Petition for Writ of Certiorari — Machinists v. Boeing Co. (No. 74-10005)

Supreme Court brief1974

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LiIGKARY

SUPREME COURT, U,

MICHAEL RODAK, JR. CLER

IN THE

Supreme Court of the United States

OcTOBER TERM, 1974

No. FYA*1005

INTERNATIONaL ASSOCIATION OF MACHINISTS AND

AEROSPACE WorKERS, AFL-CIO, Et AL., Petitioners

Vv.

THE Boring Company, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

Prato E. Papps

1300 Connecticut Avenue, N.W.

Washington, D. C. 20036

BERNARD DuNAU

912 Dupont Circle Building, N.W.

Washington, D. C. 20036

Frank E, HamILton, JR.

101 East Kennedy Boulevard

Tampa, Florida 33602

Attorneys for Petitioners

Press or Byron S. ADAMS Printinc, INc., WasHiINcTON, D. C.

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TABLE OF CONTENTS

Page

Ci I cy Lease e as vee tO ee neereses 1

Pe eee ee ear ane Ee er rr eer yy ane ey 2

QUESTION PRESENTED 2.0.6.0 0 2 ees e eee e eee eee eens 2

Beart IMVOEVED ..cccsscccvcsercsvenesecceeseces 3

Reiieige cae knd bones gaene eeaneheusen Okan’ 3

5 I od cei se base eaeeewsen ke hues 5

DE, TOE isin ce ns vaca vccceccvesenenrerds 6

Il]. NASA’s Award to Boeing of the Contract to

Furnish Installation Support Services at KSC... 7

IV. Boeing’s Reeruitment of a Work Force. ........ 9

V. Boeing’s Takeover of the Operation on April 1,

REC OSes sear ray ere Tee ere ee ee

VI. LAMAW and Boeing Join Issue... .........-. 15

Reasons FoR GRANTING THE WRIT ......----0eeeeeees 18

CONNEC oi vc coos cbse ss eseds cesedeckeeeev save 32

AUTHORITIES CITED

Cases:

ABC Food Service, 176 NLRB 426 ..............006- 21

Boys Markets v. Retail Clerks Union, 398 U.S. 235... 29

Dorrance J. Benzchawel, d/b,a Perkwood IGA, 201

PE eal einen cians nee ke Oks RR ee Oe 27

Emerald Maintenance, 188 NLRB 876 ............-. 21

Emerald Maintenance v. N.LAB., 464 F.2d 698 ...... 27

Fry Roofing Company, 192 NLRB 791 ..........---- 27

Geronimo Service Co., 191 NLRB 450 .........2..... 21

}.T.&E. Data Services Cerp., 194 NLRB 719 ......... 27

ii Table of Contents Continued

Page

Howard Jolunsou Co. v. Detroit | Pa al Joint Kvec, Ba.,

ee REA ea nny Meta Day = 1A ore 4, 18, 22

24, 29,30

Enteen Vs Comnmlen, BG UGA ooo ove ve ea kc ncn 18

Maintenance, Inc., 148 NLRB 1299 ................ 20, 28

N.LRB.v. Burns International Secxrity Services, 406

MME BERT IN cee ecaWaa conker oe 20, 21, 22, 30

N.L.R.B. vy. Geronimo Service Co., 467 F.2d 903 22... 27

Pipefitters v. United States, 407 U.S. 385 ..........-. 25

Quaker Tool and Dye, 162 NLRB 1307 ............... 28

Ranch-Way, Ine., 183 NLRB 1168 .................. 28

Royal Brand Cutlery Co., 122 NILRB 901 ............ 28

Solomon Johnusky, 184 NLRB $26 ..............0.... 28

Spruce Up Corporation, 194 NLRB 841 .............. 21

Tri-State Maintenance Corp., 167 NLRB 033 ........ 20

United Maintenance & Mfg. Co., 214 NLRB No. 31, 87

FS RE RGA ne aye pelah et 27

United States v. Hutcheson, 312 US, 219 20000. 24, 23)

Western Freight Asso., 172 NLRB 303 .............. 28

John Wiley & Sous vy. Livingston, 376 US. 543 22... 19, 31

Zim’s Foodliner v. NLRB. 495 F.2d 1131 2... 00... 27

StTaTuTES AND REGULATION:

Be Ws OE AE ho hh wed ander came eke ct 2

Oe . PP TUED wand knee eens ck bcanecuesenets 6

ctaytom Act, 6G, 13 UC. 640 ov ccc cncnccansasncce 9

Labor Management Relations Act, $2301, 301 (or oo

Service Contract Act, §4(e) ......00cccccecsccuvece 29

LEGISLATIVE MaTrertaL:

Committee Print, Report of the Special Subcommittee

on Labor, House Labor Committee, The Plight of

Service Workers under Government Contracts,

92d Cong. Ist Sess., 1, 14-16 (1971). ............ 19, 24

Hearings before the Subcommittee on Labor, House

Labor Committee on S. S827, Tbh RL 15376, Ged

Cong., 2d Sess., 1S (1972). ES RR ee EE Ce 18

S. Rep. No. 92-1151, ¢2nd Cong., 2d Sess., (1972). 2... 24

IN THE

Supreme Court of the United States

OcToBER TERM, 1974

No.

INTERNATIONAL ASSOCIATION OF MACHINISTS AND

AERospACcE WorKERS, AFL-CIO, ET AL., Petitioners

Vv.

Tae Borixa Company, Respondent

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR

THE FIFTH CIRCUIT

International Association of Machinists and Aero-

space Workers, AFL-CIO, its District Lodges 142 and

166. and its Loeal Lodges 773 and 2061 pray that a

writ of certiorari issue to review that part of the judg-

ment which is adverse to them entered in the above-

eutitled case on November 15, 1974 by the United

States Court of Appeals for the Fifth Cirenit (infra,

pp. la, 34a).

OPINIONS BELOW

The opinion of the Court of Appeals is reported at

504 F.2d 307 (infra, pp. la-34a). The opinion of the

District Court is reported at 351 F. Supp. 813 (infra,

pp. 3da-41a).

JURISDICTION

The judgment of the Court of Appeals was entered

on November 15, 1974 (infra, pp. la, 34a). The juris-

diction of this Court rests on 28 U.S.C. § 1254(1).

QUESTION PRESENTED

The Court of Appeals concluded that an incoming

employer which takes over the performance of instal-

lation support services in an ongoing operation pur-

suant to a federal service contract is not the successor

of the outgoing employer obligated to arbitrate the

claim of the incumbent union that it is bound by, and

has violated, the collective bargaining agreement be-

tween the union and the outgeing employer. The ques-

tion presented is whether the Court of Appeals, in

reaching this conclusion, applied the correct legal

standards in determining that: (1) an incoming em-

ployer which takes over an operation by bid is inher-

ently in a lesser position to be a successor than an

incoming employer which takes over an operation by

merger or purchase; (2) by reason of this lesser posi-

tion, greater continuity in the identity of work force

must be shown in the case of a takeover by bid than in

the case of a takeover by merger or purchase to estab-

lish the incoming employer as a successor; and (3)

continuity of identity in the work force is determined

by ealeulating the percentage of the incumbent em-

ployees who remained in the incoming employer’s com-

plement in relationship to the total number of employ-

ees who had been in the employ of the outgoiug em-

ployer, rather than in relationship to the total :umber

of employees who are in the employ of the ineoming

employer.

STATUTE INVOLVED

Section B01(a) of the Labor Management Relations

Act of 1947 (29 ULS.C. § 185) provides in part that

“[s]uits for violation of contracts between an employer

and a labor erganization representing employees in an

industry affecting commerce... may be brought in

any district court of the United States having juris-

diction of the parties .... .

STATEMENT

I. Introduction

National Aeronautics and Space Administration

(NASA) replaced Trans World Airlines, Tne. (TWA),

with The Boeing Company (Boeing), as the contractor

to supply installation support services at John F. Ken-

nedy Space Center, Florida (KSC). This change

from TWA to Boeing is at the center of this case.

International Association of Machinists and Aero-

space \Workers, AFL-CIO, (IAMAW), had a collee-

tive bargaining agreement with TWA establishing the

employment terms of 1,100 workers doing installation

suppert services work at KSC, TAMAW took the

position that this agreement be und Boeing as the sue-

cessor to TWA, Boeing disagreed: it disregarded and

departed from the terms of the IAMAW-TWA agree-

ment. TAMAW requested, and Boeing refused, to

arbitrate grievances arising from Boeing’s failure to

honor the TAMAW-TWA agreement.

Boeing filed a complaint in the District Court seek-

ing a declaration that it ‘is not a successor to and is

not bound by the collective bargaining agreement exe-

cuted by... [IAMAW and TWA]”’ (AT 4). IAMAW

counterelaimed, seeking enforeement of its arbitration

demand, and a declaration that “in its performance of

its installation support serviees contract at’ KSC,

Boeing ‘is bound by the terms of the collective bar-

giining agreement between” LAMAW and TWA “as

it applies at’ KSC, and “is obligated to arbitrate any

claims submitted” by IAMAW that Boeing “thas vio-

lated the agreement’ (AL 41), Upon eross-motions

for summary judgment. the District Court declared

that ** Boeing is not a snecessor and is net hound by

the collective bargaining agreement between TWA

and TAM", and it denied the TAMAW's “prayer for

an Order requiring arbitration” (infra, p. 40a, AIV

1942). It based its determination on the sole ground

that Boeing populated its work force With a comple-

ment of which less than a majority were comprised of

TWA employees (infra, p. 39a, ALV 1940),

On appeal, the Court of Appeals affirmed, but on

different grounds. It observed that “‘there is no doubt

on this record that Boeing has pursued its business in

a manner sub-tantially congruent to TW A’s patterns

-+.”” (infra, }.. 19a). Its next step took it from iden-

tity of the operation to entity of the work force. It

began with te proposition that this Court’s decision

in Howard Johuson Co, ¥. Detroit Local Joint E.ree.

Bd., 417 U.S. 249, 263 (1974), *‘establishes that ‘con-

tinnity of identity in the business enterprise neces-

sarily includes ... a substantial continuity of identity

of the work force across the change in ownership’ ”’

(infra, p. Wa). Tt noted that the ‘parties here have

debated the substantiality of the continuity in the

identity of the work force largely in terms of the 39°

of Boeing’s employees who had Worked for TWA”

(infra, p. 22a). Tt held that the standard upon which

this computation was based is erroneous, Tn its view

“the more significant factor in determining the con-

tinuity in the identity of the work force for the pur-

pose of determining whether a suecessor employer

must arbitrate under its predecessor's contract is the

percentage of the predecessor's employees who have

continued to work for the suceessor,”’ not the per-

centage of the succeessor’s employees who had earlier

worked for the predecessor” (infra, pp. 21a-23a).

Based on this newly-devised standard it determined

that 35 percent of TWA employees... became Boeing

employees... 7" Ciufra, p. 22a).

Having concluded that the relevant ratio is 35 per-

cent for the purpose of ascertaining substantial con-

tinnity of the work force, the Court of Appeals then

turned to “other indicia of euterprise continuity...”

(infra, p. 26a). It stated that *teontinuity in the iden-

tity of the business enterprise is more strongly shown

where the predecessor employer-suecessor employer

relationship is one of purchase and sale, or merger,

then in this replacement-under-periodic-rebidding sit-

untion’? Ciufra, pp. 29a-30a). To offset the hypothe-

sized lesser continuity when the operation is taken over

hy bid, the Court of Appeals reasoned that ‘the con-

tinuity in the identity of the work foree must be more

substantially established than would be required were

the relationship between the predecessor and successor

employers one of merger, or purchase and sale” (infra,

». 30a). It concluded that, given the nature of the

relation between TWA and Boeing, the extent of the

continuity in the identity of the work force established

here is not sufficiently substantial to oblige Boeing

under § 301 to arbitrate under its predecessor’s con-

tract’? (infra, p. 31a).

II. Background

NASA’s mission is to “plan, direct, and conduct

aeronautical and space activities...) 42 U.S.C.

§ 2473(a)(1). (AL 18, 154.) To this end it operates

KSC within the Merritt Island, Florida, area. This

area is NASA's principal launch site for manned and

uamanned space launches. (ALI 18, 155. )

NASA requires installation support services at KSC

in order for that facility to function. For seven years

through March 31, 1971, TWA pertormed these house-

keeping functions for NASA, the services being pro-

vided pursuant to a cost-pius-award-fee contract of

which the most vecent extension expired on March 31,

1971. The contract emphasized the need for continuity

of installation support services ‘tat the utmost pro-

ficiency without interruption” in the event of 2 change

from TWA to a “successor contractor." (AI 175, 184;

_ ATIT 1436-37, 1448-51; ALV 1709-13.)

Except for certain functions subcontracted by TWA,

the installation support services were performed by

nonsupervisory personnel employed by TWA, about

1,100 in number. These 1,160 employees were repre-

sented by TAMAW, and the terms of their employment

were governed by a collective bargaining agreement

between IAMAW and TWA. (AT 3.5, 14, 19, 155, 27,

112,171, 175, 178-296; AITTT 1098, 1440-42: ATV 1710-11,

1722-23.) IAMAW representation of. this class of

TWA employees existed throughout the entire seven

years of TWA’s inenmbeney at KSC, The then most

recent of a series of agreements between TAMAW and

TWA had been entered into on January 28, 1970 and

was to “remain in full force and effect to and inelud-

ing December 31, 1971... 2° (AT 3.5 (Arts. IT(d),

III(a), XXIX pp. 6-7, 192), 14; AIV 1873-74, 1898-

1901.)

Unlike the installation support services work done

by TWA at KSC, Boeing at KSC performed ‘‘hard-

ware contracts’’ CATV 1785-86; AIL 1442), and its

then current hardware contract with NASA required

it to furnish launch support of the missile (AI 20, 156,

176, 299; AIV 1704-09, 1763, 1496-97; AIII 1442).

The work of launch support performed by Boeing and

the work of installation support performed by TWA

are separate and different (ATT 1442; ATV 1497).

Boeing employed 287 nousupervisory personnel in

the performance of the launch suppert work. They

are represented in collective bargaining by LAMAW

and its Loeal Lodge 2061, and the terms of their em-

ployment are governed by a collective bargaining

agreement between Bocing and the IAMAW. The then

current bargaining agreement was for a term from

October 2, 1968 through October 1, 1971. CAL 20-21,

44, 156, 176, 299.)

III. NASA’s Award to Boeing of the Contract To Furnish

Installation Support Services at KSC

The wages and fringe benefits provided by the

IAMAW-TWA collective bargaining agreement were

substantially higher than those provided by the

IAMAW-Boeing agreement.’ This difference in labor

cost is at the crux of the ensuing controversy,

Under date of June 30, 1970, NASA issued Request

for Proposal No, 2-870-0 (REP), soliciting proposals

TAT 24-25, 49. 51. 52, 64, 90, 92, 94-95, 170-171; ATE 919;

ATTT 1028-31, 1040-42, 1049-51, 1116-18, 1222-25, 1728-30. 1056-

62, 1154-58, 1183-85, 1189-90, 1198-1202, 1277-79, 1281, 1256 97:

ALV 1549-50.

“to provide Installation Support Services for the

Kennedy Space Center” (AL 176, 302, 21-22,157). The

solicited services were to be performed under a cost-

plus-award-fee type coutract for a one-year period

commencing February 1, 1971, with options in NASA

to extend the contract fer four successive one-Vear

periods, resulting in an auticipated period of per-

formance tof sixty (60) months duration” (AL 176,

306-307, 21-22, 157),

With minute variations the REP called for the per-

formance of the identical installation support services

at KSC as were then being provided by TWA (Cf. Al

18-296 with AT 302-492: ALL 497-617: ATT 1457-42,

1447-51; ATV 1713-25, 1764-65). The consensus is that

the work is essentially the same (ALY 1722, 1460, 1787;

AITIT 1437-38, 1096),

TWA, Boeing, and tive others submitted proposals

in response to NASA’S REP (AT 23. 169). TWA and

three other offerors based their computation of labor

cost on the wage rates and fringe benefits established

by the TAMAW-TWA aereement (AT 24, 49-50, 170).

