National Labor Relations Board v. Burns International Security Services, Inc.

PETITIONER:National Labor Relations Board
RESPONDENT:Burns International Security Services, Inc.
LOCATION:Stanford University

DOCKET NO.: 71-123
DECIDED BY: Burger Court (1972-1975)
LOWER COURT: United States Court of Appeals for the Second Circuit

CITATION: 406 US 272 (1972)
ARGUED: Jan 13, 1972
DECIDED: May 15, 1972

ADVOCATES:
Charles G. Bakaly, Jr. – for Burns International Security Services, Inc
Gordon A. Gregory – for International Union, United Plant Guard Workers of America
Norton J. Come – for National Labor Relations Board

Facts of the case

Question

Audio Transcription for Oral Argument – January 13, 1972 in National Labor Relations Board v. Burns International Security Services, Inc.

Warren E. Burger:

We will hear arguments next in 71-123, National Labor Relations Board against Burns International and Burns against the Board in Number 198.

Mr. Come you may proceed whenever you are ready.

Norton J. Come:

Mr. Chief Justice and may it please the Court.

This case is here on writs of certiorari to the Second Circuit, presents two questions concerning the extent to which the duty to bargain under the National Labor Relations Act survives a change in employers.

The first question is whether Burns International Protective Agency which took over Wackenhut’s job of furnishing guard services, Lockheed is a successor to Wackenhut for purposes of the National Labor Relations Board and second, if Burns is a successor employer, is it obliged not only to recognize and bargain with the union represented by Wackenhut’s employees or also obliged to honor the collective bargaining agreement which Wackenhut had entered into with the union covering these employees.

Warren E. Burger:

Mr. Come if –- perhaps this question is a little bit too early, but if you will bear in mind now certainly when you want, if Burns have not employed any of the Wackenhut people, they employed 27, I think some such figures, they have not employed any, would you contend they were a successor employer because they moved in and performed the same function?

Norton J. Come:

I would say the fact that they — well, as I will develop further to continuity of the employing enterprise is the test and among the factors that are very crucial there is the complement of the workforce and had they not employed for nondiscriminatory reasons, the Wackenhut employees, that would be a big factor for holding that they were not a successor.

Whether it would be conclusive or not, I will develop as I get to it.

The basic facts here are these.

From July 1, 1962 to July 1, 1967, Wackenhut, a nationwide guard service provided plant protection services for Lockheed Aircraft Service Corporation, a subsidiary of the Lockheed Aircraft Corporation at its facility at the Ontario Airport in California.

What Lockheed was doing there was serving, was maintaining and repairing planes and Wackenhut was supplying guard service for the Lockheed operation.

On March 8, 1967, the Board certified the United Plant Guard Workers as the exclusive bargaining representative of the Wackenhut employees working at the Lockheed Airport facility.

How about the unit in place?

Norton J. Come:

It was a unit of about 42 employees.

On April 29, 1967, about a month after the certification, Wackenhut and the Union entered into a three-year collective bargaining agreement covering these employees and the collective bargaining agreement among other things contained a clause making the agreement binding on successors and assigns.

Lockheed’s then current service contract with Wackenhut was due to expire on June 10, 1967 unless extended by Lockheed.

In May of 1967, Lockheed invited various guard services, including Wackenhut to bid or rebid the job.

On May 15, Lockheed advised the prospective bidders including Burns, that Wackenhut’s guards were represented by the United Plant Guard Workers who had been certified by the Board and that there was an outstanding collective bargaining agreement between Wackenhut and the Union covering those employees.

Although, Wackenhut submitted a bid, the successful bidder was Burns.

In the next moth, June of 1967, Wackenhut or Burns sought to employ when it took over on July 1 as many of the Wackenhut guards as possible for the reason that they had, they cleared security and top security clearance that was needed for this type of work.

The Wackenhut guards applied for jobs with Burns.

As they did so, Burns’ officials in turn assisted the American Federation of Guards, another union with whom Wackenhut had a contract covering its employees in Los Angeles County.

That contract did not cover these employees because this was in San Bernardino County, but nonetheless, Burns assisted the American Federation of Guards in obtaining membership applications from the Wackenhut guards as they came to apply for jobs with Burns.

Representatives of Burns told the guards that they could not get uniforms without signing American Federation of Guards membership cards and that they had to join the American Federation of Guards in order to work for Burns.

On June 29, Burns’s Branch Manager concluding that a majority of the employees to be used that the Lockheed Airport job had signed American Federation of Guards membership applications or were already members of that union recognized the American Federation of Guards as their bargaining representative.

Wackenhut had terminated its guard service at midnight on June 30 and Burns began to furnish such service on July 1.

On that date, Burns’ Lockheed force like Wackenhut’s consisted of 42 guards.

Of the 42, 27 or more than a majority had formally been employed by Wackenhut and 15 guards were transferred from other Burns’ jobs.

The Burns guards performed essentially the same tasks at the same stations that the Wackenhut guards had performed.

Moreover, although Burns used its own supervisors, their functions and responsibilities were similar to those of their Wackenhut predecessors, both utilize area supervisors who perform similar functions and both had full time supervisors on the Lockheed job with similar functions.

How many of the Wackenhut –- former Wackenhut guards signed up with the other union of the 27?

Norton J. Come:

I believe all of them.

All 27?

Norton J. Come:

Yes, Your Honor.

And of course the 15 brought over by Burns were already members of the (Voice Overlap)

Norton J. Come:

They were already members.

They were apparently transferred from the Los Angeles County and thus were under the Burns’ contract with the American Federation of Guards which I believe had a Union Security Clause as did the United Plant Guards contract with Wackenhut.

On July 12, the United Plant Guard Workers requested that Burns recognize it as the bargaining representative of the Burns employees at Lockheed and honor the collective bargaining agreement that it had with Wackenhut.

Burns refused and the union filed unfair labor practice charges with the Board.

The Board found that the — that Burns violated Section 8 (a) (2) and (1) of the Act which prohibits illegal assistance by an employer to a labor organization by assisting the American Federation of Guards in organizing and by recognizing American Federation of Guards when it did not represent an un-coerced majority of Burns’ employees.

This finding was sustained by the Court of Appeals and it is not an issue here.

The Board also found that a bargaining unit limited that the guards working at the Lockheed Airport facility was appropriate, that Burns continued essentially the same operation at that plant that Wackenhut had, and therefore, it was a successor employer to Wackenhut and accordingly the Board held that Burns violated Section 8 (a) (5) and (1) of the Act by refusing to recognize and bargain with the United Plant Guards.

Finally, the Board drawing support from this Court’s decision in Wiley against Livingston which I will get to later, the Board held that as a successor to Wackenhut, Burns was obliged to honor the collective bargaining agreement between Wackenhut and the United Plant Guard Workers and that by refusing to do that that was an additional violation of the bargaining obligation.

The Court of Appeals in an opinion by Judge Hayes sustained the Board’s finding as I indicated, the bear legal assistance, sustained the Board’s finding of — that Burns was a successor, sustained the finding that there was a refusal to bargain and Burns refusing to recognize United Plant Guard Workers as a representative of the employees, but held that the Board had exceeded its powers under the statute in finding that there was also a further refusal to bargain in failing to honor the collective bargaining agreement.

Both the successor issue and the propriety of the Board’s finding requiring a contract to be honored before this Court on a cross petition for certiorari.

Now, as this Court knows in enacting the National Labor Relations Act, Congress made the policy declaration, Section 1 of the Act that protection by law of the right of employees are organized and bargained collectively, safeguards commerce from interruption by removing a frequent source of industrial strike.

The way the Board — the Act implements that policy is to provide a procedure whereby the Board can conduct a secret ballot election and get the employees’ wishes concerning a bargaining representative.

If a majority vote for them, it certifies them as the exclusive bargaining representative under Section 8 (a) (5) of the Act, it is a refusal to bargain, to refuse to honor the certification.

Furthermore, since the Act also rests on the premise that industrial pieces promoted by maintaining stability into bargaining relationship, a board certification is normally not subject to challenge for one year.

This Court endorsed the Board’s rule to that effect in the Brooks case or longer, if there is a collective bargaining agreement of reasonable duration and under Court principles that had been approved by the Courts collective bargaining agreement of up to three years is normally regarded as reasonable duration.

