Appendix — Advanced Stretchforming International, Inc. v. National Labor Relations Board
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APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NO. 97-71047
NLRB NO. 21-CA-29104
ORDER AND AMENDED OPINION
NATIONAL LABOR RELATIONS BOARD
Petitioner,
and
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW), AMALGAMATED
LOCAL UNION No. 509, AFL-CIO,
Petitioner-Intervenor,
V.
ADVANCED STRETCHFORMING INTERNATIONAL,
INC.,
Respondent.
On Application for Enforcement of an Order of the National
Labor Relations Board
Argued and Submitted
April 13, 1999 — Pasadena, California
2a
Filed April 4, 2000
Amended Opinion Filed November 22, 2000
Before: Robert Boochever, Diarmuid F. O’Scannlain and
A. Wallace Tashima, Circuit Judges.
Opinion by Judge Boochever;
Dissent by Judge O’Scannlain
COUNSEL
Sharon IJ. Block, National Labor Relations Board, Washing,
D.C., for the petitioner.
Henry M. Willis, Schwartz, Steinsapir, Dohrmann &
Somers, Los Angeles, California, for the petitioner-
intervenor.
Larry Walraven, O’Melveny & Myers, Newport Beach,
California, for the respondent.
ORDER
Both Advanced Stretchforming International, Inc.
(“ASI’) and the National Labor Relations Board (the
“Board”) filed petitions for rehearing and rehearing en banc.
The panel requested a response to these petitions and that
response was filed and circulated to panel members and to
all active judges. A judge of the court called for a vote on
whether the case should be reheard en banc, but voting was
suspended on the panel’s indication that its opinion would be
amended.
By unanimous vote, the panel hereby GRANTS
ASI’s petition for rehearing and GRANTS the Board’s
3a
petition for rehearing. Accordingly, the Original opinions
filed on April 4, 2000 as NLRB v. Advanced Stretchforming
Int'l, Inc., 208 F.3d 801 (9th Cir. 2000), are hereby
AMENDED.
OPINION
BOOCHEVER, Circuit Judge:
We decide whether a successor employer forfeits its
unilateral right to set initial terms of employment when it
announces to the former employees of its unionized
predecessor that there will be no union at the new company
should they apply to work there.
I
Advanced Stretchforming International, Inc., (“ASI”)
manufactures structural body components used in the
aerospace industry at a facility in Gardena, California. Prior
to ASI’s tenure, Aero Stretch, Inc. (“Aero”) engaged in the
Same operations at the same site. Aero and the International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America, Local No. 509 (“UAW” or
“Union”) entered into a collective bargaining agreement
(“CBA”) for production and maintenance employees
effective August 19, 1991 through August 19, 1994.
On June 11, 1992, Avro filed for bankruptcy under
Chapter 11 of the Bankruptcy Act. Aero continued to
operate, but gradually laid off employees. UAW
representative Duane LaMothe contacted Aero’s
management over the ensuing months to check on Aero’s
bankruptcy status. At a November 19, 1992 hearing, the
bankruptcy court converted Aero’s bankruptcy to a
Chapter 7 case and auctioned its assets.
4a
Stephen Brown submitted the successful bid. As a
condition of the sale, the bankruptcy judge ordered Aero to
cease operations and to terminate all employees by
November 30. On November 30, Brown called Aero’s
Manufacturing Director, Eric Cunningham, and told him to
inform Aero employees that they could report to the plant the
next day to interview for positions with ASI, which Brown
incorporated on December 1. Cunningham called a meeting
of Aero’s employees and informed them that the plant had
been purchased, and that all employees would be terminated
at the end of the day, but that they should report to the plant
the next day to interview for positions if they were interested
in working for ASI. Two employees present at the meeting,
and LaMothe, who was also present at the meeting, testified
that Cunningham told the employees that there would be “no
union, no seniority, no nothing” at ASI. Cunningham denied
making such a statement, but testified that at some point he
told the employees that ASI would not assume Aero’s CBA.
On December1, Brown interviewed and _ hired
Cunningham as ASI’s general manager. Brown and
Cunningham then interviewed Aero’s former employees who
came to the plant that day. Brown required each applicant to
sign the following statement:
I UNDERSTAND THAT I WILL BE WORKING
UNDER NEW TERMS AND CONDITIONS
WHICH IS NOT A CONTRACT AND IS SUBJECT
TO CHANGE.
NEW COMPANY IS NOT ASSUMING
COLLECTIVE BARGAINING AGREEMENT.
YOU MAY BE EMPLOYED BY NEW COMPANY
ON AN AT WILL BASIS.
Sa
DETAILED LIST OF TERMS AND CONDITIONS
IS TO FOLLOW.
During the interviews, Brown informed each applicant that
the new terms of employment would include different wages,
no 401(k) plan, less vacation time, fewer holidays, no
medical or dental benefits and at-will employment.
ASI hired eight of the seventeen former Aero
production and maintenance employees. Four were hired at
Aero’s hourly rate; two received more and two received less.
UAW sent certified letters to ASI on December 3, 7,
and 11, demanding that ASI recognize the Union as its
employees’ bargaining representative. UAW filed an unfair
labor practice charge against ASI on December11. On
December 14, ASI conducted a poll of its employees
regarding their desire for continued union representation.
The employees voted against union representation. That
same day, ASI’s counsel wrote the union a letter advising
that ASI did not recognize the UAW as the representative of
its employees. On April 30, 1993, the National Labor
Relations Board (“NLRB” or “Board”) issued a complaint
and notice of hearing against ASI.
After conducting a hearing, an Administrative Law
Judge (“ALJ”) found that ASI had violated sections 8(a)(1)
and (5) of the National Labor Relations Act (“NLRA”),
29 U.S.C. §§ 158(a)(1), (5), by (1) making the “no union”
Statement at the November30 meeting, (2) improperly
polling its employees regarding union representation on
December 14, and (3) refusing to recognize and to bargain
with UAW, as ASI was required to do as an alleged
“successor” employer to Aero. The ALJ, however, rejected
the General Counsel’s claim that ASI had further violated the
NLRA by setting the initial terms of employment on
December 1. The ALJ reasoned that under NLRB v. Burns
6a
Int'l Sec. Serv., Inc., 406 U.S. 272 (1972), ASI had the nght
to establish initial employment terms when it hired Aero’s
former employees.
The NLRB’s General Counsel appealed the ALJ’s
decision that ASI did not violate the NLRA by setting the
initial hiring terms, and the Board reversed. The Board
reasoned that ASI had forfeited its mght to set the initial
terms of employment because it unlawfully “block[ed] the
process by which the obligations and rights” of a successor
are incurred when it made the “no union” statement.
Advanced Stretchforming Int'l, Inc., 323 N.L.R.B. 529,
530-31 (1997). Thus, the Board held that ASI unlawfully
and unilaterally changed the employment terms without first
bargaining with the union. /d. at 531.
Based on its conclusions, the Board adopted the
ALJ’s recommended order, but added to it, directing ASI,
“in order to remedy [the] unlawful unilateral changes,” to
rescind any changes in employees’ terms and conditions of
employment unilaterally effectuated and to make the
employees whole by remitting all wages and benefits that
would have been paid absent [ASI’s] unlawful conduct, until
[ASI] negotiates in good faith with the Union to agreement
or to impasse. Jd.
The Board timely applied to this court for
enforcement of its order. ASI does not challenge the Board’s
ruling on the “no union” statement, the union representation
poll and the refusal to bargain with UAW. Accordingly, the
Board’s “finding of those unfair labor practices violations
must be taken as established.” Jdaho Falls Consol. Hosp.,
Inc. v. NLRB, 731 F.2d 1384, 1386 (9th Cir. 1984). We
grant summary enforcement of the Board’s order with
respect to those findings. See Gardner Mech. Serv., Inc. v.
Ta
NLRB, 115 F.3d 636, 643 n.2 (9th Cir. 1997).' ASI does not
dispute the Board’s determination that it committed separate
violations of NLRA sections 8(a)(1) and (5) by unilaterally
changing the terms of its carryover workforce’s employment.
II
When ASI employed a majority of its workforce
from Aero’s former employees and carried on Aero’s
business essentially unchanged, ASI became a “successor”
employer to Aero. See Kallman v. NLRB, 640 F.2d 1094,
1100 (9th Cir. 1981). A successor is obligated to recognize
and bargain with the representative of its predecessor’s
former employees. See NLRB v. Burns Int'l Sec. Serv., Inc.,
406 U.S. 272, 280-81 (1972). Ordinarily, however, a
successor is not bound by its predecessor’s collective
bargaining agreement, and is free to set the initial terms of
employment for its workers without first consulting with
their union. See Burns, 406 U.S. at 294-95. Nevertheless,
the Board found that ASI “forfeited” its right to set initial
terms without first bargaining when it made the statement
that there would be “no union” at the new company.”
The forfeiture doctrine deprives a successor of its
rights under Burns when the successor has failed to fulfill its
corresponding Burns obligations. The Board has explained:
' To remedy these violations, the Board’s order requires that ASI (1) cease
and desist these unfair labor practices; (2) recognize and bargain with UAW;
(3) make various company records available for Board inspection; (4) post
notices at its facilities informing its employees that it will no longer engage in
any unfair labor practices; and (5) file a sworn certification with the NLRB’s
Regional Director that it has taken steps to comply with the order. ASI does not
challenge these remedies
2 The dissent engages in a semantical attempt to equate the “forfeiture” of
the right to set initial employment terms with a “penalty.” The “forfeiture” in this
case, however, merely places the parties in the position where they would have
been had ASI refrained from engaging in improper conduct. Thus, the
“forfeiture” qualifies as a permissible remedy.
8a
The fundamental premise for the forfeiture doctrine
is that it would be contrary to statutory policy to
confer Burns nights on an employer that has not
conducted itself like a lawful Burns successor
because it has unlawfully blocked the process by
which the obligations and rights of such a successor
are incurred .... In other words, the Burns right to set
initial terms and conditions of employment must be
understood in the context of a successor employer
that will recognize the affected unit employees’
collective-bargaining representative and enter into
good faith negotiations with that union about those
terms and conditions.
Advanced Stretchforming Int'l, Inc., 323 N.L.R.B. 529, 530
(quotation marks, citation omitted).
Courts have approved the Board’s application of
the forfeiture doctrine in instances where an employer
seeks to avoid obligations of successorship by
strategically refusing to hire its predecessor’s employees
based on their union membership. See, e.g., Kallman,
640 F.2d at 1102-03; Capital Cleaning Contractors, Inc.
v. NLRB, 147 F.3d 999, 1008 (D.C. Cir. 1998); NLRB v.
Horizons Hotel Corp., 49 F.3d 795, 806 (ist Cir. 1995);
U.S. Marine Corp. v. NLRB, 944 F.2d 1305, 1320 (7th
Cir. 1991). In Kallman, for example, we enforced the
Board’s finding that a successor forfeited its nght to set
initial terms of employment when it refused to hire a
certain number of its predecessor’s union employees in
order to avoid application of a rule that would have
required it to bargain before setting terms.
The rule whose application the successor sought to
avoid in Kallman was the so-called “perfectly-clear”
exception to the ordinary rule of Burns. Under this
a a ee -
MN
9a
exception, a successor must bargain before setting terms
when it hires all or substantially all of its initial workforce
from the ranks of a represented bargaining unit of its
predecessor, it being then “perfectly clear” that a carryover
majority desires representation. See Kallman, 640 F.2d at
1102-03; Bellingham Frozen Food, Inc. v. NLRB, 626 F.2d
674, 678-79 (9th Cir. 1980) (“When it is ‘perfectly clear’
that the employer intends to hire a majority of his workforce
in a unit represented by a union from the ranks of his
predecessor, his duty to bargain with the union commences
immediately.”). Had the successor in Kallman not
discriminated against its predecessor’s unionized employees,
the “perfectly clear” exception would have required it to
bargain before setting initial terms. We therefore found it
appropriate to treat the successor as if the “perfectly clear”
exception had applied, as it would have but for the
successor’s anti-union conduct. Kallman, 640 F.2d at
1102-03.
The question before us is whether ASI’s “no union”
statement “blocked the process by which the obligations of a
successor are incurred” in a manner similar to the
discriminatory hiring practices to which the forfeiture
doctrine previously has been applied. We believe that it did.
In Kallman, the successor employer’s discriminatory hiring
practices prevented the initial workforce from being
constituted from the ranks of the predecessor, preempting the
employees’ right to bargain through their union prior to
imposition of initial terms. Here, no discriminatory hiring
practices prevented ASI’s “perfectly clear” obligation from
arising.” Instead, the “no union” statement chilled the
invocation of that obligation once it had arisen. Having been
* To the contrary, ASI hired its entire initial complement of workers from
the ranks of a represented unit of its predecessor. The Board’s order, however,
was not based on the “perfectly clear” exception to Burns. We therefore do not
address the applicability of that exception.
10a
informed when invited to apply for work with ASI that there
would be no union at the new company, Aero’s workers may
well have believed that employment with ASI was
- contingent on abstaining from union representation,
including insistence on the might to bargain before ASI
imposed initial terms. It was not unreasonable for the Board
to conclude, as a practical matter, that the “no union”
statement blocked the process by which ASI’s obligations as
a successor were incurred.
Il
To remedy ASI’s failure to consult with the Union
before imposing terms, the Board ordered ASI to recognize
the Union, and to pay back wages and benefits under the
CBA from the time of the violation until ASI negotiated in
good faith to a bargain or impasse. Though a successor may
forfeit its mght to set initial terms unilaterally when it
engages in improper activities to evade the obligations of
successorship, the successor has “no obligation to accept his
predecessor’s labor agreement.” Kallman, 640 F.2d at 1103.
Consequently, when employees are awarded back pay
running from the time the successor acquires the business
until it finally bargains to an agreement or an impasse
pursuant to a duty to bargain imposed after lengthy
proceedings, employees may receive far more than they
would have if the violation had never occurred. Thus we
have held that “to the extent that a back pay order requires
payment at the higher rate for the entire period of ownership,
it acts as a penalty.” Jd. Rather, “an appropriate back pay
remedy cannot require [the successor] to pay the higher rate
beyond a period allowing for a reasonable time of
bargaining.” Jd.
This limitation on the period for which back pay may
be awarded applies, however, only when it is clear that the
lla
successor “lawfully would not have agreed to the wage scale
provided by the predecessor’s labor agreement, and the
resulting impasse would have resulted in reduced wages.”
New Breed Leasing Corp. v. NLRB, 111 F.3d 1460, 1467
(9th Cir. 1997). Whether bargaining would have resulted in
impasse had the violation not occurred will often be a matter
of some uncertainty. In New Breed we held that any such
uncertainty “should be resolved against the employer who
discriminates,” and we therefore placed the burden of
persuasion on the successor to show that it would not have
agreed to the higher wages. /d. at 1468.
In reaching this conclusion, we were persuaded by
the Seventh Circuit’s reasoning in U.S. Marine, 944 F.2d at
1321, that a successor should not benefit from an ambiguity
that results from its own wrongdoing. Thus in New Breed,
where the successor “failed to shoulder its evidentiary
burden,” we found that “the Board’s grant of back pay based
on the predecessor Union’s pay scale restores as nearly as
possible the employment situation that would have occurred
absent” the unfair labor practice. New Breed, 111 F.3d at
1468-69. But where, as in Kallman, “(t]he facts demonstrate
that [the successor] would not have agreed to union demands
to pay the higher rate,” the successor may not be required “to
pay the higher rate beyond a period allowing for a reasonable
time of bargaining.” Kallman, 640, F.2d at 1103.
In fashioning its remedy in this case, the Board
attempted to put the parties in the place they would have
been had ASI not made the “no union” statement. This may
literally be impossible as “The Moving Finger writes; and,
having writ, Moves on: nor all your Piety nor Wit Shall lure
it back to cancel half a Line, Nor all you Tears wash out a
Word of it.” Edward Fitzgerald, the Rubaiyat of Omar
Khayyam, st. 71 (4th ed. 1879). One reasonable hypothesis
is that, had ASI not made the “no union” statement, the
MI
12a
union and ASI would have bargained to impasse before ASI
set the new employment terms. We must give deference to
the remedy fashioned by the Board. See New Breed, 111
F.3d at 1464-65. Here, the forfeiture of the right to set the
new terms before bargaining to impasse was a permissible
method of placing the parties where they would have been
had ASI not made the “no union” statement.
The Board applied the presumption that an award of
back pay and benefits under the repudiated bargaining
agreement restores the status quo ante, but did not consider
whether ASI had rebutted the presumption with evidence
that it would have bargained to an impasse and imposed less
favorable terms. See New Breed, 111 F.3d at 1468; see also
U.S. Marine, 944 F.2d at 1323 (“[I]t is for the employer to
demonstrate that it is not appropriate [to award back pay].
U.S. Marine has failed to do so.”) (quotation marks, citation,
and original alterations omitted). Nor did the LJ make any
findings in this regard, as the ALJ did not award back pay
and benefits under any exception to the Burns rule.
