FALL RIVER DYEING & FINISHING CORPORATION, PETITIONER V. NATIONAL
LABOR RELATIONS BOARD

   No. 85-1208

   In the Supreme Court of the United States

   October Term, 1986

   On writ of certiorari to the United States Court of Appeals for the
first circuit

   Brief for the National Labor Relations Board

         TABLE OF CONTENTS

   Opinions below
   Jurisdiction
   Question presented
   Statement
   Summary of argument
   Argument:
      The Board properly found that there was
      substantial continuity between the operations of
      petitioner and its predecessor and that, having
      hired a substantial and representative employee
      complement of which a majority were former
      employees of its predecessor, petitioner was a
      successor employer obligated to recognize
      and bargain with the union that had represented
      the predecessor's employees
      A. Under settled principles a new employer is a
         "successor" obligated to bargain with the union
         that had represented its predecessor's employees
         where the new employer maintains continuity in the
         operations and employment conditions affecting the
         bargaining unit and where the predecessor's former
         employees constitute a majority of the new
         employer's workforce
      B. The Board properly found that the
         change of ownership was not accompanied by a
         substantial alteration in the operations and
         employment conditions affecting the
         bargaining unit
      C. The Board properly determined that the time
         at which petitioner had hired a representative
         complement of employees was the appropriate
         time at which to determine whether the predecessor's
         employees constituted a majority of petitioner's
         workforce
      D. The Union's bargaining request constituted a
         continuing demand, which petitioner violated by
         persisting in its refusal to bargain
      E. The Board's decision is a reasonable
         application of successorship principles to the
         fact of this case and is entitled to deference
   Conclusion

                            OPINIONS BELOW

   The opinion of the court of appeals (Pet. App. A2-A30) is reported
at 775 F.2d 425.  The decision and order of the National Labor
Relations Board (Pet. App. A31-A43) are reported at 272 N.L.R.B. 839.

                             JURISDICTION

   The judgment of the court of appeals (Pet. App. A1) was entered on
October 18, 1985.  The petition for a writ of certiorari was filed on
January 16, 1986, and granted on May 27, 1986.  The jurisdiction of
this Court is invoked under 28 U.S.C. 1254(1).

                           STATUTE INVOLVED

   Section 8(a) of the National Labor Relations Act, 29 U.S.C. 158(a),
provides in pertinent part:

      It shall be an unfair labor practice for an employer --

                      * * * * *

      (5) to refuse to bargain collectively with the representatives
      of his employees, subject to the provisions of section 9(a) * *
      * .

   Section 9(a) of the National Labor Relations Act, 29 U.S.C. 159(a),
provides in pertinent part:

      Representatives designated or selected for the purposes of
      collective bargaining by the majority of the employees in a unit
      appropriate for such purposes, shall be the exclusive
      representatives of all the employees in such unit for the
      purposes of collective bargaining in respect to rates of pay,
      wages, hours of employment, or other conditions of employment *
      * *.

                          QUESTION PRESENTED

   Whether the National Labor Relations Board properly found that
there was substantial continuity between the operations of petitioner
and its predecessor and that, having hired a substantial and
representative employee complement of which a majority were former
employees of its predecessor, petitioner was a successor employer
obligated to recognize and bargain with the union that had represented
its predecessor's employees.

                               STATEMENT

   1. a. Until 1982 the Sterlingwale Corporation operated a textile
dyeing and finishing plant in Fall River, Massachusetts.
Sterlingwale's production and maintenance employees had been
represented for nearly 30 years by United Textile Workers of America,
AFL-CIO, Local 292 (the Union).  The parties' last collective
bargaining agreement extended to April 1982.  Pet. App. A35, A36, n.1;
 J.A. 60-61, 189, 317-355.

   Sterlingwale's operations consisted of both "converting" and
"commission" dyeing.  As a converter Sterlingwale bought unfinished
fabrics for its own account, dyed and finished them, and then sold the
fabrics to apparel manufacturers.  Working as a commission dyer,
Sterlingwale dyed and finished fabrics owned by other customers to the
customer's specifications.  In its early years, Sterlingwale had
engaged almost exclusively in commission dyeing, but in the early
1970s it shifted principally into converter work.  When it encountered
economic problems in 1979, Sterlingwale began shifting back toward
commission work.  Although the financing and marketing aspects of the
two types of business vary, the production process for dyeing and
finishing fabrics is the same whether the work is done on a converting
or a commission basis.  Pet. App. A35;  J.A. 96-103, 122-155, 127-129,
192, 218.

   As a result of economic difficulties, Sterlingwale's production
workforce declined from more than 200 in 1979 to about 150 in 1982
(J.A. 92-93, 192).  In response to Sterlingwale's economic decline,
the Union agreed in October 1980 to extend the parties' then-current
collective bargaining agreement without any wage increase (J.A. 64,
353-354).  In February 1982 Sterlingwale laid off all its production
employees.  It kept a skeleton crew of employees to maintain the plant
and to ship inventory (Pet. App. A35-A36;  J.A. 63-65, 77-78,
147-148).

   Following the layoff Union representatives met with Sterlingwale
officials on a number of occasions to bargain over the economic
effects of the layoff on employees.  Sterlingwale's president, Leonard
Ansin, still hoped to resurrect the business or have "somebody take
over the plant," and he communicated that interest to Union
representatives during meetings held in the summer of 1982.  At one
meeting in July, the Union offered to meet with any prospective buyers
in an effort to "work something out" and keep the plant operating.
J.A. 65-65, 86, 146-147.

   By July or August 1982, however, Sterlingwale had decided to go out
of business, and it executed an assignment of assets for the benefit
of its major creditors (Pet. App. A36;  J.A. 68-69, 115).  The holder
of the primary mortgage on the Sterlingwale property was Lila Ansin,
the mother of Sterlingwale president Leonard Ansin, and herself an
officer of the company.  In addition, Massachusetts Capital Resource
Company (MCRC) held a security interest in Sterlingwale's machinery
and equipment (J.A. 113-114, 190).

   At about the same time that Sterlingwale decided to go out of
business, petitioner Fall River Dyeing and Finishing corporation
decided to acquire the assets and inventory of Sterlingwale and to
continue the operation as a commission dyeing business.  Petitioner
was formed for that purpose in in August 1982 by Herbert Chace, a
27-year Sterlingwale employee and its vice president in charge of
sales and plant operations until his resignation in February 1982, /1/
and by Arthur Friedman, president of Marcamy Sales Corporation, a
major customer of Sterlingwale.  Friedman became petitioner's
president, and Chace became vice president in charge of operations and
secretary.  J.A. 188-189, 190, 199, 203-204, 273-277.  Petitioner was
interested in acquiring Sterlingwale's facilities specifically because
of the known availability of a "competent and capable" workforce and
the suitability of Sterlingwale's plant and machinery (J.A. 204,
222-223).

