# Opposition Brief — Advanced Stretchforming International, Inc. v. National Labor Relations Board

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 2001
- **Citation:** 534 U.S. 948

## Text

2001
No. 00-1829

In the Supreme Court of the Gnited States’ |

ADVANCED STRETCHFORMING INTERNATIONAL, INC.,
PETITIONER

NATIONAL LABOR RELATIONS BOARD, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF FOR THE
NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION

THEODORE B. OLSON
Solicitor General
ARTHUR F. ROSENFELD Counsel of Record
General Counsel Department of Justice
JoHN H. FERGUSON Washington, D.C. 20530-0001
Associate General Counsel (202) 514-2217
NORTON J. COME
Deputy Associate General
Counsel
JOHN EMAD ARBAB
Attorney
National Labor Relations
Board
Washington, D.C. 20570

QUESTION PRESENTED

Whether, under NLRB v. Burns International Se-
curity Services, Inc., 406 U.S. 272 (1972), a successor
employer has the right to fix the initial employment
terms for its predecessor’s employees when the suc-
cessor, immediately prior to hiring those employees,
unlawfully states that there would be “no union” at the
new company.

(I)

TABLE OF CONTENTS

Page
Opinions below .....c-ssssssssseccsneessneessseesssssssnsecssnecnnnecnnnecssnssanesssssennecs 1
Feat CTA OR occcacconcnedescsoscsscsscesoscsnssenasassesssassresspeccsnsscossesosssssassscooasses 1
eee oo ncccocecsocsssescsessnsccsosssssecesessscassssascascoscepsnecsoosssssecssosossecees 2
AYQuUment ......csseccsssssseccsneessneecsneessnesssscssnecsnsecsnecenscennecnnecsnnscgnsnssensess 9
COMCIUBION. .c<caccccececscccsscsccssscsassnssosssssscasscssascsscscessssccasssesssssassosccceseoes 17
TABLE OF AUTHORITIES
Cases:
Armco, Inc., 298 N.L.R.B. 416 (1990) .....cssescseseseerereneneneens 16
Armco, Inc. v. NLRB, 832 F.2d 357 (6th Cir.
1987), cert. denied, 486 U.S. 1042 (1988) .....ssesecseseesereeenee 14
Capital Cleaning Contractors, Inc. v. NLRB, 147
F.3d 999 (D.C. Cir. 1998) ....ccccsscsssssssesenssenensssesersrenseees 2,13, 14
Fall River Dyeing & Finishing Corp. v. NLRB,
BRO 155, BT (1B) ncccnssccccccsccsscesossccscsnssssrescooescsccensensceses 2,10, 11
Kallmann v. NLRB, 640 F.2d 1094 (9th Cir.
TOBL) .accacsaccccscsecscacccescascesscscsassosscsscsssscssressessssssososssssccecsecsscrsosess 8,15
New Breed Leasing Corp. v. NLRB, 111 F.3d
1460 (9th Cir.), cert. denied, 522 U.S. 948 (1997) ............. 8
NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S.
BE IID cecissceresnsnssnscesnnncsscusssnsconensasenonsesenssssnneninasenis 2,4,9, 11,12
NLRB v. Staten Island Hotel Ltd. P’ship, 101
F.3d 858 (2d Cir. 1996) .........cccccssssscssssssssssssecceeecececnesessssensers 15
Pace Indus., Inc. v. NLRB, 118 F.3d 585 (8th Cir.
1997), cert. denied, 523 U.S. 1020 (1998) ........ecseeseereeseees ll
Phelps Dodge Corp. v. NLRB, 313 U.S.177
ee i Fe cceneipeepenuadeboiounie 12
SEC v. Chenery Corp., 318 U.S. 80 (1943) .....-s.cseeeeeens 7
Spruce Up Corp., 209 N.L.R.B. 194 (1974), enforced,
by 529 F.2d 516 (4th Cir. 1975) ..ca.cccscssscesnsesseenneeneenee 5
State Distrib. Co., 282 N.L.R.B. 1048 (1987) 0.0... 6,7
U.S. Marine Corp. v. NLRB, 944 F.2d 1305 (7th
Cir. 1991), cert. denied, 503 U.S. 936 (1992) .......... 7.11, 15-16

