Walter Kidde & Co., Inc.

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