Boeing based its computation of Tabor cost on the wage

rates and fringe benefits provided by the TAMAW-

Bocing agreement CAT 22-24. 169). The disparity was

marked, Of 22 job classifications, Boeing reduced the

existing hourly wage rate for 20 of the 22 jobs. a redue-

tien ranging in percentage terms from a decrease of

“6, at the high to 4, at the low. and in money terms

from SLES per hour at the high to 151% cents at the

low. CATTT 1154-58, 1183-85. 1189-90, 1198-1202, 1277-

#9, 1281, 1296-97: ATV 1500-07.)

On November 23, 1970, NASA selected Boeing “for

negotiations leading to an award of a contract to pro-

vide” installation support services at KSC CAT 24, 46,

157; ALV 1702). NASA later explained that, while it

had found that TWA's proposal was technically su-

perior to Boeing's, it had selected Boeing because its

proposed labor costs were substantially below the ex-

isting wage rates and fringe benefits presently enjoyed

by the incumbent work force (AT 24-25, 49, 51, 52, 64,

90, 92, 94-95, 170-171). TWA and IAMAW protested

to no avail to NASA and the Comptroller General that

an award based on undereutting the existing collee-

tively-bargained compensation of employees is in con-

Hiet with national labor poliev and government pro-

eurement poliey. On Mareh 11, 1971, after denial on

March 10. 1971 of a preliminary injunetion sought by

TWA to restrain’ NASA from contracting with.

boeing CATV 1485-84). NASA entered into a contract

with Boeing to provide installation support services at

KSC (AD 31, 158).

IV. Boeing’s Recruitment of a Work Force

The REP issued by NASA required offerors to sub-

mit a basie staffing proposal. explaining in depth how

the offeror would obtain competent persomel, incelud-

ing a statement of its plans regarding the employment

of incumbent workers (CAL 22, 169). Tn response,

Bocing stated that In order to maintain continuity of

support approximately 866, of the proposed organi-

zation will be staffed by qualified inenmbents”” CATV

1522, 1562). This representation that it would retain

about 86 percent of the incumbent work force was

repeated throughout its response (ATV 1568-71, 1574-

PAT 24. 26-31, 54-35, 47-107. 114. 116. 119, 137-142. 170-172,

176; AT 618, 621; ATID 1234, 1287, 1323-24, 1345-47: ATV 1703,

1727-32. 1529, 1532-33, 1486.

BPSK ORe nat

75). With respect to the installation support services

work performed by the TWA incumbent employees

represented by the IAMAW, Boeing expected to hire

a work force of about 1,000 employees, of whom it pro-

posed to recruit **All we eould get’? from the TWA

incumbents, no less than 86 percent and ‘closer to

100°, ...’’ (AIV 1677-78).

Boeing's proposal to hire about 86 percent of the

TWA incumbents was widely known and publicized.

Boeing told the press, and newspapers in cireulation in

Brevard County reported, that Boeing would hire a

“majority”? or a “large percentage’? of TWA incum-

bents, by which it meant the 86 percent stated in its

staffing plan (CATV 1462-63, 1743-45, 1769, 1537. 1648-

49, 1678; ATIT 1428-29, 1446-47). soeing assured

TAMAW, during their meetings in late November and

early December in 1970, that it would retain most of

the TWA incumbents in employment (ATTT 1152, 1177.

1179, 1181, 1183, 1230, 1274-76; ATV 1499). Ata meet-

ing on November 30, 1970, Boeing informed TWA that

“most of them [TWA employees] would be hired”

(ATV 1623). On Deeember 1, 1970, TWA informed

its employees that ** Boeing is interested in hiring the

majority of TWA KSC employees’? (AIV 1865-66,

1868-69, 1882: AITT 1021).

In early December 1970 Boeing and TWA devised a

hiring procedure by which applications for employ-

ment would be distributed to the TWA incumbents

that month with the expectation that Boeing would

commence interviewing them in early January 19712

FATT 1021-23, 1026, 1033-34, 1074-75. 1077-78, 1082, 1098-99,

W108, 1427-31, 1454-55: ATV 1622-24. 1670-71, 1865-66, 1868-69,

1880-82: Keil dep. 27-31.

But the plan failed primarily because of the extremely

unsettling environment which enfolded Boeing’s an-

ticipated accession, The employees were highly appre-

hensive about the proposed drastic undereutting of

their employment standards, which entailed not only

a sharp reduction in their wages (supra, p. 8), but

hire by Boeing as new employees with zero seniority,

with the consequent loss of the security of their prior

service in determining the sequence of layoff (AIV

1590, 1557-60, 1688-91, 1815-18), and with lesser vaca-

tions and sick leave, poorer promotional opportunity,

and lesser eligibility for participation in the savings

plan and in retirement benefits (ATV 1556, 1816, 1818).

There was, in addition, prolonged uncertainty as to

whether Boeing would actually replace TWA (AIII

1451, 1425; ATV 1865-71). There was also the un--

quieted anxiety of transition. This took such forms as

fear that transmission of employment applications to

Boeing through TWA would be used as a means of

conveying detractive iiformation to Boeing or that

the applications would not be transmitted at all; ap-

prehension that acceptance of employment with Boeing

would result in loss of severance pay due from TWA;

uncertainty of the time when employment with TWA

would end and employment with Boeing would begin;

and concern as to the consequences of delay in submit-

ting an employment application to Boeing (ATV 1865-

67, 1869-73, 1882, 1887-91, 1894-95). Finally, there was

Boeing’s unprofessional conduct in interviewing TWA

incumbents (ATIT 1432-34), ineluding the deception

that the ‘first people’’ to submit applications **get the

lead jobs” and minimization of the size of the wage

cuts by quoting the ‘maximum money” offered for the

lead positions (AIV 1654-57).

As a result of the utter confusion infusing the situa-

tion, the employees in December 1970 adopted the rec-

ommendation of the Executive Board of their Loeal

Lodge 773 *‘to hold onto the applications and don’t

turn them in’? (AIII 1194, 1354, 1362, 1364-67, 1371-

72, 1394-95, 1401-02). Three factors entered into their

thinking (AIII 1369-71, 1375-76, 1392-98, 1165) :

1. As the incumbent work foree, without whom it

was thought there would be no available manpower to

perform the installation support services work, with-

holding employment applications would be an effective

lever to induce Boeing to observe the existing employ-

ment terms. The thought was captured in the phrase

“They can’t run the space center without us and we

aren't applying for jobs with them.”’

29 The IAMAW-TWA agreement bound TWA’s

Scuecessors and assigns’? to comply with it, and a

united stand by the incumbent work force would im-

press Bocing with the need to observe this legal obli-

gation, while submission of employment »pplications

would prejudice its enforceability.

3 No contract had yet been entered into between

Boeing and NASA; Boeing's selection was still unre-

solved beeause of the pendency of TWA’s protest be-

fore the Comptroller General; it was therefore pre-

mature to expect the incumbent work force to commit

itself to a contractor whose selection was still in doubt.

At the instance of the IAMAW (the International

Union), the employees were persuaded to recede from

this position, and at a top-level meeting on February

19. 1971. the IAMAW informed Boeing that the TWA

ineumbents did seek and desire employment with

Boeing, and would cooperate in every way to effectuate

an orderly lateral transfer of the TWA incumbents to

Boeing’s work force.’ Boeing’s spokesman stated that

Boeing's recruitment of a work force was well ad-

vanced and that it may already be too late to place the

TWA incumbents with Boeing. This ‘‘came as a com-

plete shock”’ to the union representatives (AIIT 1313).

IAMAW’s spokesman protested that the TWA in-

cumbeuts had first priority on the jobs, and that the

premise of Boeing’s bid for the centract and NASA’s

selection of it was that most of the TWA incumbents

would be retained in employment. He heatedly com-

plained that the refusal of jobs to TWA incumbents

was something the union representatives were hearing

‘*for the very first time’’, that ‘‘this was a brand-new

position’’, and that he feared that “it would appear

... that there was a very strong possibility that most

of our members... wouldn’t get a job with... Boeing

.. (ALIT 1343). Boeing’s spokesman coneurred in

that prediction (AIL 1343-44, 1315).

The prediction came true. In early January 1971

socing had run advertisements in a local newspaper

stating that it was accepting applications for employ-

ment for the installation support services work (AIIT

1024, 1052; AIV 1631-32, 1463-64, 1681-83), and on

January 31, 1971, it mailed 818 offers of employment,

of which 207 were sent to TWA ineumbents and 601

to outsiders and former Boeing employees (ATV 1760-

61,1771). As of April 1, 1971, when Boeing took over

the performance of the installation support services

work, it had 981 employees on its payroll working in

the installation support services jobs formerly filled by

* ATIT 1313-14, 1316-20, 1326-44, 1388-92, 1245-46, 1248-50; ATV

1874-77, 1902-11, 1830, 1835, 1839, 1842, 1475-81, 1508-17, 1527-28,

1643.

IAMAW-represented TWA incumbents (AI 176, 299).

As of March 31, 1971, it had received 1,007 acceptances

of employment within this class of work, divided among

386 TWA incumbents, 129 former Boeing employees,

20 present Boeing employees, and 472 outsiders (A1V

1734-36, 1766). On this breakdown, the TWA inecum-

bents comprised more than 38 percent of Boeing’s work

foree. An analysis of other data furnished by Boeing

depicts a differert but not dissimilar breakdown. It

shows that Boeing on April 1, 1971 had 970 employees

on its payroll within the [AMAW-represented class,

divided among 380 TWA incumbents, 138 Boeing em-

ployees (transferred, recalled from layoff, and former),

450 outsiders and two employees unidentified as to

source (AI 176-177, All 622-686). On this breakdown,

the TWA incumbents comprised more than €9 percent

of Boeing’s work force.

V. Boeing’s Takeover of the Operation on April 1, 1971

Boeing took over the performance of the installation

support services work on April 1, 1971. TWA incum-

bents hired by Boeing, reporting for work on April 1,

1971, did the identical work at the identical place and

in the identical way as when they had been in TWA’s

employ on March 31, 1971, the day before. But they

worked at sharply reduced wages, as new employees

with no seniority, and with consequent loss of their

vacation and other benefits. (ALIT 1028-31, 1040-42,

1049-51, 1116-18, 1122-23, 1128-30, 1056-62.)

Boeing gave each employee reporting for work on

and after April 1, 1971, within the TIAMAW-repre-

sented class of employees performing installation sup-

port services work, a copy of the IAMAW-Boeing

agreement and a notice in the form prescribed by that

> a in

rah? ale . —_ ose; CVE OA WRAP ha ees.

“

agreement, informing the employees that the [AMAW

was their representative and that their terms of em-

ployment were governed by the [AMAW-Boeing agree-

ment (AI 36-37, 143, 159). Boeing recognizes the

IAMAW as the representative of the hourly employees

performing installation support services work, but

only as part of the KSC unit covered by the IAMAW-

soeing agreement; Boeing applies the [AMAW-

Boeing agreement to the performance of that work;

aud it treats with the union representatives in the

handling of complaints of the employees doing that

work (AIV 1546-47, 1814-15, 1778-80).

VI. IAMAW and Boeing Join Issue

As stated, on March 11, 1971, NASA entered into a

contract with Boeing to provide installation support

services at KSC (supra, p. 9). Ou March 12, 1971,

IAMAW wrote to Boeing requesting inter alia that

soeing adopt and observe the employment terms of

the IAMAW-TWA agreement as it applies at KSC

(AT 32-33, 130-131, 158). LAMAW asked Boeing to

identify any ‘‘particular terms of that agreement’’

which Boeing might believe ‘‘are inappropriate in their

application to Boeing’s forthcoming operation’ at

KSC, informing it that die “IAMAW will negotiate

with Boeing concerning those identified terms to the

end that mutual agreement upon the deletion, modifi-

extion, or continuance of those terms will be sought’’

(AT 33, 130-131).

In its reply of March 19, 1971, Boeing stated that it

recognized IAMAW as the representative of the in-

stallation support service employees as part of the

KSC unit covered by the TAMAW-Boeing agreement,

and that it would apply the IAMAW-Boeing agree-

" . ns ng “ See el A

as w Wrote SertSA » catarsia pale, RT

OS i ss

| sade ous

LE OTD ACTH SELES OW NGL PEGI IS POR OL.

ment to their performance of the installation support

services work at KSC. It further stated that ‘“We do

not regard Boeing as a successor to the bargaining

relationship as that relationship existed between the

IAMAW and TWA” (AI 33, 136). To support this

position, Boeing asserted that it has “‘already proc-

essed some 860 employees”’ to be employed to perform

the installatica support services work, and that ‘‘[o]f

this figure, 235 are current TWA employees. The re-

maining are either current or former Boeing employ-

ees, or are from outside sources.”’ Accordingly, it

concluded, “‘with the knowledge that at least 625 of

the approximately 1,000 employees .. . will be non-

incumbent, Boeing is of the opinion for these and other

reasons that it cannot be a successor to the TWA-IAM

collective bargaining agreement.”’ (AI 34, 134.)

On April 26, 1971, the IAMAW submitted a griey-

ance to Boeing arising from its refusal to observe the

IAMAW-TWA agreement (AI 38-39, 8-9, 160) :

In accordance with Article XI (b) (5) of the Col-

lective Bargaining Agreement between . . . [TWA

and IAMAW}], which... Boeing .. . is required

to observe with respect to the performance of in-

stallation support services work at... [KSC], I

am submitting the following grievance relating to

matters general in character:

1. ... Boeing... failed to retain in employment

as of April 1, 1971, at least 602 members of the

incumbent work force performing installation

support services werk at... [KSC], and this

failure constitutes a reduction in force out of

seniority order, and /or a dismissal without just

cause and without compliance with the proce-

dures requisite to that action, in violation of the

IAMAW /TWA Agreement.

\ ey eT DCP eee

re] '

m '

2.... Boeing... failed and fails to accord to the

members of the incumbent work force whom it

did retain in employment on April 1, 1971, the

seniority that each employee had as of April 1,

1971, but instead treats them as new hires with

zero seniority.

3. ... Boeing... failed as of April 1, 1971, and

fails, to observe the wages, other benefits, and

other employment terms of the TWA/IAMAW

Agreement as it applies to the performance of

installation support services work at... [KSC],

and which governs for its duration the wages,

hours and oth2r employment terms at...

[KSC].

On May 6, 1971, Boeing declined to consider the

merits of the grievance, stating in part that (AI 39,

12, 160): jet.

Consistent with our position that the contract on

which the purported grievances are based has no

application to The Boeing Company or any of its

operations or activities, we cannot and do not rec-

ognize your letter of April 26, 1971, as a grievance

and decline to respond to it as such.

On May 18, 1971, [AMAW submitted the identical

grievance to Boeing at a higher level of its hierarchy,

and, foreseeing an identical refusal, simultaneously

invoked ‘‘the procedure prescribed by Article XII of

the TWA-IAMAW agreement for final and binding

arbitral determination of the grievance’’ (ATI 39, 146-

147, 160). But Boeing had anticipatorily rejected this

request to arbitrate, having filed its complaint on May

10, 1971, praying for a declaration that Boeing ‘‘is not

a successor to and is not bound by the collective bar-

gaining agreement executed by the defendants and

Trans World Airlines’? (AI 4).

OD RS IS Le 8 +

As stated, in the litigation which ensued, the Court

of Appeals, affirming thé District Court’s judgment |

but disagreeing with its reasoning, concluded that

Boeing was ndt a successor to TWA obligated as a

successor to arbitrate IAMAW’s claim that Boeing

was bound by and had violated the IAMAW-TWA

agreement (supra, pp. 4-5).

REASONS FOR GRANTING THE WRIT

This case illumines another part of the forest in the

continuing quest for a viable law of industrial sue-

eessorsaip. In this search this Court is committed to

‘the traditional case-by-case approach of the common

law.”” Howard Johnson Co. vy. Detroit Local Joint

Exec. Bd., 417 U.S. 249, 256 (1974). The ‘*process of

litigating elucidation’’® requires periodie selection of

a vehicle by which the probe may profitably go forward.