(IIT)

IV

Statute:

Page
National Labor Relations Act, 29 U.S.C. 151
et seq.:
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© CEE), PS SEA, BIE) sccsaeicicnininitotintarnrstacasinsasin 5,6,8
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§ 8(d), 29 U.S.C. 158(d)

Jn the Supreme Court of the Gnited States

No. 00-1829

ADVANCED STRETCHFORMING INTERNATIONAL, INC.,
PETITIONER

VU.

NATIONAL LABOR RELATIONS BOARD, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI TO
THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

BRIEF FOR THE
NATIONAL LABOR RELATIONS BOARD
IN OPPOSITION

OPINIONS BELOW

The amended opinion of the court of appeals (Pet.
App. la-24a) is reported at 233 F.3d 1176. The original
opinion of the court of appeals (Pet. App. 25a-48a) is
reported at 208 F.3d 801. The decision and order of the
National Labor Relations Board (Pet. App. 53a-67a),
and the decision of the administrative law judge (Pet.
App. 70a-100a), are reported at 323 N.L.R.B. 529.

JURISDICTION

The amended opinion of the court of appeals (Pet.
App. 2a) was issued on November 22, 2000. A petition
for rehearing was denied on February 7, 2001 (Pet.
App. 101a-102a). On April 23, 2001, Justice O’Connor
extended the time within which to file a petition for a

(1)

2

writ of certiorari to and including June 7, 2001, and the
petition was filed on that date. The jurisdiction of this
Court is invoked under 28 U.S.C. 1254(1).

STATEMENT

1. Section 8(a)(5) of the National Labor Relations
Act (Act), 29 U.S.C. 158(a)(5), obligates an employer to
bargain collectively with the union that represents its
employees. That obligation also extends to the em-
ployer’s “successor.” Fall River Dyeing & Finishing
Corp. v. NLRB, 482 U.S. 27 (1987); NLRB v. Burns
Int'l Sec. Servs., Inc., 406 U.S. 272 (1972). A new em-
ployer is a successor to the former employer if (1) “sub-
stantial continuity” exists between the employers’ re-
spective enterprises and (2) a majority of the suc-
cessor’s employees had been employees of the prede-
cessor. Fall River Dyeing, 482 U.S. at 43, 46; Burns,
406 U.S. at 278-280 & n.4.

A successor is not bound to honor the predecessor’s
labor contract and, as a general rule, it is free to set the
initial terms upon which it will hire the predecessor's
employees. Burns, 406 U.S. at 291, 294. Where it is
“perfectly clear that the new employer plans to retain
all of the employees in the unit,” however, the successor
is obligated to “initially consult with the employees’
bargaining representative before he fixes terms.” /d. at
294-295. A successor also “loses the right unilaterally
to set the initial terms” if the successor “refuses to hire
its predecessor’s employees based upon anti-union ani-
mus.” Capital Cleaning Contractors, Inc. v. NLRB,
147 F.3d 999, 1008 (D.C. Cir. 1998).

2. Befure December 1, 1992, Aero Stretch, Inc.
(Aero) operated a manufacturing facility in Gardena,
California. Pet. App. 3a, 54a. Aero’s production and
maintenance employees were represented by Amalga-

3

mated Local Union No. 509, UAW. 7d. at 3a, 7la-72a.
Aero and the Union entered into a collective-bargaining
agreement effective from August 19, 1991 through
August 19, 1994. Jd. at 3a, 54a. On June 11, 1992, Aero
filed for bankruptcy protection but continued to operate
the plant and began to gradually lay off employees. Jd.
at 3a, 54a, 72a. On November 19, 1992, the bankruptcy
court auctioned Aero’s assets to Steven Brown, who
continued the plant’s operations. Jd. at 3a-4a, 73a. On
that date, the bankruptcy court ordered Aero to
terminate all of its employees by November 30. Jd. at
4a, 54a, 74a.

