482 U.S. 27 (1987), 85-1208, Fall River Dyeing & Finishing Corp. v. National

Docket Nº:No. 85-1208
Citation:482 U.S. 27, 107 S.Ct. 2225, 96 L.Ed.2d 22, 55 U.S.L.W. 4706
Party Name:Fall River Dyeing & Finishing Corp. v. National
Case Date:June 01, 1987
Court:United States Supreme Court

Page 27

482 U.S. 27 (1987)

107 S.Ct. 2225, 96 L.Ed.2d 22, 55 U.S.L.W. 4706

Fall River Dyeing & Finishing Corp.



No. 85-1208

United States Supreme Court

June 1, 1987

Labor Relations Board

Argued March 2, 1987




This case involves interpretation of the ruling in NLRB v. Burns International Security Services Inc., 406 U.S. 272, that the new employer, succeeding to another's business, had an obligation to bargain with the union representing the predecessor's employees. Sterlingwale Corp., which had operated a textile dyeing and finishing plant, laid off all of its production employees in February, 1982, and finally went out of business in late summer. During this period, one of its former officers and the president of one of its major customers formed petitioner company, intending to engage in one aspect of Sterlingwale's business and to take advantage of its assets and its workforce. Petitioner acquired Sterlingwale's plant, real property, equipment, and some of its remaining inventory, and began operating out of Sterlingwale's former facilities and hiring employees in September, 1982, with an initial hiring goal of one full shift of workers. In October, 1982, the union that had represented Sterlingwale's production and maintenance employees for almost 30 years requested petitioner to recognize it as the bargaining agent for petitioner's employees, and to begin collective bargaining. Petitioner refused the request. At that time, a majority of petitioner's employees were ex-Sterlingwale employees, as also was true in mid-January, 1983, when petitioner met its initial hiring goal of one shift of workers. By mid-April, 1983, petitioner had reached two shifts, and, for the first time, ex-Sterlingwale employees were in the minority. The same working conditions existed as under Sterlingwale, and over half of petitioner's business came from ex-Sterlingwale customers. In November, 1982, the union filed an unfair labor practice charge with the National Labor Relations Board, alleging that in refusing to bargain petitioner violated §§ 8(a)(1) and (5) of the National Labor Relations Act (NLRA). An Administrative Law Judge (ALJ) concluded that (1) petitioner was a "successor" to Sterlingwale, (2) the proper date for determining whether the majority of petitioner's employees were ex-Sterlingwale employees (necessary to require petitioner to bargain with the union) was not mid-April, when petitioner had two shifts working, but mid-January, when petitioner had obtained a "representative complement" of employees, (3) the union's October, 1982, demand for bargaining (necessary to trigger petitioner's

Page 28

obligation), although premature, was "of a continuing nature," and was still in effect in mid-January, and (4) petitioner thus committed an [107 S.Ct. 2228] unfair labor practice in refusing to bargain. The Board affirmed the ALJ's decision, and the Court of Appeals enforced the Board's order.


1. A "successor" employer's obligation to bargain is not limited to the situation (as in Burns) where the union in question only recently was certified before the transition in employers. Where, as here, a union certified for more than one year has a rebuttable presumption of majority status, that status continues despite the change in employers. Although the new employer is not bound by the substantive provisions of the predecessor's bargaining agreement, it has an obligation to bargain with the union so long as it is in fact a successor of the old employer and the majority of its employees were employed by its predecessor. Pp. 36-41.

2. Petitioner was a "successor" to Sterlingwale. The Board's approach in determining this question, approved in Burns, is based upon the totality of the circumstances, and requires that the Board focus on whether there is "substantial continuity" between the enterprises, with particular emphasis on the retained employees' perspective as to whether their job situations are essentially unaltered. The Board's determination that there was "substantial continuity" here, and that petitioner was Sterlingwale's successor, is supported by substantial evidence in the record. It is not dispositive that there was a 7-month hiatus between Sterlingwale's demise and petitioner's start-up, or that employees were hired through newspaper advertisements, rather than through Sterlingwale's employment records. Pp. 42-46.

