Prime Service, Inc. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2001 Decided October 12, 2001

No. 00-1306

Prime Service, Inc., d/b/a Prime Equipment,
Petitioner

v.

National Labor Relations Board,
Respondent

International Union of Operating Engineers,
Local Union No 3, AFL-CIO,
Intervenor for Respondent

On Petition for Review and Cross-Application
for Enforcement of an Order of the
National Labor Relations Board

Harry J. Secaras argued the cause for petitioner. With
him on the briefs was Howard L. Bernstein.

 Steven B. Goldstein, Attorney, National Labor Relations
Board, argued the cause for respondent. With him on the
brief were Arthur F. Rosenfeld, General Counsel, John H.
Ferguson, Associate General Counsel, Aileen A. Armstrong,
Deputy Associate General Counsel, and Julie B. Broido,
Senior Attorney. Howard E. Perlstein, Deputy Assistant
General Counsel, entered an appearance.

Before: Henderson, Randolph, and Rogers, Circuit
Judges.

Opinion for the Court filed by Circuit Judge Randolph.

Randolph, Circuit Judge: Prime Service, Inc.'s petition to
review and the National Labor Relations Board's cross-
petition to enforce an order of the Board raise the question
whether Prime Service should have been treated as a succes-
sor employer who breached its duty to bargain with the
incumbent union and, if so, whether the Board's affirmative
bargaining order is an appropriate remedy. Also before us is
Prime's motion for an order requiring the Board to reopen
the record. We deny Prime's petition and its motion and
enforce the Board's order.

Prime Service, a Delaware corporation headquartered in
Houston, Texas, rented and sold construction and industrial
equipment. In 1998 Prime entered into an agreement to
acquire the assets of Clementina, Ltd., a company in a similar
line of business in California. Clementina had a collective
bargaining agreement with the Operating Engineers Local
Union No. 3, International Union of Operating Engineers,
AFL-CIO (the "Union"), covering seventeen employees work-
ing at its stores in San Francisco, San Mateo, Sacramento,
San Jose, and Berkeley.

On August 7, 1998, Prime notified the Union that it was in
the process of acquiring Clementina's assets and that it would
meet with Clementina's employees to discuss the sale. In an
August 11 reply, the Union requested a meeting with Prime
and asserted that its collective bargaining agreement with
Clementina should remain in force after the sale. Prime
responded on August 13, stating that although it would

consider Clementina's employees for jobs with Prime, it
would not be bound by the Clementina collective bargaining
agreement. The next day the Union again suggested a
meeting with Prime and cautioned Prime against making any
unilateral changes in the Clementina employees' terms and
conditions of employment.

Sometime between August 25 and 27, Roland M. Katz, the
contracts manager for the Union, and other Union represen-
tatives met with representatives of Prime, including Prime's
director of human resources, regional manager, and in-house
counsel. At this lunch meeting, Prime's representatives ex-
pressed the company's desire to have a "seamless transition,"
and stated that they were thinking of calling the acquired
operation "Clementina/Prime" in order to facilitate a smooth
transition. Katz stated the Union's position that Prime had
to recognize Local 3 and had to continue to employ the
Clementina collective bargaining unit employees. The Prime
people stated that they would have to recognize the Union
only if a majority of employees were former Clementina
employees.

The participants also discussed potential locations for con-
ducting negotiations. Katz told Prime's representatives that
the Union always negotiated near the workplaces and sug-
gested Alameda as a location. One of Prime's representatives
proposed Houston; another suggested a location in between
such as Phoenix.

Prime took over Clementina's five unionized facilities on
August 28. Of Clementina's seventeen bargaining unit em-
ployees, twelve accepted Prime's offer of employment. Dur-
ing the next few weeks, several of the twelve employees
resigned, forcing Prime to run advertisements seeking new
employees. Prime also was forced to transfer temporarily
employees from its other facilities. By September 25, 1998,
due to resignations and Prime's hiring of additional non-
Union employees, the former Clementina bargaining unit
employees no longer constituted a majority of Prime's work
force.