   On August 30, 1982, Friedman, through his other corporation,
Marcamy Sales, signed an agreement with Sterlingwale's creditors --
Mrs. Ansin and MCRC -- to purchase Sterlingwale's plant, real
property, and equipment (J.A. 238-272).  On September 2, 1982, Marcamy
Sales, petitioner's parent corporation, conveyed the equipment and
leased part of the plant and property to petitioner (Pet. App. A36;
Pet. Br. iv.; J.A. 199-200, 278-290).  In a separate transaction,
petitioner acquired a substantial amount of Sterlingwale's inventory
and raw materials from a professional liquidator that Sterlingwale had
employed to sell its assets (Pet. App. A36;  J.A. 115, 200-202,
290-293).

   b. Petitioner began operating out of the former Sterlingwale
facilities in September 1982, and it hired its first employees on
September 20 (Pet. App. A38;  J.A. 206-207, 220).  /2/ In making its
hiring decisions, petitioner took into account whether an applicant
had experience as a former employee of Sterlingwale (J.A. 223).  The
employees initially hired spent four to six weeks cleaning and
repairing machines and doing other startup operations, and an
additional month in experimental production to ensure that everything
was in working order (J.A. 225-228).

   On October 19, 1982, the Union requested that petitioner recognize
it and proposed a date for collective bargaining negotiations.  On
October 21 petitioner responded that it did "not intend to comply with
your request" and that the Union's bargaining request had "no legal
basis." Pet. App. A38;  J.A. 360-362.  At the time of petitioner's
refusal to bargain, petitioner had hired about 20 employees, of whom
all but three were former Sterlingwale employees (Pet. App. A38;  J.A.
294-302). Petitioner's initial production goal was to reach one full
shift operation of 55 to 60 employees.  After that goal was achieved,
petitioner planned to "see how business would be," and then if
business warranted to expand to a two-shift operation.  Pet. App. A38;
 J.A. 207-208.

   By November 1982, employees had been hired in virtually all job
classifications.  By mid-January 1983 the first shift was in full
operation and petitioner had begun a second shift.  At that time,
petitioner had reached its initial hiring goal of about 55 employees,
and was employing at least 50 percent of those it would ultimately
employ in the majority of job classifications.  Of the 55 employees
hired by mid-January, 36 were former Sterlingwale employees.  Pet.
App. A5, A31-A32 n.1, A38;  J.A. 55-56, 225-227, 294-302.

   Petitioner performed commission dyeing and finishing work as had
Sterlingwale, but it did this type of work exclusively, performing no
converter work.  It introduced no new service or product line.  The
production process remained basically unchanged and the employees
performed the same jobs that had been performed at Sterlingwale.
Petitioner used the machinery formerly used by Sterlingwale and
retained most of the same job classifications.  Pet. App. A36-A37;
J.A. 152-156, 199-200, 205-206, 294-302, 356-359.  Herbert Chace,
petitioner's vice president and secretary, continued to be in charge
of plant operations and involved in labor relations as he had been
with Sterlingwale.  Eight of petitioner's supervisors were former
Sterlingwale supervisors and three of the other four were former
Sterlingwale employees.  Over half of the dollar volume of
petitioner's business came from former Sterlingwale customers.  Pet.
App. A6, A37-A38;  J.A. 189, 190, 196, 209-210, 300, 314-316.

   Beginning in early March 1983, petitioner increased its hiring
rate, and by the end of that month its employee complement approached
100, of whom 51 were former Sterlingwale employees.  Either late in
March or early in April, petitioner's workforce grew to 105, at which
point former Sterlingwale employees became for the first time less
than a majority of petitioner's workforce.  Pet. App. A38;  J.A.
294-302.

   2. Adopting the decision of the administrative law judge (ALJ)
(Pet. App. A31-A32), the Board, with one member dissenting, found that
the change of ownership did not materially alter the employee's
working conditions or the nature of the enterprise, and that on
January 15, 1983, petitioner had employed a substantial and
representative complement of employees, a majority of whom had been
employed by Sterlingwale.  On the basis of those findings, the Board
concluded that petitioner was a successor employer to Sterlingwale and
was obligated to bargain with the Union as of January 15, 1983 (id. at
A31-A32 n.1, A35-A37).  The Board also concluded that the Union's
October bargaining request constituted a continuing demand for
recognition and bargaining (id. at A31-A32 n.1, A37-A39).
Accordingly, the Board ruled that petitioner had violated Section
8(a)(5) and (1) of the National Relations Act (the Act), 29 U.S.C.
158(a)(5) and (1), by refusing to recognize and bargain with the Union
on and after January 15, 1983, when its bargaining obligation arose
(ibid.).  The Board's order required petitioner to bargain with the
Union upon its request (Pet. App. A41).  /3/

   3. The court of appeals, one judge dissenting, enforced the Board's
order (Pet. App. A2-A30).  The court upheld as supported by
substantial evidence the Board's finding that petitioner was the
successor to Sterlingwale (id. at A8).  The court found that the
differences between petitioner's business and Sterlingwale's "are only
indirectly related to the interests" of the bargaining unit employees
in representation and "are not sufficiently significant to require a
finding that the continuity of the enterprise, viewed from the
employees' standpoint, was broken (id. at A9).

   In addition, the court found that, where it cannot be determined at
the outset of the transition whether a union represents a majority of
a new owner's employees, the Board may fix as the date for determining
the successor's bargaining obligation the date on which the new owner
has hired a "substantial and representative complement" of its
employees (Pet. App. A10A-12).  The court concluded that the Board's
substantial and representative complement standard effectively
balances "'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'" (id. at A10
(footnote omitted), quoting NLRB v. Pre-Engineered Building Products,
Inc., 603 F.2d 134, 136 (10th Cir. 1979)).  The court upheld as
reasonable the Board's findings that petitioner's operation was at a
near-normal level by mid-January 1983 and that petitioner had hired a
substantial and representative employee complement by that time.
Accordingly, because a majority of the workforce had been represented
by the Union at Sterlingwale, the court ruled that petitioner's
bargaining obligation attached at that point.  Pet. App. A12.

   The court also upheld the Board's conclusion that the Union's
October 1982 bargaining demand constituted a continuing request for
recognition and bargaining that petitioner was required to honor once
it had hired a representative complement of employees in January 1983.
 The court noted that, in the successorship context, "(u)nions often
lack precise information about when a change in ownership of a firm is
to take place, * * * and what plans, if any, the new owners have for
expansion or modification of the enterprise," and that "it is thus not
uncommon for bargaining demands to be made" before a representative
complement has been hired (Pet. App. A14).  Noting further that a
successor's bargaining obligation turns on whether it has hired a
representative employee complement and whether a majority of the
workforce came from its predecessor, and not on the union's initial
showing of majority support, the court found that "(t)he employer,s
unlike the union, can readily reach this determination on its own by
examining whether the job classifications for the operation have been
'filled or substantially filled' and whether the operation is in
'normal or substantially normal production'" (ibid, (footnote
omitted), quoting Premium Foods, Inc. v. NLRB, 709 F.2d 623, 628 (9th
Cir. 1983)).  Thus, the court concluded that it is not unreasonable to
require a successor to respond to a previously made request to bargain
once the bargaining obligation actually arises (Pet. App. A14).  /4/

                          SUMMARY OF ARGUMENT

   A. An employer must bargain collectively with a union that
represents a majority of its employees in an appropriate bargaining
unit.  After a union has demonstrated its majority support and been
recognized by an employer, it is thereafter presumed to be supported
by a majority of the employees unless changed circumstances have
clearly eroded the union's support.  This presumption of continuing
majority support promotes stability in collective bargaining
relationships, and hence industrial peace, without unduly restricting
employees' rights.  In NLRB v. Burns International Security Services,
Inc., 406 U.S. 272 (1972), this Court held that a change in ownership
of the employer does not destroy the presumption of continued majority
support for a union if a majority of the employees hired by the new
owner had been employed by its predecessor and if there is substantial
continuity in the operation of the business.

