Walter Kidde & Co., Inc.

National Labor Relations Board - Board Decisions

May 7, 1970

182 N.L.R.B. 360 (N.L.R.B. 1970)

360 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
Kota Division of Dura Corporation , a subsidiary of Walter
Kidde & Company, Inc and Sheetmetal Workers' Inter-
national Association , Local No 496, AFL-CIO Case
18-CA-2419
May 7, 1970
DECISION AND ORDER
BY CHAIRMAN MCCULLOCH AND MEMBERS FANNING,
BROWN , AND JENKINS
of its employees, whereas this case involves the obverse
side of the coin, i e , the right of the successor employer
to insist upon the Union's adherence to the contract
negotiated with the predecessor employer The legal
policy considerations which impel our conclusion that
the continuing vitality of a bargaining relationship and
its contract obligations should be maintained in a succes-
sorship situation are, of course, the same in either
case
ORDER
On February 16, 1968, Trial Examiner A Norman
Somers issued his Decision in the above-entitled proceed-
ing, finding that the Respondent had not engaged in
any unfair labor practices, and recommending that the
complaint be dismissed in its entirety, as set forth in
the attached Trial Examiner's Decision Thereafter, the
General Counsel filed exceptions to the Trial Examiner's
Decision and a supporting brief The Respondent filed
a brief ii1 support of the Trial Examiner's Decision
On January 31, 1969, the National Labor Relations
Board, having determined that the instant case raised
issues of substantial importance in the administration
of the National Labor Relations Act, as amended,
ordered that this case be consolidated with three others'
for the purpose of oral argument before the Board
on March 12, 1969 The parties were given permission
to file further briefs Subsequently, on February 19,
1969, the Board extended the date of the oral argument
to April 23, 1969
The Board also invited certain interested parties to
file briefs amicus curiae and to participate in oral argu-
ment Briefs were filed by The Chamber of Commerce
of the United States, American Federation of Labor
and Congress of Industrial Organizations, International
Union, United Automobile, Aerospace and Agricultural
Implement Workers, the International Brotherhood of
Teamsters, Chauffeurs, Warehousemen & Helpers of
America, and the National Federation of Independent
Unions The Chamber of Commerce of the United States,
the International Brotherhood of Teamsters, Chauffeurs,
Warehousemen & Helpers of America, and the National
Federation of Independent Unions did not choose to
participate in the argument The National Association
of Manufacturers declined to either file a brief or partici-
pate in the argument
The Board has considered the Trial Examiner's Deci-
sion, the exceptions and briefs, the oral arguments,
and the entire record in this case, and, in accordance
with the principles set forth in the Board's Decision
in The William J Burns International Detective Agency,
182 NLRB No 50, a companion case issued this day,
hereby adopts the findings, conclusions, and recommen-
dations of the Trial Examiner The Burns case involved
the duty of a successor employer to honor the contractual
obligations of its predecessor with the representative
' The William J Burns International Detective Agency 182 NLRB
No 50 Travelodge Corporation et al 182 NLRB No 52 and Hackney
Iron & Steel Co 182 NLRB No 53
Pursuant to Section 10(c) of the Natidnal Labor Rela-
tions Act, as amended, the National Labor Relations
Board hereby adopts as its Order the Recommended
Order of the Trial Examiner, and orders that the com-
plaint be, and it hereby is, dismissed in its entirety
MEMBER JENKINS, dissenting
For the reasons set out in my dissent in The William
J Burns International Detective Agency, 182 NLRB
No 50, I would not require the Union here to be
bound by its agreement with the predecessor employer,
and accordingly would find the Respondent's refusal
to negotiate with the Union concerning an agreement
to be violative of Section 8(a)(5)
TRIAL EXAMINER ' S DECISION
STATEMENT OF THE CASE
A NORMAN SOMERS, Trial Examiner This case arises
under a stipulation of the parties waiving a hearing
on the complaint issued by the General Counsel, which
alleges that Respondent violated Section 8(a)(5) and
(1) of the Act ' After Respondent filed its answer, the
parties prepared and executed a stipulation, waiving
a hearing and setting forth the facts under which the
issue in dispute is to be determined The parties agreed
that a decision be rendered by a Trail Examiner in
the manner of one issued after a hearing On notice
to the parties, briefs were filed by respective counsel
for the General Counsel and Respondent On consider-
ation thereof and on the entire record, I hereby make
the following
FINDINGS OF FACT
I THE BUSINESS OF THE EMPLOYER
Dura Corporation and Walter Kidde & Company,
Inc , its parent (hereinafter Kidde), are New York corpo-
rations Dura, located in different cities, has 11 plants
or divisions The one here involved, Kota Division of
Dura Corporation (Respondent herein), is located in
Vermillion, South Dakota The products made in that
plant or division are cleaners, car washers, and utility
space heaters During the calendar year ending June
1, 1967, the sales in that division, in regular course,
' The complaint was issued by the General Counsel on August 28
1967 on charges filed by the Union on May 25 and August 28 1967
182 NLRB No 51
KOTA DIV OF DURA CORP
exceeded $500,000 in value, and its materials purchased
and received from outside South Dakota exceeded
$500,000 It is conceded that Respondent, Kota Division
of Dura Corporation, is engaged in commerce within
the meaning of the Act
II THE LABOR ORGANIZATION INVOLVED
The 11 plants owned by Dura Corporation, the subsidi-
ary of Kidde, were previously owned by Dura Corpora-
tion, a Michigan corporation, which before the transac-
tion with Kidde later described, had not been connected
with Kidde Old (or former) Dura, which we distinguish
from new (or present) Dura, had collective- bargaining
relations among different unions in its various plants
So too, does present Dura The union representing the
employees in Kota Division, both during old Dura and
present Dura, is the Charging Union The Charging
Union (hereafter sometimes referred to as "the Union
herein") is a labor organization within the meaning
of the Act
III THE ALLEGED VIOLATION
A The Question Presented Synoptic Statement
The question arises out of the fact that though present
Dura, when it took over the assets of former Dura,
assumed the various labor contracts of former Dura,
including the particular contract between the Union here-
in and the Kota Division of former Dura (which in
the stipulation is called "the predecessor employer"),
the Union herein insists upon negotiating a new contract
with Respondent covering Kota Division, even though
Respondent is the "decisional successor" of the prede-
cessor employer, and the contract has a fixed term
which does not expire until a later date In insisting
upon negotiating an entirely new contract, the Charging
