HTI Hyrdaulic Technologies, LLC

National Labor Relations Board - Administrative Judge Opinions

Jun 11, 2008

08-CA-037473 (N.L.R.B. Jun. 11, 2008)

JD–32–08
Galion, OH
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
HTI HYDRAULIC TECHNOLOGIES, LLC,
A WHOLLY OWNED SUBSIDIARY OF
LIGON INDUSTRIES, LLC,
and Case No. 8–CA–37473
INTERNATIONAL ASSOCIATION OF
MACHINISTS AND AEROSPACE WORKERS,
AFL–CIO, DISTRICT LODGE 54.
Steven D. Wilson, Esq.
Noelle Powell, Esq.
(Region 8, NLRB)
of Cleveland, Ohio, for the General Counsel
Chris Mitchell, Esq.
David A. Perry, Esq.
(Maynard, Cooper & Gale, P.C.)
of Birmingham, Alabama, for the Respondent
DECISION
INTRODUCTION
DAVID I. GOLDMAN, Administrative Law Judge. This is a case in which the Government
alleges and the employer does not dispute that the employer is a successor employer. It is also
undisputed that less than a week after taking over the facility this successor employer operated
the plant with a substantial and representative complement of employees, the majority of whom
were previously employed by the predecessor employer. The parties also agree that after
approximately ten days of operation, additional hiring by the successor employer resulted in a
workforce in which the majority of the employees were new employees never employed by the
predecessor. Both the Government and the employer accept that the employer was obligated
to recognize and bargain with the union that represented the predecessor employer’s workforce
if and only if the union made a demand for recognition that attached at a time when the majority
of the workforce was composed of employees who previously worked for the predecessor. As
the parties have framed the dispute, the question is when the union made a recognition demand
on the employer.
STATEMENT OF THE CASE
Based on an unfair labor practice charge filed October 16, 2007, and amended
December 17, 2007, by the International Association of Machinists and Aerospace Workers,
AFL–CIO, District Lodge 54 (Union), the General Counsel of the National Labor Relations Board
(Board) issued a complaint on December 21, 2007, alleging violations of Section 8(a)(1) and (5)
of the National Labor Relations Act (Act) by HTI Hydraulic Technologies, L.L.C. (Ligon). Ligon
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filed a timely answer to the complaint denying all violations of the Act. This dispute was tried in
Cleveland, Ohio on March 5, and April 3, 2008.1 Counsel for the General Counsel and
Respondent filed briefs in support of their positions on May 1, 2008. On the entire record,
including my observation of the demeanor of the witnesses and other indicia of credibility, I
make the following findings of fact, conclusions of law, and recommendations.
FINDINGS OF FACT
I. JURISDICTION
The complaint alleges, Respondent admits, and I find that Respondent is an employer
engaged in commerce within the meaning of Section 2(2), (6), and (7) of the Act. The complaint
alleges and the parties stipulate that the Union is a labor organization within the meaning of
Section 2(5) of the Act.

II. ALLEGED UNFAIR LABOR PRACTICES
a. Background
The Galion, Ohio facility at issue in this case was operated by Hydraulic Technologies,
Inc. (HTI) prior to its purchase of the facility by Ligon. HTI manufactured hydraulic cylinders and
components.
From about 1998 until September 12, 2007, employees at the Galion plant were
represented for purposes of collective bargaining by the Union and its Local 1151. The Union
and HTI entered into a series of collective-bargaining agreements with a bargaining unit of
production and maintenance employees. HTI entered bankruptcy in July 2007.
In August 2007,2 Ligon began plans to bid for assets of HTI, including the Galion plant,
that were being sold by the bankruptcy trustee. By August 23, Respondent had been named
the “stalking horse” in filings with the bankruptcy court.3 In August and September, in
anticipation of being the successful bidder at the bankruptcy auction, Respondent sent letters to
current and laid off employees of HTI and began advertising in local newspapers encouraging
those interested in employment with Respondent to apply. During this time, and as early as

1At the hearing, the General Counsel’s unopposed motion to amend the complaint to delete
paragraph 9 (and all references to it in the complaint) was granted. Also at the hearing,
Respondent admitted paragraph 3(a) of the complaint, portions of which had been denied in its
answer.