William J. Brennan, Jr.:

Can I get this clear?

Norton J. Come:

Yes sir.

William J. Brennan, Jr.:

Under the Court of Appeals decision —

Norton J. Come:

Yes, Your Honor.

William J. Brennan, Jr.:

— now the only issue as to which he did not agree with the Board was whether although Burns has to recognize, what is it, Plant Guards, United Plant —

Norton J. Come:

Yes, Your Honor.

William J. Brennan, Jr.:

— it has to deal with the United Plant Guard and not with the old American, whatever it was, nevertheless, they would have to work out a new agreement.

Norton J. Come:

That is correct.

William J. Brennan, Jr.:

That is between Plant Guard and Burns and that if Burns would not oblige, they will simply carry on the old agreement with — agreement made with Wackenhut, is that it?

Norton J. Come:

That is right, Your Honor.

William J. Brennan, Jr.:

And as the cross petition of the — of Burns that it disagrees with so much of the order that says that the — Burns has to deal with (Inaudible).

Norton J. Come:

That is right, Your Honor.

William J. Brennan, Jr.:

And are those the only two questions we have?

Norton J. Come:

Yes, Your Honor those are the only two questions as I understand it.

Now, in line with the general principles that I have just outlined, had Burns remained the employer here, it would have been obliged to recognize the United Plant Guard Workers, during life of the three-year collective bargaining agreement, notwithstanding any changes in the complement of the employees that occurred during the life of that agreement and if Wackenhut had repudiated that agreement or it unilaterally modified its wage provisions or any other provision relating to the employees terms and conditions of employment, it would not only have been subject to a suit for breach of the agreement under Section 301 of the Labor Management Relations Act, but it would have violated Section 8 (d) and therefore 8 (a) (5) of the National Labor Relations Act as well because Section 8 (d) provides in relevant part that where there is in effect a collective bargaining contract, the duty to bargain collective shall mean that no party to such contract shall terminate or modify such contract without giving prescribed notice and waiting until the expiration date of such contract.

And as I understand it, nothing in this Court’s recent decision in Pittsburgh Plate Glass affects this general principle because this contract almost exclusively, if not exclusively dealt with mandatory subjects of bargain.

Now, I do not understand that Burns disagrees with what I have just been setting forth as the obligation that would have been imposed on Wackenhut nor do I understand that there is any disagreement with the next point that I am going to make.

Namely that early in the administration of the Act, the Board evolved the doctrine and it has been uniformly approved by the Court of Appeals, although this Court has never had occasion specifically to pass on it, that the mere transfer of operations from employer to another does not distinguish — extinguish the obligation of bargain under the National Labor Relations Act and such claims for a leave substantially in fact the identity of the employing enterprise then the duty of the original employer to recognize and bargain with an incumbent union evolves upon the new employer as a successor employer.

The rationale for the doctrine is simply this.

That if the employing enterprise remains intact, continuation of a bargaining obligation serves the policy of averting industrial strike in that enterprise no less than that — by imposing that obligation upon the successor employer then did imposing it on the original employer.

Moreover, where you have maintained the employing enterprise, there is little reason to believe that the employees’ original choice of a bargaining representative would have been altered by the mere change in employers.

The point at which the difference between us develops is what are the criteria for determining whether you have a successor employer for purposes of the National Labor Relations Act and that also gets back to the Chief Justice’s question.

Warren E. Burger:

Well, before you go on to that Mr. Come, what you have said sounds as though, you are talking about a case in which Burns came in and took over and along with the takeover of the activity, took over employees.

Now, my reading of this record is that Burns was one of the competing bidders, great many people bid for this contract and this company has awarded it to Burns as the low bidder, so there were competitors of the man you — of the company you now suggest is this company to which they are successor, these employees were then, the 27 employees ultimately taken within on the open labor market, were they not?

Norton J. Come:

That is correct Your Honor.

Warren E. Burger:

Then they were hired one by one.

I just want to be sure I have got those facts clear.

Norton J. Come:

Yes you have Your Honor and it is Burns’ point that that does make a difference as that distinguishes — that distinction should be drawn between this kind of a situation in one where you have a more conventional transfer of assets or of facilities.

We submit and we believe that the cases in the Court of Appeals support our submission that so long as the new employer ends up with substantially the same bargaining unit or industrial community as it sometimes called, he is a successor employer for purposes of the National Labor Relations Act whether he does that as a result of direct dealing with the prior employer or he does it through dealing with a third party as was done in this case because the important thing as I tried to indicate the important rationale for writing this — the loss of the successor employer on the bargaining obligation is that the change in employer has not made a significant change in the bargaining unit which had originally selected the union as the employees’ representative.

And that is what we had here because irrespective of how Burns ended up with the contract and the findings of the Board as sustained by the Court of Appeals you had a situation where, I am quoting from the Court of Appeals appendix 189, “Both Burns and Wackenhut are a nationwide organizations.

Both perform the identical services at the same facility, namely providing plant protection service for Lockheed.

Although Burns used its own supervisors, their functions and responsibilities were similar to those performed by their predecessors and finally and perhaps most significantly, Burns commenced performance of the contract with 27 former Wackenhut employees out of its total complement of 42.

Moreover, as shown by Burns’ assistance to the American Federation of Plant Guards, it too recognized this Lockheed operation as a separate operation, as a separate bargaining unit.”

So that, we submit that since the change in from Wackenhut to Burns that is substantially intact, the employment conditions at the enterprise that is involved there, namely the supplying of the guard services to Lockheed which was a separate unit, the Board properly found that Burns is a successor employer to Wackenhut and which brings me to the second question as to whether Burns was not only obligated to recognize and bargain with United Plant Guard Workers’ Union and prohibited from making any unilateral changes in existing working conditions without first bargaining with the union and whether it was also obliged to honor the contract.

Now —

Potter Stewart:

How much longer does this contract have to run, this collective bargaining agreement at the time that Burns was awarded the basic contract by Lockheed?

Norton J. Come:

Probably — it had about two-and-a-half years I would say.

It was entered into in — perhaps even more than two-and-a-half years, it was entered into in April 29, 1967 and Burns took over on July 1, 1967.

Potter Stewart:

That was a three-year?

Norton J. Come:

It was a three-year contract.

Norton J. Come:

There would be no question that Wackenhut would have been required to honor the contract —

Potter Stewart:

For three years?

Norton J. Come:

For three-year time.

Potter Stewart:

Re-openable by either party and all during that three-year period?

Norton J. Come:

As I recall it, it was not.

Three-year contracts are not uncommon in collective bargaining.

There was a time when a one-year contract was the rule, then it went to two years and now three years as the —

Potter Stewart:

Early standard.

Norton J. Come:

Is very standard.

Now —

William J. Brennan, Jr.:

For the invitation of the bid went out after the agreed — new agreement had been signed?

Norton J. Come:

After the new agreement had been signed —

William J. Brennan, Jr.:

Any evidence that anyone knew that there was going to be invitation to bid?

Norton J. Come:

At the time that they — before they signed the —

William J. Brennan, Jr.:

(Voice Overlap)

Norton J. Come:

Yes, Your Honor.

Warren E. Burger:

Mr. Come, you may continue.

You have six minutes remaining of your total time.

Norton J. Come:

I would like to respond to Mr. Justice Brennan’s question and reserve the balance of my time.

At the luncheon break, Justice Brennan asked whether there was any indication that bids would be lead at the time the collective bargaining agreement was entered into.

So far as the record shows there was no indication other than the fact that Lockheed contract with Wackenhut was a year contract that was subject to removal.

However, for the last five years Wackenhut had been retained to perform the guard service at this installation and from all that appears in the record it had every intention of remaining —

William J. Brennan, Jr.:

Does that previous contract include successors in turn?

Norton J. Come:

That the record does not show.

William J. Brennan, Jr.:

Did they show whether there was any special attention given to the inclusion of that provision in this concept.

Norton J. Come:

The record does not.

Warren E. Burger:

Mr. Gregory.

Gordon A. Gregory:

Mr. Chief Justice and may it please the Court.

The United States Chamber of Commerce in its amicus brief stated and I quote, “In a service industry such as the providing the plant protection service, generally the only variable in which productivity of efficiency gains can be made is labor.”

