Pacific Hide & Fur Depot, Inc. v. N.L.R.B.

• Decision Date: 04 May 1977
• Docket Number: No. 76-2074,76-2074
• Citation: 553 F.2d 609
• Parties: 95 L.R.R.M. (BNA) 2467, 81 Lab.Cas. P 13,238 PACIFIC HIDE & FUR DEPOT, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 609

553 F.2d 609

95 L.R.R.M. (BNA) 2467, 81 Lab.Cas. P 13,238

PACIFIC HIDE & FUR DEPOT, INC., Petitioner, v. NATIONAL LABOR RELATIONS BOARD, Respondent.

No. 76-2074.

United States Court of Appeals, Ninth Circuit.

May 4, 1977.

Stephen R. Frank, Tooze, Kerr, Peterson, Marshall & Shenker, Portland, Ore., argued, for petitioner.

Elliott Moore, Paul J. Spielberg, Deputy Asst. Gen. Counsel, N. L. R. B., Washington, D. C., argued, for respondent.

Before KOELSCH, DUNIWAY and GOODWIN, Circuit Judges.

DUNIWAY, Circuit Judge:

Pacific Hide & Fur Depot, Inc. (Pacific) petitions for review of and to set aside an order of the National Labor Relations Board. The Board concluded that Pacific had violated § 8(a)(1) and (5) of the National Labor Relations Act, as amended, 29 U.S.C. § 158(a)(1) and (5) (1970), by refusing to recognize and bargain with the Amalgamated Meat Cutters and Butcher Workmen, Local No. 656 (Union). The Board cross-petitions for enforcement of its order, which is reported at 223 N.L.R.B. No. 149. We grant the petition to review and set aside, and we deny enforcement.

FACTS

Pacific, the Union, and Counsel for the General Counsel to the Board entered into a written stipulation of facts, and Counsel for the General Counsel rested his case before the Administrative Law Judge on that stipulation. The stipulation reserved to each party the right to amplify, supplement, or clarify any of the factual matters stipulated to, and Pacific presented the testimony of its vice president and manager of its Portland office, Mr. Thiebes. No other witness testified. This is what the stipulation and Thiebes' testimony show:

Before March, 1975, Cahen Trading Company (Cahen) had operated a hide-curing facility in Portland, Oregon, for many years. Cahen purchased hides from meat packers, processed them, and then sold them on the open market. The complement of workers employed by Cahen in the relevant unit fluctuated between twelve and eighteen, and for approximately twenty years Cahen had recognized the Union as the bargaining representative of these employees, entering into a series of collective bargaining agreements with the Union. The most recent agreement was effective from August 1, 1974, until August 1, 1977. It provided for a union shop, but contained no provision making it binding upon Cahen's successors or assigns and no reference to the possibility that Cahen might go out of business or sell its assets.

In March, 1975, a corporation related to Pacific purchased Cahen's real property and leased it to Pacific, and Pacific purchased the physical personal property of Cahen that was used in the plant. Pacific did not buy any of Cahen's intangibles, and it did not assume any of Cahen's liabilities.

On April 10, Cahen terminated all its employees, including the eighteen who were then covered by the agreement between Cahen and the Union. On the evening of that same day, Pacific's Mr. Thiebes interviewed the Cahen workers and hired six of the eighteen unit employees, plus another such employee who had been temporarily laid off. On April 11, Pacific started operations with that crew of seven. It hired four additional employees to work in the unit, one each on April 11, 16, 17, and 18, none of whom had been Cahen employees. Thus, on April 18 it had eleven employees in the unit, seven of whom had worked for Cahen and four of whom had not. On April 17, the Union demanded that Pacific recognize the Union and comply with the collective bargaining agreement. On April 29, Pacific refused to recognize the Union, stating that Pacific was not a successor employer to Cahen.

After April 29, Pacific hired eight more employees, one on May 5, one on May 22, three on May 30, one on June 2, and two on June 6. None of these was a former Cahen employee. On June 6, Pacific had nineteen employees in the unit, seven of whom were former Cahen unit employees under the most recent collective bargaining contract, and twelve of whom were not. As the stipulation recites: Pacific "reached its full employee complement of 19 unit employees on June 6, 1975." There is no evidence, and no suggestion by the parties, that Pacific's hiring of persons who had not been Cahen employees was motivated by anti-union bias or was in any way discriminatory against the Union.

Was Pacific Required to Bargain with the Union?

