50:0363(56)CU - - Naval Facilities Engineering Service Center ( NFESC ), Port Hueneme, CA and NAGE, Local R12-28; NFESC and NAGE Local R12-196 - - 1995 FLRAdec RP - - v50 p363



[ v50 p363 ]
50:0363(56)CU
The decision of the Authority follows:


50 FLRA No. 56

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

_____

NAVAL FACILITIES ENGINEERING SERVICE

CENTER, PORT HUENEME, CALIFORNIA

(Activity)

and

NATIONAL ASSOCIATION OF GOVERNMENT

EMPLOYEES, LOCAL R12-28

(Petitioner/Labor Organization)

SF-CU-40012

SF-CU-40020

____

NAVAL FACILITIES ENGINEERING SERVICE

CENTER, PORT HUENEME, CALIFORNIA

(Activity)

and

NATIONAL ASSOCIATION OF GOVERNMENT

EMPLOYEES, FUSE, LOCAL R12-196

(Petitioner/Labor Organization)

SF-CU-40013

_____

NAVAL FACILITIES ENGINEERING SERVICE

CENTER, PORT HUENEME, CALIFORNIA

(Petitioner/Activity)

and

NATIONAL ASSOCIATION OF GOVERNMENT

EMPLOYEES, LOCAL R12-28

(Labor Organization)

SF-RA-40030

SF-RA-40031

_____

NAVAL FACILITIES ENGINEERING SERVICE

CENTER, PORT HUENEME, CALIFORNIA

(Petitioner/Activity)

and

NATIONAL ASSOCIATION OF GOVERNMENT

EMPLOYEES, FUSE, LOCAL R12-196

(Labor Organization)

SF-RA-40032

_____

DECISION AND ORDER ON REVIEW

April 28, 1995

_____

Before the Authority: Phyllis N. Segal, Chair; Tony Armendariz and Pamela Talkin, Members.

I. Statement of the Case

In Naval Facilities Engineering Service Center, Port Hueneme, California, 50 FLRA 26 (1994) (NFESC), the Authority granted the labor organization's (NAGE's) application for review of the Acting Regional Director's (RD's) decision and order dismissing NAGE's clarification of unit (CU) petitions. We granted the parties to this case and other interested persons the opportunity to file briefs addressing the following questions:

(1) In considering the second factor for determining successorship set forth in DOE [Department of Energy, Western Area Power Administration, 3 FLRA 77 (1980)], what criteria should be applied to determine whether the appropriateness of a bargaining unit remains unimpaired as a result of a reorganization when accretion is claimed? How do those criteria apply in this case?

(2) In considering the third factor for determining successorship set forth in DOE, does the filing of an RA petition questioning the continued appropriateness of a bargaining unit raise a question concerning representation so as to preclude a finding that a successor relationship exists between an established bargaining unit and gaining agency?

(3) Should the factors for determining successorship set forth in DOE be modified or clarified in any other respect?

NFESC, 50 FLRA at 32.(1)

The Department of Navy (Navy) and NAGE filed supplemental briefs,(2) and the Department of the Interior; NAGE, Hampton, Virginia Regional Office; the American Federation of Government Employees; and the Office of the General Counsel, Federal Labor Relations Authority filed briefs as amicus curiae.(3) For the following reasons, we reverse the RD's decision and order.

II. RD's Decision

As set forth fully in 50 FLRA 26, the Naval Civil Engineering Laboratory (NCEL) was disestablished in a reorganization and the Naval Facilities Engineering Service Center (NFESC) was established. The NFESC included former NCEL employees represented by NAGE and unrepresented employees of other Navy entities. NAGE claimed in its CU petitions that the NFESC was the successor employer to its former NCEL bargaining units. The Activity claimed in its RA petitions that the character and scope of the NAGE units had changed substantially and that the units were no longer appropriate.