2Hereinafter all dates are from 2007 unless otherwise indicated.
3On my own motion, references in the transcript to “stocking horse” are corrected to
“stalking horse.” In the bankruptcy context, a stalking horse bidder reaches a tentative
purchase-agreement with the debtor-in-possession to acquire assets. As explained by
Respondent’s Chairman, John McMahon, being named the stalking horse meant that “the
company . . . is going to be recommended by the debtor in possession. And you actually
negotiate a purchase contract.” The “stalking horse” may be outbid at auction, so being the
stalking horse does not guarantee ultimate acquisition. However, in some instances there are
few or no other serious bidders and the early purchase agreement reached with the stalking
horse is the basis for the sale.
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August 22, Ligon announced the outlines of the initial terms and conditions it intended to
implement, and these involved significant reductions for incumbent employees (compare G.C.
Exh. 3 to G.C. Exh. 7, and see R. Exh. 4). In an August 22 memorandum from Ligon to
“Current and Former HTI employees,” Ligon wrote:
As you are well aware, HTI is going through bankruptcy proceedings and will
likely have new owners on Tuesday, September 11, 2007. If Ligon Industries is
the successful bidder at auction, we plan to be open for business and resume
operations on September 11, 2007.
In anticipation of being the successful bidder and new owner, Ligon Industries is
currently accepting applications to fill jobs as described on the attached. If you
have interest in applying, please fill out the application form, which is also
attached. All applications must be returned to the following address by
September 5, 2007:
Mr. Jay Wagner
Wagner Law Firm, PLL
118 Harding Highway West
Galion, OH 44833
Selection of employees will be completed by September 7, and you will be
notified of the status of your application by September 10. If you accept our offer
of employment, you will be expected to report to work on September 11 as an
employee of the new company.
Ligon Industries is purchasing the buildings and equipment of HTI and will
assume no responsibility for previous contracts, obligations or agreements of the
previous owners.
HTI was forced into bankruptcy because its losses were not sustainable.
Manufacturing costs were too high. There are many things that must change for
the new company to survive and be successful.. We must achieve lower costs
through better management, more productive employees, updated equipment
and sufficient capital to support efficient operations. Ligon Industries is
committed to doing its part.
Attached to the memo were two additional pages outlining the wages and other
terms and conditions and benefits that would prevail under Ligon. (The memo refers to
an attached application form, but the copy of the memo in the record does not contain
such an attachment.)
On the morning of September 11, plant manager Scott Thornsberry informed the HTI
employees in a meeting at the plant that Ligon had been the successful bidder and would be
taking over the operations. All HTI bargaining unit employees were offered employment.
However, the majority of HTI unit employees did not continue with Ligon. Employees were told
that if they wanted to remain employed they could just keep working. If they did not, HTI would
pay them for the remainder of the day and they could take their tools and go home.
Thornsberry estimated that 2/3 of the employees at the meeting decided to go home and did not
accept employment with Ligon.
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Since assuming the operations, Respondent has operated the Galion plant to continue
HTI’s business of manufacturing hydraulic cylinders and components used in construction and
agriculture. The plant continued to operate with the same general manager (Glen Campbell)
and plant manager (Scott Thornsberry), and six of seven supervisors remained working at
Galion for Ligon. Thornsberry testified that during the month of September, with the changeover
to Ligon, his duties and authority and responsibilities remained unchanged. The majority of the
office staff also remained after the changeover to Ligon. Both old and newly introduced
equipment and production methods were used by Ligon to produce products for sale to former
customers of HTI and other customers. At the changeover, 2/3 of the customer base remained
the same. The effect has been to substantially continue the manufacturing operations and
business of HTI at the same location. There was no hiatus or period during which the plant was
closed between the time ownership was transferred from the bankrupt HTI to Ligon.
The plant operated with reduced manpower for the first weeks under Ligon while it hired
additional employees. However, by the end of the week of September 11, Ligon had some
employees working in every job classification.
The parties stipulate that no later than September 17, and continuing thereafter,
Respondent had hired a substantial and representative complement of employees into
bargaining unit positions.
The parties stipulate that prior to September 21, a majority of the operative employees
hired by Respondent at the Galion plant were former employees of HTI.
Finally, the parties stipulate that beginning September 21, and continuing thereafter, a
majority of the operative employees at the Galion plant were not former employees of HTI.
b. Contacts Between the Union and Ligon
i. McMahon’s August 23 phone call to Gilkison
On August 23, Union Representative Earl Gilkison telephoned James Delk, the CEO of
Ligon, at Ligon’s headquarters in Birmingham, Alabama. Gilkison had met Delk during a plant
tour of the Galion facility and Gilkison later learned from the union’s attorneys that Ligon had
been named the “stalking horse” in filings made with the bankruptcy court.
Delk was out-of-town, and the Chairman of Ligon, John J. McMahon, accompanied by
two other employees from his office, returned the call to Gilkison. McMahon and Gilkison both
testified about this telephone call. According to McMahon,
[Gilkison] congratulated us on being the stalking horse. And we sort of chatted
for a moment about the expected procedure on that. He then asked if we would
work with the union in terms of selecting and—and getting a good group of
employees.
He said they obviously knew the employees well and wanted to know if we
would, I think the word was ‘work’ with the union.
McMahon told Gilkison, “Not at this time.” They both laughed, expressed mutual
assurances that they would see each other in the future, and the conversation ended.
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Gilkison recalled McMahon starting the call by saying that he was returning the call that
Gilkison had made to Delk. Gilkison testified:
I told him I understand through our attorneys that he was—his company was the
stalking horse to purchase HTI. And I would like to meet with him, if at all
possible, to see if we could establish some kind of working relationship.
McMahon responded, “No, sir, not at this time.” Gilkison then asked McMahon “if he
was gonna recognize the con—contract, recognize the union.” McMahon responded, “No, not
at this time. Asked on cross examination whether he demanded recognition in the conversation,
Gilkison replied, “Yes, sir, I did, or I felt I did.” Gilkison reaffirmed that he asked McMahon to
recognize the contract with the Union, and that he considered this to be a demand for
recognition.
ii. September 12 conversation and phone call
The parties pointedly dispute the events of September 12.
Undisputed is that on this day, the day after a majority of HTI employees quit rather than
continue working for Ligon under the inferior terms and conditions Ligon was establishing, Union
Representatives Gilkison and Andrew Campbell arrived at the plant between 6 a.m. and 6:30
a.m., and began handbilling and passing out authorization cards to entering employees.
Gilkison and Campbell were handbilling to provide information to the employees about the sale
of the HTI plant to Ligon. They were also there as part of the Union’s election drive, which
resulted, the next day, September 13, in the Union filing a representation petition with the
Board’s Regional office. That representation election was originally scheduled for October 26,
pursuant to a stipulated election agreement between the parties.
The morning of September 12, Gilkison and Campbell handbilled until approximately 7
a.m. or 7:30 a.m. Gilkison and Campbell left when no further employees were entering or
leaving the plant. They stopped for breakfast and coffee in a diner in town. Gilkison testified
that while in the diner he reviewed a list of employees he composed as he saw and talked with
entering employees that morning. Gilkison said it occurred to him that he recognized most of
the employees going into the plant, and thus, “I came to the conclusion we still had majority
status with the employees that went in that morning.” With that realization, Gilkison testified that
he told Campbell, “‘I’m gonna go back to the company . . . and request recognition from the
company.”’’ Accompanied by Campbell, Gilkison headed back to the facility and looked for
General Manager Glen Campbell’s vehicle. The union organizers entered the main entrance
and headed for the lobby telephone to call Campbell. Before they could reach the phone, plant
manager Thornsberry walked out from the offices and approached them. Thornsberry, a former
union machinist at the plant, knew both men, and, in particular, had known Gilkison for many
years.
Gilkison testified that he told Thornsberry that “basically the only reason I was there is I'd
like to speak to Mr. Campbell.” Thornsberry told Gilkison and Andy Campbell that Glenn
