NLRB v. Lily Transportation Corp

Filing

OPINION issued by William J. Kayatta , Jr., Appellate Judge; David H. Souter,* Associate Supreme Court Justice and Bruce M. Selya, Appellate Judge. Published. *Hon. David H. Souter, Associate Justice (Ret.) of the Supreme Court of the United States, sitting by designation. [15-2398]

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Entry ID: 6080756

United States Court of Appeals
For the First Circuit
No. 15-2398
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v.
LILY TRANSPORTATION CORPORATION,
Respondent.

APPLICATION FOR ENFORCEMENT OF AN ORDER
OF THE NATIONAL LABOR RELATIONS BOARD

Before
Kayatta, Circuit Judge,
Souter, Associate Justice,*
and Selya, Circuit Judge.

Jared David Cantor, Counsel, with whom Kira Dellinger Vol,
Supervising Attorney, Richard F. Griffin, Jr., General Counsel,
Jennifer Abruzzo, Deputy General Counsel, John H. Ferguson,
Associate General Counsel, and Linda Dreeben, Deputy Associate
General Counsel, were on brief, for petitioner.
Kay H. Hodge, with whom Alan S. Miller, Katherine D. Clark,
and Stoneman, Chandler & Miller LLP were on brief, for
respondent.

March 31, 2017

*

Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.

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SOUTER, Associate Justice.

The

Entry ID: 6080756

National

Labor

Relations Board applies for enforcement of its bargaining order
against

Lily

Transportation

Corporation.

We

grant

the

application.
I.
Pumpernickel Express, Incorporated, carried automotive
parts from warehouses in Mansfield, Massachusetts, to Toyota and
Chrysler dealerships in the region.

Pumpernickel's drivers were

represented by the International Association of Machinists and
Aerospace Workers, AFL-CIO, District Lodge 15, Local 447.
In October 2013, Pumpernickel filed for bankruptcy,
and

Lily

business
hired

subsequently
that

many

involved
of

and

promptly

demanded

produced

began

operations
that

portion

distributing

Lily

representative,

signed

the

Pumpernickel's

drivers,

bargaining

obtained

statements

former
in

November

Lily

for

Pumpernickel's
Toyota.

employees,

recognize

but
it

parts

of

as

refused.

allegedly

including

2013.

it

had

Lily

The
the

drivers'

Lily

received

Union

later
from

a

majority of the drivers saying that they no longer wished to be
represented by the Union.
The Union filed an unfair labor practice charge with
the National Labor Relations Board, claiming that Lily's refusal
to bargain violated Sections 8(a)(1) and 8(a)(5) of the National

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Labor Relations Act.1

After a hearing, the Administrative Law

Judge

distributing

found

that

in

for

Toyota,

Lily

was

a

"successor employer" to Pumpernickel, that is, an employer who
"makes

a

business

conscious
and

to

decision

hire

a

to

majority

maintain
of

its

generally

the

employees

from

same
the

predecessor," Fall River Dyeing & Finishing Corp. v. NLRB, 482
U.S. 27, 41 (1987); accord Asseo v. Centro Médico Del Turabo,
Inc., 900 F.2d 445, 450-51 (1st Cir. 1990).

The Judge held that

Lily, as a successor, was required under Fall River to recognize
and bargain with the Union, and rejected Lily's position that
its refusal to bargain about terms of employment in the affected
unit

was

justified

repudiation.

by

the

signed

employee

statements

of

Rather, the Judge explained, under the "successor

bar doctrine," as adopted by the Board in UGL-UNICCO Service
Co., 357 N.L.R.B. 801 (2011), an incumbent union is entitled to
represent

a

successor

employer's

employees

for

a

reasonable

period of time for bargaining before its majority status may be
questioned.
The Board affirmed, agreeing with the Administrative
Law Judge that insofar as Lily was a successor employer, it was

1

Section 8(a)(1) makes it an unfair labor practice for an
employer "to interfere with, restrain, or coerce employees in
the exercise of [their organizational] rights."
29 U.S.C. §
158(a)(1). Under Section 8(a)(5) it is an unfair labor practice
for an employer "to refuse to bargain collectively with the
representatives of his employees." Id. § 158(a)(5).

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obligated to bargain with the Union, and that UGL barred Lily
from challenging the Union's majority status until a reasonable
period

of

accordingly

time

for

ordered

bargaining

Lily

to

had

recognize

elapsed.
and

The

bargain

Board

with

the

Union.
The Board now asks this Court to enforce its order
over Lily's objection.
relying

on

UGL's

instead

substitute

Lily submits that the Board erred in

successor
only

a

bar

doctrine

rebuttable

and

that

presumption

we

of

should

majority

union support under the rule of MV Transportation, 337 N.L.R.B.
770 (2002), of the kind the Board adopted and enforced prior to
its rejection in UGL.

