Wackenhut Corp., a company that had provided plant protection
service for a Lockheed Aircraft Service Co. factory, had entered
into a collective bargaining agreement with the United Plant Guard
Workers (UPG), the union certified by the National Labor Relations
Board (NLRB) as the representative of a majority of Wackenhut
guards at the plant after an NLRB election. A few months later,
Wackenhut's service contract expired, and it was succeeded by Burns
International Security Services, which knew of the collective
bargaining agreement. Burns employed 27 of the 42 Wackenhut guards,
but refused to recognize UPG or to honor the agreement, and denied
any obligation to bargain with UPG. The NLRB found that Burns
violated §§ 8(a)(5) and 8(a)(1) of the National Labor Relations Act
by failing to recognize and bargain with UPG and by refusing to
honor the collective bargaining agreement, and ordered Burns to
abide by the terms of the agreement and to
"give retroactive effect to all the clauses of said [Wackenhut]
contract and, with interest of 6 percent, make whole its employees
for any losses suffered by reason of Respondent's [Burns'] refusal
to honor, adopt and enforce said contract."
The Court of Appeals held that the NLRB had exceeded its powers
in ordering Burns to honor the contract executed by Wackenhut
Held:
1. Where the bargaining unit remained unchanged and a majority
of the employees hired by the new employer were represented by a
recently certified bargaining agent, the NLRB correctly implemented
the express mandates of §§ 8(a)(5) and 9(a) of the Act by ordering
the new employer, Burns, to bargain with the incumbent union, UPG.
Pp.
406 U. S.
277-281.
Page 406 U. S. 273
2. While successor employers may be bound to recognize and
bargain with the incumbent union, they are not bound by the
substantive provisions of a collective bargaining agreement
negotiated by their predecessors but not agreed to or assumed by
them.
John Wiley & Sons, Inc. v. Livingston,
376 U. S. 543,
distinguished. Pp.
406 U. S.
281-291.
3. The NLRB's order for monetary restitution to Burns' employees
cannot be sustained on the ground that Burns committed an unfair
labor practice by unilaterally changing existing terms and
conditions of employment. Burns had no previous relationship to the
unit and no outstanding terms and conditions of employment, so that
Burns did not change its terms and conditions of employment when it
specified the initial basis on which it would hire employees when
it inaugurated its protection service at the plant. Pp.
406 U. S.
292-296.
441 F.2d 911, affirmed.
WHITE, J., delivered the opinion for a unanimous Court in No.
71-123, and for the Court in No. 71-198, in which DOUGLAS, STEWART,
MARSHALL, and BLACKMUN, JJ., joined. REHNQUIST, J., filed an
opinion concurring in No. 71-123 and dissenting in No. 71198, in
which BURGER, C.J., and BRENNAN and POWELL. JJ., joined,
post, p.
406 U. S.
296.
Page 406 U. S. 274
MR. JUSTICE WHITE delivered the opinion of the Court.
Burns International Security Services, Inc. (Burns), replaced
another employer, the Wackenhut Corp. (Wackenhut), which had
previously provided plant protection services for the Lockheed
Aircraft Service Co. (Lockheed) located at the Ontario
International Airport in California. When Burns began providing
security service, it employed 42 guards; 27 of them had been
employed by Wackenhut. Burns refused, however, to bargain with the
United Plant Guard Workers of America (UPG) which had been
certified after a National Labor Relations Board (Board) election
as the exclusive bargaining representative of Wackenhut's employees
less than four months earlier. The issues presented in this case
are whether Burns refused to bargain with a union representing a
majority of employees in an appropriate unit and whether the
National Labor Relations Board could order Burns to observe the
terms of a collective bargaining contract signed by the union and
Wackenhut that Burns had not voluntarily assumed. Resolution turns
to a great extent on the precise facts involved here.
I
The Wackenhut Corp. provided protection services at the Lockheed
plant for five years before Burns took over this task. On February
28, 1967, a few months before the changeover of guard employers, a
majority of the Wackenhut guards selected the union as their
exclusive bargaining representative in a Board election after
Wackenhut and the union had agreed that the Lockheed plant was the
appropriate bargaining unit. On March 8,
Page 406 U. S. 275
the Regional Director certified the union as the exclusive
bargaining representative for these employees, and, on April 29,
Wackenhut and the union entered into a three-year collective
bargaining contract.
Meanwhile, since Wackenhut's one-year service agreement to
provide security protection was due to expire on June 30, Lockheed
had called for bids from various companies supplying these
services, and both Burns and Wackenhut submitted estimates. At a
pre-bid conference attended by Burns on May 15, a representative of
Lockheed informed the bidders that Wackenhut's guards were
represented by the union, that the union had recently won a Board
election and been certified, and that there was in existence a
collective bargaining contract between Wackenhut and the union.
App. 4-5, 126. [
Footnote 1]
Lockheed then accepted Burns' bid, and, on May 31, Wackenhut was
notified that Burns would assume responsibility for protection
services on July 1. Burns chose to retain 27 of the Wackenhut
guards, and it brought in 15 of its own guards from other Burns
locations.
During June, when Burns hired the 27 Wackenhut guards, it
supplied them with membership cards of the American Federation of
Guards (AFG), another union with which Burns had collective
bargaining contracts at other locations, and informed them that
they had to become AFG members to work for Burns, that they would
not receive uniforms otherwise, and that Burns "could not live
with" the existing contract between Wackenhut and the union. On
June 29, Burns recognized the AFG on the theory that it had
obtained a card majority. On July 12, however, the UPG demanded
that Burns recognize
Page 406 U. S. 276
it as the bargaining representative of Burns' employees at
Lockheed, and that Burns honor the collective bargaining agreement
between it and Wachenhut. When Burns refused, the UPG filed unfair
labor practice charges, and Burns responded by challenging the
appropriateness of the unit and by denying its obligation to
bargain.
The Board, adopting the trial examiner's findings and
conclusions, found the Lockheed plant an appropriate unit and held
that Burns had violated §§ 8(a)(2) and 8(a)(1) of the National
Labor Relations Act, 49 Stat. 452, as amended, 1 Stat. 140, 29
U.S.C. §§ 158(a)(2), 158(a)(1), by unlawfully recognizing and
assisting the AFG, a rival of the UPG; and that it had violated §§
8(a)(5) and 8(a)(1), 29 U.S.C. §§ 158(a)(5), 158(a)(1), by failing
to recognize and bargain with the UPG and by refusing to honor the
collective bargaining agreement that had been negotiated between
Wackenhut and UPG. [
Footnote
2]
Burns did not challenge the § 8(a)(2) unlawful assistance
finding in the Court of Appeals, but sought review of the unit
determination and the order to bargain and observe the preexisting
collective bargaining contract. The Court of Appeals accepted the
Board's unit determination and enforced the Board's order insofar
as it
Page 406 U. S. 277
related to the finding of unlawful assistance of a rival union
and the refusal to bargain, but it held that the Board had exceeded
its powers in ordering Burns to honor the contract executed by
Wackenhut. Both Burns and the Board petitioned for certiorari,
Burns challenging the unit determination and the bargaining order
and the Board maintaining its position that Burns was bound by the
Wackenhut contract, and we granted both petitions, though we
declined to review the propriety of the bargaining unit, a question
which was presented in No. 71-198. 404 U.S. 822 (1971).
II
We address first Burns' alleged duty to bargain with the union,
and, in doing so, it is well to return to the specific provisions
of the Act, which courts and the Board alike are bound to observe.
Section 8(a)(5), as amended by the Labor Management Relations Act,
1947, 29 U.S.C. § 158(a)(5), makes it an unfair labor practice for
an employer "to refuse to bargain collectively with the
representatives of his employees, subject to the provisions of
section 159(a) of this title." Section 159(a) provides that
"[r]epresentatives designated or selected for the purposes of
collective bargaining by the majority of the employees in a unit
appropriate for such purposes, shall be the exclusive
representatives of all the employees in such unit for the purposes
of collective bargaining. . . ."
Because the Act itself imposes a duty to bargain with the
representative of a majority of the employees in an appropriate
unit, the initial issue before the Board was whether the charging
union was such a bargaining representative.