Those facts that are in the record and bear on this
question are equivocal. The ALJ found that of the eight
Aero unit employees originally hired on December 1, 1992,
four received the same hourly wage they had previously been
paid by Aero, two received significantly more, and two
received significantly less. ASI provided less vacation time
and paid holidays, however, and no medical or dental
benefits. Nevertheless, the ALJ found little to indicate that
ASI could have found a qualified workforce outside of
Aero’s ranks had ASI not been able to come to terms with
the incumbent union. The ALJ noted that ASI had rejected
transferring employees from a machine shop that Brown
owned in Gardena due to the unacceptable commute, and
found that, to continue Aero’s business, ASI needed a
13a
workforce with specialized skills that were not readily
available in the marketplace.
The mere fact that ASI provided fewer benefits under
the terms that it imposed provides little indication of what
ASI might have agreed to had it fulfilled its obligation to
bargain with the Union. The apparent unavailability of
qualified workers outside of the Aero unit and the need to
complete Aero’s work in progress indicate that the Union
might have brought significant negotiating power to the
table. On the other hand, the fact that Aero’s bankruptcy
indicates that ASI might have been unwilling or even unable
to continue to operate the business without significant labor
concessions, and might have chosen to liquidate the
company’s assets rather than continue operating under the
terms of the previous CBA.
Were the question regarding what would have
happened had ASI recognized and bargained with the Union
presented to us on a record that was ambiguous despite
having been fully developed under the correct legal standard,
we would resolve any uncertainty by affirming the Board’s
award under New Breed. See New Breed, 111 F.3d at 1468.
Because the record was not fully developed on this point,
however, we remand to permit ASI and the UAW to present
evidence on whether ASI would have bargained to impasse
and imposed terms, even had ASI honored its obligation to
bargain with the Union.
IV
The Petition for Enforcement is GRANTED IN
PART and REMANDED IN PART. Each party shall bear
its own costs.
O’SCANNLAIN, Circuit Judge, concurring in part and
dissenting in part:
Ss
14a
I concur in PartI of the court’s opinion, granting
summary enforcement to the National Labor Relations
Board’s (“Board”) order of prospective relief to redress
Advanced Stretchforming International, Inc.’s (“ASI”)
violations of the National Labor Relations Act (“NLRA”).
I must respectfully dissent, however, from Parts II
and III. In my view, the Board’s award of back pay under
the terms of the collective bargaining agreement of ASI’s
predecessor violates the holding of NLRB v. Burns Int'l
Security Services, Inc., 406 U.S. 272 (1972). This award
does nothing to redress ASI’s actual violations and does not
restore the status quo ante. It constitutes a penalty well in
excess of the Board’s legal authority. In holding that this
award is presumptively appropriate, the majority opinion
misconstrues and misapplies the so-called “forfeiture
doctrine,” transforming it into a broad new exception capable
of swallowing the rule set forth in Burns that a successor
employer is not bound by its predecessor’s collective
bargaining agreement and is ordinanily free to set the initial
terms of employment unilaterally. By arming the Board with
an unauthorized power to punish, the majority has
impermissibly upset the balance of power between
management and labor that Congress established in the Act.
I respectfully dissent.
The majority’s analysis begins innocently enough by
restating the general rule from Burns that a successor
employer is not bound by its predecessor’s collective
bargaining agreement (“CBA”) and is free to set the initial
terms of employment for its workers without first consulting
with their union. See Burns, 406 U.S. at 287-88. According
to the majority, however, an employer’s “nights under
Burns” to take such unilateral action can be forfeited if the
——— — —_- —
—o
15a
successor “has failed to fulfill its corresponding Burns
obligations.” Supra at 15101. The majority reasons that, in
the present case, ASI “ ‘blocked the process by which the
obligations of a successor are incurred’” by telling
prospective workers that there would be “no union” at ASI
and thus it forfeited its “Burns rights.” Supra at 15103
(quoting the Board’s decision, Advanced Stretchforming,
Int'l, 323 N.L.R.B. 529, 531 (1997)).
Somewhat surprisingly, the majority does not bother
to tell us what exactly ASI’s “Burns obligations” were and
why its failure to fulfill such obligations might possibly be
remedied by the forfeiture of ASI’s “Burns rights” ordered
by the NLRB - namely, an award of back pay under the
terms of its predecessor’s CBA. In fact, the reason for the
majority’s evasion is clear enough; the forfeiture doctrine is
simply inapplicable here. The forfeiture doctrine is premised
on the theory that an employer should forfeit its right to set
the initial terms of employment only where it evades an
actual legal obligation to consult with a union before
imposing initial terms. In contrast, ASI was under no such
obligation to consult with the UAW prior to imposing its
initial terms of employment. In the majority’s hands, the
forfeiture doctrine becomes a punishment rather than a
remedy.
A
In Burns, the Supreme Court addressed the
obligations under the NLRA of successor employers such as
ASI. The Court held that when a new employer acquires a
business, it is free, generally, to set the initial terms and
conditions of employment, and is not bound by its
predecessor’s CBA. See id. at 281-82, 287-88, 294-95. The
successor employer is, however, obligated to bargain with
the union after setting initial terms. See id. at 281.
l6a
There are three established exceptions to the Burns
rule. A successor employer’s right to set initial terms is
limited if (1) the successor employer is the “alter ego” of the
predecessor, see Sheet Metal Workers Int'l Assoc. v. Arizona
Mechanical & Stainless, Inc., 863 F.2d 647, 651 (9th Cir.
1988); (2) the successor employer assumes or adopts the
obligations of the predecessor’s CBA, see id.; or (3) if “it is
perfectly clear that the new employer plans to retain all of
the employees in the [bargaining] unit,” Burns, 406 U.S. at
294-95 (emphasis added).
The third exception to the Burns rule, the “perfectly
clear” exception, requires a successor to consult with an
incumbent union before altering the predecessor’s terms and
conditions of employment when it is “perfectly clear that the
new employer plans to retain all of the employees in the
[bargaining] unit.” Burns, 406 U.S. at 294-95. The Court
established this exception in Burns, stating:
Although a successor employer is ordinarily free to
set the initial terms on which it will hire the
employees of a predecessor, there will be instances in
which it is perfectly clear that the new employer
plans to retain all of the employees in the unit and in
which it will be appropriate to have him initially
consult with the — employees’ bargaining
representative before he fixes terms.
Id. (emphasis added). An employer subject to this exception
is not bound by its predecessor’s CBA, nor is it required to
agree to the terms the union proposes. See Burns, 406 U.S.
at 282. Rather, the successor employer must simply
“consult” with the union before setting the initial terms and
conditions of employment. See id. at 295; Kallmann v.
NLRB, 640 F.2d 1094, 1102 (9th Cir. 1981).
17a
The majority has sensibly abandoned its previous
attempt to justify the Board’s award under the Burns
perfectly clear exception.* This is prudent, given that the
ALJ correctly concluded that the exception is simply not
implicated on these facts and the Board itself specifically
disavowed any reliance on it, stating that the exception “was
not determinative of the legality of [ASI’s] conduct.”
Advanced Stretchforming, 323 NLRB at 529. Unfortunately,
the Burns perfectly clear exception remains lurking in the
background. The Board’s award can only be justified if ASI
breached a duty to negotiate with the UAW prior to setting
the initial terms of employment. Despite its new reliance on
the forfeiture doctrine without reference to the perfectly clear
exception, the majority (to borrow from its quotation of the
Rubaiyat of Omar Khayyam) has failed to cancel half a
Line” or “wash out a Word” of its previous ill-starred
attempt to apply the Burns perfectly clear exception to this
case.
In actuality, given that the perfectly clear exception
does not apply here, ASI’s only obligation under Burns was
to negotiate with the UAW after it had unilaterally set initial
terms of employment. It is not contested that ASI breached
this obligation. Nevertheless, as the majority concedes, the
Board’s award of back pay was premised on the notion that
“ASI unlawfully and unilaterally changed the employment
terms without first bargaining with the union.” See supra at
15099 (citing Advanced Stretchforming Int'l, 323 N.L.R.B.
529, 531 (1997)) (emphasis added). Because ASI was
punished for violating an obligation it did not, in fact, have,
the Board’s award of back pay should be rejected.
* The majority affirmed the Board’s award on the basis of the perfectly
clear exception in a now-withdrawn opinion. See NLRB v. Advanced
Stretchforming Int'l, Inc., 208 F.3d 801 (9th Cir. 2000).
18a
B
In its attempt to justify the Board’s award, the
majority invokes the so-called “forfeiture doctrine,” which
courts have properly characterized as “corollary” to the
perfectly clear exception. See Capital Cleaning Contractors,
Inc. v. NLRB, 147 F.3d 999 (D.C. Cir. 1998).
The majority views the doctrine differently. Quoting
the Board, the majonty describes the forfeiture doctrine as
follows:
The fundamental premise for the forfeiture doctrine
is that it would be contrary to statutory policy to
“confer Burns nghts on an employer that has not
conducted itself like a lawful Burns successor
because it has unlawfully blocked the process by
which the obligations and rights of such a successor
are incurred.” ... In other words, the Burns nght to
set initial terms and conditions of employment must
be understood in the context of a successor
employer that will recognize the affected unit
employees’ collective-bargaining representative and
enter into good-faith negotiations with that union
about those terms and conditions.
See supra at 15101 (quoting Advanced Stretchforming, 323
NLRB 529, 530) (emphasis added). Thus, in the Board’s
view, a view which the court today adopts, another exception
to the Burns rule exist when a new employer attempts to
avoid becoming a successor employer or fails to fulfill its
duty to recognize and to bargain with the incumbent union.
Apparently, only a successor who complies with ail of its
obligations under the NLRA can set the initial terms of
employment; any unfair labor practice that “block[s] the
process by which the obligations and nghts of [ ] a successor
are incurred,” id., causes the employer to forfeit its nghts.
19a
> 66.
Hence, the majority opinion concludes that ASI’s “‘no union”
statement caused ASI to forfeit its right to set initial terms
without first bargaining with UAW. The majority has it
wrong.
As the majority implicitly acknowledges, see supra at
15102, courts have previously applied the forfeiture doctrine
only in cases in which a successor employer discriminatorily
refused to hire its predecessor’s employees because of their
union membership. See Kallmann, 640 F.2d at 1102-03;
U.S. Marine Corp., 293 NLRB 669 (1989), enforced, 944
F.2d 1305 (7th Cir. 1991). Indeed, courts have held that a
successor employer who discriminatorily refuses to hire its
predecessor’s employees based on their union membership
forfeits its right to set the initial terms of employment. See
e.g., Kallmann, 640 F.2d at 1102-03; U.S. Marine Corp. v.
NLRB, 944 F.2d 1305,1320 (7th Cir. 1991); NLRB v.
Horizons Hote! Corp., 49 F.3d 795, 806 (1st. Cir. 1995);
Capital Cleaning Contractors, Inc. v. NLRB, 147 F.3d 999,
1008 (D.C. Cir. 1998). The majority now seeks to expand,
for the first time, the scope of the forfeiture doctrine outside
the discriminatory hiring context.
The majority justifies its application of the forfeiture
doctrine here because ASI’s violation of the NLRA by
making “no union” statements is “similar” to the
discriminatory hiring practices of employers such as
Kallmann. This is simply not the case. The discriminatory
hiring cases are distinguishable because the “fundamental
premise” behind the forfeiture doctrine in the discriminatory
hiring case is that but for the successor employer’s
discriminatory refusal to hire its predecessor’s employees,
the employer would have come within the perfectly clear
exception to the Burns rule, and thus would have been
obligated to consult the union before setting the initial terms
of employment. See U.S. Marine, 944 F.2d at 1320 (“Where
{
’
j
t
20a
all or substantially all of the predecessor’s employees would
have been retained but for the successor’s unlawful
discrimination, the successor loses the right to set initial
terms and conditions of employment and violates the
[NLRA] if it unilaterally alters the predecessor’s terms
without first consulting with the union .... But for its
unlawful conduct, U.S. Marine would have hired
substantially all of [its predecessor’s] employees and
therefore would have been obligated to consult with the
Union before setting the terms and conditions of
employment.”); Capital Cleaning, 147 F.3d at 1008
(“[B]ecause Capital refused to hire the Ogden employees
based upon their union membership, the Board properly
presumed that but for such discrimination Capital would
have hired a majority of the Ogden employees from the
outset. Accordingly, Capital had a duty to bargain with
Local 32 and therefore did not have the right unilaterally to
set the terms and conditions upon which it offered
employment.”).
Applying the forfeiture doctrine in these types of
cases prevents the successor employer from avoiding the
perfectly clear exception through his “unlawful conduct.”
See Kallmann, 640 F.2d at 1102-03 (holding that the Board
correctly found that the perfectly clear exception applied
because “any uncertainty regarding whether substantially all
the former employees would have been retained had to be
resolved against [the successor employer] because he could
not benefit from his ... [discriminatory] conduct” (footnote
omitted)). More precisely, because the employers in such
cases never would have had the night unilaterally to set the
initial employment terms absent their discriminatory hiring,
holding that they forfeit their nght to set the initial terms of
employment simply restores the status quo ante. Cf. Sure-
Tan, Inc. v. NLRB, 467 U.S. 883, 900 (1984) (noting that the
Board’s remedial authority includes the ability “to restore the
2la
situation ‘as nearly as possible, to that which would have
obtained’ but for” any unfair labor practice (quoting Pheips
Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941))).
Such rationale, however, does not justify holding that
ASI forfeited its right to set initial terms. The majority falls
far short in explaining how the application of the forfeiture
doctrine here restores the situation to the status quo ante.
But for ASI’s unlawful conduct, i.e, its “no union”
Statement, it still would not have been subject to the
“perfectly clear” exception and hence did not have any duty
to consult with UAW before setting the initial terms of
employment. Thus, the majority’s “hypothesis,” see supra at
15105, that ASI might have bargained to impasse before
setting initial terms had it not made the “no union” statement
is patently unreasonable.
Clearly, then, because the rationale underlying the
forfeiture doctrine is inapplicable to this case, the
discriminatory hiring cases provide absolutely no authority
for the court’s argument that ASI should be held to have
forfeited its right to set initial hiring terms. The remedy that
the Board misapplied in this case is one specifically designed
to redress an employer’s violation of the obligation created
by the “perfectly clear” exception, nothing more. The
majority utterly fails to justify extending its application here.
C
Given this close link between the forfeiture doctrine
and the perfectly clear exception of Burns, could it be that,
despite its disclaimer in footnote 3, the majority has persisted
in its attempt to apply the perfectly clear exception to the
instant case, this time sub silentio? The majority justifies its
application of the forfeiture doctrine thus:
22a
Here, no discriminatory hiring practices prevented
ASI’s “perfectly clear” obligation from arising.
Instead, the “no union” statement chilled the
invocation of that obligation once it had arisen.
Having been informed when it invited to apply for
work with ASI that there would be no unio at the
new company, Aero’s workers may well have
believed that employment with ASI was contingent
on abstaining from union representation, including
insistence on the right to bargain before ASI
imposed initial terms.
Supra at 15103 (emphasis added). The majority misses the
point. Because none of the exceptions to the Burns rule
applies here, Aero’s workers had, in fact, no nght to union
bargaining before ASI imposed initial terms. While the
majority now explicitly disclaims any reliance on the Burns
“perfectly clear” exception, it nonetheless denies that ASI
had the nght unilaterally to set its initial terms of
employment. The latter simply cannot be true.
Il
The majonity’s application of the forfeiture doctrine
is not only fundamentally inconsistent with the doctrine’s
underlying rationale, it is irreconcilable with Burns itself. In
that case, Burns, as a successor employer, had violated the
NLRA by unlawfully assisting a union which was a rival of
its predecessor’s employees’ union and failing to recognize
and to bargain with the incumbent union. See 406 U.S. at
276. However, the Court rejected the Board’s finding that
Burns was bound by its predecessor’s CBA or that it had
violated the NLRA by setting initial employment terms.
See id.
The Court viewed a successor’s duty to bargain and
the right to set initial terms as separate issues:
:
;
'
s
f
23a
Although Burns had an obligation to bargain with the
union concerning wages and other conditions of
employment when the union requested it to do so, ...
[i]t is difficult to understand how Burns could be
said to have changed unilaterally any pre-existing
terms or condition of employment without bargaining
when it had no previous relationship whatsoever to
the bargaining unit and, prior to [the date Bums
began operations], no outstanding terms and
conditions of employment from which a change
could be inferred.
Id. at 294 (italics in original) (emphasis added). Thus, the
Court rejected the Board’s position that Burns violated the
NLRA by setting the initial terms of employment, even
though Burns can be said to have attempted to “‘block[ ] the
process by which the obligations and rights of [ ] a successor
are incurred,” see supra at 15101, by refusing to bargain
with the incumbent union and by unlawfully assisting 4 nval
union. See Burns, 406 U.S. at 295-96.