 Throughout September and October, the Union repeatedly
contacted Prime regarding its assurance that it would honor
all legal obligations and negotiate with Local Union No. 3 if
legally required to do so. When Prime refused to bargain,
the Union filed an unfair labor practice charge, alleging that
Prime had a duty to bargain with the Union as a successor
employer and that its refusal to bargain violated the National
Labor Relations Act. After a hearing, an Administrative
Law Judge found that Prime had violated sections 8(a)(1) and
(a)(5) of the Act, see 29 U.S.C. ss 158(a)(1) and (a)(5), and
recommended the issuance of a cease and desist order and an
affirmative bargaining order. On March 10, 2000, the Board
affirmed the ALJ's findings, and ordered Prime to bargain
with the Union.

After the Board issued its order, Prime took affirmative
steps on March 24, 2000, to comply by posting a "Notice to
Employees." The notice informed employees that the Board
had found that Prime violated the National Labor Relations
Act and that Prime would not refuse to bargain with the
Union as the exclusive representative of its employees. With-
in three weeks of the posting, fifteen of twenty-six Prime
employees submitted written objections expressing their op-
position to the Union's representing them. This led Prime to
inform the Union that it would not proceed with collective
bargaining because a majority of employees opposed Union
representation.

I.

We shall deal first with the Board's decision that Prime
was a successor employer obligated to recognize and bargain
with the Union. In order to preserve industrial peace during
the transition between employers, the presumption of majori-
ty support ordinarily enjoyed by a certified union may contin-
ue in successor situations, thereby obligating a successor
employer to bargain with its predecessor's union. See Fall
River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41
(1987); NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272
(1972). This presumption of majority status attaches if there

is a "substantial continuity" between the predecessor's busi-
ness and that of the new employer; if the incumbent union
has made a bargaining demand; and if the new employer has
hired a "substantial and representative complement" of its
work force, a majority of which consists of the predecessor's
employees. See Williams Enters., Inc. v. NLRB, 956 F.2d
1226, 1232 (D.C. Cir. 1992). These are primarily factual
inquiries, and to that extent the Board's judgment must be
sustained if it is supported by substantial evidence. Fall
River, 482 U.S. at 43; Williams, 956 F.2d at 1232.

The parties agree that substantial continuity existed be-
tween Prime and Clementina. The dispute is whether the
Union made a valid bargaining demand on Prime before
August 28 and whether Prime had hired a substantial and
representative complement of its work force by that date.

A. Demand

A union need utter no particular words to convey its
demand for bargaining with a successor employer. The
demand may be in writing or it may be oral. Although it is
customary for a union seeking recognition to inform the
employer that it represents a majority of employees, even
this elementary representation may be unnecessary when the
successor has retained the entire workforce and hired no one
else. See Burns Int'l Sec. Servs., 406 U.S. at 278-79. Still, in
conveying its intentions to the successor the union must do
more than simply suggest a meeting without specifying the
subjects of the meeting or when or where the union would
like to get together. We have held that such a vague
proposal is not enough to trigger an employer's s 8(a)(5)
obligation to bargain. Williams, 956 F.2d at 1233; see also
K & S Circuits, Inc., 255 N.L.R.B. 1270, 1297 (1981); Sheboy-
an Sausage Co., 156 N.L.R.B. 1490, 1500-01 (1966). If the
union does not clearly express its purpose, if it does not
explicitly demand bargaining, then "some indicia of a demand,
such as a suggested meeting place and time, proposed topics,
and a method for reply" should be conveyed to the new

employer. Williams, 956 F.2d at 1233. The burden is on the
union to make its desires known.

For example, in K & S Circuits, the Board held that a
union's verbal communication to a company stating that its
employees were forming a union and asking to negotiate did
not constitute a request for recognition and bargaining. 255
N.L.R.B. at 1297. The Board relied on the fact that the
communication "did not claim majority status, nor did it
indicate how, or to whom" the company was to reply. Id.
Similarly, in Williams, we held that a phone call indicating
that the union "would ... like to represent the employees of
the new company" and "would like to have an opportunity to
discuss, perhaps negotiate" was not a sufficient request for
recognition. 956 F.2d at 1229. The call was vague and
nothing more than a suggestion. Id. at 1233.

