Banknote Corporation of America, Inc. (“BCA”) seeks review and the National Labor Relations Board (“NLRB” or “the Board”) cross-petitions for enforcement of an order entered pursuant to subsections 8(a)(1) and (a)(5) of the National Labor Relations Act (“NLRA”) (codified at 29 U.S.C. § 158(a)(1) and (a)(5)), concluding that BCA engaged in unfair labor practices.
Banknote Corp. of America,
BCA petitions for review on the ground that two of the Board’s findings — that the bargaining units that the charging party unions seek to represent in this ease are “appropriate”; and that the announcement of terms and conditions of employment on April 23 constituted an unlawful unilateral change — reflect improper application of legal principles and are contrary to the record evidence. We find merit in neither of BCA’s contentions. We therefore deny BCA’s petition for review and grant the General Counsel’s cross-petition for enforcement.
I. Facts
The following facts of record are drawn primarily from the Administrative Law Judge’s decision of March 3, 1992, affirmed by a divided panel of the Board in a Decision and Order dated December 16,1994.
This labor dispute stems from BCA’s acquisition in early 1990 of a high-security printing facility located in Suffem, New York. The facility was formerly owned by American Banknote Company (“ABN”), one of the two major U.S. firms engaged in the printing of security documents (e.g., stocks, bonds, visas, traveler’s checks). In June 1989, ABN’s competitor, United States Banknote Company (“USBN”), made a tender offer for ABN’s parent company. The Justice Department raised antitrust objections to the proposed tender offer and required, as a condition of its approval of the transaction, the sale of an ABN printing facility to an independent third party. USBN entered into negotiations with a French security printing firm, Frangois-Charles Oberthur Fi-dueiare (“FCO”), for the sale of ABN’s Suf-fern facility. FCO formed an American subsidiary, BCA, to consummate the transaction. On December 15, 1989, USBN and BCA entered into a purchase agreement under which BCA would acquire substantially all of ABN’s assets at the facility.
Under the terms of the purchase agreement, BCA was required to elect to receive either a “closed” plant or an “operating” plant after USBN completed its tender offer for ABN’s parent company. If BCA chose an operating plant, it would interview ABN employees and, within thirty days, provide USBN with a list of the employees it wished to hire. On January 9,1990, despite the fact that USBN had not yet gained control of ABN’s parent, BCA announced its intention to receive an operating plant. USBN completed its tender offer for ABN’s parent company on February 27. The sale of the Suf-fem facility assets to BCA closed on the same day.
ABN’s approximately 100 production employees were divided into eleven bargaining units to reflect the diversity of its work force, which included individuals with a variety of skills involved in the high-security printing process — designers, engravers, photoengravers, plate finishers, machinists, and so on. Because of the delay in USBN’s acquisition of ABN’s parent company, BCA officers were not able to gain access to the facility to interview employees as contemplated by the purchase agreement. Accordingly, on March 13, BCA supplied USBN with a list of those employees it wished to hire without having interviewed the employees. USBN “rejected” the employee list because it purportedly created difficulties under the seniority provisions of the collective bargaining agreements between ABN and the labor unions representing employees at the plant. When BCA officers began to discuss the rejection of the employee list with USBN officers, they discovered that there had been a communication by the human resources director of ABN to union representatives at the facility on March 1 to the effect that “[FCO] has agreed to recognize the Unions who are party to collective bargaining agreements at the ... plant and to be bound to the terms of the
As planned, BCA distributed employment applications to ABN employees prior to the closing of the plant. BCA interviewed 102 ABN employees on April 16 and 17, and extended offers of employment to fifty ABN production workers and four ABN supervisors, all of whom began work on April 19. BCA also hired two maintenance workers not previously employed by ABN. On April 23, BCA announced certain terms and conditions of employment, with the result that as of that date all employees worked the same hours, participated in the same pension, vacation, and sick pay plans, received the same health and welfare benefits, and observed new company holidays. BCA also voluntarily recognized two of the eleven unions that had previously represented ABN employees.