The trial examiner first found that the unit designated by the
regional director was an appropriate unit for bargaining. The unit
found appropriate was defined as
"[a]ll full-time and regular part-time employees of
Page 406 U. S. 278
[Burns] performing plant protection duties as determined in
Section 9(b)(3) of the [National Labor Relations] Act at Lockheed,
Ontario International Airport, excluding office clerical employees,
professional employees, supervisors, and all other employees as
defined in the Act."
This determination was affirmed by the Board, accepted by the
Court of Appeals, and is not at issue here, because pretermitted by
our limited grant of certiorari.
The trial examiner then found,
inter alia, that Burns
"had in its employ a majority of Wackenhut's former employees," and
that these employees had already expressed their choice of a
bargaining representative in an election held a short time before.
Burns was therefore held to have a duty to bargain, which arose
when it selected as its workforce the employees of the previous
employer to perform the same tasks at the same place they had
worked in the past.
The Board, without revision, accepted the trial examiner's
findings and conclusions with respect to the duty to bargain, and
we see no basis for setting them aside. In an election held but a
few months before, the union had been designated bargaining agent
for the employees in the unit, and a majority of these employees
had been hired by Burns for work in the identical unit. It is
undisputed that Burns knew all the relevant facts in this regard,
and was aware of the certification and of the existence of a
collective bargaining contract. In these circumstances, it was not
unreasonable for the Board to conclude that the union certified to
represent all employees in the unit still represented a majority of
the employees, and that Burns could not reasonably have entertained
a good faith doubt about that fact. Burns' obligation to bargain
with the union over terms and conditions of employment stemmed from
its hiring of Wackenhut's employees and from the recent election
and
Page 406 U. S. 279
Board certification. It has been consistently held that a mere
change of employers or of ownership in the employing industry is
not such an "unusual circumstance" as to affect the force of the
Board's certification within the normal operative period if a
majority of employees after the change of ownership or management
were employed by the preceding employer.
NLRB v. Downtown
Bakery Corp., 330 F.2d 921, 925 (CA6 1964);
NLRB v.
McFarland, 306 F.2d 219, 221 (CA10 1962);
NLRB v. Auto
Ventshade, Inc., 276 F.2d 303, 307 (CA5 1960);
NLRB v.
Lunder Shoe Corp., 211 F.2d 284, 286 (CA1 1954);
NLRB v.
Armato, 199 F.2d 800, 803 (CA7 1952);
South Carolina
Granite Co., 58 N.L.R.B. 1448, 1463-1464 (1944),
enforced
sub nom. NLRB v. Blair Quarries, Inc., 152 F.2d 25 (CA4 1945);
Northwest Glove Co., 74 N.L.R.B. 1697, 1700 (1947);
Johnson Ready Mix Co., 142 N.L.R.B. 437, 442 (1963).
[
Footnote 3]
It goes without saying, of course, that Burns was not entitled
to upset what it should have accepted as an established union
majority by soliciting representation
Page 406 U. S. 280
cards for another union, and thereby committing the unfair labor
practice of which it was found guilty by the Board. That holding
was not challenged here, and makes it imperative that the situation
be viewed as it was when Burns hired its employees for the guard
unit, a majority of whom were represented by a Board-certified
union.
See NLRB v. Gissel Packing Co., 395 U.
S. 575,
395 U. S. 609,
395 U. S.
610-616 (1969).
It would be a wholly different case if the Board had determined
that, because Burns' operational structure and practices differed
from those of Wackenhut, the Lockheed bargaining unit was no longer
an appropriate one. [
Footnote
4] Likewise, it would be different if Burns had not hired
employees already represented by a union certified as a bargaining
agent, [
Footnote 5] and the
Board recognized as
Page 406 U. S. 281
much at oral argument. [
Footnote
6] But where the bargaining unit remains unchanged and a
majority of the employees hired by the new employer are represented
by a recently certified bargaining agent, there is little basis for
faulting the Board's implementation of the express mandates of §
8(a)(5) and § 9(a) by ordering the employer to bargain with the
incumbent union. This is the view of several courts of appeals, and
we agree with those courts.
NLRB v. Zayre Corp., 424 F.2d
1159, 1162 (CA5 1970);
Tom-A-Hawk Transit, Inc. v. NLRB,
419 F.2d 1025, 1026-1027 (CA7 1969);
S.S. Kresge Co. v.
NLRB, 416 F.2d 1225, 1234 (CA6 1969);
NLRB v.
McFarland, 306 F.2d at 220.
III
It does not follow, however, from Burns' duty to bargain that it
was bound to observe the substantive terms
Page 406 U. S. 282
of the collective bargaining contract the union had negotiated
with Wackenhut, and to which Burns had in no way agreed. Section
8(d) of the Act expressly provides that the existence of such
bargaining obligation "does not compel either party to agree to a
proposal or require the making of a concession." Congress has
consistently declined to interfere with free collective bargaining,
[
Footnote 7] and has preferred
that device, or voluntary arbitration, to the imposition of
compulsory terms as a means of avoiding or terminating labor
disputes. In its report accompanying the 1935 Act, the Senate
Committee on Education and Labor stated:
"The committee wishes to dispel any possible false impression
that this bill is designed to compel the making of agreements or to
permit governmental supervision of their terms. It must be stressed
that the duty to bargain collectively does not carry with it the
duty to reach an agreement, because the essence of collective
bargaining is that either party shall be free to decide whether
proposals made to it are satisfactory."
S.Rep. No. 573, 74th Cong., 1st Sess., 12 (1935). This Court
immediately noted this fundamental theme of the legislation:
"[The Act] does not compel any agreement whatever. . . . The
theory of the Act is that free opportunity for negotiation with
accredited representatives of employees is likely to promote
industrial peace, and may bring about the adjustments and
agreements
Page 406 U. S. 283
which the Act, in itself, does not attempt to compel."
NLRB v. Jones & Laughlin Steel Corp., 301 U. S.
1,
301 U. S. 45
(1937).
See also NLRB v. American National Insurance Co.,
343 U. S. 395,
343 U. S.
401-402 (1952);
Teamsters Local 367 v. NLRB,
365 U. S. 667,
365 U. S.
676-677 (1961).
Section 8(d), 29 U.S.C. § 158(d), made this policy an express
statutory mandate, and was enacted in 1947 because Congress feared
that
"the present Board has gone very far, in the guise of
determining whether or not employers had bargained in good faith,
in setting itself up as the judge of what concessions an employer
must make and of the proposals and counter-proposals that he may or
may not make. . . . [U]nless Congress writes into the law guides
for the Board to follow, the Board may attempt to carry this
process still further and seek to control more and more the terms
of collective bargaining agreements."
H.R.Rep. No. 245, 80th Cong., 1st Sess., 19-20 (1947).
This history was reviewed in detail and given controlling effect
in
H. K. Porter Co. v. NLRB, 397 U. S.
99 (1970). There, this Court, while agreeing that the
employer violated § 8(a)(5) by adamantly refusing to agree to a
dues check-off, intending thereby to frustrate the consummation of
any bargaining agreement, held that the Board had erred in ordering
the employer to agree to such a provision:
"[W]hile the Board does have power . . . to require employers
and employees to negotiate, it is without power to compel a company
or a union to agree to any substantive contractual provision of a
collective bargaining agreement."
"
* * * *"
"It would be anomalous indeed to hold that, while § 8(d)
prohibits the Board from relying on a refusal to agree as the sole
evidence of bad faith bargaining, the Act permits the Board to
compel
Page 406 U. S. 284
agreement in that same dispute. The Board's remedial powers
under § 10 of the Act are broad, but they are limited to carrying
out the policies of the Act itself. One of these fundamental
policies is freedom of contract."
397 U.S. at
397 U. S. 102,
397 U. S. 108
(citations omitted).
These considerations, evident from the explicit language and
legislative history of the labor laws, underlay the Board's prior
decisions, which, until now, have consistently held that, although
successor employers may be bound to recognize and bargain with the
union, they are not bound by the substantive provisions of a
collective bargaining contract negotiated by their predecessors but
not agreed to or assumed by them.