Lily also says that it has rebutted that

presumption with its documentary evidence that a majority of the
affected drivers no longer support the Union.
II.
Lily's objection to the successor bar implicates some
doctrinal history.
neither

bar

nor

The National Labor Relations Act provides
presumption

to

address

the

unstable

labor

climate that can develop in successor employment, a silence the
Board has seen as leaving a statutory gap needing to be filled.
In 1999, it adopted a successor bar partially resembling its
present iteration, in St. Elizabeth Manor, Inc., 329 N.L.R.B.
341

(1999).

There,

the

Board

held

that

"once

a

successor

employer's obligation to recognize an incumbent union attaches

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[under Fall River], the union is entitled to a reasonable period
of

time

for

bargaining

status."

Id.

at

overruling

its

previous

without

341.

The

challenge

Board

decision

of

to

recognized
some

its

majority

that

it

twenty-four

was

years

earlier in Southern Moldings, Inc., 219 N.L.R.B. 119 (1975),
which

had

held

that

at

the

beginning

of

a

successorship

situation a union generally enjoys only a rebuttable presumption
of continuing majority membership support.

St. Elizabeth Manor,

329 N.L.R.B. at 341.
Just three years later, though, in MV Transportation,
337 N.L.R.B. 770, the Board overturned St. Elizabeth Manor in
favor of the rebuttable presumption.

The Board declared that

the presumption represented the appropriate balance between the
two "fundamental purposes" of the National Labor Relations Act,
that is, "employee freedom of choice and the maintenance of
stability in bargaining relationships."
circumstances,

it

said,

the

Id. at 772-73.

successor

bar

could

In some
preclude

employees from making a choice of representation "for as long as
several years," id. at 773, and as an example it cited the
possible combination of the successor bar and a bar running for
three

years

from

agreement, id.
dramatic

execution

of

a

collective

bargaining

One Board member dissented, however, citing the

increase

acquisitions

the

over

in
the

the

number

previous

of

corporate

twenty-five

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years,

mergers
and

and

taking

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that as a reason to argue that "the interest of stability should
be given greater . . . weight in shaping national labor policy."
Id. at 776-77 (Member Liebman, dissenting).
Nine years afterwards, in UGL, 357 N.L.R.B. 801, the
Board

changed

Transportation

course

again,

dissent

citing

along

the

with

figures

current

from

the

MV

statistics.

It

observed that successorship situations had become increasingly
common

owing

to

a

rising

level

of

corporate

merger

and

acquisition activity, id. at 801 & n.4, 805 & n.17, and held
that the bar "better achieves the overall policies of the Act,
in

the

context

presumption

of

does,

today's

id.

at

economy,"

801.

The

than

Board

did

a

rebuttable

not,

however,

merely reinstate the St. Elizabeth Manor bar, which it modified
in

two

respects.

It

defined

the

previously

unspecified

"reasonable period" of time for bargaining after the successor's
arrival as being between six months and a year, depending on the
circumstances.

Id.

at

808-09.

The

Board

also

provided

a

special variant of the bar for successorship situations that
involve

successorship

bargaining agreement.

followed

by

execution

of

a

collective

It reduced that latter bar's duration to

two years, so as to mitigate the limitation on employee choice
(or other challenges) that could previously have resulted from
adding the contract and successor bars together.

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Id. at 810.

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It is the successor bar thus doubly modified that is at stake
here.
III.
Lily attacks the Board's reliance on UGL's successor
bar on two grounds: (1) that a bar to challenging the union's
support,

as

distinguished

from

a

rebuttable

presumption,

deserves no judicial deference under Chevron U.S.A. Inc. v. Nat.
Res. Def. Council, Inc., 467 U.S. 837 (1984), because it flatly
violates employees' rights under Section 7 of the National Labor
Relations Act to choose or reject union representation;2 and (2)
that the Board's irregularity in successor cases, switching back
and forth between rebuttable presumption and bar rules, most
recently in the St. Elizabeth Manor, MV Transportation, and UGL
sequence, independently disentitles the current bar rule to the
judicial deference that an otherwise lawful administrative rule
of decision would deserve if consistently applied.

2

Section 7 provides that

[e]mployees shall have the right to self-organization,
to form, join, or assist labor organizations, to
bargain collectively through representatives of their
own choosing, and to engage in other concerted
activities for the purpose of collective bargaining or
other mutual aid or protection, and shall also have
the right to refrain from any or all of such
activities except to the extent that such right may be
affected by an agreement requiring membership in a
labor organization as a condition of employment as
authorized [elsewhere in] this title.
29 U.S.C. § 157.