   B. The Board correctly concluded that there was substantial
continuity in the operation of Sterlingwale's business by petitioner.
Petitioner was formed by Sterlingwale's former vice president and a
major customer of Sterlingwale, who intended to hire Sterlingwale's
employees.  They purchased Sterlingwale's real property and equipment
and retained most of Sterlingwale's supervisors and job
classifications.  While petitioner operated as a commission dyer only,
that change did not affect the work done by the employees, who by and
large performed the same jobs under the same supervision.  Under those
circumstances it was appropriate to conclude that employee attitudes
toward representation should be presumed to remain unchanged.

   Petitioner contends that there was no continuity in operations
primarily because of the hiatus between the date Sterlingwale laid off
most of its employees and the date petitioner commenced operations.
While a hiatus is a factor the Board considers in determining whether
a successor is required to bargain with the union representing its
predecessor's employees, it is not by itself determinative.  Here,
where there was substantial continuity in operations, the Board
properly concluded that the hiatus had not affected the employee's
expectation of continued representation by the Union.  There is no
merit to petitioner's additional contention that it should not be
required to bargain with the Union that represented Sterlingwale's
employees because it purchased Sterlingwale's property and assets at a
foreclosure sale, since that circumstance could not have affected
employees' expectations.

   C. The Board determines, as of the time that a successor has hired
a substantial and representative complement of employees, whether a
majority of the employees who have been hired by the successor were
formerly employed by its predecessor.  That approach appropriately
balances the objective of insuring maximum employee participation in
the selection of a bargaining agent and the objective of permitting
employees to be represented as quickly as possible.  If a full
complement of employees will not be hired for some time, then the
representation issue is properly resolved at an earlier point, since
employees' rights to representation would otherwise be unduly
infringed.  The Board's rule was properly applied here, since there is
no real dispute that a representative complement of employees had been
hired by mid-January 1983.

   Petitioner and amicus Chamber of Commerce err in suggesting that
this Court's decision in Burns required the Board to wait until
mid-April (seven months after petitioner commenced operations), when
petitioner had completed its hiring, to determine whether a majority
of petitioner's employees had worked for Sterlingwale.  Although the
Court stated in Burns that in some cases "it may not be clear until
the successor employer has hired his full complement of employees that
he has a duty to bargain" with the incumbent union (406 U.S. at 295),
the Court was distinguishing between cases where a successor takes
over its predecessor's ongoing operations and complete workforce and
cases where the successor delays hiring decisions until after
commencing operations.  The Court had no occasion to consider the
point in time at which a duty to bargain arises where a successor does
not take over an ongoing operation but instead gradually builds up a
business after a hiatus in operations.

   The contention of petitioner and the Chamber of Commerce that, if a
representation question is to be resolved before the successor has
hired a full complement of employees, it must be resolved through an
election, is wholly illogical.  Whether the representation
determination is made through an election or through application of
successorship principles, the union, if representing a majority of
those employed on the date the determination is made, is thereafter
entitled to a presumption of majority support.  Employees hired after
the date of an election would not be able to participate in the
election in any event, although employees can of course cause the
union to be decertified if it loses its majority support after that
date.

   Nor is the Board's rule unfair to employers.  An employer can
refuse to bargain after a full complement of employees has been hired
if it can show that the union has by then lost majority support.
Contrary to the claims of petitioner and the Chamber of Commerce, the
Board's rule does not unfairly tend to expose employers to charges
that they improperly recognized unions lacking majority support.  The
representative complement rule should not be difficult for employers
to apply, and in any event no real penalty attaches in a case where an
employer errs in good faith in recognizing and bargaining with a union
that is subsequently determined to have lacked majority support.

   D. Nor did the Board err in concluding that the Union's demand for
recognition in October 1982 was a "continuing demand." In
successorship cases an employer is on notice, once a union requests
that it bargain, that it will be obliged to bargain if a majority of
the employees it has hired at the time that it has hired a substantial
and representative complement were employed by its predecessor.  The
employer can readily determine the facts upon which its bargaining
obligation depends without further communication from the union.
Moreover, in this case the Union made clear that its bargaining demand
was a continuing demand by filing unfair labor practice charges, so
there would have been no point in requiring it to formally renew its
demand.

   E. Successorship cases require the Board to balance conflicting
policies in complex situations.  The rules the Board has developed are
reasonable and consistent with the Act, and the Board's application of
its rules to the facts of this case was reasonable:  petitioner's
facilities, operations, management, and supervisory personnel all
demonstrated a substantial continuation of those features of
Sterlingwale of direct interest to employees, and at all times from
startup through the hiring of a substantial and representative
complement of employees a majority of petitioner's employees consisted
of former Sterlingwale employees.  The one fact to which petitioner
can point -- the later addition of enough non-Sterlingwale employees
to bring the former Sterlingwale employees below a majority -- should
not deprive the Union of representative status any more than a similar
expansion by Sterlingwale would have.  The court of appeals therefore
properly upheld the Board's decision.

                               ARGUMENT

 THE BOARD PROPERLY FOUND THAT THERE WAS SUBSTANTIAL CONTINUITY
BETWEEN THE OPERATIONS OF PETITIONER AND ITS PREDECESSOR AND THAT,
HAVING HIRED A SUBSTANTIAL AND REPRESENTATIVE EMPLOYEE COMPLEMENT OF
WHICH A MAJORITY WERE FORMER EMPLOYEES OR ITS PREDECESSOR, PETITIONER
WAS A SUCCESSOR EMPLOYER OBLIGATED TO RECOGNIZE AND BARGAIN WITH THE
UNION THAT HAD REPRESENTED THE PREDECESSOR'S EMPLOYEES

 A. Under Settled Principles A New Employer Is A "Successor" Obligated
To Bargain With The Union That Had Represented Its Predecessor's
Employees Where The New Employer Maintains Continuity In The
Operations And Employment Conditions Affecting The Bargaining Unit and
Where The Predecessor's Former Employees Constitute A Majority Of The
New Employer's Workforce

   Section 8(a)(5) of the Act, 29 U.S.C. 158(a)(5), makes it an unfair
labor practice for an employer to refuse to bargain collectively with
the representative of its employees as defined in Section 9(a), 29
U.S.C. 159(a).  Section 9(a) confers exclusive representative status
upon a union selected by a majority of the employees in an appropriate
bargaining unit.  A bargaining representative that has demonstrated
its majority support in a Board-supervised election, or has been
lawfully recognized by an employer on the basis of a showing of
majority support, enjoys a presumption of continuing majority status.
This presumption is ordinarily irrebuttable for one year following a
union's certification or voluntary recognition;  /5/ thereafter, the
presumption can be rebutted by evidence showing that in fact the union
has lost its majority status or that objective considerations provide
the employer with reasonable grounds for so believing.  See Brooks v.
NLRB, 348 U.S. 96, 98-99 (1954);  Celanese Corp. of America, 95
N.L.R.B. 664, 672 (1951).