I submit Your Honors that in this case the labor gains that have been made, have been made at the sacrifice of rights that are federally protected and rights which this Court sought to stabilize and its Wiley decision.

Gordon A. Gregory:

In my view, there are classic facts here of Wackenhut Corporation having had a contract for guard services for a number of years on an unorganized basis.

The guards that my client represents organized those people.

They were certified by the National Labor Relations Board.

They entered into negotiations for their first contract which did contain the successors and assigns clause and without at least the control or participation of the parties, Lockheed elected to let its contract with Wackenhut up for bids.

Following the premise that the only commodity this guard agencies have is labor, Burns then was in the position to ignore the stability created by the bargaining agreement and effectively then to bid on the basis of labor only.

The result was that the employees lost the benefits of the gains they had made through the collective bargaining process.

I suggest that a doctrine, that a successor employer and assuming for the moment Burns was a successor, albeit a non-consenting party to what has clearly been held to be a non-consensual agreement and rather a public obligation does not do violence to clear concepts of Federal Labor Law Policy as they were established prior to the time of the Burns’ decision because prior that time in a successor situation it was held that the successor was bound to recognize and bargain with the incumbent union.

It was held that the successor was bound to recognize existent terms and conditions of employment whether or not those terms and conditions of employment were established by a bargaining agreement or otherwise.

Byron R. White:

Well, not in the service situations.

You have it mergers and purchases of assets, right?

Gordon A. Gregory:

Well, Your Honor if I understand the question, I had understood that in for example the Board’s decision in maintenance, the physical acquisition of assets was not essential to a finding of successorship nor was privity —

Byron R. White:

I know, but there was a deal that was — was there a deal there between the predecessor and the successor?

Gordon A. Gregory:

Not in the Maintenance Incorporated.

Byron R. White:

What about in the Government contract cases?

Gordon A. Gregory:

In annual maintenance, I do not believe there was privity or an understanding between the successor or predecessor in that case.

Byron R. White:

And what about the Board decisions in Government contract cases where you – where — on Government bids one person replaces another and the successor is held not to be bound?

Gordon A. Gregory:

Yes.

That decision was subsequent of course to the determination in Burns, I believe the case is on appeal and —

Byron R. White:

Well, it did not overrule any prior cases, did it?

Gordon A. Gregory:

No, it did not overrule Burns.

It distinguished I think Your Honor on the basis of “unusual circumstances” and of course, I personally disagree that there were unusual circumstances to warrant a departure from Burns and hopefully that matter will be appealed, but I do not see any distinction between annual maintenance and what the Board had held earlier in Maintenance Incorporated and then as set forth in Burns where they —

Byron R. White:

What would you say if Burns had a collective bargaining agreement with another union that gave the other union the bargaining rights with respect to any of its installations in California and then with the one who has bid with Lockheed?

Gordon A. Gregory:

Well, that was asserted below Your Honor and rejected —

Byron R. White:

I know it was rejected, but let us assume that it was true.

Gordon A. Gregory:

This I would say would be one of the numerous factors to determine whether or not initially there was a successorship involved and whether the collective bargaining agreement of the predecessor bore a reasonable relation to that predecessor.

I do not believe that that is not the case before the Court because here you had a completely separate facility and if I might add on that point, first Wackenhut and the Plant Guards negotiated the collective bargaining agreement of which I think we can assume was tailored to the needs of plant protection services at that facility.

Byron R. White:

Well, was the wage scale of Burns actually lower than Wackenhut?

Gordon A. Gregory:

Yes.

The record shows it was 10 to 12 cents lower and then at a future date some two months after its takeover Burns did raise the wages to the level of its predecessor and maintained them there for a time —

Byron R. White:

And was that wage rate higher than Burns’ other establishment?

Gordon A. Gregory:

Yes it was.

It was higher than the so-called anterior sub-office that they would rely upon as being the more appropriate unit.

Byron R. White:

Well, what would you say if the Burns, if the wage rates that Wackenhut had been lower than the Burns rate?

Gordon A. Gregory:

Had they been lower, the employees would have been stuck with them, they had negotiated them and Burns could then pay those wages at that particular facility if in fact they were a successor.

Byron R. White:

But you would not — what you — do you suppose — I suppose the union would have objected but I am not sure the employees would have objected if they had been included in the Burns’ bargaining unit?

Gordon A. Gregory:

Perhaps not, Your Honor, but a companion case with Burns was the (Inaudible) Division wherein the union desired not to be bound by a collective bargaining agreement where there had been a change in ownership and the Board has indicated that the rule set forth in Burns would apply equally to unions as well as employers and I submit that is correct Your Honor.

Potter Stewart:

Well, except that Florida as I understand, it has given itself a little leeway in the Emerald Maintenance case, is that correct?

Gordon A. Gregory:

Yes, Your Honor.

Potter Stewart:

If in other words the wage rights that Wackenhut was paying were lower as a result of the fact that Wackenhut was a failing company or some other extraordinary reason, the Board has held that this Burns’ doctrine will not be applicable, has it not?

Gordon A. Gregory:

Yes it has.

I would point out Your Honor that that involved an application of the Service Contract Act.

In fact I submit a misunderstanding of what that Act involves since basically it is a minimum wage or Davis-Bacon Act for service industry employees working under Government contract and of course those factors were not present in the Burns case.

Indeed we had two sophisticated well established giant guard agency and I would make the point that Burns not only had advance knowledge but with the sophistication on experience was in a position to adapt to the situation of the collective bargaining agreement that was present.

Warren E. Burger:

Mr. Gregory that language, successors and assigns, is that language historically had been the kind of language used to describe successors in this context or is that standard, lawyers work in contract in documents of all kind?

Gordon A. Gregory:

Mr. Chief Justice in my opinion it is standard.

It has been a form of boiler plate.

I think we have placed in bargaining agreements although until Wiley at least, until Burns, there may have been valid whether as a matter of law it would bind a non-consenting successor or assign.

More ideally in our bargaining agreements we attempted to make it a condition of sale or assignment that the predecessor would see that the successor adopt it, but realistically and in terms of placing this Court’s Wiley decision on the rationale thereof promoting industrial stability through arbitration and of giving employee some modicum of protection against changes in ownership, I submit Burns is in harmony with that doctrine because under Wiley if there has to be arbitration for the successor it is implicit there cannot be that arbitration unless the bargaining agreement survives.

Warren E. Burger:

So there is a continuity factor from the standpoint of the employer too, is there not?

It is the — Burns having an established relationship with other unions or any one in the posture of Burns might have some real problems if they have to divide up and deal with the number of unions, would they not?

Gordon A. Gregory:

If I understand the question Your Honor, Burns I do not believe would be any worse off in that situation unless you are alluding to the American Federation of Guards and (Voice Overlap)

Warren E. Burger:

Well, I am speaking to this particular union.

Assume they had a union that was part of American Federation of Labor and established, recognized, acknowledged union, you would have some jurisdictional problems then, would you not, if they came in with a contract that they were obliged to recognize that union in any acquisitions that they came to, if they acquired any new plants or branches or agency?

Gordon A. Gregory:

I do not believe they would Your Honor.

The client I represent has had experience with Burns throughout the country where we have other units and I know of my own knowledge that Burns has other unions besides AFG and UPG-WA, but I do not believe that potential threat, if it is, can destroy the fact that there was continuity of identity of an employing enterprise.

There was previously an appropriate unit certified by the National Labor Relations Board.

Moreover, I would point out that the Act contains adequate machinery for dealing with jurisdictional disputes assuming they developed.

Warren E. Burger:

Would your position be the same if five or six or seven of the employees of Burns has gone over to Wackenhut, it is better if 20 or some?

Gordon A. Gregory:

Yes it would be Your Honor.

I think that the —

Warren E. Burger:

And how about none — how about if there were no employees?

Gordon A. Gregory:

Well, I believe that was the situation in Monroe-Sander for example decided by the Second Circuit where the possible, either refusal to employ or transfer to the — a new location or to the successor in turn might be either an unfair labor practice or as I understand Wiley, a breach of the collective bargaining agreement or a matter of subject to arbitration.

So I would not state that a headcount is absolutely essential to the operation of the successorship concept.

And may I conclude by indicating that in a situation such as presented here, it would appear to me a certain stability is created not only for the employees on whose behalf I argue but for those employers who operate in the service industry area which is highly competitive but typified generally by competition based on labor rates, rates of people who generally speaking are barely above the minimums to begin with.

