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Successor Clauses: What They Are and Why Every Union Should Have One

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Successor Clauses: What They Are and Why Every Union Should Have One Catholic University Law Review Volume 46 Issue 3 Spring 1997 Article 5 1997 Successor Clauses: What They Are and Why Every Union Should Have One Thomas Benjamin Huggett Follow this and additional works at: https://scholarship.law.edu/lawreview Recommended Citation Thomas B. Huggett, Successor Clauses: What They Are and Why Every Union Should Have One, 46 Cath. U. L. Rev. 835 (1997). Available at: https://scholarship.law.edu/lawreview/vol46/iss3/5 This Notes is brought to you for free and open access by CUA Law Scholarship Repository. It has been accepted for inclusion in Catholic University Law Review by an authorized editor of CUA Law Scholarship Repository. For more information, please contact [email protected]. TENTH ANNUAL JOHN H. FANNING LABOR LAW WRITING COMPETITION WINNER SUCCESSOR CLAUSES: WHAT THEY ARE AND WHY EVERY UNION SHOULD HAVE ONE* Thomas Benjamin Huggett This agreement shall be binding upon the successors and the assignees of the parties hereto and no provision, terms or obliga- tions herein contained shall be effected, modified, altered or changed in any respect whatsoever, by any change in the regular status, ownership or management of either party herein.' Collective bargaining is the process by which the representative of the employees (usually a union) and the employer establish the wages, hours, and conditions of employment in a unionized company.2 When the union * First Place, John H. Fanning Labor Law Writing Competition, Columbus School of Law, The Catholic University of America, 1996. 1. Agreement Between Rh6ne-Poulenc Baltimore Plant and United Steel Workers of America AFL-CIO, CLC, Local Union 14188, Jan. 23, 1993, art. 19, at 29 (Successor Clause) (on file with Catholic University Law Review). 2. See Chicago Tribune Co., 304 N.L.R.B. 495, 496 (1991); see also MATTHEW A. KELLY, LABOR AND INDUSTRIAL RELATIONS: TERMS, LAWS, COURT DECISIONS, AND AR- BITRATION STANDARDS 17-18 (1987) (defining collective bargaining). This Comment reviews collective bargaining under the National Labor Relations (Wag- ner) Act of 1935, ch. 372,49 Stat. 449 (codified at 29 U.S.C. §§ 151-69 (1994)), amended by the Labor Management Relations (Taft-Hartley) Act of 1947, ch. 120, 61 Stat. 136 (codified at 29 U.S.C. §§ 141-87 (1994)), amended by the Labor-Management Reporting and Disclo- sure (Landrum-Griffin) Act of 1959, Pub. L. No. 86-257, 73 Stat. 519 (codified at 29 U.S.C. §§ 153, 158-60, 164, 186-87 (1994)). The Labor-Management Relations Act (LMRA) con- tains the provisions of the National Labor Relations Act (NLRA) with several amend- ments. See 29 U.S.C. §§ 141-187 (1994). When identifying statutory authority this Comment refers to the enacting legislation with an appropriate citation to current United States Code sections. The NLRA's centerpiece, collective bargaining, was the means by which Congress sought to promote labor stability and industrial peace. See id. § 151. The NLRA defines collective bargaining as follows: to bargain collectively is the performance of the mutual obligation of the em- ployer and the representative of the employees to meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment, or the negotiation of an agreement, or any question arising there- 836 Catholic University Law Review [Vol. 46:835 and the employer agree on any subject, the National Labor Relations Act (NLRA) requires the parties to sign a written agreement upon the re- quest of either party.3 This agreement, commonly known as a collective bargaining agreement, is a legally enforceable contract.4 However, in the event of a sale, purchase of assets, merger, consolidation, or other trans- fer5 of an ongoing business that has an unexpired collective bargaining agreement, uncertainty may exist as to the buyer's and seller's respective obligations under the agreement.6 under, and the execution of a written contract incorporating any agreement reached if requested by either party, but such obligation does not compel either party to agree to a proposal or require the making of a concession. Id. § 158(d). In order to effectuate collective bargaining between employers and employees, the NLRA guarantees employees the right to join, or not to join, a labor organization that will represent them for purposes of collective bargaining. See id. § 157. A labor organization is any kind of group through which employees participate in dealing with employers concern- ing the terms and conditions of their employment. See id. § 152(5). In the United States, labor unions are unincorporated organizations that seek to represent employees in their dealings with management and almost always qualify as labor organizations, though not all labor organizations are unions. See R.H. Bouligny, Inc. v. USWA, 336 F.2d 160, 161-63 (4th Cir. 1964) (discussing labor unions as unincorporated associations), affd, 382 U.S. 145 (1965); G.H. Bass Caribbean, Inc., 306 N.L.R.B. 823, 824 (1992) (finding a union in viola- tion of Department of Labor requirements was a labor organization so long as it met the NLRA's criteria). Because the majority of labor organizations are unions, this Comment uses the terms union and unionized to refer to any labor organization or group of employ- ees represented by a labor organization. 