On November 30, 1992, Eric Cunningham, an Aero
official, acting on Brown’s instructions, held an em-
ployee meeting at the plant. Pet. App. 4a, 77a. Cun-
ningham informed the employees that the plant had
been purchased by a new company, that all employees
would be terminated from employment with Aero
effective at the end of the work day, and that, if they
were interested in working for the new company, the
employees should report to the plant the following
morning for a job interview. /d. at 4a, 77a-78a. During
the November 30 meeting, Cunningham also told the
employees that there would be “no union” at the new
company. /d. at 4a, 54a-55a, 83a.

On December 1, 1992, Brown incorporated petitioner
Advanced Stretchforming International, Inc. Pet. App.
4a, 54a. On December 1, Brown and Cunningham inter-
viewed the former Aero bargaining unit employees who
came to the plant seeking employment. /d. at 4a, 55a,
74a. Brown informed the applicants that employment
with petitioner would be on different terms than those
provided by Aero’s labor contract with the Union, and
he required each applicant to sign a written statement
reflecting that understanding. Jd. at 4a-5a, 55a.

4

Also on December 1, petitioner hired eight of the
former Aero bargaining unit employees, and did not
hire employees from any other source at that time. Pet.
App. 5a, 55a, 74a. Of the eight employees hired, peti-
tioner continued to pay four of them at their existing
hourly wage rate; four others were hired at different
wage rates. Jd. at 5a, 55a, 79a. Petitioner reduced or
eliminated the employees’ benefits, such as holidays
and medical benefits. Jd. at 55a, 79a. Employing that
staff, petitioner immediately began to complete Aero’s
work in progress and to prepare for new similar work.
Id. at 74a.

On December 8, 7, and 11, 1992, the Union sent certi-
fied letters to petitioner demanding that it recognize
the Union as the employees’ bargaining representative.
Pet. App. 5a, 74a. On December 14, 1992, petitioner
conducted a poll of the employees respecting their de-
sire for continued representation by the Union. The
result of the poll was unfavorable to the Union. Z/d. at
5a, 74a, 85a. The same day, petitioner advised the
Union in writing that it did not recognize the Union as
the employees’ bargaining representative. Jd. at 5a; see
also id. at 58a-59a, 74a, 85a.

3. On April 30, 1993, acting on a charge filed by the
Union, the General Counsel of the National Labor
Relations Board (Board) issued a complaint alleging
that petitioner was a successor employer to Aero and
that petitioner had committed numerous violations of
the Act. Pet. App. 5a, 71a. After a hearing, an admini-
strative law judge (ALJ) sustained the complaint in
part. Jd. at 70a-96a. The ALJ found that, under NLRB
v. Burns International Security Services, Inc., 406 U.S.
272 (1972), petitioner was a successor employer to Aero
(Pet. App. 75a), and that Cunningham was acting as
petitioner’s agent when he made the “no union” state-

initial iil

5

ment during the in-plant meeting with Aero’s em-
ployees on November 30, 1992 (id. at 83a-84a). The
ALJ found that, by issuing the “no union” statement,
petitioner violated Section 8(a)(1) of the Act, 29 U.S.C.
158(a)(1). Pet. App. 91a." The ALJ noted the “ex-
treme[]” “likelihood that the ‘no union’ statement would
signal employees that their continued employment was
dependent upon the abandonment of their Union
adherence.” Jd. at 90a.

The ALJ further found that, as a Burns successor,
petitioner was obligated to recognize and bargain with
the Union as the representative of the former Aero
employees. Pet. App. 84a. He further found that peti-
tioner had committed unfair labor practices by refusing
on December 14 to recognize the Union and conducting
an employee poll in violation of the Act. Id. at 89a, 91a-
92a. The ALJ dismissed the complaint, however, inso-
far as it alleged that petitioner violated Section 8(a)(5)
and (1) by setting initial employment terms for the
former Aero employees on December 1 without first
bargaining with the Union. Jd. at 75a- 88a, 92a.