So I would submit there could be stability for the employer.

Moreover sophisticated parties anymore in labor relations do enter into voluntary adjustments to adopt to such proper changes as it may take place with a change in ownership and finally this Court has made it clear in Wiley that the arbitration machinery is to be fostered and is of course available or binding upon a successor to correct these situations.

I submit that Burns has finally placed an entire National Labor Relations Act in harmony with the Federal Labor Policy generally which is to promote and foster bargaining through agreements and informal arbitration on disputes.

Warren E. Burger:

Thank you Mr. Gregory.

Mr. Bakaly.

Charles G. Bakaly, Jr.:

Mr. Chief Justice and may it please the Court.

The Court has zeroed in on the narrowness of this case with respect to the successorship issue, it does involve service industry type businesses and our position before this Court at this time which has not been answered by the Court below or by counsel is that this facility operation of either Burns or Wackenhut was not an employing industry under either Burns or Wackenhut and therefore there could not be any continuity of the employing industry.

We are not contesting the general law that a successorship will be found where there is no change in the employing industry.

We are dealing with a particular service industry and what this facility was which everybody has assumed this facility operation was just a small portion of Wackenhut business in California and it was a very, very small portion of Burns’ business in California.

And the cases unfortunately have not dealt with this question of what is an employing industry in the service industry context and we say that an employing industry is — must be a large enough portion to where there is managerial authority and skill which is necessary to run the business and to make decision on matters that are critical to employees and that the employing industry is used with a purpose therefore in determining the employees desires about having a union.

Now, as to the regards to the facts in this case, as been pointed out that there was an annual renewal contract between Lockheed and Wackenhut.

There was not a term agreement between Wackenhut and Lockheed and that the contract between Wackenhut and the Plant Guards was the first contract so that the successors and assigns clause had not been in any previous agreement.

Now, why did not this facility have the indicia of an employing industry?

As we have said it was a very, very small portion of the business of each.

There is only one supervisor there, part time when Wackenhut had it.

When Burns took it over there was one supervisor with limited authority, limited authority.

The wages, the benefits, the working conditions, all other decisions were established at the corporate headquarters not at the facility.

With respect to Burns it was established on the anterior basis.

There were separate office staffs.

There was no office staff at the facility of Burns.

There was no payroll and accounting staff.

All that was handled at the sub-office where Burns is in it, the California office for Wackenhut.

And there were separate manuals and procedures of these two competing companies of which this facility was merely a very small portion.

In any event, there was a substantial change primarily because of the quickness within which this operation, facility was integrated in the Burns as regular operation because of Burns’ practice of interchanging guards regularly to have the flexibility, to have the particular guard work at more than one location where his services could be best utilized.

They had this practice and within six months, less than the majority of the former Wackenhut employees were employed at the facility, so that immediately upon Burns taking this over, integrated it into its other unit.

From a policy standpoint as the Chief Justice, I think pointed out, there would be serious problems if this rule of successorship applied in the service industries to the companies like Burns and that would cause a lack of stability in labor relations and this kept —

Byron R. White:

Mr. Gregory, do you contest the decision that the Union was the bargaining agent?

Charles G. Bakaly, Jr.:

We do, upon the takeover, yes.

We do not believe that Burns was a successor to Wackenhut, and therefore, the UPGW was not the bargaining representative.

Byron R. White:

Now, do you have to win on that?

Charles G. Bakaly, Jr.:

We do not have to win on that for the contract question, no.

Byron R. White:

Why not?

Why not, if it is a — if the union is a bargaining agent, it is — that because of Burns was a successor?

Charles G. Bakaly, Jr.:

That is right.

That would be the only basis on which we would have to (Voice Overlap)

Byron R. White:

When — if it is a successor how can we say that the — that Burns is not bound?

Charles G. Bakaly, Jr.:

Because Mr. Justice White, Section 8 (d) of the National Labor Relations Act very precisely proscribed certain powers to the Labor Board.

The Labor Board, the National Labor Relations does not have the power to compel an employer to become a party to an agreement.

This is a cardinal principle and this is what Labor Board has done here.

They have —

Byron R. White:

I know but the — by becoming a successor, the employer agreed?

Charles G. Bakaly, Jr.:

In what regard, Mr. Justice?

There was no law at the time of the employer begun a successor that he (Voice Overlap) obligated out of this (Voice Overlap)

Byron R. White:

He became a successor voluntarily, didn’t he?

Charles G. Bakaly, Jr.:

That is correct.

He bid for the job and was awarded it by Lockheed.

He will not have any relationship (Voice Overlap)

Byron R. White:

He says I voluntarily want to be a successor?

Charles G. Bakaly, Jr.:

Alright, but the law for 35 years to that time was that a successor was not obligated to honor the agreement.

Byron R. White:

Even though he was obligated to bargain with (Voice Overlap)?

Charles G. Bakaly, Jr.:

To bargain, yes sir.

That has been the law for 35 years until the Board in this case for the first time since 1934 changed that rule.

William O. Douglas:

And the parties by saying successors and assigns could not make that?

Charles G. Bakaly, Jr.:

Of course not.

Could –- you cannot obligate a third party by the mere successors and assigns language.

Now, the Court in Wiley in a 301 action did hold for the purposes of arbitration that a successor was obligated to arbitrate.

Charles G. Bakaly, Jr.:

But that was a far cry from a holding that — the person arbitrating was bound.

It was up to the arbitrator to decide the portion if any of the collective bargaining agreement by which the successor was obligated.

Now —

William H. Rehnquist:

Well, the Second Circuit opinion that we are reviewing here held that your client was a successor and had to bargain, but that it was not bound by the contract bid?

Charles G. Bakaly, Jr.:

That is correct, Mr. Justice, that is correct.

Byron R. White:

And you petitioned for a cert on the first part?

Charles G. Bakaly, Jr.:

On the first part, on the successorship part.

Byron R. White:

You say you are not obligated even to bargain?

Charles G. Bakaly, Jr.:

That is correct because this small facility operation was not an employing industry as that term should be applied in order to have stability.

Think what happens to a service company in the greater Los Angles area that has a collective bargaining agreement with one union that it recognizes that union for Los Angeles County and they are competing constantly for these jobs.

Now, if every time they takeover a new job they are going to takeover a new union that is going to cause serious problems of instability.

It is going to cause jurisdiction strike and it is going to put the employer in the middle between two competing unions.

Now, this is of the policy reason why in this industry, we are not talking about successorship generally, but in this service industry where there is so much of interchange of employees and the changing of jobs so regular.

Byron R. White:

Well, if it were clear in events that it refer — that in a situation like — is that in a transaction like Burns engaged in that you are (a) going to have to bargain and (b) honor collective bargaining contract then I do not know what confusion there would be?

Burns would know what it is bidding on.

It is just that there would not be of much flexibility in one element of its cause, one element on bid as they thought there might be.

Charles G. Bakaly, Jr.:

Well, they could not interchange employees.

You cannot require employees to join two or three different unions Mr. Justice White and require them to pay dues in these unions as a practical matter.

So you could not interchange employee from one job to another even though you have thought that in order to do it and have efficiency you would want it (Voice Overlap)

Byron R. White:

I do not understand that.

Charles G. Bakaly, Jr.:

Well because if over here, this Job A, you have Union X and over at Job B, you have Union Y and you have Union shop agreements with both of them and require a union membership within 30 days.

You could not transfer an employee from this job over here on a temporary basis without requiring anybody, any member of the union.

Byron R. White:

Well, that is true.

But that have — that might be a — that is really no difference in time from saying that you have to recognize and bargain with one union at one place and one at the other.

Charles G. Bakaly, Jr.:

We think it is in this small, narrow area of service industry Mr. Justice and that is why I am not — we are not trying for a principle of law here that will stop the general rule of successorship and the obligation to bargain.

When you acquire a factory, when you have acquired a business, there is growing concern with an office staff and so forth, we are not attempting to alter any general rule.

Byron R. White:

You mean requiring you to bargain?

Charles G. Bakaly, Jr.:

Requiring you to bargain as opposed to the agreement.