Rohlik, Inc., 145
N.L.R.B. 1236, 1242 n. 15 (1964);
General Extrusion Co.,
121 N.L.R.B. 1165, 1168 (1958);
Jolly Giant Lumber Co.,
114 N.L.R.B. 413, 414 (1955);
Slater System Maryland,
Inc., 134 N.L.R.B. 865, 866 (1961);
Matter of ILWU (Juneau
Spruce), 82 N.L.R.B. 650, 658-659 (1949),
enforced,
189 F.2d 177 (CA9 1951),
aff'd on other grounds,
342 U. S. 237
(1952). As the Court of Appeals said in this case,
"In none of the previous successorship cases has the Board ever
reached that result. The successor has always been held merely to
have the duty of bargaining with his predecessor's union. [
Footnote 8]"
441 F.2d at 915.
Page 406 U. S. 285
The Board, however, has now departed from this view, and argues
that the same policies that mandate a continuity of bargaining
obligation also require that successor employers be bound to the
terms of a predecessor's collective bargaining contract. It asserts
that the stability of labor relations will be jeopardized, and that
employees will face uncertainty, and a gap in the bargained-for
terms and conditions of employment, as well as the possible loss of
advantages gained by prior negotiations, unless the new employer is
held to have assumed, as a matter of federal labor law, the
obligations under the contract entered into by the former employer.
Recognizing that, under normal contract principles, a party would
not be bound to a contract in the absence of consent, the Board
notes that, in
John Wiley & Sons, Inc. v. Livingston,
376 U. S. 543,
376 U. S. 550
(1964), the Court declared that "a collective bargaining agreement
is not an ordinary contract," but is, rather, an outline of the
common law of a particular plant or industry. The Court held in
Wiley that, although the predecessor employer which had
signed a collective bargaining contract with the union had
disappeared by merger with the successor, the union could compel
the successor to arbitrate the extent to which the successor was
obligated under the collective bargaining agreement. The Board
contends that the same factors that the Court emphasized in
Wiley, the peaceful settlement of industrial conflicts and
"protection [of] the employees [against] a sudden change in the
employment relationship,"
id. at
376 U. S. 549,
require that Burns be treated under the collective bargaining
contract exactly as Wackenhut would have been if it had continued
protecting the Lockheed plant.
We do not find
Wiley controlling in the circumstances
here.
Wiley arose in the context of a § 301 suit to compel
arbitration, not in the context of an unfair labor practice
proceeding, where the Board is expressly limited by the provisions
of § 8(d). That
Page 406 U. S. 286
decision emphasized "[t]he preference of national labor policy
for arbitration as a substitute for tests of strength before
contending forces," and held only that the agreement to arbitrate,
"construed in the context of a national labor policy," survived the
merger, and left to the arbitrator, subject to judicial review, the
ultimate question of the extent to which, if any, the surviving
company was bound by other provisions of the contract.
Id.
at
376 U. S. 549,
376 U. S.
551.
Wiley's limited accommodation between the legislative
endorsement of freedom of contract and the judicial preference for
peaceful arbitral settlement of labor disputes does not warrant the
Board's holding that the employer commits an unfair labor practice
unless he honors the substantive terms of the preexisting contract.
The present case does not involve a § 301 suit, nor does it involve
the duty to arbitrate. Rather, the claim is that Burns must be held
bound by the contract executed by Wackenhut, whether Burns has
agreed to it or not and even though Burns made it perfectly clear
that it had no intention of assuming that contract.
Wiley
suggests no such open-ended obligation. Its narrower holding dealt
with a merger occurring against a background of state law that
embodied the general rule that, in merger situations, the surviving
corporation is liable for the obligations of the disappearing
corporation.
See N.Y. Stock Corp. Law § 90 (1951); 15 W.
Fletcher, Private Corporations § 7121 (191 rev. ed.). Here, there
was no merger or sale of assets, and there were no dealings
whatsoever between Wackenhut and Burns. On the contrary, they were
competitors for the same work, each bidding for the service
contract at Lockheed. Burns purchased nothing from Wackenhut, and
became liable for none of its financial obligations. Burns merely
hired enough of Wackenhut's employees to require it to bargain with
the union as commanded by § 8(a)(5) and § 9(a).
Page 406 U. S. 287
But this consideration is a wholly insufficient basis for
implying either in fact, or in law that Burns had agreed, or must
be held to have agreed, to honor Wackenhut's collective bargaining
contract.
We agree with the Court of Appeals that the Board failed to heed
the admonitions of the
H. K. Porter case. Preventing
industrial strife is an important aim of federal labor legislation,
but Congress has not chosen to make the bargaining freedom of
employers and unions totally subordinate to this goal. When a
bargaining impasse is reached, strikes and lockouts may occur. This
bargaining freedom means both that parties need not make any
concessions as a result of Government compulsion and that they are
free from having contract provisions imposed upon them against
their will. Here, Burns had notice of the existence of the
Wackenhut collective bargaining contract, but it did not consent to
be bound by it. The source of its duty to bargain with the union is
not the collective bargaining contract, but the fact that it
voluntarily took over a bargaining unit that was largely intact,
and that had been certified within the past year. Nothing in its
actions, however, indicated that Burns was assuming the obligations
of the contract, and
"allowing the Board to compel agreement when the parties
themselves are unable to agree would violate the fundamental
premise on which the Act is based -- private bargaining under
governmental supervision of the procedure alone, without any
official compulsion over the actual terms of the contract."
H. K. Porter Co. v. NLRB, 397 U.S. at
397 U. S.
108.
We also agree with the Court of Appeals that holding either the
union or the new employer bound to the substantive terms of an old
collective bargaining contract may result in serious inequities. A
potential employer may be willing to take over a moribund business
only if he can make changes in corporate structure, composition
Page 406 U. S. 288
of the labor force, work location, task assignment, and nature
of supervision. Saddling such an employer with the terms and
conditions of employment contained in the old collective bargaining
contract may make these changes impossible, and may discourage and
inhibit the transfer of capital. On the other hand, a union may
have made concessions to a small or failing employer that it would
be unwilling to make to a large or economically successful firm.
The congressional policy manifest in the Act is to enable the
parties to negotiate for any protection either deems appropriate,
but to allow the balance of bargaining advantage to be set by
economic power realities. Strife is bound to occur if the
concessions that must be honored do not correspond to the relative
economic strength of the parties.
The Board's position would also raise new problems, for the
successor employer would be circumscribed in exactly the same way
as the predecessor under the collective bargaining contract. It
would seemingly follow that employees of the predecessor would be
deemed employees of the successor, dischargeable only in accordance
with provisions of the contract and subject to the grievance and
arbitration provisions thereof. [
Footnote 9] Burns would not have been free to replace
Wackenhut's guards with its own except as the contract permitted.
Given the continuity of employment relationship, the
preexisting
Page 406 U. S. 289
contract's provisions with respect to wages, seniority rights,
vacation privileges, pension and retirement fund benefits, job
security provisions, work assignments, and the like would devolve
on the successor. Nor would the union commit a § 8(b)(3) unfair
labor practice if it refused to bargain for a modification of the
agreement effective prior to the expiration date of the agreement.
[
Footnote 10] A successor
employer might also be deemed to have
Page 406 U. S. 290
inherited it predecessor's preexisting contractual obligations
to the union that had accrued under past contracts and that had not
been discharged when the business was transferred. "[A] successor
ay well acquire more liabilities as a result of Burn than appear on
the face of a contract." [
Footnote 11] Finally, a successor will be bound to
observe the contract despite good faith doubts about the union's
majority during the time that the contract is a bar to another
representation election,
Ranch-Way, Inc., 183 N.L.R.B. No.
116 (1970). [
Footnote 12]
For the above reasons, the Board itself has expressed doubt as to
the general applicability of its Burns rule. [
Footnote 13]
Page 406 U. S. 291
In many cases, of course, successor employers will find it
advantageous not only to recognize and bargain with the union but
also to observe the preexisting contract, rather than to face
uncertainty and turmoil. Also, in a variety of circumstances
involving a merger, stock acquisition, reorganization, or assets
purchase, the Board might properly find as a matter of fact that
the successor had assumed the obligations under the old contract.
Cf. Oilfield Maintenance Co., 142 N.L.R.B. 1384 (1963).