4. The Board affirmed in part and reversed in part.
Pet. App. 53a-67a. The Board affirmed the ALJ’s find-
ings, which were not contested by petitioner, that the
“no union” statement, polling of unit employees, and re-
fusal to recognize the Union constituted unfair labor
practices. Jd. at 55a & n.4. The Board further found

1 The Act makes it an unfair labor practice for an employer “to
interfere with, restrain, or coerce employees in the exercise of”
their “right * * * to bargain collectively through representatives
of their own choosing.” 29 U.S.C. 157, 158(a)(1).

2 The ALJ concluded that petitioner was not a Burns “perfectly
clear” successor as the Board has defined that term. Pet. App.
75a-76a, 8la-82a (citing Spruce Up Corp., 209 N.L.R.B. 194 (1974),
enforced, 529 F.2d 516 (4th Cir. 1975) (Table).

ee
6

that petitioner violated Section 8(a)(5) and (1) “by uni-
laterally changing its employees’ wages and other
terms and conditions of employment at the time of their
hire.” Jd. at 54a. The Board observed that there
existed a “well-established exception to the right of a
Burns successor to set initial terms and conditions of
employment,” namely, that “an employer * * * 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.” Jd. at 57a. The “funda-
mental premise” of this “forfeiture doctrine,” the Board
explained, 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 be-
cause it has unlawfully blocked the process by which
the obligations and rights of such a successor are
incurred.’” Jd. at 58a (quoting State Distributing Co.,
282 N.L.R.B. 1048, 1049 (1987)).

Noting the uncontested fact that petitioner “was a
Burns successor bound to recognize the Union when
plant operations resumed on December 1,” the Board
explained that, “[a]t the time of successorship * * *
[petitioner] did not conduct itself like a lawful Burns
successor.” Pet. App. 58a. Rather, petitioner “unlaw-
fully declared through Cunningham to all Aero em-
ployees that there would ¥e no union for those whom it
hired.” Jbid. “This statement,” the Board explained,
“was a clearly unlawful message to empioyees that
[petitioner] would not permit them to be represented
by a union.” Jd. at 55a. The Board further explained
that “(njothing in Burns suggests that an employer
may impose such an unlawful condition and still retain
the unilateral right to determine other legitimate initial
terms and conditions of employment.” Id. at 59a.

7

Rather, the Board concluded that “[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,” for it “‘block[{s] the process by which the
obligations and rights of such a successor are in-
curred.’” Ibid. (quoting State Distributing Co., supra).

As a remedy, the Board ordered petitioner, “on re-
quest of the Union, to rescind any changes in em-
ployees’ terms and conditions of employment uni-
laterally effectuated and to make the employees whole
by remitting all wages and benefits that would have
been paid absent [petitioner’s] unlawful conduct, until
[petitioner] negotiates in good faith with the Union to
agreement or to impasse.” Pet. App. 60a. The Board
explained that such a remedy is “designed to prevent
[petitioner] from taking advantage of its wrongdoing to
the detriment of the employees,” and that a “return to
the status quo ante at least allows the bargaining
process to get under way.” Jbid. (quoting U.S. Marine
Corp. v. NLRB, 944 F.2d 1305, 1822-1323 (7th Cir. 1991)
(en banc), cert. denied, 503 U.S. 936 (1992)).

5. a. The court of appeals granted in part and
remanded in part the Board’s petition for enforcement.
Pet. App. la-13a.° The court of appeals granted sum-
mary enforcement of the Board’s uncontested findings
that petitioner committed unfair labor practices by
making the “no union” statement, conducting the union

3 Initially, a divided panel of the court of appeals had upheld
the Board’s order on the ground that petitioner was a “perfectly
clear” successor to Aero, and therefore was not free to unilaterally
set initial terms of employment. Pet. App. 33a-35a. Because the
court of appeals upheld the Board’s unfair labor practice finding on
a theory not invoked by the agency, the Board filed a petition for
rehearing and rehearing en banc. /d. at 2a; see generally SEC v.
Chenery Corp., 318 U.S. 80 (1948).