I will get to the agreement because that is a matter of great concern in this, but on the successorship issue we are not trying for a — maybe our position is somewhat different from the amicus in this regard but as far as Burns is concerned we are trying only here to show the Court the difference between a service industry and industries generally in this area of successorship. We are not trying to adopt a rule of successorship different from the present rule of successorship except in this narrow service industry.

Now —

Thurgood Marshall:

Does it not involve (Inaudible) your right to shift these men from place to place?

Charles G. Bakaly, Jr.:

Yes.

If there is any reason why —

Thurgood Marshall:

Well, I would submit that on your hypothetical on the plant and maybe if you try to shift in the union it might have a good grievance?

Charles G. Bakaly, Jr.:

Well, it depends on the collective bargaining, Mr. Justice Marshall.

Thurgood Marshall:

That is what you — you just do not want to agree with it?

Charles G. Bakaly, Jr.:

No.

No, employers today to get flexibility would obtain provisions and they avail permitting transfers of employees in order to have this opportunity to utilize people at different locations.

You might have because in economics you might bargain that away in a particular situation, but generally speaking employers had the right in service industries to transfer people.

Let us supposed, if why and here is why you have to.

I am building —

Thurgood Marshall:

How broadly the service industry in your mind?

Charles G. Bakaly, Jr.:

I am thinking particularly of a maintenance contractor and the guard service primarily.

Take a building that has a maintenance contractor and the particular employees asserts in the floor gets into a fight with the tenant.

That building contractor, the owner of the building is going to say to the maintenance company move that fellow out of there and the maintenance company is going to transfer him to another building and that just happens all the time.

They have to have (Voice Overlap)

Thurgood Marshall:

How about in the Lockheed Company if a machine is conscious of customers and knows, does that take Lockheed out?

Charles G. Bakaly, Jr.:

No.

Lockheed would discharge the employee to that building.

Thurgood Marshall:

It has to go through the grievance procedure?

Charles G. Bakaly, Jr.:

And it goes through the grievance procedure.

I suggest that this is the less of an impact on employees to permit the maintenance company to say, we know Joe that your relationship with that company was bad, but we think that you can have a good relationship with another company so we are going to give you another chance rather than fight and fire you.

Thurgood Marshall:

I agree with (Voice Overlap) this great difference of the service industry?

Charles G. Bakaly, Jr.:

And we submit that there is a difference because of the — primarily of the interchange in the integration and the fact that you are operating at hundreds and hundreds of different locations in the same general area and every location becomes a bargaining unit.

There is going to be great instability and difficulty, we submit.

Byron R. White:

Well, I take it that the Board indicated that you could — that it would be a wholly different case if you would decide it to bring it on — bring in your own employees, had not hired any of the Wackenhut employees?

Charles G. Bakaly, Jr.:

Well, Mr. Come did not say that exactly.

He said that that would be a factor that he has taken to consider (Voice Overlap) in a different case.

Mr. Gregory said that he would not find it a different case if we are drawing all of our employees and in fact where you have this policy of integration within six months, Mr. Justice White, there was a majority of non-Wackenhut employees there.

That is a really short period of time and because of this Burns policy that I am talking about, that happened.

Charles G. Bakaly, Jr.:

Now, just because it did not happen on day one, to tell you exactly the client did not have it on day one because of the required peculiar requirements for security clearances at Lockheed.

Burns did not have in its other operations enough employees that had the top secret security clearance availed and that kind of a circumstance is the only reason why they did not transfer the majority of their guards from other locations which is their normal practice when they take over.

Byron R. White:

Will you have to — will they have to be required with some sort of possibility to be almost (Inaudible)?

Charles G. Bakaly, Jr.:

Yes.

I would like to go assuming which obviously we do not, but for the purposes of argument, go to the second point on the contract issue and call of the Board’s attention that the long line of authority that says that the purpose of the National Labor Relations Act was not to allow governmental regulations of the terms and conditions of employment.

This Court in H. K. Porter in 1970 held that in Chicago Northwestern Transportation Union, the same principle, the statute, the legislative history all say that the Labor Board distinguished perhaps from a Court, does not have the power to order somebody to make a concession or to a particular proposal or to the entire agreement, we submit.

And that it is this Section of 8 (d) which controls the Board here and prohibits what the Board has done in this case.

The language of 8 (d) is “but such obligation does not compel either party to agree to a proposal or require the making of a concession.”

Byron R. White:

In Wiley, if the arbitrator had ultimately decides that the successor was bound?

Charles G. Bakaly, Jr.:

No problem with that.

No problem to that at all.

The —

Byron R. White:

The Act does not prohibit a successor from being bound by a pair of contract that he never agreed to?

Charles G. Bakaly, Jr.:

Section 301 and the policy created by this Court that it favors arbitration as the method of resolving these disputes is not circumscribed by Section 8 (d).

301 and 8 (d) are which regulates the Board’s power are separate method that does it.

Byron R. White:

(Inaudible) but the successor was bound by everything in the contract even though he never agreed and even though he never agreed to those?

Charles G. Bakaly, Jr.:

That is correct and that we feel is with — in the interest of following the policy of promoting arbitration and using arbitration as the manner in the means of resolving these disputes, but let the arbitrator who has as Mr. Justice Douglas has said that the person who has most competence in this area, who has the knowledge of the law to shop, let him be the one who decide that.

And of course you know arbitrator in the Wiley case after deciding that the contract was bound — binding for a couple of months was then not binding thereafter.

As Justice Hayes said in an extremely well reasoned opinion that H. K. Porter and the legislative history of the Act really control here.

We would like to call this Court’s attention to a very recent case decided by the Sixth Circuit on the 30th of December in NLRB, the Interstate 65 Corporation which does not have cite yet, Number 71-1198 in which the Court of Appeals for the Sixth Circuit agreed with the Court of Appeals for the Second Circuit finding a successorship in the particular facts of that case but —

Potter Stewart:

What is the caption of that case and I guess (Voice Overlap)

Charles G. Bakaly, Jr.:

The caption of the case is National Labor Relations Board versus Interstate 65 Corporation, DBA Continental Inn, before judges Weick, Celebrezze and Peck.

Potter Stewart:

Interstate, what is it called?

Charles G. Bakaly, Jr.:

Interstate 65 Corporation.

Potter Stewart:

Doing business with something (Voice Overlap)

Charles G. Bakaly, Jr.:

Continental Inn.

Potter Stewart:

And that is December 30?

Charles G. Bakaly, Jr.:

Thirtieth, Number 71-1198 in the Court of Appeals for the Sixth Circuit.

It was a very short statement.

They recognized that the Burns case is pending before this Court.

Charles G. Bakaly, Jr.:

They say we agree with the Second Circuit’s resolution of this issue in Burns.

That Court decided that the Board had exceed its powers in ordering a successor employer to honor a collective bargaining contract that had not been a party to.

The Board had never before Burns has found such requirement to exist and we see no change in case law or statutory law which would permit the Board to suddenly reverse itself on this question.

Any further discussion of this issue is unnecessary in light of the Supreme Court’s pending decision thereon.

We simply hold that in our view the Second Circuit determination of the issue was correct and we adhere to it.

That case was out in the service industry?

I think that is not in a service industry?

Charles G. Bakaly, Jr.:

It was a motel — it was a motel operation, an entire motel was the facts of that case and on the successorship they found —

Somebody board out or somehow required (Voice Overlap)

Charles G. Bakaly, Jr.:

Yes.

They reacquired a motel and made some changes, but the Court agreed with the Board on that case on the successorship and the facts of that case that it was a successor, but nevertheless held that they were not bound to the predecessor’s collective bargaining agreement and the —

Harry A. Blackmun:

Don’t hotels regard themselves as being in the service industry?

Charles G. Bakaly, Jr.:

They may well Justice Blackmun.

I was not considering them.

I am talking about the independent contractor, maintenance company, guard service that operates in most buildings and in a lot of plants now throughout the nation.

Harry A. Blackmun:

That point is not limited to the third?

Charles G. Bakaly, Jr.:

Oh!

No.

My contract point is not limited to the service industries at all.

We do not believe the Board has the power to order any employer to be bound to any contract at all and I should point out that of course as the brief show the Tenth Circuit in an opinion which interestingly enough did not cite the Second Circuit opinion or Wiley supported the Board and found that there was power for the Board to have an employer honor the collective bargaining agreement.