Five unions filed charges against the company for violations of subsections 8(a)(1) and (a)(5) of the NLRA, claiming that BCA had improperly failed to recognize and bargain with them prior to changing the terms and conditions of employment on April 23. The Board’s regional enforcement counsel issued a consolidated complaint on behalf of all five unions in September 1990. In March 1991, the Board severed and withdrew complaints filed on behalf of two of the unions because each sought to represent only one employee. The Board filed amended complaints on behalf of the three remaining unions, Local 1-P, District 15, and Local 119B^3B. The case was heard before Administrative Law Judge D. Barry Morris on April 15-19, 1991. On March 3, 1992, the ALJ issued a decision and recommended order.
The ALJ found that, as of April 19, 1990, when BCA had hired nearly its full complement of employees from ABN’s work force, BCA acquired a duty to bargain with the three charging party unions. The ALJ concluded that, despite the fact that BCA had hired only half of ABN’s employees and had indicated its intent to introduce greater “flexibility” in its operations, BCA was a legal successor to ABN. As a prerequisite for the finding that BCA was a legal successor with a duty to bargain with the charging party unions, the ALJ assessed whether the three units involved in the proceedings were “appropriate” bargaining units under BCA’s operations. The ALJ found that BCA had failed to sustain its burden of demonstrating that the bargaining units the charging party unions sought to represent were inappropriate. As a result, BCA’s duty to bargain attached no later than April 19. The duty to bargain carried with it a duty not to institute unilateral changes in the terms and conditions of employment without providing notice to or bargaining with the charging party unions. BCA therefore engaged in an unfair labor practice in announcing terms and conditions of employment on April 23 without consulting the unions.
BCA, the Board’s General Counsel, and Local 119B-43B filed exceptions to the ALJ’s decision.
1
On December 16, 1994, a panel of
On February 7, 1995, BCA filed a petition for review of the Board’s decision and order, arguing that (1) the historical bargaining units that the charging party unions sought to represent were not appropriate under BCA’s operations, and BCA therefore had no duty to recognize or bargain with the unions; and (2) BCA’s announcement of terms and conditions of employment on April 23 did not constitute an unlawful unilateral change. The General Counsel cross-petitioned for enforcement.
II. Discussion
An employer’s collective bargaining obligation derives from subsection 8(a)(5) of the NLRA which prohibits an employer from refusing “to bargain collectively with the representatives of his employees, subject to the provisions of [subsection 9(a) of the Act].” 29 U.S.C. § 158(a)(5). Subsection 9(a) identifies the representative designated by a majority of the employees in a unit appropriate for collective bargaining purposes as the exclusive bargaining representative of those employees. 29 U.S.C. § 159(a). By conjunctive application of these two subsections, the union designated by a majority of employees in an “appropriate” bargaining unit may compel the employer to negotiate as to the terms and conditions under which employees of that bargaining unit will work. In the instant case, the charging party unions had collective bargaining relationships with ABN, not BCA. Nevertheless, it has long been held that under certain circumstances a “successor” employer may be required to presume that the representative of a bargaining unit continues to enjoy the support of a majority of the employees in that unit and to negotiate with the unit’s bargaining representative.
Many of the principles governing the inquiry into whether and at what point an employer becomes a legal successor with a duty to recognize and bargain with an “incumbent” union were established in
NLRB v. Burns International Security Services, Inc.,
More complicated is the question of
when
a legal successor’s duty to bargain will attach. In
Bums,
the Court rejected the Board’s rule that a successor must in all circumstances bargain with an incumbent union
before
instituting employment terms different from those prevailing under the predecessor’s collective bargaining contract. The Court thus concluded that ordinarily a successor may set the initial terms and conditions of employment—different from the substantive terms of the previously negotiated collective bargaining agreement—without bargaining.
Id.
at 281-86,
Although an ordinary
successor
— i.e., one that does not make it “perfectly clear” that it intends to retain its predecessor’s employees — may unilaterally set the
initial
terms and conditions of employment, the
Bums
Court concluded that a successor may ultimately acquire a duty to recognize and bargain with the representative of the predecessor’s employees. In
Bums,
that duty was found to attach because a majority of the successor’s employees in an appropriate bargaining unit had been employed by the predecessor.