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The claim of a Section 7 violation on these facts is
untenable.

To be sure, we can imagine bars on challenges to

unions so patently arbitrary as to run afoul of the Section 7
guarantee; a ten-year bar following certification, say.

The bar

choice here, however, is for a newly limited period (alone or in
tandem with the contract bar), a fact that Lily disregards on
the

apparent

essence:

in

absolutist
its

view,

theory
any

that

bar,

no

matter

unlawfully burden Section 7 rights.
bar

per

se

patently

trespasses

duration

is

its

not

of

length,

the

would

But the assumption that a
on

Section

7

while

some

rebuttable presumptions would not does not survive scrutiny.

If

we compare a two-year bar with a two-year presumption, we may
easily suspect that the burdens of the bar on employees' Section
7

rights

would

alternatives

and

justification

to

action.

be

demonstrably

require
fall

a

within

the

heavier

comparatively
the

zone

of

of
more

the

two

powerful

reasonable

agency

But if the comparison is between a six-month bar and a

rebuttable presumption for the same period, the bar could turn
out to be the lighter of the two, given the added burden of
rebuttal

that

would

come

with

the

presumption,

which

could

increase litigation time and expense, as against a proceeding
free of the presumption.

Thus, Lily's argument that any bar is

forbidden because it burdens the exercise of Section 7 rights is
in

tension

with

its

favored

alternative

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of

a

rebuttable

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presumption, which does the same and could be the more onerous
of the two depending on the time period involved.
The
rejecting
species

a
of

Board
neat,

is

thus

within

categorical

rules.

Each

the

zone

distinction

serves

the

of

reason

between

obviously

the

in
two

legitimate

objective of stability in labor and management relations during
a period in which the entrance of new management can destroy the
prior modus operandi among union, employer, and employees.
Fall River, 482 U.S. at 39-40.

See

In those circumstances, for

example, there may well be a risk that employees will, rightly
or

wrongly,

blame

the

incumbent

union

for

the

demise

or

departure of the old employer, or will fear that support for a
union will jeopardize jobs with the new boss.

See id.

Thus,

some limited discouragement of an unduly hasty reexamination of
a

prior

Section

7

choice

serves

to

provide

time

for

second

thoughts, a subject the statute does not directly address in
successor

cases,

but

which

falls

within

its

"underlying

purpose."

Brooks v. NLRB, 348 U.S. 96, 103 (1954); accord NLRB

v. Beverly Enters.-Mass., Inc., 174 F.3d 13, 32 (1st Cir. 1999).
Since neither of the competing means to further this legitimate
objective, then, is categorically forbidden, the only remaining
question

in

justification

this
for

case

goes

deciding

to
to

the

impose

adequacy
the

of

newly

the

Board's

adjusted

bar

rule, with particular attention to Lily's claim that the Board

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has undercut its entitlement to deference by blowing hot and
cold in its choices of successor rules.
This inconsistency challenge to UGL calls to the fore
the Supreme Court's recent leading case on agency reversal of
prior

interpretive

doctrine,

FCC

v.

Fox

Television

Stations,

Inc., 556 U.S. 502 (2009); see also Encino Motorcars, LLC v.
Navarro, 136 S. Ct. 2117, 2125-26 (2016) (discussing Fox).3

The

Court in Fox was unanimous in its acceptance of the view, often
expressed, that an agency is not forever bound by an earlier
resolution of an interpretive issue, but that a change must be
addressed

expressly,

at

least

by

the

agency's

articulate

recognition that it is departing from its precedent.

See Fox,

556 U.S. at 514-15; id. at 535 (Kennedy, J. concurring); id. at
549

(Breyer,

J.,

dissenting);

see

also

Nat'l

Ass'n

of

Home

Builders v. EPA, 682 F.3d 1032, 1038 (D.C. Cir. 2012) (stating
that the "core requirement that Fox makes clear an agency must
meet when changing course" is to "'provide reasoned explanation
for its action,' which 'would ordinarily demand that it display
awareness that it is changing position'" (quoting Fox, 556 U.S.
at 515)).
however,

There was disagreement between majority and dissent,
on

the

detail

necessary

to

justify

an

overruling

decision, compare Fox, 556 U.S. at 514-16, with id. at 549-50
3

Because the authorities on which Lily rests for its
inconsistency challenge to UGL antedate Fox, there is no need to
discuss their holdings.