3. The Board's "substantial and representative complement" rule -- which fixes the moment when the determination is to be made as to whether a majority of the successor's employees are former employees of the predecessor, a moment that triggers the successor's bargaining obligation -- is reasonable in the successorship context. Petitioner's proposal that majority status be determined instead at the "full complement" stage, so that all the employees would have a voice in the selection of their bargaining representative, fails to consider the employees' significant interest in being represented as soon as possible. Nor does the Board's rule place an unreasonable burden on the employer. The application of the Board's rule to the facts of this case, moreover, is supported by substantial record evidence. Pp. 46-52.

4. The Board's "continuing demand" rule -- whereby a union's premature demand for bargaining continues in effect until the successor acquires a "substantial and representative complement" of employees that triggers its obligation to bargain -- also is reasonable in the successorship

Page 29

context. The rule places a minimal burden on the successor, and makes sense in light of the union's position. It would make no sense to require the union repeatedly to renew its bargaining demand in the hope of having it correspond with the "substantial and representative complement" date when, with little trouble, the employer can regard a previous demand as a continuing one. Pp. 52-54.

775 F.2d 425, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, STEVENS, and SCALIA, JJ., joined, and in Parts I and III of which WHITE, J., joined. POWELL, J., filed a dissenting opinion, in which REHNQUIST, C.J., and O'CONNOR, J., joined, post, p. 54.

BLACKMUN, J., lead opinion

JUSTICE BLACKMUN delivered the opinion of the Court. *

In this case, we are confronted with the issue whether the National Labor Relations [107 S.Ct. 2229] Board's decision is consistent with NLRB v. Burns International Security Services Inc., 406 U.S. 272 (1972). In Burns, this Court ruled that the new employer, succeeding to the business of another, had an obligation to bargain with the union representing the predecessor's employees. Id. at 278-279. We first must decide whether Burns is limited to a situation where the union only recently was certified before the transition in employers, or whether that decision also applies where the union is entitled to a presumption of majority support. Our inquiry then proceeds

Page 30

to three questions that concern rules the Labor Board has developed in the successorship context. First, we must determine whether there is substantial record evidence to support the Board's conclusion that petitioner was a "successor" to Sterlingwale Corp., its business predecessor. Second, we must decide whether the Board's "substantial and representative complement" rule, designed to identify the date when a successor's obligation to bargain with the predecessor's employees' union arises, is consistent with Burns, is reasonable, and was applied properly in this case. Finally, we must examine the Board's "continuing demand" principle, to the effect that, if a union has presented to a successor a premature demand for bargaining, this demand continues in effect until the successor acquires the "substantial and representative complement" of employees that triggers its obligation to bargain.


For over 30 years before 1982, Sterlingwale operated a textile dyeing and finishing plant in Fall River, Mass. Its business consisted basically of two types of dyeing, called, respectively, "converting" and "commission." Under the converting process, which in 1981 accounted for 60% to 70% of its business, see App. 149, Sterlingwale bought unfinished fabrics for its own account, dyed and finished them, and then sold them to apparel manufacturers. Id. at 123. In commission dyeing, which accounted for the remainder of its business, Sterlingwale dyed and finished fabrics owned by customers according to their specifications. Id. at 124. The financing and marketing aspects of converting and commission dyeing are different. Converting requires capital to purchase fabrics and a sales force to promote the finished products. Id. at 123. The production process, however, is the same for both converting and commission dyeing. Id. at 98.

In the late 1970's the textile-dyeing business, including Sterlingwale's, began to suffer from adverse economic conditions

Page 31

and foreign competition. After 1979, business at Sterlingwale took a serious turn for the worse because of the loss of its export market, id. at 127-128, and the company reduced the number of its employees, id. at 192-196. Finally, in February, 1982, Sterlingwale laid off all its production employees, primarily because it no longer had the capital to continue the converting business. Id. at 77-78, 104, 130-132. It retained a skeleton crew of workers and supervisors to ship out the goods remaining on order and to maintain the corporation's building and machinery. Id. at 147-148. In the months following the layoff, Leonard Ansin, Sterlingwale's president, liquidated the inventory of the corporation and, at the same time, looked for a business partner with whom he...

To continue reading