3. See 29 U.S.C. § 158(d) (1994). The written agreement on wages, hours, and condi- tions of employment is commonly known as a collective bargaining agreement. See KELLY, supra note 2, at 18. 4. See 29 U.S.C. § 185 (1994). See generally FLORIAN BARTOSIC & ROGER C. HART- LEY, LABOR RELATIONS LAW IN THE PRIVATE SECTOR § 11.02, at 353-57 (2d ed. 1986); 1 THE DEVELOPING LABOR LAW 955-61, 1002-06 (Patrick Hardin et al. eds., 3d ed. 1990). 5. Because the differences in the method of ownership transfer do not substantially affect the labor law interests of employers and employees, this Comment does not distin- guish between the various changes in business ownership when a business continues opera- tions at the same location. In general, the United States Supreme Court has not required different legal analyses for different types of ownership changes, at least where the em- ployees continue to work for the purchaser, on the ground that a simpler, generally appli- cable labor policy will better protect the rights of employers and employees. See Golden State Bottling Co. v. NLRB. 414 U.S. 168, 182 n.5 (1973). But see Howard Johnson Co. v. Detroit Local Joint Executive Bd.. Hotel & Restaurant Employees, 417 U.S. 249, 257 (1974) (distinguishing a merger from other changes in ownership because in a merger the background of state law determines the businesses' rights and obligations and the busi- nesses cease to exist as separate entities). 6. The NLRA does not specifically address the continuation of the employees' choice of union representation or collective bargaining agreements when a business changes own- ership. See 29 U.S.C. §§ 151-169 (1994). The federal common law determining when the purchaser of a business is required to recognize the union representing the predecessor's employees is known as the "successorship doctrine." See infra Part II.A. (explaining the successorship doctrine). See generally Seymour Swerdlow, Freedom of Contract in Labor 1997] Successor Clauses Law: Burns, H.K. Porter, and Section 8(d), 51 TEX. L. REV. 1, 7-20 (1972) (discussing the various applications of the substantive labor law of bargaining obligations and unfair labor practices, as well as contracts, to purchasing employers). When there is an unexpired col- lective bargaining agreement, the successorship doctrine is often applied to determine the purchasing employer's obligations under the terms of the existing agreement. See Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 40-41 (1987); Howard Johnson, 417 U.S. at 260-62 & n.9; see also Brian H. Redmond, Annotation, When is Subsequent Busi- ness Operation Bound By Existing Collective BargainingAgreement Between Labor Union and PredecessorEmployer, 88 A.L.R. FED. 89 (1988 & Supp. 1996) (identifying successor- ship doctrine cases addressing purchasing of employer obligations under existing collective bargaining agreements). The common law basis of the legal principles, combined with the intensive factual nature of the determination, makes it difficult to state any generally appli- cable principle to guide the parties to the sale of business in determining their successor obligations. See Howard Johnson, 417 U.S. at 262 n.9 ("[t]here is, and can be, no single definition of 'successor' which is applicable in every legal context."). Interestingly, federal and provincial statutory Canadian labor law ensures the "continua- tion of the bargaining and contractual rights" of employees "following the sale, lease, transfer, or other disposition of the employer's business." THE LABOR RELATIONS LAW OF CANADA 99-100 (Richard Martin Lyon et al. eds., 1977); see also Karin McCaskill, Purchase and Sale of a Business, ATLANTIC EMPLOYERS' COUNSEL (Spring 1995) <http:// fox.nstn.ca:80/-smsshome/employers/p&sofbus.html> (describing Canadian statutory obli- gations upon the sale of a business). Thus there has been no need for successor clauses in Canada. Recently, however, Ontario repealed successor rights for government employees causing their unions to seek inclusion of successor clauses in their collective bargaining agreements. See Thomas Walkom, Civil Service Strike Perfect for Tories, TORONTO STAR, Feb. 8, 1996, at A23 (reporting on the repeal of government employee successor rights); Daniel Girard, It's a Deal: Workers Expected on Job Monday, TORONTO STAR, Mar. 30, 1996, at Al (reporting the public employees union's strike failed to procure a successor clause with the government). For articles addressing the enforcement of successor clauses from an academic view- point, see Jules I.
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