Campbell was unavailable as he was meeting with Ligon attorneys. Gilkison testified that he
told Thornsberry “I was there, I’d like to ask for recognition for the Union.” Gilkison and
Campbell both testified that Thornsberry told them that Thornsberry and Glenn Campbell had
been told to direct inquiries related to the Union to Ligon headquarters in Alabama. Gilkison
said that wasn’t a problem, he thought he had the number in his office and he would make the
call to Alabama. After that the three just talked casually about the company’s need for
machinists and joked about Andy Campbell and Gilkison putting in applications.
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Thornsberry testified about this conversation and Thornsberry recalled a casual
conversation that began when he was heading back from a production area and someone said
that “Earl’s” in the lobby, so he went to greet him. Thornsberry testified that Gilkison, Campbell,
and he discussed the need for more machinists and the fact that so many HTI employees had
quit. But Thornsberry denied that there was any mention made during the conversation about
“recognition” or “recogniz[ing].” In addition, he said that the word “bargaining” was never used,
and he denied that Gilkison or Campbell asked to meet to bargain or proposed any dates or
times for bargaining.
Gilkison testified that after the conversation with Thornsberry, he dropped Campbell at
the local union hall and drove to his office in Ashland, Ohio. He prepared to call Ligon’s
Alabama headquarters by looking up the number on the internet and, he testified that he made
some notes on a piece of paper of what he wanted to say to McMahon. The notes were
introduced into evidence. Before talking with McMahon Gilkison wrote:
Call Mr. McMahon
congratulate him on purchase of HTI
See if he Will Agree to Recognize the IAM+AW Union. +
If So, tell him We
Can assist him in
Anyway to fill the jobs.
According to Gilkison, he spoke with McMahon. Gilkison said,
[b]asically I congratulated him on the purchase of Hydraulic Technologies,
Incorporated. And I told him I—again, I reiterated to him who I was. He
remembered me from my first call. And told him I would like to work out a
working relationship with him and would like for him to recognize the union.
According to Gilkison, McMahon responded, exactly as he had on August 23, stating
“No, sir, not at this time.” Gilkison did not recall what, if anything else was said in the
conversation.
McMahon testified and emphatically denied that he had spoken with Gilkison on
September 12 (or any time other than the August 23 conversation described above). Based on
questioning about his daily routines, and meetings scheduled, McMahon indicated that he would
have been in the office at Ligon headquarters that morning, before heading out to a meeting
around 11:45 a.m. Central Daylight Time. However, McMahon testified that he was “absolutely
certain” that the conversation alleged by Gilkison did not occur.
iii. October 5 written demand for recognition
The parties agree that on October 5, Gilkison sent the Union’s first written demand for
recognition to Ligon. That letter, written to Galion plant General Manager Glenn Campbell
stated:
Dear Mr. Campbell,
The majority of your employees are former employees of Hydraulic
Technologies, Inc., and members of the International Association of Machinists
and Aerospace Workers District 54, Local Lodge 1151. Therefore, we consider
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Hydraulic Technologies, LLC a successor employer and demand recognition.
We stand ready and willing to meet with you at a mutually agreeable date, time
and place to negotiate a Collective Bargaining Agreement. Please respond to
this demand within (7) Seven days of the date of this letter.
Sincerely,
Earl E. Gilkison
Business Representative
IAM&AW, District 54
The parties agree that by the time this letter was sent to Respondent, a majority of the
bargaining unit employees were not former employees of HTI. Campbell wrote a spirited
response to Gilkison, dated October 12, accusing him of trying to keep the employees from
having the representation vote on October 26, and stating that Gilkison knew from the list of
voting employees supplied in connection with the upcoming election that the majority were not
former employees of HTI.
c. Legal Analysis
The Supreme Court has recognized that “[t]he object of the National Labor Relations Act
is industrial peace and stability, fostered by collective-bargaining agreements providing for the
orderly resolution of labor disputes between workers and employers.” Auciello Iron Works, Inc.
v. NLRB, 517 U.S. 781, 785 (1996). “To such ends, the Board has adopted various
presumptions about the existence of majority support for a union within a bargaining unit, the
precondition for service as its exclusive representative.” Id. at 785–786. As the Board
explained in Levitz Furniture Co. of the Pacific, 333 NLRB 717, 720 (2001):
Absent specific statutory direction, the Board has been guided by the
Act’s clear mandate to give effect to employees’ free choice of bargaining
representatives. The Board has also recognized that, for employees’ choices to
be meaningful, collective-bargaining relationships must be given a chance to
bear fruit and so must not be subject to constant challenges. Therefore from the
earliest days of the Act, the Board has sought to foster industrial peace and
stability in collective-bargaining relationships, as well as employee free choice,
by presuming that an incumbent union retains its majority status.
In Fall River Dyeing & Finishing Corp., 482 U.S. 27, 39 (1987), the Supreme Court
considered the circumstances in which a union’s rebuttable presumption of majority support
should continue where there has been a change in employer. For reasons described at length
in the Court’s opinion, the Court recognized that the rationale for the presumption of an
incumbent union’s majority support is “particularly pertinent in the successorship situation.” 482
U.S. at 39. Accordingly, in Fall River Dyeing, the Court held that a union’s rebuttable
presumption of majority support “continues despite the change in employers. And the new
employer has an obligation to bargain with that union so long as the new employer is in fact a
successor of the old employer and the majority of its employees were employed by its
predecessor.” 482 U.S. at 41; NLRB v. Burns Int’l Security Services, Inc., 406 U.S. 272 (1972).
The fact of successorship is straightforward in this case. The Board’s successorship
approach "requires that the Board focus on whether the new company has `acquired substantial
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assets of its predecessor and continued, without interruption or substantial change, the
predecessor's business operations.'" Fall River, 482 U.S. at 43 (quoting Golden State Bottling
v. NLRB, 414 U.S. 168, 184 (1973)). "Hence, the focus is on whether there is a `substantial
continuity' between the enterprises." Fall River, 482 U.S. at 43. “Under this approach, the
Board examines a number of factors: whether the business of both employers is essentially the
same; whether the employees of the new company are doing the same jobs in the same
working conditions under the same supervisors; and whether the new entity has the same
production process, produces the same products, and basically has the same body of
customers.” Id.; Great Lakes Chemical Corp., 280 NLRB 1131, 1132 (1986) ("In determining
whether there is a substantial continuity the Board has considered several factors including
employees, supervisors, employees, employee skills and functions, business location, and
equipment and types of product lines"), aff'd, 855 F.2d 1174 (6th Cir. 1988). Most importantly,
the question of the substantial continuity of the enterprise is to be analyzed primarily from the
"employees' perspective." Fall River, 482 U.S. at 43. In its analysis, the Board is mindful of
whether "`those employees who have been retained will understandably view their job situations
as essentially unaltered.'" Id. (quoting Golden State Bottling, 414 U.S. at 184); Vermont
Foundry, 292 NLRB 1003, 1008 (1989) (calling this "the core question"); Derby Refining, 292
NLRB 1015 (1989), enfd. 915 F.2d 1448 (10th Cir. 1990).
In this case, it is not seriously disputed, and I find, that Ligon is a successor employer to
HTI. Ligon took over and commenced operations on September 11, 2007, without hiatus in
operations, at the same facility, at the same location, producing the same products, with almost
the entirely same managerial and office work staff, using the same equipment, with substantially
the same customers, and, initially, with a workforce overwhelmingly composed of former HTI
bargaining unit employees.
Having found that Ligon was a successor, I must consider if and when Ligon’s obligation
to recognize and bargain with the Union attached.
In NLRB v. Burns, supra, the Supreme Court rejected the Board’s position that a
successor hiring the predecessor’s workforce has an obligation to bargain with the incumbent
union before it institutes initial terms and conditions of employment. To the contrary, the Court
in Burns held that “a successor employer is ordinarily free to set initial terms on which it will hire
the employees of a predecessor.” 406 U.S. at 294.4
However, going forward, once initial terms and conditions are set, the successor’s
bargaining obligation may attach. The successor’s bargaining obligation chiefly turns on
whether the predecessor’s employees form a majority of its workforce. Vermont Foundry, supra
at 1009. “As a general rule, the relevant measuring day to determine if the Company employed
a majority of union members is the initial date it began operating.” Id. That was the case in