Burns directly controls this case. In Burns, the
employer violated the NLRA by failing to bargain with the
incumbent union and interfering with its employees’
organizational rights by assisting a rival union, and yet the
Court held that Burns retained the right to set initial hiring
terms. See 406 U.S. at 294. Here, ASI similarly violated the
NLRA by failing to bargain with the incumbent union and by
interfering with its employees’ organizational rights through
its “no union” statement. Yet, contrary to Burns, the court
today holds that ASI forfeited the right to set initial hinng
terms. The court appears to confuse a successor employer’s
obligations under the NLRA, and its right to set the initial
terms of employment. Burns made clear that these issues are
not inter-linked.
24a
Ill
The Board has only remedial power and does not
have the power to impose punishment for violations of the
NLRA. See Phelps Dodge, 313 U.S. at 194. This limitation
on the Board’s authority “at a minimum ... encompasses the
requirement that a proposed remedy be tailored to the unfair
labor practice it is intended to redress.” Sure-Tan, Inc. 467
U.S. at 900. the majority has not even come close to
explaining how forfeiture of ASI’s nght unilaterally to
establish employment terms redresses ASI’s unlawful “no
union” statements. ASI never had, and never would have
had, an obligation to consult with the UAW pnor to
imposing initial terms. The appropriate remedy for ASI’s
“no union” statement is an order directing ASI to cease and
desist telling potential applicants that ASI intends to operate
with no union. The Board’s order does so in this case. To
add that ASI forfeited its right to set the initial terms of
employment because of this unfair labor practice is “a
penalty by another name — and not a much different name at
that.” U.S. Marine, 944 F.2d at 1328 (Easterbrook, J.,
dissenting). Indeed, a synonym of forfeit is “penalty.” See
Webster’s Ninth New Collegiate Dictionary 484 (1987)
(defining forfeit as “something forfeited or subject to being
forfeited ... PENALTY’).
This court cannot authorize the Board to impose
penalties. I respectfully dissent.
25a
APPENDIX B
FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
NO. 97-71047
NLRB NO. 21-CA-29104
OPINION
NATIONAL LABOR RELATIONS BOARD
Petitioner,
and
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW), AMALGAMATED
LOCAL UNION No. 509, AFL-CIO,
Petitioner-Intervenor,
Vv.
ADVANCED STRETCHFORMING INTERNATIONAL,
INC.,
Respondent.
On Application for Enforcement of an Order of the
National Labor Relations Board
26a
Argued and Submitted
April 13, 1999 — Pasadena, California
Filed April 4, 2000
Before: Robert Boochever, Diarmuid F. O’Scanniain and
A. Wallace Tashima, Circuit Judges.
Opinion by Judge Boochever;
Dissent by Judge O’Scannlain
COUNSEL
Sharon I. Block, National Labor Relations Board,
Washington, D.C., for the petitioner.
Henry M. Willis, Schwartz, Steinsapir, Dohrmann &
Sommers, Los Angeles, California, for the petitioner-
intervenor.
Larry Walraven, O’Melveny & Myers, Newport Beach,
California, for the respondent.
OPINION
BOOCHEVER, Circuit Judge:
We decide whether a successor employer has a duty
to bargain with an incumbent union before unilaterally
imposing terms when the employer hires its initial workforce
from the ranks of a represented bargaining unit of its
predecessor.
Advanced Stretchforming International, Inc., (“ASI”)
manufactures structural body components used in the
aerospa ¢ industry at a facility in Gardena, California. Prior
to ASI’s tenure, Aero Stretch, Inc. (“Aero”) engaged in the
same operations at the same site. Aero and the International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America, Local No. 509 (“UAW” or
“Union”) entered into a collective bargaining agreement
(“CBA”) for production and maintenance employees
effective August 19, 1991 through August 19, 1994.
On June 11, 1992, Aero filed for bankruptcy under
Chapter 11 of the Bankruptcy Act. Aero continued to
operate, but gradually laid off employees. UAW
representative Duane LaMothe contacted Aero’s
management over the ensuing months to check on Aero’s
bankruptcy status. At a November 19, 1992, hearing, the
bankruptcy court converted Aero’s bankruptcy to a
Chapter 7 case and auctioned its assets.
Stephen Brown submitted the successful bid. As a
condition of the sale, the bankruptcy judge ordered Aero to
ceas€ operations and to terminate all employees by
November 30. On November 30, Brown called Aero’s
Manufacturing Director, Eric Cunningham, and told him to
inform Aero employees that they could report to the plant the
next day to interview for positions with ASI, which Brown
incorporated on December 1. Cunningham called a meeting
of Aero’s employees and informed them that the plant had
been purchased, and that all employees would be terminated
at the end of the day, but that they should report to the plant
the next day to interview for positions if they were interested
in working for ASI. Two employees present at the meeting,
and LaMothe, who was also present at the meeting, testified
28a
that Cunningham told the employees that there would be “no
union, no seniority, no nothing” at ASI. Cunningham denied
making such a statement, but testified that at some point he
told the employees that ASI would not assume Aero’s CBA.
On December1, Brown interviewed and _ hired
Cunningham as ASI’s general manager. Brown and
Cunningham then interviewed Aero’s former employees who
came to the plant that day. Brown required each applicant to
sign the following statement:
I UNDERSTAND THAT I WILL BE WORKING
UNDER NEW TERMS AND CONDITIONS
WHICH IS NOT A CONTRACT AND IS SUBJECT
TO CHANGE.
NEW COMPANY IS NOT ASSUMING
COLLECTIVE BARGAINING AGREEMENT.
YOU MAY BE EMPLOYED BY NEW COMPANY
ON AN AT WILL BASIS.
DETAILED LIST OF TERMS AND CONDITIONS
IS TO FOLLOW.
During the interviews, Brown informed each applicant that
the new terms of employment would include different
wages, no 401(k) plan, less vacation time, fewer holidays, no
medical or dental benefits and at-will employment.
ASI hired eight of the seventeen former Aero
production and maintenance employees. Four were hired at
Aero’s hourly rate; two received more and two received less.
UAW sent certified letters to ASI on December 3, 7,
and 11, demanding that ASI recognize the Union as its
employees’ bargaining representative. UAW filed an unfair
29a
labor practice charge against ASI on December11. On
December 14, ASI conducted a poll of its employees
regarding their desire for continued union representation.
The employees voted against union representation. That
same day, ASI’s counsel wrote the union a letter advising
that ASI did not recognize the UAW as the representative of
its employees. On April 30, 1993, the National Labor
Relations Board (““NLRB” or “Board”) issued a complaint
and notice of hearing against ASI.
After conducting a hearing, an Administrative Law
Judge (“ALJ”) found that ASI had violated sections 8(a)(1)
and (5) of the National Labor Relations Act (“NLRA”) by
(1) making the “no union” statement at the November 30
meeting, (2) improperly polling its employees regarding
union representation on December 14, and (3) refusing to
recognize and to bargain with UAW, as ASI was required to
do as an alleged “successor” employer to Aero. The ALJ,
however, rejected the General Counsel’s claim that ASI had
further violated the NLRA by setting the initial terms of
employment on December 1. The ALJ reasoned that under
NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272 (1972),
ASI had the right to establish initial employment terms when
it hired Aero’s former employees.
The NLRB’s General Counsel appealed the ALJ’s
decision that ASI did not violate the NLRA by Setting the
initial hiring terms, and the Board reversed. The Board
reasoned that ASI had forfeited its right to set the initial
terms of employment because “it unlawfully blocked the
process by which the obligations and rights” of a successor
are incurred when it made the “no union” statement.
_ Advanced Stretchforming Int'l, 323 N.L.R.B. 529, 531
(1997). Thus, the Board held that ASI unlawfully and
unilaterally changed the employment terms without first
bargaining with the union. /d.
30a
Based on its conclusions, the Board adopted the
ALJ’s recommended order, but added to it, directing ASI,
“in order to remedy [the] unlawful unilateral changes,” to
rescind any changes in employees’ terms and
conditions of employment unilaterally effectuated
and to make the employees whole by remitting all
wages and benefits that would have been paid absent
[ASI’s] unlawful conduct, until [ASI] negotiates in
good faith with the Union to agreement or impasse.
Id.
The Board timely applied to this court for
enforcement of its order.
Il
In the proceedings before the Board, ASI did not
challenge the ALJ’s_ findings that ASI _ violated
sections 8(a)(1) and (5)' of the NLRA. Section 10(e) of the
NLRA provides that “[n]Jo objection that has not been urged
before the Board . . . shall be considered by the court, unless
the failure or neglect to urge such objection shall be excused
because of extraordinary circumstances.” 29 U.S.C.
§ 160(e). “The failure [ ] of the employer to object to the
ALJ’s findings before the Board precludes the raising of
those issues on appeal.” Jdaho Falls Consol. Hosps., Inc. v.
NLRB, 731 F.2d 1384, 1386 (9th Cir. 1984).
Thus, ASI could not, and, indeed, does not, challenge the
Board’s rulings on the “no union” statement, the union
representation poll and the refusal to bargain with UAW.
' Section 8(a)(1) provides, in pertinent part, that it is an unfair labor practice
for an employer “to interfere with, restrain, or coerce employees in the exercise
of” their collective bargaining rights. 29 U.S.C. § 158(a)(1).
3la
Accordingly, the Board’s “finding of those unfair labor
practices violations must be taken as established,” id., and
we grant summary enforcement of the Board’s order with
respect to those findings. See Gardner Mechanical Servs..
Inc. v. NLRB, 115 F.3d 636, 643 n.2 (9th Cir. 1997).
Ill
ASI does challenge, however, the Board’s finding
that ASI violated sections 8(a)(1) and (5) of the NLRA by
unilaterally changing its employees’ terms and conditions of
employment when they were hired on December 1. AS]
claims that it was privileged to set the initial terms upon
which it would hire former Aero employees. The Board
argues that ASI forfeited this right when it infermed Aero’s
employees that it intended to operate without a unionized
workforce. Resolution of this issue requires a review of
what has come to be known as the “successorship
doctrine” — a body of labor law which governs the rights
and obligations of “successor” employers.
A
Central to this body of law is the “Burns rule,” which
provides that when a new employer acquires a business, it is
free, generally, to set the initial terms and conditions of
employment, and is not bound by its predecessor’s CBA.
See Burns, 406 U.S. at 281-82, 287-88, 294-95. Despite this
freedom, however, the new employer must recognize and
bargain with the union representing its predecessor’s
> To remedy these violations, the Board’s order requires that ASI (1) cease
and desist these unfair labor practices; (2) recognize and bargain with UAW;
(3) make various company records available for Board inspection; (4) post
notices at its facilities informing its employees that it will no longer engage in
any unfair labor practices; and (5) file a sworn certification with the NLRB’s
Regional Director that it has taken Steps to comply with the order. ASI does not
challenge these remedies.
32a
employees if the new employer is a “successor” employer.
See id. at 281; Kallmann v. NLRB, 640 F.2d 1094, 1100 (9th
Cir. 1981). A new employer is a successor if “the [new]
employer conducts essentially the same business as the
former employer, and . . . a majority of the new employer’s
work force are former employees or would have been former
employees absent a refusal to hire because of anti-union
animus.” /d.°
ASI concedes that it must be treated as a successor
employer. Thus, as the ALJ found, and the Board affirmed,
ASI had a duty to recognize and to bargain with UAW,
Aero’s employees’ representative. ASI failed to fulfill this
duty and, thus, the Board found that it violated the NLRA.
ASI disputes, however, the Board’s_ separate
determination that it violated sections 8(a)(1) and (5) by
“unilaterally changing its employees’ wages and other terms
and conditions of employment at the time of their hire.”
Advanced Stretchforming, 323 NLRB at 529. The Board
identified the “only issue” in this case as “whether [ASI], as
a successor employer obligated to recognize the Union’s
continuing status as a collective-bargaining representative,
had the legal right to establish unilaterally its initial terms
and conditions of employment for bargaining unit
employees.” Jd. Because the Supreme Court held in Burns
that “‘a successor employer is ordinarily free to set initial
terms on which it will hire the employees of a predecessor,”
despite its duty to bargain with its predecessor’s employees’
union,’ 406 U.S. at 294, ASI would indeed have been free to
> Although a new employer is not required to hire its predecessor’s
employees, see Howard Johnson Co. v. Detroit Local Joint Exec. Bd., 417 U.S.
249, 261-62 (1974), the new employer may not lawfully refuse to hire them
because of their union affiliation, see Fall River Dyeing & Finishing Corp. v.
NLRB, 482 U.S. 27, 40 (1987).
* Thus, a new employer may begin operations pursuant to terms that it has
set and operations may proceed under those terms while the new employer is
Peeee rE EETES PERE TEUNOE > oe
ieee
33a
set initial hiring terms when it began operations on
December 1, unless an exception to this general rule applied.
One qualification to the rule in Burns is the
“perfectly clear” exception. The duty to bargain with an
incumbent union arises when it becomes evident that the
union represents a majority of the employees hired by the
new employer. See id. at 281 (“[W]Jhere the bargaining unit
remains unchanged and a majority of the employees hired by
the new employer are represented by a recently certified
bargaining agent [the Board may] order[ ] the employer to
bargain with the incumbent union.”). In some cases, such as
Burns itself, the duty to bargain is not evident until the
employer has hired its full initial complement of employees,
“since it will not be evident until then that the bargaining
representative represents a majority of the employees in the
unit....” Jd. at 295. In such cases, it is not an unfair labor
practice unilaterally to impose initial terms of employment,
because at that point, the duty to bargain has not yet arisen.
See id. But in other cases, it will be “perfectly clear that the
new employer plans to retain all of the employees in the
unit,” and thus apparent from the outset that the incumbent
| union represents a majority of the employees. /d. at 294-95.
| In these cases, “it will be appropriate to have [the employer]
initially consult with the employees’ bargaining
representative before he fixes terms.” Jd. at 295.
fulfilling its duty to bargain with the union until agreement or impasse. See
Kallman, 640 F.2d at 1102 (stating that Burns held that “a successor employer is
ordinarily free to set initial hiring terms without preliminary bargaining with the
incumbent union”). If the employer fulfills its duty to bargain in good faith with
the union, and the employer and the union are unable to agree on the terms of
employment, the employer may continue to oper*'e under the terms it initially
set. See Burns, 406 U.S. at 295.
34a
The duty to bargain before imposing terms is based
on the fact that a majority of the successor employer’s initial
workforce have chosen to be represented by an incumbent
union. Therefore, the example given in Burns itself, where
the successor hires all of the predecessor’s employees (and
presumably few others), is not exhaustive of the perfectly
clear exception. The Burns perfectly clear exception to the
nght of the employer to set the initial terms of employment
applies whenever it is apparent that the incumbent union
continues to represent a majority of the initial workforce.
Thus we have held that “[i]f a majority of the employees in
the unit after the purchase were in the unit before the
purchase, there is a duty to bargain, it being assumed that the
holdover majority continues to desire representation by the
{uJnion.” Bellingham Frozen Foods, Inc. v. NLRB, 626 F.2d
674, 678 (9th Cir. 1980). “When it is ‘perfectly clear’ that
the employer intends to hire a majority of his workforce in a
unit represented by a union from the ranks of his
predecessor, his duty to bargain with the [u]nion commences
immediately.” Jd. at 678-79.
The circumstances surrounding the takeover in this
case strongly indicate ASI’s intent to hire its initial
workforce from the ranks of its predecessor. At a meeting
the day before the takeover, Cunningham told Aero’s
employees to report to the plant at the regular time the next
day if they wished to apply for employment with ASI. Two
witnesses testified, and the ALJ concluded, that Cunningham
stated that ASI intended to hire some Aero workers
immediately, and others as work became available. ASI
then hired all eight of its initial unit employees from Aero’s
ranks. There is no evidence that ASI interviewed any non-
Aero employees. After their interviews, the unit employees
continued work that had been in progress at Aero and
commenced similar work for ASI.
35a
ASI’s hiring activities after the takeover are also
substantially identical to those that we considered indicative
of an intent to hire the predecessor’s employees in
Bellingham. In Bellingham, the successor hired all of its
initial workforce from its predecessor, and then continued to
hire its predecessor’s former employees for many months as
work and vacancies permitted. /d. at 679. Here, after hiring
its initial workforce exclusively from Aero’s ranks, ASI
continued to hire former Aero unit employees to expand its
workforce as business permitted. ASI did not hire its first
non-Aero employee until several months after the takeover,
and three of the four non-Aero employees in the unit when
the ALJ hearing commenced in September 1993 were not
hired until ASI had already hired fifteen of the seventeen
former Aero unit employees. At no time did former Aero
employees cease to constitute an overwhelming majority of
the unit under ASI.
Under such circumstances, it is perfectly clear that
ASI intended from the outset to constitute the majonity of its
workforce from the ranks of its predecessor, and its duty to
bargain therefore commenced immediately. Consequently, it
was an unfair labor practice for ASI to impose terms without
first consulting with the union.