   The presumption that a union selected by a majority of the
employees in an appropriate bargaining unit thereafter continues to
enjoy majority support is "designed to promote stability in collective
bargaining relationships, without impairing the free choice of
employees" in their selection of a bargaining representative.  Terrell
Machine Co., 173 N.L.R.B 1480, 1480-1481 (1969), enforced, 427 F.2d
1088 (4th Cir.), cert. denied, 398 U.S. 929 (1970).  Because the union
need not repeatedly demonstrate its majority status, it can
concentrate on negotiating a collective bargaining agreement and,
after an agreement has been negotiated, on the fair administration of
its provisions.  In addition, the knowledge that a temporary loss of
majority support for the union will not free the employer from its
duty to bargain reduces its temptation to seek to undermine union
strength rather than to negotiate and administer the collective
bargaining agreement in good faith.  However, the employer may rebut
the presumption and have the representation question redetermined
whenever changed circumstances clearly indicate a nontemporary erosion
of the union's support.  See Brooks, 348 U.S. at 100, 103-104.

   In NLRB v. Burns International Security Services, Inc., 406 U.S.
272 (1972), the Court held that a change in employers does not itself
destroy the presumption of continued majority support for an incumbent
union where there is continuity in employment conditions and workforce
across the change in ownership.  Noting that an incumbent union is
irrebuttably presumed to have majority support for one year following
certification or voluntary recognition and is rebuttably presumed to
have majority support thereafter, the Court found that "a mere change
of employers or of ownership in the employing industry is not such an
'unusual circumstance' as to affect the force" of that presumption
(id. at 279 & n.3).  The Court concluded that, where a new employer
maintains substantial continuity in the operations of its
predecessor's business, so that the "unit appropriate for * * *
collective bargaining" under Section 9(a) remains essentially
unchanged, and where "a majority of employees after the change of
ownership or management were employed by the preceding employer,"
"there is little basis for faulting * * * implementation of the
express mandates of Section 8 (a)(5) and Section 9(a) by ordering the
(new) employer to bargain with the incumbent union" (406 U.S. at 279,
281).  /6/

   The Court's holding in Burns that a change of ownership does not
destroy an incumbent union's presumption of continued majority support
where there is continuity in employment conditions and workforce
effectively accommodates the statutory policies in favor of employee
free choice and industrial stability.  As the Court explained in
Golden State Bottling Co. v. NLRB, 414 U.S. 168, 184 (1973), "(w)hen a
new employer * * * has acquired substantial assets of its predecessor
and continued, without interruption or substantial change, the
predecessor's business operations, those employees who have been
retained will understandably view their job situations as essentially
unaltered." /7/ Thus when the new employer retains as a majority of
its own workforce employees who were represented by the incumbent
union, and when they continue work under essentially the same
conditions as before, it is reasonable to presume "that the change in
ownership has not affected employee attitudes towards union
representation" in the bargaining unit as a whole (NLRB v. Jarm
Enterprises, Inc., 785 F.2d 195, 199 (7th Cir. 1986)), and that the
new employer's workforce would "legitimately expect a continuity of
bargaining rights" (International Union of Electrical Workers v. NLRB,
604 F.2d 689, 694 (D.C. Cir. 1979)).  There is thus no more reason to
disturb the incumbent union's presumption of continuing majority
status, or to require current proof of its actual majority support,
where there is continuity across a change of ownership than there is
where the employer remains the same.  See United Food & Commercial
Workers Int'l Union v. NLRB, 768 F.2d 1463, 1470 (D.C. Cir. 1985);
NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 464 (9th Cir. 1985);
Morris & Gaus, Successorship and the Collective Bargaining Agreement:
Accommodating Wiley and Burns, 59 Va. L. Rev. 1359, 1395-1396 (1973).
/8/

   The principle underlying the "Burns successor" bargaining
obligation is analogous to the principle articulated just last Term in
NLRB v. Financial Institution Employees, Local 1182, No. 84-1493 (Feb.
26, 1986), in which the Court held that the Board may not permit an
employer to withdraw recognition from a certified union that has
undergone affiliation with another union "without determining that the
affiliation raises a question of representation" under Section 9(c)(1)
of the Act, 29 U.S.C. 159(c)(1) (slip op. 9).  Noting that "'(t)he
industrial stability sought by the Act would unnecessarily be
disrupted if every union organizational adjustment were to result in
displacement of the employer-bargaining representative relationship,'"
and that "(i)n many cases, a majority of employees will continue to
support the union despite any changes precipitated by affiliation,"
the Court concluded that a "question of representation" is raised
under the Act only where reorganization "substantially change(s) a
certified union's relationship with the employees it represents" and
thereby destroys "continuity of representation." Id. at 9, 10 & n.10
(footnote and citation omitted).  But, in the absence of a break in
continuity, unions remain free to "'alter their structures and
alignments in response to changing economic and political conditions'"
without disturbing the presumption that they continue to enjoy
majority support among unit employees.  Id. at 6 n.5 (citation
omitted).

   The principle applied in Burns is also reflected in the Court's
decision in NLRB v. Bildisco & Bildisco, 465 U.S. 513 (1984).  There,
the Court held that, because "a * * * beneficial recapitalization
could be jeopardized if the debtor-in-possession were saddled
automatically with the debtor's prior collective-bargaining agreement"
(id. at 528), the debtor-in-possession could, without violating any
bargaining obligation under the NLRA, "unilaterally change() the terms
of the collective bargaining agreement between the date of filing the
bankruptcy petition and the date on which the Bankruptcy Court
authorizes rejection of the agreement" (id. at 529 (footnote
omitted)).  But, the Court also held in Bildisco that the filing of a
bankruptcy petition does not destroy the union's presumed majority
status or relieve the debtor-in-possession of its obligation "to
bargain collectively with the employees' certified representative over
the terms of a new contract pending rejection of the existing contract
or following formal approval of rejection by the Bankruptcy Court"
(465 U.S. at 534).  /9/

 B. The Board Properly Found That The Change of Ownership Was Not
Accompanied By A Substantial Alteration In The Operations And
Employment Conditions Affecting The Bargaining Unit

