UNITED STATES COURT OF APPEALS FOR THE D.C. CIRCUIT


DEFERIET PAPER CO

v.

NLRB


00-1067a

D.C. Cir. 2000


*	*	*


Randolph, Circuit Judge: In June 1999, Deferiet Paper  Company
purchased the assets of a paper mill in Deferiet,  New York, from
Champion International. Champion had  collective-bargaining agreements
with two unions represent- ing maintenance employees in the mill.
Paper, Allied-Indus- trial, Chemical and Energy Workers, Locals 45 &
56,  AFL-CIO ("PACE") represented production workers and  those
maintenance department workers classified as welders,  masons, oilers,
tinsmiths, electricians and instrument mechan- ics. Local Lodge 1009,
District Lodge 65 of the International  Association of Machinists and
Aerospace Workers, AFL-CIO  ("IAM") represented maintenance employees
classified as  millwrights, pipefitters, machinists and shift
mechanics. Pri- or to the sale of the mill, there were 102 employees
in  Champion's maintenance department. IAM represented 60  of these
employees; PACE represented 42. Of the 82 main- tenance workers who
remained at the mill after the sale to  Deferiet, 46 had been
represented by IAM and 36 had been  represented by PACE. Approximately
300 production em- ployees, who work in the same area of the plant,


After Deferiet acquired the mill, each union requested  recognition to
bargain on behalf of those maintenance em- ployees it had represented
in the past. Deferiet declined to  recognize IAM, claiming that the
division between IAM and  PACE maintenance employees was no longer
appropriate.  Instead Deferiet recognized PACE as the exclusive
collective  bargaining agent for all production and maintenance


In the resulting unit clarification proceeding, Deferiet ar- gued that
the IAM unit should be accreted to the PACE unit  because changes in
the work duties of plant employees meant  that the IAM employees no
longer had a separate community 


of interest. At Champion, maintenance employees were di- vided by craft
classifications that corresponded to their indi- vidual skills (e.g.,
millwrights, pipefitters). According to De- feriet they did little, if
any, crossover work between their  respective areas of expertise.
Deferiet canceled the tradi- tional craft-titled classifications and
replaced them with cate- gories for craftspersons called "A," "B,"
"AB" or "AA."  Deferiet also developed a new employee handbook,
alerting  employees that they might be required to work in areas other
 than their traditional craft assignments. Based largely on  these
changes, and on the allegation that the PACE/IAM  distinction was
solely the result of an historical accident,  Deferiet sought a
determination that the separate units were  no longer appropriate.


The Board's Regional Director determined that Deferiet  had made
insufficient changes to the operation of the facility  to render the
existing IAM unit inappropriate. She viewed  the reclassification of
workers as craftspersons A and B as  largely meaningless, since the
only basis for assignment to  one of these positions was the
historical craft skill of the  employees. All of the IAM-represented
workers became  craftspersons A, and all of the PACE-represented
workers  became craftspersons B. She found that employees "perform 
various maintenance duties in essentially the same manner as  before
the sale," and concluded that Deferiet "did not make  significant
changes in the structure and operation of the mill."


The Board denied Deferiet's request for review. When the  company
thereafter declined to bargain with IAM, the Gener- al Counsel filed a
complaint and moved for summary judg- ment. The Board granted this and
issued an order requiring  Deferiet to bargain with the IAM upon
request. The compa- ny petitioned for review and the Board
cross-petitioned for  enforcement of its order.


Board precedent in successor-employer cases favors the  retention of
historical bargaining units. "A successor em- ployer is required to
recognize and negotiate with the bar- gaining agent of a predecessor's
employees if the bargaining  unit remains appropriate and the
successor does not have a 


good faith doubt of the union's continuing majority support."1  Trident
Seafoods, Inc. v. NLRB, 101 F.3d 111, 114 (D.C. Cir.  1996). Deferiet
tells us that this precedent, which the Board  invoked here, conflicts
with a dictum in NLRB v. Burns  International Security Services, Inc.,
406 U.S. 272, 281  (1972).2 The trouble is that Deferiet never made
any such  argument during the Board proceedings. We therefore can- not
decide whether the Board should have followed the Burns  dictum. See
29 U.S.C. s 160(e) ("No objection that has not  been urged before the
Board, its member, agent, or agency,  shall be considered by the
court, unless the failure or neglect  to urge such objection shall be
excused because of extraordi- nary circumstances."); Exxel/Atmos, Inc.
v. NLRB, 147 F.3d  972, 978 (D.C. Cir. 1998).


Deferiet's fall-back position is that the old IAM unit is not  an
appropriate unit despite the presumption in favor of  historical
bargaining units. Why? Because creation of the  IAM unit at the mill
was an "historical accident"; because  Deferiet substantially
restructured the operations of the mill  after its acquisition; and
because under the Board's "tradi- tional standards," a separate IAM
unit for some maintenance  workers in the newly-acquired mill would be
inappropriate.  The Regional Director rejected the company's claims




__________

n 1 Deferiet concedes that it is a successor employer. It does not 
contest the majority support of IAM within a unit comprised of 
employees in the crafts this union previously represented, but the 
company denies that majority support exists for IAM within the  larger
unit of all production and maintenance workers.