That case is in the briefs that the — but of the three Circuits now, that the two have decided against the Board’s power and one in favor of it.

The Board’s reliance on Wiley is really, really misplaced.

It was not implicit in Wiley that the agreement was binding on — as the Board would have stayed in its brief.

It was argued by the amicus AFL-CIO that that ought to be the rule but the Court did not hold.

They held it was up to the arbitrator to decide in each (Voice Overlap).

William J. Brennan, Jr.:

Yes.

But the source of the arbitration was the contract, was it not?

Charles G. Bakaly, Jr.:

They —

William J. Brennan, Jr.:

It would not have been an arbitration except for the collective bargaining agreement, entirely an arbitration?

Charles G. Bakaly, Jr.:

That is correct.

William J. Brennan, Jr.:

At least to that extent —

Charles G. Bakaly, Jr.:

To the extent —

William J. Brennan, Jr.:

Wiley held that successors bound by a provision of the collective bargaining agreement?

Charles G. Bakaly, Jr.:

Bound to arbitrators not to –-

William J. Brennan, Jr.:

I know but — that it had been no of [Laughter] no obligation to arbitrate except to what which was created by the collective bargaining agreement, is that right?

Charles G. Bakaly, Jr.:

That is correct.

But as a point, as the Court — to a critical point, whereas the Court points out what they are doing is they are favoring the policy of settling disputes by arbitration.

They are not saying that the Labor Board which its powers are set forth by Congress has the power to do this.

Now, I set this —

William J. Brennan, Jr.:

Wiley speaks this is compulsory arbitration?

Charles G. Bakaly, Jr.:

I beg your pardon.

Byron R. White:

Wiley; just what it speaks is a compulsory arbitration as was holding — with the holding contrary to the Act?

Just as Mr. Justice Brennan says it is because presumably the party was bound by — was bound to arbitrate.

He was ordered to arbitrate because of the contract provision.

Charles G. Bakaly, Jr.:

Well, that is right.

But the point that I am making though is that we are not here now where a Court has ordered the employer to be bound by the agreement.

We are here under an unfair labor practice charge.

Thurgood Marshall:

Well, suppose this contract — this is obliged to arbitration?

Charles G. Bakaly, Jr.:

It does —

Thurgood Marshall:

Would you not —

Charles G. Bakaly, Jr.:

And there was arbitration request that Burns would be obligated if their successor would be obligated to arbitrate, no question about that.

Thurgood Marshall:

Well, that is different from this one?

Charles G. Bakaly, Jr.:

Yes sir.

Thurgood Marshall:

Why?

Charles G. Bakaly, Jr.:

Yes sir, because of the policy permitting arbitration and the resolving of disputes and because that Congress has not given the Board that power.

Thurgood Marshall:

I thought you said you are not bound with a contract at all?

Charles G. Bakaly, Jr.:

We are not bound by the contract, we are not bound to obey the Board’s order that we honor this agreement.

Now, if that is —

Thurgood Marshall:

I misunderstood you.

I thought you said you were not bound by the contract?

Charles G. Bakaly, Jr.:

Well, I — if I said that Mr. Justice Marshall I — would I — we are not taking a position assuming that we are a successor that we would not have to arbitrate.

We would have to arbitrate if that — and we would have to arbitrate to the extent to which the agreement is binding, which is what they did in Wiley.

I would like to point that —

Warren E. Burger:

What about the other provisions of the contract other than arbitration you have to — all of them?

Charles G. Bakaly, Jr.:

Only if the arbitrator would so order Mr. Chief Justice.

William H. Rehnquist:

Wiley was not an NLRB case?

Charles G. Bakaly, Jr.:

It was not an NLRB case and it is clear that the principles of 301 are not necessarily applied to unfair labor practice cases.

Three years ago, I argued before this Court in Strong Roofing and which Mr. Justice White wrote the opinion against us.

We were arguing in Strong Roofing that the Labor Board did not have the power to order an employer to pay fringe benefits.

That this was a subject of arbitration, but because of a clear as Mr. Justice White said because of a clear provisions of Section 10 (a) and 10 (c) of the Act giving the Board a large remedial powers and in that case the Doctrines of 301 applied to Courts, did not apply to the Board because of the provisions Section 10 of the Act and we say that the same thing applies here.

Though the rules with respect to Section 301 do not apply because of a clear intent of Congress in 8 (b) not to permit the Labor Board.

They were very concerned —

Byron R. White:

Well, I take it arguably at least the Board went way beyond Wiley in the sense that it ordered you to comply whatever the provision in the contract?

Charles G. Bakaly, Jr.:

That is correct.

Byron R. White:

And that any provision of the contract that you refuse to comply with would be an unfair labor practice?

Charles G. Bakaly, Jr.:

And contempt, yes sir.

Byron R. White:

And as far as Wiley, Wiley said you are bound to arbitrate, but we do not know whether you are bound by any other provision of the contract or not?

Charles G. Bakaly, Jr.:

That is correct and they left it to the arbitrator and his expertise to so hold.

Now, the Board really is overreaching when they say that the result called for here is to promote industrial peace and to — and that there is a policy of maintaining collective bargaining agreements.

The policy of Section 1 of the Act is to promote collective bargaining, not the imposition brought on consenting parties of collective bargaining agreements and that is what they have done here and the Courts, the strife argument was made in H.K. Porter.

It was there a flagrant case of the employer of bargaining in bad faith and refusing to adduce, check off provision or it had in other plants, it had adduced check off provision and just did not want to have one here in that plant, and no other legitimate economic reasons whatsoever.

And it would have saved economic strife.

It would not had so much economic strife possibly if this Court had ordered the employer to be bound, to adduce to check of provisions, but it did not.

There would be industrial peace if there was compulsory arbitration in this country maybe.

Although in some European countries where they have had co-determination and government intervention they have had national strifes if anything but industrial peace but maybe it would but that is not what Congress has intended here.

Plant closures cause industrial strife but in Darlington this Court held that you could close a plant for union activity because you did not like — you did not want your plant organized and that kind of industrial strife is great.

So under free collective bargaining which is what we have at this time, strife and strikes are sometimes necessary and of course the fact that you have a collective bargaining agreement does not mean that you are necessarily going to be free from strikes.

All of us know the situations where employees and unions have struck in violation of collective bargaining agreements and refused to go back in the face of Court Order.

(Voice Overlap) Yes sir.

Byron R. White:

Going back to the successor point, the duty to recognize that union in bargain, was it — it might have existed, the wholly independently if whether you are successor?

Charles G. Bakaly, Jr.:

I do not follow that Mr. Justice.

I do not know.

If I could other than if we were a successor —

Byron R. White:

27 out of 42 of the Wackenhut employees were already represented by a union and if they had demanded bargaining without even saying you are successor, I suppose you would have some obligations to bargain?

Charles G. Bakaly, Jr.:

Well, they could file a petition and there could have been an election if either one, yes, then we would have and that is really where are on the successorship issue.

We are not saying that there is not a way for these employees to have the union.

We are just saying that we ought to have an election as the way rather than having the union imposed upon the employees and —

Byron R. White:

But certainly you did not challenge — were you in any position to challenge the unit at that point?

Charles G. Bakaly, Jr.:

No.

We were not.

That unit had been agreed to.

It was a consent unit.

It was not the Board’s determination on the unit it was the consent Your Honor.

Byron R. White:

No, but the Board had a — there had not been a certification?

Charles G. Bakaly, Jr.:

There was a certification based upon the consent agreement.

Byron R. White:

Well, based upon a unit then?

Charles G. Bakaly, Jr.:

But the parties, not the Labor Board agreed to the unit.

Byron R. White:

But nevertheless under the rule you could not challenge that unit?

Charles G. Bakaly, Jr.:

Yes.

We think we could challenge that unit, yes sir, and we so argued below that we could challenge that unit.

The certification here is not all encompassing that.

They are unusual circumstances and we think that in this case this change of ownership, the integration etcetera would be a (Voice Overlap) unusual circumstances —

Byron R. White:

Did the Board rule against you on that?

Charles G. Bakaly, Jr.:

I believe so.

Byron R. White:

And you have to challenge that ruling?

Charles G. Bakaly, Jr.:

No sir.

Byron R. White:

So we are going on the assumption here anyway that the unit was fixed and the only question was your duty to bargain with a union that previously been certified?