   1. As this Court's successorship decisions make clear, the question
whether there is "'substantial continuity of identity in the business
enterprise'" (Howard Johnson, 417 U.S. at 263) is a factual question
properly focused on whether the employer has "continued, without * * *
substantial change, the predecessor's business operations" so that
employees who have been retained would reasonably view their
employment situations as "essentially unaltered." Golden State
Bottling, 414 U.S. at 184;  see Burns, 406 U.S. at 278-280 & n.4.
"The focus of the analysis, in other words, is not on the continuity
of the business structure in general, but rather on the particular
operations of the business as they affect the members of the relevant
bargaining unit." United Food & Commercial Workers v. NLRB, 768 F.2d
at 1470.  /10/

   In making such a determination in a successorship case, the Board
considers a number of factors, including the extent to which 1) the
same business is being continued;  2) the same plant is used;  3) the
same jobs exist under the same working conditions;  4) the same
supervisors have been retained;  5) the same machinery, equipment, and
methods of production are used;  and 6) the same product or service is
manufactured or performed.  See Burns, 406 U.S. at 280 n.4;  Premium
Foods, Inc., 260 N.L.R.B. 708, 714 (1982), enforced, 709 F.2d 623 (9th
Cir. 1983).  The determination is based on the totality of these
circumstances, and no one factor is determinative.  However,
consistent with the proper focus of the inquiry, where the above
indicia of continuity are present, changes in the scope or focus of a
new employer's business that do not affect the employment relationship
or the working conditions of employees will not preclude a finding of
successorship.  See NLRB v. Jeffries Lithograph Co., 752 F.2d at 463,
465-466;  NLRB v. Hudson River Aggregates, 639 F.2d at 869;
International Union of Electrical Workers v. NLRB, 604 F.2d at 694;
NLRB v. Band-Age, Inc., 534 F.2d at 6.

   The record in this case reflects substantial continuity between the
old and new employers across the change of ownership.  Petitioner was
formed, in specific anticipation of Sterlingwale's decision to
liquidate its business, by Sterlingwale's former vice president and a
major customer of Sterlingwale, for the purpose of continuing the
business of textile dyeing and finishing, and specifically to take
advantage of Sterlingwale's ready workforce and the facilities and
production processes that the workforce had operated for more than 30
years.  Petitioner acquired Sterlingwale's real property, all of its
machinery, furniture, and fixtures, and a substantial part of its
materials and inventory.  Although petitioner operated exclusively as
a commission dyer and did not perform the converter work previously
performed by Sterlingwale, the production process remained the same,
and petitioner introduced no new service or product line.  Petitioner
used the former Sterlingwale machinery and retained most of the same
job classifications, and employees performed the same jobs under the
same supervision -- eight of petitioners' twelve supervisors had been
supervisors at Sterlingwale and three of the remaining four
supervisors had worked for Sterlingwale -- as they had performed while
employed by Sterlingwale.  See pages 4-6, supra.  /11/

   2. Against the great weight of this evidence establishing
continuity in operations and employment conditions, petitioner
nonetheless contends that it was operating a fundamentally different
enterprise after the takeover and thus was not obliged to recognize
and bargain with the Union.  Petitioner relies heavily (Br. 16-17,
21-22) on the hiatus between the cessation of production at
Sterlingwale and commencement of its own operations to support its
contention that there was no substantial continuity between the old
and new enterprises.  That reliance is misplaced and was properly
rejected by the Board and the Court below.  /12/

   It is not unusual in a change of ownership for a break in
production to occur while the old employer makes it exit and the new
employer surveys its new property and formulates plans for its
operation.  Although the Board considers the effect of a hiatus
between the termination of the predecessor's operations and the
commencement of the new employer's operations in determining whether
to impose a successor bargaining obligation, such an obligation will
be imposed unless the hiatus is "'one of many factors pointing to such
a substantial transformation in the nature of the predecessor's
operations'" that employees could not reasonably expect to continue
their employment under the same conditions and in the same labor
relations environment as under the predecessor.  NLRB v. Band-Age,
Inc., 534 F.2d at 5 (quoting United Maintenance & Mfg Co., 214
N.L.R.B. 529, 523 (1974)).  /13/ Where it is clear that a hiatus is
merely a normal incident of the transfer of ownership, and that the
new employer intends to take advantage of the existing operation and
workforce, a successor bargaining obligation will be imposed
notwithstanding a break in production of several months.  See NLRB v.
Daneker Clock Co., 516 F.2d 315, 316 (4th Cir. 1975) (bargaining
obligation imposed despite hiatus of eight months where other indicia
of substantial continuity are present);  C.G. Conn Ltd., 197 N.L.R.B.,
442, 445-447 (1972), enforced, 474 F.2d 1344 (5th Cir. 1973) (Table)
(bargaining obligation imposed despite hiatus of 4 1/2 months).

   On the record here it can scarcely be contended that the layoff of
employees by Sterlingwale beginning in February 1982 consituted a
complete break in their status as employees that would defeat
expectations of continued employment or union representation once the
operation resumed.  Rather, after ceasing production in February, the
laid-off workers remained employees of Sterlingwale, and the company
assured them of its continuing efforts either to reemploy them or to
see that another employer would take over and do so.  In addition,
Sterlingwale maintained a small crew of employees to ship orders and
to keep the plant and equipment in working order.  And throughout the
period of the layoff the Union met with Sterlingwale officials on a
number of occasions to bargain over the effects of the layoff and to
offer its assistance in reopening the plant or in finding a new
employer to do so.  See page 3, supra.

   Moreover, while the Sterlingwale employees were on layoff status
and hoping to return to work in the summer of 1983, petitioner's
officers were formulating their plans for the new operation with the
specific objective of taking advantage of the Sterlingwale facilities
and Sterlingwale's "competent and capable" workforce (J.A. 222, 223).
/14/ Petitioner did in fact take over the business for that purpose on
August 31;  shortly thereafter it began hiring its predecessor's
employees and resumed its operations in a substantially unaltered
fashion.  See pages 5-6, supra.  Under these circumstances, as the
court below found (Pet. App. A8 (footnote omitted)), "(t)he interim
period may be viewed as part of the 'the normal concomitants of a new
management * * *, not a break in the continuity of the employing
industry'" (quoting NLRB v. Middleboro Fire Apparatus, 590 F.2d at 8).

   Finally, there is no merit to petitioner's suggestion (Br. 17)
that, because technically it purchased Sterlingwale's property and
assets at a public foreclosure sale and not directly from
Sterlingwale, there was no substantial continuity between the two
operations.  First, to the extent petitioner suggests that it had no
direct commercial relationship with Sterlingwale, that suggestion is
belied by the evidence that petitioner was formed by a former
Sterlingwale executive and a major customer for the very purpose of
taking over Sterlingwale's operation, and that petitioner, albeit
through its parent corporation, signed an agreement to purchase
Sterlingwale's real property and equipment prior to the foreclosure
proceedings.