The RD dismissed the CU petitions and directed that representation elections be conducted, finding that the NFESC was not the successor to the NCEL because the second and third DOE factors had not been satisfied. As to the second factor, the RD concluded that the appropriateness of the former units had been impaired because the reorganization substantially changed the character and scope of the units. As to the third factor, the RD found that a QCR had been raised by the filing of the RA petitions. The RD determined that appropriate units for exclusive recognition were: (1) all nonprofessional GS and WG employees of NFESC and (2) all professional employees of NFESC, and the RD directed that representation elections be conducted in those units.

III. Positions of the Parties

Navy asserts that the Authority should continue to apply the second DOE factor and that, based on that factor, the RD properly found that, after the reorganization, the NCEL units were no longer appropriate.

NAGE argues that the appropriateness of a unit is impaired if: (1) a new entity has a "radically new and expanded mission"; (2) employees of a former unit are dispersed within a new entity; and (3) a majority of former unit employees have different job classifications and perform different functions in the new entity. NAGE Brief at 2. NAGE also argues that successorship may not be found unless former unit employees constitute a majority of the employees and are functionally integrated within the gaining entity. Applying these principles, NAGE contends that NFESC is the successor employer to the NCEL units.

Navy and NAGE agree that the mere filing of an RA petition does not preclude a finding of successorship.

IV. Analysis and Conclusions

This case presents the Authority an opportunity to consider and address issues concerning the criteria and analysis for determining successorship in cases involving reorganizations. As noted in NFESC, 50 FLRA at 32, it is unclear from Authority precedent whether and/or how successorship can be established in certain situations. As also noted in NFESC, the likelihood that other reorganizations will raise these issues creates a need for further guidance. Indeed, briefs filed in this case emphasize that reorganizations affecting many employees and bargaining units have become commonplace in the Federal government and underscore the significance of the successorship doctrine. Cf. Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 36 (1987) (Fall River) (Court granted petition for certiorari, in part, because of "the importance of the successorship issue in labor law[.]").

The briefs filed by the parties and amici in this case persuade us, for the reasons discussed more fully below, that the DOE doctrine previously applied to determine successorship should no longer be followed. The criteria for determining successorship must strike an appropriate balance between clarity and flexibility. In this regard, one of the purposes motivating statutory protection of, and authority for, collective bargaining in the Federal sector is to promote stability in labor-management relationships. See National Treasury Employees Union v. FLRA, 810 F.2d 295, 300 (D.C. Cir. 1987) ("Congress . . . has . . . determined that collective bargaining contributes to stability in federal labor-management relations, and to effective and efficient government.") (citing 5 U.S.C. § 7101(a)). Such stability is not promoted by the current ambiguity in the approach to determining successorship. At the same time, it is impossible at this point to predict with any certainty all of the facts and circumstances that may arise in the contexts of reorganizations. To be useful, therefore, successorship criteria must be applicable in a myriad of unanticipated situations. The DOE factors do not appear to be flexible enough to apply, as they must, to the types of organizational changes being undertaken in Government at the present time.

In addition, the briefs filed in this case demonstrate the extent to which the existing criteria for determining successorship under the Statute differ from those that have been developed and applied in the private sector. Of course, there are obvious and fundamental differences between labor relations in the two sectors. E.g., Fort Stewart Schools v. FLRA, 495 U.S. 641, 648 (1990) (court stated that the National Labor Relations Act and the Postal Reorganization Act "deal with labor-management relations in entirely different fields of employment, and the [Statute] contains no indication that it is to be read in pari materia with them."). However, the differences that relate to successorship principles are neither numerous nor significant. Moreover, "as the legislative history of the [Statute] makes clear, the structure, role and functions of the Authority and its General Counsel were closely patterned after the structure, role and functions of the N[ational] L[abor] R[elations] B[oard] and its General Counsel under the National Labor Relations Act (NLRA)," and "[i]n view of the clearly expressed intent of Congress to pattern the Authority upon the model of the NLRB, it is appropriate . . . to consider precedent developed under the NLRA in interpreting the [Statute]." Turgeon v. FLRA, 677 F.2d 937, 939-940 (D.C. Cir. 1982). Accordingly, it is appropriate to bring the approach for determining successorship in the Federal sector into closer alignment with the treatment of this issue already well-established in private sector labor law.