IV
The Board did not address the application of the
perfectly clear exception to the circumstances of this case,
but instead found that ASI had forfeited its nght to impose
initial terms under U.S. Marine Corp. v. NLRB, 944 F.2d
1305 (7th Cir. 1991), by declaring that there would be no
union, and by conducting an improper poll. Because we find
that the perfectly clear exception to the Burns rule applies in
this case, we need not take up the Board’s application of the
forfeiture doctrine to affirm its finding that ASI’s unilateral
36a
imposition of terms violated Sections 8(a)(5) and (1) of the
NLRA.
The dissent contends that in so doing, we “ignore[ ]
basic tenets of administrative law,” because we must uphold
the Board’s order under the forfeiture doctrine, or not at all.
Slip op. at 3834. The general rule is of course well
established that ‘‘an administrative order cannot be upheld
unless the grounds upon which the agency acted in
exercising its powers were those upon which its action can
be sustained.” SEC v. Chenery Corp., 318 U.S. 80, 95
(1943). But the rule is not so broad as the dissent would
suggest. “The rule is to the effect that a reviewing court, in
dealing with a determination or judgment which an
administrative agency alone is authorized to make, must
judge the propriety of such action solely by the grounds
invoked by the agency.” SEC v. Chenery Corp. (Chenery
IT), 332 U.S. 194, 196 (1947) (emphasis added); see also
Fleshman v. West, 138 F.3d 1429, 1433 (Fed. Cir.), cert.
denied, 119 S. Ct. 371 (1998) (“[Chenery] does not prohibit
a reviewing court from affirming an agency decision on a
ground different from the one used by the agency if the new
ground is not one that calls for a determination or judgment
which an administrative agency alone is authorized to
make.”’ (quotations omitted)).
[T]he court is not so bound when, as here, the issue
in dispute is the interpretation of a federal statute.” Railway
Labor Executives’ Ass'n v. Interstate Commerce Comm'n,
784 F.2d 959, 969 (9th Cir. 1986). Directly on point is
North Carolina Commission of Indian Affairs v. United
States Department of Labor, 725 F.2d 238, 240 (4th Cir.
1984), on which we relied in Railway Labor Executives. In
North Carolina Commission, the administrative judge found
that the Comprehensive Employment and Training Act of
1973, 29 U.S.C. § 801, implicitly authorized the Department
a
37a
of Labor to obtain repayment from states of improperly paid
funds. The court of appeals affirmed, but on the ground that
the right to repayment was express in the statute under the
rationale of Bell v. New Jersey and Pennsylvania, 461 U.S.
773 (1983). See North Carolina Comm'n, 725 F.2d at
240-41.
Here, the issue is whether Sections 8(a)(5) and (1) of
the National Labor Relations Act require a successor
employer to bargain collectively before imposing terms
when it hires its initial complement of workers entirely from
the ranks of a represented unit. This is an issue of statutory
interpretation, see Burns, 406 U.S. at 277-81, and one that
we decided conclusively in Bellingham, 626 F.2d at 678-79.
The Board’s forfeiture rationale, adopted from the Seventh
Circuit’s decision in U.S. Marine, is simply an alternative
gloss on the same statutory provisions, but one that has not
been likewise conclusively established in this circuit. We do
not transgress Chenery by enforcing the Board’s order under
a better established interpretation of the same statutory
provisions on which the Board relied in reaching its result.
Moreover, we are not required to remand when it is
certain that the agency would reach the same result under the
correct rule. See Vista Hill Found., Inc. v. Heckler, 767 F.2d
556, 566 n.9 (9th Cir. 1985). “Chenery does not require that
we convert judicial review of agency action into a ping-pong
game.” NLRB v. Wyman-Gordon Co., 394 U.S. 759, 766 n.6
(1969). As a litigant, the Board has pressed the perfectly
clear rationale at every stage in these lengthy proceedings.
The factual predicate for the application of the perfectly
clear doctrine has been exhaustively developed in the record
below. Were we to decline to adopt the Board’s forfeiture
rationale, and remand instead of deciding the question of
ASI’s liability, Bellingham would still dictate the ultimate
result. “A remand is not required when it would be an idle
38a
and useless formality ....” Vista Hill Found., 767 F.2d at
566 n.9 (quotations omitted).°
Vv
We turn next, therefore, to the remedy that the Board
imposed for the violation. To remedy ASI’s failure to
consult with the Union before imposing terms, the Board
ordered ASI to recognize the Union, and to pay back wages
and benefits under the CBA from the time of the violation
until ASI negotiated in good faith to a bargain or impasse.
Though a successor has a duty to bargain with an
incumbent union before imposing terms when it hires an
essentially intact bargaining unit from its predecessor, the
successor has “no obligation to accept his predecessor’s
labor agreement.” Kallman, 640 F.2d at 1103.
Consequently, when employees are awarded back pay
running from the time the successor acquires the business
until it finally bargains to an agreement or an impasse
pursuant to a duty to bargain imposed after lengthy
proceedings, employees may receive far more than they
would have if the violation had never occurred. Thus we
have held that “to the extent that a back pay order requires
payment at the higher rate for the entire period of ownership,
it acts as a penalty.” Jd. Rather, “an appropriate back pay
remedy cannot require [the successor] to pay the higher rate
beyond a period allowing for a reasonable time of
bargaining.” Jd.
This limitation on the period for which back pay may
be awarded applies, however, only when it is clear that the
* The dissent asserts that “[t]here is no basis for the majority’s asserted
confidence that the Board would, on remand, reach the same result that the
majority now embraces... .” Slip Op. at 383 n. 1. If our confidence is
misplaced, as the dissent suggests, the Board is free to petition for rehearing on
that ground.
SL,
39a
successor “lawfully would not have agreed to the wage scale
provided by the predecessor’s labor agreement, and the
resulting impasse would have resulted in reduced wages.”
New Breed Leasing Corp. v. NLRB, 111 F.3d 1460, 1467
(9th Cir. 1997). Whether bargaining would have resulted in
impasse had the violation not occurred will often be a matter
of some uncertainty. In New Breed we held that any such
uncertainty “should be resolved against the employer who
discriminates,” and we therefore placed the burden of
persuasion on the successor to show that it would not have
agreed to the higher wages. Jd. at 1468.
In reaching this conclusion, we were persuaded by
the Seventh Circuit’s reasoning in U.S. Marine, 944 F.2d at
1321, that a successor should not benefit from an ambiguity
that results from its own wrongdoing. Thus in New Breed,
where the successor “failed to shoulder its evidentiary
| burden,” we found that “the Board’s grant of back pay based
on the predecessor Union’s pay scale restores as nearly as
possible the employment situation that would have occurred
absent” the unfair labor practice. New Breed, 111 F.3d at
1468-69. But where, as in Kallman, “[t]he facts demonstrate
that [the successor] would not have agreed to union demands
to pay the higher rate,” the successor may not be required “‘to
pay the higher rate beyond a period allowing for a
reasonable time of bargaining.” Kallman, 640 F.2d at 1103.
In fashioning its remedy in this case, the Board
applied the presumption that an award of back pay and
benefits under the repudiated bargaining agreement restores
the status quo ante, but did not consider whether ASI had
rebutted that presumption with evidence that it would have
bargained to an impasse and imposed less favorable terms.
See New Breed, 111 F.3d at 1468; see also U.S. Marine, 944
F.2d at 1323 (“[I]t is for the employer to demonstrate that it
is not appropriate [to award back pay]. U.S. Marine has
al
40a
failed to do so.” (quotations, citations, and onginal
alterations omitted)). Nor did the ALJ make any findings in
this regard, as the ALJ did not award back pay and benefits
under any exception to the Burns rule.
Those facts that are in the record and bear on this
question are equivocal. The ALJ found that of the eight
Aero unit employees originally hired on December 1, 1992,
four received the same hourly wage they had previously
been paid by Aero, two received significantly more, and two
received significantly less. ASI provided less vacation time
and paid holidays, however, and no medical or dental
benefits. Nevertheless, the ALJ found little to indicate that
ASI could have found a qualified workforce outside of
Aero’s ranks had AS1 not been able to come to terms with
the incumbent union. The ALJ noted that ASI had rejected
transferring employees from a machine shop that Brown
owned in Gardena due to the unacceptable commute, and
found that, to continue Aero’s business, ASI needed a
workforce with specialized skills that were not readily
available in the marketplace.
The mere fact that ASI provided fewer benefits under
the terms that it imposed provides little indication of what
ASI might have agreed to had it fulfilled its obligation to
bargain with the Union. The apparent unavailability of
qualified workers outside of the Aero unit and the need to
complete Aero’s work in progress indicate that the Union
might have brought significant negotiating power to the
table. On the other hand, the fact of Aero’s bankruptcy
indicates that ASI might have been unwilling or even unable
2 continue to operate the business without significant labor
concessions, and might have chosen to liquidate the
company’s assets rather than continue operating under the
terms of the previous CBA.
ee
4la
Were the question regarding what would have
happened had ASI recognized and bargained with the Union
presented to us on a record that was ambiguous despite
having been fully developed under the correct legal standard,
we would resolve any uncertainty by affirming the Board’s
award under New Breed. See New Breed, 111 F.3d at 1468.
Because the record was not fully developed on this point,
however, we remand to permit ASI and the UAW to present
evidence on whether ASI would have bargained to impasse
and imposed terms, even if ASI had honored its obligation to
bargain with the Union as it was required to do under the
perfectly clear exception to the Burns rule.
VI
The Petition for Enforcement is GRANTED IN
PART and REMANDED IN PART. Each party shall bear
its own costs.
O° SCANNLAIN, Circuit Judge, dissenting:
The court’s opinion frames the issue before us as
“whether a successor employer has a duty to bargain with an
incumbent union before unilaterally imposing terms when
the employer hires its initial workforce from the ranks . . . of
its predecessor.” Supra at 3814. With respect, I suggest it is
the wrong question. Worse yet, the majority compounds the
error by giving the wrong answer to that question.
The National Labor Relations Board (“NLRB” or
“Board”) has applied to this court for the enforcement of its
order, which declares in part that Advanced Stretchforming
International (“ASI”) violated the National Labor Relations
Act (the “Act”) by “unilaterally changing wages and
benefits” without first bargaining with the union that had
42a
previously represented the individuals whom ASI ultimately
hired. The Board based this element of its order on its
conclusion that ASI had “forfeited” its otherwise
unquestioned right to set the initial terms and conditions of
employment by peremptorily and impermissibly stating that
there would be “no union” at its workplace. Naturally, the
Board urges the enforcement of its order on this score; ASI
is opposed. The majority agrees with the conclusion of the
Board but does not endorse its logic.
The majority substitutes its own argument for that of
the Board on the issue of whether ASI’s imposition of novel
terms and conditions of employment was unlawful. ASI’s
new terms and conditions violated the Act, the majority
holds, not because ASI made its impermissible “no union”
statement but because ASI had made it “perfectly clear” that
it intended to man its workforce with the employees of its
predecessor. See supra at 3822 (“Because we find that the
perfectly clear exception to the Burns rule applies in this
case, we need not take up the Board’s application of the
forfeiture doctrine ... .”). The majonity’s reliance on its
own argument is plainly impermissible, for, as the Supreme
Court has “often held, the validity of an agency’s
determination must be judged on the basis of the agency’s
stated reasons for making that determination.” Industrial
Union Dept., AFL-CIO v. American Petroleum Inst., 448
U.S. 607, 631 n.31 (1980).
The majority asserts that the scope of our review
need not be limited to determining the validity of the
grounds actually advanced in the Board’s order, because the
majority can affirm the order with the “ ‘interpretation of a
federal statute,” supra at 3823 (quoting Railway Labor
Executives’ Ass'n v. ICC, 784 F.2d 959, 968 (9th Cir.
1986)), which is not a type of determination that the Board
“alone is authorized to make,” id. (quoting SEC v.
a
43a
Chenery Corp. (Chenery II), 332 U.S. 194, 196 (1947)). I
must disagree. The majority is administering the Act—not
interpreting it—with the unilateral declaration that ASI
committed an “unfair labor practice” when it set the initial
terms of employment and shortly thereafter hired eight of its
predecessor’s employees. If this were not the sort of
determination that the Board is uniquely authorized to make,
I would be hard pressed to conceive of what is.'
' By way of contrast, our decision in Railway Labor Executives exemplifies
the type of statutory interpretation that we may undertake in considering a novel
basis on which to affirm an agency’s order. In that case, an order of the ICC was
challenged because the ICC refused to impose certain labor protections as a
condition of its approval of the sale of a railroad line. See 784 F.2d at 961. A
third party attempted to justify the ICC’s refusal by arguing that Congress had not
given the ICC any discretion to impose such protections. See id. at 969. Even
though the ICC had not attempted to defend its action in this way, we noted that
we could consider the third party’s proposed justification for the ICUs order,
because the issue of whether the ICC had the discretion at issue involved only the
“interpretation of a federal statute.” Jd. Quite unlike the grounds advanced by
the majority here, the novel basis we considered in Railway Labor Executives in
no way involved the application of substantive terms of a statute for reasons not
adopted by the agency in the order under review.
The majority’s attempt to analogize the substitution of its own reasons for
those of the NLRB in this case to the Fourth Circuit’s decision in North Carolina
Commission of Indian Affairs v. United States Department of Labor, 725 F.2d
238 (4th Cir. 1984), is unavailing. In that case, as in Railway Labor Executives,
the reasoning at issue related to the scope of the agency’s power under a federal
Statute. See id. at 240. As the Fourth Circuit took pains to note, “[t]he
interpretation [was] wholly different from what it is in the case where Congress
specifically entrusts an administrative agency, because of its special competence,
with the task of . . . setting up standards or rules of conduct.” /d. (quoting Milk
Transport v. ICC, 190 F. Supp. 350, 355 (D. Minn. 1960)). In this case,
however, the majority is, in fact, applying a “rule[ ] of conduct”: A successor
employer may not unilaterally set the initial terms of employment “when it hires
its initial complement of workers entirely from the ranks of a represented unit.”
Supra at 3824.
The majority is on no more solid footing in suggesting that its alternative
reasoning is merely meant to avoid the conversion of “ judicial review of agency
action into a ping-pong game."” Supra at 3824 (quoting NLRB v. Wyman-
Gordon Co., 394 U.S. 759, 766 n.6 (1969)). There is no basis for the majority's
asserted confidence that the Board would, on remand, reach the same result that
the majority now embraces, for the Board has repeatedly and notably declined to
44a
This court is constrained, therefore, to consider the
validity of the Board’s stated reasons for concluding that
ASI’s conduct violated the Act. Because the court has not
done so, it would be improvident for the court now to
remand the Board’s order for findings on the sustainability
of the Board’s desired remedy.
II
Considerations of administrative law aside, the
court’s holding practically eviscerates the rule of NLRB v.
Burns International Security Services, Inc., 406 U.S. 272
(1972). In Burns, the Supreme Court established that a new
employer is presumptively free to set the initial terms and
conditions of employment without negotiating with a union,
even if the new employer is the “successor” of an
organization whose employees were represented by that
union. Jd. at 294 (noting that, even though the successor
employer’s terms differed from those of the old employer, “it
does not follow that [the successor employer] changed its
terms and conditions of employment when it specified the
initial basis on which employees were hired” (emphasis
added)). The Court has underscored that this presumption
will be overborne only in “exceptional situation[s].” Fall
River Dyeing and Finishing Corp. v. NLRB, 482 U.S. 27, 47
n.14 (1987).
The Burns rule derives from the well-established
principle that an employer’s duty to bargain with a union
does not arise until it transpires that a majority of the
employer’s workforce has chosen to be represented by that
union. See id. at 295 (noting that the duty to bargain does
not mature before it is “evident . . . that the bargaining
representative represents a majority of the employees in the
rely on the “perfectly clear” exception as a basis for its order—and there are good
reasons for the Board’s hesitation. See infra.
45a
unit”). See generally NLRB v. Local Union No. 103, Int’l
Ass'n of Bridge, Structural, and Ornamental Iron Workers,
434 U.S. 335, 344 (1978) (noting “the generally prevailing
statutory policy that a union should not purport to act as the
collective-bargaining agent for all unit employees, and may
not be recognized as such, unless it is the voice of the
majority of the employees in the unit”). Because the
preference ‘or union representation amongst the majority of
employees cannot be determined before the composition of
the workforce is established, the composition of the
workforce generally cannot be established before the
employees are hired, and employees cannot be hired without
the employer’s stating the initial terms of employment, it is
pure syllogism that the employer cannot generally be held to
negotiate with a union before the employer has set the initial
terms of employment.