In the instant case, the Board concluded that BCA was not a “perfectly clear” successor to ABN. Because BCA had communicated to ABN’s unions in March and early April 1990 that it intended to make certain changes in the terms and conditions of employment, there existed a real question as to whether ABN’s employees would accept the offered terms and enter into an employment relationship with BCA. Thus, it could not be “perfectly clear” from the outset that BCA would ultimately draw a majority of its employees in the bargaining units in question from ABN’s work force. As of April 19, however, BCA had completed its hiring. Nearly all of BCA’s employees were then former ABN employees. The Board concluded that, under these circumstances, BCA had a duty to bargain with the charging party unions as of April 19. The duty to bargain encompassed a duty not to impose unilateral changes in the terms and conditions of employment' without notice to or bargaining with unions that are presumed to enjoy majority support among employees in a bargaining unit. The Board therefore found that BCA committed an unfair labor practice when it introduced terms and conditions of employment on April 23 without giving the unions prior notice and an opportunity to negotiate.
To sustain and enforce the Board’s order, we must accept two disputed conclusions underlying the Board’s holding that BCA acquired a duty to bargain as of April 19. First is the Board’s factual determination
We review these conclusions in reverse order. We find no merit in BCA’s argument that, in the absence of a demand by the charging party unions for recognition or bargaining, no collective bargaining relationship would have existed between BCA and the unions. We then consider BCA’s argument that the Board’s finding of unit appropriateness is unsupported by the record evidence. We reject this contention as well.
A. Significance of Bargaining Demand in Ordinary Successorship Cases
As previously noted, in Fall River Dyeing the Court addressed the question of when a successor’s obligation to bargain with an “incumbent” union attaches. The Court upheld the Board’s conclusion that a bargaining obligation attached in that case although the union had made a premature bargaining demand — that is, it had demanded bargaining prior to the successor’s hiring of a substantial and representative complement of employees. The Board’s conclusion was based on its finding that the union’s bargaining demand was “continuing in nature.” The Court reasoned as follows:
[T]he Board’s “continuing demand” rule is reasonable in the successorship situation. The successor’s duty to bargain at the “substantial and representative complement” date is triggered only when the union has made a bargaining demand. Under the “continuing demand” rule, when a union has made a premature demand that has been rejected by the employer, this demand remains in force until the moment when the employer attains the “substantial and representative complement.”
Id.
at 52,
We are unpersuaded. To be sure, several courts of appeals and Board cases applying
Fall River Dyeing
unequivocally state that the concurrence of two circumstances is required to trigger a bargaining obligation on the part of an “ordinary”
(i.e.,
not “perfectly clear”) successor: (1) the hiring of a “substantial and representative complement” of employees, a majority of whom were employed by the predecessor; and (2) the existence of an outstanding demand by the union for recognition or bargaining.
See Nephi Rubber Prods. Corp. v. NLRB,
Suceessorship does not automatically carry with it the obligation to bargain with the union that represented the predecessor’s employees. Nor does the fact that the union represents a majority of the successor’s employees in an appropriate unit operate alone to invoke the bargaining obligation; and this is so even when the successor has attained a “substantial and representative complement” of employees. The bargaining obligation — albeit potentially present when suceessorship and representative complement are established— must be triggered by a demand for recognition or bargaining.
Neither the ALJ nor the Board discussed the requirement of a bargaining demand in this case. In defending the Board’s decision, the General Counsel does not argue that the charging party unions demanded recognition prior to the employer’s April 23 action allegedly altering the terms and conditions of employment. Rather, the General Counsel argues that no bargaining demand was required. First, the General Counsel contends that a successor has an obligation to bargain over terms and conditions of employment once it is clear that the majority of the employees in a bargaining unit were drawn from the predecessor’s work force, regardless of whether the union has made a valid bargaining demand. Second, the General Counsel claims that no specific bargaining demand is required where an employer imposes, without notice, changes to the terms and conditions of employment. That is, where a union did not receive prior notice of possible changes as to a mandatory subject of collective bargaining, it cannot be thought to have waived its right to bargain as to such changes by failing to make a bargaining demand. Because we accept a variant of the first argument, we need not address the second.