A. Analytic Framework

Based upon our careful consideration of the Statute and the arguments presented, we adopt and will henceforth apply the following framework to determine whether, following a reorganization, a new employing entity is the successor to a previous one such that a secret ballot election is not necessary to determine representation rights of employees who were transferred to the successor. In particular, we will no longer follow the DOE doctrine and, instead, we will find that a gaining entity is a successor, and a union retains its status as the exclusive representative of employees who are transferred to the successor, when:

(1) An entire recognized unit, or a portion thereof, is transferred and the transferred employees: (a) are in an appropriate bargaining unit, under section 7112(a)(1) of the Statute, after the transfer;(4) and (b) constitute a majority of the employees in such unit;

(2) The gaining entity has substantially the same organizational mission as the losing entity, with the transferred employees performing substantially the same duties and functions under substantially similar working conditions in the gaining entity; and

(3) It has not been demonstrated that an election is necessary to determine representation.

1. The First Factor--Characteristics of the Unit

This factor, which modifies the first and second DOE factors, states three requirements: (1) at least a portion of a recognized unit must be transferred; (2) the post-transfer unit must be appropriate; and (3) transferred employees must constitute a majority of the new unit.

Under the first and second DOE factors, respectively, successorship depended on finding that a recognized collective bargaining unit was transferred "substantially intact" to a gaining employer, and that the appropriateness of "the unit" was "unimpaired in the gaining [entity]." DOE, 3 FLRA at 79. The first factor has been applied in only two cases: DOE and U.S. Department of Health and Human Services, Administration for Children and Families, Washington, D.C., 47 FLRA 247, 251 (1993) (Administration for Children and Families). In both cases, an entire bargaining unit was transferred to a gaining entity.(5) However, in Administration for Children and Families, in addition to the unit transferred entirely intact, a portion of another unit was also transferred. The Authority concluded that the first DOE factor was not satisfied because the gaining entity did not "constitute a bargaining unit that was transferred substantially intact . . . ." Id. at 251. To the extent that this application of DOE can be interpreted to require that a unit transferred to a gaining entity encompass the predecessor unit exclusively, the doctrine could significantly restrict the number of cases where successorship is possible.(6) In particular, it would eliminate a finding of successorship where a unit, or a portion thereof, was combined with other employees after a transfer.

Such a restriction does not similarly limit a finding of successorship in the private sector. Under the National Labor Relations Act, "successorship is not precluded because the entire bargaining unit is not transferred to the new employer." Hydrolines, Inc., 305 NLRB 416, 422 (1991) (Hydrolines) (footnote omitted). See also International Union of Petroleum & Industrial Workers v. NLRB, 980 F.2d 774, 780 (D.C. Cir. 1992) (Petroleum Workers) ("The mere fact . . . that [the transferred] employees were drawn from a larger unit cannot defeat the successorship obligations that arose in this case."); Stewart Granite Enterprises, 255 NLRB 569, 573 (1981) ("successorship obligations are not defeated by the mere fact that only a portion of a former union-represented operation is subject to . . . transfer to a new owner[]"). Consistent with permitting successorship when less than entire units are transferred, private sector precedent requires only that "the acquired employees must be in appropriate units both before and after successorship." Petroleum Workers, 980 F.2d at 780. See also Hydrolines, 305 NLRB at 421-23. The portion of a unit which is transferred need not constitute a separate appropriate unit by itself, provided that the transferred employees constitute a majority of the post-transfer unit. In addition, there is no requirement that the portion transferred be "substantial."

We find no basis in the Statute, its legislative history, or the reasoning set forth in DOE to warrant applying more restrictive requirements concerning the transferred employees in the Federal sector than in the private sector. Accordingly, we are modifying the first two DOE factors and will no longer either: (1) require that a unit of employees be transferred "substantially intact" to a gaining entity which encompasses that unit exclusively; or (2) condition successorship on a finding that the same unit existed and was appropriate, by itself, in the predecessor and the successor entities (that the "appropriateness of the unit remains unimpaired"). Instead, successorship is possible even if only a portion of a unit is transferred, and a post-transfer unit may be found appropriate even if it has been expanded to include employees in addition to those transferred.(7)