Union relies solely on the fact that the contract with
the predecessor employer does not contain a "successor
or assigns" clause and the Union had not been asked
or consulted about whether the successor corporation
would assume the contract All parties admit that
Respondent, in conformity with Section 8(a)(5) and (1)
and 8(d) of the Act, recognizes the Union as still the
exclusive bargaining representative of the unit of employ-
ees in Kota Division Also, Respondent has assumed
the contract of the predecessor, and has offered to
negotiate with the Union herein all grievances and terms
and conditions of the predecessor's agreement Howev-
er, Respondent refused to negotiate a new contract
before the time fixed therefor in the contract the Union
signed with the predecessor The General Counsel alleges
that by refusing to negotiate a new contract prior to
the fixed time of the predecessor's contract, Respondent
violated Section 8(a)(5) and (1) of the Act
B The Stipulated Facts
361
1 The scope of the Dura Corporation enterprise, both
before and after the takeover
As stated, Dura, old or new, is an industry of 11
plants or divisions in various cities (including Canada),
with products more varied than those made in the Kota
Division previously described Dura has several thousand
employees, and its collective-bargaining contracts are
with five different unions covering 10 production and
maintenance units which in the aggregate exceed 1,850
employees The only contract of the Charging Union
is the one in Kota Division, and the unit there is com-
posed 'of a little under 40 employees' As to how that
plant in Vermillion became part of the Dura enterprise,
in September 1964, old Dura bought it from a South
Dakota corporation called Electronics, Inc The employ-
ees before then had not been organized After old Dura
took over and designated it as Kota Division, the Union,
following a Section 9 election, was certified by the
Board on August 3, 1965, as the exclusive collective-
bargaining representative of the production and mainte-
nance employees of Kota Division Old Dura recognized
it as such and so too does new Dura 2 On November
1, 1965, the Charging Union and the predecessor employ-
er executed the contract previously described, which
has the expiration date of August 31, 1968 As stated,
it does not contain a "successors or assigns" clause
2 The takeover by Respondent and its assumption of all
obligations of the predecessor
About July 1, 1966, the president of old Dura and
the president of Kidde issued a press release announcing
that they had tentatively agreed that Kidde would acquire
substantially all of the assets of old Dura On August
9, old Dura and Kidde signed an agreement for the
purchase of substantially all of the assets of old Dura
by W K Corporation (hereafter W K ), a New York
corporation and a wholly owned subsidiary of Kidde
At meetings held on November 21, 1966, by the respec-
tive stockholders, the purchase agreement was approved
Also, on that date, substantially all the assets, property,
and good will of old Dura were turned over to W
K , the subsidiary of Kidde, in exchange for stock
of Kidde In addition, W K and old Dura signed
an agreement under which W K assumed substantially
all obligations of old Dura These included all the 10
labor agreements , including the one with the Union
herein, covering the plant in Vermillion, called Kota
Division (supra, fn 2) Still further, old Dura arranged
for its corporate liquidation, and when that was accom-
plished Kidde stock was distributed to the stockholders
of old Dura The name of W K was thereupon changed
to Dura Corporation, and every division continued unin-
' The unit is
All production and maintenance employees of the Employer s Ver
million South Dakota operation excluding office clerical employees
guards professional and managerial employees and supervisors
as defined in the Act
362 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
terruptedly with its original name or style, including
Kota Division of Dura Corporation, Respondent herein.
3. The extent of the notification to the Union herein
Neither old Dura nor Kidde had given actual notice
to the Union either of their intent to enter into the
purchase agreement or of the actual execution of that
purchase agreement . However, on July 8, 1966, a memo-
randum was distributed to each employee of Kota Divi-
sion by the manager of the division (who also has
continued in that capacity, under present Dura) setting
forth extracts of the July 1 press release which advised
of the contemplated exchange of the common stock
of old Dura for specified stock of Kidde, subject to
respective stockholder approval. The memorandum fur-
ther stated that the president of the then Dura notified
all the division managers as follows:
I want to assure you and your people that it is
planned the Dura Corporation will continue to oper-
ate on the same basis it has in the past, except
that there will be greater 'opportunities for all of
our employees.
The memorandum of the Division Manager to the Kota
employees went on to say:
In summary-This plant will continue under present
management and no one need be concerned about
their immediate or future security.
4. The continuing character of the operations and status
of all of the personnel
The stipulation describes the purchase agreement as
"the above-described corporate reorganization." It
states that when this occurred, Kota Division employed
about 35 production and maintenance employees. It
recites that "all of these employees automatically became
employees of Respondent without any break in service
or employment." It also states that the respective Divi-
sion and Manufacturing Managers of Kota Division have
each continued in that capacity under Respondent, and
"they negotiate and establish labor relations for
Respondent as they did for the predecessor employer."
Respondent's employees "receive substantially the same
salaries, wage rates and fringe benefits," including also
the pension plan. The employees of all divisions of
present Dura, including Kota Division, sustained no
break in service, and it is further stated that "neither
seniority rights nor any other term or condition of
employment was affected by the corporate reorganiza-
tion." The parties have further stipulated that "Respond-
ent is a successor employer within the meaning of deci-
sional law of the National' Labor Relations Board" and
that "since November 21, 1966, Respondent continued
to abide by and to apply all provisions of the collective
bargaining agreement negotiated by the predecessor
employer and the Union," as well as the contracts
that had been negotiated between old Dura and the
labor organizations representing the employees in the
other divisions.
5. The Union' s inquiry concerning the consummation of
the sale of Kota Division and its subsequent demand that
Respondent negotiate a new contract
As stated previously, no information had been given
the Union concerning the sale except the memorandum
of July 8, 1966, by the division manager to the Kota
Division during the tentative stage previously described.