As the Court noted in Burns, however, there are
some circumstances in which the composition of an
employer’s workforce can be established before the
employees are hired. In these circumstances, the foregoing
syllogism breaks down. One such circumstance arises when
“it is perfectly clear that the new employer plans to retain all
of the employees [of its predecessor].” Burns, 406 U.S. at
295. When the new employer’s plan is “perfectly clear,” the
preference for union representation of the employer’s future
workforce is equally clear. Hence, the new employer can
fairly be required to negotiate with the union before setting
the initial terms of employment. This is the “perfectly clear”
exception to the Burns rule.
The critical element of the “perfectly clear”
exception is that of timing: When can an employer be said to
have known of the composition of its future workforce and
thus of its duty to bargain with a union? See Burns, 406 U.S.
at 294 (“[T]here is no evidence that Burns ever unilaterally
46a
changed the terms and conditions of employment it had
offered to potential employees in June after its obligation to
bargain with the union became apparent.” (emphasis
added)). Nothing in our case law suggests that the issue of
timing has lost its relevance. Indeed, courts applying the
“perfectly clear” exception continue to rely explicitly on the
fact that the successor employer plainly
intended--prospectively--to retain the predecessor’s
empioyees before setting the initial terms of employment.
See, e.g., Canteen Corp. v. NLRB, 103 F.3d 1355, 1363 (7th
Cir. 1997) (noting that the NLRB had found that “‘the [new
employer] had effectively and clearly communicated to the
Union its plan to retain the predecessor employees’”
(emphasis added)); Bellingham Frozen Foods, Inc. v. NLRB,
626 F.2d 674, 679 (9th Cir. 1980) (noting that the statements
of the new employer’s president supported the NLRB’s
conclusion “that it was ‘perfectly clear’ that [the employer]
intended to staff the plant with a sufficient number of
[predecessor] employees to tngger a bargaining obligation”
(emphasis added)).
Applying the “perfectly clear” exception to this case
thus requires evidence establishing that ALI planned--before
setting the initial terms of employment--to hire at least the
majority of its employees from the workforce of its
predecessor, Aero Stretch, Inc. (“Aero”). See Bellingham,
626 F.2d at 678-79. Neither the Board nor the
administrative law judge (“ALJ”) found such evidence.’
Nevertheless, the majority does. See supra at 3821 (“The
circumstances surrounding the takeover in this case strongly
indicate ASI’s intent to hire its initial workforce from the
ranks of its predecessor.”) The evidence on which the
majority relies, however, falls far short of establishing the
* This alone, of course, should foreclose our consideration of the matter, for,
as an appellate court, we are generally not authorized to find facts at this stage.
47a
existence of ASI’s plan. The majority first observes that an
agent of ASI told Aero’s employees that they should report
to the plant on the first day of ASI’s operation if they wanted
to apply to work for ASI. An invitation to apply for work,
however, is far from a statement of the employer’s intention
to hire the applicant. The majority also notes that ASI’s
agent stated that “ASI intended to hire some Aero workers
immediately, and others as work became available.” See
supra at 3821-22. Because ASI’s intent to hire some Aero
workers cannot establish that former Aero workers would
constitute the majority of ASI’s workforce, this evidence,
too, is irrelevant. Cf. Bellingham, 626 F.2d at 679 (relying
on the successor employer’s statement that it would “employ
all but ‘some’ of the [predecessor’s] employees” (emphasis
added)). The majority also relies on the fact that “there is no
evidence that ASI interviewed any non-Aero employees”
immediately. See supra at 3822. That no evidence of such
interviews appears in the record hardly establishes that such
interviews did not occur. Furthermore, the majority’s
reliance on a lack of evidence for ASI’s position suggests —
wrongly — that a successor, barring evidence to the contrary,
is presumed to have made “perfectly clear” a plan to hire
most of its employees from its predecessor.
All the “evidence” marshaled by the majority, then,
boils down to ASI’s actual recruitment practices. See supra
at 3822 (“ASI then hired all eight of its initial unit
employees from Aero’s ranks.”). That an employer
ultimately did something, however, does not establish that
what the employer would do was “perfectly clear.” See
Burns, 406 U.S. at 295 (“{I]t may not be clear until the
successor employer has hired his full complement of
employees that he has a duty to bargain with a union.”
(emphases added)). The majority attempts to sidestep this
embarrassingly elementary point by noting that we relied in
Bellingham on an employer’s ultimate hiring practices in
48a
evaluating the earlier transparency of its plans. See supra at
3822 (citing Bellingham, 626 F.2d at 679). Bellingham
posed a different issue, however. In that case, we were
called upon to determine whether substantial evidence
supported the Board’s conclusion that an employer’s hiring
plans had been “perfectly clear.” We were not conducting
de novo review, and we did not state that we would have
reached the same conclusion as the Board if we were.
Moreover, the facts in Bellingham presented other probative
evidence in addition to the employer’s ultimate recruitment
practices. The majority here marshals no additional
probative evidence whatsoever.
The majonty sets the standard for applying the
“perfectly clear” exception so low that the exception can
only swallow the rule. This outcome does not merely flout
the decision of the Supreme Court in Burns. It also invites
every successor employer to discriminate against the
employees of its predecessor. Anything else would only
increase the successor employer’s risk of being found to
have plainly intended to hire its predecessor’s employees all
along—and the concomitant nsk of having retroactively
forfeited its presumptive (and valuable) right to set the initial
terms and conditions of employment.
The majority ignores basic tenets of administrative
law, flouts Supreme Court precedent, and worsens the plight
of American workers facing the insecurity of a failed
employer. I respectfully dissent.
‘
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49a
APPENDIX C
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 97-71047
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
and
INTERNATIONAL UNION UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW), AMALGAMATED
LOCAL UNION NO. 509, AFL-CIO,
Intervenor,
Vv.
ADVANCED STRETCHFORMING INTERNATIONAL,
INC.
Respondent.
JUDGMENT
Before:ROBERT BOOCHEVER, DIARMUD F.
O’SCANNLAIN and A. WALLACE TASHIMA,
Circuit Judges.
50a
THIS CAUSE came to be heard upon an application
of the National Labor Relations Board for the enforcement of
an order in Board Case No. 21-CA-29104, issued by it
against Respondent, Advanced Stretchforming International,
Inc., Gardena, California, its officers, agents, successors, and
assigns, on April 25, 1997. The Court heard argument of
respective counsel on April 13, 1999, and has considered the
briefs and transcript of record filed in this case. On April 4,
2000, the Court, being fully advised of the premises, handed
down its opinion granting in part and remanding in part
enforcement of the Board’s Order. In conformity therewith,
it is hereby
ORDERED AND ADJUDGED by the Court that the
Respondent, Advanced Stretchforming International, Inc.,
Gardena, California, its officers, agents, successors, and
assigns, shall:
i. Cease and desist from:
(a) Telling potential applicants for employment
that it intends to operate with no union when it is obliged to
recognize and bargain with International Union, United
Automobile, Aerospace and Agnricultural Implement
Workers of America (UAW), Amalgamated Local Union
No. 509, AFL-CIO.
(b) Polling its employees concerning
representation by the Union.
(c) Refusing to recognize and bargain with the
Union as the exclusive collective-bargaining representative
of its employees in the following appropriate unit:
All production and maintenance employees including
quality control inspectors, maintenance mechanics, metal
fabricators, extrusion formers, stretch press operators,
Sla
warehousemen, assemblers, machinist trainees and machine
operators employed at the Respondent’s facility located at
18620 South Broadway, Gardena, California: excluding
office clerical employees, confidential employees,
supervisors and guards as defined in the Act.
(d) Changing the terms and conditions of
employment of employees in the above unit without notice to
and bargaining with the Union.
(e) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the National Labor
Relations Act (“the Act”).
“4 Take the following affirmative action
necessary to effectuate the policies of the Act.
(a) Notify the Union in writing that it recognizes
that labor organization as the exclusive representative of its
employees under Section 9(a) of the Act and will bargain
with it concerning the terms and conditions of employment
for employees in the appropriate unit.
(6) On _ request, bargain with the Union
conceming terms and conditions of employment of unit
employees.
(c) Preserve and, within 14 days of a request,
make available to the Board or its agents for examination
and copying, all payroll records, social security payment
records, timecards, personnel records and reports, and all
other records necessary to analyze the amount of backpay
due under the terms of this Judgment.
(d) Within 14 days after service by the Region,
post at its facility in Gardena, California, copies of the
52a
attached notice marked “Appendix.” Copies of the notice,
on forms provided by the Regional Director for Region 21 of
the National Labor Relations Board (Los Angeles,
California), after being signed by the Respondent’s
authorized representative, shall be posted by the Respondent
and maintained for 60 consecutive days in conspicuous
places, including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by
Respondent to ensure that the notices are not altered,
defaced, or covered by any other material. In the event that,
during the pendancy of these proceedings, the Respondent
has gone out of business or closed the facility involved in
these proceedings, the Respondent shall duplicate and mail,
at its Own expense, a copy of the notice to all current
employees and former employees employed by the
Respondent at any time since December 11, 1992.
(e) Within 21 days after service by the Region,
file with the said Regional Director a sworn certification of a
responsible official on a form provided by the Region
attesting to the steps that the Respondent has taken to
comply.
IT IS FURTHER ORDERED AND ADJUDGED
that this case be and it hereby is remanded to the Board for
further proceedings consistent with the Court’s opinion.
IT IS FURTHER ORDERED that each party shall
bear its own costs.
Endorsed, Judgment Filed and Entered
/s/ Cathy A. Catterson
Cathy A. Catterson
53a
APPENDIX D
NATIONAL LABOR RELATIONS BOARD
(N.L.R.B.)
No. 509, AFL-CIO
Case 21-CA-29104
April 25, 1997
Advanced Stretchforming International, Inc.
And
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America
(UAW), Amalgamated Local Union
DECISION AND ORDER
BY CHAIRMAN GOULD AND MEMBERS FOX
AND HIGGINS
The only issue raised by the exceptions’ in this case
is whether the Respondent, as a successor employer
obligated to recognize the Union’s continuing status as a
collective-bargaining representative, had the legal nght to
establish unilaterally its initial terms and conditions of
employment for bargaining unit employees. The judge
found that the Respondent had this right under the standard
set forth in NLRB v. Burns Security Services, 406 U.S. 272
(1972).
' On November 18, 1994, Administrative Law Judge William L. Schmidt
issued the attached decision. The Charging Party filed exceptions and a
supporting brief. The Respondent filed an answering brief and the Charging
Party filed a reply brief. The Service Employees International Union filed an
amicus statement.
54a
The National Labor Relations Board has considered
the decision and the record in light of the exceptions and
briefs and has decided to affirm the judge’s rulings, findings,
and conclusions and to adopt the recommended Order only
to the extent consistent with this Decision and Order.’ For
the reasons which follow, we find that the Respondent
violated Section 8(a)(5) and (1) by unilaterally changing its
employees’ wages and other terms and conditions of
employment at the time of their hire.
Two predecessor employers engaged in stretch
forming operations at the Gardena facility involved in this
case. During the period that the first predecessor operated
the enterprise, the Union was recognized as the exclusive
collective-bargaining representative for the production and
maintenance employees. The second predecessor, Aero
Stretch, Inc. (Aero), acquired the operation in 1990 and
negotiated an agreement with the Union effective from
August 19, 1991, through August 19, 1994. In June 1992,°
Aero declared bankruptcy but continued to operate the
facility through November 30. When Aero ceased
operations, 17 unit employees remained. On November 19,
Steven Brown purchased Aero’s assets. On December 1,
Brown incorporated the Respondent.
As required by order of the Bankruptcy Court, Aero
terminated all of its employees on November 30. On that
day, according to the credited testimony, Eric Cunningham,
Aero’s operations director (an agent of the Respondent and
formaily hired by the Respondent on December 1 as general
manager), told the employees that a majority of them would
be hired by the Respondent but there would be no union and
? We shall modify the judge’s recommended Order in accordance with our
decision in /ndian Hills Care Center, 321 NLRB 144 (1996).
> All dates are in 1992 unless otherwise indicated.
5Sa
no seniority. On December 1, the Respondent formally
employed the entire management, professional and
administrative staff, and eight of the unit employees
terminated by Aero on November 30. The Respondent hired
no employees from other sources at that time.
On December 1, all employees interviewed for
employment were informed that they would be working
under new terms and conditions which were subject to
change, that the Respondent was not assuming the collective-
bargaining agreement, and that they would be employed on
an at-will basis. The Respondent’s initial terms provided for
less vacation time and fewer paid holidays than employees
had received under Aero. In contrast to Aero, the
Respondent provided no medical or dental benefits. Of the
eight unit employees hired by the Respondent on
December 1, four received the same hourly wage rate they
had received at Aero, two received wage increases that
exceeded a dollar per hour, and two received wage decreases
that were more than a dollar per hour.
The judge found that the Respondent violated
Section 8(a)(1) by telling employees at the November 30
meeting that there would be no union. This statement was a
clearly unlawful message to employees that the Respondent
would not permit them to be represented by a union.*
Relying on Burns, as interpreted by the Board majority in
Spruce Up Corp., 209 NLRB 194 (1974), enfd. per curiam
529 F.2d 516 (4" Cir. 1975), the judge nevertheless found
that the Respondent did not violate Section 8(a)(5) of the Act
* Love's Barbeque Restaurant, 245 NLRB 78, 124 (1979), enfd. in pertinent
part 640 F.2d 1094 (9™ Cir. 1981). The Respondent does not except to this unfair
labor practice finding or to the judge’s finding that it subsequently violated
Sec. 8(aX'5) and (1) of the Act by polling unit employees concerning
representation by the Union and by thereafter refusing to recognize and bargain
with the Union.
56a
by unilaterally setting different terms and conditions of
employment for the unit employees.
The judge noted that the Supreme Court in Burns
recognized certain circumstances which require that a
successor employer bargain with the union before changing
the terms and conditions of employment of the unit
employees. In particular, the Supreme Court stated:
Although a successor employer is ordinarily free to
set initial terms on which it will hire the employees
of a predecessor, there will be instances in which it is
perfectly clear that the new employer plans to retain
all of the employees in the unit and in which it will
be appropriate to have him initially consult with the
employees’ bargaining representative before he fixes
terms.
The judge went on to find thai, in Spruce Up, the
Board limited the application of the Burns “perfectly clear”
caveat to cases “in which the new employer has either
actively or, by tacit inference, misled employees into
believing they would all be retained without change in their
wages, hours, or conditions of employment, or at least to
circumstances where the new employer ... has failed to
clearly announce its intent to establish a new set of
conditions prior to inviting former employees to accept
employment.””
The judge concluded that the Respondent clearly
manifested its intention to establish its own initial terms of
employment at the same time that Cunningham announced
the Respondent’s intention to hire a majority of Aero unit
> 406 U.S. 272, 294-295.
® 209 NLRB 194, 195 (fn. omitted).
57a
employees. Specifically, the judge found that the mention
that employees would lose their seniority was a sufficient
signal to employees that the terms and conditions of
employment would be different under the Respondent’s
operation. For these reasons, the judge found that the
Respondent did not forfeit its unilateral right under Burns to
establish the initial employment terms for the successor
employees by misleading unit employees about its
intentions.
Unlike the judge, we do not find an application of
Spruce Up’s interpretation of the Burns caveat to the facts of
this case to be determinative of the legality of the
Respondent’s conduct.’ Instead, we rely on another well-
established exception to the right of a Burns successor to set
initial terms and conditions of employment. In U.S. Marine
Corp., 293 NLRB 669, 672 (1989), for example, the Board
held that an employer—like the Respondents — that
unlawfully discriminates in its hiring in order to evade its
obligations as a successor does not have the Burns right to
set initial terms of employment without first consulting with
the Union. The Respondents forfeited any right they may
have had as a successor to impose initial terms when they
embarked on their deliberated scheme to avoid bargaining
with the Union by their discriminatory hiring practices.
This equitable doctrine, which arose in the context of
defining an appropriate remedy for an employer that sought
to avoid the successor’s bargaining obligation by refusing to
hire applicants from the predecessor’s unionized work
force,® is equally relevant to the allegation here of unlawful
” We therefore do not rely on the judge’s Spruce Up analysis. Moreover,
Chairman Gould does not agree with the Spruce Up majority’s interpretation of
the Burns caveat. See the Chairman’s concurring opinion in Canteen Co., 317
NLRB 1052, 1054-1055 (1995).
® See Love's Barbeque Restaurant, supra.
58a
unilateral changes. The fundamental premise for the
forfeiture doctrine is that it would be contrary to statutory
policy to “confer Burns rights on an employer that has not
conducted itself like a lawful Burns successor because it has
unlawfully blocked the process by which the obligations and
rights of such a successor are incurred.” State Distributing
Co., 282 NLRB 1048, 1049 (1987). In other words, the
Burns right to set initial terms and conditions of employment
must be understood in the context of a successor employer
that will recognize the affected unit employee’s collective-
bargaining representative and enter into good-faith
negotiations with that union about those terms and
conditions.