Because we are recognizing that the transferred unit may be expanded to include other employees, it becomes necessary to address the requirement under the Statute that a union is entitled to act as exclusive representative only if it has been selected by a majority of employees in the unit. Since a finding of successorship under the Statute results in continued recognition, without a new, secret ballot election, successorship depends on the fact that the affected union is the choice of a majority of employees in the claimed successor's unit. Cf. Defense Supply Agency, Defense Property Disposal Office, Aberdeen Proving Ground, Aberdeen, Maryland, 3 FLRC 789, 802 (1975) (if successorship requirements are satisfied, then there "is no requirement that a new secret ballot election be conducted, since the election requirement . . . was already satisfied at the time the previous recognition was accorded"). In the private sector, the principle is firmly established that the majority of the claimed successor's bargaining unit must consist of unit employees of the predecessor. See NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 464 (9th Cir. 1985) (Jeffries Lithograph) ("The presumption that the old union should represent the new workforce applies only when a majority of the new workforce once worked for the old employer."). Cf. NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 279 (1972) ("[A] mere change of employers . . . is not such an 'unusual circumstance' as to affect the force of the Board's certification . . . if a majority of employees after the change of ownership . . . were employed by the preceding employer."). Consistent with the foregoing, we conclude that this requirement should similarly be applied in the Federal sector successorship context.(8) Accordingly, although the post-transfer unit need not encompass the transferred employees exclusively, those employees must constitute a majority of the post-transfer unit.(9)

2. The Second Factor--Characteristics of the Successor Employer and Continuity in Working Conditions

The second factor set forth above requires that the claimed successor have substantially the same organizational mission as the losing entity and that transferred employees perform substantially the same duties and functions under substantially similar working conditions after the transfer. In this connection, the approach taken by the NLRB, and approved by the Supreme Court, "requires that the Board focus on whether the new company has . . . 'continued, without interruption or substantial change, the predecessor's business operations.'" Fall River, 482 U.S. at 43 (citation omitted). Stated more simply, the "focus is on whether there is 'substantial continuity' between the enterprises." Id. The inquiry emphasizes "the employees' perspective[,]" that is, whether the employer's operations, as they affect unit employees, remain essentially the same after the transfer. Petroleum Workers, 980 F.2d at 779. See also Fall River, 482 U.S. at 43 (Board focuses on, among other things, "whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors[.]").

This requirement in private sector labor law recognizes that there are situations where changes in an employing entity's operations are so substantial that successorship is defeated. E.g., Radiant Fashions, Inc., 202 NLRB 938, 941 (1973) (NLRB concluded that hiatus in operations, evidence pointing towards a purchase of assets rather than an ongoing business, absence of significant carryover in customers, and differences in markets between predecessor and claimed successor indicated "an extinguishment of the continuity of . . . business enterprise[]" so as to defeat successorship); Lincoln Private Police, Inc., 189 NLRB 717, 719 (1971) (where claimed successor did not purchase any of predecessor's assets or property, obtained its own operating capital, purchased new uniforms, vehicles, and equipment, and occupied different premises from those of the predecessor, NLRB found no successorship because there had been "a substantial and material alteration in the employing enterprise."). At the same time, the requirement of substantial continuity furthers the principle preserving a labor organization's status as exclusive representative in situations where changes in an employer's operations are not sufficient to question whether the union remains the choice of a majority of employees in an appropriate bargaining unit.

We conclude, noting the absence of any assertion to the contrary, and in furtherance of this same basic principle, that requiring substantial continuity in the employer's operations and in the employees' duties, functions, and working conditions is also appropriate under the Statute. However, recognizing that we determine successorship among Governmental entities, the requisite continuity in the Federal sector is better stated as a continuity in mission rather than in business enterprise. As in the private sector, we will not require that the missions of the predecessor and claimed successor be identical, see Fall River, 482 U.S. at 46, n.11, and our approach will be "primarily factual in nature and . . . based upon the totality of the circumstances of a given situation[.]" Id. at 43.