Although the rule invoked by BCA here— that the concurrence of the hiring of a substantial and representative complement of employees, a majority of whom had been employed by the predecessor, and a bargaining demand is required to trigger an employer’s duty to bargain — has been broadly stated, it developed within a specific factual context: where “there is a start-up period by the new employer while it gradually builds its operations and hires employees.”
Fall River Dyeing,
While the two-pronged rule of
Fall River Dyeing
may be appropriate in a situation involving the staggered or gradual hiring of employees during a start-up period, or even the hiring of employees after a prolonged delay between the closing and reopening of a business, we do not find it appropriate here. Where a successor rebuilds an operation over a period of time or where there is a hiatus between the closing and reopening of an enterprise, there may be considerable doubt as to whether a union that enjoyed the support of a majority of a predecessor’s bargaining unit continues to do so under the successor’s operation. Here, however, the employer hired its full complement of employees at once, shortly after the change in ownership of the business. Accordingly, the fact that the majority of the employees in each bargaining unit were former ABN employees was immediately clear to BCA. BCA could easily discern its obligation to
We therefore find those cases involving gradual hiring over a start-up period or involving a hiatus in operations, in which courts and the Board have linked a determination of a duty to bargain with a bargaining demand, sufficiently distinguishable from the instant case to warrant application of a different rule here.
Cf. Nephi Rubber Prods.,
We therefore conclude that the absence of a bargaining demand in this case— which involves neither a prolonged start-up period and gradual or staggered hiring of employees nor a significant hiatus in operations, but rather, a rapid transition period with the immediate hiring of a full employee complement — does not preclude a finding of a duty to bargain on the part of BCA.
4
We turn to BCA’s remaining contentions. We address at length only BCA’s argument that the ALJ and the Board erred in concluding that the bargaining units the charging party unions sought to represent remained “appropriate” under BCA’s operations, finding the remainder of BCA’s contentions to be insubstantial.
B. Unit Appropriateness Under BCA’s Operations
BCA challenges on two grounds the determination that the bargaining units in question remained appropriate after BCA took over the plant. First, BCA contends that the Board improperly applied a rebuttable presumption in this case in favor of the appropriateness of historical bargaining units. BCA argues that the Board should instead have conducted the “community-of-interest” analysis that it typically employs in determining whether a bargaining unit is appropriate; bargaining history is only one of several factors considered under that approach. Second, BCA suggests that it succeeded in overcoming the presumption in any event.
We examine each argument in turn.
1. Board’s Use of a Rebuttable Presumption in Favor of Historical Units
In concluding that BCA had failed to demonstrate that the three bargaining units the charging party unions sought to represent were inappropriate, the Board reasoned as follows:
[T]he Board has consistently held that long-established bargaining relationships will not be disturbed where they are not repugnant to the Act’s policies. The Board places a heavy evidentiary burden on a party attempting to show that historical units are no longer appropriate.
We find BCA’s argument unpersuasive. We have previously acknowledged the power of the Board to apply rebuttable presumptions regarding the appropriateness of bargaining units. Most recently, in
Staten Island University Hospital,
we found that power to be “beyond dispute,” recognizing that the Board “is not required to exercise ‘standardless discretion in each case’” and “has authority to ‘resolve certain issues of general applicability unless Congress clearly expresses an intent to withhold that authority.’ ”
A rule such as the one invoked by the Board here—favoring long-established bargaining relationships—is “reviewable for consistency with the Act, and for rationality.”
Beth Israel Hosp. v. NLRB,
BCA contends, however, that the Board’s reliance on the presumption was improper in this case. Specifically, BCA claims that the application of a presumption in favor of historical bargaining units is not rational here, where the historical bargaining units have long gone unchallenged despite significant changes in the technology of the high-security printing industry. 6
The rationality of applying a particular presumption need not be demonstrated by reliance on testimonial evidence in the case in which the Board invokes the presumption,
Big Y Foods, Inc. v. NLRB,
2. Board’s Finding that BCA Failed To Overcome Presumption in Favor of Existing Bargaining Units
BCA contends that even if the Board rationally applied here a presumption that long-established bargaining units remain appropriate, BCA has overcome that presumption. BCA claims that, upon reopening the plant, it significantly restructured the workplace. As a result, “[n]ot one of the [charging party] unions sought to represent a properly severable group of employees.” Brief of Petitioner-Cross-Respondent at 31. BCA first emphasizes that it made clear prior to hiring its employees that it intended to develop a more “flexible” production process; it launched a program of “cross-utilization” almost immediately, as a result of which employees of the bargaining units in question performed functions largely indistinguishable from those performed by other BCA employees. Second, BCA claims that all BCA employees were paid on the same hourly scale, were covered by the same benefit plans, and worked the same hours.