Such a duty does not, however, ensue as a matter of law from the
mere fact than an employer is doing the same work in the same place
with the same employees as his predecessor, as the Board had
recognized until its decision in the instant case.
See
cases cited
supra at
406 U. S. 284.
We accordingly set aside the Board's finding of a § 8(a)(5) unfair
labor practice insofar as it rested on a conclusion that Burns was
required to, but did not, honor the collective bargaining contract
executed by Wackenhut.
Page 406 U. S. 292
IV
It therefore follows that the Board's order requiring Burns
to
"give retroactive effect to all the clauses of said [Wackenhut]
contract and, with interest of 6 percent, make whole its employees
for any losses suffered by reason of Respondent's [Burns'] refusal
to honor, adopt and enforce said contract"
must be set aside. [
Footnote
14] We
Page 406 U. S. 293
note that the regional director's charge instituting this case
asserted that,
"[o]n or about July 1, 1967, Respondent [Burns] unilaterally
changed existing wage rates, hours of employment, overtime wage
rates, differentials for swing shift and graveyard shift, and other
terms and condition of employment of the employees in the
appropriate unit . . . ,"
App. 113, and that the Board's opinion stated that
"[t]he obligation to bargain imposed on a successor employer
includes the negative injunction to refrain from unilaterally
changing wages and other benefits established by a prior collective
bargaining agreement even though that agreement had expired. In
this respect, the successor employer's obligations are the same as
those imposed upon employers generally during the period between
collective bargaining agreements."
App. 8-9. This statement by the Board is consistent with its
prior and subsequent cases that hold that, whether or not a
successor employer is bound by its predecessor's contract, it must
not institute terms and conditions of employment different from
those provided in its predecessor's contract, at least without
first bargaining with the employees' representative.
Overnite
Transportation Co., 157 N.L.R.B. 1185 (1966),
enforced sub
nom. Overnite Transportation Co. v. NLRB, 372 F.2d 765 (CA4),
cert. denied, 389 U.S. 838 (1967);
Valleydale Packers,
Inc., 162 N.L.R.B. 1486 (1967),
enforced sub
Page 406 U. S. 294
nom. NLRB v. Valleydale Packers, Inc., 402 F.2d 768
(CA5 1968);
Michaud Bus Lines, Inc., 171 N.L.R.B.193
(1968);
Emerald Maintenance, Inc., 188 N.L.R.B. No. 139
(1971). Thus, if Burns, without bargaining to impasse with the
union, had paid its employees on and after July 1 at a rate lower
than Wackenhut had paid under its contract, or otherwise provided
terms and conditions of employment different from those provided in
the Wackenhut collective bargaining agreement, under the Board's
view, Burns would have committed a § 8(a)(5) unfair labor practice,
and would have been subject to an order to restore to employees
what they had lost by this so-called unilateral change.
See
Overnite Transportation Co., supra; Emerald Maintenance, Inc.,
supra. 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, this case is not like a § 8(a)(5)
violation where an employer unilaterally changes a condition of
employment without consulting a bargaining representative. It is
difficult to understand how Burns could be said to have changed
unilaterally any preexisting term or condition of employment
without bargaining when it had no previous relationship whatsoever
to the bargaining unit and, prior to July 1, no outstanding terms
and conditions of employment from which a change could be inferred.
The terms on which Burns hired employees for service after July 1
may have differed from the terms extended by Wackenhut and required
by the collective bargaining contract, but it does not follow that
Burns changed its terms and conditions of employment when it
specified the initial basis on which employees were hired on July
1. 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
Page 406 U. S. 295
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. In other situations, however, it may not be
clear until the successor employer has hired his full complement of
employees that he has a duty to bargain with a union, since it will
not be evident until then that the bargaining representative
represents a majority of the employees in the unit, as required by
§ 9(a) of the Act, 29 U.S.C. § 159(a). Here, for example, Burns'
obligation to bargain with the union did not mature until it had
selected its force of guards late in June. The Board quite properly
found that Burns refused to bargain on July 12, when it rejected
the overtures of the union. It is true that the wages it paid when
it began protecting the Lockheed plant on July 1 differed from
those specified in the Wackenhut collective bargaining agreement,
but there is no evidence that Burns ever unilaterally 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. If the union had made a request to bargain after
Burns had completed its hiring, and if Burns had negotiated in good
faith and had made offers to the union which the union rejected,
Burns could have unilaterally initiated such proposals as the
opening terms and conditions of employment on July 1 without
committing an unfair labor practice.
Cf. ~ NLRB v. Katz,
369 U. S. 736,
369 U. S. 745
n. 12 (1962);
NLRB v. Fitzgerald Mills Corp., 313 F.2d
260, 272-273 (CA2)
cert. denied, 375 U.S. 834 (1963);
NLRB v. Southern Coach & Body Co., 336 F.2d 214, 217
(CA5 1964). The Board's order requiring Burns to make whole its
employees for any losses suffered by reason of Burns' refusal to
honor and enforce the contract, cannot, therefore,
Page 406 U. S. 296
be sustained on the ground that Burns unilaterally changed
existing terms and conditions of employment, thereby committing an
unfair labor practice which required monetary restitution in these
circumstances.
Affirmed.
* Together with No. 71-198,
Burns International Security
Services, Inc. v. National Labor Relations Board et al., also
on certiorari to the same court.
[
Footnote 1]
A Burns executive later admitted in the unfair labor practice
proceeding that Burns was aware of the union's status, the unit
certification, and the collective bargaining contract after the May
15 meeting. App. 105.
[
Footnote 2]
In regard to this latter finding, the Board stated:
"The question before us thus narrows to whether the national
labor policy embodied in the Act requires the successor employer to
take over and honor a collective bargaining agreement negotiated on
behalf of the employing enterprise by the predecessor. We hold
that, absent unusual circumstances, the Act imposes such an
obligation."
"
* * * *"
"We find, therefore, that Burns is bound to that contract as if
it were a signatory thereto, and that its failure to maintain the
contract in effect is violative of Sections 8(d) and 8(a)(5) of the
Act."
[
Footnote 3]
Cf. § 9(c)(3) of the NLRA, 29 U.S.C. § 159(c)(3), which
provides that
"[n]o election shall be directed in any bargaining unit or any
subdivision within which in the preceding twelve-month period, a
valid election shall have been held."
See NLRB v. Gissel Packing Co., 395 U.
S. 575,
395 U. S. 599
n. 14 (1969).
Where an employer remains the same, a Board certification
carries with it an almost conclusive presumption that the majority
representative status of the union continues for a reasonable time,
usually a year.
See Brooks v. NLRB, 348 U. S.
96,
348 U. S. 98-99
(1954). After this period, there is a rebuttable presumption of
majority representation.
Celanese Corp. of America, 95
N.L.R.B. 664, 672 (1951). If there is a change of employers,
however, and an almost complete turnover of employees, the
certification may not bar a challenge if the successor employer is
not bound by the collective bargaining contract, particularly if
the new employees are represented by another union or if the old
unit is ruled an accretion to another unit.
Cf. McGuire v.
Humble Oil & Refining Co., 355 F.2d 352 (CA2),
cert.
denied, 384 U.S. 988 (1966).
See n5,
infra.
[
Footnote 4]
The Court of Appeals was unimpressed with the asserted
differences between Burns' and Wackenhut's operations:
"All of the important factors which the Board has used and the
courts have approved are present in the instant case: 'continuation
of the same types of product lines, departmental organization,
employee identity and job functions.' . . . Both Burns and
Wackenhut are nationwide organizations; both performed the
identical services at the same facility; although Burns used its
own supervisors, their functions and responsibilities were similar
to those performed by their predecessors; and finally, and perhaps
most significantly, Burns commenced performance of the contract
with 27 former Wackenhut employees out of its total complement of
42."
441 F.2d 911, 915 (1971) (citation omitted). Although the labor
policies of the two companies differed somewhat, the Board's
determination that the bargaining unit remained appropriate after
the changeover meant that Burns would face essentially the same
labor relations environment as Wackenhut: it would confront the
same union representing most of the same employees in the same
unit.