Of course, unlike in U.S. Marine, Love’s Barbeque,
and State Distributing Co., there is no allegation in this case
that the Respondent unlawfully discriminated in its hiring
practices. In fact, it looked exclusively to the predecessor’s
unionized work force and hired a majority of Aero’s unit
employees in forming its own initial employee contingent.
Furthermore, for purposes of this litigation, the Respondent
conceded that it was a Burns successor bound to recognize
the Union when plant operations resumed on December 1.
At the time of successorship, however, the
Respondent did not conduct itself like a lawful Burns
successor. At this unsettling time of transition, when “a
union is in a peculiarly vulnerable position” and employees
“might be inclined to shun support for their former union,
especially if they believe that such support will jeopardize
their jobs with the successor,” the Respondent unlawfully
declared through Cunningham to all Aero employees that
there would be no union for those whom it hired. Fourteen
days later, the Respondent relied on the results of an
employee poll tainted by Cunningham’s statement when it
® Fall River Dyeing & Finishing v. NLRB, 482 U.S. 27, 39-40 (1987).
59a
refused to bargain with the Union and thereafter refused to
recognize the Union as the unit employees” representative.
A statement to employees that there will be no union
at the successor employer’s facility blatantly coerces
employees in the exercise of their Section 7 right to bargain
collectively through a representative of their own choosing
and constitutes a facially unlawful condition of employment.
Nothing in Burns suggests that an employer may impose
such an unlawful condition and still retain the unilateral night
to determine other legitimate initial terms and conditions of
employment. A statement that there will be no union serves
the same end as a refusal to hire employees from the
predecessor’s unionized work force. It “block[s] the process
by which the obligations and rights of such a successor are
incurred.” State Distributing, 282 NLRB at 1049.
_In sum, we hold that by declaring at the outset that
there would be no union at its facility, the Respondent, like a
successor that discriminatorily refuses to hire a majority of
its predecessor’s employees in order to avoid recognizing
and bargaining with a union, forfeited its Burns right to set
initial terms and conditions of employment without first
bargaining with the Union. Accordingly, we find that the
Respondent violated Section 8(a)(5) and (1) of the Act by
unilaterally changing wages and benefits when it
commenced operations.
AMENDED CONCLUSIONS OF LAW
Substitute the following for paragraph5 of the
judge’s Conclusions of Law. __- :
“3. By modifying the terms and conditions of
employment of unit employees without prior notice
to the Union and without affording the Union an
opportunity to bargain over these matters, the
60a
Respondent violated Section 8(a)(5) and (1) of the
Act.”
AMENDED REMEDY
On request, the Respondent shall bargain with the
Union concerning wages, health and welfare benefits,
vacations, holidays, and other terms and conditions of
employment. Furthermore, in order to remedy the
Respondent’s unlawful unilateral changés, we shall order the
Respondent, on request of the Union, to rescind any changes
in employees’ terms and conditions of employment
unilaterally effectuated and to make the employees whole by -
remitting all wages and benefits that would have been paid
absent the Respondent’s unlawful conduct, until the
Respondent negotiates in good faith with the Union to
agreement or to impasse. As the Seventh Circuit stated in
enforcing the Board’s decision in U.S. Marine, a remedial
measure of this kind not only is “designed to prevent [the
Respondent] from taking advantage of its wrongdoing to the
detriment of the employees ... [but a] return to the status quo
ante at least allows the bargaining process to get under way.”
944 F.2d at 1322-1323. Employees shall be made whole in
the manner prescribed in Ogle Protection Service, 183
NLRB 682 (1970, enfd. 444 F.2d 502 (6" Cir. 1971), with
interest as prescribed in New Horizons for the Retarded, 283
NLRB 1173 (1987).
The Respondent shall also make whole its unit
employees by making all delinquent employee benefit fund
contributions, including any additional amounts due the
funds in accordance with Merryweather Optical Co., 240
NLRB 1213, 1216 fn. 7 (1979). In addition, the Respondent
shall reimburse unit employees for any expenses ensuing
from its failure to make the required contribution, as set forth
in Kraft Plumbing & Heating, 252 NLRB 891 fn. 2 (1980),
6la
enfd. mem. 661 F.2d 940 (9" Cir. 1981), such amounts to be
computed in the manner set forth in Ogle Protection Service,
supra, with interest as prescribed in New Horizons for the
Retarded, supra. ad
ORDER
The National Labor Relations Board orders that the
Respondent, Advanced Stretchforming International, Inc.,
Gardena, California, its officers, agents, successors, and
assigns, shall:
1. Cease and desist from
(a) Telling potential applicants for employment
that it intends to operate with no union when it is obliged to
recognize and bargain with International Union, United
Automobile Aerospace and Agricuitural Implement Workers
of America (UAW), Amalgamated Local Union No. 509,
AFL-CIO.
(b) Polling its employees concerning
representation by the Union.
(c) Refusing to recognize and bargain with the
Union as the exclusive collective-bargaining representative
of its employees in the following appropriate unit:
All production and maintenance employees including
quality control inspectors, maintenance mechanics, metal
fabricators, extrusion formers, stretch press operators,
warehousemen, assemblers, machinist trainees and machine
' To the extent that an employee has made personal contributions to a fund
that are accepted by the fund in lieu of the employer’s delinquent contributions
during the period of the delinquency, the Respondent will reimburse the
employee, but the amount of such reimbursement will constitute a setoff to the
amount that the Respondent otherwise owes the fund.
62a
operators employed at the Respondent’s facility located at
18620 South Broadway, Gardena, California; excluding
office clerical employees, confidential employees,
supervisors and guards as defined in the Act.
(d) Changing the terms and conditions of
employment of employees in the above unit without notice to
and bargaining with the Union.
(e) In any like or related manner interfering with,
restraining, or coercing employees in the exercise of the
rights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action
necessary to effectuate the policies of the Act.
(a) Notify the Union in writing that it recognizes
that labor organization as the exclusive representative of its
employees under Section 9(a) of the Act and will bargain
with it concerning the terms and conditions of employment
for employees in the appropriate unit.
(b) On request, bargain with the Union
conceming terms and conditions of employment of unit
employees.
(c) On request, cancel changes in terms and
conditions of employment of unit employees unilaterally
effectuated and make employees whole by remitting all
wages and benefits that would have been paid absent the
Respondent’s unlawful conduct, until the Respondent
negotiates in good faith with the Union to agreement or to
impasse, in the manner set forth in the amended remedy
section of this decision.
(d) Preserve and, within 14 days of a request,
make available to the Board or its agents for examination
63a
and copying, all payroll records, social security payment
records, timecards, personnel records and reports, and all
other records necessary to analyze the amount of backpay
due under the terms of this Order.
(e) Within 14 days after service by the Region,
post at its facility in Gardena, California, copies of the
attached notice marked “Appendix.”'' Copies of the notice,
on forms provided by the Regional Director for Region 21,
after being signed by the Respondent’s authorized
representative, shall be posted by the Respondent and
maintained for 60 consecutive days in conspicuous places
including all places where notices to employees are
customarily posted. Reasonable steps shall be taken by the
Respondent to ensure that the notices are not altered,
defaced, or covered by any other material. In the event that,
during the pendency of these proceedings, the Respondent
has gone out of business or closed the facility involved in
these proceedings, the Respondent shall duplicate and mail,
at its own expense, a copy of the notice to all current
employees and former employees employed by the
Respondent at any time since December 11, 1992.
(f) Within 21 days after service by the Region,
file with the Regional Director a sworn certification of a
responsible official on a form provided by the Region
attesting to the steps that the Respondent has taken to
comply.
'! If this Order is enforced by a judgment of a United States court of
appeals, the words in the notice reading “Posted by Order of the National Labor
Relations Board” shall read “Posted Pursuant to a Judgment of the United States
Court of Appeals Enforcing an Order of the National Labor Relations Board.”
64a
MEMBER HIGGINS, concurming.
I agree with my colleagues that, under the
circumstances of this case, the Respondent violated
Section 8(a)(5) and (1) by unilaterally setting the initial
terms and conditions of employment for the unit employees.
I do not, however, adopt all of their analysis.
Under NLRB v. Burns Security Services, 406 U.S.
272 (1972), a successor employer is ordinarily free to
establish initial terms and conditions for unit employees.
The majority finds that the Respondent, an admitted Burns
successor, forfeited this right because it unlawfully declared
that there would be no union at its facility. It did so at the
time that it announced that it would hire a majority of. the
predecessor’s employees under altered terms and conditions.
In their view, this 8(a)(1) statement was antithetical to the
Respondent’s Burns’ obligation to bargain in good faith and
was analogous to situations where successors unlawfully and
discriminatorily refuse to hire a majority of its predecessors’
employees. I disagree with this view.
In my view, the mere 8(a)(1) statement would not
warrant forfeiture of the Respondent’s Burns’ rights to set
initial terms and conditions for its employees.
Although unlawful, I do not find that such a
statement, in isolation, establishes that an employer has
“embarked on [the] deliberate scheme to avoid bargaining
with the Union by ... discriminatory hiring practices,’ or
that it has “unlawfully blocked the process by which the
obligations and rights of ... a successor are incurred.” State
Distributing Co., 282 NLRB 1048, 1049 (1987). Nor do I
agree with my colleagues that the statement is analogous to a
discriminatory refusal to hire. Cf Love's Barbeque
' U.S. Marine Corp., 293 NLRB 669, 672 (1989).
65a
Restaurant, 245 NLRB 78 (1979), enfd. in relevant part sub
nom. Kallman v. NLRB, 640 F.2d 1094 (9" Cir. 1981).
Here, however, the Respondent did not merely utter
the unlawful “no union” statement; it acted on it. Within
days of this 8(a)(1) statement, and its hire of the
predecessor’s employees, the Union repeatedly demanded
that the Respondent recognize and bargain with it. Rather
than accede to these demands, as it was obligated to do, the
Respondent promptly conducted an unlawful of employee
sentiment.’ Further, within 2 weeks of its unlawful
statement, the Respondent expressly refused to recognize the
Union, in violation of Section 8(a)(5) and (1). Thus, the
Respondent, by both act and word, violated Section 7 rights
and dishonored its Burns obligations. Having done so, it
cannot claim the privilege of setting initial terms and
conditions for the unit employees.
Accordingly, I find that the Respondent violated
Section 8(a)(5) and (1) by unilaterally setting the initial
terms and conditions of the unit employees.’
APPENDIX
NOTICE TO EMPLOYEES POSTED BY ORDER
OF THE NATIONAL LABOR RELATIONS BOARD
An agency of the United States Government
The National Labor Relations Board has found that
we violated the National Labor Relations Act and has
ordered us to post and abide by this notice.
2 Struksnes Construction Co., 165 NLRB 1062 (1967).
> In all other respects, I agree with my colleagues.
66a
WE WILL NOT tell employees or potential
applicants that we intend to operate with no union when we
are obligated to recognize and bargain with International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW), Amalgamated
Local Union No. 509, AFL-CIO.
WE WILL NOT poll employees concerning
representation by the Union and WE WILL NOT refuse to
recognize and bargain with the Union as the exclusive
collective-bargaining representative of our employees in the
following appropriate unit:
All production and maintenance employees including
quality control inspectors, maintenance mechanics, metal
fabricators, extrusion formers, stretch press operators,
warehousemen, assemblers, machinist trainees and machine
operators employed at our facility located at 18620 South
Broadway, Gardena, California; excluding office clerical
employees, confidential employees, supervisors and guards
as defined in the Act.
WE WILL NOT change terms and conditions of
employment of the employees in the above unit without
notice to and bargaining with the Union.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce employees in the exercise
of the nights guaranteed them by Section 7 of the Act.
WE WILL notify the Union in wniting that we
recognize it as the exclusive representative of our employees
under Section 9(a) of the Act and will bargain with it
concerning the terms and conditions of employment for our
employees in the appropriate unit.
67a
WE WILL, on request, bargain with the Union
conceming terms and conditions of employment of unit
employees.
WE WILL, on request, cancel changes in terms and
conditions of employment of unit employees unilaterally
effectuated and make employees whole by remitting all
wages and benefits that would have been paid absent our
unlawful conduct, until we negotiate in good faith with the
Union to agreement or to impasse.
68a
APPENDIX E
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS
BOARD
ADVANCED STRETCHFORMING INTERNATIONAL,
INC.
and
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW), AMALGAMATED
LOCAL UNION NO. 509, AFL-CIO.
Case 21-CA-29104
JD(SF)-81-94
ORDER TRANSFERRING PROCEEDING TO THE
NATIONAL LABOR RELATIONS BOARD
A hearing in the above-entitled proceeding having
been held before a duly designated Administrative Law
Judge and the Decision of the said Administrative Law
Judge, a copy which is annexed hereto, having been filed
with the Board in Washington, D.C..,
IT IS HEREBY ORDERED, pursuant to Section
102.45 of National Labor Relations Board’s Rules and
Regulations, that the above- entitled matter be, and it hereby
is, transferred to and continued before the Board.
69a
Dated, Washington, D.C., November 18, 1994
By direction of the Board:
JOHN C. TRUESDALE
Executive Secretary
70a
APPENDIX F
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS
BOARD
DIVISION OF JUDGES -
SAN FRANCISCO BRANCH OFFICE
JD(SF)-81-94 Gardena, CA
Case 21-CA-29104
ADVANCED STRETCHFORMING INTERNATIONAL,
INC.
and
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW) AMALGAMATED
LOCAL UNION NO. 509 AFL-CIO.
Yvette H. Hollida-Curtis and Peter Tovar, Attys., NLRB
Region 21, Los Angeles, CA, for General Counsel.
Margo A. Feinberg, Atty., with Henry, M. Willis, Atty., on
the brief, of Schwartz, Steinsapir, Dohrmann & Sommers,
Los Angeles, CA, for Charging Party.
Thomas H. Reilly, Atty., with Richard C. White, Atty., on
the brief, of O’Melveny & Meyers, Newport Beach, CA, for
Respondent.
Tla
DECISION
Statement of the Case
WILLIAM L. SCHMIDT, Administrative Law
Judge: The General Counsel alleges here that Advanced
Stretchforming International, Inc. (Respondent or Company),
as a successor employer, refused to recognize International
Union, United Automobile, Aerospace and Agricultural
Implement Workers of America (UAW), Amalgamated
Local Union No. 509, AFL-CIO, (Union or Charging Party),
and bargain over the initial terms and conditions of
employment, both in violation of Section 8(a)(1) and (5) of
the National Labor Relations Act (Act). The General
Counsel also alleges that Respondent polled its employees
conceming Union representation in violation of
Section 8(a)(1) and (5), and that it told its predecessor’s
employees that it intended to operate without a union in
violation of Section 8(a)(1).
The Union filed the unfair labor practice charge on
December 11, 1992.' On April 30, 1993, the Regional
Director for Region 21 of the National Labor Relations
Board (Board or NLRB) issued a complaint and notice of
hearing. Respondent timely answered the complaint denying
that it engaged in the unfair labor practices alleged.
I heard this case over the course of four days between
September 23 and October 14, 1993, at Los Angeles,
California. Having now carefully considered the record, the
demeanor of the witnesses while testifying, and the parties’
post-hearing briefs, I conclude that Respondent violated the
Act in certain respects based on the following:
' All dates below refer to the 1992 calendar year unless shown otherwise.
72a
Findings of Fact
I. Jurisdiction and Overview
Respondent, a corporation engaged in the business of
stretchforming structural body components used in the
aerospace industry, commenced operations from its facility
located at Gardena, California on December 1. Based on an
annual projection of its operations between December | and
April 30, 1993, when the complaint issued, Respondent’s
direct outflow will annually exceed the dollar volume
standard established by the Board for exercising its statutory
jurisdiction over nonretail enterprises. Accordingly, I find
Respondent is an employer engaged in commerce within the
meaning of Section 2(2), (6).and (7) of the Act.
Two _ predecessor employers engaged in
stretchforming operations at the Gardena facility for more
than 20 years pnor to its acquisition by Respondent. During
the period that the predecessor Aeronca owned and operated
the enterprise, the Union was recognized as the collective
bargaining representative for the plant’s production and
maintenance employees and a series of successive collective
bargaining agreements ensued until the operation was
acquired in early 1990 by Aero Stretch, Inc. (Aero).
Thereafter, Aero and the Union negotiated a successor
agreement effective from August 19, 1991, through
August 19, 1994.
In June, Aero filed a Chapter11 bankruptcy
proceeding and continued to operate the facility through
November 30. Throughout this period, Aero gradually laid
off employees so that by November 30 when Aero ceased
operations, 17 unit employees remained. Aero made no
attempt to secure court relief from the collective bargaining
agreement. Instead, it unilaterally ceased payments for
employee health benefits in October which resulted in the
cancellation of health benefits in mid-November, failed to
implement incremental wage increases due to employees
under the collective bargaining agreement, terminated
contributions to an employee 401 (K) plan provided for
under the agreement, and generally disregarded contractual
job classifications in making work assignments. The Union
took no action to contest these modifications but Union agent
Dwaine LaMothe contacted several Aero officials in the
post-bankruptcy period to inquire about Aero’s financial
- condition and to explore the reported sale prospects of the
enterprise.