On December 15, 1966, during a grievance meeting
conducted under the contract between the Charging
Union and the predecessor employer (apparently dealing
with other matters), the Union asked the Kota Division
management whether the sale was still `pending or had
been consummated. The Union added that if the latter
was the case, a new agreement should be negotiated
since the present one had no "successor or assigns"
clause. The management of Kota Division said it would
look into the matter and advise. On March 23, 1967,
the Charging Union wrote Kota Division asking whether
there had been any change and would the successor
employer negotiate a new agreement. On March 30,
Kota Division wrote the Union enclosing copies of the
"reorganization agreement" consummated November
21, and calling attention to the fact that the new owner
assumed all obligations of the predecessor, including
the labor contract involving Kota Division. This letter,
and a series of letters between Union and management
thereafter, including also a meeting held May 11, reflect
the opposing positions of the Union and the Respondent,
which are the subject of this litigation: the Union's
position is that since the contract has no "successor
or assigns" clause, the new owner is obligated, on
the Union's request, to negotiate a new contract. The
Respondent's position is that the contract binds both
Union and Respondent under the date of August 31,
1968, fixed in the contract.
C. Conclusionary Discussion
The parties agree that there is no case specifically
in point . However , each side relies upon a different
decision . In each of the separate decisions respectively
relied upon , the Union did not demand that the successor
negotiate a new contract . It demanded that the successor
give effect to the predecessor ' s contract and the succes-
sor refused because the contract did not have a successor
clause and the successor did not assume the contract.
From these respective decisions , each side draws the
necessary corollary in accord with its position in the
instant case-one where the successor did assume the
contract but the Union nevertheless demanded that the
successor negotiate a new contract . The General Counsel
relies on the Board ' s decision in Rohlik , Inc., 145 NLRB
1236. The Respondent , on the other hand , relies on
the Supreme . Court' s decision in Wiley & Sons, 376
U.S. 543, rendered subsequent to Rohlik and whose
underlying principle , as contended, is so contrary to
Rohlik as to call for a different result.
In Rohlik , the Board held that the Respondent there,
as a successor, of the predecessor employer (though
it violated Section 8 (a)(5) and (1) of the Act by refusing
KOTA DIV OF DURA CORP
to bargain collectively with the incumbent union as
the employees ' exclusive bargaining representative), did
not violate the Act by refusing to administer the prede-
cessor ' s contract because it had not assumed the contract
and therefore was not bound by it All that appears
concerning it is the following footnote (id at 1242,
fn 15)
It is clear from the facts recited above that
the Union's request for recognition and bargaining
included, inter alia, a request that the Respondent
administer certain provisions of the collective-bar-
gaining agreement between the Union and Respond-
ent's predecessor As Respondent had not assumed
and was not bound by the contract, and therefore
was not obligated to bargain concerning its adminis-
tration, Respondent's refusal to bargain with respect
thereto was not unlawful
No further explication appears The Rohhk case is the
only unfair labor practice case on the subject However,
its forerunner is the doctrine established in representation
cases to the effect that where the successor has not
assumed the contract of the predecessor, it is not a
bar to a representation petition where the successor
is now the employer That too is stated as a "well-
established rule" without further rationale 3
The conclusion that the General Counsel derives from
the Rohhk doctrine is this (br 7)
Considering the Rohltk principle it would seem
that if one party has a choice to either assume
or decline to accept an existing labor contract,
the other party should have the same choice There-
fore, even if the predecessor's labor agreement
is assumed by the successor employer no bargaining
agreement exists unless and until the bargaining
representative assents to the novation It would
be inequitable and entirely unjustified to say that
the bargaining representative is unqualifiedly bound
but the successor may exercise an option whether
to continue its predecessor's labor agreement or
to terminate the same
We assume, as do the parties, that the Board was
relying on the principle of common law dealing with
the assignment of debts or obligations under a conven-
tional contract 4
5 In General Extrusion Company Inc 121 NLRB 1165 1168 the
Board stated
The well established rule that the assumption of the operations
by a purchaser in good faith who had not bound himself to assume
the bargaining agreement of the prior owner of the establishment
removes the contract as a bar also remains in effect "
i' See e g Jolly Giant Lumber Co 114 NLRB 413 414 Stubnitz
Greene Spring Corporation 113 NLRB 226 228
Though the Board in Jolly Giant also stated that a supplemental
memorandum between the Employer [the successor] and the prede
cessor did not sufficiently stabilize the bargaining relationship
its basic position is that the issue here turns on the contractual
relation between the Intervenor (the incumbent union] and the
Employer and the latter was not a party to the April 4 contract
[i e the contract between the incumbent union and the predecessor
employer]
"A novation may be made by eliminating one of the parties to
the original contract and substituting another in his stead but this
requires the assent of all three parties to the transaction 3 Williston
363
Respondent stresses that all of this is a thing of
the past, that in the light of Wiley, and of two courts
of appeals decisions which applied Wiley,' and indeed
in the light of the Board's reliance on Wiley in other
contexts, not specifically involving the Rohlik type of
situation, the matter of whether the successor employer
assumed the predecessor employer's contract does not
control To be sure, as the General Counsel points
out, these suits in Wiley and the two appellate courts
arose under Section 301 of the Labor Management Rela-
tions Act, which is Title III of the LMRA and not
cases arising under our Act, which is Title I of that
law, and further, that in the Wiley case and the two
appellate court cases, the court in each instance held
the successor was required to arbitrate the predecessor's
contract on the issues raised by the plaintiff union
But what establishes their relevance to the situation
before us is that in each such instance , the contract
which the defendant employer was required to arbitrate
was a collective-bargaining contract that the Union had
made with the predecessor employer, which contained
no provision binding the successor and which the succes-
sor did not assume The court, in Wiley, citing its
own prior decisions under Section 301," stressed that
what controlled where a collective-bargaining contract
was involved was not traditional common law applicable
to a "consensual arrangement" as in the case of an
ordinary contract, but "federal law, fashioned from
the policy of our national labor laws" (p 548, quoting
Lincoln Mills, supra, fn 6, 456) and that this "calls
into being a new common law-the common law of
a particular industry or of a particular plant" (p 550,
quoting from Warrior& Gulf, supra, fn 6, 578)
These ring with principles involved under the National
Labor Relations Act and indeed the court stressed that
the central feature of a collective-bargaining contract
is that "it is not in any real sense the simple product
of a consensual relationship" but that its function is
dictated "by circumstance [citing Warrior & Gulf) and
by the requirements of the National Labor Relations
Act " Id at 550
From what already appears, it would seem manifest
that the principles enunciated in Wiley and in the cases
arising under Section 301 are relevant to that aspect
of Rohhk which determines whether the successor is
bound by the predecessor's contract solely on whether
it assumed it The General Counsel notes that in cases
subsequent to Wiley, the Board has stated that on the
particular facts there appearing, the issue of whether
the Rohlik doctrine called for reexamination in the light
of the Supreme Court's decision in Wiley did not arise,
and hence did not have to be considered 7 It additionally
Contracts §418 (3d ed 1960) See also 4 Corbin Contracts §866 (1951)
Restatement Contracts k 160 (1932)
5 Wackenhut Corp v United Plant Guard Workers 332 F 2d 954
(C A 9) United Steelworkers v Reliance Universal Inc 335 F 2d
891 (C A 3)
^ Textile Workers Union v Lincoln Mills 353 U S 448 Steelworkers
v Warrior & Gulf Navigation 363 U S 574 United Steelworkers v
Enterprise Wheel & Car Corp 363 U S 593 596
' Glenn Goulding dlbla Fed Mart 165 NLRB 202 Rinker Materials
Corp 162 NLRB 1670 Valleydale Packers Inc 162 NLRB 1486
K B & J Young s Super Markets 157 NLRB 916
364 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
appears that there has been an attempt also to have
the issue of whether a contract with the predecessor
which has not been assumed by the successor is a
bar to a representation petition (supra, fn. 3) reconsid-
ered in the light of Wiley, but the Board indicated
that there too the issue did not arise , ` since on the
particular facts of that case, the predecessor's contract
happened to be a bar for other reasons." Thus the
Board has been careful to avoid passing on Wiley's
effect on Rohlik in the absence of a record specifically
posing that issue.