   In any event, because the proper focus of the continuity inquiry is
on operations and conditions of employment as they affect employees'
legitimate expectations concerning continued representation, the
precise form of the corporate transaction by which a new employer
succeeds to the workforce and assets of a predecessor is immaterial to
that inquiry.  Rather, as this Court has made clear, "ordinarily there
is no basis for distinguishing" between the various ways in which a
transfer of assets may occur, and no requirement of a direct
transaction between a successor and predecessor, where the relevant
indicia of "continuity in the 'employing industry'" are otherwise
present.  Howard Johnson Co., 417 U.S. at 257;  Golden State Bottling,
414 U.S. at 183 n.5;  NLRB v. Band-Age, Inc., 534 F.2d at 5;  Slicker,
A Reconsideration of the Doctrine of Employer Successorship -- A Step
Toward A Rational Approach, 57 Minn. L. Rev. 1051, 1062-1063 (1973).
/15/ For regardless of the precise nature of the transaction, the new
employer has availed itself of a workforce substantially intact from
the predecessor and has succeeded to "the tangible or intangible
assets by the use of which the employees might have expected the first
employer to have performed" its obligations to them.  Burns, 406 U.S.
at 305 (Rehnquist, J., concurring in part and dissenting in part).
/16/

 C. The Board Properly Determined That The Time At Which Petitioner
Had Hired A Representative Complement Of Employees Was The Appropriate
Time At Which To Determine Whether The Predecessor's Employees
Constituted A Majority Of Petitioner's Workforce

   1. a. Once it is found that a new employment is continuing the
operations of its predecessor essentially unchanged, the remaining
determinant of its obligation to bargain with an incumbent union is
whether it has hired the predecessor's employees as a majority of its
workforce.  /17/ In cases such as this one where the workforce grows
as the successor moves from startup to regular operation, fixing the
appropriate date for determining majority status "involves balancing
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." NLRB v.
Pre-Engineered Building Products, Inc., 603 F.2d 134, 136 (10th Cir.
1979) (footnote omitted).  Accord, Premium Foods, Inc. v. NLRB, 709
F.2d 623, 628 (9th Cir. 1983).  See also Hudson River Aggregates,
Inc., 639 F.2d at 870.

   The need to strike that balance is not peculiar to the
successorship situation.  The Board balances the same conflicting
statutory goals whenever an initial representation election is sought
on behalf of an expanding or contracting workforce.  Giving weight to
the dual needs of "maximum participation" and "immediate
representation," the Board holds representation elections in such
situations where "the employee complement is 'representative and
substantial.'" Clement-Blythe Companies, 182 N.L.R.B. 502 (1970),
enforced, 77 L.R.R.M. 2373 (4th Cir. 1971).  As the Board explained
there:  "it would unduly frustrate existing employees' choice to delay
selection of a bargaining representative for months or years until the
very last employee is on board.  Conversely, it would be pointless to
hold an election for very few employees when in a relatively short
period the employee complement is expected to multiply many times."
Ibid.  In determining whether a representative employee complement
exists on a given date, the Board does not employ, "hard and fast
rules." /18/ Ibid.  Rather, it examines such factors as current size
of the bargaining unit compared with its full size, whether employees
representing the range of required skills and job classifications have
been hired, the relative certainty of anticipated changes in size of
the bargaining unit, and the time expected to elapse before a
substantially larger complement would be hired.  Ibid.; see also Evans
Products Co., 221 N.L.R.B. 1080 (1975);  Witteman Steel Mills, Inc.,
253 N.L.R.B. 320, 321 (1980).

   The Board, with the approval of the courts of appeals, has applied
the same "representative complement standard" in cases where a
successor has commenced operations with less than a full complement of
employees.  See, e.g., NLRB v. Jeffries Lithograph Co., 752 F.2d 459,
467 (9th Cir. 1985);  Aircraft Magnesium, A Division of Griso Corp.,
265 N.L.R.B. 1344, 1345 (1982), enforced, 730 F.2d 767 (9th Cir. 1984)
(Table);  Hudson River Aggregates, Inc., 246 N.L.R.B. 192, 197-198
(1979), enforced, 639 F.2d 865, 870 (2d Cir. 1981);  see also
Indianapolis Mack Sales and Service, Inc., 272 N.L.R.B. 690, 694-696
(1984), enforcement denied on other grounds, No. 84-3061 (7th Cir.
Sep. 25, 1986);  NLRB v. Pre-Engineered Building Products, Inc., 603
F.2d 134, 136 & n.1 (10th Cir. 1979) (footnote omitted).  /19/ The
Board looks to see whether the job classifications for the operation
are "filled or substantially filled" and whether the operation is in
"normal or substantially normal production." Premium Foods, Inc. v.
NLRB, 709 F.2d at 628.  In addition, the Board considers the relative
certainty of any anticipated change in the size of the bargaining unit
and the time expected to elapse before a substantially larger
complement would be hired.  Indianapolis Mack Sales & Service, Inc.,
272 N.L.R.B. at 694-695.  Where the new employer's plans for expansion
are speculative or are dependent on future economic conditions, or
where planned changes will not be completed for a number of months,
the Board, just as in the initial representation election context,
will not delay determining the representation question if an otherwise
representative number of employees is on the job.  Id. at 695.
Accord:  NLRB v. Jeffries Lithograph Co., 752 F.2d at 467-468.

   b. Petitioner does not seriously question the reasonableness of the
Board's finding that petitioner employed a substantial and
representative complement of its workforce in mid-January 1983 or its
finding that a majority of its workforce at that time consisted of
former Sterlingwale employees.  Petitioner had by then hired employees
in virtually all job classifications, had hired at least 50 percent of
those it would ultimately employ (55 out of 106 to 109 employees), and
added no new skills to the workforce thereafter.  Of the 55 employees
petitioner had hired by mid-January, 36 were former Sterlingwale
employees (see pages 5-6, supra).  /20/ Petitioner had also reached
substantially normal production in mid-January, at which time the
first shift was in full operation and petitioner had begun a second
shift.  /21/ Finally, petitioner did not anticipate reaching its total
complement until mid-April, three months later and almost seven months
after commencing operation in September, and that expansion was
contingent on "how business would be" (J.A. 208).  In sum, petitioner
had reached a substantially normal workforce and level of operation by
mid-January and a majority of that workforce was comprised of
employees who had been represented by the Union under its predecessor.
 Petitioner's plans for future growth were somewhat uncertain and, in
any event, future growth was not expected for at least two more
months.  Accordingly, the Board reasonably concluded that petitioner
was obligated to recognize and bargain with the Union in mid-January.