8

representation poll, and refusing to bargain with the
Union. /d. at 6a. The court of appeals further upheld
the Board’s conclusion that petitioner violated Section
8(a)(5) and (1) by “failling] to consult with the Union
before imposing terms.” /d. at 10a. The court found
that, “as a practical matter,” the “no union” “statement
‘blocked the process by which the obligations of a
successor are incurred’ in a manner similar to the dis-
criminatory hiring practices to which the forfeiture
doctrine previously has been applied.” Jd. at 9a, 10a.

On the question of remedy, however, the court of ap-
peals remanded the case to the Board for further
proceedings. Pet. App. 10a-13a. The court of appeals
observed that the evidentiary record in this case was
“equivocal” as to “what would have happened had [peti-
tioner] recognized and bargained with the Union.” /d.
at 12a-13a. The court explained that, as a general rule,
“the Board’s grant of back pay based on the pre-
decessor Union’s pay scale restores as nearly as possi-
ble the employment situation that would have oc-
curred,” absent the violation of the Act. Jd. at lla
(quoting New Breed Leasing Corp. v. NLRB, 111 F.3d
1460, 1468-1469 (9th Cir.), cert. denied, 522 U.S. 948
(1997)). The court added, however, that where “ [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.’” Jbid. (quoting Kallmann v. NLRB, 640
F.2d 1094, 1103 (9th Cir. 1981) (bracketed material
added by court of appeals)). “Because the record was
not fully developed on this point,” the court remanded
the case to the Board “to permit [petitioner] and the
UAW to present evidence on whether [petitioner]
would have bargained to impasse and imposed terms,

—S

9

even had [petitioner] honored its obligation to bargain
with the Union.” Jd. at 13a.

b. Judge O’Scannlain coneurred in part and dis-
sented in part. Pet. App. 138a-24a. He concurred in the
court’s enforcement of the Board’s order of prospective
relief, id. at 14a, but took the view that “the Board’s
award of back pay under the terms of the collective
bargaining agreement of [petitioner’s] predecessor vio-
lates the holding of [Burns],” and “constitutes a penalty
well in excess of the Board’s legal authority.” /bid.

ARGUMENT

1. Addressing an issue of first impression, the court
of appeals properly held that petitioner forfeited its
right under NLRB v. Burns International Security
Services, Inc., 406 U.S. 272 (1972), to set the initial
terms of employment when it made the “no union”
statement. It is undisputed that petitioner, as a suc-
cessor employer to Aero, was obligated by Section
8(a)(5) of the Act to recognize and bargain with the
Union when petitioner initially began operating the
former Aero facility with a work force comprised en-
tirely of employees from the former Aero bargaining
unit. Burns, 406 U.S. at 278-279, 280-281; see Pet. App.
7a, 58a, 75a, 84a. Rather than honor that obligation,
petitioner unlawfully stated to the former Aero em-
ployees that there would be “no union” at the new
company. /d. at 6a, 55a, 83a. As the Board found, peti-
tioner’s statement sent “a clearly unlawful message to
employees that [petitioner] would not permit them to
be represented by a union” (id. at 55a), and “blatantly
coerce[d] employees in the exercise of their Section 7
right to bargain collectively through a representative of
their own choosing.” Jd. at 59a.

ee ee ee ey

10

This Court has recognized that, “after being hired by
anew company * * * employees initially will be
concerned primarily with maintaining their new jobs.”
Such 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.”
Fall River Dyeing & Finishing Corp. v. NLRB, 482
U.S. 27, 40 (1987); see also Pet. App. 58a. Petitioner’s
“no union” threat allowed it to capitalize upon those
well-recognized employee predilections. As the ALJ
observed, coming as it did “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
“no union” threat signaled the employees in the Aero
unit that “their continued employment was dependent
upon the abandonment of their Union adherence.” /d.
at 89a-90a.* Accordingly, petitioner’s actions effectively
assured that its bargaining obligation under Burns
would be rendered a nullity.

