essential nature of the employees’
responsibilities because both types of work involve essentially the
same production process. The differences between the Company's
business and Sterlingwale’s are not sufficiently significant to re-
quire a finding that the continuity of the enterprise, viewed from
the employees’ standpoint, was broken. The changes in purchas-
ing, sales, marketing, and financial operations brought about by
the switch to a straight commission operation are only indirect-
ly related to the interests of the unit production and maintenance
employees.” The change from three shifts to two and the reduc-
tion in the number of supervisors might rationally be found to
represent only a reduction in the size and scope of the opera-
tion, not an essential change in the employing enterprise.
Ill.
In a successorship situation, the bargaining obligation can nor-
mally be determined at the time of transfer or when operations
begin." In other instances, however, such as when an employer
is rebuilding a collapsed business or is operating at a substan-
tially reduced capacity, a delay in making the determination may
be appropriate. As the Supreme Court has noted, a determina-
tion regarding the successor’s obligation to bargain may have to
wait “until the successor employer has hired his full complement
of employees ..., since it will not be evident until then that the
* Cf. NLRB v. Band-Age Inc., 534 F.2d at 5; Tom-a-hawk Transit, Inc. v. NLRB,
419 F.2d 1025, 1026-1027 (7th Cir. 1969).
" See NLRB v. Interstate 65 Corp., 453 F.2d 269, 273 (6th Cir. 1971).
* NLRB v. Hudson River Aggregates, Inc. 639 F.2d 865, 870 (2d Cir. 1981);
see also NLRB v. Ideal Laundry Corp., 422 F.2d 801, 804 (10th Cir. 1970).
A-10
bargaining representative represents a majority of employees in
the unit as required by § 9(a) of the Act.”
This “full complement” principle, however, has not been in-
terpreted to require that the examination of the workforce com-
position be postponed until the business is operating at its max-
imum capacity or until the employer has completed hiring all
of its bargaining unit employees. Courts have agreed that, in cases
in which the successorship obligation cannot be determined at
the very outset of the transition, fixing the appropriate date at
which the bargaining obligation arises “involves balancing the
objective of insuring maximum employee participation in the
selection of a bargaining agent against the goal of permitting
employees to be represented as quickly as possible.”
These interests are effectively reconciled in the “substantial and
representative complement” standard applied by the Board in
this case.” This “standard embodies the balance between early
representation and maximum participation that lies at the heart
of the ‘full complement’ concept,” and it has met with general
acceptance in courts that have considered this type of successor-
ship problem.”
* NLRB v. Burns Sec. Servs., Inc., 406 US. at 295, 92 S.Ct. at 1586, 32 L.Ed.2d
at
” NLRB v. Pre-Engineered Bldg. Prods., Inc., 603 F.2d 134, 136 (10th Cir. 1979):
accord Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628.(9th Cir. 1983); NLRB
v. Hudson River Aggregates, Inc., 639 F.2d at 870-71.
* See, e.g., Indianapolis Mack Sales and Serv., Inc., 272 N.L.R.B. No. 108, 117
L.R.R.M. 1335 (1984); enforcement appeal filed, No. 84-3061 (7th Cir. Dec.
7, 1984); Aircraft Magnesium, 265 N.L.R.B. 1344, 1345 (1982), enforced, 730
F.2d 767 (9th Cir. 1984) (table).
# Premium Foods, Inc. v. NLRB. 709 F.2d at 628.
a v. Jeffries Lithograph Co., 752 F.2d at 467; NLRB v. Hudson River
ggregates, Inc., 639 F.2d at 870; see also NLRB v. Pre-Engineered Bldg. Prod.,
Inc., 603 F.2d at 136 & n.1 (10th Cir. 1979).
A-11
The Company's contention that the Board’s representative com-
plement standard is “at variance with the Ninth and Tenth Cir-
cuits” is not supported by the cases cited. In Pacific Hide & Fur
Depot, Inc. v. NLRB,” the Ninth Circuit declined to enforce the
Board’s order to bargain in part because it read the Board’s deci-
sion in that case as rejecting altogether the proposition that the
Burns “full complement” dictum was relevant to the question
whether a successorship obligation exists. While the court im-
plied in dicta that strict adherence to the “full complement” stan-
dard was proper, it also recognized that a “full complement” could
be defined “only by considering the facts of each case” in the light
of the general goals to be attained.* The Ninth Circuit has since
made clear its acceptance of the “substantial and representative
complement” standard as an appropriate means of satisfying the
interests recognized in Burns.” Similarly, in NLRB v. Pre-
Engineered Building Products,” the Tenth Circuit, while it declin-
ed to enforce the Board’s order on the basis of the record evidence,
rejected a rigid interpretation of the “full complement” standard
that would postpone the obligation to bargain until the employer
achieved its ultimate objectives and acknowledged the necessity
of balancing the objecives of early representation and maximum
employee participation.”
In determining whether a representative complement existed
at a given date, the Board first looks to see whether the job
classifications for the operation were “filled or substantially fill-
ed” and whether the operation was in “normal or substantially
* 553 F.2d 609 (9th Cir. 1977).
* Id. at 613.
* See NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 467 (9th Cir. 1985) (citing
Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628-29 (9th Cir. 1985)).
7 603 F.2d 134 (10th Cir. 1979).
* Id. at 136.
A-12
normal production.”” The Board also considers the size of the
complement on that date, the time expected to elapse before a
substantially larger complement would be hired, and the relative
certainty of the expected expansion.”
Considering these guides, the Board reasonably found that the
Company employed a substantial and representative complement
of its workforce in mid-January. By then the Company had hired
employees in virtually all job classifications, had hired at least
fifty percent of those it would ultimately employ in the majori-
ty of those classifications, and it employed a majority of the
employees it would eventually employ when it reached full com-
plement. No workers having new skills were later employed. The
Company had also reached substantially normal production in
mid-January, at which time the first shaft was in full operation
and a second had begun.
IV.
In successorship situations, when a union’s clear request for
bargaining in an appropriate unit has been rejected outright and
unconditionally by the employer, the Board has treated the de-
mand as continuing and has not required the union to renew
the demand later, even if the employer’s bargaining obligation
was not mature at the time of the original request." The Board
has applied this doctrine in cases in which a union, lacking a
majority at the time of its original demand, did not renew the
* Premium Foods, Inc. v. NLRB, 709 F.2d at 628; acowrd NLRB v. Jeffries
Lithograph Co., 752 F.2d at 467 (9th Cir. 1985); Indianapolis Mack Sales and
Serv., Inc., 272 N.L.R.B. No. 108, 17 LRRM 1335 (1984), enforcement appeal
filed, No. 84-3061 (7th Cir. Dec. 7, 1984); see also Hayes Coal Co., Inc., 197
N.L.R.B. 1162, 1163 (1972).
* NLRB v. Jeffries Lithograph Co., 752 F.2d at 467-68; Premium Foods, Inc.
v. NLRB, 709 F.2d at 628.
* Aircraft Magnesium, 265 N.L.R.B. 1344, 1345 n.9 (1982), enforced, 730 F.2d
767 (9th Cir. 1984) (table).
A-13
demand upon gaining a majority” and in cases in which an
employer, seeking to defend against an unfair labor practice
charge, asserts the charge is barred by the Act’s statute of limita-
tions® because of the union’s failure to renew its demand within
six months of the charge’s filing.” —
The Company argues, however, that the Third Circuit’s re-
jection of the continuing demand cuncept in Hedstrom Co. v.
NLRB*® controls the present case. In Hedstrom, a case not in-
volving a successor enterprise, the initial demand was made by
a union lacking majority support. The court reasoned that to
recognize as continuing a demand made when the union lacked
majority designation would force employers “to tread the fine
line between” violating Section 8(a)(2) of the Act,” which pro-
hibits recognizing a minority union, and violating Section 8(a) (5)
of the Act,** which requests employers to bargain with the ma-
jority union. Under the circumstances present in Hedstrom, if
the initial immature demand were to be deemed continuing, the
employer's obligation to bargain would arise simply upon the
union’s reaching majority status. Such a rule would require an
employer to monitor the union’s status in order to avoid violating
Section 8(a)(5) of the Act.
The rationale of Hedstrom is nullified in successorship cases.
When a continuity in the enterprise has been found, as is the
* Schwab Foods, Inc., 223 NLRB 394, 413 (1976), enforced 549 F.2d 805 (7th
Cir. 1977) (table); Local No. 152 v. NLRB, 343 F.2d 307, 310 (D.C. Cir. 1965).
*% National Labor Relations Act § 10(b); 29 U.S.C. § 160(b).
* Enterprise Prods. Co., 265 NLRB 544, 563 (1982).
* 558 F.2d 1137, 1146-48 (1977), cert. denied, 450 U.S. 996, 101 S.Ct. 1699, 68
L.Ed.2d 196 (1981).
* Id. at 1148.
7 29 U.S.C. § 158(a)(2).
* Id. § 158(a)(5).
A-14
case here, “the presumption of majority status by the union under
the predecessor . . . is not affected by a change in ownership.”
“A union is not required to substantiate anew its majority status
when a successor assumes an employer's business.”* The rationale
behind this presumption of majority status derives from the fact
that a successor’s obligation to bargain with the union arises when
the employer reaches a “substantial and representative comple-
ment” of its work force.* The employer, unlike the union, can
readily reach this determination on its own by examining whether
the job classifications for the operation have been “filled or
substantially filled” and whether the operation is in “normal or
substantially normal production.”* Thus, in the successorship con-
text, the continuing demand concept does not present the risks
the Hedstrom court found unfair.
In the successorship context, moreover, the Board’s continu-
ing demand rule is practical. Unions often lack precise informa-
tion about when a change in ownership of a firm is to take place,
how it is to take place, and what plans, if any, the new owners
have for expansion or modification of the enterprise; it is thus
not uncommon for bargaining demands to be made before the
bargaining obligation actually arises.“ In none of the successor-
ship cases was it even claimed that the Board could not properly
find a Section 8(a) (5) violation because the initial bargaining
* Aircraft Magnesium, 265 N.L.R.B. 1344, 1345 (1982), enforced, 730 F.2d
767 (9th Cir. 1984) (table).
“ Id. at 1346.
4
See supra text accompany notes 19-30.
“ Premium Foods, Inc. v. NLRB, 709 F.2d at 628; see also Hayes Coal Co.,
Inc., 197 N.L.R.B. 1162, 1163 (1972).
“ See, e.g., NLRB v. Hudson River Aggregates, 639 F.2d at 867-68, 870 (2d
Cir. 1981); Aircraft Magnesium, 265 N.L.R.B. 1344, 1344-45, 1346 (1982), en-
forced, 730 F.2d 767 (9th Cir. 1984); Cf. Premium Foods, Inc. v. NLRB, 709
F.2d at 625-26, 629 (though union demand timely, sent to wrong company also
involved in the transfer).
