US court says longstanding NLRB rule on post-merger union bargaining is invalid

The NLRB declined to comment. Lawyers for the hospital did not immediately respond to a request for comment. Hospital Menonita de Guayama acquired another hospital in 2017 and withdrew recognition of the union representing its workers, claiming it had lost majority support. The D.C. Circuit was reviewing an NLRB ruling that said the hospital had violated the National Labor Relations Act. The NLRB first adopted the successor rule in 1981 after rejecting a similar requirement in the 1970s, and since then has twice eliminated and then re-adopted it, most recently in 2011. NLRB policies often fluctuate as control of the agency changes hands in successive presidential administrations. Tuesday's ruling is significant because any NLRB decision can be appealed to the D.C. Circuit, so any decision applying the successor bar is vulnerable to being overturned by the appeals court. The Boston-based 1st Circuit upheld the current iteration of the successor bar in a 2017 decision, relying in part on the concept of Chevron deference, which said that courts must uphold agencies' reasonable interpretation of ambiguous laws. But the Supreme Court, which created Chevron deference in a 1984 decision involving the oil company, eliminated it in the 2024 ruling. On Tuesday, Circuit Judge A. Raymond Randolph in a dissenting opinion said there was no reason to disturb the original three-judge panel's ruling, because unlike the 1st Circuit it did not explicitly rely on Chevron deference as the source of the NLRB's authority. "Chevron supplied one theory of agency deference," he wrote. "But it did not displace, much less create, the distinct principle that the NLRA itself entrusts the Board with substantial discretion to develop and implement national labor policy." Randolph was appointed by Republican former President George H.W. Bush. 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 A U.S. appeals court on Tuesday said a decades-old National Labor Relations Board policy requiring companies that acquire other employers to bargain with their workers' unions is unlawful, citing a landmark U.S. Supreme Court ruling that struck a blow to federal agency powers. The U.S. Court of Appeals for the District of Columbia Circuit in a 2-1 decision said the so-called "successor bar" doctrine, which has existed in some form for decades and was last upheld by the NLRB in 2011, is inconsistent with federal labor law's guarantees of employee freedom and majority rule. The NLRB 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. A different D.C. Circuit panel hearing the case in 2024 had rejected a bid by Hospital Menonita de Guayama in Puerto Rico to strike down the longstanding doctrine. But the Supreme Court later that year told the court to reconsider in light of the high court's major ruling curbing the deference that courts owe to agency rules interpreting ambiguous laws. Circuit Judge Neomi Rao on Tuesday said the Supreme Court ruling requires courts to instead make their own independent judgments. And in her judgment, Rao wrote, the requirement improperly interfered with workers' ability to choose whether to be represented by unions. "We reject the Board’s arguments that it has 'policymaking' authority to suspend these guarantees of the Act," Rao wrote, joined by Circuit Judge Justin Walker. Both judges were appointed by Republican President Donald Trump.

US court says longstanding NLRB rule on post-merger union bargaining is invalid

Hospital Menonita case and broader implications

D.C. Circuit strikes down successor-bar doctrine

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