NLRB’s Revised Successor Bar Doctrine Upheld by Federal Appellate Court

The U.S. Court of Appeals for the First Circuit upheld the National Labor Relations Board’s 2011 revision to its successor bar doctrine, under which a successor employer is required to recognize the union’s bargaining relationship with the prior employer for some reasonable period of time.

Background on the Successor Bar Doctrine: The issue of the relationship between the union and a successor employer has been subject to inconsistent treatment by the NLRB over the years. Under the 1975 case of Southern Moldings, Inc., at the time the successor assumed control of the business, there existed a rebuttable presumption of union support, meaning that the successor employer would be obligated to bargain with the union unless it could show that the union did not have support from the majority of the bargaining unit. In 1999, however, the NLRB issued St. Elizabeth Manor, Inc., which created the successor bar doctrine by stating that “the union is entitled to a reasonable period of time without challenge to its majority status.” Only three years later, however, in 2002 under the Bush administration, the NLRB issued MV Transportation, which returned to the rebuttable presumption. The NLRB again changed course in 2011, in the case of UGL-UNICCO Service Co., which re-established the successor bar with some variations: (1) defining the previously undefined “reasonable period” to be between six months and a year, depending on the circumstances, and (2) in successorship situations involving the execution of a collective bargaining agreement, the bar would last only two years rather than three.

The First Circuit’s Decision: In the current case of NLRB v. Lily Transportation Corp., the employer urged the First Circuit to reject the NLRB’s reinstatement of the successor bar, but the Court refused, finding that the NLRB had offered a “reasoned explanation” for its change in position. Specifically, the NLRB had cited a sharp increase in mergers and acquisitions, with statistics, which increased the number of successor situations, thereby increasing “the potential volatility in union-management relationships across the national labor market,” and resulting in a greater likelihood of litigation challenging union support during the unsettled period immediately following successorship, which would place a greater burden on the administrative law machinery including the NLRB itself. In addition, the First Circuit found that the NLRB, by implementing the above-mentioned variations to the successor bar doctrine, imposed reasonable limits to the doctrine, providing for “a shorter period of union protection and a correspondingly earlier opportunity to challenge the ensconced union, whether by employees … or by the successor or a competing union.”

Thus, the First Circuit determined that this revised approach to the successor bar provides “a reasonable balance between the Section 7 right of employee choice and the need for some period of stability to give the new relationships a chance to settle down.” For employers, however, this approach gives them less flexibility in their dealings with the union, even where, as in this case, a clear majority of the employees had expressed the desire to no longer be represented by the union.