Charles G. Bakaly, Jr.:

Yes.

But we are not contending that the appropriate unit and the employing industry are the same thing at all.

We are saying that those are two different concepts and we did contest the unit and we did not raise it specifically unless it is raised in out question number one, in our certification in this case.

Mr. Bakaly, the Board’s holding on unfair labor practice, this has to be contract point?

Was that your refusal to honor the contract was the violation with 8 (a) (5)?

Charles G. Bakaly, Jr.:

Yes sir.

But, well, 8 (a) (5) that has been formed by 8 (d)?

Charles G. Bakaly, Jr.:

Yes sir.

Not especially on 8 (d) but just 8 (a) (5) derived from 8 (d), was that it?

Charles G. Bakaly, Jr.:

I think both —

Both?

Charles G. Bakaly, Jr.:

Both were alleged, yes.

Well, did you make any argument below or do you make any here based on the language of 8 (d), the full 8 (d) says that whether is in effect, the collective bargaining contract and so forth.

The duty to bargain collect agreement shall also mean that no party with such contract shall and so forth.

Charles G. Bakaly, Jr.:

That is — we make that point —

So you are not a party?

Charles G. Bakaly, Jr.:

We are not a party to the agreement and the — Congress was clear with the language of party.

Byron R. White:

Well, does not the Board have to rely on 8 (d) to say you are bound?

Charles G. Bakaly, Jr.:

They are relying on 8 (d).

Byron R. White:

You just cannot rely on 8 (a) (5)?

Charles G. Bakaly, Jr.:

8 (d).

No, because 8 (d) defines 8 (a) (5).

8 (d) is the Section that tells what 8 (a) (5) and means and so 8 (a) (5) just says refuse to bargain in good faith then 8 (d) says what that means so they go together.

You cannot —

Well, of course the Board’s brief say that [Laughter Attempt] their holding relied principally on Wiley —

Charles G. Bakaly, Jr.:

That is right.

They also concluded that its decision effectuated 8 (d).

They do not say, we do not agree, we can see that they relied on 8 (d) those — for the 8 (a) (5) finding it necessary.

Rather (Voice Overlap)

Charles G. Bakaly, Jr.:

Well, I do not — I do not see how they can separate the two —

But in any event you do —

Charles G. Bakaly, Jr.:

In any event we rely on 8 (d) as a proscription on the Board’s power on unfair labor practice cases to require somebody to be obligated to an agreement.

You have to be a party to the contract?

Charles G. Bakaly, Jr.:

You have to be a party.

The Board has no power to order it to, you should be a party.

Byron R. White:

Well, that is true, but here the Board, they hold you guilty of an unfair labor practice in that respect had find that you were bound to the contract and had modified it without bargaining?

Charles G. Bakaly, Jr.:

They could — they do not like to go to the last part.

Byron R. White:

Why?

Charles G. Bakaly, Jr.:

If we are a successor then if we have unilaterally modified the —

Byron R. White:

Where does the Board get their jurisdiction to enforce labor contracts?

Charles G. Bakaly, Jr.:

Well, that is a good question.

Byron R. White:

(Voice Overlap) It is not only unfair labor practice to breach it automatically to breach the contract?

Charles G. Bakaly, Jr.:

That is right.

Byron R. White:

Well, you have to go 8 (a) (5) — you have to — there is a provision where is it that says you cannot modify —

Charles G. Bakaly, Jr.:

Modify, that is 8 (d) and that is the provision that the Board relies on to find a violation of 8 (a) (5) for a unilateral modification.

This Court as you point out has never so ruled on that point.

In Strong Roofing there is some dicta that would indicate in that direction but this Court and not all Courts ruled on that question and the Board in its most recent prior case as while not exceeding that it does not have a power, it now says that it is going to defer questions of modification to arbitration, a position that many of those had been urging the Board for sometime, this most recent prior case and the case indicates that that is the direction the Board’s going to go at this time.

Now, the purposes of the Act will be effectuated by assuming a successorship by requiring good faith bargaining and the arbitration that Wiley permits.

We are not asking the Court to back away at all on the Wiley case.

Arbitrator, the arbitrator is more qualified and desirable and quicker to interpret these matters than the Labor Board and we submit that the Board’s rule of imposing collective bargaining agreements will cause serious inequities upon the parties as Judge Hayes pointed out, counsel alluded to the Duro rule as Judge Hayes pointed out, it would be very unfair to a labor union that made a collective bargaining agreement with failing company, let us say for three years on very favorable terms to then have that company acquired by certain — some large company that is not at all failing and be obligated to that agreement for two-and-a-half to three years.

This would be a serious inequity as Judge Hayes pointed out —

William H. Rehnquist:

Mr. Bakaly, would you concede that the Board could enter an order compelling you at least to arbitrate in this situation or would you say that that had top be done through a Section 301 proceeding?

Charles G. Bakaly, Jr.:

Through Section 301 —

William H. Rehnquist:

As there was in Wiley.

Charles G. Bakaly, Jr.:

Yes sir.

No question about that.

But the board could have abstained for the arbitrator?

Charles G. Bakaly, Jr.:

I do not follow that. [Laughter]

Well, even if the Board was right in saying that unfair practice or might be, they could have abstained depending on the provision?

Charles G. Bakaly, Jr.:

Yes.

They could have deferred arbitration and that is what they have now done in (Inaudible), that is what they have done.

The Board’s rule really also from a policy standpoint in our view would really unduly restrain competition in this area.

The Board points this out in Emerald Maintenance and they point out that there it is under a Service Contract Act, but there is a policy permitting a government contractor to bid Lockheed as a 99% government contractor.

Charles G. Bakaly, Jr.:

While it is true that this contract with Burns was not out of the Service Contract Act yet the same policy applies with saving the government money which is really what the Air Force argued in Emerald Maintenance that a policy of contract honoring would cause the government because of its inability to have lower bids that same principle would apply here.

Also often times the alternative for a company that is in the place of being acquired is to go out of business, if it cannot be acquired.

Now, we submit that this rule of contract honoring, requiring, imposing a collective bargaining agreement is going to be a deterrent to acquisitions because an employer that comes in and wants to buy a company is a successor.

He has no — he does not mind about bargaining with the union but he wants to try that to get some changes in that collective bargaining agreement.

It may well be that collective bargaining agreement that has caused the company to be in the position it is in.

Now, if this is prevented, we are going to have a lot more industrial strike —

Byron R. White:

You might as well say if — rather than to say it is a strange acquisition, it is a strange competition?

Charles G. Bakaly, Jr.:

Yes sir, it does.

And I have just said that.

Byron R. White:

In the service industry?

Charles G. Bakaly, Jr.:

In the service industry and in any industry.

In any industry it would have that effect if the contract is because no one could come in and bid any and particularly would it be so in these industries where the big bulk of the price is the cost of the service.

Byron R. White:

If you prevail then the employer may bargain to the labor practice?

Charles G. Bakaly, Jr.:

He could bargain, he — we — if we are a successor we would bargain with the union and it may depending upon economic power, may have — get a better economic arrangement or not.

What is the rule?

Charles G. Bakaly, Jr.:

And this is the system that we have been under.

We submit that Burns is not a successor because of the peculiar industry involved here and that in any event assuming that Burns is a successor that the Board has no power to impose a collective bargaining agreement.

Thank you very much.

Warren E. Burger:

Thank you Mr. Bakaly.

Mr. Come you have about seven minutes remaining.

William J. Brennan, Jr.:

Mr. Come.

Norton J. Come:

Yes, Your Honor.

William J. Brennan, Jr.:

Just what does the Court opinion means, this under contract?

Norton J. Come:

I refer you to appendix 10.

William J. Brennan, Jr.:

Yes, that is what I am looking at.

Norton J. Come:

In which the Board says, we find therefore that Burns is bound to that contract as if it were a signatory thereto.

It’s failure to maintain the contract in effect is violative of Sections 8 (d) and 8 (a) (5).

William J. Brennan, Jr.:

But 8 (d) is not an independent unfair labor practice, is it?

Norton J. Come:

No, you have —

William J. Brennan, Jr.:

Tell me a definition of that as a collective bargaining is collected, is it not?