A-15
demand was not renewed, and the Company has cited no suc-
cessorship case that supports that proposition.
The doctrine applied by the Board may not be one that we
would ourselves devise. Given the discretion imparted to it to in-
terpret and enforce the Act, we do not find the Board’s ruling
“arbitrary or contrary to law.”
V
At the unfair labor practice hearing, the Company sought to
introduce two petitions disclaiming employee support for the
Union. The petitions had been signed by the employees on April
29, 1983, three days before the unfair labor practice hearing com-
menced. The administrative law judge rejected these exhibits
because, given their timing, they could not justify the Company s
refusal to bargain on January 15. The administrative law judge
properly declined to consider the petitions on the ground that
they were made after the time when the Company became
obligated to bargain with the Union and failed to do so. As in
the analogous situation of an employer withdrawing recognition
from a union because it is in good faith doubts the union’s ma-
jority status, no useful purpose is served by permitting the
employer to defend the propriety of an earlier refusal to bargain
by relying on subsequent events that had nothing to do with the
refusal.“ Furthermore, once it has been determined that an
employer has unlawfully withheld recognition of an employees’
bargaining representative, the employer cannot defend against
a remedial bargaining by pointing to an intervening loss of
“ Charles D. Bonanno Linen Serv., Inc. v. NLRB, 454 U.S. 404, 413, 102 S.Ct.
720, 725, 70 L.Ed.2d 656, ____ (1982); see also Beth Israel Hosp. v. NLRB 437
USS. 483, 501, 98 S.Ct. 2463, 2473-74, 57 L.Ed.2d 370, ____ (1978) (The judicial
role is narrow: The rule which the Board adopts is judicially reviewable for
consistency with the Act, and for rationality, but if satisfies those criteria, the
Board’s application of the rule, if supported by substantial evidence on the record
as a whole, must be enforced.”).
“ See Terrell Machine Co. v. NLRB, 427 F.2d 1088, 1090 (4th Cir.), cert. denied,
398 U.S. 929, 90 S.Ct. 1821, L.Ed.2d _____ (1970); NLRB v. Gulfmont Hote!
Co., 362 F.2d 588, 589 (5th Cir. 1966).
A-16
employee support for the union when such loss of support is a
foreseeable consequence of the employer's unfair labor practice.“
Had the Company voluntarily bargained with the Union in
January, the employees’ wage concerns might have been addressed
and the employees might not have signed these petitions. If the
employees had nonetheless signed petitions disclaiming support
for the Union after such bargaining, the Company might have
had a basis for withdrawing recognition; having behaved lawfully,
it would be free to withdraw recognition on the basis of any
evidence that established actual loss of majority or supported good
faith doubt.” However, the Board found the Company did not
bargain when it should have; hence, these petitions cannot pro-
perly serve either to justify the earlier refusal to bargain or to
affect the order remedying that refusal.*
For these reasons, the Board’s Order is ENFORCED.
“ Franks Bros. Co. v. NLRB, 321 U.S. 702, 702-04, 64 S.Ct. 817, 818, 88 L.Ed.
1020, _____ (1944).
* Landmark Int'l Trucks, Inc. v. NLRB, 699 F.2d 815, 819 (6th Cir. 1983):
Harley-Davidson Transp. Co., 273 N.L.R.B. No. 192, 118 L.R.R.M. 1204 (Jan.
22, 1985).
“ Aircraft Magnesium, 265 N.L.R.B. 1344, 1346 (1982), enforced, 730 F.2d
767 (9th Cir. 1984).
A-17
TORRUELLA, Circuit Judge (Dissenting). The central issue
presented by this appeal is whether the National Labor Rela-
tions Board (Board) has contravened N.L.R.B. v. Burns Inter-
national Detective Agency, 406 U.S. 272 (1972) in ruling that Fall
River is a “successor employer” to Sterlingwale and was thus
bound to recognize and negotiate with the labor organization
that represented Sterlingwale’s employees. Underlying the resolu-
tion of this question are two Board-promulgated theories: (1) the
“continuing demand” concept, whereby a union’s demand for
recognition, once made and rejected by an employer, is considered
to be continuing in nature, see Aircraft Magnesium, 265 N.L.R.B.
1344, 1345 n.9 (1982), enforced, 730 F.2d 767 (9th Cir. 1984),
and (2) the “substantial and representative complement” stan-
dard, under which the determination of whether a new employer
is a successor is postponed until his workforce reaches a substan-
tial complement, representative of the number and type of
employees that will ultimately constitute the appropriate bargain-
ing unit. Aircraft Magnesium, 265 N.L.R.B. at 1345; Premium
Foods, Inc. v. N.L.R.B., 709 F.2d 623, 628 (9th Cir. 1983). These
issues are unavoidably intertwined and are of first impression in
this circuit.
At the outset, it must be recognized that “[t]he judicial role
is narrow: The rule{s] which the Board adopts [are] judicially
reviewable for consistency with the Act, and for rationality, but
if [they] satisfy[y] those criteria, the Board’s application of the
rule[s], if supported by substantial evidence on the record as a
whole, must be enforced.” Beth Israel Hospital v. N.L.R.B., 437
U.S. 483, 501 (1977). See also § 10(e), N.L.R.A., 29 U.S.C. § 160(e);
Administrative Procedure Act, 5 U.S.C. § 706(2)(E); Universal
Camera Corp. v. N.L.R.B., 340 U.S. 474 (1951). In my opinion
the Board has failed to meet all of these tests and is promoting
concepts that are clearly contrary to the Labor Management Rela-
tions Act (Act) and to Supreme Court precedent.
In the area of successorship there are few broad governing prin-
ciples and thus, there exists considerable uncertainty. N.L.R.B.
v. Band-Age, Inc., 534 F.2d 1, 2 (Ist Cir. 1976). See also Note,
The Bargaining Obligations of Successor Employers, 88 Harv.
L. Rev. 759, 760 (1975) (hereinafter cited as Bargaining Obliga-
tions); Comments, Criteria For Determining Employer
A-18
Successorship-Factor Analysis, Burns and the Need For a New
Standard, 11 Wake Forest L. Rev. 437, 446, 457 (1975) (hereinafter
cited as Criteria). In light of the difficulty of the successorship
question, it is especially appropriate to focus on the particular
facts of each case. Howard Johnson Co. v. Detroit Local Joint
Executive Board, Hotel and Restaurant Employees Union, 417
U.S. 249, 256 (1974); Band-Age, Inc., supra.
In the present case, the facts upon which the Board’s action
is predicated are essentially undisputed. I will restate them,
however, in the context of various items apparently glossed over
by the Board in reaching its successorship conclusion.
On February 12, 1982, Sterlingwale shut down its textile dye-
ing and finishing operation and indefinitely laid off all of its pro-
duction and maintenance employees. These employees were
represented since 1968 by the United Textile Workers of America,
AFL-CIO, Local 292 (Union). A series of collective bargaining
agreements had been negotiated, the last of which was due to
expire on April 1, 1982, and eventually did so expire without fur-
ther extension by the parties. Notwithstanding the existence of
a grievance and arbitration procedure, the Union did not
challenge Sterlingwale’s actions, as it was patently clear that the
terminations were not motivated by anything except Sterlingwale’s
dire economic circumstances involving the loss of millions of
dollars.
After February 12th, Sterlingwale entered a period of liquida-
tion during which it retained a skeleton crew until the Summer
of 1982, when the business ceased activities altogether. An assign-
ment was -. ade for the benefit of creditors and a foreclosure was
made on 1 premises occupied by Sterlingwale. Thereafter, Sterl-
ingwale’s ~operty was sold at auction. The real property was
acquired in late August 1982 by Macramy Sales Corp. (Macramy),
who then leased part of these premises to Fall River. Fall River
moved into this locale in September 1982. Fall River also acquired
at auction most of Sterlingwale’s machinery, furniture, and fix-
tures, and part of Sterlingwale’s remaining materials and inven-
tory. It is significant to note that these purchases were made at
public auction, not through direct private sales.
A-19
Fall River acquired no other former Sterlingwale assets such
as its trade name, good will, or customer lists, nor did Fall River
assume any of Sterlingwale’s liabilities. Additionally, there is no
evidence that Fall River obtained any of Sterlingwale’s employee
lists or personnel records.
Thereafter, Fall River publicly advertised employment oppor-
tunities in the local newspapers. On September 20, 1982, after
hiring its first new employees, it commenced preliminary start-
up operations in one of three former Sterlingwale buildings. Fall
River proposed to engage solely in commission work, which con-
sists of the dyeing and finishing of fabric belonging to others for
a commission, in contrast with Sterlingwale, whose business had
been approximately 60-70% processing its own fabric and only
30-40 % commission finishing.
On October 19, 1982, the Union sent Fall River a letter stating
that, “pursuant to the Agreement between Sterlingwale” and the
Union, the Union demanded recognition. It then indicated that
on October 28th at 1:00 PM a Union representative would call
upon Fall River “for the purpose of negotiating a collective
bargaining agieement.” At the time of this demand Fall River
had 21 employees on the payroll, 18 of whom were former Ster]-
ingwale employees. Fall River's initial production goal was to have
a one-shift operation of 55 to 60 employees, and then to expand
fully to a two-shift operation totaling 106-109 employees by April
1983.
On October 21, 1982, in a letter written by its counsel, Fall
River indicated that it did “not intend to comply with [the
Union's] request; and further . . . that there was no legal basis
for same.”
On November 1, 1982, the Union fiied an unfair labor prac-
tice charge with the Board, claiming that Fall River had violated
Sections 8(a) (1) and (5) of the Act. By mid-November, Fall River
had hired employees in virtually all job classifications. They were
engaged in start-up operations, cleaning and repairing machines
for the first 4-6 weeks, and carrying out experimental produc-
tion on old Sterlingwale inventory during the next 4-5 weeks.
A-20
After investigation, the Regional Director of the Board on
December 21, 1982 issued a complaint charging Fall River with
violation of Sections 8(a) (1) and (5) of the Act because “[o]n or
about October 21, 1982, and at all times thereafter, Respondent
did refuse and continues to refuse to meet and bargain collec-
tively, with the Union as the exclusive representative of all the
employees in the unit.” A hearing was set for May 2, 1983.
On January 4, 1983, Fall River answered the complaint, the
substance of which was a denial that it was a successor employer
to Sterlingwale or that it had violated Sections 8(a) (1) and (5)
of the Act.
In mid-January, 1983, the first shift was in full operation and
a second shift was begun, with a total complement of 55
employees, approximately 36 of whom were former Sterlingwale
employees. Furthermore, Fall River's Vice-President and
Secretary, Herbert Chance, had formerly served as Vice-President
of Sterlingwale until February, 1982. Over half of the dollar
volume of Fall River’s commission dyeing and finishing work came
from customers who had also done business with Sterlingwale.