The question presented is whether, for the purposes of a duty to bargain with the Union, Pacific is a "successor" to Cahen. One of the tests of successorship is met in this case. Pacific, so far as the work of employees in the unit is concerned, has continued to conduct essentially the same business as Cahen, processing hides in the same manner, in the same plant, using the same equipment, and applying the same skills. This conclusion is not weakened by the fact that Cahen had bought most of the hides that it processed, while Pacific received them as bailee. Nor is it weakened by Pacific's intention to make some improvements in the way in which it processes hides.

Nevertheless, at least in a case like this one, the type of successorship that we have described is not, standing alone, enough to support a Board order requiring the "successor" employer to bargain with the Union. This is because, as the Supreme Court has made clear in recent cases, a purchaser of assets, like Pacific, which has not agreed to be bound by its vendor's contracts or to employ its workers or to bargain with their union, need not hire those workers. Howard Johnson Co. v. Hotel and Restaurant Employees and Bartenders Int'l Union, 1974, 417 U.S. 249, 261-62, 94 S.Ct. 2236, 41 L.Ed.2d 46; Golden State Bottling Co. v. NLRB, 1973, 414 U.S. 168, 184, n. 6, 94 S.Ct. 414, 38 L.Ed.2d 388; NLRB v. Burns International Security Services, Inc., 1972, 406 U.S. 272, 280-81, n. 5, 92 S.Ct. 1571, 32 L.Ed.2d 61.

The decisions require that, in such a case, and absent a refusal to hire because of anti-union animus, a majority of the work force of the purchasing employer in the unit be former employees of the seller in that unit. If that is the case, there is a duty to bargain, it being assumed that the holdover majority continues to desire representation by the union. Burns, supra, 406 U.S. at 281, 92 S.Ct. 1571, and cases cited; NLRB v. Band-Age, Inc., 1 Cir., 1976, 534 F.2d 1, 3; NLRB v. Daneker Clock Co., Inc., 4 Cir., 1975, 516 F.2d 315, 316; NLRB v. Zayre Corp., 5 Cir., 1970, 424 F.2d 1159, 1161, 1163; Tom-A-Hawk Transit, Inc. v. NLRB, 7 Cir., 1969, 419 F.2d 1025, 1027. On the other hand, when the successor employer has never employed in the unit a majority of its workers who are former employees of the predecessor, there is no duty to bargain. Howard Johnson Co., supra, 417 U.S. at 261-62, 94 S.Ct. 2236; NLRB v. John Stepp's Friendly Ford, Inc., 9 Cir., 1964, 338 F.2d 833, 836; NLRB v. United Industrial Workers of Seafarers Int. U., 5 Cir., 1970, 422 F.2d 59, 62-63. ¹

Under our decision in Friendly Ford, supra, if we take as the controlling date April 11 when Pacific began to operate in the former Cahen plant, it could be said that Pacific had "taken over and succeeded to (its) predecessor's employees." (338 F.2d at 836) On that day, there were seven employees in the unit, everyone of whom had worked for Cahen and been represented by the Union. The same is true of April 17, when the Union demanded recognition. On that day there were 10 employees in the unit, seven of whom had worked for Cahen and been represented by the Union when Cahen closed its business. Similarly, on April 29, when Pacific declined to bargain with the Union, there were eleven employees in the unit, including the same seven former Cahen employees.

On the other hand, on June 6, when Pacific reached its "full complement of 19 unit employees" as stipulated, there were still only seven holdovers and a majority, twelve, were not holdovers. Indeed, on May 30, there were sixteen employees, and a majority, nine, were not holdovers. No case has been cited to us in which there was such a transition from a majority to a minority of holdovers. In the cases where the holdovers were a majority, the majority existed from the beginning and continued thereafter. In the cases where there was a minority of holdovers, that was the fact from the beginning, and did not change.

Pacific bases its argument on the Supreme Court's statement in Burns, supra, 406 U.S. at 294-95, 92 S.Ct. at 1585:

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 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).

Pacific says that this case falls squarely within the last sentence. It bases that argument on the stipulation quoted above. The effect of its argument is that the Board and the Union have stipulated their case away. This may be so, but we do not think that it follows merely because the language of the stipulation tracks the language of the Burns "full complement" sentence. The more relevant inquiry is whether the principles underlying the Burns "full complement" language have been properly applied in this case. ²

The Burns sentence implies that when a new employer hires only part of the old unit, together with others who were never part of the unit, any decision regarding...