   There is no merit whatever to petitioner's contention, echoed by
the Chamber, that the Board arbitrarily selected the one time
Sterlingwale employees constituted a majority of petitioner's
employees.  Sterlingwale employees had constituted a majority of
petitioner's workforce at all times from the commencement of its
operations through mid-January, expanding from 17 out of 20 to 36 out
of 55, and continued to constitute a majority of petitioner's
workforce for nearly three months thereafter.  The Board measured the
bargaining obligation from the earliest point at which petitioner had
hired a representative complement of employees.  The fact that
petitioner ultimately hired additional employees late in March and
early in April -- and that as a result former Sterlingwale employees
for the first time were not a majority of petitioner's workforce --
does not make the Board's decision arbitrary or artificial and should
no more release petitioner from its bargaining obligation than would a
similar expansion have released Sterlingwale from its bargaining
obligation.  /22/

   2. a. Petitioner (Br. 29-31) and the Chamber (Br. 20-21) contend
that this Court's decision on Burns mandates that the determination of
whether a majority of a successor's workforce was employed by its
predecessor must be made only after the new employer has hired its
full complement of employees, in this case not until mid-April.  In
making this contention, they rely on the Court's remark in Burns that
"(i)n other situations * * * it may not be clear until the successor
employer has hired his full complement of employees that he has a duty
to bargain with a union, since it will not be evident until then that
the bargaining representative represents a majority of the employees
in the unit" (406 U.S. at 295).  There is no merit to this contention.
 The Court in Burns was considering a situation in which the new
employer took over its predecessor's business as an ongoing operation,
and it was distinguishing a case where the new employer made all its
hiring decisions before commencing operations from a case where hiring
decisions were to be made after the new employer commenced operations.
 The Court had no occasion to consider at precisely what point in a
case such as this one, where the successor gradually rebuilt its
predecessor's business after a hiatus in operations, it would be
appropriate to examine the successor's workforce to determine whether
it was required to bargain with the union that represented its
predecessor's employees.  /23/ Accordingly, the statement on which
petitioner and the Chamber of Commerce rely cannot properly be
construed as mandating postponement of the determination of a
successor employer's bargaining obligation until the new business is
operating at its peak capacity or until the successor employer has
hired all of its bargaining unit employees;  the courts of appeals
have agreed (see page 29, supra).

   b. Petitioner and the Chamber of Commerce further contend (Pet. Br.
30;  Ch. Br. 25-26 & n. 18) that making the representation
determination without an election after the successor has hired only a
substantial and representative complement of employees is unfair to
subsequently hired employees and is also unfair to the new employer.
This contention does not withstand analysis.

   The Board's rule is not unfair to employees hired after a
substantial and representative complement has been hired and the
representation determination has been made.  Petitioner (Br. 29) and
the Chamber (Br. 26-27) both concede that it would be appropriate to
hold a representation election among the employees of a successor once
a substantial and representative complement has been hired.  It is
difficult to understand why a representation determination is any more
or less fair to subsequently hired employees depending on whether the
determination (in which they do not participate in any event) is made
through an election, through voluntary recognition, or in unfair labor
practice proceedings.  Nor is there any reason why the use of the
representative complement standard should be permissible in a case
involving an election or a voluntary recognition, but not permissible
for resolving a refusal to bargain charge.

   It is well settled that, where the majority status of a bargaining
agent has been properly determined, the mere fact that the unit
thereafter expands, so that the employees who initially selected the
union may no longer constitute a majority, does not in itself provide
grounds for redetermining the existence of majority support.  See
Franks Bros. Co. v. NLRB, 321 U.S. 702, 702-704 (1944).  Accordingly,
if an election had been held on January 15, 1983, when petitioner had
hired a substantial and representative complement of employees, and as
a result the Union had been certified as the majority representative,
it would be irrelevant that some three months later the predecessor's
employees were for the first time less than a majority.  There is no
good reason to apply a different principle where the Union's majority
status was determined by application of the presumption to which an
incumbent union is properly entitled.

   Enforcement of the Board's order does not by any means irrevocably
lock the employees into representation by the Union.  As the Court has
observed, "(t)here is, after all, nothing permanent (about) a
bargaining order * * *." NLRB v. Gissel Packing Co., 395 U.S. 575, 613
(1969).  Once the Union has had a reasonable opportunity to represent
the employees free of the effects of petitioner's unlawful failure to
bargain, the employees may take appropriate action to reject the
Union.  Ibid.; Bishop v. NLRB, 502 F.2d 1024, 1029 (5th Cir. 1974).
See also Harley-Davidson Transportation Co., 273 N.L.R.B. 1531 (1985)
(footnote omitted) (with respect to an incumbent union that had been
recognized by a predecessor employer for a year or more, the successor
was free to discontinue recognition "at any time following recognition
if it (could) show that the union had in fact lost its majority status
at the time of the refusal to bargain or that the refusal to bargain
was grounded on a good-faith doubt based on objective factors that the
union continued to command majority support").  Accordingly, had
petitioner recognized the Union after it had hired a substantial and
representative complement of employees, it would have been entitled,
absent a contract, to withdraw that recognition if presented with
evidence creating a good faith doubt that a majority of its workforce
wanted to be represented by the Union.  Similarly, in those
circumstances, the employees would have been entitled to file a
petition for an election to decertify the Union.  See NLRB v.
Financial Institution Employees, slip op. 5.

   The Chamber asserts (Br. 24) that it makes "little practical sense"
to require a successor to commence bargaining based on the incumbent
union's majority status in a representative complement when the
employer is free to subsequently withdraw recognition should the full
complement not in fact desire union representation.  What the Chamber
ignores is that the delay in according employees who desire union
representation that right "disrupts the employees' morale, deters
their organizational activities, and discourages their membership in
unions." Franks Bros., 321 U.S. at 704.  Here, for example, the
petitions allegedly forswearing support of the Union, on which
petitioner and the Chamber rely, were motivated in part by the
employees' concern that the pendency of the instant unfair labor
practice proceeding would delay an expected wage increase.  /24/ Had
petitioner bargained with the Union in January, when a representative
complement of employees had been hired, the employees' concern over
wages might have been addressed by April and the employees might not
have signed the petitions.  /25/

   Petitioner (Br. 32) and the Chamber of Commerce (Br. 24) further
contend that fairness to the employer dictates that a representation
election be utilized to determine majority status if that
determination is to be made based on a substantial and representative,
rather than a full, complement of employees.  Specifically, the
Chamber asserts (Br. 24) that, since the Board "has established no
hard and fast rules for determining when an employer has hired a
representative complement of employees," an employer runs the risk of
violating Section 8(a)(5) if it withholds recognition after a
representative complement has been hired, and it risks violating
Section 8(a)(2), 29 U.S.C. 158(a)(2), if it recognizes an incumbent
union before having hired a representative complement.  /26/

   However, while the determination of whether the employer has hired
a "representative complement" of employees turns on the facts of each
case, the criteria for making that determination are fairly clear and
can readily be applied by the employer, who is in the best position to
know the facts relating to its future business expansion and hiring
plans.  Thus in most cases it should not be difficult for an employer
to determine when a representative complement of employees has been
hired.  Moreover, "full complement" is not a concept that is
inherently any more susceptible to precise calculation than is
"representative complement." Where (as here) continuing expansion is
related to economic factors such as demand or accessibility of
capital, it is plainly not possible to determine with absolute
certainty when a full complement of employees has been hired.  Thus,
even under a "full complement" standard an employer would run some
risk that the Board would find that it had recognized a union too
early, or had failed to recognize it when it was required to do so,
and waiting for a "full complement" could mean an indefinite wait.