4An exception, not applicable here, is where the successor is a “perfectly clear” successor.
If from the outset it is “perfectly clear that the new employer plans to retain all of the employees
in the unit,” the new employer—commonly called a “perfectly clear” successor—is required to
recognize and bargain with the union before making any changes to the employees’ terms and
conditions. Burns, supra at 294-295. Ligon’s pre-purchase solicitations to the HTI workforce
clearly indicated that their continued employment at the facility was conditioned on their
willingness to accept new terms, which, under longstanding Board precedent, warrants a finding
that the employer is not a “perfectly clear,” but, rather, an ordinary successor. Windsor
Convalescent Center, 351 NLRB No. 44 (2007); Spruce Up Corp., 209 NLRB 194 (1974), enfd.
per curiam 529 F.2d 516 (4th Cir. 1975).
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Burns, where the successor began operating the day after the predecessor ceased operations
with a majority of its employees drawn from the predecessor’s workforce. Burns, supra.
In Fall River, the Supreme Court considered a case of a successor that took over a
facility and began operations after several months hiatus in operations. The new employer
started up operations and hired employees gradually over time. Explicitly contrasting the
situation to that in Burns, the Court in Fall River pointed out that
[i]n other situations, as in the present case, there is a start-up period by the new
employer while it gradually builds its operations and hires employees. In these
situations, the Board, with the approval of the Courts of Appeals, has adopted the
"substantial and representative complement" rule for fixing the moment when the
determination as to the composition of the successor's work force is to be made.
If, at this particular moment, a majority of the successor's employees had been
employed by its predecessor, then the successor has an obligation to bargain
with the union that represented these employees.
482 U.S. at 47 (footnotes omitted).
In this context, the Supreme Court in Fall River approved as reasonable the Board’s
substantial and representative complement rule, which evaluates the successor’s bargaining
obligation when a substantial and representative complement of employees is hired. In Fall
River the Court rejected the proposition that the bargaining obligation cannot be assessed, or
attach, until an employer has hired its full complement of employees. 5
In Fall River Dyeing, the Court also approved the Board’s “continuing demand” rule,
including the requirement when applying the substantial and representative complement rule
that “[t]he successor's duty to bargain at the ‘substantial and representative complement’ date is
triggered only when the union has made a bargaining demand.” 482 U.S. at 53. However,
based on the “continuing demand” rule, the demand triggering the bargaining obligation can be
made before a substantive and representative complement is hired: “Under the ‘continuing
demand’ rule, when a union has made a premature demand that has been rejected by the
employer, this demand remains in force until the moment when the employer attains the
‘substantial and representative complement.’” Fall River Dyeing, 482 U.S. at 43; MSK Corp.,
341 NLRB 43, 44 (2004) (“where a union demands recognition from a prospective successor
employer before that successor has hired a substantial and representative complement of
employees, the union’s demand is deemed to be a continuing one and the successor’s
bargaining obligation matures once it hires a substantial and representative employee
complement”; the hiring of a substantial and representative complement and a demand for
recognition and bargaining “need not occur in any particular order”).
From Fall River, one might conclude that application of the substantial and
representative complement rule should be limited to circumstances akin to the extended start up