Like the successor who engages in unlawful hiring
discrimination, petitioner’s illegal “no union” threat
“blocked the process” by which its bargaining obliga-
tion would have been made effective. See Pet. App. 9a-
10a, 57a-59a. The successor that engages in hiring dis-
crimination seeks to assure that a numerical majority of
its work force will not be comprised of the pre-

4 As the Board noted (Pet. App. 58a-59a), petitioner reinforced
its coercive “no union” message by conducting an unlawful em-
ployee poll on December 14 and refusing to recognize the Union.
The negative outcome of the unlawful poll served to provide an
ostensible air of legitimacy to petitioner’s “no union” stance. The
refusal to recognize the Union further demonstrated to the former
Aero employees that it would be futile for them to attempt to
exercise their Section 7 right to bargain collectively.

11

decessor’s employees, thereby allowing the successor to
“block[] the process” by which the obligation to bargain
with the incumbent union would otherwise attach. Fall
River Dyeing, 482 U.S. at 46 & n.12; Burns, 406 U.S. at
278-279, 280-281; see, e.g., U.S. Marine Corp. v. NLRB,
944 F.2d 1305, 1316-1319 (7th Cir. 1991) (en banc), cert.
denied, 503 U.S. 936 (1992); Pace Indus., Inc. v. NLRB,
118 F.3d 585, 587-593 (8th Cir. 1997), cert. denied, 523
U.S. 1020 (1998). Similarly, by issuing the “no union”
threat, petitioner sought to “block[] the process” by
which its obligation to bargain with the Union might, as
a practical matter, have been made effective. In those
circumstances, the Board properly concluded that peti-
tioner forfeited its right under Burns to set initial
terms of employment.

2. Petitioner contends (Pet. 13-17) that this Court’s
review is warranted because the court of appeals’ de-
cision conflicts with Burns. Petitioner argues that,
although the successor employer in Burns had com-
mitted an unfair labor practice by recognizing and
assisting a rival to the incumbent union, 406 U.S. at
274-277, the Court upheld only the Board’s ordering
that the successor employer bargain with the incum-
bent union, id. at 281, while recognizing the successor’s
right to set initial terms of employment, id. at 294. The
Court in Burns did not address, however, the Board’s
remedial authority when a successor employer unlaw-
fully departs from the legal framework that the Court
set forth in Burns. Nor did the Court address the
effect of the successor’s unlawful recognition of the
rival union upon its right to set initial employment
terms. As the Board correctly explained, although a
successor ordinarily possesses a right unilaterally to set
initial terms (ibid.), “{nJothing in Burns suggests” that
a successor may avail itself of the right recognized in

12

Burns and, at the same time, impose “an unlawful
condition” of employment on the predecessor’s em-
ployees. Pet. App. 59a. Rather, that Burns right “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.” /d. at 58a.

Thus, as Burns itself recognizes, a successor’s right
to set initial employment terms is but one aspect of the
panoply of rights and obligations of a successor under
the system of collective bargaining established by the
Act. See 406 U.S. at 277-296. While a successor acts
within its rights in rejecting the predecessor’s collec-
tive bargaining agreement and, ordinarily, in setting
initial terms, the successor, concomitantly, must recog-
nize and bargain with the incumbent union with respect
to wages, hours, and other terms and conditions of em-
ployment. See id. at 280-281, 291, 294; see also 29
U.S.C. 158(d). That legal framework necessarily con-
templates that, through the process of good-faith
collective negotiations with the incumbent union, terms
of employment which the successor may choose to
initially set unilaterally will be subject to alteration,
and that different terms may ultimately be incor-
porated into a new collective bargaining agreement.