This is such a case. As the Court of A ppeals observed,

“*We determine our conclusions by reference te land-

marks set by the Supreme Court; but its positions have

been too few to survey the entire landseape, and we

explore here a largely shadowed spot’ (infra, p. 9a).

The spot is the enormously important commercial

activity by which a contractor is periodically selected

to perform a service through competitive bids, Even

limiting the field to a private eontractor’s furnishing

of services to a federal agency, the area is vast. Fed-

eral service contracts are negotiated “tat the rate of

about 21,000 annually,’’® and **several hundred thou-

sand employees work .. . under Government service

5T.AM. v. Gonzales, 356 U.S. 617, 619 (1958).

®Tearings before the Subcommittee on Labor, House Labor

Committee on S. 3827, ILR. 15376, 92d Cong., 2d Sess., 18 (1972).

ro =

contracts.”? The practical import of the activity is

therefore plain.

The situation in this case is ideal for additional de-

mareation of relevant criteria. The germinal test of

successorship is ‘‘any substantial continuity of identity

in the business enterprise before and after a change”’

in employers (John Wiley & Sons v. Livingston, 376

U.S. 543, 551 (1964) ); ‘relevant similarity and eonti-

nuity of operation across the change’? must exist

(ibid.). In this ease the relevant “business enter-

prise’ is furnishing NASA with installation support

services at KSC. Beeing replaced TWA in providing

NASA in essentially the same way with essentially

the same services formerly performed by TWA. Com-

plete continuity was maintained between TWA and

socing in the performance of that work, TWA step-

ping out as Boeing stepped in. Suceession exists in

every literal and realistic sense. Accordingly, the elar-

ity of the underlying situation presents an optimum

opportunity to fashion refined standards by which to

confirm or negate successorship as a matter of law.

The Court of Appeals framed part of the inquiry as

follows: ‘It is well established that the principle of

Wiley applies to corporate successorships accomplished

through purchase and sale rather than merger. We

consider here the extent to which the Wiley test of

continuity in the business enterprise can be satisfied

in a periodie rebidding service contract context .. .”’

(infra, p. 27a). It coneluded that, ‘where the rela-

* Committee Print, Report of the Special Subcommittee on

Labor, House Labor Committee, The Plight of Service Workers

under Government Contracts, 92d Cong., Ist Sess., 1 (1971).

tiouship between the predecessor and successor em-

ployers is one of replacement in the periodic rebidding

context, ... the continuity in the identity of the work

force must be more substantially established than

would be required were the relationship between the

predecessor and successor employers one of merger, or

purchase and sale’’ (infra, p. 30a). The first facet

of the question presented, therefore, is whether suc-

eessorship is to be tested by more rigorous criteria

when the takeover of an operation is effectuated by bid

‘ather than merger or purchase.

The beginning point is this Court’s decision in

NLRB. vy. Burns International Security Services, 406

U.S. 272 (1972). There, suceessorship was found al-

though Burns was the successful bidder on a contract

to provide security services at an airport facility in

competition with the previous contractor, Wackenhut.

The only difference between Burns and this ease, with

respect to the status of the incoming and outgoing em-

ployers as competitors seeking an award to perform

the same work, is that in Burns the successful bidder

contracted to furnish services to a private enterprise,

whereas in this case the successful bidder contracted

to furnish services to a federal agency. But as the

National Labor Relations Board has long held with ju-

dicial approval, suecessorship does not depend upon

the private or governmental character of the entity to

whom the services are furnished, but on substantial

continuity and identity in the services rendered to that

entity by the outgoing and incoming contractors.’

* Maintenance, Inc.. 148 NLRB 1299 (1964) (successor em-

ployer contracted with NASA to provide services); Tri-State

Maintenance Corp., 167 NLRB 933 (1967), enforced as modified,

Indeed, an observation in the dissenting opinion in

Burns emphasizes Boeing’s status as the successor em-

ployer in this case. The dissent is premised on the

proposition that there can be no successorship when the

sole connection between the incoming and outgoing

employers ‘‘is the hiring of some of the latter’s em-

ployees and the performance of some of the work which

was previously performed by the latter ...’’ (406 U.S.

at 306). The dissent stated that the situation would be

different :

where the new employer continues to make use of

tangible or intangible assets used in earrying on

the business of the first employer. [406 U.S. at

302.

The dissent reiterated that:

... We can require another employing entity to

perform the contract only when he has sueeeeded

to some of the tangible or intangible assets by the

use of which the employees might have expected

the first employer to have performed his contract

with them. [406 U.S. at 305.]

408 F.2d 171 (CLA.D.C. 1968) (successor employer contracted with

General Services Administration to provide services); ABC Food

Service, 176 NLRB 426 (1969) (successor employer contracted

with Alameda Naval Air Station to provide services); Emerald

Maintenanec, 188 NLRB 876 (1971), enforced as modified, 464

F.2d 698 (CLA. 5, 1972) (suecessor employer contracted with

Laredo Air Force Base to provide services): Geronimo Service

Co., 191 NLRB 450 (1971), enforced, 467 F.2d 903 (C.A. 10, 1972)

(successor employer contracted with the United States Air Force

to provide services at Holloman Air Force Base, New Mexico) ;

Spruce Up Corporation, 194 NLRB 841 (1972), modified on other

grounds, 209 NLRB No. 19 (197-4) (suecessor employer contracted

with United States Army and Air Force Exchange Service to

provide services at Fort Bragg, Novth Carolina).

The missing element which the dissent thought to be

eritical is supplied in this case. The TWA-NASA

agreement required that (AI 192):

The Contractor shall utilize available assigned

Government working space, equipment, tools, sup-

plies, materials and services... .

NASA's Request For Proposals stipulated the iden-

tical requirement (id. at 324). And the ensuing NASA-

Boeing agreement contained the identical requirement

(AIT 702). Accordingly, precisely as the dissent en-

visaged, but the majority found to be unnecessary,

Boeing makes use of the identical assets—space, equip-

ment, tools, supplies, materials and services—formerly

used by TWA to perform the same work. Given this

situation, in the words of the dissent in Burns, sue-

cessorship is supported by ‘‘the legitimate expectation

of employees...’ (406 U.S. at 305).

Nevertheless, the Court of Appeals distinguishes

Burns on the basis that it arose in a duty to bargain

context rather than a duty to arbitrate context (infra,

pp. 27a-28a), disregarding this Court’s stress in TTow-

ard Johuson that the “basic policies” pertinent to sue-

eessorship should not be different merely because the

issue arises in an unfair labor practice proceeding

rather than in an LMRA § 301 suit (417 US. at 256).

More fundamentally, however, the Court of Appeals

disregards the direction to policy that Congress gave

when on October 9, 1972, it amended the Service Con-

tract Act by the addition inter alia of a new section

4(¢) providing that a succeeding contractor shall pay

its service employees in the performance of a federal

service contract no less than the Wages and fringe

benefits provided for in the collective bargaining agree-

ment with the predecessor employer (41 U.S.C. § 353

(¢)):

No contractor or subeontractor under a contract,

which suceceds a contract subject to this Act and

under which substantially the same services are

furnished, shall pay any service employee under

such contract less than the wages and fringe hene-

fits, including accrued wages and fringe benefits,

and any prospective increases in wages and fringe

benefits provided for in a_collective-hargaining

agreement as a result of arm’s-length negotiations,

to which such service employees would have heen

entitled if they were employed under the predeces-

sor contract: Provided, That in any of the fore-

going circumstances such obligations shall not ap-

ply if the Secretary finds after a hearing in aceord-

ance with regulations adopted by the Seeretary

that such wages and fringe benefits are snhstan-

tially at variance with those which prevail for serv-

ices of a character similar in the locality.

Accordingly, so long as the incoming employer per-

forms under a sueceeding contract with a federal

ageney “under which substantially the same services

are furnished” as were provided by the outgoing em-

ployer to the federal agency. the existing collective

bargaining agreement with the predecessor employer

establishes the norm for the compensation of the em-

ployees, The congressional purpose is to provide ‘‘as-

surance that employees working for service contractors

under a collective bargaining agreement will have

wages and fringe benefits under a new service contract

no lower than these under current agreement.’’ S. Rep.

No, 92-1131, 92d Cong., 24 Sess, 1 (1972). “Ordi-

narily, where service employees are covered by a col-

lective bargaining agreement, a successor contractor

furnishing substantially the same services at the same

location will be obligated to pay such service employ-

ees no less than wages and fringe benefits requir -d by

such agreement. This requirement would likewise ap-

ply to prospective wages and fringe benefits.” Td., 4.

The immediate spur to adoption of section 4(¢) was

the disastrous experience at Kennedy Space Center

depicted in this very case, deseribed by the House La-

hor Subcommittee as ‘ta bitter ease history.”’* Given

that experience section 4(¢) was adopted ‘to provide

at measure of stability and dignity to service contract

employees ....°" S. Rep. No. 92-1131, 92nd Cong., 2d

Sess., 4 (1972).

But the Court of Appeals ignores the poliey which

underlies section 4(¢), saying that section 4(e¢) “was

not in effect at the time of the events which gave rise

to this controversy,”? is not to “apply retroactively,”

and, given its limitation to governmental contracting,

is not to be read ‘to express any Congressional state-

ment as to the interpretation of preexisting successor-

ship law in general’ (infra, p. 8a, and n. 8). This

coustriction of perspective recalls Justice Holmes’ ad-

tionition that in reading legislation “ ‘it is not an ade-

auate discharge of duty for courts to say: We see what

You are driving at, but you have not said it, and there-

fore we shall go on as before.’ United States y.

Hutcheson, 312 US. 219, 235 (1941). This Court re-

iterated in Howard Johusou that the “federal common

law [in an LMRA §301 suit] must be ‘fashion[ed]

from the policy of our national labor laws’ ’? 417 US.

* Committee Print, Report of the Special Subeommittee on Labor,

House Labor Committee. The Plight of Service Workers Under

Government Contracts, 02d Cong. Ist Sess., 14-16 (1971).

at 255). Among the ‘‘congressional pronouncements”

to which to look (ibid.), section 4(¢) is now of the first

rank and relevance as a source of law in shaping sue-

cessorship. For its policy makes crystal clear that

a change in the identity of the contractor-employers

in furnishing a service should not deprive the employ-

ees of the benefits of an existing collective bargaining

agreement which had established the labor standards

for the performance of the work in an ongoing opera-

tion. When the Court of Appeals says, in disregard

of the vivifying policy of section 4(¢), that it is “left

to the guidance and direction of the developing ease

law regarding suecessorship controversies” (infra, p.

Sa), it shuts from sight the one sure recent light. To

grope along without the aid thrown by this ‘ ‘eross

light’ ”’ is to try to read the will of Congress without

the illumination it has given.’ That is not the way to

read its will.

The Court of Appeals adopted a new and different

standard than has hitherto been employed by which to

measure the percentage of the incoming employer's

work force that is populated by employees who had

been in the employ of the outgoing employer for the

purpose of ascertaining continuing substantial iden-

tity of the employee complement. The Court of Ap-

peals noted that “the parties here have dehated the

substantiality of the continuity in the identity of the

work force largely in terms of the 39°; of Boeing’s

employees who had worked for TWA” (infra, p. 22a).

*Pipefitters v. United States, 407 U.S. 885, 411-412 (1972) see

also, Bous Markets vy. Retail Clerics Union, 398 U.S. 235. 250

(1970): United States v. Hutcheson, 312 U.S. 219, 234-235 (1941).

This percentage was arrived at by utilizing the total

number of employees in the i nceoming employer’s work

force as the denominator and the number of those em-

ployees who had come from the outgoing employer as

the numerator. The Court of Appeals, however, ar-

rives at a percentage of “about 35°; , by utilizing the

total number of employees in the outgoing employer's

work force as the denominator and the number of those

employees who went with the incoming employer as

the numerator (infra, p. 22a). According to the Court

of Appeals, **the more significant factor in determining

the continuity in the identity of the work force for the

purpose of determining whether a successor employer

must arbitrate under its predecessor’s contract is the

percentage of the predecessor's employees who have

continued to work for the suecessor,”’ not the **nercent-

age of the successor’s employees who earlier worked

for the predecessor”? (infra, pp. 21a-23a).

The formula newly-devised by the Court of Appeals

ein lead to quite bizarre ratios, Evample 1: The out-

going employer has a work force of 1,000. The ineom-

ing employer continues the operation in unchanged

form, but on a redneed seale, employing a work force

of 500 all of whom came from the outgoing employer.

According to the Court of Appeals, although all of the

incoming employer's force had been in the employ of

the outgoing employer, the relevant ratio is 50 percent.

Bramule 2: Ona takeover by merger the new emplover

absorbs into its existing foree of 750 all of the 250 em-

ployees comprising the old employer’s work force, Ac-

cording to the Court of Appeals, although the old em-

ployer’s work force makes up but 25 percent of the

new employer’s work force, the relevant ratio is 100

pereent.

SO NS a Re ED

The National Labor Relations Board with judicial

approval has repeatedly rejected the formula newly

adopted by the Court of Appeals. As it recently reit-

erated, ‘under circumstances where operations under

the new employer have not been changed in any sub-

stantial way, the standard for determining the new

employer's obligations to bargain with the union rep-

resenting the employees of the predecessor is not...

the percentage of the predecessor’s total complement

that the new employer retains, but the percentage of

the new employer’s work force which had previously

worked for the predecessor in the bargaining unit.’’ ™

United Maintenance & Mfg. Co., 214 NLRB No, 31. 87 LRRM

1469, 1472 (1974). See also the following cases, in each of which

the scope of the new employer's operation was sharply reduced

over that of the old employer, but in which successorship was found

based on the percentage of the new employer's work force which

had come from the old employer: Dorrance J. Benzchawel, d/b/a

Parkwood IGA, 201 NLRB 905 (1973), enforced, sub nom., Zim’s

Foodliner ¥. N.L.R.B., 495 F.2d 1131 (CA. 7, 1974) (the pur-

chaser of a single store is a suecessor employer although this

one store was formerly part of a multi-store unit of 11. stores

operated by the predecessor employer); N.L.R.B. v. Geronimo

Service Co., 467 F.2d 903, 904 (C.A. 10, 1972) (the incoming

employer was a successor although it took over only the mainte-

nance painting operation, whereas the predecessor employer per-

formed both maintenance painting and refuse collection) = Emerald

Maintenance v. N.L.R.L., 464 F224 698. 700 (C.A. 5, 1972) (the

original unit was composed of ‘all employees... performing serv-

ive work at Laredo Air Force Base.’’ while the succeeding unit

was confined to billeting and maintenance employees); G.T.&E.

Data Serviecs Corp., 194 NLRB 719 (1971) (the Board found sue-

cessorship where the incoming employer provided data processing

services with a complement of 21 employees, and this complement

of 21 when formerly employed by the predecessor was part of a

work force of 3,000 employees furnishing telephone services) :

Fry Roofing Company, 192 NLRB 791 (1971) (a ‘‘split’’ in the

predecessor's unit does not detract from the status of the second

employer as the successor of that part of the “*split’’ which it

The Court of Appeals would distinguish this stand-

ard on the ground that it is. suitable in a duty to bar-

gain context but not in a duty to arbitrate context (in-

fra, pp. 23a-24a). But in either context the central

inquiry is directed to determining whether continuity

and similarity of the operation has been maintained,

of which substantial continuity of identity in the work

force is one component. To say, as here, that employ-

ing one standard 39 percent may be enough in a re-

fusal to bargain context, but employing a different

standard 35 percent does not suffice in a duty to arbi-

trate context, is to allow sheer impressionism to rule.