Fall River continued to expand until it reached its goal of a
full complemes' |° employees in mid-April 1983, with two
10-hour shift: en g approximately 106 to 109 persons. By
March 24, lf «© © Sterlingwale employees were a minori-
ty of the emp» © © the production and maintenance unit.
The hearing before the administrative law judge began on May
2nd. The judge held in substance that the Union’s October 19th
demand was a continuing one that Fall River was bound to com-
ply with at such time as its operations reached a “representative
complement, not full complement.” He then ruled “that the du-
ty to bargain with the Union attached for [Fall River] in mid-
January 1983,” and ordered Fall River, upon request of the Union,
to bargain.
A majority of the Board, with one dissenting vote, adopted
the decision in toto, enforcement of which is now before us.
A-21
There are three distinct but related reasons why enforcement
should be denied.
I
The Board’s “representative complement” rule contravenes the
“full complement” rule enunciated by the Supreme Court in
N.L.R.B. v. Burns International Detective Agency, supra. See
Criteria, 11 Wake Forest L. Rev. at 449, 457. In Burns the Court
was faced with a changeover of employers in an ongoing opera-
tion. Wackenhut Corporation, the initial employer, had a con-
tract to provide security services to the Lockheed Aircraft Com-
pany. A majority of Wackenhut’s employees voted in a Board-
supervised election to be represented by a union and, thereafter,
Wackenhut and the union negotiated a collective bargaining
agreement. Approximately four months later Wackenhut’s con-
tract with Lockheed expired without renovation. Instead,
Lockheed contracted with the Burns Detective Agency for these
services. At the time of Burns’ takeover, Burns employed 27 of
Wackenhut’s guards directly from the certified unit, in addition
to which it completed the unit by bringing in 15 of its own guards
from other Burns’ locations. No hiatus occurred in the provision
of services to Lockheed between the Wackenhut and Burns’ opera-
tions. After the takeover Burns refused the union’s request for
recognition and compliance with the labor contract and the Board
thereafter found Burns in violation of Sections 8(a) (1) and (5)
of the Act as a successor of Wackenhut.
In sustaining the Board’s findings regarding successorship, the
Court stated:
In an election held but a few months before, the union
had been designated bargaining agent for the
employees in the unit and a majority of these employees
had been hired by Burns for work in the identical unit.
It is undisputed that Burns knew all the relevant facts
in this regard and was aware of the certification and
of the existence of a collective-bargaining contract. In
these circumstances, it was not unreasonable for the
|
2 ——_e_errreeee
A-22
Board to conclude that the union certified to represent
all employees in the unit still represented a majority of
the employees and that Burns could not reasonably have
entertained a good-faith doubt about that fact, Burns’
obligation to bargain with the union over. terms and
conditions of employment stemmed from its hiring of
Wackenhut’s employees and from the recent election and
Board certification. It has been consistently held that
a mere change of employers or of ownership in the
employing industry is not such an “unusual cir-
cumstance” as to affect the force of the Board’s certifica-
tion within the normal operative period if a majority
of employees after the change of ownership or manage-
ment were employed by the preceding employer.
406 U.S. at 278-279.
The Court then considered the Board’s findings that Burns had
violated the Act by unilaterally changing working conditions of
the employer. The Court, in ruling against the Board stated:
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 perfect-
ly clear that the new employer plans to retain all of the
employees in the unit and in which it will be ap-
propriate 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 comple-
ment of employees that he has a duty to bargain with
a union, since it will not be evident until then that the
bargaining representative represents a majority of the
employees in the unit as required by § 9(a) of the Act,
29 U.S.C. § 159 (a). Here, for example, Burns’ obliga-
tion to bargain with the union did not mature until it
had selected its force of guards late in June. The Board
quite properly found that Burns refused to bargain on
July 12 when it rejected the overtures of the union.
406 U.S. at 294-95 (emphasis supplied).
A-23
The present case is precisely one of the “other situations” refer-
red to by the court in Burns, particularly when we consider the
substantial difference between Burns and Fall River that militate
in favor of Fall River: the lack of any expression of union
preference by the employees for many years (Fall River) versus
a recent election and certification (Burns), the non-existence of
a labor contract (Fall River) in contrast to one in effect (Burns),
the start up of a new business entity after a substantial hiatus
following the liquidation of the original employer (Fall River)
versus a continuity of operations (Burns).
The court’s reference to Section 9(a) of the Act in its ruling
is of special relevance as it is this part of the Act that provides
for selection of the employee's representatives “for the purpose
of collective bargaining by the majority of the employees.” This
provision establishes a strong public policy favoring free choice
of a bargaining agent by the employees which should not light-
ly be frustrated. Schmerler Ford, Inc. v. N.L.R.B., 424 F.2d 1335,
1339 (7th Cir. 1970). It is because of this self-evident principle
that four justices dissented in Burns against any application of
the successorship principle to even the strong factual situation
in Burns, concluding “that the Board and the Court of Appeals
stretched that concept beyond the limits of its proper applica-
tion”. 406 U.S. at 296. As the dissent indicates, “the successor-
ship doctrine, carried to its ultimate limits, runs counter to other
equally well-established principles of labor law. Industrial peace
is an important goal of the Labor Management Relations Act.”
Id. at 302. “But Congress has plainly been unwilling to purchase
industrial peace at the price of substantial curtailment of free
collective bargaining by the freely chosen representatives of the
employees with their employer.” Jd. at 303.
' 29 U.S.C. 159(a):
Representatives designated ox selected for the purposes of col-
lective bargaining by the majority of the employees in a unit ap-
propriate for such purposes, shall be the exclusive representatives
of all the employees in such unit for the purposes of collective
bargaining in respect to rates of pay, wages, hours of employment,
or other conditions of employment....
A-24
The dissent, in concluding that the application of the successor-
ship doctrine was not authorized by the Act, stated:
The rigid imposition of a prior-existing labor relations
environment on a new employer whose only connec-
tion with the old employer is the hiring of some of the
latter’s employees and the performance of some of the
work which was previously performed by the latter,
might well tend to produce industrial peace of a sort.
But industrial peace in such a case would be produc-
ed at a sacrifice of the determination by the Board of
the appropriateness of bargaining agents and of the
wishes of the majority of the employees which the Act
was designed to preserve. These latter principles cau-
tion us against extending successorship, under the ban-
ner of industrial peace, step by step to a point where
the only connection between the two employing en-
tities is a naked transfer of employees.
Id., at 306-307 (emphasis supplied). See also Bargaining Obliga-
tions, 88 Harv. L. Rev. at 763; Criteria, 11 Wake Forest L. Rev.
at 457.
Although normally a dissent may be considered weak support
upon which to base an opinion, the dissent in Burns buttresses
the soundness of the majority’s “full complement” requirement
and its reliance on Section 9(a) of the Act for that proposition.
Although the majority in Burns was not willing to set aside the
successorship finding, it did so because it concluded that Burns’
employees, already operating at full complement, and shortly
after having freely expressed their collective bargaining
preference, were not being denied their rights under the Act. By
requiring a full complement of employees, all employees to be
affected by the Board’s actions were given a choice. The Board’s
contention that the “full complement” requirement in Burns con-
stitutes mere dicta which it is cavalierly free to disregard, is hardly
an approach that this court should be eager to follow. See Pacific
Hide ¢> Fur Depot, Inc. v. N.L.R.B., 553 F.2d 609 (9th Cir. 1977);
N.L.R.B. v. Pre-Engineering Building Products, 603 F.2d 134
(10th Cir. 1979).
A-25
In the present case the Board’s bureaucratic legalese deprives
the employees of their right to express a free choice, a result totally
contrary to the most fundamental purposes of the Act. It is,
therefore, not entitled to enforcement. Beth Israel Hospital, supra.
II
In the seminal case of Universal Camera v. N.L.R.B., supra,
the Court laid down the rule for review of Board actions by courts
of appeal:
Congress has ... made it clear that a reviewing court
is not barred from setting aside a Board decision when
it cannot conscientiously find that the evidence sup-
porting that decision is substantial, when viewed in
the light that the record in its entirety furnishes, in-
cluding the body of evidence opposed to the Board’s
view.
340 U.S. at 488. “The substantiality of the evidence must take
into account whatever in the record fairly detracts from its
weight.” Id. The cumulative impact of multiplication of minutiae
cannot be regarded as substantia! evidence to support a finding
by the Board. N.L.R.B. v. United Parcel Service, Inc., 317 F.2d
912, 914 (ist Cir. 1963). “Substantial evidence” means such rele-
vant evidence as a reasonable mind might accept as adequate
to support a conclusion. Coppus Engineering Corp. v. N.L.R.B.,
240 F.2d 564, 570 (Ist Cir. 1957); N.L.R.B. v. Local 776, IATSE
(Filia Editors), 303 F.2d 513, 517 n.3 (9th Cir. 1962), cert. denied,
371 U.S. 826 (1963). Such evidence, however, is not substantial
if it appears in isolation rather than is viewed in proper perspec-
tive. Id. Substantiality of evidence is measured by consideration
of all the evidence and not merely that which supports the Board’s
conclusions. M.R.¢<-R. Trucking Co. v. N.L.R.B., 434 F.2d 689
(5th Cir. 1970).
Accepting, as we must, this framework for review, I do not
hesitate to find that the Board’s conclusion that Fall River is a
“successor employer” is not supported by substantial evidence.
See Note, The Successor Employer's Obligation to Bargain: Cur-
rent Problems In The Presumption of a Union's Majority Status,
A-26
8 Fordham Urb. L.J. 429, 442-444 (1980) (hereinafter cited as
Current Problems).
The traditional test for determining successorship is whether
there is substantial continuity between the employing enterprises.
Burns, 406 U.S. at 279-281. In making this determination we look
to whether there has been a change in the essential nature of
the enterprises. Burns, id.; Band-Age, Inc., supra, 534 F.2d at
3; N.L.R.B. v. Middleboro Fire Apparatus, 590 F.2d 4, 6 (1st Cir.
1978). This question, as we have previously indicated, is highly
fact specific. Howard Johnson, supra.
There is no question in my mind but that there has been no
continuity between the operations of Sterlingwale and Fall River.
It is undisputed that Sterlingwale ceased operations and went
out of business for economic reasons. It is also undisputed that
Fall River is a separate legal entity to Sterlingwale, with different
ownership, financing, etc., e.g. the Board does not make any claim
that Fall River is an alter ego of Sterlingwale. Fall River leases
one of Sterlingwale’s three buildings from a company, totally
unrelated to Sterlingwale, who purchased it on the open market.