3. The Third Factor--An Election Is Not Necessary

Finally, we conclude that the third DOE factor continues to be appropriate, but needs to be modified to avoid the confusion it has fueled. The language in DOE, providing that for successorship to be found, a QCR "may not be timely raised as to the representative status of the incumbent union[,]" is, as this case illustrates, susceptible to an interpretation that would preclude a finding of successorship based on the mere filing of a petition. The parties in this case agree, as do those filing amicus briefs, that the mere filing of a petition should not be sufficient to bar a finding of successorship. In particular, although an agency may file an RA petition to determine the impact of a reorganization,(10) it is not proper to view the mere act of filing an RA petition as sufficient to preclude a finding of successorship. Until the merits of a petition are reviewed, it is not possible to determine whether an election is necessary to determine representation matters following a reorganization. To permit the mere filing of a petition, without regard to its merits, to frustrate successorship would not effectuate the purposes and policies of the Statute. To avoid this result, we restate the DOE factor to focus on whether or not an election is necessary, rather than whether a document has been filed.

In sum, whenever all of the three factors set forth and explained above are met, we will find that successorship exists and, as a result, the agency involved must recognize the exclusive representative of the employees in a former unit without a new, secret ballot election. Moreover, insofar as the new unit includes employees in addition to those transferred, they will be found, consistent with the foregoing, to have accreted to the unit.(11)

B. Application of the Framework

Applying the aforementioned principles in this case, we find that NFESC is the successor to NCEL. It is clear that all criteria for finding successorship are satisfied in this case.

With respect to the first factor, it is undisputed that both of the former NCEL units transferred to NFESC. In addition, the RD found that these transferred employees are in appropriate units in NFESC. The RD considered the appropriate unit criteria set forth in section 7112(a)(1) of the Statute and determined that the appropriate units for exclusive recognition were: (1) all nonprofessional GS and WG employees of NFESC and (2) all professional employees of NFESC. These RD determinations are not disputed by any party and we adopt them.

Next, the record establishes that employees in the former NCEL units constitute a majority of the employees in the NFESC units determined to be appropriate for purposes of exclusive recognition. In particular, data supplied by the Agency reflects that NCEL employees constitute 71 percent of the NFESC nonprofessional unit and 62 percent of the professional unit. Data supplied by the Union reflect that NCEL employees constitute 72 percent of the nonprofessional and 65.3 percent of the professional unit. It is not necessary to resolve these discrepancies because, using either party's figures, the former NCEL unit employees constitute a majority of the post-transfer units.

As for the second factor, according to the RD, the reorganization resulted in NFESC performing an "expanded mission" when compared to that of NCEL. RD's Decision at 9. Specifically, "[w]hile the primary mission of NCEL was research and development, NFESC's mission covers the entire spectrum of design, planning, operation and maintenance of projects." Id. at 6. However, the RD also found that NCEL employees "participated in the installation and implementation of its products that often went beyond more than mere operation and development testing, and consulting." Id. at 4. Moreover, according to the RD, the reorganization "had little effect on the working conditions of the former NCEL employees" and "[t]he former NCEL employees still perform[ed] the same type of work as they had prior to the integration of functions." Id. at 7. Based on the "totality of the circumstances," Fall River, 482 U.S. at 43, and noting that the missions of the predecessor and the claimed successor need not be identical for successorship to be found, id. at 46, n.11., we find the record before us is a sufficient basis for concluding that NFESC has substantially the same mission as NCEL, and that the transferred employees perform substantially the same duties and functions under substantially similar working conditions in NFESC as they did in NCEL.

Finally, with regard to the third factor, it has not been demonstrated that an election is necessary to determine the representational rights of the employees in the post-transfer units.

Based on the foregoing, we conclude that NAGE, Local R12-28, is the exclusive representative of all nonprofessional employees of the NFESC, with mandatory exclusions, and NAGE, FUSE, Local R12-196, is the exclusive representative of all professional employees of the NFESC, with mandatory exclusions, and direct the Regional Director to issue appropriate certifications.

V. Order

The Regional Director is directed to take appropriate action consistent with this decision.