During the summer and fall Aero unsuccessfully
courted several prospective buyers. Eric Cunningham,
Aero’s operations director, advised employees monthly
about Aero’s efforts to locate a buyer and the status of the
bankruptcy proceeding. After Aero’s principal creditor
rejected the most recent buyout proposal at a November 19
bankruptcy hearing, the Bankruptcy Court converted the
Aero’s bankruptcy to a Chapter 7 proceeding, auctioned its
assets, and ordered Aero to terminate its employees and
close on November 30. Apparently, Aero anticipated this
development because it had begun to coordinate the removal
of customer tools and dies from the plant prior to the
November 19 hearing.
Steven Brown, a Southern California, entrepreneur,
submitted the successful bid for Aero’s assets ‘through an
agent at the November 19 hearing. Although Brown
ostensibly purchased the assets with the intention of
liquidating them forthwith, he quickly decided to continue
the Gardena stretchforming operation. By December 1,
Brown incorporated Respondent, secured the financing
required to close the bankruptcy sale, and invited Aero’s
employees to submit employment applications.
74a
As required by the November 19 Bankruptcy Court
order, Aero terminated all of its employees on November 30.
The following day Respondent formally employed the entire
management, professional and administrative _ staff
terminated by Aero on the previous day, including John
Rockwood, Aero’s president who was retained as
Respondent’s president, and eight unit employees. No unit
employees were hired from other sources at this time.
During their employment interviews, the employees were
informed of new terms and conditions of employment which
differed from Aero’s terms. This staff commenced work
immediately to complete Aero’s work in progress and to
prepare for new work of like kind.
On December 3, 7 and 11, LaMothe sent letters to
Brown demanding recognition. Before responding to the last
demand letter on December 14, Respondent polled its
employees concerning continued representation by the Union
and the employees who participated in the poll voted against
continued representation. Thereafter, Brown’s counsel wrote
LaMothe rejecting the Union’s demand on the ground that
Brown had a good faith doubt of the Union’s majority
standing and on the further ground that the demand was
premature because Respondent planned to add “quite a few
new production-type employees in the near future.”
2 Respondent does not defend its December 14 refusal to recognize the
Union on the ground that it had not yet employed a representative complement of
employees. Between December | and the date of the hearing Respondent had
employed 11 additional unit employees in the following sequence: two in
January; three in March; three in April; two in June; and one in August. One
non-Aero employee was hired in March and three more non-Aero employees
were hired in June and August. At least one employee, Duane Mooney, hired in
April worked only one week. I find this evidence would not support a
“representative complement” defense if made. NLRB v. Cutter Dodge, Inc., 825
F.2d 1375 (9th Cir. 1987).
75a
II. The Alleged Unfair Labor Practices
A. Setting Initial Terms of Employment
In its brief, Respondent concedes that it is a successor
employer under the standards enunciated in NLRB vy. Burns
International Security Services, 406 U.S. 272 (1972). As
Respondent continued to engage in the same business at the
same location utilizing all of its predecessors managerial,
supervisory and administrative personnel, and only unit
employees employed by its predecessor, I find Respondent is
a successor employer under Burns.
In Burns, the Supreme Court affirmed the court of
appeals refusal to enforce a Board Order requiring that
employer to adopt its predecessor’s collective bargaining
agreement. Having refused to adopt the rationale for the
Board’s affirmative order, the Court then addressed the
Board’s general characterization that a successor employer’s
bargaining obligation was analogous to an employer’s
obligation to refrain from unilaterally changing wages and
other benefits during the period between collective-
bargaining agreements.
Justice White, on behalf of the Burns Court, wrote
that it was “difficult to understand how Burns could be said
to have changed unilaterally any pre-existing term or
condition of employment without bargaining when it had no
previous relationship whatsoever to the bargaining unit ....”
Although Burns may have employed workers on terms
different than those of its predecessor, Justice White noted
that “it does not follow that Burns changed its terms and
conditions of employment when it specified the initial basis
on which employees were hired ....” However, he observed
that “[a]lthough a successor employer is ordinarily free to set
initial terms on which it will hire the employees of a
predecessor, there will be instances in which it is perfectly
76a
clear that the new employer plans to retain all of the
employees in the unit and in which it will be appropriate to
have him initially consult with the employees’ bargaining
representative before he fixes terms.” Later the Supreme
Court made clear that this caveat concerning the duty to
bargain over the initial terms refers to the “exceptional
situation” whereas a successor’s right to unilaterally
establish its initial terms is the “standard situation.” Fall
River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27
(1986), at fn.15. =
In Spruce Up, 209 NLRB 194 (1974), enfd per
curiam 529 F.2d 516 (4th Cir. 1975), the Board announced
its intention to limit the application of the Burns caveat to
cases “in which the new employer has either actively or, by
tacit inference, misled employees into believing they would
all be retained without change in their wages, hours, or
conditions of employment, or at least to circumstances where
the new employer ..has failed to clearly announce its intent
to establish a new. set of conditions prior to inviting former
employees to accept employment.” [Emphasis added] The
Board reaffirmed this approach in Fremont Ford, 289 NLRB
1290 (1988). There it stated that “[s]ince Spruce Up the
Board has adhered to this distinction based on when the
successor employer announces its offer of different terms of
employment in relation to its expression of intent to retain
the predecessor’s employees unless the successor has misled
them.” See also Level, a Division of Worcester Mfg., 306
NLRB 218 (1992).
Underlying the General Counsel’s allegation that
Respondent unilaterally changed the wages and _ benefits
contained in the Aero collective bargaining agreement when
it commenced operating the business is the contention that
the facts here merit the conclusion that this case fits the
77a
Burns caveat. The relevant facts and my conclusions on this
issue follow.
1. The Evidence
The unit employees first learned of potential
employment opportunities with Respondent at a
November 30 meeting conducted by Cunningham. LaMothe
happened to be at the plant that day and listened to
Cunningham address the assembled employees about their
future. LaMothe claims that Cunningham told the
employees at that time that a majority of the employees
would be hired by the new buyer’s company (Respondent)
but “there would be no union and no seniority and the new
company was not responsible for any of the previous
administrative claims.” One employee, LaMothe claims,
asked why there would be no_ union. Purportedly,
Cunningham stated that Aero had lost several contracts
because of the Union wages and benefits and, therefore, the
plant could not afford to operate with the Union. Tyron
Bennett, the unit chairperson, recalled that Cunningham told
the employees on this occasion that they would all be
terminated but a majority would be rehired. He claims that
Cunningham stated that “there will be no union, no seniority,
no nothing....”
Howard Venard, Aero’s production supervisor who
was hired as Respondent’s production manager on
December 1, testified that Cunningham told the employees at
the November 30 meeting that all would be terminated but
they should report for interviews the following morning at
their regular work time. He further testified that
| Cunningham told employees that the new company “wasn’t
| going to abide by the Union contract and that there wouldn’t
| be any seniority....” Venard explained that he interpreted
| Cunningham’s “Union contact” statement to mean that there
78a
would be no union at the new company and, consequently, in
a pre-hearing statement he provided to the General Counsel,
Venard stated that Cunningham told the employees on this
occasion that there would be “no union.”
Cunningham’s acknowledges that he met with the
employees on this occasion and told them that they would all
be terminated from Aero effective at the end of that
workday. At Brown’s instruction, Cunningham further
advised the employees that, if they were interested in
working for the new company, they should turn in the
previously distributed employment applications if they had
no already done so and report to the plant at their regular
time the following morning to interview for employment.
He stated that some of the employees would be hired
immediately and others would be employed later after the
new company acquired more work. In agreement with the
others who testified, Cunningham said that he told the
employees, in effect, that they would not be credited with
their prior seniority at the facility if they were employed by
the new company. However, Cunningham denied that he
told the employees that there would be no union. Instead, he
claims that he told the employees either on this occasion or
at another meeting on November 20 that the buyer would not
assume the Union contract.°
There is no evidence that Brown spoke with any of
the plant employees or Union representatives nor is there any
evidence that Brown caused any written statement
concerning Respondent’s initial terms and conditions of
> Allegedly, Brown told Cunningham on November 20 that he would not
assume the Union contract and Cunningham claims to have so informed the
employees. However, this account is inherently inconsistent with Brown's claim
_ that he did not decide until about a week later to continue the operation rather
than liquidate the equipment until about a week later while on a trip to Texas and,
seemingly, would have no reason to address the Union contract question as early
as November 20. ;
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employment to be published prior to December1. On
December 1, each individual interviewed for employment
with Respondent signed the following statement:
I UNDERSTAND THAT I WILL BE WORKING
UNDER NEW TERMS AND CONDITIONS
WHICH IS NOT A CONTRACT AND IS SUBJECT
TO CHANGE.
NEW COMPANY IS NOT ASSUMING
COLLECTIVE BARGAINING AGREEMENT.
YOU MAY BE EMPLOYED BY NEW COMPANY
ON AN AT WILL BASIS.
DETAILED LIST OF TERMS AND CONDITIONS
IS TO FOLLOW.
Brown interviewed and hired Cunningham as the
Respondent’s general manager early on December 1.
Pursuant to Brown’s instructions, Cunningham conducted
most of the rest of the interviews and claims, without
contradiction, to have informed those interviewed that the
benefit terms would be identical to those offered to
Cunningham which Brown derived from the employee
handbook effective at Camarillo Dynamics, another
company Brown owns near Ontario, California.
Among other benefits, Respondent’s initial terms
provided for less vacation time and fewer paid holidays than
had been in effect at Aero. Contrary to Aero, Respondent
provided no medical or dental benefits for unit employees.
Of the 8 unit employees hired by Respondent on
December 1, four were employed at the same hourly wage
rate they received at Aero, two received wage increases
which exceeded a dollar per hour, and two received wage
decreases which were more than a dollar per hour.
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2. Further Findings and Conclusions
The General Counsel and the Charging Party argue
that Respondent’s obligation to bargain with the Union arose
before it established its initial terms of employment and,
hence, it was obliged to negotiate those terms with the
Union. They contend that once Respondent made the
decision secure its work force from among the Aero
employees the Burns caveat applied and Respondent was no
longer at liberty to unilaterally establish new terms and
conditions of employment. In my judgment, this theory is at
odds with Burns and Spruce Up.
In ordinary circumstances, a successor employer
would likely look to the existing work force to staff an
enterprise unless exigencies dictated otherwise. Nothing
here suggests that Brown was in a position to secure a work
force elsewhere. To be sure, he owned a machine shop in
the Los Angeles metropolitan area but at such a distance that
the two or so Camanillo employees approached by Brown
about transferring to the Gardena facility declined a transfer
because of the lengthy commute involved. Moreover,
Respondent’s operation obviously required a work force with
certain specialized skills which were most readily available
from Aero’s workers. Here there is no doubt but that Brown
was a small entrepreneur venturing into a new enterprise
bearing only a modicum of similarity to his other companies.
Hence, the likelihood that he would have a readily available
work force apart from that which existed at Aero would be
unlikely.
These exigencies, in my judgment, confuse the
General Counsel and the Charging Party. Unlike a
nationwide enterprise such as Burns which employs semi-
skilled employees, or less, by the thousands and regularly
shifts employees from one location to another, Brown
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ventured into a highly specialized industry engaged in the
manufacture of airplane skins and related structural
paraphernalia where, it should be anticipated, he would give
preference to the predecessor’s work force as a practical
business judgment. Hence, Brown’s decision, whether made
in the bankruptcy courtroom or later as he contends, to
operate the Gardena plant using employees from the existing
workforce can hardly be considered an extraordinary
circumstance requiring application of the Burns caveat.
On the contrary, the Spruce Up doctrine essentially
requires an examination as to whether, once Brown decided
to operate the business with the predecessor’s workers, he or
his agents led the Aero employees to believe that they would
be employed under the existing wages, hours and conditions
of employment, or, at the very least, said nothing about any
new terms and conditions of employment. The evidence
here plainly shows that the General Counsel has not met the
Spruce Up criteria.
Although I agree, as the General Counsel and the
Charging party contend, that Cunningham was Brown’s
agent even before any formal hiring process on December l,
nothing in Cunningham’s November 30 statements to the
Aero employees should have lead them to expect that there
would be no changes in their terms and conditions of
employment. Instead, the contrary is true. The mere
mention that employees would forfeit their seniority is a
clear signal that, when employed by the Brown enterprise,
things would be different. Moreover, the form employees
were required to sign the following moming during the
employment interviews further articulated Respondent’s
intention to establish its own initial terms of employment.
Hence, I find that this intention was clearly made known to
the employees contemporaneous with Respondent’s
announcement of employment opportunities. | find,
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therefore, that Respondent never forfeited its right to
unilaterally establish its initial employment terms.
The principal authorities cited by the General
Counsel and the Charging Party, Helnick Corp., 301 NLRB
128 (1991) and A-/ Schmidlin Plumbing, 284 NLRB 1506
(1987), do not support a different conclusion. In Helnick the
ALJ specifically found that the successor employer
“informed employees that they could all expect to be
retained...[without discussing] in any detail with any
employee at that time the numerous changes in fringe
benefits which he later made.” 301 NLRB at p. 134.
Similarly, in Schmidlin the successor employer made no
mention of any changes in the terms and conditions of
employment when he told the predecessor’s employees that
the successor would hire them if they wanted to work for the
new company. Indeed, the L.A.X. Medical Clinic citation in
footnote 3 of Schmidlin clearly shows that the Board relied
on the employer’s silence when offering employment to the
predecessor’s employees as the basis for imposing the status
quo remedy. This construction of Helnick and Schmidlin is
consistent with the Board’s continued application of the
Spruce Up doctrine in the later Level case.
As found above, Respondent, by Cunningham,
signaled employees concerning changes in employment
terms at the very time he announced that there would be
employment opportunities. In my judgment, it is of no
moment that he did not detail the extent of the changes as he
did the following morming during the employment
interviews. His unequivocal statement concerning the
treatment of seniority on November 30 is enough to preclude
any finding that Respondent was silent, or misled the Aero
employees into believing there would be no changes. That
being the case, I read Spruce Up, to compel the conclusion,
which I have reached, that the changes in the terms and
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conditions of employment which occurred on December 1
were lawful. Accordingly, the recommended order will
provide for the dismissal of the allegation that Respondent
violated Section 8(a)(1) and (5) by that conduct.
However, I credit the claim by Bennett and LaMothe
that Cunningham told employees at the November 30
meeting that there would be no union at the new company
and find that this remark violated Section 8(a)(1) as alleged.
Level, supra.; see also Love's Barbeque, 245 NLRB 78, 124
(1979), enfd. in pertinent part 640 F.2d 1094 (9th Cir. 1981).
Their account is essentially corroborated by Venard’s pre-
hearing statement, prepared in the presence of Respondent’s
counsel. Moreover, Venard’s attempt to retract this portion
of his pre-hearing statement while testifying impressed me as
contrived.
Even so, Respondent contends that it is not
responsible for Cunningham’s statement because he was an
employee of Aero, rather than Respondent, when the
Statement was made. Wholly apart from the fact that the
circumstances of Cunningham’s remarks on November 30
merit the conclusion that he was speaking with the apparent
authority of Brown, I have concluded that the accounts of
Respondent’s principal witnesses, Brown, Rockwood and
Cunningham, is so far fetched and untruthful as to merit the
inference that Brown had actually selected at least
Cunningham to continue in a responsible managerial position
prior to November 30. In particular, Cunningham admitted
that in the interim period between November 19 and
December 1, he prepared a business plan for the continuation
of the operation which included, among other matters, the
selection of the employees who would be offered
employment first. Essentially, Cunningham explained that
he did so on the off-hand chance that Brown would decide to
operate the business. This assertion was unconvincing when
84a
he made it from the witness chair and it became even more
unconvincing when I again studied it in the transcript. For
that reason, I refuse to credit Respondent’s entire account
concerning the timing of the selection of its managerial
agents and reject its claim that Cunningham was not its agent
when he addressed the employees on November 30.
B. The Poll and Respondent’s Refusal to Recognize the
Union
Where, as here, a successor employer makes a
conscious decision to maintain generally the same business
and to hire a majority of its employees from its predecessor’s
work force, the successor is obliged under Section 8(a)(5) of
the Act to recognize and bargain with the collective
bargaining agent of the predecessor employees. Underlying
this obligation is the presumption that the bargaining agent
enjoys majority support among the unit employees. If,
however, the successor employer can show that the
bargaining agent has in fact lost its majority standing, or that
it has a good faith doubt based on objective factors that the
agent has lost its majority support, it may lawfully refuse to
recognize and bargain with the incumbent agent. Fail River
Dyeing & Finishing v. NLRB, supra.
