Fall River Dyeing & Finishing Corp. v. National Labor Relations Board

482 U.S. 27, 107 S. Ct. 2225, 96 L. Ed. 2d 22, 1987 U.S. LEXIS 2364, 55 U.S.L.W. 4706, 125 L.R.R.M. (BNA) 2441
Supreme Court of the United States·Decided June 1, 1987·No. 85-1208·Published·Cited by 483 cases

Opinions

Justice Blackmun

delivered the opinion of the Court.

In this case we are confronted with the issue whether the National Labor Relations Board’s decision is consistent with NLRB v. Burns International Security Services, Inc., 406 U. S. 272 (1972). In Bums, 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 pro[30] ceeds 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.

I

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 condi[31] tions 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 192-195. 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 could “resurrect the business.” Id., at 114-115, 146-147. Ansin felt that he owed it to the community and to the employees to keep Sterlingwale in operation. Id., at 103-104.

For almost as long as Sterlingwale had been in existence, its production and maintenance employees had been represented by the United Textile Workers of America, AFL-CIO, Local 292 (Union). Id., at 60-61. The most recent collective-bargaining agreement before Sterlingwale’s demise had been negotiated in 1978 and was due to expire in 1981. By an agreement dated October 1980, however, in response to the financial difficulties suffered by Sterlingwale, the Union agreed to amend the 1978 agreement to extend its expiration date by one year, until April 1, 1982, without any wage increase and with an agreement to improve labor productivity. Id., at 353-355. In the months following the final February 1982 layoff, the Union met with company officials over problems involving this job action, and, in particular, Sterlingwale’s failure to pay premiums on group-health insurance. Id., at 66-67, 86,131. In addition, during meetings with Ansin, Union officials told him of their concern with Sterlingwale’s future and their interest in helping to keep the [32] company operating or in meeting with prospective buyers. Id., at 67-68, 86, 146-147.

In late summer 1982, however, Sterlingwale finally went out of business. It made an assignment for the benefit of its creditors, id., at 115,147, primarily Ansin’s mother, who was an officer of the corporation and holder of a first mortgage on most of Sterlingwale’s real property, id., at 113, and the Massachusetts Capital Resource Corporation (MCRC), which held a security interest on Sterlingwale’s machinery and equipment, id., at 113-114. Ansin also hired a professional liquidator to dispose of the company’s remaining assets, mostly its inventory, at auction. Id., at 115.

During this same period, a former Sterlingwale employee and officer, Herbert Chace, and Arthur Friedman, president of one of Sterlingwale’s major customers, Marcamy Sales Corporation (Marcamy), formed petitioner Fall River Dyeing & Finishing Corp. Chace, who had resigned from Ster-lingwale in February 1982, had worked there for 27 years, had been vice president in charge of sales at the time of his departure, and had participated in collective bargaining with the Union during his tenure at Sterlingwale. Id., at 189, 232. Chace and Friedman formed petitioner with the intention of engaging strictly in the commission-dyeing business and of taking advantage of the availability of Sterlingwale’s assets and workforce. Id., at203-204, 223-224. Accordingly, Friedman had Marcamy acquire from MCRC and Ansin’s mother Sterlingwale’s plant, real property, and equipment, id., at 238-272, and convey them to petitioner, id., at 278-289.1 Petitioner also obtained some of Sterlingwale’s remaining inventory at the liquidator’s auction. Id., at 200-202,290-293. Chace became petitioner’s vice president in charge of operations and Friedman became its president. Id., at 190, 232.

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Fall River Dyeing & Finishing Corp. v. National Labor Relations Board, 482 U.S. 27, 107 S. Ct. 2225, 96 L. Ed. 2d 22, 1987 U.S. LEXIS 2364, 55 U.S.L.W. 4706, 125 L.R.R.M. (BNA) 2441 (1987).

482 U.S. 27 (Fall River Dyeing & Finishing Corp. v. National Labor Relations Board) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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