Although Fall River uses machinery and equipment which at one
time belonged to Sterlingwale, they also were purchased on the
open market. Thus the fact that the building and machinery were
once Sterlingwale’s property should be totally irrelevant to the
successorship determination. Fall River acquired no trade name,
good will or other assets from Sterlingwale. It assumed none of
Sterlingwale’s liabilities. There was no transfer of employee or
personnel records between Sterlingwale and Fall River and more
importantly, no transfer of any employees or personnel. Those
persons hired by Fall River who were former employees, super-
visors, cr executives of Sterlingwale were also hired from the open
market after advertisement. Such new employment took place
after at least a seven-month periud had passed since their ter-
mination by Sterlingwale. The nature of Fall River’s business is
different from that of Sterlingwale’s, commission work versus pro-
cessing, thus bring about substantial changes in Fall River's opera-
tion when compared to Sterlingwale: a smaller manufacturing
A-27
plant, less employees, less work shifts, longer working hours.’
There was no transfer of customer lists or customers between
Sterlingwale and Fall River, thus any former Sterlingwale
customers who also became Fall River customers were presumably
acquired in the open market. Last but not least, if the proper
Burns standard is used, when Fall River reached full capacity,
a majority of its employees were “new” employees. See Current
Problems, 8 Fordham Urb. L.J. at 447.
This record, rather than substantially supporting the Board’s
conclusion of successorship, should mandate a ruling against it.
The situation was stated in more appropriate language by Chief
Judge Campbell in his dissent in Band-Age:
The premise of the National Labor Relations Act is
industrial democracy, requiring an employer to bargain
with the representative of a majority of its employees.
This democratic principle must, of course, yield to
practicality and the need for industrial peace, as rules
limiting the frequency of elections illustrate. But such
rules, presuming the continuity of majority sentiment,
evolved within the frame of a single enterprise. While
they may be appropriately extended toe genuine suc-
cessor entities, they should not apply where the original
bargaining unit and nature of the enterprise have been
radically altered. I fear that the enlargement of the
successorship doctrine to accommodate such a case may
sweep aside the requirement that the Union have roots
in the actual wishes of the employees. Here it would
be simple to require an expression of the wishes of the
37 current employees rather than to presume,
somewhat woodenly, that the earlier-expressed wishes
of a different group of employees working for a dif-
ferent employer remain effective.
534 F.2¢ at 7 (citations omitted).
? There are no findings regarding similarity of wages and fringe benefits, fac-
tors which would have been relevant to demonstrate continuity.
A-28
III
This Court in Middleboro Fire Apparatus, a case involving the
successorship doctrine held:
Simply stated, if the Board finds on the totality of
the circumstances that a change in ownership did not
affect the “essential nature” of the former business, then
the new enterprise must recognize and bargain with
the union that represented the empioyees of the former
business. The exception to this rule relevant here per-
mits the new employer not to bargain with the union
if the employer could “reasonably have entertained a
good-faith doubt” about the union’s continued majority
status.
590 F.2d at 6. (Emphasis supplied. Citations and footnotes
omitted).
The facts of this case as evidenced by both the Board majori-
ty and dissent leave no question as to Fall River’s good faith doubt®
in denying union recognition. See Current Problems, 8 Fordham
Urb. L.J. at 431, 448.
On October 19, 1982, when recognition and bargaining was
requested, the Board concluded that the union was not legally
entitled to compliance with this request. As a matter of law, Fall
River would have violated Section 8(a)(2) of the Act if it had ac-
ceded. 29 U.S.C. 158(a)(2), see Hedstrom Co. v. N.L.R.B., 558
F.2d 1137, 1146-48 (3d Cir. 1977), cert. denied, 450 U.S. 996 (1981).
The Board also conceded that Fall River was correct on October
21, when it formally denied the Union’s request. If we continue
this line of reasoning, when the Union filed its charge on
November 1, even if Fall River had accepted these allegations,
the Board would also have been legally bound to rule, as it did
*“TIn its simplest form, the phrase implies breach of faith, wilful failure to res-
pond to plain, well-understood statutory or contractual obligations.” N.L.R.B.
v. Knoxville Pub. Co., 124 F.2d 875, 883 (6th Cir. 1942); Hurry v. Jones, 560
F. Supp. 500, 507 (D.R.I. 1983).
—
A-29
in its decision, that the Union did not at that point represent Fall
River’s employees. This hypothesis is equally applicable to
December 21, when the Regional Director issued a complaint,
and even as late as January 4, 1983 when Fall River answered
the same. By what logic or reasoning can events that took place
thereafter retroactively be made to transform these good faith
rejections by Fall River into illegal conduct? At best the Board's
ambiguous criteria create an unacceptable uncertainty in the
standard of conduct required of “successors.” See Current Pro-
blems, 8 Fordham Urb. L.J. at 447-449; Bargaining Obligations,
88 Harv. L. Rev. at 760, 764; Criteria, 11 Wake Forest L. Rev.
at 446, 457. This court should not place upon it the imprimatur
of legality by enforcing the Board’s order.
The issue presented is in reality two-pronged: (1) do these cir-
cumstances objectively justify a good faith doubt by Fall River
in mid-January, 1983, and (2) is it permissible (e.g., rational) to
allow the Board to presume continued Union majority support
under the facts of this case in view of the requirements of Sec-
tion 9 of the Act?
I believe the proper answer to both questions to be in the
negative.
If the Board found Fall River to be free from any illegal con-
duct when the demand was made on October 19, when rejected
on October 21, when the complaint issued on December 21st,
and when it was answered on January 4, it cannot follow that
by the mere “running [of] one shift at full capacity” in mid-
January 1983, this fact triggered a duty to bargain with the
Union. An objective view of this situation, particularly consider-
ing the dynamic circumstances under which they developed, can-
not justify the hanging of a bad faith label on Fall River. The
factual basis for the presumption of continued majority support
for the Union is lacking.
Stated differently, given the facts of this case, there is no ra-
tional basis for having an illegal demand (e.g., one which if com-
plied with by Fall River would have subjected it to violation of
Section 8(a)(2) of the Act) carryover ad infinitum, thus
A-30
permitting the imposition of a union on employees who have not
expressed a free choice since 1968. Such a rule is clearly contrary
to the purposes of the Act as stated in Section 9.
It is ironic, to say the least, that the Board order enforced to-
day requires Fall River to bargain with the Union upon request.
Yet this minimal effort is dispensed with in deciding the merits
of this case.
This Court should not be eager to embrace doctrines fraught
with perceptions that un contrary to the spirit and letter of the
Act, and which radically depart from logic and common sense.
For the above-stated reasons, I dissent.
ZHDe
272 NLRB No. 127 D--227€
Fall River, MA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
FALL RIVER DYEING &
FINISHING CORP.
and Case 1-CA-20391
UNITED TEXTILE WORKERS
OF AMERICA, AFL--CIO,
LOCAL 292
DECISION AND ORDER
On 27 January 1984 Administrative Law Judge Burton S.
Kolko issued the attached decision. The Respondent filed ex-
ceptions and a supporting brief, and the General Counsel filed
a brief in support of the judge’s decision.
The National Labor Relations Board has delegated its authori-
ty in this proceeding to a three-member panel.
The Board has considered the decision and the record in
light of the exceptions and briefs and has decidec *» affirm the
judge’s rulings, findings,’ and conclusions and to adopt the
recommended Order.
' In its exceptions, the Respondent challenges, inter alia, the judge's reliance
on certain testimony. We interpret this as a challenge to the judge's implicit
credibility findings. The Board’s established policy is not to overrule an ad-
ministrative law judge’s credibility resolutions unless the clear preponderance
(Footnote continued)
A-32
ORDER
The National Labor Relations Board adopts the recommended
Order of the administrative law judge and orders that the
Respondent, Fall River Dyeing & Finishing Corp., Fall River,
Massachusetts, its officers, agents, successors, and assigns, shall
take the action set forth in the Order.
Dated, Washington, D.C. 19 October 1984
Don A. Zimmerman, Member
Patricia Diaz Dennis, Member
(SEAL) NATIONAL LABOR RELATIONS BOARD
of ail the relevant evidence convinces us that they are incorrect. Standard
Dry Wall Products, 91 NLRB 544 (1950), enfd. 188 F.2d 363 (3d Cir. 1951).
We also agree with the judge that the Respondent incurred a 0 taining
obligation in mid-January 1983. It was at that point that the Respone« * first
employed a substantial and representative complement of its work curce (a
majority of which, it is undisputed, the Union represented when those
employees worked for the Respondent's organized predecessor). Thus, in mid-
January the Respondent had one shift in full operation and had started a se-
cond shift. All job titles had been filled since the previous November, and
by mid-January the Respondent employed more than 50 percent of those it
would ultimately employ in the vast majority of existing job classifications.
Indeed, at the critical time, the Respondent employed nearly two-thirds the
number it planned to ultimately have. Furthermore, with the addiuion of the
second shift, the Respondent added no new skills to its work force.
A-33
MEMBER HUNTER, dissenting
Contrary to my colleagues, I would dismiss the complaint
allegation that the Respondent violated Section 8(a)(5) and (1)
of the Act by refusing to recognize and bargain collectively with
the Union, Textile Workers Local 292. As of the date that the
Union made its recognition demand on 19 October 1982 the
Respondent did not have even a representative complement of
employees and did not have such complement until 15 January
1983, the date on which the judge and my colleagues have im-
posed a bargaining obligation. Thus, at the time the Respon-
dent denied recognition on 21 October 1982, it had no obliga-
tion to recognize the Union. In the absence of any evidence that
the Union renewed its request for recognition subsequent to Oc-
tober 1982 at a time when the Respondent would have been
obligated to honor such a request under successorship principles, '
there is no basis for finding that the Respondent unlawfully
refused to recognize the Union.
Dated, Washington, D.C. 19 October 1984
Robert P. Hunter, Member
NATIONAL LABOR RELATIONS BOARD
' | find it unnecessary to consider the Respondent's argument that the judge
erred in imposing a bargaining obligation on the date that a representative
complement of employees was employed by the alleged successor employer,
and that the proper date for determining whether any bargaining obligation
may arise pursuant to a recognition demand of a union which represented
the predecessor's employees is the date that the alleged successor employed
a full complement of employees.
A-34
JD-25-84
Boston, MA
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
WASHINGTON, D.C.
FALL RIVER DYEING &
FINISHING CORP.
and Case 1-CA-20391
UNITED TEXTILE WORKERS
OF AMERICA, AFL—CIO,
LOCAL 292
Robert Redbord, Esq., of
Boston, MA, for General Counsel.
James W. Clarkin, Esq., of Fall
River, MA, for Respondent.
Mr. James Lenehan, of Providence,
RI, for Charging Party.
DECISION
Statement of the Case
BURTON S. KOLKO, Administrative Law Judge: Upon a
charge filed on November 1, 1982 by the United Textile Workers
of America, AFL-CIO, Local 292, a complaint issued on
December 21, 1982 against Fall River Dyeing and Finishing
Corp. (herein Respondent) alleging violation of Sections 8(a)(1)
and (5) of the Act. The Matter was heard before me in Boston,
Massachusetts on May 2, 1983, and was briefed on August 5,
1983.