5As the Supreme Court in Fall River Dyeing explained, the “[substantial and representative
complement] rule represents an effort to balance the objective of insuring maximum employee
participation in the selection of a bargaining agent against the goal of permitting employees to
be represented as quickly as possible. . . . The latter interest is especially heightened in a
situation where many of the successor's employees, who were formerly represented by a union,
find themselves after the employer transition in essentially the same enterprise, but without their
bargaining representative.” (internal quotation marks omitted). 482 U.S. at 48–49.
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situation described in Fall River Dyeing. When a successor immediately begins normal
production, as in Burns, the composition of the employer’s workforce can be measured from day
one. Vermont Foundry, supra at 1009. Indeed, in those circumstances, there is no reason even
to require the formality of a bargaining demand and the employer, though permitted to
unilaterally establish initial terms and conditions of employment, may be required to notify and
provide the union with an opportunity to bargain before it makes further unilateral changes after
operations commence. Banknote Corp. of America v. NLRB, 84 F.3d 637, 646 (2d Cir. 1996)
(finding a successor’s bargaining obligation and duty to forego unilateral changes without
notification to the union even in absence of a bargaining demand) (enforcing, 315 NLRB 1041
(1994)), cert. denied, 519 U.S. 1109 (1997).6

However, in this case the Government does not contend either that a bargaining
demand is unnecessary, or that Ligon’s workforce composition should be measured
immediately after it took over the operations without hiatus. In fact, without distinguishing the
extended start-up situation in Fall River Dyeing from the more seamless transfer of operations in
Burns, many Board cases since Fall River Dyeing have tended to apply the substantial and
representative complement formula for successorship cases generally, with the requirement that
a bargaining demand is necessary to trigger the duty to bargain:
A successor employer's obligation to recognize the union attaches after the
occurrence of two events: (1) a demand for recognition or bargaining by the
union; and (2) the employment by the successor employer of a ‘substantial and
representative complement of employees, a majority of whom were employed by
the predecessor.
Hampton Lumber Mills-Washington, Inc., 334 NLRB 195 (2001), enfd. 38 Fed. Appx. 27 (D.C.
Cir. 2002); MSK, supra; The Market Place Inc., 304 NLRB 995, 1000 (1991); Royal Midtown
Chrysler Plymouth Inc., 296 NLRB 1039, 1040 (1989).
In Royal Midtown Chrysler, supra, the Board found that the date for measuring the
composition of the successor employee’s workforce is not necessarily, as described in Burns,
“the initial date it began operating” (Vermont Foundry, supra) or, as described in Fall River, the
date on which a substantial and representative complement is at work. Rather, it is the later of
the date on which a substantial and representative complement is first reached and the date a
bargaining demand is made on the employer. Thus, even where an employer has hired a
substantial and representative complement, the majority of which worked for the predecessor,
the window in which a union can effectively demand recognition closes if the composition of the
workforce subsequently changes and leaves predecessor employees in the minority.

