A U.S. appeals court on Tuesday rejected a Puerto Rico-based hospital's bid to strike down a longstanding National Labor Relations Board rule requiring employers that acquire other companies to bargain with their workers' unions.
The rule says that successor employers must recognize and bargain with existing unions for up to one year after acquiring a company, even when they believe a union lacks the support of a majority of workers. After that period, employers can petition to decertify a union.
Tuesday's ruling came in a case involving Hospital Menonita de Guayama in southern Puerto Rico, which acquired another hospital in 2017 and withdrew recognition of the union representing its workers, claiming it had lost majority support.
The D.C. Circuit upheld an NLRB ruling that said the hospital had violated the National Labor Relations Act. In doing so, the court rejected the hospital's claim that the NLRB's vacillating stance on the successor bar rule over the last 50 years undermined its validity.
The NLRB first adopted the rule in 1981 after rejecting a similar requirement a few years earlier, and since then has twice eliminated and then re-adopted it. But the court said that an agency's policy considerations can shift over time, and it was not unusual for the board to reverse its own precedent.
"The Board’s decision to overrule its previous rule was neither hastily reached nor unthinkingly decided," Circuit Judge Harry Edwards wrote.
The NLRB declined to comment. Lawyers for the hospital did not immediately respond to a request for comment.
The Boston-based 1st Circuit upheld the current iteration of the successor bar in a 2017 decision. No other appeals court has reviewed the 2011 rule.
Circuit Judge Gregory Katsas suggested in a short concurring opinion that the successor bar could be vulnerable if the U.S. Supreme Court in a pair of pending cases does away with the doctrine known as Chevron deference, which says courts must uphold agencies' reasonable interpretation of ambiguous laws. The justices at oral arguments last month seemed divided about doing so.
Katsas, an appointee of Republican former President Donald Trump, said that because federal labor law is unclear on successors' bargaining obligations, the board's rule is arguably invalid. But the judge stopped short of saying he would vote to do away with the requirement if Chevron is overturned.
"I also agree with my colleagues that the Board has adequately explained the policy justifications driving its interpretive choice," Katsas wrote.
The panel also included Circuit Judge Karen Henderson.
The case is Hospital Menonita de Guayama v. NLRB, U.S. Court of Appeals for the D.C. Circuit, No. 22-1163.
For the hospital: Patrick Muldowney of Baker Hostetler
For the NLRB: Heather Beard
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