A viable and coherent law of suecessorship cannot be

took over which of itself constitutes an appropriate unit); Ranch-

Way, Inc., 153 NLRB 1168, enforced, 445 F.zd 625 (C.A. 10,

1971), vacated and remanded to NLRB on other grounds, 81

LRRM 2736 (C.A. 10, 1972) (second employer was successor to

one of the predecessor's 11 mills and 5 grain elevators operating

in 5 states covered by a single national agreement); Solomon

Johnsky, 154 NLRB 826 (1970) (second employer was the succes-

sor to one of the predecessor's four meat markets); Western

Freight Asso., 172 NLRB 303 (1968) (the predecessor conducted a

freight handling operation at three ** Houses’? employing over 500

workers; the successor conducted a freight handling operation at a

single, new automated house, replacing one of the predecessor’s

houses, and employed at this house 110 men recruited from all three

of the predecessor's houses, with the predecessor continuing to op-

erate two of its houses; successorship was found although the

new employer operated only one of three of the predecessor's

houses) ; Quaker Tool and Dyce, 162 NLRB 1307 (1967) (the union

was certiied as the representative of a two-plant unit: the prede-

cessor leased one of the two plants; the lessee was held to he a

successor bounce by the certification although it operated oply

one of the two plants) ; Maintcnanec, Inc., 148 NLRB 1299 (1964)

(the predecessor performed both janitorial services and garbage

collection; the successor performed only janitorial services) ;

Royal Grand Cutlery Co., 122 NLRB 901 (1959) (the predecessor

operated a plant, including a warehouse and importing business

as part of the operation; the successor acquired the plant, less

the warehouse and importing business).

built by finding differences between 39 percent and 35

percent brought about by needless overrefinement. It

should be instructive that, in newly exacting section

4(c¢) of the Service Contract Act, Congress based sue-

cessorship solely on the incoming employer’s perform-

ance ‘under a contract, which succeeds a contract

subject to this Act and under which substantially the

same services are furnished’’, and not at all on the

coniposition of the incoming employer’s work force.

III

The Court of Appeals holds that, ‘given the nature

of the relation between TWA and Boeing, the extent

of the continuity in the identity of the work force es-

tablished here is not sufficiently substantial to oblige

Boeing under § 301 to arbitrate under its predecessor’s

contract” (infra, p. 31a). This determination, wholly

conclusory, rests on erronecus legal standards whether

or not the correct ratio is 39 percent or 35 percent.

In Howard Johnson, this Cout reiterated that the

Wiley successorship test requires ** ‘substantial con-

tinuity of identity in the business enterprise’ before

and after a change of ownership ...’’ (417 U.S. at

263). It fleshed out this test by its statement that

“[t]his continuity of identity in the business enter-

prise necessarily includes, we think, a substantial con-

tinuity in the identity of the work force across the

change ..."" (ibid., emphasis supplied). It concluded

that no suceessorship existed in Howard Johnson he-

cause ‘there was plainly no substantial continuity of

identity in the work force hired by” the incoming em-

ployer with that of the outgoing employer (id. at 264,

emphasis supplied). Thus, this Court looks to substan-

tial overlapping population to determine the sufficiency

of the nexus linking the work forces of the incoming

and outgoing employers.

In this case substantial overlapping population

plainly exists. Under the prevailing standard Boeing

retained 38-- or 39+ percent of the TWA incumbents

(supra, p. 14). Under the standard newly-devised by

the Court of Appeals Boeing retained 35 percent of the

TWA incumbents. Either 39 percent or 35 percent is

substantial by any measure. In contrast, in Howard

Johnson, wider the prevailing standard, the overlap-

ping population was 20 percent (9 over 45), and under

the Court of Appeals’ standard, the overlapping popu-

lation was 17 percent (9 over 53) (417 U.S. at 252).

But the link between the TWA and Boeing work

forces is substantially more than either 39 percent or

39 percent. Howard Johnson confirms an incoming

employer's *tright not to hire any of the former. . .

employees, if it so desired” (417 U.S. at 262, emphasis

supplied). Boeing did not so desire. Instead, it

planned to employ at least 86 percent of the TWA in-

cumbents (supra, pp. 9-10). Boeing proposed to utilize

the incumbent work force as its work force and by its

own plan therefore established “substantial continuity

in the identity of the work force... Cf.. N.L.R.B. v.

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

294-295 (1972).

To be sure, Boeing ultimately populated its work

force, not with the 86 percent of the incumbent em-

ployees that it planned, but with 39 pereent or 35 per-

cent depending on the standard applied. But the very

reason which accounts for this diminution is Boeing’s

refusal to observe the terms of the IAMAW-TWA

agreement. The work force would have been fully oe-

cupied with TWA incumbents had Boeing, in conform-

ity with the IAMAW-TWA agreement, maintained

their existing wages and fringe benefits and preserved

their preexisting seniority acquired by service at KSC

with TWA. Instead, it treated them, in derogation of.

the IAMAW-TWA agreement, as mere applicants for

employment with whom it could do as it would. The

resistance of TWA incumbents to immediate submis-

sion of employment applications to Boeing—which is

Bocing’s stated reason for employing others—was in

essence resistance to Boeing’s refusal to adhere to the

IAMAW-TWA agreement. Boeing is thus using the

condition it brought about by dishonoring the

IAMAW-TWA agreement as the basis for its claim

that it is not required to observe that agreement. Boe-

ing’s reasoning is therefore wholly circular. On its

theory the act and consequence of violating the agree-

ment becomes the reason why it is not obliged to ob-

serve it.

A viable law of suecessorship cannot be built on cir-

cularity. A dog may be entertained by chasing its own

tail. The law should not be.

The seminal essence of Wiley is that a switch in em-

ployers in an ongoing operation should “‘be balanced

by some protection to the employees from a sudden

change in the employment relationship’? (376 U.S. at

549). Its underlying philosophy is that employees

are not mere pawns in a commercial game whose wel-

fare may be sacrificed in any way which suits an en-

treprenenr’s pecuniary or managerial interest on a

takeover. This case epitomizes the vice which a mean-

ingful development of Wiley should suppress. Boeing

raed

decimated the incumbent work force, destroyed its

employment standards, and treated its members as if

they were mere supplicants to whom it owed no more

duty than to an utter stranger. A healthy law of

successorship should no longer tolerate such: industrial

absolutism. It should give contemporary meaning to

the continuing policy of Congress that ‘the labor of a

human being is not a commodity or article of com-

g y

merce,’’ "

CONCLUSION

For the reasons stated, this petition for a writ of

certiorari should be granted.

Respectfully submitted,

Puiato E. Parrs |

1300 Connecticut Avenue, N.W.

_ Washington, D. C. 20036

BERNARD Dunavu

912 Dupont Circle Building, N.W.

Washington, D. C. 20036

Frank E. Hamirron, Jr.

101 East Kennedy Boulevard.

Tampa, Florida 33602

Attorneys for Petitioners

February 1975

"Clayton Act, §6, 15 U.S.C. § 17.

ancerter ie, |

UNITED STATES COUKT OF APPEALS,

FIFTH CIRCUIT.

No. 73-1052

Tue Boetnc Company, Plaintiff-Appellee-Cross Appellant,

INTERNATIONAL AssoctATION oF MACHINISTS

AND Arrospack Workers, AFL-CIO, er at.,

Defendants-Appellants-Cross Appellees.

November 15, 1974

Appeals from the United States District Court for the

Middle District of Florida.

Before Brown, Chief Judge, and Gewrn and Go.psere,

Cireuit Judges.

GotpserG, Circuit Judge:

This clash between the Bocing Company (Boeing) and

the International Association of Machinists and Aerospace

Workers (IAMAW) over Boeing’s obligations to some

1100 installation support services employees at John F.

Kennedy Space Center, Florida, has spread far beyond

the launch pad and into the executive bureaucracy, the

halls of Congress, and several federal courtrooms. In

other forums, the great issues of national labor policy and

government contracting policy have been debated and

determined in their ways. Ours is the more mundane, but

nonetheless complex, task of defining the obligations of a

successor employer to arbitrate claims submitted by a union

on behalf of incumbent employees of a _ predecessor

employer.

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Facts

From March, 1964, until April 1, 1971, Trans World

Airlines Ine. (TWA) performed ‘‘installation support

services’’' at Kennedy Space Center under contract with

the National Aeronautics and Space Administration

(NASA). The approximately 1100 nonsupervisory per-

sonnel employed by TWA were represented in collective

bargaining by IAMAW. A collective bargaining agree-

ment between TWA and IAMAW,? entered into ou, January

28, 1970, was in force at the time TWA’s contract with

NASA expired, and was to “remain in full force and

effect to and including December 31, 1971." Two subor-

dinate TAMAW units, District Lodge 142 and Local Lodge

773, helped administer the TWA-TAMAW agreement,

In June, 1970, NASA invited bids for performance of

the Kennedy Space Center installation services duties for

a one-year period commencing February 1, 1971 (per-

formance to begin April 1, 1971), with option for NASA

to extend the contract for four successive one-year periods.

TWA, Boeing, and five other companies submitted pro-

posals. Four of the offerors, including TWA, based their

1 These services included maintenance, refurbishing, and altera-

tion of buildings, and new construction involving outlays of less

than $10,000; maintenance of roads and grounds: operation and

maintenance of water and sewage plant, heating and air-condi-

tioning systems, heavy equipment, and automotive equipment ;

ordering and distribution of supplies; and similar housekeeping

functions. TWA subcontracted guard, fire, and janitorial services

to other firms.

? When TWA, an air carrier, secured the NASA support serv-

ices contract in 1964, TWA and IAMAW already had a nation-

wide collective bargaining agreement, which was governed by the

Railway Labor Act, 45 U.S.C. $$ 151 et seq. By supplemental

agreement entered into between TWA and TAMAW, the non-ear-

rier Kennedy Space Center employees of TWA were brought under

the previous agreement.

computations of labor costs on the wage rates and fringe

benefits established by the existing TWA-IAMAW col-

lective bargaining contract. Boeing based its eomputa-

tion of labor costs on the wage rates and fringe benefits

provided under its own existing collective bargaining

agreement with [AMAW, which covered some 287 Kennedy

Space Center employees performing mission support

services known as ‘hardware contracts’’ on the Saturn V

launch vehicle. The wages and benefits fixed by the Boeing-

IAMAW agreement were substantially below those specified

in the TWA-IAMAW agreement, * and the Boeing-LAMAW

agreement was administered through different local subordi-

nates, District Lodge 166 and Local Lodge 2061.

In November, 1970, NASA announced that Boeing had

been selected to perform the installation support services

at’ Kennedy Space Center. Although both TWA and

IAMAW vigorously protested NASA’s decision, * Boeing

3 Hourly rates on Boeing's wage scale were lower than TWA’s in

20 of the 22 job classifications, with the differentials ranging from

4% to 26% (of the lower rates).

4ITAMAW notified NASA in November and December of 1971

of its claim that installation support services labor rates at Ken-

nedy Space Center were governed by the TWA-IAMAW agree-

ment. TWA likewise protested that government purchasing power

was being used ‘‘as an instrument to deprive organized employees

of an incumbent contractor of the wages and other benefits gained

through collective bargaining, a result contrary to national labor

policy and government procurement policy.’’ Nevertheless, in a

January 6, 1971 letter to the Comptroller General of the United

States, NASA indicated that it had found TWA’s proposal to be

technically superior to Boeing's, but had selected Boeing primarily

because of Bocing’s substantially lower proposed labor costs.

On March 1, 1971, TWA brought an action against NASA in

United States District Court for the District of Columbia to set

aside NASA's selection of Boeing, and moved for a preliminary

injunction to restrain NASA from entering into a contract with

Boeing. After denying a motion to intervene by IAMAW, the

district court on March 10, 1971, denied TWA’s motion for a

preliminary injunction. On April 26, 1971, the parties entered

into a stipulation dismissing the action without prejudice.

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Pisadssorseneres

began performance of the contract on April 1, 1971, with a

work foree of 981,° of whom 380 were TWA incumbents.

On this appeal the parties have debated at length the

reasons why a greater percentage of incumbents were not

hired by Boeing. The district court’s opinion provides a

partial summary :

When Boeing first learned that it would get the con-

tract for support services commencing April 1, 1971,

it delivered over 1,000 job application forms to TWA’s

Industrial Relations office for dissemination to TWA

employees. Boeing offered evidence that TAM[AW]

officials—International and local—had discouraged

TWA support service employees from seeking employ-

ment with Boeing and for that reason by April, 1971,

of the approximately 1,000 Boeing employees hired to

perform under the support serviees contract less than

400 were formerly TWA employees. At first in the

course of this suit the defendants contested that posi-

tion ... and contended there was discrimination by

Boeing in its hiring. However, in its brief filed July

3, 1972, IAM[AW] withdrew for the purposes of this

case that contention.

Boeing Co. v. International Association of Machinists &

Aerospace Workers, M.D.Fla. 1972, 351 F.Supp. 813, 815.

ITAMAW emphasizes here, however, that the TWA em-

ployees were dissatisfied with the wages and benefits offered

under the Boeing contract and that the environment sur-

rounding Boeing’s takeover was highly unsettled. In

particular the union argues that Boeing and NASA had

not yet entered into a contract, and a TWA protest to the

contract award was still pending, as of carly February,

1971, so that it would have been premature for the in-

cumbent work force to commit itself to a contractor whose

* This figure represents the total number of employees perforim-

ing installation support services work and within the unit claimed

to be covered by the TWA-IAMAW agreement.

selection was still in doubt. In any case, by February 19,

1971, when an IAMAW spokesman told Boeing represen-

tatives that the union would cooperate in distributing

Boeing employment applications to TWA incumbents and

in transmitting completed applications to Boeing, Boeing

had extended offers to and received acceptances from 521

non-incumbents, more than half its workforce.

When Bocing took over performance of the installation

support services work on April 1, 1971, the TWA in-

ecumbents hired by Boeing reported for work as new

employees with no seniority and at reduced wages. Boeing

gave each of the IAMAW-represented employees a copy

of the Boeing-IAMAW agreement and a notice stating

that IAMAW was its employees’ representative and that

terms of employment were governed by the Boeing-

[AMAW agreement.

On April 26, 1971, L[AMAW advised Boeing that:

film accordance with Article XI(b)(5) of the [TWA-

IAMAW] collective bargaining agreement... [it was]

submitting the following grievance relating to matters

general in character: :

1. The Boeing action failed to retain in employment

as of April 1, 1971, at least 602 members of the in-

cumbent work foree performing installation support

services work at Kennedy Space Center, Florida, and

this failure constitutes a reduction in foree out of

seniority order, and or a dismissal without just cause

and without compliance with the procedures requisite

to that action, in Violation of the [AMAW/TWA

agreement.

2. The Boeing Company failed and fails to aceord to

the members of the incumbent work force whom it did

retain in employment on April 1, 1971, the seniority

that each employee had as of April 1, 1971, but instead

treats them as new hires with zero seniority.

Rta IE te

3. The Boeing Company failed as of April 1, 1971

and fails, to observe the wages, other benefits, and

other employment terms of the TWA/IAMAW

agreement as it applies to the performance of installa-

tion support service work at Kennedy Space Center,

Florida, and which governs for its duration the wages,

hours and other employment terms at the Kennedy

Space Center.

Boeing declined to consider the merits of the grievances,

stating in part:

As of April 1, 1971, the date on which Boeing

assumed its responsibilities under the Installation

Support Services contract, a substantial majority of

the bargaining unit employees were from = sources

other than Trans World Airlines. Therefore, Boeing

is. of the opinion that it ix not a successor to the TWA/

ITAM[AW] agreement. Furthermore, even if the

majority of the Boeing work force was made up of

former TWA employees, it is the position of the Boeing

Company that a finding of suecessorship would be

precluded because of the substantial change in the

employing industry.

Consistent with our position that the contract on

which the purported grievances are based has no

application to the Boeing Company or any of its

operations or activities, we cannot and do not recognize

your letter of April 26, 1971, as a grievance and decline

to respond to it as such.

During the pendency of this dispute IAMAW informed

. Boeing that, while it would continue to press for adoption

. of the TWA-IAMAW agreement, it would utilize the dues

deduction authorization ecards of Local Ledve 2061 (the

IAMAW local affiliated with Boeing) until the issue was

resolved. Boeing deducted union dues in accordance with

the individual authorizations; instead of transmitting the

checked-off dues to Local 2061 pursuant to the authoriza-

tion, however, Boeing deposited the collected dues in an

escrow fund on the ground that IAMAW had refused to

recognize the Bocing-IAMAW collective — bargaining

agreement.