A successor employer can demonstrate that the
employee bargaining agent has actually lost its majority
standing either by petitioning for a Board conducted election
under Section 9 of the Act or by polling its employees to
determine the degree of support the agent enjoys. If the
latter course is chosen, the employer must adhere to several
safeguards to avoid unlawful interference under
Section 8(a)(1) of the Act. When the poll is conducted for
the purpose of determining the degree of employee support
for an incumbent union, the employer must be able to show
that: (1) the union was given advance notice of the time and
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place of the poll, Texas Petrochemicals, 296 NLRB 1057
(1989); (2) it has a good faith doubt based on objective
factors that the union no longer enjoys majority support,
Thomas Industries, 255 NLRB 646 (1981); (3) employees
were told truthfully that the purpose of the poll was for the
purpose of determining the degree of support enjoyed by the
union; (4) employees were given assurances against
reprisals; (5) the poll was conducted by secret ballot; and
(6) the poll was conducted in an atmosphere free of unfair
labor practices or other forms of coercion, Strucksnes, 165
NLRB 1062 (1967).
A successor employer who withholds recognition on
the basis of a poll or on the basis of an asserted good faith
doubt is essentially acting at its own peril. Hence, if the poll
is defective or if the employer is unable to sustain its good
faith doubt, an employer may be found guilty of an unfair
labor practice.
Respondent admittedly refused to recognize the
Union but its answer affirmatively avers that it “conducted a
noncoercive poll, by secret ballot and with assurances of
nonreprisal,...to determine whether the [unit] employees
wanted to be represented by the Union in light of previous
statements made by employees against Union
representation.”
Respondent further avers, and the evidence
establishes, that the poll “resulted in seven votes against
Union representation and only one vote in favor of Union
representation.”
The General Counsel argues that although
Respondent complied with some of the required safeguards
for conducting a valid poll on December 14, the poll
nonetheless was defective because it was conducted in the
context of an unremedied unfair labor practice, i.e., the
86a
November 30 Cunningham “no union” statement, and a
coercive atmosphere as evidenced by the “I doubt that claim”
statement made on the ballot form itself.* In addition, the
General Counsel further notes that Respondent failed to
notify the Union in advance of the poll as required by Texas
Petrochemicals. The Union joins most of the General
Counsel’s arguments but further asserts that Respondent’s
good faith doubt evidence is simply “hearsay or supposition”
insufficient to support Respondent’s refusal to recognize the
Union.
For all practical purposes Respondent’s brief
abandons the poll as a justification for refusing to recognize
the Union. Thus, Respondent concedes that it did not notify
the Union in advance of the poll but argues that this was
merely a technical violation requiring, at most, a cease and
desist order. Instead, Respondent now argues that the poll is
irrelevant because it “had a sufficient doubt as to the union’s
majority status even without the poll, and the poll merely
provided cumulative evidence of the union’s lack of
support.” The relevant facts and my conclusions on this
issue follow.
1. The Evidence
To support its good faith doubt defense Respondent
relies on the testimony of Cunningham and Venard about
employees expressing disenchantment with the Union.
Cunningham testified that sometime in October 1992,
shipping and receiving clerk Joe Hernandez stated that he
was dissatisfied with the Union as asked how he could get
* Although the General Counsel’s complaint makes factual allegations
concerning the poll in paragraph 12, the complaint contains no specific allegation
that the poll constitutes an unfair labor practice. However, as counsel for the
General Counsel stated clearly in her opening statement that the poll was
unlawful, and as the matter has been fully litigated, I have treated paragraph 12 as
an allegation that the pull is an independent unfair labor practice.
87a
rid of the Union. Cunningham told Hernandez that he did
not know and did not pursue an answer to Hemandez’
question.
Cunningham further testified that a group of
employees approached him in early November 1992. The
group included Arturo and Reynaldo Ayala, Mike Vigil,
Denny Bass and Carlos Cordova who seemed to be speaking
for the group. At that time Cordova asked Cunningham how
they could “go about decertifying the Union.” None of the
other employees spoke at all either to express dissatisfaction
with the Union or to disavow Cordova’s statements to
Cunningham. Cunningham promised to find out and, to this
end, reported the inquiry (but not the names of those present)
to Rockwood. Purportedly, Rockwood provided a long
explanation of the decertification process which became so
complicated for Cunningham that he abandoned any notion
of responding to the employees. Insofar as is known,
Cunningham never took the matter up with Cordova or the
others again.
Toward the end of November, Cunningham
overheard employee Larry Stevens shouting at Union agent
LaMothe during a meeting at the shop but he could not
understand the substance of the LaMothe-Stevens exchange.
Later, Stevens approached Cunningham and stated in an
upset manner. “How can I get rid of this Union? They’re
doing nothing for me. We don’t want them here.” No
evidence establishes that anyone else was present when
Stevens made these latter comments. Cunningham provided
Stevens with no advice and did not report this incident to his
superiors.
Venard testified that he had numerous conversations
with employees concerning their dissatisfaction with the
Union. He recalled two meetings in particular. On one
88a
occasion in the middle of November, a group of employees
which included the two Ayalas, Mike Vigil, Carols Cordova,
Bryan Van Overbook, and Danny Bass approached Venard
right after a break period. According to Venard, Vigil stated,
in substance, that “they were tired of the Union and they
wanted to know ...how they could go about getting rid of it.”
Venard plead ignorance and referred them to Cunningham.
Venard told Cunningham that he could expect a visit from
these employees and reported the substance of his
conversation. About a week later, Venard recalled that he
told Rockwood about the conversation.
At approximately the same time, Larry Stevens
approached Venard. Although Venard testified that Stevens
“wanted to get rid of the Union,” Venard said that Stevens
was more interested at that time in canceling his dues
checkoff so he referred Stevens to the personnel office for
that purpose:
After receiving LaMothe’s December 11 letter,
Brown spoke with Rockwood concerning the Union.
Purportedly, Rockwood told Brown that several employces
previously had expressed dissatisfaction with the Union to
Cunningham and Venard. Brown asked Rockwood to
confirm this information with Cunningham and Venard.
According to Rockwood, Cunningham and Venard began
reporting about employee dissatisfaction with the Union in
the summer of 1993. However, in his pre-poll discussions
with Brown, Rockwood testified that no mention was made
of names and numbers of dissatisfied employees but Brown
claims that he was given the impression that more than a
majority were opposed to Union representation.
As a result of their exchanges, Brown and Rockwood
decided to poll employees on December 14 concerning their
desire for Union representation. Mechanically, Rockwood
89a
assembled the employees and explained the purpose of the
poll. He further explained the procedure for secret balloting
and assured employees that their vote one way or the other
was of no moment to him and would not affect their position
with the Company. Brown was present during this
explanation.
Each employee was given a ballot and permitted to
mark it in the privacy of the production office. The ballot
began with the explanation that the Union claimed to
represent a majority of the unit employees and continued
with the following words: “ I doubt that claim. However, to
clear up this matter, the purpose of this secret poll is to
determine the truth of the union’s claim.” After all unit
employees voted, that ballots were counted with the result
that has been noted above. Respondent’s counsel thereafter
sent LaMothe the letter declining to recognize the Union.
2. Further Findings and Conclusions
Based on the foregoing, I conclude that Respondent
violated Section 8(a)(1) and (5) of the Act as alleged by its
refusal on December 14 to recognize the Union and that
Respondent independently violated Section 8(a)(1) and (5)
by polling its employees on the same date.
Strucksnes, Thomas Industries, and Texas
Petrochemicals compel the conclusion that Respondent’s
poll was unlawful. First, I find that the poll was conducted
in an atmosphere of coercion and unremedied unfair labor
practices. As noted above, I have concluded that
Cunningham violated Section 8(a)(1) by informing
employees that there would be no union in the new
operation. Since that remark occurred in the course of
informing employees for the first time about the certainty of
a continued operation and immediately in advance of the
initial selection of employees for the new entity, the
90a
likelihood that the “no union” statement would signal
employees that their continued employment was dependent
upon the abandonment of their Union adherence would be
extremely high.
Secondly, I find that regardless of Cunningham’s
November 30 statement, the evidence of employee
disaffection described by Cunningham and Venard is badly
tainted by the unalleged unfair labor practices of
Respondent’s predecessor which were occurring at the time
the disaffection was apparently spreading. Thus,
Rockwood’s admission that he unilaterally abrogated
significant economic terms of the collective bargaining
agreement while serving as Aero’s president without
securing authorization from the bankruptcy court to do so
establishes that Respondent’s predecessor created an
atmosphere, albeit out of necessity perhaps, which, in my
judgment, precludes any reliance on the disaffection
evidence provided by Cunningham and Venard. Clearly,
Aero’s economic distress left the Union with practically no
reasonable responses to these unilateral changes. Even so,
the testimony of Cunningham and Venard fails to
demonstrate that a majority of Aero’s employees wanted to
get nd of the Union. The evidence of Union disaffection
does not become sufficient for the purposes use here until
Respondent - and Cunningham in particular - culled through
Aero’s work force in the selection of its initial complement
of employees and the overall atmosphere of Aero’s final
months is ignored. Accordingly, I conclude that it would be
unreasonable to permit Respondent to look back upon this
disaffection evidence free of the context in which it arose as
a basis for asserting its alleged good faith doubt either for the
purpose of conducting the poll as required by Thomas
Industries or for the purpose of withdrawing recognition.
9la
Finally, as it concedes in its brief, the poll is tainted
by Respondent’s failure to give the Union advance notice of
the time and place of the poll as required by Texas
Petrochemicals. In view of these conclusions, I find it
unnecessary to address the General Counsel’s contention
concerning the ballot language.
Conclusions of Law
2 Respondent is an employer engaged in
commerce within the meaning of Section 2(2), (6) and (7) of
the Act.
ea The Union is a labor organization within the
meaning of Section 2(5) of the Act which is the exclusive
representative of the following appropriate unit of employees
under Section 9(a) of the Act:
All production and maintenance employees including
quality control inspectors, maintenance mechanics,
metal fabricators, extrusion formers, stretch press
operators, warehousemen, assemblers, machinist
trainees and machine operators employed at
Respondent’s facility located at 18620 Broadway,
Gardena, California; excluding office clerical
employees, confidential employees, supervisors and
guards as defined under the Act.
a By informing employees on November 30
that there would be no union when it commenced its
operation, Respondent engaged an in unfair labor practices
affecting commerce within the meaning of Section 8(a)(1)
and Section 2(6) and (7) of the Act.
4. By polling its employees concerning
representation by the Union on December 14 and by
thereafter refusing to recognize and bargain with the Union
92a
as requested, Respondent engaged in unfair labor practices
affecting commerce within the meaning of Section 8(a)(1)
and (5), and Section 2(6) and (7) of the Act.
5. Respondent did not violate the Act as alleged
in connection with setting its initial terms and conditions of
employment.
Remedy
Having found that the Respondent has engaged in
certain unfair labor practices, my recommended order will
require it to cease and desist from the unlawful actions found
here and to take certain affirmative action designed to
effectuate the policies of the Act. Affirmatively, the
recommended order requires Respondent to forthwith
recognize and bargain with the Union as the representative of
its employees in the existing appropriate unit, and post an
apprcpriate notice to employees.
On these findings of fact and conclusions of law and
on the entire record, I issue the following recommended.°
ORDER
The Respondent, Advanced Stretchforming
International, Inc., Gardena, California, its officers, agents,
successors, and assigns, shall
. Cease and desist from
* If no exceptions are filed as provided by Section 102.46 of the Board’s
Rules and Regulations, the findings, conclusions, and recommended Order shall,
as provided in Section 102.48 of the Rules, be adopted by the Board and all
objections to them shall be deemed waived for all purposes. Any outstanding
motions inconsistent with this Order are denied.
93a
a. Telling potential applicants for employment
that it intends to operate with no union when it is obliged to
recognize and bargain with Amalgamated Local Union
No. 509, International Union, United Automobile, Aerospace
and Agricultural Implement Workers of 35 America (UAW),
AFL-CIO.
b. Refusing to recognize and bargain with
Amalgamated Local Union No. 509, International Union,
United Automobile, Aerospace and Agricultural Implement
Workers of America (UAW), AFL-CIO.
c. In any like or related manner interfering with,
restraining, or coercing employees in the exercise of the
nights guaranteed them by Section 7 of the Act.
2. Take the following affirmative action
necessary to effectuate the policies of the Act.
a. Forthwith notify Amalgamated Local Union
No. 509, International Union, United Automobile, Aerospace
and Agricultural Implement Workers of America (UAW),
AFL-CIO, in writing that it recognizes that labor
organization as the exclusive representative of its employees
under Section 9(a) of the Act and will bargain with it
concerning the terms and conditions of employment for
employees in the following appropriate unit:
All production and maintenance employees including
quality control inspectors, maintenance mechanics,
metal fabricators, extrusion formers, stretch press
operators, warehousemen, assemblers, machinist
trainees and machine operators employed at
Respondent’s facility located at 18620 South
Broadway, Gardena, California; excluding office
clerical employees, confidential employees,
supervisors and guards as defined under the Act.
94a
b. Post at its Gardena, California, facility copies
of the attached notice marked “Appendix.” Copies of the
notice, on forms provided by the Regional Director for
Region 21, after being signed by the Respondent’s
authorized representative, shall be posted by the Respondent
immediately upon receipt and maintained for 60 consecutive
days in conspicuous places including. all places where
notices to employees are customarily posted. Reasonable
steps shall be taken by the Respondent to ensure that the
notices are not altered, defaced, or covered by any other
material. If this Order is enforced by a\Judgment of the
United States Court of Appeals, the words in the notice
reading “POSTED BY ORDER OF THE NATIONAL
LABOR RELATIONS BOARD” shall read “POSTED
PURSUANT TO A JUDGMENT OF THE UNITED
STATES COURT OF APPEALS ENFORCING AN
ORDER OF THE NATIONAL LABOR RELATIONS
BOARD.”
e. Notify the Regional Director in writing within
20 days from the date of this Order of the steps the
Respondent has taken to comply.
IT IS FURTHER ORDERED that the complaint
allegations concerning Respondent’s failure to bargain about
its initial terms and conditions of employment be dismissed.
Dated, San Francisco, CA November 18, 1994
ADMINISTRATIVE LAW JUDGE
95a
APPENDIX
NOTICE TO EMPLOYEES
Posted by Order of the National Labor Relations
Board, An Agency of the United States Government
Following a hearing before an administrative law
judge, the National Labor Relations Board has found that we
violated the National Labor Relations Act and ordered us to
post and abide by this notice.
WE WILL NOT tell employees that we intend to
operate with no union when we are obliged to recognize and
bargain with Amalgamated Local Union No. 509,
International Union, United Automobile, Aerospace and
Agricultural Implement Workers of America (UAW), AFL-
CIO.
WE WILL NOT refuse to recognize and bargain with
Amalgamated Local Union No. 509, International Union,
United Automobile, Aerospace and Agricultural Implement
Workers of America (UAW), AFL-CIO.
WE WILL NOT in any like or related manner
interfere with, restrain, or coerce our employees in the
exercise of the rights guaranteed them by Section 7 of the
Act.
WE WILL forthwith notify Amalgamated Local
Union No. 509, International Union, United Automobile,
Aerospace and Agricultural Implement Workers of America
(UAW), AFL-CIO, in writing that we will recognize with
that labor organization as the exclusive representative of our
employees under Section 9(a) of the Act and will bargain
96a
with it concerning the terms and conditions of employment
for employees in the following appropriate unit:
All production and maintenance employees including
quality control inspectors, maintenance mechanics,
metal fabricators, extrusion formers, stretch press
operators, warehousemen, assemblers, machinist
trainees and machine operators employed at
18620 South Broadway, Gardena, California;
excluding office clerical employees, confidential
employees, supervisors and guards as defined under
the Act.
ADVANCED STRETCHFORMING
INTERNATIONAL, INC.
(Employer)
Dated By
(Representative) (Title)
THIS IS AN OFFICIAL NOTICE AND MUST NOT BE
DEFACED BY ANYONE
This notice must remain posted for 60 consecutive
days from the date of posting and must not be altered,
defaced, or covered with any other material. Any questions
concerning this notice or compliance with its provisions may
be directed to the NLRB Region 21, 888 South Figueroa
Street, 9" Floor, Los Angeles, CA 90017-5455, Telephone
(213) 894-5229.
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APPENDIX G
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS
BOARD
DIVISION OF JUDGES
SAN FRANCISCO BRANCH OFFICE
Case 21-CA-29104
ADVANCED STRETCH-FORMING INT ERNATIONAL,
INC.
and
INTERNATIONAL UNION, UNITED AUTOMOBILE,
AEROSPACE AND AGRICULTURAL IMPLEMENT
WORKERS OF AMERICA (UAW) AMALGAMATED
LOCAL UNION NO. 509 AFL-CIO.
CORRECTIONS
Correct the Decision in this matter [JD(SF)-81-94] as
follows:
1. Page 2, line 46, delete “the.”
2. Page 3, line 1, delete the comma after “California.”
This text is long and has been trimmed here. Open the source document for the complete record.
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