In this case, petitioner, by its own actions, upset that
bargaining dynamic: it sought the benefit of setting
initial terms while it evaded the obligation to bargain
with the Union, thereby breaking the linkage between
benefit and obligation that is required by the Act.
Thus, a remedial order limited only to an order to
refrain from committing future unfair labor practices,
as suggested by petitioner (Pet. 19), would do nothing
to restore the parties to the status quo ante. See

13

Phelps Dodge Corp. v. NLRB, 313 U.S. 177, 194 (1941)
(purpose of remedial order is “a restoration of the
situation, as nearly as possible, to that which would
have obtained but for the illegal [conduct]”); see also
Pet. App. 7a n.2 (explaining that the forfeiture doctrine
does not act as a “penalty” but “merely places the
parties in the position where they would have been had
[petitioner] refrained from engaging in improper con-
duct”). Indeed, the result urged by petitioner would
permit employers such as petitioner to benefit from
their wrongdoing by insulating the employer’s initial
terms from modification through collective bargaining
until a court later forces the employer to comply with
the law.

3. Petitioner contends (Pet. 17-20) that the court of
appeals’ decision conflicts with Capital Cleaning
Contractors, Inc. v. NLRB, 147 F.3d 999 (D.C. Cir.
1998). That contention lacks merit. In Capital Clean-
ing, the District of Columbia Circuit “join[ed] every
other court to have considered the issue,” and held that
“when a successor refuses to hire its predecessor’s
employees based upon anti-union animus, the successor
loses the right unilaterally to set the initial terms and
conditions of employment; it must first bargain with the
union.” Jd. at 1008.° The District of Columbia Circuit
did not address whether, much less hold that, the “for-
feiture doctrine” applies only to that circumstance.
Indeed, the District of Columbia Circuit explained that
the employer’s “antiunion discrimination makes it diffi-

5 Petitioner therefore errs in contending (Pet. 22-23) that the
courts of appeals are confused whether the forfeiture doctrine is
ever appropriate. Petitioner cites no court that has accepted
its view, but rather relies on the views expressed by dissenting
judges on two courts of appeals.

14

cult to determine how many of its predecessor’s em-
ployees it would have hired,” and that the resulting
uncertainty is reasonably resolved against the suc-
cessor. /bid. That reasoning fully supports the court of
appeals’ decision in this case. Petitioner’s coercing of
the predecessor’s employees into abandoning the in-
cumbent union created a comparable uncertainty as to
what legitimate terms of employment would have
applied to the former Aero workers whom it hired on
December 1, had petitioner complied with its duty to
recognize and bargain with the Union.°

4. Petitioner contends (Pet. 20) that this Court’s re-
view is warranted to resolve a circuit “split over the
proper remedy under the forfeiture doctrine.” Peti-
tioner urges the Court to adopt the view of the Sixth
and District of Columbia Circuits, which have held that
any award of back pay is limited to a period of a “rea-
sonable time of bargaining.” Under that view, the
successor is “responsible for the pay difference for the
time which would have been required for bargaining”
where “the facts indicate[] that the employer would not
have agreed to union demands to pay the higher rate.”
Armco, Inc. v. NLRB, 832 F.2d 357, 365 (6th Cir. 1987),
cert. denied, 486 U.S. 1042 (1988); see also Capital
Cleaning Contractors, Inc., 147 F.3d at 1011 (relief
limited to “a period allowing for a reasonable time of
bargaining” when “there is no reason to believe that
[the successor] would have agreed to paying any more

6 Contrary to petitioner’s suggestion (Pet. 18), the court of ap-
peals did not hold that the forfeiture doctrine applies to “a suc-
cessor employer who commits any unfair labor practice during the
transition process.” Rather, the court limited the question before
it to “whether [petitioner’s] ‘no union’ statement” was sufficiently
similar to discriminatory hiring practices so as to warrant an appli-
cation of the forfeiture doctrine. Pet. App. 9a.