FOOTNOTES:
(If blank, the decision does not have footnotes.)
 

1. The three "factors" referenced in the questions are set forth in DOE, 3 FLRA at 79:

(1) the recognized unit is transferred substantially intact to the gaining employer;

(2) the appropriateness of the unit remains unimpaired in the gaining employer; and

(3) a question concerning representation [QCR] is not timely raised as to the status of the incumbent labor organization.

2. Navy also filed a motion to exclude NAGE's brief as untimely filed. However, NAGE's brief was timely filed under section 2422.17 of the Authority's regulations. Accordingly, we deny Navy's motion.

3. Only the positions of the parties to this case are set forth in this decision. However, all briefs were considered.

4. Under section 7112(a)(1), a unit may be determined appropriate only if it will: (1) ensure a clear and identifiable community of interest among the employees in the unit; and (2) promote effective dealings with, and efficiency of the operations of, the agency involved. The Authority makes determinations under section 7112(a)(1) on a case-by-case basis. See Department of Health and Human Services, Region II, New York, New York, 43 FLRA 1245, 1254 (1992) (HHS, Region II).

5. Thus, the Authority has never had an opportunity to address the "substantially intact" requirement as it might have applied in cases where less than an entire unit was transferred.

6. Although the Authority's holding in Administration for Children and Families relied on the first DOE factor, it is consistent with the literal wording of the second DOE factor, which focuses on whether the appropriateness of "the unit" is "unimpaired."

7. It is clear that a union may be certified as the exclusive representative only of employees in an appropriate unit. 5 U.S.C. § 7111. Accordingly, there is no question that successorship may not be found unless, after a reorganization, the employees for whom recognition is claimed are in an appropriate unit. In addition, employees other than those transferred may be included in an appropriate successor unit only pursuant the criteria set forth in section 7112(a)(1) of the Statute, consistent with established accretion principles. E.g., U.S. Department of the Air Force, Air Force Materiel Command, Wright-Patterson Air Force Base, 47 FLRA 602, 611-12 (1993) (Air Force). In particular, additional employees must be integrated with those in the claimed unit. As is discussed in connection with the third factor, however, even in some situations in which additional employees may be included in an appropriate unit with transferred employees, an election may be appropriate to determine the representational rights of the employees.

8. We also note that requiring that transferred employees constitute a majority of a claimed successor's appropriate unit is consistent with Authority case law concerning accretion. In particular, the Authority has held that even "a large number of employees who have historically resisted attempts at union representation" may be accreted into a bargaining unit. Air Force, 47 FLRA at 612. However, elections must be held "where the number of employees proposed for inclusion nearly equals or exceeds the number of employees in the existing unit[.]" Id. (citing HHS, Region II, 43 FLRA at 1255-56). Cf. Renaissance Center Partnership, 239 NLRB 1247 (1979) (NLRB stated that it is "cautious" in finding accretion "when the accreted group numerically overshadows the existing certified unit . . . .").

9. In cases where a claimed successor's operations are subject to a start-up period and, for example, the successor is gradually hiring employees, issues can arise as to the appropriate time for determining whether employees of the predecessor constitute a majority of the successor's unit. In these situations, the NLRB uses the "substantial and representative complement" rule for determining whether the successor's unit is sufficiently representative of the ultimate unit, in size and composition, so that it is appropriate to measure whether employees of the predecessor constitute a majority of the unit. See Fall River, 482 U.S. at 47. See also Jeffries Lithograph, 752 F.2d at 464 ("[W]e permit the Board to make a successorship determination when the new employer has achieved a 'substantial and representative' complement of workers.") (citation omitted). We note that the Authority has previously adopted the "substantial and representative complement" rule for determining whether and when to hold a representation election in an expanding unit. See U.S. Department of Transportation, U.S. Coast Guard Finance Center, Chesapeake, Virginia, 34 FLRA 946, 951-54 (1990).

10. Section 2422.1(c) of Authority's Regulations provides, in relevant part, that:

A petition seeking to clarify a matter relating to representation may be filed . . . where the activity or agency has a good faith doubt, based on objective considerations . . . that, because of a substantial ch