6The General Counsel in Banknote contended successfully to the Court of Appeals that the
uninterrupted operations and immediate hiring of the predecessor employees meant that no
bargaining demand was necessary in order to find a bargaining obligation. The Court held:
[w]hile the two-pronged rule of Fall River Dyeing may be appropriate in a
situation involving the staggered or gradual hiring of employees during a startup
period, or even the hiring of employees after a prolonged delay between the
closing and reopening of a business . . . . the absence of a bargaining demand in
this case—which involves neither a prolonged startup period and gradual or
staggered hiring of employees nor a significant hiatus in operations, but rather, a
rapid transition period with the immediate hiring of a full employee complement—
does not preclude a finding of a duty to bargain.
84 F.3d at 646.
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Accordingly, where a successor initially employs a substantial and representative complement
of employees, the majority of whom were employed by the predecessor, but the union fails to
make a demand until a time when the predecessor employees are no longer in the majority, the
employer is privileged to refuse to recognize and bargain with the union. The Board in Royal
Midtown Chrysler reasoned,
the determination of whether the successor has incurred a bargaining obligation
must be assessed at [the time of the demand] rather than when successorship
takes place. Of course, if a demand is made concurrent with the establishment
of successorship or the attainment of a representative complement, or, even
prematurely but is continuing, the obligation will attach upon the occurrence of
such events. But where no demand is made until some time after successorship
and representative complement have occurred, the obligation will rise or fall
depending on the union's representation among the unit employees at the time of
its demand.
296 NLRB at 1040. Accord, Bengal Paving Co., 245 NLRB 1271, 1272 (1979) (dismissing
complaint where General Counsel failed to prove that a demand was made at time when a
majority of respondent’s employees were former employees of the predecessor).7
The reasoning of Royal Midtown Chrysler is critical to this case. The General Counsel
contends that oral demands for recognition and bargaining were made on September 12. As
the parties agree that no later than September 17, a substantial and representative complement
of employees was working, the majority of which had previously been employed by HTI, if the
General Counsel’s contention is upheld then pursuant to the continuing demand rule the
employer had a duty to recognize and bargain with the Union no later than September 17. On
the other hand, Ligon contends that the first bargaining demand made by the Union was the
written demand of October 5. At that point in time, the parties agree, the majority of the
employees were new employees never previously employed by HTI. In that case, pursuant to
the reasoning of Royal Midtown, supra, the Union’s demand was ineffective and the
presumption of majority support no longer applicable.
This case is notable for the pointed credibility dispute the parties have offered up at trial

7I note that nothing in Fall River Dyeing suggests, much less compels this result. Indeed, it
is unclear why the existence of a rebuttable presumption of majority support should turn on
when the union requests bargaining. One can certainly question how this result comports with
the Supreme Court’s expressions in Fall River of concern for the uncertainty, lack of knowledge,
and vulnerability, faced by an incumbent union and employees as a reason for extending the
presumption of majority support to successorship situations in the first place. It would be one
thing if the “loss” of the presumption of majority support was premised on a finding of undue
delay in making a bargaining demand, or a theory of waiver—but that is not the case. Under the
reasoning of Royal Midtown Chrysler, the timeliness of the union’s demand turns not on the
alacrity of the union but on the shifting composition of the workforce, a shift that can occur
without warning after reaching a substantial and representative complement, and which, after a
union’s bargaining demand, is acknowledged to be irrelevant. Particularly when combined with
the General Counsel’s apparent view that a bargaining demand should not come too soon (see
discussion below), these rules operate to undercut significantly the point of the continuing
demand rule, and create the situation criticized by the Supreme Court where a union has to time
its bargaining demand based on conditions of which it has limited knowledge and no control.
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as the basis for determining the outcome of this case. Two union officials, Gilkison and
Campbell, testified to the oral demands for recognition made on September 12, one in the lobby
to plant manager Thornsberry, the other by phone to McMahon. Both Thornsberry and
McMahon testified and denied these oral demands were made. McMahon denied the
conversation even occurred. In addition, on brief, Respondent argues that, even assuming the
conversations occurred as claimed by the union officials, these conversations were inadequate
as bargaining or recognition demands.
Before addressing the events of September 12, I note the August 23 conversation
between McMahon and Gilkison. The complaint alleges only the September 12 bargaining
demands and does not mention the August 23 conversation. The General Counsel has not
moved to amend the complaint to allege that this conversation constituted a premature
continuing demand effective to create a bargaining obligation upon the hiring of a substantial
and representative complement. This was not an oversight. In his brief, the General Counsel
affirmatively disavows (G.C. Br. at 6 fn. 5) that the August 23 conversation constituted a
demand for recognition, calling the conversation “too remote in time from the actual purchase
date to be timely.” In the face of the General Counsel’s affirmative disavowal of the possibility
that the August 23 conversation was a valid continuing bargaining demand, I will not reach the
issue. I admit, however, I am less convinced than the General Counsel.8