A-35
The case centers around whether Respondent is a successor
to Sterlingwale Corporation. If it is, the second question arises
— did it violate the Act by refusing to recognize and bargain
with the Union? I find that Respondent is a successor and did
violate the Act by refusing to recognize and bargain with the
Union once it had a representative complement of workers the
majority of whom were former employees of Sterlingwale.
Successorship
Sterlingwale Corp. in Fall River had been in business for over
30 years before it closed in 1982. The business involved mainly
the dyeing and finishing of textiles, and a small amount of retail
sales. Sterlingwale had handled both flat goods and corduroy
fabrics. Although it had been both a converter of fabrics and
a commission dyer, it moved more toward commission dyeing
as it suffered economically.
Converter work meant that goods were purchased by Sterl-
ingwale, then dyed and finished for sale in the marketplace.
Commission dyeing involved the receipt of goods from a
customer, the dyeing and finishing of the goods and the return
of those goods to the customer. Leonard Ansin, president of
Sterlingwale, testified that from an employee's viewpoint, the
production process for either converter goods or commission
goods was the same. In addition, the production process for cor-
duroy and flat goods was similar. (Corduroy required back-
sizing and some cutting and post-cutting inspection. )
Ansin testified that beginning in 1979, Sterlingwale had finan-
cial problems. By February 1982, Ansin decided to close
Sterlingwale. On February 12 he laid off all the production
A-36
employees.' From then until August 1982, Sterlingwale main-
tained a skeletal existence. A few people were still employed
there throughout this period. They maintained the building,
shipped out remaining goods, and kept watch over the
machinery. In August, Sterlingwale went under. There was an
assignment for the benefit of creditors. An auction was held of
Sterlingwale’s property. Through a series of complex transac-
tions, Respondent purchased all the machinery, equipment, fur-
niture and fixtures of Sterlingwale. It purchased some of Sterl-
ingwale’s materials and inventory at auction. It bought Steri-
ingwale’s premises and moved in during September 1982.
The traditional test for determining successorship is whether
there is substantial continuity in the employing enterprise.’ The
factors used in making this determination are: (1) business opera-
tions; (2) plant; (3) work force; (4) jobs and working conditions;
(5) supervisors; (6) machinery, equipment and methods of pro-
duction; and (7) product or service.’
Respondent places great emphasis on the fact that it is solely
a commission dye house, while Sterlingwale was mainly a con-
verter of fabric. Respondent urges that this results in a difference
in the nature and identity of the enterprise. I disagree. The
' Sterlingwale employees were represented by United Textile Workers, Local
292, in a production and maintenance unit for about 30 years. Such recogni-
tion was embodied in successive collective bargaining agreements, the most
recent of which was extended to April 1, 1981 (G.C. Exh. 13).
* N.L.R.B. vo Peens International Security Services, Inc., 406 U.S. 272,
279-281 (1972)
’ Aircraft Magnesium, a Division of Grico Corp., 265 NLRB No. 172 (1982)
at pg. 6 (sl. op.).
A-37
business is, like Sterlingwale, dyeing and finishing of fabric.
The fact that Respondent does something different before and
after the production process is completed does not result in any
essential difference. The enterprise is not identical, but it is
similar.
Respondent uses the same production building, with the same
machinery as Sterlingwale did. It retained most of the same job
classifications. (Respondent has no retail store and fewer inspec-
tors of fabric.) Norman Rego, an employee for 20 years at Sterl-
ingwale and now employed by Respondent, testified that as far
as he can tell, the machines are the same, the jobs are the same,
and the supervision is the same. (Tr. 113-115) Respondent did
not start a new service or product line.
Continuity of customers has also been considered as a factor
in determining continuity in the employing industry. General
Counsel Exhibit 10 indicates that in dollar volume over one-
half of the current customers of Respondent were customers of
Sterlingwale. Thus, a substantial part of Respondent's business
is linked with Sterlingwale. On these bases I conclude that
Respondent was a successor to Sterlingwale.*
| Demand for Bargaining
A new employer has an obligation upon request to bargain
with the Union if a majority of the unit employees hired were
unit employees of the predecessor employer. The demand for
* | make this finding despite the fact that there was a seven-month hiatus bet-
ween the ending of Sterlingwale and the beginning of Fall River Dyeing.
Generally, a hiatus is only material in determining successorship status when
there have been other substantial changes in the enterprise. Aircraft
Magnesium, supra; United Maintenance & Manufacturing Co., Inc., 214
NLRB 529, 532 (1974).
A-38
bargaining by the Union must be made when the new employer
is operating at a representative capacity. However, if the new
employer is not at that capacity at the time of the demand, the
demand is of a continuing nature. Once the employer reaches
a representative capacity, the bargaining obligation will attach.
Respondent hired its first ernployees on September 20, 1982.
The Union demanded recognition by letter dated October 19,
1982. Respondent denied recognition by letter dated October
21, 1982.
Twenty-one employees had been hired by October 22. Eigh-
teen of them were former Sterlingwale employees. Herbert
Chace, who had worked at Sterlingwale and is now executive
vice-president and secretary for the Respondent, testified that
after the first hirings in September the employees spent approx-
imately 4-6 weeks of start-up: cleaning, repairing machines, and
so forth. Then they began 4-5 weeks of experimental produc-
tion, just to make sure everything was in working order. (Tr.
185-187.) Chace agreed with employee Rego’s testimony that
the first shift was at almost full operating level when a second
shift was commenced in January 1983. Chace also testified that
their production goal was to have two full shifts working by
mid-April. Respondent asserts that since a full complement of
workers was not reached until then, it is at that point that one
should inquire as to the status of former Sterlingwale employees.
Presumably this argument is pressed because the evidence in-
dicates that in the week ending March 24, 1983, former Sterl-
ingwale employees were, for the first time, a minority of the
unit.
However, the standard to be used indicated by the Board is
representative complement, not full complement.’ By late
November 1982, employees had been hired in all job titles.
* Aircraft Magnesium, supra.
A-39
Accounts receivable in November 1982 from previous months
totalled $145,001.38 (Tr. 188). Clearly, the business was gear-
ing up. Since we have testimony from Chace and Rego, above,
which points to January 1983 as a time when the plant was run-
ning one shift at full capacity, I find that the duty to bargain
with the Union attached for the Respondent in mid-January
1983.
Respondent contends that since it did not purchase Sterl-
ingwale directly, it should not be held to be a successor. This
argument fails since direct purchase from a predecessor is not
a prerequisite to successorship.°
Since Respondent has refused to bargain with the Union, it
has violated Section 8(a)(5) and (1) of the Act.
Conclusion of Law
1. Respondent, Fall River Dyeing and Finishing, is an
employer within the meaning of Section 2(2) of the Act and
engaging in commerce within the meaning of Section 2(6) and
(7) of the Act.’
9 United Textile Workers of America, AFL-CIO, Local
292, is a labor organization within the meaning of Section 2(5)
of the Act.
* Cf. Makaha Valley, Inc., 241 NLRB 30), 303 1979), where an intervening
trusteeship did not defeat successorshiy status. °
’ Based upon a projection of its operations since on or about August 1982 at
which time Respondent commenced operations, Respondent, in the course
and conduct of its business of dyeing and finishing textiles and related pro-
ducts, will annually provide services valued in excess of $50,000 for customers —
located outside the Commonwealth of Massachusetts, and in excess of $50,000
for enterprises located within Massachusetts, who themselves are directly
engaged in interstate commerce.
A-40
3. The following employees constitute a unit appropriate
for collective bargaining within the meaning of Section 9(b) of
the Act:
All production and maintenance employees at the
Fall River plant, including the electrician, electrician’s
helper, and mechanics but excluding all executives,
office clerical and plant clerical employees, second
hands, guards, and professional employees and super-
visors as defined in the Act.
4. United Textile Workers, of America, AFL-CIO, Local
292, has been and is the exclusive representative of all employees
in the aforesaid appropriate unit for the purposes of collective
bargaining within the meaning of Section 9(a) of the Act.
5. By refusing on or about January 15, 1983 and at all times
thereafter to recognize and bargain collectively with the above-
named labor organization as the exclusive representative of all
its employees in the appropriate unit, Respondent has engaged
in and is engaging in unfair labor pratices within the meaning
of Section 8(a)(5) and (1) of the Act.
6. The aforesaid unfair labor practices are unfair labor prac-
tices affecting commerce within the meaning of Section 2(6) and
(7) of the Act.
The Remedy
Having found that Respondent has engaged in and is engag-
ing in unfair labor practices within the meaning of Section
8(a)(5) and (1) of the Act, it shall cease and desist therefrom
and, upon request, bargain collectively with the Union as the
exclusive representative of all employees in the appropriate unit.
A-41
ORDER
Pursuant to Section 10(c) of the National Labor Relations Act,
as amended, the National Labor Relations Board hereby orders
that the Respondent, Fall River Dyeing and Finishing, Fall
River, Massachusetts, its officers, agents, successors, and assigns,
shall:
1. Cease and desist from:
(a) Refusing to bargain collectively with United Textile
Workers of America, AFL-CIO, Local 292, as exclusive
representative of the following unit:
All production and maintenance employees at the
Fall River plant, including the electrician, electrician’s
helper, and mechanics but excluding all executives,
office clerical and plant clerical employees, second
hands, guards, and professional employees and super-
visors as defined in the Act.
(b) In any like or related manner interfering with,
restraining, or coercing its employees in the exercies of their
rights under Section 7 of the Act.
2. Take the following affirmative action to effectuate the
policies of the Act:
(a) Upon the request, bargain with the above-named
Union as exclusive representative of employees in the above-
described unit with respect to rates of pay, wages, hours, and
other terms and conditions of employment and, if an agreement
is reached, embody it in a signed contract.
A-42
(b) Post at its Fall River, Massachusetts, plant copies of
the attached notice marked “Appendix.”* Copies of said notice,
on forms provided by the Regional Director for Region 1, after
being duly signed by Respondent's authorized representative,
shall be posted by it immediately upon receipt thereof, and be
maintained by it for 60 consecutive days thereafter, in con-
spicuous places, including all places where notices to employees
are customarily posted. Reasonable steps shall be taken by
Respondent to insure that such notices are not altered, defac-
ed, or covered by any other material.
(c) Notify said Regional Director, in writing, within 20
days from the date of this Order, what steps Respondent has
taken to comply herewith.
Dated: January 27, 1984.
Burton S. Kolko
Administrative Law Judge
* In the event no exceptions are filed as provided in Section 102.46 of the Rules
and Regulations of the National Labor Relations Board, the findings, con-
clusions, and recommended Order herein shall, as provided in Section 102.48
of the Rules and Regulations, be adopted by the Board and become its fin-
dings, conclusions, and Order, and ail objections thereto shal] be deemed waiv-
ed for all purposes.