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(Breyer, J., dissenting), with Justice Kennedy's view (generally
in

the

majority)

requires

taking

reasoned

concurring).

the

position

explanation,

id.

that
at

reversing

535

course

(Kennedy,

J.,

Nonetheless, all views were in accord that an

about-face

on

a

underlying

the

rule

prior

owing
view

to

facts

requires

changed

that

the

from

new

those

facts

be

addressed explicitly by reasoned explanation for the change of
direction.

See id. at 515-16 (majority opinion); id. at 535-36

(Kennedy,

J,

concurring);

id.

at

550-51

(Breyer,

J.,

dissenting); see also Modesto Irrigation Dist. v. Gutierrez, 619
F.3d 1024, 1034 (9th Cir. 2010) (describing Fox as holding that
"an agency [must] provide a greater justification for changing a
policy" when the new policy rests upon changed facts).
This is such a case.

Changes from the significant

factual bases of the earlier rule were essential to the Board's
departure from precedent in UGL, where two such developments
received attention.
The first concerned corporate business activity, as
the Board in UGL emphasized the fact stressed by the dissenting
Board

member

activity

was

in

MV

much

Transportation:

increased

from

the

presumption rule of Southern Moldings.
801.

In

UGL,

the

Board

majority

merger
quieter

and

acquisition

heyday

of

the

UGL, 357 N.L.R.B. at
brought

the

supporting

statistics up to date, and showed, in this respect, that the

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of

mergers

and

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acquisitions

had

not

Entry ID: 6080756

substantially

declined since the MV Transportation majority ignored them.
at 805 n.17.
acquisition
valued

at

Id.

The UGL Board noted that, in 1975, merger and
announcements

$11.8

numbered

billion;

that

in

2,297,
2000,

with

two

transactions

years

before

MV

Transportation was decided, the numbers had increased to 9,566
and $1.3 trillion; and, finally, that following a drop after
2000, the numbers had "ris[en] again, peaking in 2007, before
another decline, which now seems over."
cited

an

article

claiming

that

Id.

conditions

The Board also
were

ripe

for

a

"[b]oom" in mergers and acquisitions in 2011, the year in which
the UGL Board was writing.

Id. (citing Frank Aquila, Conditions

are Ripe for an M&A Boom in 2011, Bloomberg Business Week (Dec.
22, 2010)).
Lily tries to disparage the Board's reliance on these
statistics by asking what they are supposed to prove.

But we do

not think the decision gets a failing grade for dereliction in
spelling out the point the Board was making, since it seems
clear enough that the corporate activity in question carries
significant consequences under the Fall River successor rule.
The greater the number of mergers and acquisitions, the greater
the number of those that will produce a Fall River successor
employer.
unionized

The greater the number of successor situations with
employees,

the

greater

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the

potential

volatility

in

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union-management relationships across the national labor market.
The

greater

the

level

of

that

instability,

the

greater

the

likelihood of precipitate disruption in litigation challenging
union support during the unsettled period with the new employer.
This risk would not only affect the actual employment relations
in the market overall owing to the quantity of successorships,
but by the same token would also portend a heavier burden on the
administrative

law

machinery,

including

the

Board

itself,

in

administering the National Labor Relations Act.
These obviously apparent consequences answer not only
Lily's objection to the reliance on the statistics, but its
attempt to distance this case from their threat by pointing out
that its own successor status follows neither a merger nor an
acquisition.

But how the fact of successor employment comes

about is not to the point.

What does matter is simply the

probable volume of hasty challenges to union support.

It is

this that makes the merger and acquisition facts relevant in
reexamining the MV Transportation rule and in concluding that a
bar would serve stability in labor relations better in a market
likely to be fraught with higher numbers of upsets than in the
world of forty years ago.4

4

We are mindful of the Supreme Court's observation in
Encino Motorcars that a reviewing court passes on the adequacy
of an agency's reasoning, without authority to inject new
reasons of its own.
136 S. Ct. at 2127 (citing Motor Vehicle
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The UGL Board relied on another set of changed facts
in justifying its return to a successor bar.

These facts are

notable

to

in

that

they

were

actually

subject

the

Board's

control, which the Board exercised by modifying its own rules in
respects

not

independently

challenged

here.

