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

775 F.2d 425, 120 L.R.R.M. (BNA) 2825, 1985 U.S. App. LEXIS 23734
CourtCourt of Appeals for the First Circuit
DecidedOctober 18, 1985
Docket85-1019
StatusPublished
Cited by13 cases

This text of 775 F.2d 425 (National Labor Relations Board v. Fall River Dyeing & Finishing Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
National Labor Relations Board v. Fall River Dyeing & Finishing Corp., 775 F.2d 425, 120 L.R.R.M. (BNA) 2825, 1985 U.S. App. LEXIS 23734 (1st Cir. 1985).

Opinions

ALVIN B. RUBIN, Circuit Judge.

The National Labor Relations Board found that Fall River Dyeing & Finishing Corporation (the Company) was the successor to Sterlingwale Corporation, most of whose assets the Company acquired when Sterlingwale became insolvent and was liquidated. The Board also found that a premature demand for collective bargaining made by the Union that had represented Sterlingwale’s employees continued in force and became effective against Fall River upon its employment of a representative complement of Sterlingwale employees. Because Fall River, upon reaching its representative complement of employees, did not recognize and bargain with the Union, the Board found that it had violated Section 8(b)(5) and (1) of the National Labor Relations Act. We enforce the Board’s order, finding that substantial evidence on the record as a whole supports the Board’s conclusions and the legal principles it applied do not violate the Act.

I.

For more than thirty years before 1982, Sterlingwale, which was owned by the An-sin family, operated a plant at Fall River, Massachusetts, in which it engaged primarily in dyeing and finishing textiles. Ster-lingwale bought unfinished fabrics for its own account, dyed and finished them, then offered the fabrics for sale to apparel manufacturers. This business is known in the trade as “converting.” Sterlingwale also dyed and finished fabrics owned by other customers to the customers’ specifications, a business known as “commission finishing.” In 1981, sixty to seventy percent of Sterlingwale’s volume was converting and the rest commission finishing.

The process for dyeing and finishing fabrics is the same whether the work is done for resale or on commission. However, the financing and customer relations aspects of the two types of businesses are different. Converting requires capital to buy merchandise and a sales force. Several major national firms are engaged in this business, and it is intensely competitive. Commission finishing serves a different market and involves supplying only the services designated by the customer.

Adverse economic conditions and foreign competition afflicted the textile industry in the 1970’s. Sterlingwale’s business became unprofitable but Ansin, its president and principal stockholder, tried to stay in business because he thought that he “owed that to the community” and to the company’s employees, many of whom had been employed by it for over twenty-five years. Early in 1982, after years of losses amounting to millions of dollars, Sterlingwale ran out of cash and could no longer buy fabric for its converting business. Consequently, Ansin ceased normal production operations and began to liquidate the company, laying off employees and selling its inventory. In July 1982, Sterlingwale employed a professional liquidator to sell the firm’s remaining assets. Sterlingwale then executed an assignment of its assets for the benefit of its creditors.

Through another company, Arthur Friedman, who is now the President of Fall River, acquired Sterlingwale’s equipment [428]*428and the real property formerly used by it at a mortgage foreclosure sale. Friedman’s company conveyed the equipment and leased part of the original Sterlingwale plant to Fall River Dyeing & Finishing.

Fall River, operating out of one of the three former Sterlingwale buildings, began hiring employes on September 20, 1982. The employees then spent approximately four to six weeks on start-up operations, cleaning, relocating and repairing machines. They spent the next four to five weeks on experimental production to ensure that everything was in working order. Following the start-up stage, employees did much the same work they had done for Sterlingwale. The Company conducted all of its operations in what had been Sterling-wale’s production building, using the same machinery and the same basic process. It did commission work, as Sterlingwale had done, but did no converter work.

By a letter dated October 19, the union demanded that Fall River recognize it as its employees’ collective bargaining agent. The Company replied that it did not intend to comply with the request. At that time, the Company was still engaged in start-up operations, and, as the Board found, did not have a representative complement of employees.

The Company’s initial production goal was to have one full shift operation employing fifty-five to sixty employees. Upon reaching that goal, the Company intended to “see how business would be,” and planned to expand to a two-shift operation by April 1983. Such a sixteen-hour operation is desirable, indeed almost essential to the production process because the fabrics emerge from the process wet and the entire operation, including drying, cannot be completed in eight hours.

By November 1982, employees had been hired in virtually all job classifications. In mid-January 1983, the first shift was in full operation and the Company had begun a second shift. At that time, the Company had hired at least fifty percent of those it would ultimately employ in the majority of existing job classifications and 55 of the 106-109 employees it was to employ in April, the month in which the Company reached its anticipated employee complement. Of the fifty-five employees hired by mid-January, approximately thirty-six were former Sterlingwale employees. Eight of the Company’s twelve supervisors were former Sterlingwale supervisors and three of the other four were former Sterlingwale employees. Over half of the dollar volume of the Company’s business came from former customers of Sterlingwale.

The Board found that, as of January 15, 1983, the Company had employed a representative complement of employees in an appropriate unit and that at that time the Company was a successor employer to Sterlingwale. The Board further found that the Union’s bargaining request constituted a continuing demand for recognition and bargaining and that the Company violated Section 8(a)(5) and (1) of the National Labor Relations Act1 by refusing to recognize and bargain with the Union once its successor bargaining obligation arose.

Member Hunter dissented on the ground that the Company did not have a representative complement of unit employees at the time of the Union’s October 19 recognition demand and the Company’s October 22 refusal. Absent a renewed Union bargaining demand at a time when the Company had reached a representative complement, Member Hunter would find no bargaining obligation.

II.

“[A] mere change of employers or of ownership in the employing industry,” the Supreme Court held in NLRB v. Burns International Security Services, Inc.,2 does not affect the Board’s certification of a bargaining unit. The successor employer’s obligation to bargain is founded on the mandate of Sections 8(a)(5) and 9(a) of the [429]*429Act3—an employer must bargain with “[Representatives designated or selected for the purposes of collective bargaining by the majority of the employees in a unit appropriate for such purposes.”4 The successor employer’s obligation also arises from the rule that a mere change in ownership does not destroy the presumption of continuing employee support for a certified union.5 “The basic rationale is that a mere change in ownership, without an essential change in working conditions, would not be likely to change employee attitudes toward representation.”6

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Bluebook (online)
775 F.2d 425, 120 L.R.R.M. (BNA) 2825, 1985 U.S. App. LEXIS 23734, Counsel Stack Legal Research, https://law.counselstack.com/opinion/national-labor-relations-board-v-fall-river-dyeing-finishing-corp-ca1-1985.