2 Burns held that a successor employer has an obligation to  bargain
with the union if the bargaining unit remained unchanged  and a
majority of the employees hired by the new employer are  represented
by "a recently certified bargaining agent," id. To this  the Supreme
Court added: "It would be a wholly different case if  the Board had
determined that because [the successor's] operation- al structure and
practices differed from those of [the predecessor  employer] and the
... bargaining unit was no longer an appropriate  one." Id. at 280.
This sentence, according to Deferiet, precludes  the Board from
adopting a presumption in favor of historical  bargaining units.


examining each of its alleged post-acquisition changes, and  asking
whether the change significantly altered the former  IAM unit. But the
proper inquiry was not simply whether  the evidence showed
"significant changes in the operation of  the mill since [Deferiet]
has assumed control." Neither the  decisions of this court nor those
of the Board sanction a  purely comparative inquiry. See Trident
Seafoods, 101 F.3d  at 118 (collecting standards); Indianapolis Mack
Sales &  Serv., 288 N.L.R.B. 1123, 1126 (1988); Crown Zellerbach 
Corp., 246 N.L.R.B. 202, 203 (1979). Although "the Board  places a
heavy evidentiary burden on a party attempting to  show that
historical units are no longer appropriate," this  burden can be met
if "historical units no longer conform  reasonably well to other
standards of appropriateness." Tri- dent Seafoods, 101 F.3d at 118


In determining whether a unit is appropriate, the Board  exercises wide
discretion. Packard Motor Car Co. v. NLRB,  330 U.S. 485, 491 (1947).
Determinations of this sort take  into account a variety of factors,
and often focus on whether  the unit represents a "community of
interest." See Robert A.  Gorman, Basic Text on Labor Law 68-74
(1976); Theodore  Kheel, Labor Law s 14.03 (2000) (listing various
factors  taken into account by the Board). In the context of a 
successor employer, the appropriateness inquiry is not the  same
inquiry the Board would conduct when certifying a unit  for the first
time. Trident Seafoods, 101 F.3d at 118. We  wrote in Trident
Seafoods: "In most cases, a historical unit  will be found appropriate
if the predecessor employer recog- nized it, even if the unit would
not be appropriate under  Board standards if it were being organized
for the first  time,"3 id.--by which we meant that the Board will
sustain  the historical unit even if it is not the most appropriate




__________

n 3 We do not believe the court in Trident Seafoods meant to say  that
in successorship cases, the Board approves improper bargain- ing
units. In support of the sentence quoted in the text, the court  cited
the Board's decision in Indianapolis Mack. The Board there  ruled that
a change in ownership of a facility will not automatically  uproot
historical units, "as long as they remain appropriate." 288 


This is not to say that a historical unit will always be  upheld in the
face of "compelling evidence" of inappropriate- ness. Crown Zellerbach
Corp., 246 N.L.R.B. at 204; Met  Elec. Testing Co., 331 N.L.R.B. No.
106, 2000 WL 1058928, at  *1 (July 27, 2000). The most common way for
a successor to  meet its burden is to show that it has made
significant  revisions in plant operations and employee duties. See
Fire- stone Synthetic Fibers Co., 171 N.L.R.B. 1121, 1123 (1968) 
(finding that similarities in working conditions outweighed the 
historic unit). Even if the successor implements no signifi- cant
changes, we held in Trident Seafoods that an historical  unit may
still be found inappropriate if it fails to "conform  reasonably well
to other standards of appropriateness." 101  F.3d at 119-20. On
occasion, both pre-acquisition factors and  post-acquisition changes
in plant operation will combine to  render an historical unit
inappropriate. Rock-Tenn Co., 274  N.L.R.B. 772 (1985); see also
Banknote Corp. of Am. v.  NLRB, 84 F.3d 637, 649 (2d Cir. 1996)
(presumption in favor  of historical units inappropriate when there is
evidence that  units had been rendered obsolete by industry shifts or 
changes in the operation of the predecessor). A unit might,  for
instance, be only marginally appropriate prior to the  transaction, in
which event relatively small changes following  the transfer of
ownership could push it into the category of an  inappropriate unit.
Whether this describes the situation in  the Deferiet paper mill is
for the Board, not us, to say. The  question is--does the IAM unit
"conform reasonably well to  other standards of appropriateness"?
Indianapolis Mack  Sales & Serv., 288 N.L.R.B. at 1123 n.5. The Board
never  answered this question. Its Regional Director failed to con-
sider the appropriateness of the unit as such. Her review  was purely
comparative--were Deferiet's changes so signifi- cant, or so major, or
so fundamental that the old unit had  been replaced by a new and
different one. She did not go  further and determine whether Deferiet




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n N.L.R.B. at 1126. Properly viewed, the sentence in Trident Sea- foods
conveys the idea that because the burden falls upon the  employer to
demonstrate inappropriateness, the Board may wind up  certifying a
less-than-ideal unit.


pelling evidence" that the old unit no longer conformed to the  Board's
contemporaneous standards of appropriateness.


We therefore deny enforcement of the Board's order, set  aside its
decision that Deferiet committed unfair labor prac- tices when it
refused to recognize the IAM, and remand the  case to the Board for
further proceedings.


So ordered.