15

than it had to for labor”). Petitioner further contends
(Pet. 20) that the Second, Seventh, and Ninth Circuits
hold that the Board may “award back pay according to
the terms of the prior [collective bargaining agreement]
for the entire period from the date of the unfair labor
practice until the successor employer reaches or would
have reached a new agreement or an impasse with the
predecessor’s employees.”

This case, however, is not an appropriate vehicle to
resolve whatever tension exists on that issue, because
the court of appeals remanded the case to the Board in
order to permit petitioner to establish that any back
pay award should be limited to a period “allowing for a
reasonable time of bargaining.” Pet. App. 10a, lla
(quoting Kallmann v. NLRB, 640 F.2d 1094, 1103 (9th
Cir. 1981)). On remand, the Board must “permit [peti-
tioner] and the UAW to present evidence on whether
[petitioner] would have bargained to impasse and
imposed terms, even had [petitioner] honored its obliga-
tion to bargain with the Union.” Jd. at 13a. Hence, this
case is in an interlocutory posture in which the court of
appeals’ decision permits petitioner on remand to ob-
tain the limitation on relief that it seeks, if a more fully
developed record shows that such limitation is factually
appropriate. The outcome of the remand proceeding
would again be subject to review by the court of
appeals. It would therefore be premature for this
Court to undertake to address, at this juncture in the
case, the appropriate remedy under the forfeiture
doctrine.’

7 Moreover, it is not clear that the Second and Seventh Circuits
have rejected the “reasonable time of bargaining” rule sought by
petitioner. In neither NLRB v. Staten Island Hotel Ltd.
Partnership, 101 F.3d 858 (2d Cir. 1996) (per curiam), nor U.S.

16

5. Petitioner finally asserts (Pet. 23-25) that the
court of appeals’ decision will discourage successor
employers from attempting to revive a failing business
because they may learn many years after the fact that
they are bound to the terms of the predecessor’s labor
agreement. As previously discussed, however, the
court of appeals’ decision merely prevents petitioner
from benefitting from its unlawful conduct. The court’s
decision does not bind petitioner to its predecessor's
labor agreement, but simply applies its terms for a
limited period of time as a baseline for awarding relief.
Moreover, it is unpersuasive for petitioner now to
complain (Pet. 25) that the court of appeals unfairly
“foisted” on petitioner its predecessor’s labor agree-
ment ten years after petitioner took over Aero’s busi-
ness. In November 1994, the ALJ issued his decision
finding that petitioner had issued the illegal “no union”
threat, had conducted an unlawful poll, and had unlaw-
fully refused to recognize and bargain with the Union.
Pet. App. 70a-96a. Petitioner has never contested those
findings, id. at 6a, 53a, and has never commenced bar-
gaining with the Union. Indeed, had petitioner reached
agreement (or impasse) with the Union through good-
faith bargaining, petitioner might have established an
empirical basis for determining that it would not have
agreed to employment terms more favorable than it
initially set. See Armco, Inc., 298 N.L.R.B. 416 (1990).
Thus, petitioner has heretofore failed to avail itself of
ample opportunity to limit its litigation exposure in this
case, and it may still succeed in doing so in the pro-

Marine Corp. v. NLRB, supra, cited by petitioner (Pet. 20), did the
court of appeals expressly consider and reject the propriety of
imposing a “reasonable period of bargaining” limitation on the
Board’s award of relief.

17

ceedings on remand that the court of appeals has
ordered.

CONCLUSION
The petition for a writ of certiorari should be denied.
Respectfully submitted.

THEODORE B. OLSON
Solicitor General

ARTHUR F. ROSENFELD

General Counsel
JOHN H. FERGUSON

Associate General Counsel
NORTON J. COME

Deputy Associate General

Counsel ta

JOHN EMAD ARBAB

Attorney
National Labor Relations
Board

SEPTEMBER 2001

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386014_1916%3A3. Public record. Not legal advice.