8Testimony on this issue, which was initiated by Respondent, came into evidence without
objection. If Gilkison is credited and a bargaining demand found, the timing of the conversation
is not an insuperable hurdle. That the conversation occurred prior to the completion of the
purchase and assumption of operations is not decisive. See, e.g. University Medical Center,
335 NLRB 1318, 1319, 1334 (2001) (bargaining demand made over 7 weeks prior to employer
assuming control of predecessor, and prior to final approval of the sale, subsequently attached
when a substantial and representative complement of employees was hired), enforcement
granted in relevant part, 335 F.3d 1079 (D.C. Cir. 2003); The Bronx Health Plan, 326 NLRB 810
(1998) (demand made June 9 was continuing demand where substantial and representative
complement hired after July 1 assumption of management by respondent), enfd. 203 F.3d 51
(D.C. Cir. 1999); Paramus Ford, Inc., 351 NLRB No. 53 (2007) (demand made 4 days before
asset purchase, bargaining obligation attached one week after purchase).
By the August 23 date of this conversation, Ligon had sent a memo to HTI employees (G.C.
Exh. 3) explaining its plans for the new business, soliciting employment applications, explaining
the process and timeline for hiring, and announcing in significant detail the new wages and
benefits it would be implementing upon assumption of the operations. In other words, by
August 23, Ligon had availed itself of its right to set new initial terms and conditions and was
moving to establish and control the labor relations environment. I am hard pressed to accept
that the Union could not avail itself of its right to invoke the continuing demand rule while the
successor goes about choosing, interviewing and establishing terms and conditions for the new
workforce. It is the precise point of the continuing demand rule to permit a union to act to
preserve its bargaining rights in this uncertain situation. See, Fall River, 482 U.S. at 53.
In Fremont Ford Sales, Inc., 289 NLRB 1290, 1295 (1988) the Board did suggest a limitation
on how premature a valid bargaining demand could be. Although it made no difference to the
result in that case, in Fremont Ford the Board reasoned that an encounter with the employer
that came before the employer was legally or functionally operational was too premature to be
the basis for recognition. Instead, the Board found that a second premature demand made
before the purported successor had hired any bargaining unit employees, but after the actual
takeover of the predecessor had begun, constituted a valid continuing demand. At the time of
the second demand, the Board noted that the financing of the new operation and interviewing of
employees had begun. Subsequently, in Bendix Transportation Corp., 300 NLRB 1170 fn. 2
Continued
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As to the September 12 demand allegations, there is a sharp dispute over what was
stated in two conversations, and whether one of the conversations even occurred. Four
witnesses testified as to this matter. I can point to no obvious problems with the demeanor of
any of them. For the reasons set forth below, I find that the General Counsel has failed to prove
that the demands were made. I am not sure that the demands were not made, but my doubts
are such that I am unwilling to credit the General Counsel’s witnesses.
Thornsberry testified that in the conversation he had in the Galion plant lobby on
September 12, no mention was made of a bargaining or recognition request. McMahon testified
emphatically that he did not talk to Gilkison on September 12, or anytime after August 23. I
found these witnesses were highly believable in their demeanor. McMahon’s credibility is
bolstered by his frank admission and recall relating to the August 23 conversation. It would be
an unusually discriminating witness (well beyond my capability, as indicated in my footnoted
discussion above), who could confidently determine that recollection of the August 23
conversation would not be harmful to the interests of Respondent, but would then pretend that a
similar conversation on September 12 never occurred.
_________________________
(1990), the Board rejected the contention that Fremont Ford stood for the proposition that “a
demand for recognition is not viable unless it is made after the purported successor hires
bargaining unit employees and has commenced operations with them.” Contrasting the first
demand in Fremont from the situation in Bendix, the Board explained:
Where, as here, the successor is already in existence, has effectively concluded
the transaction leading to its takeover of the predecessor’s business, and has
distributed employment applications to unit employees, a union can make a
viable demand to bargain which continues in effect even though the successor,
at the time of the demand, has not actually commenced operations or hired a
substantial and representative complement of the predecessor’s unit employees.
Bendix, supra.
In Williams Enterprise, 301 NLRB 167 (1991), enfd. denied and remanded in part on
other grounds 956 F.2d 1226 (D.C. Cir. 1992), the Board similarly rejected a respondent’s effort
to have a premature demand ruled invalid based on Fremont, pointing out that
before the Union acted, the Respondent had executed an agreement to purchase
the predecessor’s assets[,] . . . immediately began accepting employment
applications for the plant . . . [and later,] informed [employees] of . . . the working
conditions they could expect. In Fremont, by contrast, the Board found that the
union’s first demand for recognition was premature because the successor at
that time had not entered into a franchise agreement to operate the car
dealership nor had it taken any other steps to divest the predecessor's control of
the employing entity.
Williams, supra at 167.
In terms of precedent, the question would be whether the situation here is more like
Bendix, Williams, and the second demand in Fremont, or more like the initial too-early demand
of Fremont. There was, it is true, no binding purchase agreement signed by August 23, and no
assumption of control. But Ligon was in existence, had served notice of its intent to purchase
the Galion facility, and had been named the bankruptcy stalking horse. And, most important,
when McMahon and Gilkison spoke on August 23, Ligon had already begun soliciting HTI
employees, distributing employment applications, and taking advantage of its right under Burns
to set initial terms and conditions of employment. Assuming a demand was made on August
23, application of the continuing demand rule would seem warranted under the circumstances.
But I am not inclined to reach a theory in favor of the General Counsel that is affirmatively
opposed by the General Counsel.
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It is true, as the General Counsel presses, that telephone records indicate a 4 minute
call was made to Ligon headquarters from the Union late in the morning of September 12. This
is a powerful piece of evidence, and Respondent did not come up with a witness to say that he
or she was on the phone with the Union that morning. And yet it is, ultimately, circumstantial
and limited. The call, placed to the main number does not prove who talked to whom, much
less what was discussed. It must be weighed in balance with other circumstantial evidence.
I had no problem with the demeanor of Gilkison or Campbell, who told consistent and
corroborating stories about the events of September 12. Yet, given the sharp credibility dispute,
I remain unconvinced.
I certainly agree with the General Counsel, and disagree with Respondent: it is not
inconsistent for a union to proceed along a representation election path while simultaneously
seeking recognition based on the employer’s successorship status. But Respondent’s point is
not so easily dismissed. It is not that the Union went down both avenues, but the manner in
which it did so. For instance, it is not the fact that the Union filed a representation petition on
September 13, the day after the alleged requests for recognition, but the fact that the petition
effectively denied that previous requests for recognition had been made. The Board’s
representation petition form specifically asks for the date on which a prior request for recognition
was made by the union and declined by the employer. The Union answered this on the petition
form by stating that the “Petition serves as demand.” R. Exh. 1, item 7a. The Government
would attribute this, essentially, to one arm of the Union not knowing what the other was doing,
but we are not talking about a massive bureaucratic system here. A very small number of union
officials were involved in this matter. Gilkison, in particular, had longtime responsibility for
servicing this plant and was also involved in the solicitation of authorization cards that were the
basis for the representation petition. One would expect the Union’s petition to reference any
prior request for recognition. In the same vein, but even more troubling, Gilkison’s only written
demand for bargaining—his October 5 letter to Ligon—makes no reference to the September 12
demand(s). Such a reference would have been natural, and the failure of Ligon to have written
back disputing it may have cinched the matter for the Union. But, in fact, no written
communication to, or exchanged with, or provided to Ligon (prior to trial) mentions the oral
demands of September 12. I accept that Gilkison’s explanation is possible. He says that he
wrote the October 5 letter on orders from superiors, and presumably he would add, if pressed,
he printed it from a form for successor bargaining demands kept on a computer somewhere,
and that he put not one moment of thought into customizing the letter to fit the situation
presented, including the fact that by October 5 he surely knew that a majority of the employees
were no longer former HTI employees. Such detachment is possible. But we are dealing with
burdens of proof, and albeit possible, it is far from convincing.9
It is also notable that Gilkison and Campbell’s alleged conversation with Thornsberry
was prompted by an afterthought: the realization over coffee, after passing out authorization
cards and while reviewing the list of employees, that an overwhelming majority of the
employees (over 80% on September 13) were former HTI employees. The General Counsel
contends that the fact of the August conversation makes it more likely that Gilkison requested
recognition from McMahon as soon as Ligon’s operations began. However, Gilkison’s

