First Student, Inc. v. Nat'l Labor Relations Bd.
935 F.3d 604 (2019)
Rule of Law:
Under the 'perfectly clear' successor doctrine, if a new employer expresses an intent to retain the predecessor's employees without simultaneously and clearly announcing that employment is conditioned on the acceptance of new terms, the employer forfeits the right to unilaterally set initial terms and must bargain with the incumbent union.
Facts:
- Saginaw Public School District employed bus drivers and transportation staff who were represented by a union under a collective bargaining agreement.
- First Student, Inc. won a bid to provide transportation services for the district and began contract negotiations with the school board.
- On March 2, 2012, First Student managers met with the school district employees and stated they intended to hire as many incumbents as possible (typically 80-90%) and would recognize the Union if 51% were hired.
- During this meeting, managers stated that matters like paid time off would be 'subject to negotiations' but did not explicitly state that wages or hours would be unilaterally reduced.
- On May 16, 2012, First Student representatives publicly reaffirmed to the School Board and employees that they intended to hire incumbents and maintain current wages.
- On May 17, 2012, First Student distributed employment applications containing new terms, including reduced pay for non-driving duties and fewer guaranteed hours.
- First Student subsequently hired a workforce primarily composed of the former school district employees.
- When the Union requested to bargain, First Student refused and later unilaterally implemented new attendance policies without bargaining.
Procedural Posture:
- The Union filed unfair labor practice charges against First Student with the National Labor Relations Board (NLRB).
- An Administrative Law Judge (ALJ) held a hearing and ruled that First Student was a successor but not a 'perfectly clear' successor, finding the May 17 announcement of new terms sufficient.
- Both First Student and the General Counsel filed exceptions to the ALJ's ruling.
- The National Labor Relations Board reversed the ALJ, finding First Student was a 'perfectly clear' successor as of March 2 and ordered them to bargain.
- First Student petitioned the D.C. Circuit for review of the Board's order.
- The NLRB filed a cross-application for enforcement of its order.
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Issue:
Does a successor employer become a 'perfectly clear' successor, thereby losing the right to unilaterally set initial employment terms, when it expresses an intent to retain incumbent employees without clearly announcing new terms, even if this expression occurs before the commercial contract is finalized or formal hiring begins?
Opinions:
Majority - Rogers
Yes, a successor employer becomes a 'perfectly clear' successor if it fails to clearly announce new terms while expressing intent to retain the workforce. The Court deferred to the NLRB's interpretation of the Burns doctrine, emphasizing that the 'perfectly clear' exception is designed to prevent employers from misleading employees or lulling them into a false sense of security regarding their jobs and employment conditions. First Student induced reliance on March 2 by stating they wanted to hire most employees without mentioning specific unilateral changes; stating terms were 'subject to negotiations' implied bargaining, not unilateral imposition. Consequently, the announcement of new terms on May 17 was too late, as the obligation to bargain had already attached upon the earlier misleading statements.
Dissenting - Silberman
No, the employer should not be classified as a 'perfectly clear' successor because it did not plan to retain 'all' employees, but only a majority. The dissent argued that the Supreme Court's decision in Burns created a narrow exception applicable only when an employer plans to retain all unit employees, and the Board impermissibly expanded this to include employers hiring merely a majority. Furthermore, the dissent contended that attaching a bargaining obligation on March 2, while commercial negotiations were still ongoing and months before operations began, was legally erroneous and imposed an unreasonable burden on the successor.
Analysis:
This decision reinforces a strict interpretation of the 'perfectly clear' successor doctrine, placing a significant burden on successor employers to be explicit about changes to employment terms immediately upon expressing any interest in hiring the predecessor's workforce. It establishes that 'perfectly clear' status can attach well before a commercial contract is finalized or formal hiring offers are made. Practically, this means companies taking over unionized workforces must announce wage or benefit reductions in their very first communication with incumbent employees to preserve their right to set initial terms unilaterally.