The

MV

Transportation majority justified its rejection of a bar rule by
showing how long a period of union immunity to challenge might
stretch out if the St. Elizabeth Manor successor bar period of a
"reasonable" but unspecified time was combined with other bars.
The MV Transportation Board explained in this way:
It is possible . . . that the successor bar could
preclude the employees' exercise of their Section 7
rights for as long as several years.
For example, a
successor employer could engage in bargaining with the
incumbent union and, prior to the expiration of a
"reasonable period of time," reach agreement with the
union on a new collective-bargaining agreement, which
then would serve as a bar to a representation petition
for the duration of the contract, up to a period of 3
years.
Moreover, the incursion on the employees'
freedom of choice could be even more severe (up to 6
years) if the union and the predecessor employer were
parties to a collective-bargaining agreement that
served to bar any employee efforts to remove or
replace the Union prior to the successor's assumption
of operations.
Mfrs. Ass'n, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S.
29, 43 (1983)); see also River St. Donuts, LLC v. Napolitano,
558 F.3d 111, 115 (1st Cir. 2009) ("This Court cannot 'attempt
to supply a reasoned basis for the action that the agency itself
has not given.'" (quoting Citizens Awareness Network v. U.S.
Nuclear Regulatory Comm'n, 59 F.3d 284, 291 (1st Cir. 1995))).
We regret that the Board did not do a more extensive job
spelling out what it meant, but because we think that the point
of its reliance on statistical fact justification is so obvious,
we hold the explanation merely laconic, not inadequate.

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337 N.L.R.B. at 773.

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The Board in UGL treated this as a serious

objection, see 357 N.L.R.B. at 808, to which it responded by
decreeing the following modifications of bar rules as previously
imposed.

First, as to the successor bar, the Board tightened

the formerly undefined "reasonable period" of time, setting it
at a six-month minimum but no longer than a year, depending on
circumstances.

Id. at 808-09.

Second, the Board modified the

contract bar doctrine, holding that where a first contract is
reached between the successor employer and the incumbent union
within the successor bar's newly specified reasonable time, and
where there was no open period permitting the filing of a union
challenge

petition

during

the

final

year

of

the

predecessor

employer's bargaining relationship with the union, the contractbar period would be a maximum of two years, instead of three.
Id. at 810.
Thus, in responding to the MV Transportation majority
objection, the Board changed the consequences the earlier rules
might

produce.

It

did

not

merely

revert

back

to

the

interpretive regime imposed or assumed by St. Elizabeth Manor,
but devised a new scheme to produce a shorter period of union
protection
challenge

and
the

a

correspondingly

ensconced

union,

earlier

whether

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by

opportunity
employees

in

to
the

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exercise of Section 7 rights, or by the successor or a competing
union.
In
reason

for

sum,

we

find

changing

that

course

the

and

Board

has

support for its doctrinal move.

has

explained

marshalled

new

its

factual

It brought up to date the

commercial reality ignored by the MV Transportation majority and
changed

the

factual

consequences

of

the

successor

bar

by

modifying the terms on which the bar was previously imposed.
The

result

is

an

adequately

explained

interpretive

change

reflecting the Board's judgment of 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.
The

need

to

strike

such

challenged, and hardly could be.

a

balance

is

not

itself

We see no cause to doubt that

the Board's position taken here is within the scope of reasoned
interpretation

and

thus

subject

to

judicial

deference

under

Chevron, 467 U.S. at 842-45.
IV.
Lily

raises

three

additional

successor bar, and we reject them.

challenges

to

the

Lily contends that the bar

is inconsistent with references to a presumption rule in Fall
River and NLRB v. Burns International Security Services, Inc.,
406 U.S. 272 (1972).

But the language in those cases on which

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Entry ID: 6080756

Lily relies simply describes the legal landscape at the time.
See Fall River, 482 U.S. at 41 & n.8; Burns, at 278-79, 279 n.3.
Neither case holds that a rebuttable presumption, rather than a
bar, is required in a successorship situation.

Second, Lily

argues that the bar is inconsistent with the Act's requirement,
in Section 10, that the Board support its factual findings with
"substantial evidence on the record," 29 U.S.C. § 160(e)-(f).
The

successor

bar,

however,

is

a

legal

rule,

not

a

factual

finding, and therefore the substantial evidence requirement is
not on point.

Finally, Lily argues that the bar (and, in fact,

any bar) is inconsistent with this court's holding in Big Y
Foods,

Inc.

v.

NLRB,

651

F.2d

40

(1st

Cir.

1981).

That

argument, too, fails, as Big Y concerned the Act's requirement,
not at issue here, that the Board determine the appropriate
bargaining unit "in each case."

Id. at 45-46 (quoting 29 U.S.C.

§ 159(b)).
V.
Because we see no error in the Board's adherence to
UGL's successor bar doctrine, we need not reach Lily's arguments
that it would prevail if that doctrine were rejected in favor of
a rebuttable presumption of majority support for the Union.
Board's

application

for

enforcement

against Lily is granted.

- 17 -

of

its

bargaining

The
order