[
Footnote 5]
The Board has never held that the National Labor Relations Act
itself requires that an employer who submits the winning bid for a
service contract or who purchases the assets of a business be
obligated to hire all of the employees of the predecessor though it
is possible that such an obligation might be assumed by the
employer.
But cf. Chemrock Corp., 151 N.L.R.B. 1074
(1965). However, an employer who declines to hire employees solely
because they are members of a union commits a § 8(a)(3) unfair
labor practice.
See K.B. & J. Young's Super Markets, Inc.
v. NLRB, 377 F.2d 463 (CA9),
cert. denied, 389 U.S.
841 (1967);
NLRB v. New England Tank Industries, Inc., 302
F.2d 273 (CA1),
cert. denied, 371 U.S. 875 (1962);
Piasecki Aircraft Corp. v. NLRB, 280 F.2d 575 (CA3 1960),
cert. denied, 364 U.S. 933 (1961);
Tri-State
Maintenance Corp., 167 N.L.R.B. 933 (1967),
enforced with
mod. sub nom. Tri-State Maintenance Corp. v. NLRB, 132
U.S.App.D.C. 368, 408 F.2d 171 (1968). Further restrictions on the
successor employer's choice of employees would seem to follow from
the Board's instant decision that the employer must honor the
preexisting collective bargaining contract.
See infra at
406 U. S.
288-290.
[
Footnote 6]
"Q. But [counsel for the Union], when he argued, said that, even
if [Burns] hadn't taken over any [employees of Wackenhut], even if
they hadn't taken over a single employee, the legal situation would
be the same."
"Mr. Come [for the NLRB]. We do not go that far. We don't think
that you have to go that far in --"
"Q. Do you think it has to be a majority?"
"Mr. Come. I wouldn't say that it has to be a majority; I think
it has to be a substantial number. It has to be enough to give you
a continuity of employment conditions in the bargaining unit."
Tr. of Oral Arg. 64-65.
[
Footnote 7]
Two exceptions to this general reluctance to interfere with free
collective bargaining are the imposition of compulsory arbitration
during wartime, Exec.Order No. 9017 (1942), and, on occasion, in
the railroad industry, 77 Stat. 132, 81 Stat. 122. Congress has
consistently rejected compulsory arbitration even as a remedy for
"national emergency" disputes, however.
See Goldberg, The
Labor Law Obligations of a Successor Employer, 63 Nw.U.L.Rev. 735,
742-743 (1969).
[
Footnote 8]
When the union that has signed a collective bargaining contract
is decertified, the succeeding union certified by the Board is not
bound by the prior contract, need not administer it, and may demand
negotiations for a new contract, even if the terms of the old
contract have not yet expired.
American Seating Co., 106
N.L.R.B. 250 (1953);
Farmbest, Inc., 154 N.L.R.B. 1421,
1453-1454 (1965),
enf. with mod. sub nom. Farmbest, Inc. v.
NLRB, 370 F.2d 1015 (CA8 1967);
see also Modine Mfg. Co.
v. International Association of Machinists, 216 F.2d 326 (CA6
1954). The Board has declined to overturn its "longstanding"
American Seating rule after
Burns. General
Dynamics Corp., 184 N.L.R.B. No. 71 (1970).
[
Footnote 9]
The vast majority of collective bargaining agreements specify
the procedures to be used in choosing employees for available jobs,
and approximately 92% of all such contract place some limitations
on the right to discharge. Collective Bargaining Negotiations and
Contracts §§ 40:1, 60:11 (BNA 1971). Under the Board's theory, if a
successor refused to hire or fired any of the predecessor's
employees without going through applicable grievance procedures, it
might be guilty of a § 8(a)(5) refusal to bargain.
See NLRB v.
Strong, 393 U. S. 357,
393 U. S. 359
(1969);
NLRB v. Hutti Sash & Door Co., 377 F.2d 964,
968-969 (CA8 1967).
[
Footnote 10]
Section 8(d) of the Act provides, in part:
"[W]here there is in effect a collective bargaining contract
covering employees in an industry affecting commerce, the duty to
bargain collectively shall also mean that no party to such contract
shall terminate or modify such contract, unless the party desiring
such termination or modification --"
"(1) serves a written notice upon the other party to the
contract of the proposed termination or modification sixty days
prior to the expiration date thereof, or in the event such contract
contains no expiration date, sixty days prior to the time it is
proposed to make such termination or modification;"
"(2) offers to meet and confer with the other party for the
purpose of negotiating a new contract or a contract containing the
proposed modifications;"
"(3) notifies the Federal Mediation and Conciliation Service
within thirty days after such notice of the existence of a dispute,
and simultaneously therewith notifies any State or Territorial
agency established to mediate and conciliate disputes within the
State or Territory where the dispute occurred, provided no
agreement has been reached by that time; and"
"(4) continues in full force and effect, without resorting to
strike or lock-out, all the terms and conditions of the existing
contract for a period of sixty days after such notice is given or
until the expiration date of such contract, whichever occurs
later:"
"The duties imposed upon employers, employees, and labor
organizations by paragraphs (2)-(4) of this subsection . . . shall
not be construed as requiring either party to discuss or agree to
any modification of the terms and conditions contained in a
contract for a fixed period, if such modification is to become
effective before such terms and conditions can be reopened under
the provisions of the contract."
29 U.S.C. § 158(d).
[
Footnote 11]
Doppelt, Successor Compagnies: The NLRB Limits the Options --
and Raises Some Problems, 20 DePaul L.Rev. 176, 191 (1971).
[
Footnote 12]
The Board imposes this contract-bar rule for the term of a
collective bargaining of "reasonable duration," a period the Board
now defines as three years.
General Cable Corp., 139
N.L.R.B. 1123 (1962). Also during this time, an employer cannot use
doubt about a union's majority as a defense to a "refusal to
bargain" charge.
Oilfield Maintenance Co., 142 N.L.R.B.
1384, 1387 (1963);
Hexton Furniture Co., 111 N.L.R.B. 342
(1955). Prior to
Burns, the Board had held that a
successor was barred by the contract of the predecessor from
requesting a representation election during the term of the
contract only if it had assumed the contract.
Jolly Giant
Lumber Co., 114 N.L.R.B. 413 (1955);
General Extrusion
Co., 121 N.L.R.B. 1 165 (1958);
MV Dominator, 162
N.L.R.B. 1514 (1967). Moreover, such assumption had to be by an
express written agreement.
American Concrete Pipe of Hawaii,
Inc., 128 N.L.R.B. 720 (1960). The Board had also permitted a
non-assuming successor to raise a good faith doubt as to the
union's majority as a defense to a "refusal to bargain" charge
during the term of the old contract.
Randolph Rubber Co.,
152 N.L.R.B. 496 (1965);
Mitchell Standard Corp., 140
N.L.R.B. 496 (1963).
[
Footnote 13]
Emerald Maintenance, Inc., 188 N.L.R.B. No. 139 (1971).
Emerald involved a civilian contractor who undertook to
provide certain maintenance services at an Air Force base. During
the preceding year, the same services had been performed by two
other companies whose employees were represented by a union that
had negotiated collective bargaining agreements that had not yet
expired. The employer performed the work with substantially the
same employee complement as had its predecessors. The Board held
that the employer had a duty to recognize and bargain with the
union, but could not agree with the trial examiner that the
employer was bound by the provisions of the contract, emphasizing
in this respect the impact of the Service Contract Act of 1965, 79
Stat. 1034. The case was considered as presenting unusual
circumstances justifying an exception to the
Burns rule;
the Board noted that
"[t]his case suggests the hazards of enforcing the contracts of
one employer against a successor where annual rebidding normally
produces annual changes in contractor identity. These circumstances
might encourage less arm's-length collective bargaining whenever
the employer had reason to expect that it would not be awarded the
next succeeding annual service contract."
An
amicus strongly contends that the
Emerald
rule is inconsistent with
Burns, and is based on a
misreading of the legislative history of the Service Contract Act
of 1965. Brief for AFL-CIO as
Amicus Curiae 23 n. 2
[
Footnote 14]
In its entirety, the Board's order required Burns to:
"1. Cease and desist from: "
"(a) Refusing to bargain collectively, upon request, with the
Union as the exclusive bargaining representative of its employees
in the above-described unit."