A-43
NOTICE TO EMPLOYEES
POSTED BY ORDER OF THE
NATIONAL LABOR RELATIONS BOARD » scexcy oF me
UNITED STATES GOVERNMENT
After a hearing at which all sides had an opportunity to present
evidence and state their positions, the National Labor Relations
Board found that we have violated the National Labor Relations
Act, as amended, and had ordered us to post this notice.
WE WILL NOT refuse to bargain collectively with United
Textile Workers of America, AFL-CIO, Local 292, as exclusive
representative of the following unit:
All production and maintenance employees at the Fall
River plant, including the electrician, electrician’s
helper, and mechanics but excluding all executives, of-
fice clerical and plant clerical employees, second hands,
guards, and professional employees and supervisors as
defined in the Act.
WE WILL NOT in any like or related manner interfere with,
restrain, or coerce our employees in the exercise of the rights
guaranteed them under Section 7 of the Act.
WE WILL, upon request, bargain collectively with the
aforesaid Union as the exclusive representative of all
employees in the appropriate unit described above with
respect to rates of pay, hours of employment and other terms
and conditions of employment and, if an understanding is
reached, embody such understanding in a signed agreement.
FALL RIVER DYEING & FINISHING CORP.
(Employer)
Dated By
(Representative) (Title)
THIS IS AN OFFICIAL NOTICE
AND MUST NOT BE DEFACED BY ANYONE
This notice must remain posted for 80 consecutive days from the date of posting and must not
be altered, defaced. or covered by any other material. Any questions concerning this notice or
compliance with its provisions may be directed to the Board's Office
120 Boylston Street, Walker Building, 3rd Floor,
Boston, MA 02116, Telephone No. (617) 223-4550.
A-44
APPENDIX “E”
STATUTORY PROVISIONS INVOLVED
United States Code, Title 29
Ҥ158. Unfair labor practices
(a) It shall be an unfair labor practice for an employer —
(1) to interfere with, restrain, or coerce employees in
the exercise of the rights guaranteed in section 7;
(2) to dominate or interfere with the formation or ad-
ministration of any labor organization or contribute
financial or other support to it: Provided, That sub-
ject to rules and regulations made and published by
the Board pursuant to section 6, an employer shall not
be prohibited from permitting employees to confen with
him during working hours without loss of time or pay;
(5) to refuse to bargain collectively with the represen-
tatives of his employees, subject to the provisions of sec-
tion 9(a),
Ҥ159. Representatives and elections
(a) Exclusive representatives—Employees’ adjustment of
grievances directly with employer. Representatives designated or
selected for the purposes of collective bargaining by the majori-
ty 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 in respect of rates of
pay, wages, hours of employment, or other conditions or employ-
ment: Provided. That any individual employee or a group of
employees shall have the right at any time to present grievances
adjusted. without the intervention of the bargaining represen-
tative, as long as the adjustment is not inconsistent with the terms
of a collective-bargaining contract or agreement then in effect:
Provided further, That the bargaining representative has been
given opportunity to be present at such adjustment.”
OPPOSITION
BRIEF -
Gop ers See” |
FILED
MAR 31 1988
aoe F. SPANIOL, JR.
Ju the Supreme Court of the United|Stater“
OCTOBER TERM, 1985
FALL RIVER DYEING & FINISHING
CORP., PETITIONER
Vv.
NATIONAL LABOR RELATIONS BOARD
ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
BRIEF FOR
THE NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION
CHARLES FRIED
Solicitor General
Department of Justice
Washington, D.C. 20530
(202) 633-2217
ROSEMARY M. COLLYER
General Counsel
JOHN E. HIGGINS, JR.
Deputy General Counsel
ROBERT E. ALLEN
Associate General Counsel
NORTON J. COME
Deputy Associate General Counsel
LINDA SHER
Assistant General Cceunsel
ROBERT C. BELL, JP.
Attorney
National I «bor Relations Board
Washinyton, D.C. 20570
|
ys \ .
a
secs
QUESTION PRESENTED
Whether the National Labor Relations Board prop-
erly found, in the circumstances of this case, that
petitioner is a successor employer and that it violated
Section 8(a)(1) and (5) of the National Labor Re-
lations Act, 29 U.S.C. 158(a)(1) and (5), by refus-
ing to recognize and bargain with the union that had
represented the predecessor’s employees.
(1)
TABLE OF CONTENTS
Page
Opinions below ..............-----------:--:-s-ecsesseeeeeeeneeeeeneteteeteteneees 1
a Sethe s aon oa 1
nie _.. ssigntamicnnnenmanonnrerenaseesmrresnnes eee 2
Argument ............--.------.---0--ss-c00--eceencseocesnessaseneeeneeeneesseesensees 7
III | ________cesnemscoumnapsevenmssseneunveereecsoracscosteqocooooores 15
TABLE OF AUTHORITIES
Cases:
Aircraft Magnesium, 265 N.L.R.B. 1344, enforced,
i ceseanemenverencnere aa SB
Hedstrom Co. v. NLRB, 558 F.2d 1137...............---..- 13
Howard Johnson Co. Vv. Detroit Local Joint Execu-
tive Board, Hotel Employees Int’l Union, 417
a cscssunstenvevpwasvanncssunccoess 8
International Ass’n of Machinists V. “NLRB, 595
F.2d 664, cert. denied, 439 U.S. 1070 ....... ne. 9
IUEW v. NLRB, 604 F.2d 6839 .................-------+---++++- 8
NLRB v. Boston Needham Industrial Cleaning Co..,
a. cceesistsucconmenconcoues 8
NLRB v. Burns International Security Services,
| ae 7,8, 9,10, 11
NLRB v. Hudson River Aggregates, Inc., 639 F.2d
a ee 8,11, 13
NLRB v. Jeffries Lithograph Co., 752 F.2d 459 ...... 8,11
NLRB v. Middleboro Fire Apparatus, Inc., 590
a enencnenpnenccoonces 8, 10
NLRB v. Pre-Engineered Building Products, Inc.,
nn 11
Premium Foods, Inc., 260 N.L.R.B. 708, enforced,
a . scnsnnonnosowrdercens 8, 9,11
Saks & Co. v. NLRB, 634 F.2d 681....................---- . 13
(TIT)
IV
Cases—Continued : Page
Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d
Oe. cicesantanlnenmenniesioanienmmmnnaninmaniaath 13
Universal Camera Corp. V. NLRB, 340 U.S. 474... 8
Statutes :
National Labor Relations Act, 29 U.S.C. 151
et seq.:
§ 8(a) (2), 29 U.S.C. 158 (a) (2) .........------------ 13
§ 8(a) (5), 29 U.S.C. 158 (a) (5) ......----------------- 13
Ju the Supreme Court of the United States
OCTOBER TERM, 1985
No. 85-1208
FALL RIVER DYEING & FINISHING
CorP., PETITIONER
Vv.
NATIONAL LABOR RELATIONS BOARD
ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
BRIEF FOR
THE NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION
OPINIONS BELOW
The opinion of the court of appeals (Pet. App.
A2-A30) is reported at 775 F.2d 425. The decision
and order of the National Labor Relations Board
(Pet. App. A31-A43) are reported at 272 N.L.R.B.
839.
JURISDICTION
The judgment of the court of appeals (Pet. App.
Al) was entered on October 18, 1985. The petition
for a writ of certiorari was filed on January 16,
(1)
2
1985. The jurisdiction of this Court is invoked under
28 U.S.C. 1254(1).
STATEMENT
1. For more than 30 years prior to 1982, the
Sterlingwale Corporation operated a plant in Fall
River, Massachusetts, where it engaged primarily in
dyeing and finishing textiles. Sterlingwale’s produc-
tion and maintenance employees were represented by
United Textile Workers of America, AFL-CIO, Local
292. The parties’ last collective agreement extended
to April 1, 1982. Pet. App. A35, A36 n.1; C.A. App.
A370, A375.
Sterlingwale’s operations consisted of both “con-
verting” and “commission dyeing.” As a converter
Sterlingwale bought unfinished fabrics for its own
account, dyed and finished them, then sold the fab-
rics to apparel manufacturers. Working as a com-
mission dyer, Sterlingwale dyed and finished fabrics
owned by other customers to the customers’ specifi-
cations. In its early years, Sterlingwale had engaged
almost exclusively in commission dyeing, but in the
early 1970s it shifted into principally converter work.
When it encountered economic problems in 1979,
Sterlingwale again began shifting toward commis-
sion work. Although the financing and marketing as-
pects. of the two types of business varied, the produc-
tion process for dyeing and finishing fabrics was the
same whether the work was done on a converting or
commission basis. Pet. App. A385; C.A. App. A112-
A113, A141-A1438, A146-A147.
As a result of its economic problems, Sterlingwale
laid off all its production employees in February
1982. From that time until August, Sterlingwale
maintained a skeletal operation of employees who
3
maintained the plant and shipped remaining inven-
tory. Pet. App. A385-A36; C.A. App. A166-A167.
During this period Sterlingwale’s president still
hoped to resurrect the business or have “somebody
take over the plant,” and he communicated this in-
terest to union representatives during meetings held
in the summer of 1982 (C.A. App. A82, A102, A165-
A166).
In August 1982, however, Sterlingwale went out
of business and executed an assignment of assets for
the benefit of its creditors. Through another corpora-
tion, Arthur Friedman, the president of petitioner
Fall River Dyeing and Finishing Corp., acquired
Sterlingwale’s plant and real property, all of its
equipment, and part of its materials and inventory
at a mortgage foreclosure sale. Friedman’s corpora-
tion conveyed the equipment and materials and leased
part of the plant and property to petitioner. Pet.
App. A36; C.A. App. A67, A130-A131, A158-A159,
A195, A218-A222, A256.
Petitioner began operating out of the former Ster-
lingwale production building in September 1982. Pe-
titioner performed commission dyeing and finishing
work as had Sterlingwale, but it did this type of work
exclusively, performing no converter work and intro-
ducing no new service or product line. The produc-
tion process remained basically unchanged and the
employees performed the same jobs that had been per-
formed at Sterlingwale. Petitioner used the machin-
ery formerly used by Sterlingwale and retained most
of the same job classifications. Pet. App. A36-A37;
C.A. App. A172-A175, A219-A220, A222, A327-
A331. Petitioner’s vice president and secretary for-
merly served as vice president of Sterlingwale. Eight
of petitioner’s supervisors were former Sterlingwale
supervisors and three of the other four were former
4
Sterlingwale employees. Over half of the dollar voi-
ume of petitioner’s business came from former Ster-
lingwale customers. Pet. App. A37-A38; C.A. App.
A209, A216, A229-A230, A830.
Upon commencing operations in September 1982,
employees spent four to six weeks on start-up opera-
tions, cleaning and repairing machines. They spent
the next four or five weeks on experimental produc-
tion to ensure that everything was in working order.