The facts of this case are different. Katz testified that he
made a demand for recognition on behalf of the Union in
early August. The ALJ credited his testimony. Katz also
testified that when they met for lunch at the end of August he
informed the Prime representatives of the Union's position
that the company had to recognize Local 3. Katz further
testified that the Union and Prime then discussed potential
bargaining locations, and the subject of the transition from
Clementina to Prime, which was about to occur. Substantial
evidence thus supported the ALJ's and the Board's finding
that the Union made a bargaining demand. The Union
requested recognition, and the parties discussed bargaining
locations and the subject of negotiation.

We recognize the line of judicial authority holding that a
bargaining demand is not required in cases--such as this
one--in which there has been an immediate rather than a
gradual transition period. See Banknote Corp. of America v.
NLRB, 84 F.3d 637, 645-46 (2d Cir. 1996). Whether this
circumstance sufficiently distinguishes Fall River, 482 U.S. at
47, and Williams, 956 F.2d at 1230, 1232-34, which required a
bargaining demand in the context of gradual hiring during
prolonged start-up periods, is an issue about which we ex-

press no opinion in light of our agreement with the Board
that the Union did make a bargaining demand.

B. Substantial and Representative Complement

Prime also challenges the ALJ's (and the Board's) finding
that a substantial and representative complement of the
workforce existed at the five California stores on August 28.
In fixing the time for determining the composition of the
successor's workforce, the "substantial and representative
complement" rule reconciles the employees' interest in choos-
ing a bargaining agent with their interest in being represent-
ed at the earliest possible time. Fall River, 482 U.S. at 47, 48
& n. 15. "If, at this particular moment,"--the moment when
a substantial and representative complement is on board--"a
majority of the successor's employees had been employed by
its predecessor, then the successor has an obligation to
bargain with the union that represented these employees."
Id. at 47.

Deciding when a substantial and representative comple-
ment existed can be difficult, particularly when the new
employer has plans to expand or alter operations. See Sulli-
van Indus. v. NLRB, 957 F.2d 890, 895-96 (D.C. Cir. 1992);
see also Pennsylvania Transformer Tech. v. NLRB, 254 F.3d
217, 223 (D.C. Cir. 2001). Here the matter is relatively
simple. Prime was not rebuilding a moribund business and
the ALJ properly refused to give weight to the company's
unsupported assertions that it planned to expand the work-
force. Prime was intent on having what it described as a
"seamless transition." Appendix 65-66 (testimony of Roland
M. Katz). When Prime took over the stores on August 28, it
encountered a shortage of workers because several former
Clementina employees had rejected their employment offers
or had quit immediately. But the company quickly brought
in new workers to fill the vacancies. Employing twelve of
Clementina's seventeen former bargaining unit employees, it
continued Clementina's full operations on August 28 without
any hiatus. See NLRB v. Cutter Dodge, Inc., 825 F.2d 1375,
1378 (9th Cir. 1987). Prime itself wrote the Union on Octo-

ber 28 stating that its "substantial and representative comple-
ment of employees" consisted of eighteen workers, only one
more than the contingent under Clementina. See Appendix
345. Substantial evidence therefore supported the ALJ's
finding, adopted by the Board, that August 28 was the correct
date for determining whether the successor had a majority of
union members in its workforce. On that date a majority of
Prime's employees were former Clementina employees.
Prime was thus a successor employer obligated to recognize
and bargain with the Union. The Board properly decided
that the company's failure to do so violated sections 8(a)(1)
and (a)(5) of the National Labor Relations Act.

II.