In relying on the fact that all BCA employees had the same hours, wages, and benefits, BCA refers to the state of affairs
following
the April 23 institution of terms and conditions of employment. Like the Board and the ALJ, we decline to consider those changes in determining unit appropriateness. Based on the testimony of several ABN employees, the ALJ and the Board found that the only changes BCA officers announced as terms and conditions of employment were that employee health benefits would be extended for a period of sixty days and that BCA intended to introduce greater flexibility in the plant’s operations.
We turn to BCA’s argument that it restructured the workplace, integrating the functions of various employees and rendering the bargaining units in question — which had developed along strict craft lines — inappropriate. The Board rejected BCA’s position, concluding that the employees in the three bargaining units at issue in this case “continued performing the same or substantially the same work as they had prior to the change in ownership, only occasionally filling in as needed on tasks otherwise assigned to employees in other bargaining units.”
a. Local 1-P
Local 1-P represented six photoengravers employed by ABN. ABN’s photoengravers prepared film images of designs for transfer to plates used on the facility’s printing presses. Three of the six workers represented by Local 1-P were rehired by BCA. BCA contends that it immediately expanded the duties of the photoengravers and submitted
b. District 15
District 15 represented four ABN machinists. They were responsible for preparing plates for use on the printing presses, by “grinding” the back of the plates, bending the plates to the shape of the press, and punching holes in the plates for press clamps. In addition, the machinists maintained and repaired the presses, building parts when necessary. BCA hired two District 15 employees. BCA contends that other employees share machinists’ duties: those who operate the presses are responsible for more maintenance than they had been under ABN, and others grind and bend plates, a task previously performed exclusively by machinists. Again, BCA’s contention that many other employees perform tasks traditionally assigned to the machinists is contradicted by the relevant employee testimony. Both BCA machinists testified that they perform the same duties under BCA as they did under ABN. One machinist testified that, beginning in November or December 1990, he was trained to apply serial numbers to documents (such as visas). The testimony suggests that only the machinists grind plates and that others bend and punch plates only if the machinists are “overloaded.”
c. Local 119B-USB
Local 119B-43B represented 13 workers engaged in finishing operations at ABN. ABN’s finishing workers would count and examine printed sheets containing multiple documents, remove those with imperfections, and cut or otherwise separate the documents. Nine of the workers represented by Local 119B^13B were rehired by BCA BCA contends that it immediately introduced changes so that former finishing workers of ABN— characterized, along with other employees in BCA’s printing department, as “General Workers” — began to perform a variety of other tasks, and that other employees began to perform tasks formerly exclusively performed by the finishing workers. Specifically, according to BCA, finishing workers now perform tasks further along in the production process (such as shrink-wrapping, packing, and storing products) as well as tasks performed earlier in the production process (such as “unwinding” — meaning unrolling metal printing plates from the spool on which they are shipped). As with Local 1-P and District 15 employees, the Local 119B — 43B employees do not appear to have performed additional duties until several months after the reopening of the facility, or to have performed those duties regularly. Thus, a 119-43B employee testified that after five months she was trained to work on the unwinding machine and had done so on two or three occasions.