Pet. App. A38; C.A. App. A226-A227, A246-A248. On
October 19, 1982, the Union requested that petitioner
recognize it and proposed a date for collective bar-
gaining negotiations. On October 21, petitioner re-
sponded that it did “not intend to comply with your
request” and that the Union’s bargaining request had
“no legal basis.” Pet. App. A388; C.A. App. A380,
A381.
At the time of petitioner’s refusal to bargain, peti-
tioner had hired 21 employees, 18 of whom were
former Sterlingwale employees (Pet. App. A38). Pe-
titioner’s initial production goal was to reach one full
shift operation of 55 to 60 employees. After that
goal was achieved, petitioner planned to “see how
business would be, and then expand to a two-shift
operation by April 1983” (Pet. App. A38; C.A. App.
A227-A228).
By November 1982, employees had been hired in
virtually all job classifications. In mid-January 1983,
the first shift was in full operation and petitioner
had begun a second shift. At that time, petitioner
had hired at least 50% of those it would ultimately
employ in the majority of existing job classifications
and 55 of the 106-109 employees it was to employ
by April, when it reached its anticipated employee
complement. Of the 55 employees hired by mid-
5
January, 36 were former Sterlingwale employees.
Pet. App. A5, A31-A32 n.1, A838; C.A. App. A68-
A69, A425, A327-A331. By April, former Sterling-
wale employees were for the first time less than a
majority of petitioner’s workforce (Pet. App. A38).
2. Adopting the opinion of the administrative law
judge (Pet. App. A31-A32), the Board, with one
member dissenting, found that the change of owner-
ship did not materially alter the employees’ working
conditions or the nature of the enterprise, and that
petitioner employed a substantial and representative
complement of employees, a majority of whom had
been employed by Sterlingwale, on January 15, 1983.
Based on that finding, the Board concluded that peti-
tioner was a successor employer to Sterlingwale and
was obligated to bargain with the Union as of that
date (id. at A31-A32 n.1, A35-A37). The Board
also concluded that the Union’s October bargaining
request constituted a continuing demand for recogni-
tion and bargaining (id. at A31-A32 n.1, A37-A359).
Accordingly, the Board ruled that petitioner was the
successor to Sterlingwale and violated the National
Labor Relations Act (the Act) by refusing to recog-
nize and bargain with the Union once its bargaining
obligation arose (ibid.). The Board’s order required
petitioner to bargain with the Union upon its request
(id. at A41).’
3. The court of appeals, one judge dissenting, en-
forced the Board’s order (Pet. App. A2-A30). The
court upheld as supported by substantial evidence the
Board’s finding that petitioner was the successor to
1 Board Member Hunter dissented on the ground that peti-
tioner did not have a representative complement of employees
on the date that the union demanded recognition (Pet. App.
A33).
6
Sterlingwale (id. at A8). The differences between
petitioner’s business and Sterlingwale’s, the court ex-
plained, “are only indirectly related to the interests”
of the bargaining unit employees in representation
and “are not sufficiently significant to require a find-
ing that the continuity of the enterprise, viewed from
the employees’ standpoint, was broken” (id. at AQ).
In addition, the court ruled that, where it cannot be
determined at the outset of the transition whether a
union represents a majority of a new owner’s em-
ployees, the Board may fix as the date for determin-
ing the successor bargaining obligation that point at
which the new owner has hired a “ ‘substantial and
representative complement’” of its employees (id.
at Al0-A12). Moreover, the court upheld as reason-
able the Board’s findings that petitioner’s level of
operations was near-normal by mid-January 1983
and that petitioner had hired a substantial and rep-
resentative employee complement by that time. Ac-
cordingly, because a majority of the workforce had
been represented by the union at Sterlingwale, the
court ruled that petitioner’s bargaining obligation
attached at that point. Jd. at Al2. Finally, the court
upheld the Board’s conclusion that the union’s Octo-
ber 1982 bargaining demand constituted a continu-
ing request for recognition and bargaining that peti-
tioner was required to honor once it had hired a rep-
resentative complement of employers in January
1983. Noting that a union, unlike the successor busi-
ness, often lacks precise information about the tim-
ing and nature of a transition, that it is not uncom-
mon for bargaining demands to be made before a bar-
gaining obligation actually arises, and that a union’s
presumption of majority status is not affected by a
change of ownership, the court concluded that it is
not unreasonable to require a successor to respond to’
7
a previously made request to bargain once its bargain-
ing obligation actually matures (id. at Al4).’
ARGUMENT
The decision of the court of appeals correctly ap-
plied settled legal principles to the particular facts
of this case and does not conflict with any decision of
this Court or of any other court of appeals. Accord-
ingly, review by this Court is not warranted.
1. Petitioner challenges (Pet. 8-15) the Board’s
finding that petitioner was the successor to Sterling-
wale. That claim lacks merit.
It is well-settled that a mere change of employers
or ownership does not eliminate the presumption that
a majority of employees continue to support an in-
cumbent union. NLRB vy. Burns Internatienal Secu-
rity Services, Inc., 406 U.S. 272, 277-279 (1972).
Accordingly, where there is no essential change in
working conditions or in the nature of the enterprise
and a majority of the new employees were employed
by the predecessor firm, the new employer is the “‘suc-
cessor” to the former one and must recognize and
bargain with the incumbent union as the representa-
tive of its employees (ioid.). Among the factors that
the Board considers in determining whether a new
employer is a successor are whether the new employer
* Judge Torruella dissented (Pet. App. A17-A30). In his
view, petitioner’s bargaining obligation did not arise until it
had attained a full complement of employees (id. at A21-
A25). He also concluded that, on the facts of this case,
petitioner was not a successor employer to Sterlingwale (id.
at A25-A27) and that the Board’s order should not be enforced
because petitioner had a “good-faith doubt” about the union’s
continued majority status in mid-January 1983 (id. at A28-
A30).
8
is using the same supervisory personnel, equipment,
and facilities as its predecessor, whether it is produc-
ing the same goods or providing the same services,
whether it is serving the same customers, and whether
there is a substantially identical workforce. Pet. App.
AT, A36; see also, e.g., Burns, 406 U.S. at 280 n.4;
NLRB vy. Jeffries Lithograph Co., 752 F.2d 459, 463
(9th Cir. 1985); NLRB v. Hudson River Aggregates,
Inc., 639 F.2d 865, 869 (2d Cir. 1981); JUEW vy.
NLRB, 604 F.2d 689, 694 (D.C. Cir. 1979); NLRB
v. Middleboro Fire Apparatus, Inc., 590 F.2d 4, 6-8
(1st Cir. 1978); Premium Foods, Inc., 260 N.L.R.B.
708, 714 (1982), enforced, 709 F.2d 623 (9th Cir.
1983). The question whether a change of ownership
has produced a substantial and material alteration
in the employing enterprise is “highly iact specific”
(Howard Johnson Co. v. Detroit Local Joint Execu-
tive Board, Hotel Employees Int'l Union, 417 U.S.
249, 256 (1974)), and the Board’s finding, which
is based upon “the totality of circumstances” (NLRB
v. Boston Needham Industrial Cleaning Co., 526 F.2d
74, 77 (1st Cir. 1975) ), must be upheld if there is
substantial evidence to support it (see, e.g., Universal
Camera Corp. v. NLRB, 340 U.S. 474, 490-491
(1951); Jeffries Lithograph Co., 752 F.2d at 462;
Hudson River Aggregates, 639 F.2d 869).
Petitioner contends (Pet. 8-9) that the Board “ar-
ranged the facts and weighted them in such a way
as to ignore, or give little or no weight to certain
facts while at the same time stressing other facts
which are not dispositive of the issue.” Petitioner’s
admittedly fact-bound contention does not warrant
this Court’s review.’ In any event, there is ample
% Petitioner erroneously suggests (Pet. 9) that the Board’s
factual analysis in successorship cases is entitled to less defer-
9
support in the record for the Board’s finding that the
change in ownership did not cause a material altera-
tion in employees’ working conditions or in the nature
of the enterprise. As the Board and the court of
appeals found (Pet. App. A4-A5, A36-A37), peti-
tioner acquired Sterlingwale’s real property, all of
its machinery, furniture, and fixtures, and part of
its materials and inventory. The basic dyeing and
finishing operation, the physical plant and production
process, the job classifications, and the supervision
remained substantially the same. Petitioner’s argu-
ments to the contrary are insubstantial.*
ence on appellate review than are its fact findings in other
types of cases. As the case that petitioner cites itself makes
clear, in the successorship context no less than in other areas
the responsibility of applying broad legal principles to par-
ticular cases is “committed primarily to the Board,” and the
Board’s decisions in successorship cases are entitled to defer-
ence as long as they are compatible with “the spirit as well
as the language” of the Court’s decision in Burns. Interna-
tional Ass’n of Machinists v. NLRB, 595 F.2d 664, 673 n.41
(D.C. Cir. 1978), cert. denied, 439 U.S. 1070 (1979).
* As the court of appeals explained (Pet. App. A8-A9), the
changes on which petitioner relies (Pet. 11-14)—a change
from three shifts to two and a reduction in the total number
of supervisors—reflect simply a reduction in the size and
scope of the operation, not an essential change in the enter-
prise. Similarly, the changes in purchasing, financing, and
marketing associated with the switch to straight commission
dyeing were no* the kind of changes likely to have a signifi-
cant effect on employer-employee relations or the employees’
attitude toward representation. See Premium Foods, Inc. v.
NLRB, 709 F.2d 623, 627 (9th Cir. 1983).
Finally, petitioner’s reliance on the hiatus between Sterling-
wale’s closing and petitioner’s resumption of operations is also
misplaced. As the Board and the court of appeals explained
(Pet. App. A8, A37), absent other factors showing a material
10
2. Petitioner also contends (Pet. 16-19) that the
Board erred by applying a “substantial and repre-
sentative employee complement” standard in deter-
mining when petitioner’s bargaining obligation arose.
In petitioner’s view, the Board was required to wait
until it had hired its full complement of employees
before determining whether it was required to bar-
gain with the union. The Board and the court of
appeals properly rejected this contention.
Although the question whether a successor business
incurs the predecessor’s bargaining obligation is nor-
mally determined at the time of transfer, where, as
here, an employer is rebuilding a collapsed business
or is operating initially at a substantially reduced
capacity, that principle does not apply. For instance,
this Court explained in Burns that in some cases, “‘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
represents a majority of the employees in the unit”
(406 U.S. at 295). However, contrary to petitioner’s
contention, this dictum has never been construed as
requiring this determination to be postponed until
transformation of the enterprise, such a hiatus is reasonably
viewed as part of the “ ‘normal concomitants of a new man-
agement and a new approach to a failing business, not a break
in the continuity of the employing industry.’” NLRB v.
