National Labor Relations Board v. Burns International Security Services, Inc., et al.
406 U.S. 272 (1972)
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Rule of Law:
A successor employer has an obligation to recognize and bargain with the incumbent union representing its predecessor's employees if it hires a majority of those employees. However, the successor is not bound by the substantive provisions of the predecessor's collective bargaining agreement unless it voluntarily assumes the contract.
Facts:
- Wackenhut Corp. provided security services for Lockheed Aircraft Service Co. at the Ontario International Airport.
- The United Plant Guard Workers of America (UPG) was certified as the exclusive bargaining representative for Wackenhut's guards at the Lockheed plant.
- Following certification, Wackenhut and UPG entered into a three-year collective bargaining agreement (CBA).
- Lockheed's service contract with Wackenhut expired, and Lockheed solicited new bids for security services.
- Burns International Security Services, Inc. was informed during a pre-bid conference about the UPG union and the existing CBA.
- Burns won the contract, replacing Wackenhut as the security provider for Lockheed.
- To staff the Lockheed operation, Burns hired 42 guards, 27 of whom had been employed by Wackenhut at the same location.
- Burns informed the newly hired guards that it would not honor the Wackenhut-UPG contract and required them to join a different union with which Burns had contracts elsewhere.
Procedural Posture:
- The United Plant Guard Workers of America (UPG) filed unfair labor practice charges against Burns with the National Labor Relations Board (NLRB).
- The NLRB, adopting the trial examiner's findings, concluded that Burns violated the NLRA by refusing to bargain with UPG and by refusing to honor the terms of the collective bargaining agreement between UPG and Wackenhut.
- The NLRB ordered Burns to cease and desist, to bargain with the union, and to give retroactive effect to the Wackenhut-UPG contract, making employees whole for any losses.
- Burns sought review of the NLRB's order in the U.S. Court of Appeals for the Second Circuit.
- The Court of Appeals enforced the NLRB's order to bargain but denied enforcement of the order requiring Burns to honor the substantive terms of the pre-existing contract.
- Both Burns and the NLRB petitioned the U.S. Supreme Court for a writ of certiorari, which was granted.
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Issue:
Does the National Labor Relations Act require a successor employer, who hires a majority of its predecessor's unionized employees, to honor the substantive terms of the collective bargaining agreement negotiated by the predecessor but not agreed to by the successor?
Opinions:
Majority - Mr. Justice White
No. The National Labor Relations Act does not require a successor employer to honor the substantive terms of a collective bargaining agreement to which it has not agreed. While Burns had a duty to bargain with the union, it was not bound by the predecessor's contract. The duty to bargain under § 8(a)(5) arose because Burns hired a majority of Wackenhut's employees into the same bargaining unit, establishing a substantial continuity of the employing industry. However, § 8(d) of the Act and the principle of freedom of contract prevent the National Labor Relations Board from compelling an employer to agree to any substantive contractual provision. The Court distinguished this case from John Wiley & Sons, Inc. v. Livingston, noting that Wiley involved a corporate merger and a suit to compel arbitration, whereas this case involved competitors and an unfair labor practice charge. Forcing a successor to adopt a predecessor's contract could create serious inequities and inhibit the transfer of capital.
Concurring-in-part-and-dissenting-in-part - Mr. Justice Rehnquist
No. A successor employer is not required to honor the substantive terms of a predecessor's contract. This opinion concurs with the majority's holding on this central issue but dissents from the conclusion that Burns had a duty to bargain with the union at all. The successorship doctrine was improperly applied because there was no business transaction, sale of assets, or merger between Wackenhut and Burns; they were direct competitors who simply performed the same work at the same site. The only continuity was the hiring of employees, which is an insufficient basis to impose a bargaining obligation. Imposing successorship in this context creates unwarranted rigidity in labor relations and infringes on the employer's freedom and the employees' right to choose their own representative.
Analysis:
This landmark decision establishes the foundational 'successorship' doctrine in American labor law, creating the 'bargain, but not bound' rule. The Court balanced the need for stability in industrial relations with the fundamental principle of freedom of contract. By requiring successors to bargain with the incumbent union, the decision protects employees' representational rights across a change in employers. However, by refusing to bind successors to the predecessor's contract, it allows new employers the flexibility to negotiate terms that reflect their own economic realities, thereby facilitating the transfer of capital and the rescue of failing businesses. This ruling has profoundly shaped negotiations in business sales, mergers, and changes in subcontractors.
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