"(b) Refusing to adopt, honor and enforce its contract with the
Union, as successor of Wackenhut."
"(c) Assisting or recognizing AFG as the representative of its
employees for the purposes of collective bargaining, unless and
until said labor organization shall have been certified as the
exclusive bargaining representative of said employees in an
appropriate unit."
"(d) Interfering with representation of its employees through
labor organizations of their own choosing."
"(e) In any like or related manner interfering with,
restraining, or coercing its employees in the exercise of their
rights to join or assist the Union or otherwise engage in
activities protected by the Act."
"2. Take the following affirmative action which is necessary to
effectuate the policies of the Act: "
"(a) Withdraw and withhold recognition from AFG until or unless
it is certified as bargaining representative of Respondent's
employees in an appropriate unit."
"(b) Bargain collectively, upon request, with the Union and, if
any understanding is reached, embody such understanding in a signed
agreement."
"(c) Honor, adopt and enforce the contract between Respondent,
as successor to Wackenhut, and the Union and give retroactive
effect to all the clauses of said contract and, with interest of 6
percent, make whole its employees for any losses suffered by reason
of Respondent's refusal to honor, adopt and enforce said
contract."
"(d) Post at its Lockheed, Ontario, California, operations
copies of the notice attached hereto as 'Appendix.' Copies of said
notice, to be furnished by the Regional Director for Region 31,
shall after being signed by Respondent's authorized representative,
be posted by it immediately upon receipt thereof and be maintained
by it for a period of 60 consecutive days in conspicuous places,
including all places where notices to employees are customarily
posted. Reasonable steps shall be taken to insure that such notices
are not altered, defaced or covered by any other material."
"(e) Notify said Regional Director, in writing, within 20 days
from the date of the receipt of this Recommended Order what steps
Respondent has taken to comply herewith."
MR. JUSTICE REHNQUIST, with whom THE CHIEF JUSTICE, MR. JUSTICE
BRENNAN, and MR. JUSTICE POWELL join, concurring in No. 71-123 and
dissenting in No. 71-198.
Although the Court studiously avoids using the term
"successorship" in concluding that Burns did have a statutory
obligation to bargain with the union, it affirms the conclusions of
the Board and the Court of Appeals to that effect which were based
entirely on the successorship doctrine. Because I believe that the
Board and the Court of Appeals stretched that concept beyond the
limits of its proper application, I would enforce neither the
Board's bargaining order nor its order imposing upon Burns the
terms of the contract between the union and Wackenhut. I therefore
concur in No. 71-123, and dissent in No. 71-198.
The National Labor Relations Act imposes upon an employer the
obligation "to . . . bargain collectively with the representatives
of his employees. . . ." 29 U.S.C. § 158(a)(5). It also defines
those representatives, in § 159(a), as
"[r]epresentatives designated or selected for the purposes of
collective bargaining by the majority of the employees in a unit
appropriate for such purposes. . . ."
The union must establish its status as a majority representative
either by one of the methods discussed in
NLRB v. Gissel
Packing Co., 395 U. S. 575
(1969), or because its certification as a representative of the
employees of another employer binds Burns as a "successor."
Page 406 U. S. 297
The Court concludes that, because the trial examiner and the
Board found the Lockheed facility to be an appropriate bargaining
unit for Burns' employees, and because Burns hired a majority of
Wackenhut's previous employees who had worked at that facility,
Burns should have bargained with the union, even though the union
never made any showing to Burns of majority representation. There
is more than one difficulty with this analysis.
First, it is by no means mathematically demonstrable that the
union was the choice of a majority of the 42 employees with which
Burns began the performance of its contract with Lockheed. True, 27
of the 42 had been represented by the union when they were
employees of Wackenhut, but there is nothing in the record before
us to indicate that all 27 of these employees chose the union as
their bargaining agent even at the time of negotiations with
Wackenhut. There is obviously no evidence whatever that the
remaining 15 employees of Burns, who had never been employed by
Wackenhut, had ever expressed their views one way or the other
about the union as a bargaining representative. It may be that, if
asked, all would have designated the union. But they were never
asked. Instead, the trial examiner concluded that, because Burns
was a "successor" employer to Wackenhut, it was obligated, by that
fact alone, to bargain with the union.
The second problem with the Court's reasoning is that it relies
on the Board's approval of the Lockheed plant as an appropriate
unit to support its conclusion that Burns must bargain with the
union. While it is true, as the Court notes, that the trial
examiner and the Board found the Lockheed facility to be an
appropriate bargaining unit for Burns' employees, it is equally
true that the trial examiner's finding to this effect was clearly
dependent upon the previous stipulation between
Page 406 U. S. 298
Wackenhut and the union. [
Footnote
2/1] One of the reasons asserted by Burns for declining to
recognize the union was its belief that the single Lockheed
facility was not an appropriate bargaining unit. This was more than
a colorable claim. Unlike Wackenhut, Burns had never bargained with
a union consisting of its employees in a single job location. One
of the reasons for this difference was that Burns made a practice
of transferring employees from one job to another, on a temporary
or permanent basis. Both Burns and Wackenhut had numerous security
guard jobsites in Southern California; for administrative purposes,
Wackenhut treated each jobsite as a separate unit, while Burns
treated large numbers of them together.
The Court says, in effect, that the Burns employees at Lockheed
were found by the Board to be an appropriate unit; that Burns has
not expressly preserved that point for review here; and that Burns
is therefore obligated to bargain with the previously certified
union. But the major premise leading to this conclusion, the
determination of the appropriate unit, was itself established by
the Board and sustained by the Court of Appeals solely under the
doctrine of successorship. Burns is neither required to expressly
challenge the designation of the bargaining unit nor to prevail in
such a challenge in order to demonstrate the error in the
bargaining order. Burns has expressly challenged the determination
that underlay both the determination
Page 406 U. S. 299
as to bargaining unit and the bargaining order -- the finding of
successorship.
Thus, in a situation where there was no evidence at the time as
to the preference of a majority of the employees at the Lockheed
facility a to a bargaining agent, and there was no independent
finding that the employees at that facility were an appropriate
unit as to Burns, the Board nonetheless imposed the duty to
bargain. This result is sustainable, if at all, only on the theory
that Burns was a "successor" to Wackenhut. [
Footnote 2/2] The imposition of successorship in this
case is unusual, because the successor, instead of purchasing
business or asset from or merging with Wackenhut, was in direct
competition with Wackenhut for the Lockheed contract. I believe
that a careful analysis of the admittedly imprecise concept of
successorship indicates that important rights of both the employee
and the employer to independently order their own affairs are
sacrificed needlessly by the application of that doctrine to this
case.
It has been aptly observed that the doctrine of "successor"
employer in the field of labor law is "shrouded in somewhat
impressionist approaches." [
Footnote
2/3] In
John Wiley & Sons, Inc. v. Livingston,
376 U. S. 543
(1964), we employed a form of the "successor" doctrine to impose
upon an employer an obligation to arbitrate disputes under an
arbitration clause in an agreement entered into between a
predecessor employer and the bargaining representative of the
latter's employees. The doctrine has been applied by the Board and
by the courts of
Page 406 U. S. 300
appeals to impose upon the successor employer a duty to bargain
with representatives of the employees of his predecessor,
NLRB
v. Auto Ventshade, Inc., 276 F.2d 303, 304 (CA5 1960);
Makela Welding, Inc. v. NLRB, 387 F.2d 40, 46 (CA6 1967),
to support a finding of unfair labor practices from a course of
conduct engaged in by both the predecessor and the successor,
NLRB v. Blair Quarries, Inc., 152 F.2d 25 (CA4 1945), and
to require the successor to remedy unfair labor practices committed
by a predecessor employer,
United States Pipe & Foundry Co.
v. NLRB, 398 F.2d 544 (CA5 1968). The consequences of the
application of the "successor" doctrine in each of these cases has
been that the "successor" employer has been subjected to certain
burdens or obligations to which a similarly situated employer who
is not a "successor" would not be subject.
The various decisions that have applied the successor doctrine
exhibit more than one train of reasoning in support of its
application. There is authority for the proposition that it rests,
in part, at least, upon the need for continuity in industrial labor
relations, and the concomitant avoidance of industrial strife that
presumably follows from such continuity.