In the literal sense , the case before us still does
not present a Rohlik situation, since, as indicated, 'what
we have here is a successor who, far from not assuming
the predecessor's contract, has assumed it and is -bound
by it. The General Counsel, however, insists that in
the facts before us, we do reach the- Rohlik doctrine
under the, previously quoted statement of its position.
The General Counsel contends that if Respondent had
not assumed the contract, it would not have been bound,
and hence so the-,argument runs; that the Union is
not bound even. if in fact' Respondent did assume the
contract-unless there was a "novation" (supra, fn.
4). The thread of that argument unravels, however,
once it is manifest,, as it is in the Supreme Court's
decision in Wiley, that whether the successor-employer
is obligated under the contract hinges not on traditional
common law principles applicable to a conventional
contract but upon principles under the "new common
law" applicable to a' collective-bargaining contract.
Whether the, successor is bound by that contract hinges
on whether the -policies of the Act call for it, rather
than whether the successor assumed the contract. So
too, whether the Union is bound, where the successor
has assumed the contract, hinges on wliether tthe policies,
of 'the Act call for , the contract being , continued in,
effect, even in the absence of a "successor or assigns"
clause or of a "novation" (supra,fii. 4)
The General Counsel relies on qualifications that the
Supreme Court attached in its decision in, Wiley. But
these-qualifications inhered in the facts. Wiley did not
have a neat situation such as the one here,, in which
there has been only a change in corporate ownership
while the industry in all - its facets have been- retained
in their totality. In, Wiley, the predecessor (called "Inter-
science") that had made the contract with the union
containing an arbitration clause, was a small employer
that merged with Wiley, which was a large employer
and was nonunion. When the merger took place, Intersci-
ence ceased doing business, and Wiley absorbed the
Interscience employees into Wiley's larger, -nonunion,
working force. The union made no claim that it thereby
became the bargaining representative of Wiley's working
force, but it asserted that Wiley should arbitrate certain
rights of the newly, acquired employees, which were
"vested" by the union's agreement with, Interscience."
United States Gypsum Co , 157 NLRB 652, 654=655
These concerned such matters as seniority status ,- severance pay,
etc , and payments under the pension fund as called for in the Interscience
agreement and which the` union contended Wiley was now required
to pay
Wiley refused to do so. It insisted that with the merger,
Interscience's contract with the union was a nullity;
that in any event the agreement had no clause binding
the successor,- and further,, the union did not represent
any existing bargaining unit. A week before the expira-
tion date of the Interscience agreement, the union sued'
Wiley under Section 301 to' compel' it to arbitrate the
disputed aspects of the contract with Interscience. Supra,
fn. 9. The decision of the Supreme Court was (376
U.S. at 548):
We, hold that the disappearance by. merger of a
corporate employer which was entered into a collec-
tive bargaining agreement with a union does not
automatically terminate all rights of the employees
covered by the agreement , and that , in appropriate
circumstances , present here, the successor employer
may be required to arbitrate with the union, under;
the agreement . [Emphasis supplied.]
The Court added (p. 549):
This Court has in the past recognized the central
role of arbitration in effectuating national labor
policy. Thus, in Warrior & Gulf Navigation Co.,
supra, at 578 , arbitration was described as "the
substitute for industrial strife" and as "part and
parcel of the collective bargaining process itself. "
It would derogate from "the federal policy of set-
tling labor disputes by arbitration , " United Steel-
workers v . Enterprise Wheel & Car Corp., 363
U.S. 593, 596, if a change in the corporate structure
or ownership of a business enterprise had the auto-
matic ,consequence, of removing a duty , to arbitrate
previously established ; this is ,so as much in cases
like the present , where ' the contracting ' employer-
disappears into another by merger ,, as in those
,in which one owner replaces another , but the business.
entity remains the same. [Emphasis supplied .] :„ •.t
It is in that connection that the Court reiterated the
basis for distinguishing
' '
the collective -bargaining agree-
ment from the ordinary contract. It stated ( id. at 550):
While the principles of law governing ordinary con-
tracts would not bind to a contract an unconsenting
successor to a contracting party [footnote omitted],
a collective bargaining agreement is not an ordinary
contract . ". . . The collective agreement covers
the whole employment relationship . It calls into
being a new common law-the common law of
a particular industry or of a particular plant ." Warri-
or & Gulf, supra, atu 578-579 [footnotes omitted].