This brings us to Prime's motion to reopen the record.
Prime asserts that regardless whether the Board correctly
found it to be a successor employer, it still had no duty to
bargain with the Union because new evidence showed that
the Union lacked the support of unit employees. Prime asks
this court to grant its motion to reopen the record pursuant
to s 10(e) of the Act, 29 U.S.C. s 160(e), so that it can adduce
petitions and letters signed by fifteen of twenty-six bargain-
ing unit employees in April 2000 stating that they did not
want to be represented by the Union. Section 10(e) provides
that reviewing courts may order evidence to be taken before
the Board if the party moving for leave to adduce additional
evidence shows "that such additional evidence is material and
that there were reasonable grounds for the failure to adduce
such evidence in the hearings before the Board." See NLRB
v. Mexia Textile Mills, Inc., 339 U.S. 563, 569 (1950). This
information, according to Prime, gave it a good faith doubt
about the Union's majority status.

Once a successor employer develops a "good faith doubt"
about a union's majority status, it is no longer obligated to
recognize and bargain with the union. Williams, 956 F.2d at
1234; see also St. Agnes Med. Ctr. v. NLRB, 871 F.2d 137,
145 (D.C. Cir. 1989). An anti-union petition signed by a
majority of the successor's employees stating that they do not

want to be represented by the union may serve to create such
a good faith doubt. See Williams, 956 F.2d at 1234. But the
Board has adopted a presumption--which this court has
upheld--that an employer's unlawful refusal to bargain taints
any later anti-union petition. See Harter Tomato Prods. Co.
v. NLRB, 133 F.3d 934, 938-39 (D.C. Cir. 1998); see also Lee
Lumber & Bldg. Material Corp. v. NLRB, 117 F.3d 1454,
1458-61 (D.C. Cir. 1997). An employer can rebut this pre-
sumption of taint only by showing : (1) that employee disaf-
fection arose after it resumed recognition of the union; and
(2) that it bargained with the union for a reasonable time
without committing additional unfair labor practices. See
Harter Tomato, 133 F.3d at 939.

Prime did post a notice at some of its locations in compli-
ance with the Board's order, but it never engaged in bargain-
ing with the Union. The company canceled a bargaining
session scheduled for April 13, 2000. Given these facts,
Prime has not rebutted the Board's presumption that an
employer's unlawful refusal to bargain taints any later anti-
union petition.

We reject Prime's argument that we should reopen the
record so that it can demonstrate that at the time the Board
issued the bargaining order (March 10, 2000) the Union no
longer enjoyed majority status. If Prime had objected to the
bargaining order it might have a point. We have held that
before the Board issues a bargaining order on the basis of a
union majority of authorization cards--a Gissel order, after
NLRB v. Gissel Packing Co., 395 U.S. 575 (1969)--the Board
must take into account changes between the time of the
unfair labor practices and the issuance of its order. See
Flamingo Hilton-Laughlin v. NLRB, 148 F.3d 1166, 1170-71
(D.C. Cir. 1998). In mounting this argument Prime assumes
that it may attack the bargaining order, an assumption we
reject for the reasons given in the next section.

III.

Prime argues that the Board erred in issuing the bargain-
ing order without offering a reasoned explanation. This court

has repeatedly held that the Board must supply a reasoned
analysis for issuing a bargaining order rather than milder
relief. See Vincent Indus. Plastics, Inc. v. NLRB, 209 F.3d
727, 738 (D.C. Cir. 2000); Flamingo Hilton-Laughlin, 148
F.3d at 1173. But Prime failed to raise any specific objec-
tions to the propriety of the bargaining order in the Board
proceedings. It merely excepted to the remedy "in its entire-
ty" and to the order "in its entirety." Appendix 350-52
(Exceptions of Respondent/Employer Prime Service, Inc. to
the Administrative Law Judge's Decision). This form of
generalized objection is insufficient to preserve the argument
for appeal. See Quazite Div. v. NLRB, 87 F.3d 493, 497
(D.C. Cir. 1996). Section 10(e) of the Act precludes reviewing
courts from considering objections not first presented to the
Board "unless the failure or neglect to urge such objection
shall be excused because of extraordinary circumstances," 29
U.S.C. s 160(e), circumstances not present here. See
Exxel/Atmos, Inc. v. NLRB, 147 F.3d 972, 978 (D.C. Cir.
1998); Quazite, 87 F.3d at 497-98.

The petition for review and the motion to reopen are
denied. The Board's cross-petition for enforcement is grant-
ed.

So ordered.