NLRB v. Colten,
105 F.2d 179 (CA6 1939);
Tom-A-Hawk Transit, Inc. v. NLRB,
419 F.2d 1025 (CA7 1969). On examination, however, this proposition
may more accurately be described as a statement of the result of a
finding of successorship, rather than a reason for making that
finding.
Other cases have stated the guiding principle to be whether the
"employing industry" remains essentially the same after the change
in ownership.
NLRB v. Tempest Shirt Mfg. Co., 285 F.2d 1
(CA5 1960);
NLRB v. Alamo White Truck Service, Inc., 273
F.2d 238 (CA5 1959). Under this approach, a variety of facts
relating to the "employing industry" have been examined to see
whether a sufficient number remain unchanged to warrant the
imposition of successorship. While it cannot be
Page 406 U. S. 301
doubted that a determination as to successorship will vary with
different fact situations, some general concept of the reason for
the successorship doctrine is essential in order to determine the
importance of the various factual combinations and permutations
that may or may not call for its application.
This Court's opinion in
Wiley makes it clear that one
of the bases for a finding of successorship is the need to grant
some protection to employees from a sudden transformation of their
employer's business that results in the substitution of a new legal
entity, not bound by the collective bargaining contract under
contract law, as the employer, but leaves intact significant
elements of the employer's business. The Court said there:
"The objectives of national labor policy, reflected in
established principles of federal law, require that the rightful
prerogative of owners independently to rearrange their businesses
and even eliminate themselves as employers be balanced by some
protection to the employees from a sudden change in the employment
relationship. The transition from one corporate organization to
another will, in most cases, be eased, and industrial strife
avoided, if employees' claims continue to be resolved by
arbitration, rather than by 'the relative strength . . . of the
contending forces.' . . ."
376 U.S. at
376 U. S. 549.
But other language in
Wiley makes it clear that the
considerations favoring the continuity of existing bargaining
relationships are not without their limits:
"We do not hold that, in every case in which the ownership or
corporate structure of an enterprise is changed, the duty to
arbitrate survives. As indicated above, there may be cases in which
the lack of any substantial continuity of identity in the business
enterprise before and after a change would
Page 406 U. S. 302
make a duty to arbitrate something imposed from without, not
reasonably to be found in the particular bargaining agreement and
the acts of the parties involved."
376 U.S. at
376 U. S.
551.
The conflicting implications in these portions of the opinion in
Wiley suggest that employees are indeed entitled to a
measure of protection against change in the employing entity where
the new employer continues to make use of tangible or intangible
assets used in carrying on the business of the first employer. They
also make clear that the successorship doctrine, carried to its
ultimate limits, runs counter to other equally well established
principles of labor law. Industrial peace is an important goal of
the Labor Management Relations Act. But Congress has time and again
refused to sacrifice free collective bargaining between
representatives of the employees and the employer for a system of
compulsory arbitration. [
Footnote
2/4] As the Court said in
NLRB v. Insurance Agents,
361 U. S. 477,
361 U. S. 488
(1960):
"The mainstream of cases before the Board and in the courts
reviewing its orders, under the provisions fixing the duty to
bargain collectively, is concerned
Page 406 U. S. 303
with insuring that the parties approach the bargaining table
with this attitude [good faith]. But, apart from this essential
standard of conduct, Congress intended that the parties should have
wide latitude in their negotiations, unrestricted by any
governmental power to regulate the substantive solution of their
differences."
And this Court has recently held that the Board itself may not
compel one of the parties in the collective bargaining process to
agree to any particular proposal of the other.
H. K. Porter Co.
v. NLRB, 397 U. S. 99
(1970). Conceivably, the imposition of a system of compulsory
arbitration, or the granting of authority to the Board to insist
that the parties at some point agree on particular terms of a
potential contract, would lessen the risk of industrial strife. But
Congress has plainly been unwilling to purchase industrial peace at
the price of substantial curtailment of free collective bargaining
by the freely chosen representatives of the employees with their
employer.
There is also a natural tension between the constraints imposed
on employers by the Labor Management Relations Act and the right of
those employers in competition with one another "independently to
rearrange their businesses and even eliminate themselves as
employers."
Wiley, 376 U.S. at
376 U. S. 549.
An employer's ability to compete in his market is affected, of
course, by the terms of whatever collective bargaining agreement he
negotiates with the representative of his employees. Aside from the
direct influence on price brought about by the terms of a
collective bargaining agreement, the collective bargaining process
itself presents a certain cost factor that may affect competition
between employers in the market. [
Footnote 2/5] The national commitment to collective
bargaining
Page 406 U. S. 304
embodied in the Labor Management Relations Act either requires
or permits many of these constraints. But quite reasonable
expectations of the employees in a particular collective bargaining
unit may be disappointed by a voluntary change in the condition of
the employer that is quite incapable of being remedied by any
rational application of the successorship doctrine. An employer is
free to cease doing business, even though he chooses to do so
wholly because of anti-union animus.
Textile Workers v.
Darlington Mfg. Co., 380 U. S. 263
(1965). An employer may adamantly refuse, at the expiration of the
period covered by a collective bargaining agreement, to again
consent to a particular term of the agreement that the employees
regarded as significant.
NLRB v. American National Insurance
Co., 343 U. S. 395
(1952). These examples of permissible employer conduct for which
the Labor Management Relations Act provides no remedy,
notwithstanding that the conduct results in the disappointment of
legitimate expectations of employees, suggest that the
successorship principle, like every other principle of law, has
limits beyond which it may not be expanded.
Wiley, supra, speaks in terms of a change in the
"ownership or corporate structure of an enterprise" as bringing
into play the obligation of the successor employer to perform an
obligation voluntarily undertaken by the predecessor employer. But
while the principle enunciated in
Wiley is by no means
limited to the corporate merger situation present there, it cannot
logically be extended to a mere naked shifting of a group of
employees from one employer to another without totally disregarding
the basis for the doctrine. The notion of a change in the
Page 406 U. S. 305
"ownership or corporate structure of an enterprise" connotes, at
the very least, that there is continuity in the enterprise, as well
as change; and that that continuity be at least in part on the
employer's side of the equation, rather than only on that of the
employees. If we deal with the legitimate expectations of employees
that the employer who agreed to the collective bargaining contract
perform it, we can require another employing entity to perform the
contract only when he has succeeded to some of the tangible or
intangible assets by the use of which the employees might have
expected the first employer to have performed his contract with
them.
Phrased another way, the doctrine of successorship in the
federal common law of labor relations accords to employees the same
general protection against transfer of assets by an entity against
which they have a claim as is accorded by other legal doctrines to
non-labor-related claimants against the same entity.
Non-labor-related claimants in such transfer situations may be
protected not only by assumption agreements resulting from the
self-interest of the contracting parties participating in a merger
or sale of assets, but also by state laws imposing upon the
successor corporation of any merger the obligations of the merged
corporation (
see, e.g., § 90 of the N.Y. Stock Corp.Law
(1951), cited in
Wiley, supra), and by bulk sales acts
found in numerous States. [
Footnote
2/6] These latter are designed to give the non-labor-related
creditor of the predecessor entity some claim, either as a matter
of contract right against the successor or as a matter of property
right to charge the assets that pass from the predecessor to the
successor. The implication of
Wiley is that the federal
common law of labor relations accords the same general type and
degree of protection to employees claiming under a collective
bargaining contract.
Page 406 U. S. 306
Cases from the courts of appeals have found successorship,
consistently with these principles, where the new employer
purchases a part or all of the assets of the predecessor employer,
NRLB v. Interstate 66 Corp., 453 F.2d 269 (CA6 1971);
where the entire business is purchased by the new employer,
NLRB v. McFarland, 306 F.2d 219 (CA10 1962); and where
there is merely a change in the ownership interest in a partnership
that operates the employing entity,
NLRB v. Colten, 105
F.2d 179 (CA6 1939). Other courts of appeals have, equally
consistently with these principles, refused to find successorship
where there have been no contractual dealings between the two
employers, and all that has taken place is a shift in employees.
