Pennsylvania Transformer Tech v. Nat'l Labor Relations Bd.

• Decision Date: 29 June 2001
• Docket Number: No. 00-1388,00-1388
• Citation: 254 F.3d 217
• Parties: (D.C. Cir. 2001) Pennsylvania Transformer Technology, Inc., Petitioner v. National Labor Relations Board, Respondent United Steelworkers of America, Intervenor
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 217

254 F.3d 217 (D.C. Cir. 2001)

Pennsylvania Transformer Technology, Inc., Petitioner v. National Labor Relations Board, Respondent

United Steelworkers of America, Intervenor

No. 00-1388

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 17, 2001

Decided June 29, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board

Clare M. Gallagher argued the cause for the petitioner. Patrick L. Abramowich and Brian Seth Roman were on brief for the petitioner.

Eric D. Duryea, Attorney, National Labor Relations Board, argued the cause for the respondent. Leonard R. Page, General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and Charles P. Donnelly, Attorney, National Labor Relations Board, were on brief.

David R. Jury argued the cause for the intervenor. David I. Goldman entered an appearance.

Before: Henderson, Tatel and Garland, Circuit Judges.

Opinion for the court filed by Circuit Judge Henderson.

Karen LeCraft Henderson, Circuit Judge:

The petitioner, Pennsylvania Transformer Technology, Inc. (PTTI), petitions the court for review of a decision and order of respondent National Labor Relations Board (NLRB or Board), reported at 331 N.L.R.B. No. 151 (Aug. 25, 2000). In that decision, the Board affirmed and adopted, with modifications, the decision of the Administrative Law Judge (ALJ), who held that PTTI violated section 8(a)(1) and 8(a)(5) of the National Labor Relations Act (NLRA or Act), 29 U.S.C. 158(a)(1) & (5), by refusing to recognize the United Steel Workers of America, AFL-CIO (Union) as the collective-bargaining representative of PTTI's production and maintenance employees pursuant to a recognition request made on March 30, 1998. PTTI maintains that the Board erred in determining that it was a successor to Cooper Industries, Inc. (Cooper) and that it had hired a substantial and representative complement of employees as of April 1, 1998. The Board cross-applies for enforcement. For the reasons set forth below, we deny PTTI's petition for review and grant the Board's application for enforcement.

I. Background

Beginning in 1985, Cooper owned and operated a plant in Canonsburg, Pennsylvania where it produced core electric transformers and shell form transformers. Cooper also sold spare parts to customers. In 1994 Cooper employed between 750 and 880 employees. Its employees were represented by different locals of the Union in three separate collectivebargaining units. In April 1994 Cooper announced to the Union that it planned to close the facility unless a purchaser could be found by the end of 1994. Although the Union and its three locals formed a committee to find a buyer, none was found and on November 22, 1994 the plant closed. Cooper and the Union entered into a "closing agreement" that provided for recognition of the Union in the event Cooper reopened within two years. Cooper retained a skeleton crew to maintain the facility and to provide spare parts to its utility customers. Several former union presidents, state and local officials and members of the local Chamber of Commerce formed a new search committee to find a buyer. Ultimately the committee helped to bring about the sale of the plant to Ravindra Nahl Rahangdale.

In 1995 Rahangdale began negotiations to acquire Cooper's plant and equipment. On August 9, 1996 he acquired all of the assets of the Canonsburg plant, which he combined with another company he owned to form PTTI. PTTI commenced operations in August 1996 and hired its first employees on September 1, 1996. In January 1997 the company produced its first transformers, utilizing about one-half of the plant space previously used by Cooper and most of the same equipment. PTTI obtained its employees from Bedway Temporary Services (Bedway), which had also assisted Cooper with staffing. Applicants for employment were interviewed by PTTI personnel but hired by Bedway. Employees worked under the supervision of PTTI as probationary employees for three to six months, at which time they were eligible to become permanent employees of PTTI.