Based on our review of the record, we conclude that substantial evidence supports the Board’s finding that employees in the units in question continued for some time to perform substantially the same work as they had prior to the change in ownership of the facility, only occasionally performing tasks assigned to employees in other bargaining units and being trained to perform other tasks several months after BCA reopened the plant. We are unpersuaded by the dissenting Board Member’s suggestions that significant changes in the allocation tasks were “already in the works before [BCA] hired its employee complement” and that
Nonetheless, we do not mean to suggest that the record would admit only of one finding. Some of BCA’s documentary evidence on the distribution of work responsibilities under ABN and BCA at the facility appears to be corroborated by testimony of supervisors or officers of BCA. However, we are mindful that in reviewing a decision of the Board as to unit appropriateness, our task is not to substitute our judgment for that of the Board, but to determine whether the Board’s conclusion is supported by substantial evidence on the record as a whole. We may not “displace the Board’s choice between two fairly conflicting views.”
Universal Camera Corp. v. NLRB,
We recognize that, in upholding the Board’s findings and conclusions, we sustain an agency order requiring BCA to recognize three unions that together claim to represent only one quarter of BCA’s employees. As a result, BCA may encounter additional obstacles in its efforts to achieve further integration of its operations, if that is indeed its goal. In its decision, the Board alluded to these difficulties, recognizing that unit fragmentation may result from technological changes in the printing industry and emphasizing that the Board’s unit clarification procedures provide a mechanism for “ensuring that bargaining units continue to reflect the reality of the workplace.”
Conclusion
To summarize:
1. We find this case sufficiently distinguishable from Fall River Dyeing and its progeny to warrant the conclusion that the charging party unions need not have demanded recognition and bargaining to trigger BCA’s duty to bargain in this ease. Instead, the bargaining obligation was triggered by BCA’s virtually immediate hiring of a full complement of employees, nearly all of whom were former ABN employees.
2. We likewise reject BCA’s claim that the Board erred in concluding that the bargaining units the charging party unions seek to represent were appropriate.
a. We find no error in the Board’s application of a presumption in favor of the appropriateness of long-established bargaining units.
b. We conclude that the Board’s finding that BCA failed to overcome this presumption was supported by substantial evidence on the record as a whole.
3. We have considered the remainder of BCA’s arguments and find them to be without merit.
Accordingly, the petition for review is denied and the petition for cross-enforcement is granted.
Notes
. The General Counsel and Local 119-43B challenged the ALJ's conclusion that BCA was not a "perfectly clear" successor to ABN — that is, that BCA had no duty to bargain with the unions prior to establishing its initial terms of employment. See discussion infra p. 643.
.
Bums
actually contained conflicting language as to whether the proper inquiry required (1) a determination of whether a majority of the employees in the
successor's
bargaining unit had been employed by the predecessor; or (2) a determination of whether a majority of the employees in the
predecessor’s
bargaining unit were hired by the successor.
Compare
. The union in Bums did make a bargaining demand prior to the successor’s hiring of the predecessor's employees. Nevertheless, neither the Bums Court nor the Fall River Dyeing Court, in its exposition of Bums, appeared to attach legal significance to that fact.
. In so holding, we do not fully accept the General Counsel’s position on the question of when a bargaining demand is required to preserve a union’s right to object to the unilateral imposition of terms and conditions of employees. That position appears to be that BCA, though not initially a "perfectly clear” successor, developed or ripened into one after hiring its full complement of employees, nearly all of whom were drawn from ABN’s ranks. We agree with BCA that, absent indicia that an employer intends to
. Thus, we reject BCA’s argument that the terms of employment imposed on April 23 were “initial” terms of employment. Under principles established by the Board and sanctioned over many years by courts of appeals, a successor is not held to the terms of its predecessor’s contract, but to the terms on which it hired its employees. A successor must make clear, before its duty to bargain attaches, that it intends to vary its predecessor’s terms; in so doing, it establishes its "initial” terms.
See International Ass'n of Machinists,
. BCA also argues that changes instituted since BCA’s takeover of the printing facility render the application of a presumption in favor of the appropriateness of long-established bargaining units improper in this case. Evidence of changes instituted by BCA would not cast doubt upon the rationality of applying the presumption, but would demonstrate that the presumption has been overcome in this case. We therefore postpone scrutiny of this evidence. Even if we thought BCA’s position relevant here, as will become clear, BCA fails to establish the factual predicate of this argument—namely that, upon its takeover of the plant, it immediately introduced a new operational structure, as a result of which functions were no longer divided along unit lines.