Central to the peculiar status and function of a
collective bargaining agreement is the fact , dictated
both by circumstance , see id ., at 580 , and by the
requirements of the National Labor Relations Act,
that it is not in any real sense the simple product
of a consensual relationship . Therefore , although
the duty to arbitrate . . . must be founded on a
contract , the impressive policy considerations
favoring arbitration are not wholly overborne by
the fact that Wiley did not sign the contract being
construed . [Emphasis supplied.]
KOTA DIV. OF DURA CORP.
The General Counsel nevertheless contends that Wiley
has a limited impact and does not affect the preexisting
doctrine of the Board of Rohlik (and the previously
mentioned representation cases, supra, fn. 3) under
which the only test of whether the successor is bound
by the predecessor's contract is whether the successor
has assumed it. From the Supreme Court's decision
in Wiley, it is manifest that the successor's failure to
assume the predecessor's contract does not dispose of
the question of whether it is obligated under it. The
General Counsel claims that Wiley concerned, only the
question of whether the successor was obligated under
the arbitration provision of the predecessor's contract
and the matter to be arbitrated concerned certain spec-
ified'items "vested" under the predecessor's contract
(supra, fn. 9). Assuming this to be so, the court made
it clear that the issue was determined not under common
law principles applicable to a conventional contract but
under principles of the "new common law" where a
collective-bargaining contract was involved. The General
Counsel's stress on Section 301 carries the implication
that the national labor policy is confined to Title III
(of which Section 301 is a part) but plays no part
in a collective-bargaining contract involved in Title I
(our Act). Yet the Supreme Court's rationale sounds
in principles enunciated under our Act, and the decision
on its face expressly refers to the "requirements of
the National Labor Relations Act" as indicating why
the collective-bargaining contract " is not in any real
sense the simple product of a consensual relationship."
Like language appears in a Board decision rendered
well before the Wiley decision but in a different context
considered in a later part of our discussion.]' The princi-
ple called into play here is first the indigenous doctrine
that speaks in terms of the "employing industry" as
distinguished from the particular employer." As applied
to the situation before us the principle involved is the
interest of stability. The Board has long invoked that
interest in developing the well-established "successor
doctrine" to the effect that the successor employer
is obligated to continue to recognize the labor organiza-
tion that has been selected as bargaining representative
during the tenure of the predecessor. Yet however much
that interest has been invoked in connection with the
successor's obligation to continue to give effect to the
bargaining relationship, the same interest has yet to
have been mentioned by any Board decision in connec-
tion with the obligation of the successor to continue
the bargaining contract. The Rohlik case is an example.
As previously appears, the successor was found to be
obligated under Section 8(a)(5) and (1) of the Act to
bargain with the union that had made the contract with
the predecessor; at the same time the Board held that
the successor was not bound by that contract on no
other ground than that it had not assumed it. However,
the interest of stability, would seem to be involved
° American Seating Co , 106 NLRB 250, infra fns 17 and 18
See N L R B v Colten , 105 NLRB F 2d 179, 183 (C A 6)
It is the employing industry that is sought to be regulated and
brought within the corrective and remedial provisions of the Act
in the interest of indusrial peace
365
in one situation as it is in the other. In Overnite Transpor-
tation Co. v. N.L.R.B., 372 F.2d 765, 767-768 (C.A.
4), the court indicated that the Wiley decision is relevant
to both. The court stated:
Our case does not come squarely within Wiley
because the [predecessor's] collective bargaining
contract had expired prior to the take-over (footnote
omitted). But what was said . . . is not irrelevant.
In Wiley, the "new" employer was held bound
by one of the terms of a collective bargaining
contract to which it never had agreed. Wiley reaches
beyond the Board's order in this case and, in so
doing, strongly supports the more limited successor
doctrine developed by the courts of appeals but
not as yet expressly by the Supreme Court [which
obligates the successor to recognize and bargain
with the incumbent union].
The General Counsel in the Glenn 'Goulding case
(supra, fn. 7) successfully argued to the Trial Examiner
in that case that the principle of stability called for
a successor's being bound by the predecessor's contract
with the union as it is by the predecessor's bargaining
relationship with it. The Trial-Examiner developed the
proposition that on the basis of Wiley what now controls
when the issue is whether the successor is bound by
the contract is not whether it has assumed it but whether
the interest of stability calls for giving effect to the
contract as it does to giving , effect to the bargaining
relationship. As stated, however, the Board decided
that it need not consider that issue under the particular
facts appearing before it.
As previously mentioned , also, that issue is not speci-
fically reached in this case, since the Respondent here
has assumed the contract and is bound by it. We come
to it, as previously stated, only in connection with
the General Counsel's contention that the Respondent
would not have been bound by the contract if it had
not assumed it, and that as a corollary, the Union
is not bound by it even if the Respondent did assume
it, since the contract has no " successor or assigns"
clause and there was no "novation" (supra, fn. 4).
But, to repeat, it would seem manifest from Wiley
that the question of whether the successor is bound
by the predecessor's contract does not hinge on whether
the successor assumed the contract. Even if we scale
the General Counsel's contention in respect to Wiley
(as well as the two courts of appeals cases that applied
it, supra, fn. 5) to the proposition that it decided only
that the successor was obligated to comply with the
arbitration provision of the predecessor's contract, the
fact is that it was thus obligated under the national
labor policy which controls the collective-bargaining con-
tract, even though it would have had no such obligation
under an ordinary contract, since it had not assumed
it.