On May 10, 1971, Boeing filed this suit under § 301 of the

Labor Management Relations Act, 29 U.S.C. § 185, against

[AMAW in the United States District Court for the Middle

District of Florida, secking a declaratory judgment that

socing ‘fis not a successor to and is not bound by the col-

lective bargaining agreement executed by the defendant

and Trans World Airlines.”” IAMAW filed a counter-

claim seeking a declaration that Boeing is bound by the

terms of the TWA-IAMAW agreement and an order com-

pelling Boeing to arbitrate the grievanees submitted by

IAMAW, and an order requiring Boeing to remit the dues

which the employees had authorized the company to check-

off from their wages.

Upon cross-motions for summary judgment, the District

Court declared that ‘* Boeing is not a suecessor and is not

hound’? by the TWA-IAMAW collective bargaining agree-

ment, and declined to order Boeing to arbitrate the

grievances submitted under that agreement. The District

Court did, however, require Bocing to remit the dues pre-

viously withheld and escrowed. LAMAW = appeals the

declaration that Boeing is not a successor; Boeing cross-

appeals the order that it turn over the checked-off dues.

We affirm.

Succrssorsiip

Had 41 U.S.C. §353(c) been in effect at the time when

the events giving rise to this controversy occurred, this

matter would have been much simpler of resolution. That

section provides in effect that a government service con-

tractor, such as Boeing, which suceecds to a contract under

PPLE PEG EOLA PLE LD OE R IAEBEL IE BOL t

which it furnishes substantially the same services as its

predecessor, shall not pay its employees less than its

predecessor paid under its collective bargaining agreement,

unless such terms are found by the Secretary of Labor

to be substantially at variance with the going rate in the

locality. °

Section 353(c) was not in effect at the time of the events

which gave rise to this controversy, however; it was added

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

by amendment in 1972, 86 Stat. 789.7 Nor does § 353(c)

apply retroactively. We are thus left to the guidance and

direction of the developing case law regarding successor-

ship controversies. ®

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Before approaching these cases we note that we cannot

rest upon the formal concepts of merger, suceessorship, or

Py he, le ee

® Section 353(¢) provides in terms that ;

No contractor or subcontractor under a contract, which suc-

ceeds a contract subject to this chapter and under which sub-

stantially the same services are furnished, shall pay any serv-

ive employee under such contract less than the wages and

fringe benefits, including accrued wages and fringe benefits,

and any prospective increases in wages and fringe benefits

provided for in a collective-bargaining agreement as a result

of arm’s-length negotiations, to which such service employees

would have been entitled if they were employed under the

predecessor contract: Provided, That in any of the foregoing

circumstances such obligations shall not apply if the Seere-

tary finds after a hearing in accordance with regulations

adopted by the Secretary that such wages and fringe benefits Aol

are substantially at variance with those which prevail for

services of a character similar in the locality.

«2st acted ah I WONT Lae RN RD A EY

Len ae Reet

7 7 The section was, in fact, added by Congress largely in response

to the controversy at bar.

only

8 Limited as §353(c) is to government contracting, we do not

read it to express any Congressional statement as to the interpre-

tation of preexisting successorship law in general. Nor do we

think that the application of existing successorship case law prin-

ciples to this case is altered by the fact that the federal government

is the primary ‘‘employer’’ here.

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alter egoism developed in fields alien to labor law. In the

sprawling workaday world of employer-employee relation-

ships we go to the plant to find human continuity and

pragmatic identity of enterprise; we are not pinued by the

precisions and precedents fixed and tormulated in the law

of taxation, securities, or real property.

GENERAL PRINCIPLES

The district court reasoned in this case, 351 F.Supp. 813,

816, that NLRB v. Burns Int'l Security Servs. Inc., 1972,

406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61, had established

that an employer will not be bound as a successor to

arbitrate under its predecessor’s labor contract unless it

has employed a majority of its predecessor’s personnel;

since Boeing did not meet that standard} the district court

determined that Boeing was not bound to arbitrate. While

we ultimately conclude as well that TAMAW had made out

an insufficient case on the law here, we are concerned that

the district court has misapprehended Burns. Thus, with

the additional benefit of the Supreme Court’s opinion in

Howard Johnson Co, vy. Detroit Local Joint Exec. Bd.,

1974, —— U.S. . 94 S.Ct. 2256, 41 L.Ed.2d 46, which

was undecided at the time of the distriet court’s opinion,

we proceed at some length to elaborate our understanding

of the relevant case law

oF.

The course thropaete Tie" Mases yu which the parties

dispatch us leadeOver ground both, dense and largely un-

charted. This case requires the resolution of difficult

issues regarding the contractual freedom and expectations

of empioyers and the expectations and reliance of em-

ployees. We determine our conclusions by reference to

landmarks set by the Supreme Court; but its positions have

been too few to survey the entire landscape, and we explore

here a largely shadowed spot.

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10a

The reference points which the Supreme Court has estab-

lished lie chiefly in three cases: John Wiley & Sons, Ine. v.

Livingston, 1964, 376 U.S. 543, 84 S.Ct. 909, 11 L.Ed.2d

898; Burns, supra; and Howard Johnson, supra. These

three cases not only offer three different perspectives on

the suecessorship problem, but at times they seem to illum-

inate a different background. Thus, it is necessary to con-

- sider them individually and chronologically in order to

determine the coordinates of established principles. In-

deed, as the Supreme Court has counselled, ‘‘In our

development of the federal common law [in this area] we

must necessarily proceed cautiously, in the traditional case-

by-case approach of the common law.’’ Howard Johnson

— US. at ——, 94 S.Ct. at 2240, 41 L.Ed.2d at 53.

The primary case on which IAMAW relies, and which

Boeing secks to distinguish, is Wiley, supra, in which the

Supreme Court held that ‘‘the disappearance by merger of

a corporate employer which has entered into a collective

bargaining agreement with a union does not automatically

terminate all rights of the employees covered by the agree-

ment, and that, in appropriate circumstances, . . . the sue-

cessor employer may be required to arbitrate with the

union under the agreemem.’’ 376 U.S. at 548, 84 S.Ct. at

914, 11 L.Ed.2d at 904.

In Wiley a small publishing house, Interscience, with 80

employees, 40 of whom were union-represented, merged

into Wiley, a firm with larger assets and commitments and

a premerger total of about 300 employees. Interscience

ceased to exist in its own right after the merger, and almost

all* the 40 union-represented employees of Interscience

*The Wiley opinion in the Supreme Court states that all the

unionized employees at Interscience ‘‘except a few . . . continued

in Wiley’s employ,’’ 376 U.S. at 545, 84 S.Ct. at 912, 11 L.Ed.2d

at 902, and refers to ‘‘the wholesale transfer of Interscience em-

ployees io the Wiley plant,’’ 276 U.S. at 551, 84 S.Ct. at 915, 11

L,.Ed.2d at 995. Sinee the Supreme Court’s opinion, the district

court originally hearing the case has stated that ‘‘[t]he union in

lla

stayed on with Wiley and were mingled with the existing

work force at Wiley’s plant, where they pursued the same

kind of work as before. The employees’ union and Wiley

were unable to agree on the effect of the merger on the’

existing collective bargaining agreement between Inter-

science and the union. The union asserted grievances con-

cerning ‘‘eonditions of entployment typivally covered by

collective bargaining agreements and submitted to arbitra-

tion if other grievance procedures fail. Specific provision

for each of them [was] made in the Interscience agree-

ment.’”’ 376 U.S. at 554, 84 S.Ct. at 916, 11 L.Ed.2d at 907.

Wiley refused to arbitrate, however, protesting its freedom

from a contract which it had not joined. Ultimately the

union sued under § 301 to compel arbitration.

The Supreme Court recognized that ordinary contract

law would not bind Wiley to the Interscience agreement.

Under § 301, however, the controlling principles were held

to be a matter of federal law, to be developed from the |

policies embedded in the ‘‘national labor laws.’’ See

Textile Workers Union v. Lincoln Mills, 1957, 353 U.S. 448,

77 S.Ct. 912, 1 L.Ed.2d 972. The Court rested its conelu-

sions regarding the requirements of arbitration on two such

policies. First,

[e]mployees, and the union which represents them,

ordinarily do not take part in negotiations leading to a.

change in corporate ownership. The negotiations will

ordinarily not concern the well-being of the employees,

whose advantage or disadvantage, potentially great,

will inevitably be incidental to the main considerations.

The objectives of national labor policy, reflected in

Wiley represented 40 employees in the Interscience plant, 29 of

whom went to work for Wiley... .’’ McGuire v. Humble Oil

& Refining Co., S.D.N.Y.1965, 247 F.Supp. 113. However that may +

be, in Howard Johnson the Supreme Court read Wiley as a case

in which ‘‘the surviving corporation hired all of the employees

of the disappearing corporation.’ — U.S. at —, 94 S.Ct: at 2241,

41 L.Ed.2d at 56.

12a

established principles of federal law, require that the

rightful prerogative of owners independently to rear-

range their business and even eliminate themselves: as

employers be balanced by some protection to the

employees from a sudden change in the employment

relationship.

376 U.S. at 549, 84 S.Ct. at 914, 11 L.Ed.2d at 904, Second:

The transition from one corporate organization to

another will in most cases be eased and industrial strife

avoided if employees’ claims continue to be resolved by

arbitration rather, than by ‘the relative strength .

of the contending forces,’’ [United Steelworkers ¥i

Warrior & Gulf [Navigation Co,, 19], 363 U.S. [574,]

at 580, 80 S.Ct. 1347, at 1352, 4 L.Ed.2d [1409,] 1416.

The preference of national labor policy for arbitra-

tion as a substitute for tests of strength between con-

tending forces could be overcome only if other consider-

ations compellingly so demanded.

Furthermore, the Court considered that

a collective bargaining agreement is not an ordinary

contract. **... [I]t is a generalized code to govern a

myriad of cases which the draftsmen cannot wholly

anticipate .... The collective agreement covers the

whole employment relationship. It calls into being a

- new common law—the common law of a particular

- industry or of a particular plant.’’ Warrior & Gulf,

supra, 363 U.S. at 578-579, 80 S.Ct. at 1351, 4 L.Ed.2d

fat 1415]. ... Central to the peculiar status and fune-

tion of a collective bargaining agreement is the fact,

dictated both by circumstance . .. and. by the require-

ments of the National Labor Relations Act, that it is

not in any real sense the simple product of a consensual

relationship.

13a

376 U.S. at 550, 84 S.Ct. at'914, 11 L.Ed.2d at 905. ‘“There-

fore,’’ the Court concluded,

although the duty to arbitrate ... must be founded on

a contract, the impressive policy consideration favor-

ing arbitration are not wholly overborne by the fact

that Wiley did not sign the contract being construed.

This case cannot readily be assimilated to the category

of those in which there is no contract whatever, or none

which is reasonably related to the party sought to be

obligated. There was a contract, and Interscience,

: Wiley’s predecessor, was party to it. We thus find

Wiley’s obligation to arbitrate this dispute in the

Interscience contract construed in the context of a

national labor policy.

376 U.S. at 550-551, 84 S.Ct. at 915, 11 L.Ed.2d at 905

(footnote omitted).

Consonant with its reasoning, the Court limited applica-

tion of its holding to cases in which there was ‘substantial

continuity of identity in the business enterprise before and

after a change,’’ so that the duty to arbitrate was not

‘something imposed from without, not reasonably to be

found in the particular bargaining agreement and the acts

of the parties involved.’’ 376 U.S. at 551, 84 S.Ct. at 915,

11 L..Ed.2d at 905.

The broad principle of employee protection against sud-

den changes in the employment relationship which the Court

first sketched in Wiley is not, however, the complete picture.

Most significantly, the Supreme Court has somewhat shifted

its view of the poliey framework on which the Wiley result

hung, as evidenced by its opinion in NLRB v. Burns Int’1

Security Servs., Inc., supra, on which Boeing relies here.

SMARTER TN AEE RD, SORT TARA AID aR Beads

Burns involved an NLRB action to enforce an order re-

quiring a successor employer (1) to recognize and bargain

with the union representing its predecessor employer’s

employees, and (2) to adhere to the collective bargaining

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14a

agreement which had bound the predecessor employer. The

predecessor-successor relationship was of the service con-

tract type involved in the case at bar: on submitting the best

bid in an annual rebidding, Burns was chosen to replace

its predecessor, Wackenhut, at the supplier of plant pro-

tection services for the Lockheed Aircraft Service Co. at a

California airport. When Burns took over the security

operation, employing 42 workers, 27 of whom had been with

Wackenhut in identical jobs, Burns refused to recognize

the United Plant Guard Workers of America (UPG), which

had been certified four months earlier as the exclusive bar-

gaining representative of Wackenhut’s employees.

The Court’s opinion, which turned ‘‘to a great extent on

the precise facts involved here,’’ 406 U.S. at 274, 92 S.Ct.

at 1575, 32 L.Ed.2d at 65 was in two parts.

First, the Court held 5 to 4, that assuming the appropri-

ateness of the bargaining unit,

it was not unreasonable for the Board to conciude 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.

406 U.S. at 278, 92 S.Ct. at 1577, 32 L.Ed.2d at 68. Four

Justices dissented to this holding on the grounds that a

continuing union majority had not been shown with mathe-

matical certainty and that notions of suecessorship such as

underlay Wiley ought not apply even to require the union

recognition here, given the nature of the predecessor-suc-

cessor relationship.

Second, the Court held unanimously that Burns was not

bound to observe the substantive terms of the Wackenhut-_

UPG agreement. Stressing the fundamentality of the free-

dom of contract principle in the national labor laws, see

generally Howard K. Porter Co. v. NLRB, 1970, 397 U.S. 99,

90 S.Ct. 821, 25 L.Ed.2d 146, the Court emphasized that

15a

the existence of a duty to bargain did not enable the Board

to bind either side to agree to any particular term of con-

tract. The Board argued that the interests in the ‘‘ peaceful

settlement ef industrial conflicts and ‘protection [of] the

employees [against] a sudden change in the employment

relationship’’ 406 U.S. at 285, 92 S.Ct. at 1581, 32 L.Ed.2d

at 72, recognized in Wiley ‘‘require that Burns be treated

under the collective-bargaining contract exactly as Wacken-

hut would have been if it had continued protecting the

Lockheed pliant.’? Jd. The Court found the Wiley case

distinguishable, however, on two grounds.’°

First, Wiley held only that the agreement to arbitrate

survived the merger there, and left for the arbitrator to

decide, subject to judicial review, the extent to which the

successor employer was bound by the remaining provisions

of the predecessor’s collective bargaining agreement. In

Burns, however, arbitration was not in issue, and the in-

terest in labor stability was insufficiently substantial to out-

weigh the policy against governmental imposition of specific

contract terms. Second, the Burns Court distinguished the

predecessor-successor relationship in the Burns annual

rebidding situation from that in Wiley, which involved

a merger occurring against a background of state law

that embodied the general rule that in merger situa-

tions the surviving corporation is liable for the obliga-

tions of the disappearing corporation. ... Here there

was no merger or sale of assets, and there were no deal-

The Court also distinguished the posture in which each case

was presented. Wiley was a § 301 action, while Burns arose ‘‘in

the context of an unfair labor practice proceeding where the Board

is expressly limited by the provisions of §8(d),’’ from requiring

that any party ‘‘agree to a proposal or... [make] a concession,

see H. K. Porter Co. v. NLRB,’’ 406 U.S. at 285, 92 S.Ct. at 1581,

32 L.Ed.2d at 72. The Court has subsequently minimized the

importance of this consideration, however, sce Howard Johnson,

— US, at —, 94 S.Ct. at 2240, 41 L.Ed.2d at 53. Sce also The

Supreme Court, 1972 Term, 82 Harv.L.Rev. 50, 255-56 (1972).

CM AAPM be

16a

ings whatsoever between Wackenhut and Burns. On

the contrary, they were competitors for the same work,

each bidding for the service contract at Lockheed.