9I note also that the October 5 letter is written to Glenn Campbell at the Galion plant. This is
inconsistent with Gilkison’s testimony that he contacted McMahon on September 12 because he
was directed by Thornsberry to contact Ligon in Alabama regarding all union-related matters.
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September 12 demands were not a continuation of a plan to request recognition. That scenario
appears to have been abandoned, allegedly renewed only as an afterthought that came to
Gilkison sitting in the diner. The spontaneous nature of Gilkison’s decision to request
recognition accounts for the lack of evidence of an intent to make this demand, but does not add
to the trustworthiness of the claim. It does seem possible, as Respondent has suggested, that
Gilkison’s realization that a bargaining demand was needed came not on September 12 in the
diner, but some weeks later when the Union evaluated its election prospects less positively.
In addition, one cannot help but notice that Gilkison’s account of McMahon’s comments
in the September 12 conversation sounds a lot like his account of McMahon’s comments in the
August 23 conversation. According to Gilkison, in both conversations McMahon responded,
“No, sir, not at this time” to Gilkison’s requests. McMahon agrees that this was (essentially) his
response on August 23. It is possible that McMahon again offered this same response nearly
three weeks later. But it is unlikely. More typically, conversations build on and reference one
another. (The same doubt is engendered by Gilkison’s October 5 letter which, as discussed, is
written without reference or acknowledgment of the prior demands allegedly made.) Gilkison
may be attributing comments from the August 23 discussion to September 12.
The other pieces of proof relied upon by the General Counsel—Gilkison’s printout of
materials from the Ligon website from a computer with the date set at September 12, notes of
his telephone conversation with McMahon and his letter to another union official, Forgione,
detailing his contacts with Respondent, including the September 12 encounter with Thornsberry
and McMahon—are powerful if true, and damning if not. Again, they have no external
corroboration. The letter to Forgione was “cc’d” to no one. Forgione did not testify. The
website printout and the notes were mentioned to no one (as far as the record reveals).10
This is not an easy case. I was presented with four witnesses with no obvious problems
in demeanor, but the two stories are not reconcilable. The Union’s story, however, is more
complicated, requires more explanation and in the end, given all the circumstances and the
excellent demeanor of McMahon and Thornsberry, is less likely. The Union may be the victim
here of its own informality and missteps, and my misreading of the situation, but the burden of
proof lies with the General Counsel and I find that this burden has not been met here. I find that
no recognition or bargaining demand was made on September 12.
Accordingly, the first proven demand for recognition was made on October 5. At that
time the majority of the employee complement was no longer composed of former HTI
employees. As discussed, above, pursuant to the reasoning of Royal Midtown Chrysler, by
October 5 the successor’s obligation to recognize and bargain with Union upon demand had
come and gone. I will recommend dismissal of the complaint.11

10The notes seem a tad unusual to me. According to Gilkison, moments before calling
McMahon for the purpose of seeking recognition he wrote a note to remind himself to “[c]all Mr.
McMahon” and “see if he will recognize the IAM&AW Union.”
11In light of my findings and conclusions, it is unnecessary to consider Respondent’s
contention that, assuming the September 12 conversations occurred as alleged by the General
Counsel, the conversations were inadequate to serve as valid bargaining or recognition
demands.
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Conclusions of Law
Respondent did not violate the Act as alleged in the complaint.
On these findings of fact and conclusions of law and on the entire record, I issue the
following recommended12
ORDER
The complaint is dismissed.
Dated, Washington, D.C. June 11, 2008
____________________
David I. Goldman
U.S. Administrative Law Judge

12If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and regulations,
the findings, conclusions, and recommended Order shall, as provided in Sec. 102.48 of the
Rules, be adopted by the Board and all objections to them shall be deemed waived for all
purposes.