The implication of the- General Counsel's position,
however unwitting perhaps, is that the principles of
the National Labor Relations Act apply to a collective-
bargaining contract involved in a suit in a federal court
arising under Section 301, but do not apply to a collective-
366 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
bargaining contract in a case before the Board arising
under the Act itself . Yet Section 8(d) on its face gives
the Board duties and functions relating to collective-
bargaining contracts . Indeed , the Supreme Court, even
before its statement in Wiley that the collective -bargain-
ing contract calls for the application of principles rooted
in "the requirement of the National Labor Relations
Act," had earlier , in Warrior & Gulf (supra , fn. 6),
observed the nexus between a collective -bargaining con-
tract in a suit under Section 301 in a federal court
and a case under Section 8(d) before the Board. After
restating its holding in Lincoln Mills (supra , fn. 6) that
"a grievance arbitration provision in a collective bargain-
ing contract could be enforced by reason of §301(a)
. . . and that the policy to be applied in enforcing this
type of arbitration was that reflected in our national
policy," the Court, in Warrior & Gulf, continued (363
U.S. at 577-578):
The present federal policy is to promote industrial
stabilization through the collective bargaining
agreement.3
3 In §8(d) of the National Labor Relations Act, as
amended by the 1947 Act, 29 U S C. § 158(d), Congress
indeed provided that where there was a collective agreement
for a fixed term the duty to bargain did not require either
party "to discuss or agree to any modification of the
terms and conditions contained in" the contract
[Emphasis supplied ]
The emphasized portion of Section 8(d), quoted by
the Supreme Court in Warrior & Gulf, has been given
effect where a union is involved.12 It has also been
applied against employers (as a violation of Section
8(a)(5) and (1)) even where no unfair labor practice
was involved except conduct in derogation of the portion
of Section 8(d), which states that:
. . . the duties so imposed [by a contract] shall
not be construed as requiring either party to discuss
or agree to any modification of the terms and
conditions contained in a contract for a fixed term
[except where there is a reopening clause]. 13
And in giving effect to Section 8(d), the Board has
done so squarely on the basis of the interest of stability.
In C& S Industries, it stated (supra, fn. 13):
The statutory intent to stabilize during a contract
term agreed-upon conditions of employment is
apparent from the provisions of Section 8(d) of
the Act, which defines the obligation to bargain.
[Emphasis supplied.]
After referring to the previously quoted portion of Sec-
tion 8(d), the Board continued (ibid.):
In line with that provision, the Board has consistent-
ly held that a party does not violate its bargaining
obligation when it refuses to discuss changes pro-
posed by the other party in the terms of an existing
contract.4
12 E g , Local 3, United Packinghouse Workers [ Wilson & Co ] v
NLRB , 210 F 2d 325 (C A 8), cert denied 348 U S 822
11 See C & S Industries, 158 NLRB 454, 457, W P. Ihne & Sons,
165 NLRB 167
' Tide-Water Associated Oil Company, 85 NLRB 1096,
Jacobs Manufacturing Company, The [sic], 94 NLRB 1214;
enfd. 196 F.2d 680 (C A 2); see also The Press Company,
Incorporated, 121 NLRB 976
In the cases where Section 8(d) was involved, it
happened that the parties were those who had executed
the contract and had undergone no intervening change.
(The special situation where the bargaining representative
has undergone a change will engage our attention in
a later context, infra, fns. 17 and 18, and does not
involve us here.) What concerns us here, insofar as
the General Counsel builds his thesis on the hypothesis
of a successor that has not assumed the contract, is
just how "the statutory intent [of Section 8(d)] to stabi-
lize . . . agreed-upon conditions" (C & S Industries,
supra, 457) evaporates when, in place of the employer
who signed the contract, a new employer has taken
over who is the successor of the original employer.l
Since there has been no change in the "employing
industry" (supra, fn. 11), one wonders how the advent
of a successor-employer does away with the "statutory
intent to stabilize . . . agreed-upon conditions" merely
because the successor has not assumed the contract.
The Rohlik doctrine, which so holds, does not say,
and the stated proposition in Rohlik has an exquisite
synonymity: "As Respondent had not assumed and was
not bound by the contract. . . ." Though the reason
for the above is not given, the General Counsel's posi-
tion, as earlier quoted, acknowledges the Rohlik doctrine
as a stark application of traditional common principles
deemed to be inexorable to any contract, whether, a,
conventional one or a collective-bargaining contract. -
Yet the decision in Wiley mandates the difference,-
between the two. It rings the curtain on Rohlik and
detour from national labor policy. It requires that the,,
obligation be determined on other than conventional,
common law principles. The fact that the successor
employer has not assumed the contract does not in
itself terminate the obligation under the predecessor's
contract. Neither does the fact that the successor has
assumed the contract leave the union free to demand
the negotiation of a new contract merely because there
has been no "novation" (supra, fn. 4). When there
has been a change of ownership within the "employing
industry," the obligation in either instance hinges on
national labor policy: does the interest of stability call
for continuing the "agreed-upon" conditions, or is it
superseded by a legitimate competing interest.14
11 In this connection, we note the impact of Wiley on the obligation
of a successor-employer in another context In Perma Vinyl Corp
164 NLRB 968, the Board, in the light of Wiley, held that a successor-
employer is obligated to remedy the unfair labor practices of the predeces-
sor employer, even though the successor played no part in the predeces-
sor's offense and did not assume the predecessor's debts In so doing,
the Board, giving renewed emphasis to the doctrine of the "employing
industry" (supra, fn 11), overruled Symns Grocer Co , 109 NLRB
349, and revived the holding in The Alexander Milburn Co , 78 NLRB
747, that Symns, had overturned That kind of obligation by the successor
cuts deeper than an obligation to give effect to a predecessor's contract
with the union, for the existence of a contract is one about which
a successor would normally initiate inquiry and whose contents are
immediately manifest within its four corners
KOTA DIV. OF DURA CORP. 367
It would seem that just as the General Counsel's
position is built on the supposition that the Respondent
has not assumed the contract, so too has the Respondent
built its position on the same hypothesis. It supposes,
first, that the Respondent has not assumed the contract,
and argues that, even if so, the Respondent would
nevertheless have been entirely bound, from which it
follows, according to its argument, that in such a situation
the Union too would be bound. Thus Respondent, instead
of availing itself of the actual situation where it has
assumed the contract, relies instead, in the same manner
as the General Counsel, on the imagined situation where
it has not assumed it. This has involved Respondent
in extended arguments to the effect that the Wiley deci-
sion reaches beyond the specific result arising from
the particular complexities of Wiley's own facts. It under-
takes to demonstrate at considerable length that a succes-
sor employer in a position comparable to the Respondent
here, would have been totally bound by the contract
even if it had not assumed it. To be sure, there is
much to indicate that this is so.'5 Yet one wonders
why Respondent should have felt called upon to use
the opposite arm to point to its ear instead of the
one directly under it. Respondent's brief shows a heavy
dependence on the rationale used by the Ninth Circuit
in Wackenhut (supra, fn. 5). Since that case, like the
Third Circuit in Reliance (supra, fn. 5), involved a
successor that had not assumed the contract and the
union was suing to give effect to it, they differ from
our situation, where the successor has assumed the
contract, but the union nevertheless resists giving effect
to•it.-Respondent's theory, based' as it is on Wackenhut,
ne'v`ertheless"fu'rhi'shes'the occasion to`observe in passing'-
ttfatAiow"ever'15r`oadly'o`e' con'sfrues Wiley, as-'did Wack j
enhut,•t`o`r''d'arrowl'y ' as 'did Reliance; we come to 'the
same result`he're"'r'el`e'vant, that the-Rohlik'"not' assumed"
and°,wa's'`hot' bound •'doctrine 'Has" gone' by"the board`'
in the light of Wiley. The Ninth Circuit had first decided
Wackenhut before the Supreme• Court decided Wiley.