Burns purchased nothing from Wackenhut and became

liable for none of its financial obligations. Burns

merely hired enough of Wackenhut’s employees to

require it to bargain with the union .... But this con-

sideration is a wholly insufficient basis for implying

either in fact or in law that Burns had agreed or must

be held te-have agreed to honor Wackenhut’s collective-

bargaining contract.

406 U.S. at 286-287, 92 S.Ct. at 1581, 32 L.Ed.2d at 72.

Whatever the possibility of distinguishing the precise

holdings of the two cases, however, there remains a funda-

mental difficulty in reconciling their approaches, as we have

remarked elsewhere, United Steelworkers v. United States

Gypsum Co., 5 Cir. 1974, 492 F.2d 713, 725 n. 20, and as the

Supreme Court has itself subsequently observed, Howard

Johnson, — U.S. at —, 94 S.Ct. at 2239-2241 L.Ed.2d at

52-53. Wiley’s expansive approach to the reach of a col-

lective bargaining agreement remains in stark contrast to

the Burns Court’s emphasis on traditional principles of

consent to be bound by contract, which emphasis culminated

in the statement that ‘‘[s]trife is bound to occur if the eon-

cessions that must be honored do not correspond to the

relative economic strength of the parties.’’ 406 U.S. at 288,

92 S.Ct. at 1582, 32 L.Ed.2d at 73.

The Supreme Court has not yet found it necessary to

resolve these differences in approach. We are confident,

however, that even at the most Burns has not overruled the

principles of Wiley. See ec. q., Golden State Bottling Co. v.

NLRB, 1973, 414 U.S. 168, 94 S.Ct. 414, 38 L.Ed.2d 388 (a

post-Burns case applying principles of Wiley in enforcing

an NLRB unfair labor practice remedy against successor

employer, where it had notice of predecessor’s unfair labor

l7a

practice litigation); see United Steelworkers v. United

States Gypsum Co., 5 Cir. 1974, 492 F.2d at 725-726.

The matter at bar resembles both Wiley (in that the

remedy sought is an arbitration order under § 301) and

Burns (in that the link between the predecessor and suc-

cessor is the tenuous one of replacement under a periodic

rebidding service contract arrangement). While we need

not determine the precise remaining vitality of Wiley’s

reach, we are required to measure its application to the mat-

ter at hand, in light of the approach more recently adopted

by the Supreme Court. In this effort we extract some guid-

ance from the Court’s most recent discussion of these issues

in Howard Johnson, supra. There Howard Johnson leased

the real property and purchased the remaining assets of a

restaurant and motor lodge of one of its franchisees, and

proceeded to operate the unit itself. Determining to

establish its own work foree, Howard Johnson hired 45

employees, only 9 of whom had been its former franchisee’s

personnel. The union which had represented the former

franchisee’s work force and entered into a collective bar-

gaining agreement with the former franchisee brought a

£301 action to compel arbitration under the predecessor’s

barg:@ning agreement; its principal grievance was that

Iloward Johnson was obligated under that contract to con-

tinue the employment of all the franchisee’s employes be-

cause they had not been discharged in accordance with

the terms of the union-franchise contract.

While the Howard Johnson Court explicitly declined to

resolve the differences between Wiley and Burns, it did

make three points significant here. First, it established

that Wiley should be read restrictively, as a ‘‘guarded,

almost tentative statement,’’ — U.S. at —, 94 S.Ct. at 2240,

41 L.Ed.2d at 53. Second, it held that even under Wiley

the arbitration sought could not be ordered because of the

lack of ‘‘substantial continuity of identity in the business

enterprise,’ which requirement it read to include a show-

ing of a ‘‘substantial continuity in the identity of the work

‘9

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18a

force across. the change in ownership.’’ — U.S. at —, 94

S.Ct. at 2241, 41 L.Ed.2d at 57. Third, the Court articulated

the balance which must be struck in determining whether

an employer is obliged to fulfill any given obligation of

‘*suecessorship’’:

The answer to this inquiry requires analysis of the

interests of the new employer and the employees and

of the policies of the labor laws in light of the facts

of each case and the particular legal obligation which

is at issue, whether it be the duty to recognize and bar-

gain with the union, the duty to remedy unfair labor

practices, the duty to arbitrate, ete. There is, and can

be, no single definition of ‘‘successor’’ which is appli-

cable in very legal context. A new employer, in other

words, may be a successor for some purposes and not

for others.

— U.S. at — n. 9, 94S.Ct. at 2243, 41 L.Bd.2d at 56-57."

SvuBsTaNTIAL CONTINUITY IN THE IDENTITY OF THE

Bustness ENTERPRISE

The Supreme Court opinions are consistent on the one»

proposition that there is no simple checklist for decision; °

none could exhaust the factors relevant to determining

whether a successor employer is bound to arbitrate under

™ The Howard Johnson Court also concluded that even were ar-

bitration required of Howard Johnson, hiring of predecessor em-

ployees could not be, since it determined that the requirement of

hiring any particular one or number of a predecessor’s employees

to be *‘completely at odds with the basie principles [of employer

freedom to contract which] this Court elaborated in Burns.’’ —

U.S. at —, 94 S.Ct. at 2243, 41 L.Ed.2d at 56. In light of the way

in which we resolve this case, we need not consider this phase of

the Howard Johnson opinion.

19a

its predecessor’s contract. We are in essence called upon to

pragmatize the corporate and labor relationships to deter-

mine whether the past is part of the present, or the present

the beginning of tomorrow. In a given case it may be clear

that some one indicator of continuity is so weak as to allow

a simple conclusion of no duty to arbitrate; but in more

closely balanced cases, ownership, contracts terminated and

germinated, purity and impurity of motives, and an encyclo-

pedia of other variables must be equiponderated. We con-

clude here that despite the fact that there is no doubt on this

record that Boeing has pursued its business in a manner

substantially congruent to TWA’s patterns,” Boeing cannot

he ordered in this § 301 action to arbitrate IAMAW’s griev-

ances under the TWA-IAMAW contract, given (1) the

extent of the continuity in the identity of the work force

across the change in employers, and (2) the relation be-

tween Boeing and TWA themselves.

Continuity in the Identity of the Work Force

Howard Jolunson establishes that ‘‘continuity of identity

in the business enterprise necessarily includes ... a sub-

stantial continuity of identity of the work force across the

change in ownership.’? —— U.S. at ——, 94 SCt. at 2244, 41

12 Wiley, supra; Note, The Successor Employer’s Duty to Ar-

bitrate: A Reconsideration of John Wiley & Sons, Ine. v. Livings-

ton, 82 Harv.L.Rev. 318, 341 (1965). See Wackenhut Corp. v.

International, ete., Plant Guard Workers, 9 Cir. 1964, 332 F.2d

954. See also e.y., United States Gypsum Co. v. United Steel-

workers, 5 Cir, 1967, 384 F.2d 38, 41, cert. denied, 1968, 389 U.S.

1042. 88 S.Ct. 783, 19 L.Ed.2d 832; United Steelworkers v. Re-

liance Universal, 3 Cir. 1964, 335 F.2d 891, 893; Joint Bd. ete.,

Dressmakers Union v. Senco, Ine., D.Mass.1970, 310 F.Supp. 539,

544; Retail Clerks Union Local No. 1552 v. Lynn Drug Co., S.D.

Ohio, 1969, 299 F.Supp. 1036, 1039-1040; International Bhd, Pulp,

ete., Workers v. Great Northwest Fibre Co., E.D.Wash., 1965, 263

F.Supp. 167, 169; Local Joint Exec. Bd., Hotel, ete., Employees

v. Joden, Inc., D.Mass., 1966, 262 F.Supp. 390, 396.

snglRudenladed Raha lah aan TR a ies

20a

L.Ed.2d at 46." We do not think that any precise definition

of ‘‘substantiality’’ in work force continuity can be distilled

from the particular language of Howard Johnson, however.

The Court found support for its ‘‘substantial’’ standard in

the ‘wholesale transfer’’ of employees from predecessor to

successor in Wiley’ and from ‘‘the emphasis most of the

lower courts have placed on whether the successor em-

ployer hires a majority of the predecessor’s employees in

determining the legal obligations of the successor in § 301

suits under Wiley’’ U.S. at , 94 S.Ct. at 2244, 41

L.Ed.2d at 46, We believe that these statements in Howard

Johnson are descriptive rather than prescriptive and do

not, in themselves, establish any ‘‘majority’’ criterion,

such as Boeing argues in favor of here.” TAMAW argues

in the other direction that the Supreme Court’s enuncia-

tion of a ‘‘substantiality’’ test when it might have adopted

a ‘‘majority’’ standard establishes that a **majority’? em-

ployee continuity cannot be prerequisite to a duty to ar-

13 There is no suggestion, however, that retention of a prede-

cessor’s employees is in itself a sufficient basis on which to found

an obligation under § 301 to arbitrate; if, for example, a successor

employer radically changed the type of product manufactured

and the ways of doing business of a plant and retained the former

employer's personnel solely in order to preserve stability in the

local economy, we expect that the successor would not be obliged

to arbitrate under his predecessor's contract.

™ But see note 11 supra.

™ None of the cases cited in the Howard Johnson opinion (save

the district court opinion in the matter sub judicc, which we deter-

mine in any event to have the product of a misapprehension

of Burns) articulates a general standard for the quantum of em-

ployee continuity prerequisite to an order to arbitrate under a

predecessor's contract. Indeed, in one of the cited cases, Local

Joint Exec. Bd... Hotel, ete., Employees v. Joden, Inc., D.Mass.1966,

262 F.Supp. 390. a duty to arbitrate was found despite the fact

that (contrary to the Supreme Court's apparent reading of the

case) a majority of the predecessor's employees were not retained

by the suecessor (12 of **29 or 30’’ were retained).

21a

bitrate. We find this argument as unimpressive as its re-

jected converse. Rather, we regard the Supreme Court’s

emphasis in Howard Johnson of the necessity for pursuing

a “traditional case-by-case approach’’ in this area,

U.S. at , 94 S.Ct. at 2240, 41 L.Ed.2d at 53, as an

assurance that it intended to establish no precise bench-

mark at this stage in the law’s development, even assuming

that a strict standard would ever be appropriate.

Computation of Continuity in the Identity of the

Work Force

Boeing argues, and JAMAW denies, that even if the

Supreme Court has not committed itself to any precise

definition of ‘‘substantiality,’? case law from the lower

courts establishes ‘‘majority status’? as the test of sub-

stantial continuity in the identity of the work force. Be-

fore addressing the appropriateness of a ‘‘majority”’

standard, we consider what group it is that this ‘‘major-

ity’? is to be computed from: that is, whether the more

significant factor in determining the continuity in the iden-

lity of the work force for the purpose of determining

whether a successor employer must arbitrate under its

predecessor’s contract is the percentage of the predeces-

sor’s employees who have coutinued to work for the suc-

cessor, or whether it is the percentage of the successor’s

employees who had earlier worked for the predecessor.”®

16 The differences between the two majorities are illustrated by

the facts of Local Joint Exec. Id. Hotel, ete., Employees v. Joden,

Inc., D.Mass.1966, 262 F.Supp. 390, 392: ‘* Prince [the predecessor]

was employing twenty-nine er thirty people. Of these thirty,

Joden {the successor] retained twelve to make a total complement

of eighteen or nineteen people working for Joden ....’’ Thus,

the percentage of the predecessor's employees who remained at

the restaurant was 12/30 = 40°7: while the percentage of the

suecessor’s employees who had been working for the predecessor

was 12/18 or 12/19 = 67% or 63%7.

C AEAEM WE Ft ag DO ca pd 84 BO i |

22a

The parties here have debated the substantiality of the

continuity in the identity of the work force largely in

terms of the 39% of Boecing’s employees who had worked

for TWA. We conclude, however, that the percentage of

TWA employees who became Boeing employees, which we

determine to be about 35%, is the more significant figure in

considering whether Boeing is obliged to arbitrate under

the TWA-IAMAW contract.

To begin with, the showing of employee continuity is rele-

vant in establishing ‘‘the continuity of identity in the busi-

ness enterprise.’’ As a matter of principle, since the duty

to arbitrate arises from an application of the contract be-

tween the predecessor employer and his organized em-

ployees, the entity whose identity is to be the reference

point for judging continuity ought to be the predecessor

enterprise. Accordingly, in judging the continuity in the

identity of the work force, the incumbent component of the

successor’s work force ought to be compared against the

predecessor’s staff, not the successor’s.’7

This method of computation is consistent with the Su-

preme Court’s opinions. In Wiley the Court required ar-

bitration where the predecessor’s employees comprised a

much smaller percentage of the successor’s employees

after the merger (40 of 340—117) than the corresponding

ratio in Howard Johnson (9 of 45—20%), in which no ar-

7 Additionally, the percentage representing those of the pred-

ecessor’s employees who were retained by the successor decreases

according to the successor’s trimming of his total work force, while

the figure representing the percentage of the successor’s employees

who are incumbents increases as the size of the successor’s total

work force diminishes. (Where the total employee complement is

the same under both predecessor and successor the percentages will

be equal.) Since a net decrease in the total number of personnel

indicates a lesser continuity in the identity of the business enter-

prise, the percentage of the predecessor’s employees remaining

with the successor seems a better general indicator of the enter-

prise continuity.

bitration was required. Rather, the Howard Johnson

Court found it most significant that ‘‘in Wiley the surviv-

ing corporation hired all of the employees of the disap-

pearing corporation,”’ U.S. at ——, 94 S.Ct. at 2241,

41 L.Ed.2d at 54 (emphasis altered). Moreover, it found

support for its conclusion in what it perceived to be ‘‘the —

emphasis most of the lower courts have placed ... in de-

termining the legal obligations of the successor in § 301

suits under Wiley’’ on the percentage of the predecessor’s

employees hired by the successor employer, —— U.S. at

—, 94 S.Ct. at 2244, 41 L.Ed.2d at 57.

Thus, while the figure most significant in determining the

suecessor’s duty under Burns to bargain with the union

representing the predecessor’s organized employees may

be ™ the percentage of the successor’s employees who are

incumbents from the predecessor, see e.g., Burns, 406 U.S.

at 279, 92 S.Ct. at 1577, 32 L.Ed.2d at 68; Emerald Main-

tenance, Inc., 5 Cir. 1972, 464 F.2d 698, 701; Goldberg, The

Labor Law Obligations of a Successor Employer, 63 Nw.

U.L. Rev. 735, 793-794 (1969), we find those cases—where

the basie question to be resolved by examination of em-

ployee continuity is simply whether the union represents a

'* The cases do not always consider which ratio is most signifi-

cant. Sce Note, Contrary Rights and the Successor Employer:

The Impact of Burns Sceurity, 71 Mich.L.Rev. 571, 575 n. 35

(1973). Compare Burns, 406 U.S. at 281, 92 S.Ct. at 1579, 32

L.Ed.2d at 68 (‘‘a majority of the employees hired by the new

employer’’) with the Supreme Court’s later recitation of Burns,

Golden State Bottling Co. v. NLRB, 414 U.S. at 184 n. 6, 94 S.Ct.

at 425, 38 L.Ed.2d at 402 (‘‘a majority o” [the predecessor’s]

employees’’). No doubt a large part of this obscurity is owing to

the fact that in the case—probably the usual case—where the

predecessor and successor employ the same number of personnel

or close to the same number, the figures will be the same or close,

so that it does not matter which figure is consulted. See, e.g.,

NLRB v. Zayre Corp, 5 Cir. 1970, 424 F.2d 1159; NLRB v. Wayne

Convalescent Center, Inc., 6 Cir. 1972, 465 F.2d 1039: NLRB v.

Interstate 65 Corp., 6 Cir. 1971, 453 F.2d 269, 273.

crn

fa ee ee

* ae

24a

majority of the successor’s employees, see Burns, 406 U.S.

at 278-281, 92 S.Ct. at 1577-1579, 32 L.Ed.2d at 68-69 ; NLRB

v. Auto Ventshade, Ine., 5 Cir. 1960, 276 F.2d 303, 307—

unpersuasive examples in this context.’