Norton J. Come:

Yes, which is the unfair labor practice, 8 (a) (5)

William J. Brennan, Jr.:

8 (a) (5)?

Norton J. Come:

Which says that it is an unfair labor practice to fail the bargain collectively.

Now 8 (d) defines large part what constitutes a failure —

William J. Brennan, Jr.:

I do not suppose it is said in the Court but I gather technically the violations is 8 (a) (5)?

Norton J. Come:

Yes Your Honor.

Now, to be sure Wiley only compelled arbitration, however the considerations upon which the Court compelled a non-consenting employer to the contract to go to arbitration under that contract we submit are precisely the same considerations that justified the Board in applying the same principle to its interpretation of 8 (d).

The Court relied upon the fact that a collective bargaining agreement is not in any real sense, the simple product of a consensual relationship; it is a cold governing, an industrial community that is negotiated under the principles and requirements of the National Labor Relations Act.

It binds employees who did not even consent to the contract or weren’t even employed at the time it was negotiating and may not even be a member of the union which negotiated it, but albeit a member of the bargaining unit if the union has to represent.

More importantly the Court relied upon the fact that the objective of National Labor Policy requires that the rightful prerogatives of owners independently to rearrange their businesses and even eliminate themselves as employers, be balanced by some protection to employees from a sudden change in the employment relationship because the employee and the union usually does not have a say in these transfer negotiations and we submit that that is a fortiori in an industry like the service industry which is subject to its rapid turn on.

Finally the Court relied upon the fact that industrial strife could be avoided by submitting employees’ claims to arbitration leave it — rather than leaving them to a test of economic powers.

Byron R. White:

Mr. Come.

I take it that your position means that the employer, the successor, he is bound by the contract and hence he could not bring in his own employees if he wanted to?

Norton J. Come:

Well —

Byron R. White:

He could not fire the existing employees because there is no cause under the provision of the contract?

Norton J. Come:

As to — if the contract is applicable, the extent to which he has to abide by the contract, the extent to which he can make changes to meet his situation are all matters that he is free to bargain with the union about and failing an agreement to take to the arbitration.

The Board’s decision here far from being in derogation of arbitration, permits arbitration to work.

All the Board is saying here is that if you are a successor under the National Labor Relations Act as we have defined it, you have taken over willingly this employing enterprise, you just cannot say that you are not going to pay any attention to the (Voice Overlap)

Byron R. White:

But your answer to my question is yes, it does mean that.

He is not free to bring in his own employees without following the contract provisions with respect to discharge?

Norton J. Come:

That is correct.

He may be free at the decision as to what are — before he takes over the business as to —

Byron R. White:

So the other 15 employees of Wackenhut that he did not employ, if they had wanted to be employed and were refused, had grievances under the Board provision?

Norton J. Come:

They might have although they were not subject to that contract originally, but —

Why would it not?

Norton J. Come:

Well, at the time that he took over, I mean before —

They were part of the workforce, weren’t they?

Norton J. Come:

Well, they were —

Byron R. White:

(Voice Overlap) were they not?

They were part of the union.

Norton J. Come:

There were 27 — there were 42 members of the Wackenhut workforce when Wackenhut shut down.

Burns employed, I believe it was 27 of those members of the workforce.

Byron R. White:

What about the 15 if they had wanted to be employed and were refused?

Norton J. Come:

Conceivably they would have had grievance under the —

Byron R. White:

Conceivably?

Norton J. Come:

I think that they were — that they would have but at that point, however I mean, the reason I am hedging is that they were discharged by Wackenhut and their contracts of employment were not renewed by Burns (Voice Overlap)

(Voice Overlap) agreements, didn’t they?

Norton J. Come:

But in any event this is a problem for the arbitrator.

William J. Brennan, Jr.:

But tell me Mr. Come, does — do the decisions in Emerald Maintenance (Inaudible) would say gather about a year later than the decision here by the Board.

Do they represent some retreat from the principles of this case?

Norton J. Come:

No, Your Honor.

In formulating the principle in this case the Board —

William J. Brennan, Jr.:

Well, the fact is in neither case was the employer held bound by the —

Norton J. Come:

The Board — the Board found a successorship in Emerald Maintenance —

William J. Brennan, Jr.:

But —

Norton J. Come:

It did not bind them to the contract because in Burns as Mr. Justice Stewart indicated earlier the Board had a caveat in there for unusual circumstances and the Board found that the peculiarities of government procurement practice coupled with wage determinations under the Service Contract Act created a situation where at least with respect to certain types of government contracts, there was not the flexibility for negotiation that was present in the typical civilian type of contract which is what we have here.

We do not have here Lockheed’s government contracts involved in this case.

Now, I — if I may be permitted to just make one other point.

Wiley also, we submit, disposes of the contention that what the Board is doing here is writing a contract for the parties because the Court in Wiley specifically pointed out at this case, where they had found the kind of continuity that you had in Wiley, the continuity here is much stronger than you had in Wiley.

The Court said 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 parties sought to be obligated.

It was a contract and Interscience, Wiley’s predecessor was party to it.

We submit that is precisely the situation here a fortiori in view of the substantial identity with the original workforce.

Warren E. Burger:

Mr. Come, I have one question, I am sure you want to deal with it with a very short answer.

Do I get your position correctly, the Board’s position now that someone taking over a large operation, whether it’d be its maintenance force or its security force, having a large number of employees and instead of a bidding process such as we had here, Burns under bidding Wackenhut and the others, the basic factory or operator is terminating the contract with the Guard Service Company because they are unreliable, untrustworthy, inefficient, that there is pilfering going on, all sorts of things that happen in these types of service organizations.

Now, is it your position that the “successor” who takes over that function, either of maintaining the building or protecting it has got to take lock, stock and barrel, all the employees in those circumstances?

Norton J. Come:

No.

Warren E. Burger:

Is it pretty close to that?

Norton J. Come:

No, I do not think so.

Warren E. Burger:

Well, then what did you have in mind when you suggested that — in the response to Mr. Justice White that perhaps the other 15 that they did not take might have a grievance for not being taken over by Burns?

Norton J. Come:

But the the grievance does not mean that they will prevail.

Norton J. Come:

I mean, if there were (Voice Overlap) —

Warren E. Burger:

Well, I assume you meant a colorable claim?

Byron R. White:

Well, it means there is still employees though, Mr. Come until they are fired in the accordance of the contract, that must be what you meant?

Norton J. Come:

I think that this is a question that the arbitrator would have to determine as to whether or not —

Byron R. White:

Well, they are employees until they are discharged in accordance of the contract?

Norton J. Come:

But, query whether it would not be cause under the contract for —

Byron R. White:

I agree, I agree.

Norton J. Come:

— for Wackenhut to say that since I am closing down my operation, I am terminating you as of 5 o’clock tomorrow.

Warren E. Burger:

Whose employees are they?

Is that not the question?

They are the employees of the first, the one in the posture of Wackenhut here, but I took your position before us expressed to say that for all practical purposes they are employees of whoever takes over that function, whether it is on winning by a lower bid or whether cancellation or termination of a prior contract?

Norton J. Come:

Well, they certainly were here because Burns voluntarily took over a majority of the Wackenhut employees for reasons that were of advantage to its own operation (Voice Overlap).

Warren E. Burger:

Your friend when he argued said that even if they had not taken over any, even if they have not taken over a single employee, the legal situation would be the same?

Norton J. Come:

We do not go that far.

We do not think that you have to go that far —

Warren E. Burger:

Do you think that is to be a majority?

Norton J. Come:

I would not say that it has to be a majority.

I think it has a substantial number as to be enough to give you a continuity of employment conditions in the bargaining unit.

Mr. Come I suggest that your position means that they have to take over all of them?

They cannot come in with this part.

They have to take them over all of them until and unless they are discharged in accordance of the contract?

Norton J. Come:

Well, I am not prepared to go that far, Your Honor.

I think that there may be a difference for purposes of compelling arbitration under 301 and what would be the rule for purposes of establishing a bargaining obligation or representation status under the National Labor Relations Act.

The Court in Wiley was very careful to indicate that it was not passing on the question as to whether you had enough there to impose representation status on the union.

Warren E. Burger:

Mr. Come, I have kept you overtime.

Norton J. Come:

It has been a pleasure.

Warren E. Burger:

Thank you gentlemen.

The case is submitted.