In its first Wackenhut decision,- the court (55 LRRM
2554) had decided the successor employer was not obli-
gated to arbitrate the predecessor's contract, because,
inter alia, if the union was not bound, the successor
was not, and in any event neither could be bound
because of the Board's doctrine that where the successor
did not assume the contract it ceased to be a bar
(citing the Board's representation cases in General Extru-
sion and Jolly Giant, supra, fn. 3). Then came the
Supreme Court's decision in Wiley. The court thereupon
reheard the Wackenhut case, and held the successor
was obligated. However, it did so on as broad a base
as its previous conclusion the other way. It now stated
(332 F.2d at 958):
'' Illustrative is the following statement in Wiley (id , at 550)
This case cannot readily be assimilated to the category of those
in which there is no contract whatever, or none which is reasonably.
related to the party sought to be obligated. There was a contract,
and Interscience, Wiley's predecessor, was party to it. We thus
find Wiley's obligation to arbitrate this dispute in the Interscience
contract construed in the context of a national labor policy
The specific rule which we derive from Wiley
is that where there is substantial similarity of opera-
tion and continuity of identity of the business enter-
prise before, and after a change in ownership,
a collective bargaining agreement containing an arbi-
tration provision, entered into by the predecessor
employer is binding upon the successor employer.
It follows that under the rule of Wiley, Wackenhut
is bound by the collective bargaining agreement
entered into by the General Plant [the predecessor],
and is bound thereunder to arbitrate the Union
grievances as ordered by the district court. [Empha-
sis supplied.]
The Third Circuit, in Reliance (supra, fn. 5), though
it too held a successor was obligated to arbitrate the
predecessor's contract, and recognized that "the [prede-
cessor's] collective bargaining agreement , as an embodi-
ment of the law of the shop, remained the basic charter
of labor relations . . ." (p. 895), nevertheless avoided
taking the broad view of Wiley expressed by the Ninth
Circuit in ,Wackenhut. The Third Circuit's point, in
essence, was this: sufficient unto the case is the issue
thereof. It stated in part (p. 895):
In any event, we find implicit in the guarded
language of the Wiley opinion, recognition and con-
cern that new circumstances created by the acquisi-
tion of a business by a new owner may make
it unreasonable or inequitable to require labor or
management to adhere to particular terms of a
collective bargaining agreement previously negotiat-
':.ed, by., a, differ'ent party in different circumstances.
[Emphasis supplied.],
At all, events, whether the path from Wiley is the
high, wide 'and handso ,me one of Wackenhut, or the
low, lean and cheese-paring one of Reliance, in either
instance , were there is a successor, the contract still
remains, and does not vanish into thin air as an inexorable
consequence of its not having been assumed by the
successor.
And that is all we know or need to know here.
In our case, the situation where the successor has not
assumed the contract does not exist. So one cannot
say how far the successor would have had to be obligat-
ed, since we' do not know what the facts would have
been in that situation.
Perhaps this serves to explain the Board's concern
about treating' an issue involving the successor's respon-
sibility where it has not assumed the contract, unless
there is a concrete set of facts specifically presenting
the issue.
The problem would be difficult enough if we were
here faced with that actual situation . So it would seem
less than fruitful to speculate on how far the successor's
obligation would have had to run in an imagined situation
where the successor ' has not assumed the contract.
Respondent, to be sure , in its hypothetical situation,
adopts the premise that it would have retained all aspects
of the predecessor employer's business as it has now
368 DECISIONS OF NATIONAL LABOR RELATIONS BOARD
where it assumed the contract. But a successor's refusal
to assume usually, arises when the successor does not
want to be bound, and normally this is so because
of uncertainties and complexities in the particular case.
See the Board's reasons in Glenn Goulding, supra, fn.
7, for deeming it 'inappropriate to consider whether
respondent there was obligated under the, contract of
the preceding employer. Thus, the question of whether
the Union can demand that the Respondent negotiate
a new contract is properly to be determined not under
the uncertainties of an imagined situation but under
the certainties of the actual one.
Accordingly, against the fact that Respondent has
assumed and given effect to the conditions of the con-
tract, what circumstances require that Respondent, under
pain of being declared in violation of Section 8(a)(5)
of the Act, negotiate a new contract which abrogates
what the Union had itself helped create as a party
to the contract. The Union makes no claim that it
has been given less' than what it had itself subscribed
to in executing the agreement. Nor does the Union
or the General Counsel rely on any circumstance in
competition with the interest of stability inhering in
the "agreed upon conditions." C & S Industries, supra,
fn. 13. The General Counsel relies only on the proposi-
tion, inhering in Rohlik, that Respondent had had the
option not to assume the contract and thereby not be
bound. But the proposition that it is national labor
policy that controls, and not the stark common law
based on nonassumption by a successor, needs no further
elaboration. Had Respondent not assumed the contract,
it would have had to give effect to these terms in
the interest of stability to the extent at least that it
was not overcome by other circumstances. The same
holds true so far as the Union is concerned. The Union
too must indicate some basis in the policies of the
Act which overcomes the interest :of, 9tability-inheringi
in the contract it had signed and Respondent has
assumed.'