Regarding ‘‘Majority’’ Work Force Continuity

“Having established the reference point from which to

compute the ratio of substantial continuity in identity of

the work force, we turn to the substance of the question :

whether the fact that Bocing hired only about 35% of the

incumbent TWA work force determines that Boeing is not

obligated to arbitrate under its predecessor’s contract.

We are not prepared at this point in the development of

the law of successor employers’ obligations to arbitrate

either to accept or to reject Boeing’s argument that

‘majority status’’ is prerequisite to the obligation to

bargain. In the first place, as we have already expressed,

we de not find that the Supreme Court has established any

benchmark. Furthermore, we are convinced that reliance

on bargaining cases, such as Burns, ix misplaced. There is

much, though not unanimous, authority for the proposition

that a suecessor employer will be required to bargain with

the union representing his predecessor's employees only

when predecessor’s personnel comprise a majority of the

suecessor’s work foree.*” But the federal labor law polices

” Our conclusion as to which ratio is more significant in deter-

mining whether a successor is obliged to arbitrate does not, of

course, preclude all consideration of the other ratio. For example,

an arbitrator may consider that the work foree of an absorbed

enterprise has been diffused in such a way as to preclude the ap-

plication of the predecessor's collective bargaining agreement.

See Howard Johnson, — US. at —. nw. 4, 94 S.Ct. at 2241, 41

L.Ed.2d at 54.

*°The Burns opinion speaks in inclusive, not exclusive, terms,

holding that ‘‘where the bargaining unit remains unchanged and

a majority of the employees hired by the new employer are rep-

resented by a recently certified bargaining agent there is little

LLL LE LDL OLE LES

’

i “3

25a

underlying such conclusions are analytically distinct from

those involved in successorship arbitration suits under

§ 301. The majority requirement in duty to bargain cases

is premised upon notions of majority selection of organized

employees’ collective bargaining agents. In the duty to

arbitrate cases under §$ 301, however, the ineumbent em-

ployees fulfill no such representative function in the filing

of their grievances. *!_ Thus, in Wiley the Supreme Court

noted that its finding of Wiley’s duty to arbitrate did ‘‘not

suggest any view on the questions surrounding a certified

union’s claim to continued representative status. This

union .. / seeks to arbitrate claims based on [its contract

with the predecessor employer], not to negotiate a new

agreement,’’ and stated that ‘‘[t]he fact that the Union

does not represeni a majority of an appropriate bargaining

unit in Wiley does not prevent it from representing those

employees wh» are covered by the agreement which is in

dispute and Gat of which Wilcey’s duty to arbitrate arises.’’

376 U.S, at 551 and n. 5, 84 S.Ct. at 915, 11 L.Ed.2d at 905.

To the same effeet, we have upheld a successor employer’s

duty to arbitrate with a union which had once represented

the predecessor’s employees, but lost its certification.

basis for faulting the Board’s’’ ordering the employer to bargain.

406 U.S. at 281, 92 S.Ct. at 1579, 32 L.Ed.2d at 69. ‘“vertheless.

it is clearly established by the vast majority of cases that the

Board will generally impose a duty to bargain only where a ma-

jority of the successor’s personnel are incumbents from the prede-

cessor work force. See gencrally Goldberg, The Labor Law Obli-

gations of a Successor Employer, 63 Nw.U.L.Rev. 735, 793-799

(1969); Note, supra note 20, 71 Mich.L.Rey. at 575 n. 38. Sve

also Emerald Maintenance, Inc. vy. NLRB, 5 Cir. 1972, 464 F.2d

698, 670. A majority, while necessary, is not necessarily sufficient,

however, see cases summarized in Slicker, A Reconsideration of

the Doctrine of Employer Successorship—A Step Toward a Ra-

tional Approach, 57 Minn.L.Rey. 1051, 1055 n. 15 (1973).

*1 Indeed, this distinction is evident in the differences in the

reference points from which the relevant majority of employees

requisite to establishment of the employer's duty are to be com-

puted.

se TALS RN) NEEAS. a ye Sae PUNY

26a

‘

United States Gypsum Co. v. United Steelworkers, 5 Cir.

1967, 384 F.2d 38, 47. .

For the purpose of resolving this ease, however, we need

not decide whether the principles underlying the Howard

Johnson requirement of a substantial continuity in the

work force is to be read as a generally applied ‘*majority’’

standard. * ‘We conclude only that the continuity in the

identity of the work force must be considered together with

other indicia of enterprise continuity, and turn to a con-

sideration of those factors.

Nature of the TWA-Bocing Relationship

It is well established that the principle of Wiley applies

to corporate successorships accomplished through purchase

We have discovered no ease (save the district court opinion

below) holding that successor employer's retention of! a majority

of ‘its predecessor's personnel is prerequisite to, the finding of a

duty to arbitrate under the predecessor’s contract. But ef. How-

ard Johnson, — US. at — and n. 10, 94 S.Ct. at 2244, 41 L.Ea2a

at 57; Retail Clerks Union Local No. 1552 v. Lynn Drug Co.

8.D.Ohio 1969, 299 F.Supp. 1036. One case has ordered arbitra-

tion despite the suecessor’s taking only a minority of the prede-

cessor’s employees, Local Joint Exec. Bd., Hotel, ete., Employees

v. Joden, Inc., D.Mass.1966, 262 F.Supp. 290. See also Monroe

Sander Corp. v. Livingston, 2 Cir. 1967, 377 F.2d 6, cert. denied,

1967, 389 U.S. 831, 88 S.Ct. 97, 19 L.Ed.2d 89; but sec also Print-

ing Specialties, ete., Union No. 447 v. Pride Papers Aronson Bros.

Paper Corp. 2 Cir. 1971, 445 F.2d 361. 364 n. 1, vert. denied, 1971,

404 U.S, 1001, 92 S.Ct. 564, 30 L.Ed.2d 553: Owens-Illinois, Ine.

v. District 65, Retail, ete., Store Union, S.D.N.Y.1967. 276 F.Supp.

749, 743, aff'd on district court opinion, 2 Cir. 1968, 393 F.2d 932.

Cf. also International Bhd., Pulp. ete.. Workers vy. Great Northwest

Fibre Co., E.1). Wash, 1965, 263 F.Supp 167, 168 (‘significant num-

ber of former employees’’). Some commentators argue that a

majority need not be required, s-« Goldberg, supra, note 22, at

750 n. 52; Note, supra, ‘note 14, at 430. But see Note, Contractual

Successorship: The Impact of Burns, 40 U.Chi.L.Rev. 617, 621

n. 20 (1973), cited with approval, Howard Johnson, — VS. at

—,n. 10, 94 S.Ct. at 2244, 41 L.Ed.2d at 57.

“< SEAL en

27a

and sale rather~than merger.** We consider here the

extent to which the Wilcy test of continuity in the identity

of the business enterprise can be satisfied in a periodic

rebidding service contract context—‘hardly ... a typical

suecessorship situation. ’’ **

We begin by distinguishing the cases finding sufficient

continuity in the ‘‘cinploying industry’’ * to support a duty

to recognize and bargain with the predecessor employees’

union in such a context.” The focus in these duty to

bargain eases being whether ‘‘the unit still represent[s] a

majority of the employees,’’ Burns, 406 U.S. at 278, 92

S.Ct. at 1577, 32 L.Ed.2d at 68, the primary consideration

is naturally the work force continuity. Sce generally

Goldberg, supra note 22, at 793-799. As a secondary mat-

ter, attention is given to whether the successor’s ‘‘opera-

tional structure and practices differed from those of [the

predecessor, so that the successor’s] bargaining unit was

no longer an appropriate one.”’ Burns, 406 U.S. at 280, 92

S.Ct. at 1578, 32 L.Ed.2d at 68. See Emerald Maintenance

Ine. v. NLRB, 5 Cir. 1972, 464 F.2d 698, 701-702. See, e.g.,

*3 See Golden State Bottling Co. v. NLRB, 1973, 414 U.S. at

182, n. 5, 94 S.Ct. at 424, 38 L.Ed.2d at 402: United States Gyp-

sum Co, v. United Steelworkers, 5 Cir. 1967, 384 F.2d 38, 43-44.

cert. denied, 1968, 389 1S. 1042, 88 S.Ct. 783, 19 L.Ed.2d 832.

*#St. Antoine, Judicial Caution and the Supreme Court’s Labor

Decisions, October Term 1971, U.Mich.3.L.Ref. 269, 270 (1973).

* See Golden State Bottling Co. v. NLRB. 414 U.S. at 182 n. 5.

94 S.Ct. at 424, 38 L.Ed.2d at 402; Emerald Maintenance. Ine.

v. NLRB, 5 Cir. 1972, 464 F.2d 698; NLRB v. Zayre Corp., 5 Cir.

1970, 424 F.2d 1159; NLRB v. Auto Ventshade. Inc.. 5 Cir. 1960,

276 F.2d 303: NLRB v. Colten. 6 Cir. 1939, 105 F.2d 179, 183.

*6 Sec, e.g., Burns, 406 U.S. at 278-281. 92 S.Ct. at 1577-1579. 32

L.Ed.2d at 67-69; Emerald Maintenance, Ine. v. NLRB. 5 Cir.

1972, 464 F.2d 698. See also, e.g.. NLRB vy. Geronimo Service Co..

10 Cir. 1972, 467 F.2d 903; Maintenance, Inc.. 1965, 148 N.L.R.B.

1299; see generally Slicker, supra note 22, at 1062-1063. Cf. also

Eastman Kodak Co., 1971, 194 NLRB No. 27.

a a Si

28a

NLRB v. Alamo White Truck Service, 5 Cir. 1959, 273

F.2d 238. See generally Goldberg, supra note 22, at 799-

806. Thus, the. nature of the predecessor-suceessor rela-

tionship is of relatively minor significance.

In the duty to arbitrate context, however, it is the con-

linuity in identity of the enterprise which makes the duty

to arbitrate under the predecessor’s collective bargaining

agreement ‘‘reasonably related to the party sought to be

obligated,’’ and not ‘something imposed from without,”’

Wilew, 376 U.S. at 550-551, 84 S.Ct. at 915, 11 L.Ed.2d at

#05; and the ‘‘continnity in the identity of the work force

across the change in ownership’ constitutes only a neces-

sary but insufficient part of the enterprise continuity.

Howard Johnson. Thus we think the relationship between

the predecessor and sueeessor employers far more critical

here than in the duty to bargain cases.

While we recognize that the Supreme Court spoke in

Howard Johnson of substantial continuity in the identity

of the work force across the change in ownership, we do

not regard that oblique reference as a conclusion that a

suecessor’s duty to arbitrate under § 301 depends on a

merger or purchase and sale connection between the pred-

ecessor and successor. Nor do we think that the Burns

majority’s ‘‘studious’’ avoidance of the term ‘sueces-

sor,’’*? while a significant gesture, should be taken to

conclude the Supreme Court’s thinking on the matter.

More important, however, is the Burns Court’s emphasis

of the tenuous quality of the enterprise continuity in

denying the application of substantive contract terms in

Burns:

Wiley[’s] . .. [narrow] holding dealt with a merger

occurring against a background of state law that em-

bodied the general rule that in merger situations the

** Sce 406 U.S. at 296, 92 S.Ct. at 1586, 32 L.Ed.2d at 78 (Rehn- |

quist, J.).

To ee cern ee eer TIE SI EM MIT: FP POY NE ENG FAN

LILO EY QE NG AIS aS NS ATONE SDE SG BH LISLE LISI AASB ADI FOG, ON

29a

surviving corporation is liable for the obligations of

the disappearing corporation. ... Here there was no

merger or sale of assets, and there were no dealings

whatsoever between Wackenhut and Burns. On the

contrary, they were competitors for the same work,

each bidding for the service contract at Lockheed.

Burns purchased nothing from Wackenhut and be-

came liable for none of its financial obligations.

Burns merely hired enough of Wackenhut’s employees

to require it to bargain with the union .... But this

consideration is a wholly insufficient basis for implying

either in fact or in law that Burns had agreed or must

be held to have agreed to honor Wackenhut’s collective

bargaining contract.

406 U.S. at 286, 92 S.Ct. at 1581, 32 L.Ed.2d at 72. This

factor was not, however, the critical basis of Burns con-

clusion that the service contract there was not bound to

the terms of its predecessor’s contract. Indeed, com-

mentators have stressed that the most significant consid-

eration in the Supreme Court’s conclusion was the in-

flexibility of the nonarbitrated enforcement of the precise

and entire substance of the predecessor’s contract through

the NLRB’s mechanisms. * Nevertheless, we recognize

that continuity in the identity of the business enterprise is

more strongly shown where the predecessor employer-

*8Cf. also Tri-State Maintenance Corp. v. NLRB, 1968, 132

U.S. App.D.C. 368, 408 F.2d 171.

*9 See generally Note, supra note 20, at 576-579; Note, supra

note 12, at 256-258; Note, supra note 24, at 624-631. But see St.

Antoine, supra note 26, at 273-276. This was substantially the

difficulty recognized by the Labor Board in Emerald Maintenance,

Ine., 1971, 188 N.L.R.B. 876, 878, enforced in part, 5 Cir. 1972,

464 F.2d 698, in which, prior to Burns, it questioned the appli-

cability in some circumstances of its own doctrine of applying con-

tractual terms against a successor employer in the periodic re-

bidding context.

~ tte gg

‘

. _ - Re . . ves BEADED ORDA AM RE

| SRG ee Re Py Bh 2a NATE Page ey ee oe a Pend O22 A 32

Say =o erat ry rl i!

DP IOV BI SAY Bel ay Fo

30a

suecessorx employer relationship is one of purchase and

sale, or merger, than in this replacement-under-periodic-

rebidding situation.

We are not prepared at this stage in the development

of successorship principles, however, to say—when we need

not do so to resolve this case—that there cannot be ‘any

substantial continuity of identity in the business enter-

prise’’ in the absence of a transfer of ownership of tangible

assets between employers, even when the most substantial

assets involved in both the predecessor and successor enter-

prises may be the relationship to the primary employer and

the collection of the work force, both of which have passed

from the predecessor to the successor employer.* Rather,

in keeping with the case-by-case approach the Supreme

Court has advised, we conclude at this time only that where

the relationship between the predecessor and successor

employers is one of replacement in the periodic rebidding

context, so that demonstration of continuity in the identity

of the enterprise depends completely upon the continuity of

the employee complement, the continuity in the identity of

the work force must be more substantially established than

would be required were the relationship between the

predecessor and successor employers one of merger, or pur-

chase and sale.

This conclusion is consistent with the Howard Johnson

Court’s injunction that Wiley ought to be expanded only

with caution, and with the Wiley Court’s balancing of

employee interests in protection from ‘‘a sudden change in

the employment relationship’’ (which exists regardless of

the form of employer substitution), against the ‘‘rightful

prerogative of owners independently to rearrange their

business,’’? 376 U.S. at 549, 84 S.Ct. at 914, 11 L.Ed.2d at

“Compare St. Antoine, supra note 26, at 273, with Goldberg,

supra note 22, at 748-750.

LOM AR BAO AE Pa aw

3la

904." We regard the substantiality of continuity from

neither the employers’ nor the employees’ standpoint

alone.*”

Conclusion

We hold, then, that given the nature of the relation

hetween TWA and Boeing, the extent of the continuity in

the identity of the work force established here is not suffiei-

ently substantial to oblige Boeing under § 301 to arbitrate

under its predecessor’s contract. Howard Johnson, — US.

at —, 94 S.Ct. at 2244, 41 L.Ed.2d at 58. Cf. Hoisting, ete.,

Kng’rs Local, ete., 701 v. Pioneer Constr. Co., D.Or.1970,

313 F.Supp. 753. In this conclusion we do not pretend to

* There may also be third party interests at stake in this pe-

riodie rebidding service contract context: those of the primary

employer. It is not clear, however, that those interests cannot be

adequately protected through the flexible mechanisms of arbitra-

tion or otherwise. Furthermore, to hold that a suecessor in this

context is never bound to arbitrate may be to interfere with the

bidding process iself by establishing a favored competitive position

for any outsider. Of course the lack of sufficient notice of pre-

existing collective bargaining agreement may free a successor em-

ployer in this context from any duty under its predecessor’s con-

tract. Seo Wiley, 376 US. at 551, 84 S.Ct. at 915, 11 L.Ed.2d at

905.

