Creative Vision Res., L.L.C. v. Nat'l Labor Relations Bd.

Decision Date14 February 2018
Docket NumberNo. 16-60715,16-60715
Citation882 F.3d 510
Parties CREATIVE VISION RESOURCES, L.L.C., Petitioner Cross–Respondent v. NATIONAL LABOR RELATIONS BOARD, Respondent Cross–Petitioner
CourtU.S. Court of Appeals — Fifth Circuit

Clyde H. Jacob, III, Esq., Fisher & Phillips, L.L.P., New Orleans, LA, Amanda Wingfield Goldman, Coats, Rose, Yale, Ryman & Lee, P.C., New Orleans, LA, for Petitioner Cross–Respondent.

Linda Dreeben, Esq., Deputy Associate General Counsel, Usha Dheenan, Kellie Isbell, Esq., National Labor Relations Board Appellate & Supreme Court Litigation Branch, Washington, DC, M. Kathleen McKinney, National Labor Relations Board Region 15, New Orleans, LA, for Respondent Cross–Petitioner.

Brian Hayes, Esq., Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Washington, DC, Jenn Betts, Ogletree Deakins, P.C., Pittsburgh, PA, Todd Clifford Duffield, Ogletree Deakins, P.C., Atlanta, GA, Janet Galeria, Warren Postman, U.S. Chamber Litigation Center, Washington, DC, Gavin Samuel Martinson, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., Dallas, TX, for Amicus Curiae CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA.

Before KING, PRADO, and SOUTHWICK, Circuit Judges.

KING, Circuit Judge:

The opinion previously issued in this case is withdrawn, and the following opinion is substituted therefor:

Creative Vision Resources, L.L.C., succeeded another company as the staffing provider for garbage trucks in New Orleans. It set its own initial terms and conditions of employment instead of bargaining with the incumbent union. The union filed an unfair-labor-practice charge against Creative, alleging violations under Section 8(a) of the National Labor Relations Act. The administrative law judge concluded, among other things, that Creative was not a "perfectly clear" successor and accordingly was within its right to set initial terms and conditions. The National Labor Relations Board reversed. Creative petitions this court for review, while the Board seeks enforcement of its order. We deny Creative's petition and grant the Board's petition to enforce.

I. FACTUAL AND PROCEDURAL BACKGROUND1

Richard's Disposal is a trash-collection company in the greater New Orleans area. Since 2007, Local 100, United Labor Unions has represented the "hoppers" who ride on the back of Richard's Disposal's garbage trucks and pick up trash cans. Until early June 2011, the hoppers were employed by a labor-supply company called Berry III.

Dissatisfied with Berry III's management practices, Richard's Disposal's vice president, Alvin Richard III, decided to form Creative Vision Resources, L.L.C. ("Creative"), to become the new hopper supplier. These unsatisfactory practices, according to the Board's decision, included Berry III's "treatment of the hoppers as independent contractors," which meant "Berry III paid the hoppers a flat rate of $103 per day with no overtime, and made no deductions for taxes or social security."

To prepare for the transition from Berry III to Creative, which was scheduled to take place on May 20, 2011, Richard prepared an employee handbook and safety manual. He also put together employment applications, which, along with federal and state tax forms, were to be distributed to current Berry III hoppers. Richard then personally distributed these applications along with tax forms to about 20 hoppers. He informed them that joining Creative would mean changes in the terms and conditions of their employment, including $11-per-hour pay with overtime and the deduction of taxes and social security from their paychecks.

Richard also asked a Berry III hopper named Eldridge Flagge to help him pass out applications. Flagge passed out approximately 50 applications and tax forms between mid-May and June 1. Richard testified that he told Flagge of the new terms and conditions; Flagge denied he was told and testified he did not tell the hoppers of the changes in the prospective terms of employment.

Regardless, some of the hoppers learned of the changed terms. One hopper, Anthony Taylor, testified that the hoppers knew of the new pay rate before June 2 because "we all congregate out there in the morning. We been knowing that." A Union official also testified that at least one hopper asked her about the $11-per-hour pay rate. When she asked who told them about the pay cut, "they said they just hear it. They had not heard from any authorized personnel."

Relevant here, Creative's employee-selection process was not rigorous. Once Berry III hoppers filled out the application and tax forms, they were hired. Creative did not interview candidates, review qualifications, or check references. Rather, Richard acknowledged that he (and thus Creative) intended to offer a job to any Berry III hopper who applied.

