882 F.3d 510
5th Cir.2018Background
- Creative Vision Resources (Creative) replaced Berry III as the labor-supplier for "hoppers" on New Orleans garbage trucks; Creative distributed applications (with W-4s) and intended to hire former Berry III hoppers en masse.
- Richard (Creative’s principal) told ~20 hoppers about new terms ($11/hr, overtime, tax withholding); a hopper (Flagge) distributed ~50 applications but disputed whether Richard told him the new terms.
- Creative began operations June 2; a morning foreman informed assembled hoppers of the new terms, 44 former Berry III hoppers worked that first day, and Creative distributed a handbook soon after.
- The Union demanded recognition on June 6; it had represented the hoppers previously and filed unfair-labor-practice charges alleging Creative unlawfully refused to bargain and unlawfully imposed initial terms.
- The ALJ found Creative was a successor but not a "perfectly clear" successor (so could set initial terms); the NLRB reversed, finding Creative was a perfectly clear successor and thus unlawfully imposed terms without bargaining; Creative sought review in this court.
Issues
| Issue | Plaintiff's Argument (Creative) | Defendant's Argument (NLRB/Union) | Held |
|---|---|---|---|
| Whether Creative was a "perfectly clear" successor requiring pre-hiring bargaining | June 2 announcement (when hoppers boarded trucks) was the relevant hiring moment, so prior communications were not binding; pre-June 2 contacts were insufficient | Creative had evinced intent to retain predecessor’s workforce by June 1 (pro forma applications, W-4s, no outside hiring) so predecessor majority was "perfectly clear" and Creative had to bargain before imposing terms | Court held Creative was a perfectly clear successor; June 2 announcement was untimely and pre-June-2 communications did not give majority notice, so bargaining obligation attached before unilateral terms were set |
| Sufficiency/timing of pre-June-2 communications (Richard→Flagge, word-of-mouth, W-4s) | These communications (and rumors) sufficed to notify hoppers; W-4s plainly signaled tax withholding and employment status | Board reasonably found Flagge did not relay terms, rumors were unquantified and speculative, and inclusion of tax forms was ambiguous in context | Court found substantial evidence supports Board: Flagge did not inform others; rumors were unquantified gossip; W-4s were ambiguous—insufficient to give majority clear notice |
| Whether a union bargaining demand was required before duty to bargain arose | Fall River rule: successor can set initial terms until union makes a demand | For a "perfectly clear" successor, demand is unnecessary; composition/plan to retain workforce alone triggers bargaining duty | Court held Fall River’s demand rule does not extend to perfectly clear successor cases; no demand required where successor’s actions make majority status "perfectly clear" |
| Validity of complaint issued under Acting General Counsel (FVRA) | Complaint void because Acting General Counsel served in violation of FVRA; relief cannot be based on void action | Objection was untimely before the Board; Section 10(e) bars consideration; Board later ratified complaint | Court declined to consider the FVRA challenge because Creative waived/timely forfeited the objection under 29 U.S.C. §160(e); enforcement granted |
Key Cases Cited
- NLRB v. Burns Int’l Sec. Servs., Inc., 406 U.S. 272 (1972) (successor ordinarily free to set initial terms; narrow "perfectly clear" exception requires bargaining)
- Fall River Dyeing & Furnishing Corp. v. NLRB, 482 U.S. 27 (1987) (ordinary-successor duty-to-bargain triggers when a substantial and representative complement is hired and a union demand has been made)
- NLRB v. SW Gen., Inc., 137 S. Ct. 929 (2017) (Federal Vacancies Reform Act limits acting officials; relevant to validity of actions taken by improperly serving appointees)
- Int’l Ass’n of Machinists & Aerospace Workers v. NLRB, 595 F.2d 664 (D.C. Cir. 1978) (approving prior-or-simultaneous-announcement rule to prevent successors from lulling employees)
- DuPont Dow Elastomers, L.L.C. v. NLRB, 296 F.3d 495 (6th Cir. 2002) (announcement of new terms after offers/acceptances is too late to avoid bargaining duty)
- Canteen Corp. v. NLRB, 103 F.3d 1355 (7th Cir. 1997) (endorsing requirement that new terms be announced prior to or simultaneously with retention indications)
- Banknote Corp. of Am. v. NLRB, 84 F.3d 637 (2d Cir. 1996) (distinguishing gradual hiring from rapid, full-hire transitions; demand rule more applicable in staggered hiring)
- Emerald Maintenance, Inc. v. NLRB, 464 F.2d 698 (5th Cir. 1972) (contrast case: gradual hiring and post-commencement workforce formation meant not a perfectly clear successor)