Middleboro Fire Apparatus, 590 F.2d at 8. Petitioner’s claim
that the hiatus destroyed any reasonable expectation that
employees would be rehired belies the evidence (page 3,
supra) that Sterlingwale’s president told the union through-
out the summer of 1982 that he hoped to have “somebody take
over the plant” and that petitioner in fact did so in the
early Fall.
11
the new business is operating at its peak capacity or
until the new employer has hired all of its bargain-
ing unit employees. That issue was not presented in
Burns,’ and the Board and the courts of appeals are
in agreement that, when the successorship obligation
cannot be determined at the outset, fixing the appro-
priate date involves striking a balance between the
objective of insuring maximum employee participa-
tion in the selection of a bargaining agent and the
goal of permitting employees to be represented as
quickly as possible. See Premium Foods, Inc. v.
NLRB, 709 F.2d 623, 628 (9th Cir. 1983); Hudson
River Aggregates, 6239 F.2d at 870-871; NLRB vy.
Pre-Engineered Building Products, Inc., 603 F.2d
134, 136 (10th Cir. 1979). As the court below found
(Pet. App. A10), these interests are effectively recon-
ciled by the Board’s “substantial and representative
complement” standard, and that standard has also
been approved by every other court that has con-
sidered it. See Jeffries Lithograph Co., 752 F.2d at
467; Premiums Foods, 709 F.2d at 628; Hudson
River Aggregates, 639 F.2d at 870 (“full comple-
ment” and “representative complement” used inter-
changeably); Aircraft Magnesium, 265 N.L.R.B.
1344, 1345 (1982), enforced, 730 F.2d 767 (9th Cir.
1984) (Table); see also Pre-Engineered Building
5In Burns, the Court simply distinguished between the
situation in which a successor takes over the predecessor’s
ongoing operations and complete workforce and those cases
in which a successor delays hiring decisions until after the
actual transfer of ownership. Accordingly, the Court had no
occasion to consider at precisely what point in the latter cate-
gory of cases it would be appropriate to examine the suc-
cessor’s workforce.
12
Products, Inc., 603 F.2d at 136 & n.1.° Accordingly,
there is no occasion for the Court to review that
standard in this case.
3. Finally, there is no merit to petitioner’s con-
tention (Pet. 20-22) that the Board’s continuing de-
mand rule improperly compels an employer to bar-
gain with a union where a good faith doubt existed
as to its majority status.
In successorship situations, when an incumbent
union makes a clear request for bargaining in an
appropriate unit and that demand is rejected by the
employer, the Board generally treats the demand as
continuing and does not require the union to renew
the request at a later time, even if the employer’s
bargaining obligation had not matured at the time
of the original request. See Aircraft Magnesium,
265 N.L.R.B. at 1345 n.9. The court of appeals
properly concluded that the Board’s continuing de-
mand rule is a reasonable exercise of the Board’s
discretion under the Act. As the court explained
(Pet. App. A13-A14 (citations, footnotes, and quota-
tion marks omitted) ) :
When a continuity in the enterprise has been
found, as is the case here, the presumption of
majority status by the union under the predeces-
sor... is not affected by a change in ownership.
* * * The rationale behind this presumption of
majority status derives from the fact that a suc-
cessor’s obligation to bargain with the union
arises when the employer reaches a substantial
and representative complement of its work force.
The employer, unlike the union, can readily
® Petitioner concedes (Pet. 18) that it employed a substan-
tial and representative complement of employees as of mid-
January 1983.
13
reach this determination on its own by examin-
ing whether the job classifications for the opera-
tion have been filled or substantially filled and
whether the operation is in normal or substan-
tially normal production.
Moreover, as the court of appeals noted (Pet. App.
Al4), the Board’s rule is also eminently practical.
Unions often lack precise information about when a
change in ownership is to take place and what plans,
if any, the new owners have for the enterprise. It is
therefore not uncommon for bargaining demands to
be made before the bargaining obligation actually
arises.’
Petitioner’s reliance (Pet. 20, 22) on Hedstrom
Co. v. NLRB, 558 F.2d 1137 (3d Cir. 1977), is mis-
placed. Hedstrom rejected the continuing demand
concept only in a non-successorship case where the
union made its initial bargaining demand without
majority support. The court found that applying the
continuing demand rule in that situation would put
an employer in the untenable position of either vio-
lating Section 8(a)(2) of the Act, 29 U.S.C. 158(a)
(2), by recognizing a union lacking majority support,
or risking a violation of Section 8(a) (5), 29 U.S.C.
158(a) (5), by refusing to bargain at a later point
when, unknown to the employer, the union actually
obtained majority support (558 F.2d at 1148). How-
ever, as the court of appeals explained (Pet. App.
A13-A14), those concerns are absent in the successor-
ship context, because there is a presumption of the
7 See, e.g., Hudson River Aggregates, 639 F.2d at 868, 870:
Saks & Co. v. NLRB, 634 F.2d 681, 684-685 (2d Cir. 1980) :
Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025, 1026
(7th Cir. 1969) ; Aircraft Magnesium, 265 N.L.R.B. at 1345.
14
Union’s continued majority status and because the
employer is in a superior position to know the facts
that trigger its bargaining obligation. Indeed, the
Board’s decisions applying the continuing demand
rule in successorship cases have been uniformly ap-
proved by the courts of appeals. See page 13 note 7,
supra.*
8 There is no merit to petitioner’s suggestion (Pet. 20-21)
that it was improper for the Board to find a refusal to bargain
as of January 1983, even though the unfair labor practice
charge and complaint issued prior to that time. Petitioner
does not contend that it was not on notice in the unfair labor
practice proceeding of the General Counsel’s theory that it
violated the Act as of mid-January, and the Board’s order
imposes no obligation on petitioner with respect to its conduct
prior to the time the bargaining obligation actually arose.
Moreover, the facts in this case demonstrate that it would
have been futile to require the union to renew its bargaining
request after it was first made. After petitioner rejected the
union’s October demand—with no suggestion that it might
later change its mind—the union made clear that it still
sought recognition by filing an unfair labor practice charge
on November 1. In its answer to the unfair labor practice
complaint issued by the General Counsel, petitioner admitted
that on October 21 (when it formally rejected the union’s
demand) “and at all times thereafter,” it “did refuse and
continues to refuse” to bargain, with the union (C.A. App.
A5, A8& (emphasis added) ).
15
CONCLUSION
The petition for a writ of certiorari should be
denied.
Respectfully submitied.
CHARLES FRIED
Solicitor General
ROSEMARY M. CuLLYER
General Counsel
JOHN E. HIGGINS, JR.
Deputy General Counsel
ROBERT E. ALLEN
Associate General Counsel
NORTON J. COME
Deputy Associate General Counsel
LINDA SHER
Assistant General Counsel
ROBERT C. BELL, JR.
Attorney
National Labor Relations Board
APRIL 1986
W ov. &. Government PRINTING orrice; 1906 491507 20160
No. 85-1208
IN THE
Supreme Court of the Unite
Octroser TerRM, 1985
FALL RIVER DYEING « FINISHING CORP.,
Petitioner,
— against —
NATIONAL LABOR RELATIONS BOARD,
Respondent.
REPLY BRIEF IN SUPPORT OF PETITION
FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
IrA DROGIN
LEAF STERNKLAR & DROGIN
Attorneys for Petitioner
440 Park Avenue South
New York, New York 10016
(212) 685-8400
TABLE OF CONTENTS
THE PETITION FOR CERTIORARI SHOULD
BE GRANTED BECAUSE THE CONFLICTING
PRINCIPLES APPLIED BY THE NATIONAL
LABOR RELATIONS BOARD OPERATE TO
DEPRIVE EMPLOYEES AND THE EMPLOYER
OF THEIR RIGHTS UNDER THE NATIONAL
LABOR RELATIONS ACT ..ceeccccesccccceces
CONCLUSION ee eeeneeneeneeeeeee *eereeieeeeeeee
Page
il
TABLE OF AUTHORITIES
CASES
Hedstrom Co. v. NLRB, 558 F.2d 1137
GE
NLRB v. Band-Age, Inc., 534 F.2d l
(lst Cir.), cert. denied,
>, )
NLRB v. Burns International
Security Services,Inc.,
i EEE ccc cceécecceocececceces
STATUTES
Labor Management Relations Act, as amended
EE Ee
ee se cece sc eseses
Ul dO
No. 85-1208
IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1985
FALL RIVER DYEING & FINISHING CORP.,
Petitioner,
- against -
NATIONAL LABOR RELATIONS BOARD,
Respondent.
REPLY BRIEF IN SUPPORT OF PETITION FOR A WRIT
OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE FIRST CIRCUIT
THE PETITION FOR CERTIORARI SHOULD BE
GRANTED BECAUSE THE CONFLICTING
PRINCIPLES APPLIED BY THE NATIONAL
LABOR RELATIONS BOARD OPERATE TO
DEPRIVE EMPLOYEES AND THE EMPLOYER OF
THEIR RIGHTS UNDER THE NATIONAL LABOR
RELATIONS ACT.
This case requires a reexamination of the
successorship principles heretofore enun-
ciated by this Court to ensure that statu-
torily protected rights of employees and
employers are not violated by principles and
concepts adopted by the National Labor
Relations Board.
As has been previously noted, the
former employees of Sterlingwale worked
under a succession of collective bargaining
agreements for approximately 30 years,
involving the same Union, Local 292, the
last of which expired April 1, 1982. The
collective bargaining agreements contained
Standard Union security provisions permitted
by Section 8(a)(3) of the Labor Management
Relations Act, as amended. As a result, any
employee who had worked for Sterlingwale
Since the Union was recognized, and any
employee hired by Sterlingwale during the
ensuing 30 years until its financial demise
in the early spring of 1982 did not express
their preference with regard to their choice
of a bargaining representative.
The Board's continuing demand theory in
this case rests upon the presumption of
majority status by the Union under the
predecessor employer's ownership (Respon-
dent's Brief, pp. 12-14). Petitioner urges
that the Board's continuing demand concept
is not applicable where the Union made its
initial bargaining demand without majority
Support, as is undisputedly the situation
herein. The Board urges in its Brief (p.
13) that petitioner's reliance on Hedstrom
Co. v. NLRB, 558 F.2d 1137 (3rd Cir. 1977),
is misplaced.
In Hedstrom, supra, the Court rejected
the Board's concept, in an unfair labor
practice context, reasoning that if it were
adopted, the employer might be forced to
violate Section 8(a)(2) of the Act by
recognizing a minority union. The Board
urges in its Brief (p. 13) that Hedstrom is
not applicable to a successorship case and
rests its argument on the analysis of the
Court of Appeals hereinbelow (Pet. App. Al3-
Al4). This, in turn, rests on the presump-
tion of the Union's continued ntentes
status. It is indeed difficult to reconcile
this presumption under the facts of this
case and in light of the holding of this
Court in NLRB v. Burns Internatio
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