In a letter dated March 30, 1998, the Union requested PTTI to recognize and bargain with it as the exclusive bargaining representative of the company's employee units. As of that time, approximately 82 production employees worked at the plant, 58 of whom, or 72 per cent, were former Cooper employees. Of the 68 production workers on the company's payroll, 54 were former Cooper employees. PTTI refused to recognize the Union, prompting the Union to file an unfair labor practice charge. The Board subsequently issued a complaint alleging that, beginning April 1, 1998, PTTI had unlawfully refused to recognize and bargain with the Union in violation of sections 8(a)(1) and 8(a)(5) of the Act. By the time of the hearing, which was held on July 7, 1998, PTTI had hired approximately 100 production and maintenance employees, a majority of whom were former Cooper employees.

On September 30, 1998 the ALJ issued his findings of fact and conclusions of law, finding, in pertinent part, that PTTI was a successor employer under the Act. The ALJ ordered PTTI to recognize the Union, to bargain collectively with the Union and to post an appropriate notice. PTTI filed timely exceptions to the ALJ's decision. On December 10, 1998 PTTI also filed a motion to reopen the record to introduce evidence that it had 130 production and maintenance employees, only 62 of whom were former Cooper employees and that former members of the Cooper production and maintenance unit became a minority of PTTI's production workers as of October 29, 1998. JA 409. The Board's General Counsel filed limited cross exceptions challenging the ALJ's failure to find specifically that as of April 1, 1998 PTTI had hired a substantial and representative complement of employees. The Board denied PTTI's exceptions and its motion to reopen the record, adopted the ALJ's findings, rulings and order with slight modifications and corrections and granted the General Counsel's cross-exceptions. The Board held that (1) PTTI was a successor to Cooper, (2) PTTI had hired a substantial and representative complement of employees as of April 1, 1998 and (3) PTTI violated the Act by refusing to recognize and bargain with the Union. PTTI challenges all three determinations.

II. Analysis

A new employer is a successor to a former employer if there is "substantial continuity" between the enterprises. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43 (1987). "Substantial continuity exists when the new company has 'acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations.' " CitiSteel USA, Inc. v. NLRB, 53 F.3d 350, 353 (D.C. Cir. 1995) (quoting Golden State Bottling Co., Inc. v. NLRB, 414 U.S. 168, 184 (1973)). "The essential inquiry is whether operations, as they impinge on union members, remain essentially the same after the transfer of ownership." International Union of Elec., Radio & Mach. Workers (IUEW) v. NLRB, 604 F.2d 689, 694 (D.C. Cir. 1979). The analysis is undertaken with an "emphasis on the employees' perspective." Fall River, 482 U.S. at 43. The implied statutory goal is to promote "industrial peace." "If the employees find themselves in essentially the same jobs after the employer transition and if their legitimate expectations in continued representation by their union are thwarted, their dissatisfaction may lead to labor unrest." Id. at 43-44. Thus the union certified as the collective bargaining representative of the predecessor employer's employees presumptively retains its certification if the majority of employees after the change of ownership worked for the predecessor employer. See NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 279 (1972).

We will uphold the Board's "successorship determination unless it is not supported by substantial evidence or the Board acted arbitrarily or otherwise erred in applying established law to the facts of the case." CitiSteel, 53 F.3d at 354. To determine whether a "substantial continuity" exists, courts and the Board consider

whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers.

Fall River, 482 U.S. at 43 (citations omitted). While the Board does not afford controlling weight to any single factor, "[t]he ultimate question is this: Will the employees 'understandably view their job situations as essentially unaltered?' " Harter Tomato Prods. Co. v. NLRB, 133 F.3d 934, 937 (D.C. Cir. 1998) (quotation omitted).

When a new employer is a successor, it has an obligation to bargain with the certified union so long as "the majority of its employees were employed by its predecessor." Fall River, 482 U.S. at 41. The Board has adopted the "substantial and representative complement" rule for fixing the moment that the determination as to the composition of the successor's work force is to be made. Id. at 47. In deciding when a "substantial and representative complement" exists after a change in employer, the Board examines a number of factors:

It studies "whether the job classifications designated for the operation were filled or substantially filled and whether the operation was in normal or substantially normal production." See Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628 (9th Cir. 1983). In addition, it takes into consideration "the size of the complement on that date and the time expected to elapse before a substantially larger complement would be at work ... as well as the relative...