* Sec Howard Johnson, — US. at —, n. 9, 94 S.Ct. at 2243, 41

L.Ed.2d at 56-57; Retail Store Employees Union Local No. 954 v.

Lane’s of Findlay, Inc., N.D.Ohio 1966, 260 F.Supp. 655, 659;

Drivers, ete., Local No. 75 ¥. Wisconsin Employment Relations Bd.,

1965, 29 Wis.2d 272, 279, 138 N.W.2d 180, 184,

*TAMAW argues against this conclusion that to determine the

continuity of identity of the work force, as we have done, by ref-

erence to the quantum of employees who actually were hired by

sowing, rather than by the number who would have signed on with

Boeing had Boeing initially offered a contract identical to TWA ‘s,

is incorrect, since it allows Boeing to avoid the contract in the end

by simply ignoring it in the beginning. We are not convinced.

We do not think that a successor in Boeing's shoes cap be required

to assume its predecessor's contract even before it is established

”

;

PALE LAL OER TAY th Fe EAM 4B A at

32a

have harmonized the law; such would be beyond the range

of any single opinion, given the variety of relevant factors.

We have simply improvised a tune with which to develop

the established themes, and followed past scores to avoid

discord.

Cueck-Orr Provision

The District court ordered Bocing to turn over to

IAMAW (with interest) the union dues of its TAMAW-

that it will succeed in lacing up its predecessor's work fore e. Burne,

406 U.S. at 287-288, 92 S.Ct. at 1582-1583, 32 L.Ed.2d at 73. More-

over, the rationale behind the requirement of demonstrating a

substantial continuity in the identity of the work force in order to

make out a case of substantial continuity of the enterprise is, as

we have understood it, to establish that an employer's securing the

continuity in the work force is a factor to be considered in deter-

mining the continuity of the enterprise. It is quite apparent that

Boeing did not ultimately secure a sufiiciently substantial con-

tinuity of the work force here, although at one point Boeing ex-

pected to inherit the bulk of TWA’s staff and undoubtedly it

thought it could benetit from having the experienced personne},

Nor is there any suggestion in this case that Boeing discriminated

against TWA incumbents, as the opinion below makes clear, 351

F.Supp. at 815. See generally Howard Johnson, US. at —,

8, 94 pn at 2243, 41 L.Ed at 56; Burns, 406 U.S. at 280

n. 9, 92. S.Ct. at 1578, 32 L.Ed.2d at 69. We hold that where, as

in the itr es of this case, the employee complement. is

perhaps the prime identity link between the successor and pred-

ecessor employers, a successor employer cannot be forced under

$301 to arbitrate under its predecessor's contract when the suc-

cessor did not take the necessary steps to secure his enjoying, and

consequently did not enjoy, a suffie ‘iently substantial continuity

in the identity of the work force.

In light of this conclusion, we need not consider the relevance,

if any, to the resolution of IAMAW'’s rights against Boeing, of

the continuing existence of TWA. Cf. Goldberg, supra note 22,

at 754-755; but ef. also Howard Johnson, — VS. at —. 94 S.Ct.

at 2241, 41 L.Ed.2d at 54. Nor need we consider Decl’ Ss argu-

ment that since the TWA-IAMAW contract’s arbitration clause

was designed to conform to the mechanisms of the Railway Labor

Act, it could not be applied against Boeing.

33a

member employees which Boeing had checked-off and

escrowed. Boeing cross-appeals this part of the district

court’s order, arguing that where there is no collective

bargaining agreement applicable to Boeing (1) that it is

not obligated to deduct dues for the benefit of IAMAW,

and (2) that to remit any such check-off dues to LAMAW

violates § 302(a) of the Labor Management Relations Act,

29 U.S.C. § 186(a).*

We need not consider the correctness of Boeing’s legal

conclusions here, however, for we determine that its premise

is unsupported; we find that there is a labor contract appli-

cable to Boeing. Boeing contends that the Boeing-T[AMAW

agreement is controlling.’ Reply Brief for Plaintiff-

Appellee-Cross Appellant at 4. IAMAW contends that if

—_- -——_.

34 The district court also ordered

IAM[AW] and Local Lodge 2061 [{to] deliver simultaneously

with the payments ... a hold harmless and indemnity agree-

ment, wherein each . .. agrees to indemnify and hold Boeing

harmless from any losses by Boeing because of the payment

to Lodge 2061 of the escrowed dues arising from a final find-

ing that IAM[AW]| was not the collective bargaining agent

for the employees from whom such dues were collected.

351 F.Supp. at 816-817. This part of the order is not in contro-

versy.

%* Section 302(a) generally prohibits payments by an employer

to a labor union. Section 302(¢)(4) provides, however, that that

general prohibition

shall not be applicable . . . with respect to money deducted

from the wages of employees in payment of membership dues

in a labor organization: Provided, That the employer has

received from each employee. on whose account such dedue-

tions are made, a written assignment which shall not be ir-

revocable for a period of more than one year, or beyond the

termination date of the applicable collective agreement, which-

ever occurs sooner . .

Boeing's argument is that this exception to §302(a) does not

apply, because the proviso is unsatisfied.

>’ Do we GehPon ieee

ee SO ee

WMA eas Se Se

OA ONDA cP

the TWA-IAMAW contract does not control here, then the

Boeing-IAMAW contract does. The district court correctly

observed that ‘‘ there is no evidence that anyone has chal-

lenged IAM[AW] as the collective bargaining agent for

the Boeing support services employees—the whole dispute

has centered around which contract was applicable. 351

F.Supp. at 816. With our holding here that Boeing is

obliged neither to adhere to nor to arbitrate under the

TWA-IAMAW collective bargaining agreement, that dis-

pute is resolved, and Boeing’s argument is left without

any foundation.

The judgment and order entered below are

Affirmed.

as.

35a

UNITED STATES DISTRICT COUKT MIDDLE DISTRICT OF FLORIDA

ORLANDO DIVISION

No. 71-96-ort-crvi

Filed Orlando, Fla. Oct. 16, 1972

Wesley R. Thies, Clerk

Tue Borixc Company,

Plaintiff,

Vs.

INTERNATIONAL Association or Macnixists aXp AEROSPACE

Workers, AFL-CIO, et al.,

Defendants.

Order.

The Boeing Company (Boeing) brought this suit against

the International Association of Machinists and Aerospace

Workers, AFL-CIO (IAM), District Lodges 142 and 166

of IAM and Local Lodges 773 and 2061 of IAM seeking a

declaratory judgment as to the applicability of a collective

bargaining agreement to the plaintiff under Section 301 of

the Labor-Management Relations Act, as amended, (the

Act).’ Jurisdiction of this Court under 29 U.S.C. 185(e)

is conceded by all parties and is found to exist by this

Court.

The defendants filed their answer and a counterclaim

seeking a holding by this Court that Boeing was bound by

the agreement in dispute and that Boeing is obligated to

submit to arbitration any claims of IAM that Boeing has

violated the agreement.

The ease was submitted on cross motions for summary

judgment with each side agreeing that for the purposes

of this case there are no disputed material issues of fact

129 U.S.C. 185(a).

OL: OEE CEE EEL ER PORE MEPS YER see Or. saps

opr Owe — a’

| 36a

so that the case can and should be determined by applica-

tion of the law to the admitted facts. Briefs were filed,

oral arguments heard and, then at the request of counsel,

disposition was stayed to await the decision of the Supreme

Court in V.L.R.B. v. Burns, 406 U.S. 272, decided May 15,

1972. Thereafter supplemental briefs were filed as to the

effect of the Burns decision on the case at bar.

The facts are that until April 1, 1971 Trans World Air-

lines, Inc. (TWA) had a contract with the National Aero-

nautics and Space Administration (NASA) for support

services * for NASA at the Kennedy Space Center, Florida.

In 1970 Boeing successfully bid for a new contract with

NASA to perform the support services which had been

rendered by TWA. On April 1, 1971, Boeing commenced

full performance under its contract with NASA.

The TWA contract with NASA had run from March 9,

1964 through March 31, 1971. TWA had employed about

1,100 persons to perform the support services other than

guard, fire, janitorial and training services which were

subcontracted by TWA to other firms. The 1,100 TWA

nonsupervisory employees were represented in collective

bargaining by [AM which had in force at the time of the

expiration of TWA’s contract with NASA a collective

bargaining agreement with TWA entered into on January

28, 1970 which was to remain in full foree and effect to and

including December 31, 1971.

TWA, an air carrier, had had a nation-wide collective

bargaining agreement already in force and when in 1964

TWA ‘secured the NASA support services contract, a

supplemental agreement was entered into between TWA

and TAM on February 17, 1964 bringing the Kennedy

;

2 Included such services as test support management, plant en-

gineering and maintenance, logistics operations, mail and postal

distribution, janitorial services, fire prevention and protection

services, quality assurance, and security services.

Bar. BaP bauer ids Veda le

;

Space Center TWA employees under the nation-wide TWA-

IAM agreement. That agreement—subject to the Railway

Labor Act—was apparently extended to the non-carrier

space center employees of TWA by action of TWA and

IAM without any vote of preference by the non-carrier

employees. District Lodge 142 and Local Lodge 773 of

IAM are the subordinate units of IAM which aided in the

administering of the TWA-IAM agreement covering the

space center employees.

Prior to its securing the service contract, Boeing had

been performing mission launch support services known

as ‘‘hardware contracts’’.” These services were separate

and different from the installation support services per-

formed by TWA prior to April 1, 1971, and after that date

by Boeing. There were about 287 employees of Boeing

working on the hardware contracts and they were also

represented by IAM in collective bargaining pursuant to a

nation-wide agreement between Boeing and IAM entered

into October 2, 1968 and continuing through October 1,

1971. The subordinate units of IAM which aided in the

administering the Boeing-IAM agreement for the space

center Pocing hardware contracts employees were District

Lodge 166 and Local Lodge 2061.

The wages and fringe benefits provided by the TWA-

IAM collective bargaining agreement were higher than

those provided by the Boeing-IAM agreement and therein

lies the reason for the controv ersy at bar.

When Boeing first learned that it would get the contract

for support services commencing April 1, 1971, it delivered

over 1,000 job application forms to TWA’s Industrial Re-

lations office for dissemination to TWA employees. Boeing

offered evidence that IAM officials—International and

* These included such services as the production of the first

stage of the Saturn V launch vehicle, structural work on the

launch vehicle tower, high pressure gas system connections and

electrical connections to the Saturn V rocket.

WHE PLETE ARNO RIS

ee eh

38a

local—had discouraged TWA support service employees

from seeking employment with Boeing and for that reason

by April, 1971, of the approximately 1,000 Boeing employ-

ees hired to perform under the support services contract

less than 400 were formerly TWA employees. At first in

the course of this suit the defendants contested that po-

sition of the plaintiff and contended there was discrimina-

tion by Boeing in its hiring. However, in its brief filed

July 3, 1972, IAM withdrew fer the purposes of this case

that contention. On page 10 of the brief counsel stated:

‘*... we now withdraw, for the purpose of this pro-

ceeding only, any claim that Boeing purposely pop-

ulated it work force with a minority of TWA incum-

bents in order to avoid the status of successor. We

choose in this proceeding to stand or fall on our posi-

tion that Boeing is a successor independently of any

rs that it hired discriminatorily to escape successor-

ship.’’

In this case the defendants have relied heavily on John

Wiley & Sons, Inc. v. Livingston. 276 U.S 543 (1964) to

establish Boeing as the successor of TWA and thereby

bound to the TWA contract witn IAM. But the Burns

case has clarified the Wiley decision, p. 286:

“Its (Wiley) narrower holding dealt with a merger

occurring against a background of state law that em-

bodied the general rule that in merger situations the

surviving corporation is liable for the obligations of

the disappearing corporation.”’

Boeing and TWA did not merge; they were rivals

competing for a contract which resulted in Boeing securing

the contract and employing a majority of non-TWA former

employees. In Burns (which replaced Wackenhut’s pro-

tective services at a Lockheed California plant) more than

a majority of Wackenhut’s employees were employed by

Burns. The Court said, p. 279:

‘*. . . It has been consistently held that a mere

change of employers or of ownership in the employing

i mOREOY

MER ae OnE |

industry is not such an ‘unusual circumstance’ as to

affect the force of the Board’s certification within the

normal operative period if a majority of employees

after the change of ownership or management were

employed by the preceding employer.’’ (Emphasis

added)

Burns held that Burns had the duty to bargain with the :

union with which Wackenhut had had a collective bar-

gaining agreement but that it (Burns) was not bound by

the terms of the contract. That holding appears to have

been based on finding Burns the successor to Wackenhut

as a result of employing a majority of Wackenhut em-

ployees. In the case at bar Boeing did not meet that

standard of successorship and this Court holds therefore

that it was not a successor to TWA.

That holding does not put to rest all remaining issues

in the case. In their counterclaim the defendants sought

to have Boeing turn over to them dues deductions now

being withheld and escrowed by ‘Boeing.

Boeing on March 19, 1971 advised IAM that it would

make payroll deductions for union dues and initiation fees

under the nation-wide agreement between Boeing and LAM.

Thereafter, on April 8, 1971, IAM wrote to Boeing that

without prejudice to [AM’s position as to Boeing’s obliga-

tion to perform under the TWA-IAM agreement, IAM

members performing installation support services for

Boeing would utilize Local Lodge 2061 dues deduction

authorization cards for check-offs in accordance with the

Boeing-IAM agreement.

On May 3, 1971 Boeing advised LAM that it would deduct

but put in escrow — rather than remit — union dues pur-

suant to an employee’s individual authorization. Boeing

takes the position that until IAM agrees that the Boeing-

IAM agreement is the applicable collective bargaining

agreement, it can not under the prohibition of Section 302

A ARRON EY ee

» e 40a

collected. Boeing points out the possibility that neither the

TWA-IAM nor the Boeing-IAM agreement may be appli-

cable and that it may be ultimately found’ that the support

services employées are unrepresented. *

However, there is no evidence that anyone has chal-

lenged IAM as the collective bargaining agent for the

Boeing support service employees—the whole dispute has

centered around which contract was applicable. Under the

circumstances Boeing should remit the withheld dues to

Local Lodge 2061 and [AM and Lodge 2061 should provide

Boeing with an agreement to indemnify and hold harmless

Boeing for any losses it might sustain as a result of such

payments to Lodge 2061. It is therefore,

ORDERED:

1. Plaintiff’s Motion for Summary Judgment be and

is hereby granted in that this Court finds that Boeing is

not a successor and is not bound by the collective bar-

gaining agreement between TWA and IAM;

2. Defendants’ Motion for Summary J udgment on their

prayer for an Order requiring arbitration be and is hereby

denied ;

3 Defendants’ Motion for ‘Summary Jedgunt on their

prayér for remittance of dues withheld by Boeing and

escrowed is granted and Boeing shall forthwith pay over

to Local Lodge 2061 of IAM the dues previously with-

held and escrowed for each of those support service em-

ployees who. were members of IAM and had delivered to

Boeing a written assignment as required by Section 302(e)

of the Act. In addition, Boeing shall pay to Local Lodge

2061, 6% interest on each deduction from the day of dedue-

tion to the day of payment to the Lodge. IAM and Local

2061 shal? deliver to Boeing simultaneously with the pay-

4TAM has offered to hold Boeing harmless for any liability it —

may incur as a result of paying over the deductions made pur-

svant to the Boeing-LAM agreement.

ee ne ee

4la

ments aforesaid, a hold harmlss and indemnity agreement,

wherein each of said entities—IAM and Local Lodge 2061

—agrees to indemnify and hold Boeing harmless from any

losses by Boeing because of the payment to Lodge 2061 of

the escrowed dues arising from a final finding tha sA¥

was not the collective bargaining agent for the employee

from whom such dues were collected.

, Downe and Orperep in Chambers at Orlando, Florida, this

16th day of October, 1972.

/s/ Grorce C. Youne

George C. Young

United States District Judge

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