An example of how the interest of stability can be
overcome by a countervailing circumstance appears in
the doctrine of American Seating Co., 106 NLRB 250,
to which we have earlier alluded, supra, fn. 10. In
that case, it was not the employer that underwent a
change, but the bargaining representative, and the issue
was whether despite the fact that the contract made
with the prior representative still had a fixed time to
run, the new representative could require the employer
The General Counsel, quoting from Wiley, states:
The objectives of national labor policy, reflected in established
principles of federal law, require that the rightful prerogatives
of owners independently to rearrange their businesses and even
eliminate themselves as employers be balanced by some protection
to the employees from a sudden change in the employment relation-
ship
This , of course , was intended to prevent the frustration of the employ-
ees, expectations under the terms of the contract by the mere refusal
of the successor to assume the contract The statement must be appraised
against the background of a union's efforts to give effect to the contract
as against the successor's refusal to do so The statement could hardly
be used to support the view of a union that resists the successor's
giving effect to the contract and instead demands the abrogation of
the agreed-upon conditions
to negotiate a new contract." The employer said it
was willing to recognize the new representative in place
of the old and bargain under its terms (grievances,
etc.), but resisted negotiating a new contract before
the time fixed under the still unexpired contract made
with the prior bargaining representative. The employer
stressed that the previous representative was the " agent"
and the employees the "principal" when the contract
was signed, and so they were bound by the contract
during the fixed time. The Board, in a decision rendered
years before Wiley, explained that though "under the
common law, agency is a consensual relationship," this
principle is here superseded by policies of the statute
related to the powers of a statutory bargaining represent-
ative."' More specifically relevant here was the Board's
exposition of why the policy of stability was there
overcome by a competing consideration. It stated (p.
253):
One of the problems in this connection arises from
the claim that a collective-bargaining contract of
fixed term should bar a new election during the
entire term of such contract. In solving this problem,
the Board has had to balance two separate interests:
The interest of employees and society in the stability
that is essential to the effective encouragement
of collective bargaining, and the sometimes conflict-
ing interest of employees in being free to change
their representatives at will. [Emphasis supplied.]
The Board in evaluating the "two separate interests,"
concluded that the interest of stability here was overcome
by the competing interest of the employees in their
choice of a new bargaining representative after the con-
tract had run long enough so' as not to'"'bar a new
election,'and by'that token the new representative could
appropriately demand the' negotiation of a' new, cont`ract'
even though' this was before the fixed time of the con
tract. -
In the situation before us, there are no "two separate
interests" in competition or in "balance." The "employ-
ing industry" is unchanged though the employing corpo-
rate entity is different. All else has continued as it
was when the predecessor employer owned the employ-
" In the text, I have stated the facts in the broad terms here relevant
The contract with the employer had been made with an industrial
union which covered a production and maintenance unit that included
also the employees of a craft (patternmakers) The contract had a
3-year term After it had run 2 years , the Board granted a petition
of the Patternmakers Union to permit the craft employees to vote
on whether they wanted to be split off from the p and in unit and
be represented by the craft union instead of the industrial union The
Board concluded that though the contract had a 3-year term, the 2
years it had run constituted a sufficient basis to terminate the bar
to a new choice of representative The Patternmakers Union won the
election and then demanded that the employer negotiate a new contract
with it, though this was before the fixed time in the contract
" The Board explained (id at 252, fn omitted)
Under agency principles, a principal has the power to terminate
the authority of his agent at any time Not so in the case of
a statutory bargaining representative Thus a solution for
the problem presented in this case must be sought in the light
of that special relationship rather than by the device of pinning
labels on the various parties involved and applying without change
principles of law evolved to govern entirely different situations
[Emphasis supplied I
KOTA DIV OF DURA CORP
ing industry Hence, the first interest in the balancing
used by the Board in the American Seating case remains
unchanged, and there is no second interest Thus there
is no dichotomy of interest which calls for competition
with the interest of stability
Is there any competition with the interest of stability
on any other basis9 As stated before, the Union never
pointed to any and the General Counsel does not claim
any The agreed upon conditions when the Union execut-
ed the contract are those the successor has unequivocally
acted to continue during the fixed time of the contract
Possibly the Union feels that it can make a better
deal with the successor than it did with the predecessor
But a like consideration applies when the question is
whether the successor should be required to bargain
with the representative selected when the predecessor
was the owner Conceivably, the employees could have
voted otherwise had the successor been the employer
at the time of that election But just as the interests
of stability are not overcome in that situation, so too
are they not overcome by speculation of how the Union
might have fared if it had negotiated in the first instance
with the successor At any rate, no such claim is here
made Conceivably also, there could be a situation where
the contract the union made was with a small employer-
say a food store-where it agreed to terms which were
not representative of what was obtainable with a large
chain Suppose that during the life of that contract,
the large food chain buys up that small store and takes
over the employees as well Whether the union could
even in such a situation claim that the existing contract
calls for renegotiation before the fixed time, it would
at least be an element to be considered against the
factor of stability inhering in the contract that had
been made with the single store owner But there is
no situation of the kind here, and again none is claimed
369
The industry owned by the predecessor employer was
a large one, and Respondent has continued it in all
its aspects, including its personnel and its various con-
tracts
As a final thought, Respondent has in the spirit of
Jacobs Manufacturing, 94 NLRB 1314, enfd 196 F 2d
680 (C A 2), not refused any request by the Union
to discuss something not contained in the contract
The Union apparently wants no part of that either
It simply wants to negotiate a brand new contract for
no other reason than that the contract has no successor
clause and there was no "novation" (fn 4) However,
if it is at all still relevant, it is hardly enough under
the facts here presented to countervail against the interest
of stability called for by the contract
On the basis of all of the foregoing, the undersigned
hereby states the following
CONCLUSIONS OF LAW
1 On the facts here demonstrated, the interests of
stability call for the continuation of the bargaining con-
tract made by the Charging Party with the predecessor
employer which has been assumed by Respondent, the
successor employer
2 Respondent is in full compliance with Section 8(d)
and 8(a)(5) of the Act, and its refusal to negotiate
a new contract prior to the fixed time stated in the
contract made with the predecessor conforms with Sec-
tion 8(d) and is not in violation of Section 8(a)(5) or
(1) of the Act
RECOMMENDED ORDER
On the basis of all of the foregoing it is recommended
that the case be dismissed