No transition occurred on May 20 because Creative had not received enough applications to fully staff its operations. By June 1, though, Creative had about 70 completed applications from the Berry III hoppers. At this point, Richard's Disposal cancelled its contract with Berry III. Creative was to start as the new hopper supplier the next day. As the Board found, Creative directly told the hoppers about the new terms on the morning of June 2:

At approximately 4 a.m., the hoppers assembled in the yard as usual, to await assignment to a truck. They were met by former Berry III supervisor, Karen Jackson, whom Richard had hired on June 1. Jackson informed all of the hoppers present that "[t]oday is the day you start working under Creative Vision." Jackson then explained to them the terms under which they would be working, including, among other things, the $11-per-hour pay rate, the deduction of Federal and State taxes, and a number of new employment standards and safety rules. Some of the hoppers refused to work upon learning of the new terms. A sufficient number of hoppers remained, however, to staff the trucks. Thus, on its first day of operations, [Creative] supplied 44 hoppers to Richard's Disposal, all of whom were formerly employed by Berry III.

Two days later, on June 4, Creative distributed an employee handbook setting out new rules and employment standards. Then, on June 6, after learning that Creative had replaced Berry III and retained the incumbent employees, the Union hand delivered a letter to Creative demanding that it recognize the Union as the hoppers' exclusive representative for collective-bargaining purposes. Creative did not reply.

Shortly thereafter, the Union filed an unfair-labor-practice charge against Creative. Acting on behalf of the Board's Acting General Counsel, a Board Regional Director investigated and issued a complaint in March 2012. The dispute proceeded to a two-day trial, after which the administrative law judge ("ALJ") concluded that Creative violated subsections 8(a)(1) and (5) of the National Labor Relations Act (the "Act") by refusing to recognize the Union. He also concluded that Creative was not a perfectly clear successor because it "did not fail to communicate candidly with the hoppers" about its intent to set initial terms. As such, Creative did not violate the Act by setting initial terms.

In making this determination, the ALJ relied on the fact that Richard communicated the initial terms of employment to approximately 20 hoppers in May and that a rumor spread among the hoppers that Creative would be paying $11 per hour. The ALJ also heavily relied on Creative's June 2 announcement of initial terms to the hoppers who were assembled for work and were awaiting assignment.

The Board disagreed with the ALJ in part. It upheld the ALJ's finding that Creative was a successor and therefore violated subsections 8(a)(1) and (5) by refusing to recognize and bargain with the Union. It also concluded that Creative was a perfectly clear successor and had violated the Act by unilaterally imposing initial terms and conditions of employment. In its analysis, the Board looked only to Creative's communications on or before June 1, concluding the June 2 announcement was untimely. The Board concluded that Creative's pre-June 2 communications—Richard's communication of new terms to 20 hoppers, the rumors that reached an unknown number of hoppers, and the inclusion of tax forms with the applications—were insufficient. The Board concluded that the limited notice from these communications "did not negate the inference of probable continuity of employment of the remaining 50 Berry III hopper applicants, who lacked knowledge that their wages and benefits would be reduced."

One Board member dissented. He concluded that the hoppers were not formally hired until June 2, when they boarded the trucks, so he would have "examine[d] what [Creative] communicated to the hoppers on or before June 2 ." To him, then, the 4:00 a.m. June 2 meeting was enough to give notice of new terms of employment. Even if it were not, though, the tax forms attached to the applications were sufficient in his view because the hoppers did not pay income taxes when employed by Berry III. Finally, Creative's bargaining obligation was not triggered, and it could therefore unilaterally set new terms of employment, until June 6, the date the Union made its bargaining demand.

Creative now petitions this court for review, while the Board seeks to have its order enforced. Creative does not contest the Board's holding that Creative violated subsections 8(a)(1) and (5) of the Act by refusing to recognize and bargain with the Union. "[W]hen an employer does not challenge a finding of the Board, the unchallenged issue is waived on appeal, entitling the Board to summary enforcement." Sara Lee Bakery Grp. v. NLRB , 514 F.3d 422, 429 (5th Cir. 2008). Thus, the Board is entitled to summary enforcement of the uncontested parts of its order.

II. DISCUSSION

Creative makes three main arguments, two of which relate to the applicability of the perfectly clear successor doctrine. Creative first argues the Board erred by concluding Creative was a perfectly clear successor and thus could not set initial...

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