Tri-State Maintenance Corp. v. NLRB, 132 U.S.App.D.C. 368,
408 F.2d 171 (1968);
International Assn. of Machinists v.
NLRB, 134 U.S.App.D.C. 239, 414 F.2d 1135 (1969). [
Footnote 2/7]
The rigid imposition of a prior existing labor relations
environment on a new employer whose only connection with the old
employer is the hiring of some of the latter's employees and the
performance of some of the work which was previously performed by
the latter might well tend to produce industrial peace of a sort.
But industrial peace in such a case would be produced at a
sacrifice of the determination by the Board of the appropriateness
of bargaining agents and of the wishes of the majority of the
employees which the Act was designed to preserve. These latter
principles caution us against extending successorship, under the
banner of
Page 406 U. S. 307
industrial peace, step by step, to a point where the only
connection between the two employing entities is a naked transfer
of employees. Justice Holmes, in
Hudson Water Co. v.
McCarter, 209 U. S. 349,
209 U. S. 355
(1908), summarized the general problem this way:
"All rights tend to declare themselves absolute to their logical
extreme. Yet all, in fact, are limited by the neighborhood of
principles of policy which are other than those on which the
particular right is founded, and which become strong enough to hold
their own when a certain point is reached."
Burns acquired not a single asset, tangible or intangible, by
negotiation or transfer from Wackenhut. It succeeded to the
contractual rights and duties of the plant protection service
contract with Lockheed not by reason of Wackenhut's assignment or
consent, but over Wackenhut's vigorous opposition. I think the only
permissible conclusion is that Burns is not a successor to
Wackenhut. Following its decision in this case, the Board
concluded, in
Lincoln Private Police, 189 N.L.R.B. No. 103
(1971), that an employer of guards was not a successor, saying:
"Respondent, moreover, has operated as an entirely new and
independent business enterprise. It obtained its own operating
capital, purchased new uniforms, vehicles, and equipment, and
occupied different premises than Industrial. Additionally, there is
no indication that there has been any carryover of supervisory
personnel from Industrial to Respondent."
189 N.L.R.B. at ___.
See also Tri-State Maintenance Corp. v.
NLRB, supra. To conclude that Burns was a successor to
Wackenhut in this situation, with its attendant consequences under
the Board's order imposing a duty to bargain with the
Page 406 U. S. 308
bargaining representative of Wackenhut's employees, would import
unwarranted rigidity into labor-management relations. The fortunes
of competing employers inevitably ebb and flow, and an employer who
has currently gained production orders at the expense of another
may well wish to hire employees away from that other. There is no
reason to think that the best interests of the employees, the
employers, and ultimately of the free market are not served by such
movement. Yet inherent in the expanded doctrine of successorship
that the Board urges in this case is the notion that, somehow, the
"labor relations environment" comes with the new employees if the
new employer has but obtained orders or business that previously
belonged to the old employer. The fact that the employees in the
instant case continued to perform their work at the same situs,
while not irrelevant to analysis, cannot be deemed controlling. For
the rigidity that would follow from the Board's application of
successorship to this case would not only affect competition
between Wackenhut and Burns, but would also affect Lockheed's
operations. In effect, it would be saddled, as against its
competitors, with the disadvantageous consequences of a collective
bargaining contract unduly favorable to Wackenhut's employees, even
though Lockheed' contract with Wackenhut was set to expire at a
given time. By the same token, it would be benefited, at the
expense of its competitors, as a result of a "sweetheart" contract
negotiated between Wackenhut and its employees. From the viewpoint
of the recipient of the services, dissatisfaction with the labor
relations environment may stimulate a desire for change of
contractors.
E.g., Tri-State Maintenance Corp. v. NLRB,
supra, 76 Lab.Rel.Rep. 230 (1971). Where the relation between
the first employer and the second is as attenuated
Page 406 U. S. 309
as it is here, and the reasonable expectations of the employees
equally attenuated, the application of the successorship doctrine
is not authorized by the Labor Management Relations Act.
This is not to say that Burns would be unilaterally free to mesh
into its previously recognized Los Angeles County bargaining unit a
group of employees, such as were involved here, who already have
designated a collective bargaining representative in their previous
employment. Burns' actions in this regard would be subject to the
commands of the Labor Management Relations Act, and to the
regulation of the Board under proper application of governing
principles. The situation resulting from the addition of a new
element of the component workforce of an employer has been dealt
with by the Board in numerous cases, and various factors are
weighed in order to determine whether the new workforce component
should be itself a separate bargaining unit, or whether the
employees in this component shall be "accreted" to the bargaining
unit already in existence.
See, e.g., NLRB v. Food Employers
Council, Inc., 399 F.2d 501 (CA9 1968);
Northwest
Galvanizing Co., 168 N.L.R.B. 26 (1967). Had the Board made
the appropriate factual inquiry and determinations required by the
Act, such inquiry might have justified the conclusion that Burns
was obligated to recognize and bargain with the union as a
representative of its employees at the Lockheed facility.
But the Board, instead of applying this type of analysis to the
union's complaints here, concluded that, because Burns was a
"successor," it was absolutely bound to the mold that had been
fashioned by Wackenhut and its employees at Lockheed. Burns was
thereby precluded from challenging the designation of Lockheed as
an appropriate bargaining unit for a year after the original
certification. 61 Stat. 144, 29 U.S.C. § 159(c)(3).
Page 406 U. S. 310
I am unwilling to follow the Board this far down the
successorship road, since I believe to do so would substantially
undercut the principle of free choice of bargaining representatives
by the employees and designation of the appropriate bargaining unit
by the Board that are guaranteed by the Act.
[
Footnote 2/1]
"While a broader unit might have been appropriate, I find a unit
of guards limited to a single facility as an appropriate unit.
Here, the certification was pursuant to a consent election
agreement."
Trial Examiner's decision, App. 22.
"Trial Examiner: I am not concerned with whether or not there
was a hearing. The Regional Director approved of the consent
election and stipulation, and the election having taken place, I
would find that the Regional Director's action was properly
conducted in due course. . . ."
Proceedings before the NLRB, App. 68.
[
Footnote 2/2]
The Court's emphasis,
ante at
406 U. S.
275-276, on the Board's determination that Burns
committed unfair practices by aiding the AFC cannot be taken as any
support for the bargaining order. It merely supports the cease and
desist order directing Burns to stop such practices, which has not
been challenged here by Burns.
[
Footnote 2/3]
International Assn. of Machinists v. NLRB, 134
U.S.App.D.C. 239, 243, 414 F.2d 1135, 1139 (1969) (Leventhal, J.,
concurring).
[
Footnote 2/4]
"Except in isolated instances, . . . Congress and the Supreme
Court have refused to compel, or even to allow, that form of
governmental compulsion of economic decisions which has come to be
called 'compulsory arbitration.'"
Jones, Compulsion and the Consensual in Labor Arbitration, 51
Va.L.Rev. 369 (1965).
"In dealing with the problem of the direct settlement of labor
disputes, the committee has considered a great variety of the
proposals ranging from compulsory arbitration, the establishment of
factfinding boards, creation of an over-all mediation tribunal, and
the imposition of specified waiting periods. . . . [W]e do not feel
warranted in recommending that any such plans become permanent
legislation."
S.Rep. No. 105, 80th Cong., 1st Sess., 13 (1947).
See
also the speech by Senator Taft, during debate on the
Taft-Hartley Act, 93 Cong.Rec. 3835-3836, cited in
Bus
Employees v. Wisconsin Board, 340 U.
S. 383,
340 U. S. 395
n. 21 (1951).
[
Footnote 2/5]
The General Accounting Office has recognized that bidders for a
cost-plus fee subcontract to NASA, who dealt with different unions,
could be evaluated by NASA on the basis of varying costs that
collective bargaining itself might generate. 76 Lab.Rel.Rep. 230
(1971).
[
Footnote 2/6]
Uniform Commercial Code §§ 101 to 111.
[
Footnote 2/7]
A finding of successorship has been upheld, on the other hand,
by one court of appeals where there were no contractual dealings
between the two employers and the successor employer merely
replaced the predecessor as a successful bidder for a transit
franchise.
Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025
(CA7 1969).