   But even if the Chamber of Commerce and petitioner were correct in
their assertion that the Board's representative complement rule
exposes employers to some risk of charges that they had violated
Section 8(a)(2) of the Act, /27/ a successor employer that violates
Section 8(a)(2) in good faith is subject only to a remedial order.  No
serious penalty would result if an employer determined that it had
hired a representative complement of employees and bargained with the
union that previously represented them, if it were subsequently
determined that in fact the employer had not yet hired a
representative complement of employees.  /28/

 D. The Union Bargaining Request Constituted A Continuing Demand,
Which Petitioner Violated By Persisting In Its Refusal To Bargain

   It is not uncommon in successorship cases for the union's
bargaining demand to be made before it is clear that a bargaining
obligation has arisen.  The realities of business transfers are such
that unions often lack precise information about whether and when a
change in ownership is to take place and what plans the new owners
have for the enterprise.  Accordingly, in such cases, when an
incumbent union makes a clear request for bargaining in an appropriate
unit, the Board generally treats the demand as continuing until such
time as the employer has reached a sufficient employee complement to
resolve the representation issue, and does not require the union to
renew its request at that time.  See, e.g., Aircraft Magnesium, 265
N.L.R.B. at 1345;  Hudson River Aggregates, 639 F.2d at 868, 870;
Saks & Co. v. NLRB, 634 F.2d at 684-685;  Tom-A-Hawk Transit, Inc. v.
NLRB, 419 F.2d 1025, 1026 (7th Cir. 1969);  United Maintenance & Mfg.
Co., 214 N.L.R.B. at 530, 534;  Spruce Up Corp., 209 N.L.R.B. at 194,
196, 197-198.

   Contrary to the contention of petitioner (Br. 31-35) and the
Chamber of Commerce (Br. 24-25), the Board's "continuing demand"
principle does not create an unacceptable uncertainty and unfairness
for the successor employer.  Regardless of the timing of the union's
demand, the employer is on notice that it will be obliged to bargain
if a majority of the employees it hired were employed by its
predecessor.  Moreover, whereas the union may not know the employer's
precise plans before making a bargaining demand, the employer can
readily determine, without further communication from the union, the
facts on which its bargaining obligation is dependent -- i.e., whether
a majority of the workforce came from the predecessor at the time that
the job classifications for the operation were "filled or
substantially filled" and the operation was "in normal or
substantially normal production." Premium Foods, Inc. v. NLRB, 709
F.2d 628.  See also Hayes Coal Co., 197 N.L.R.B. 1162, 1163 (1972).
/29/

   Moreover, on the facts in this case, there was no practical reason
for the Union to renew its bargaining request after it was first made.
 After petitioner rejected the Union's October 1982 demand -- with no
suggestion that it might later change its mind -- the Union made clear
that it still sought recognition by filing an unfair labor practice
charge on November 1.  See Enterprise Products Co., 265 N.L.R.B. 544,
563 (1982) ("(t)he Union's actions in diligently pursuing the
representation proceeding and in pressing the unfair labor practice
charges establish its demand as a continuing one") (footnote omitted).
 Furthermore, in its answer to the unfair labor practice complaint,
petitioner admitted that on October 21 (when it finally rejected the
Union's demand) "and at all times thereafter," it "did refuse and
continues to refuse" to bargain with the Union (J.A. 6, 11) (emphasis
added).  It is thus unmistakably clear that the Union's repetition of
its initial bargaining request would have been futile;  a renewal
demand should therefore not be deemed necessary to the finding of the
violation here.  /30/

 E. The Board's Decision Is A Reasonable Application Of Successorship
Principles To The Facts Of This Case And Is Entitled To Deference

   In this case, as in many others, "'(t)he ultimate problem is the
balancing of conflicting legitimate interests.  The function of
striking that balance to effectuate national labor policy is often a
difficult and delicate responsibility, which the Congress committed
primarily to the National Labor Relations Board, subject to limited
judicial review.'" Beth Israel Hospital v. NLRB, 437 U.S. 483, 501
(1978), quoting NLRB v. Truck Drivers, 353 U.S. 87, 96 (1957).  As the
court of appeals recognized, "'The judicial role is narrow:  The rule
which the Board adopts is judicially reviewable for consistency with
the Act, and for rationality, but if (it) satisfies those criteria,
the Board's application of the rule, if supported by substantial
evidence on the record as a whole, must be enforced.'" Pet. App. A15
n.44 (quoting Beth Isreal Hospital, 437 U.S. at 501).  /31/ This Court
has made clear that these principles apply in successorship cases no
less than in other areas under the Act.  Golden State Bottling, 414
U.S. at 181.  /32/ The Board's decision here is not "irrational or
inconsistent with the Act" (NLRB v. Financial Institution Employees,
slip op. 9), and thus is entitled to deference.

   The Board's rule that a change in ownership of a company does not
destroy the presumption of continued majority support for a union, if
there is a substantial continuity in the operation of the
predecessor's business and a majority of those hired by the successor
employer worked for its predecessor, is a reasonable rule that is
neither inconsistent with the Act nor irrational, as this Court held
in Burns.  The Board's determination in this case that there was
substantial continuity in the operation of the business is amply
supported by the evidence in the record.

   Similarly, the Board's determination that a successor employer has
a duty to bargain, at the time that it has hired a substantial and
representative complement of employees, if a majority of the employees
hired at that point had been employed by the predecessor, is a rule
that balances conflicting legitimate interests in a manner within the
Board's province.  Petitioner and the Chamber of Commerce contend that
if the representation issue is resolved when a representative
complement of employees has been hired it must be resolved through an
election, but their proposal, which ignores the fact that the union in
such a situation has already demonstrated its majority support and is
entitled to a presumption of continued support, is not entitled to
this Court's deference:  The task of developing rules that balance the
conflicting concerns of national labor policy is one "'which the
Congress committed primarily to the National Labor Relations Board.'"
Golden State Bottling, 414 U.S. at 181.  The Board's rule is not
inconsistent with the Act, since no statutory provision mandates that
the Board either hold an election or wait until a full complement of
employees has been hired before determining the representation
question.  And the Board's rule is hardly irrational, as it gives
force to the presumption of continuing majority support to which a
union is entitled and avoids unduly delaying the employees' right to
representation.  Accordingly, the court of appeals correctly upheld
the representative complement rule.  There is little question that the
Board correctly applied its representative complement rule to the
facts of this case, since it is clear that a representative complement
of employees has been hired by petitioner in mid-January of 1983.

   Finally, the Board's rule that a union's demand to bargain may be
deemed a continuing demand is a rational rule that is not inconsistent
with the Act.  The court of appeals correctly concluded (Pet. App.
A15), citing Charles D. Bonanno Linen Service, Inc. v. NLRB, 454 U.S.
404, 413 (1982), that even if the continuing demand rule is "not one
that we would ourselves devise," it is not "'arbitrary or contrary to
law.'" It is clear that substantial evidence supports the application
of the continuing demand rule here since the Union pressed unfair
labor practices charges promptly once petitioner refused to bargain
with it, so that petitioner cannot reasonably argue that it was
unaware that the Union continued to demand that petitioner bargain
with it.

                              CONCLUSION

   The judgment of the court of appeals should be affirmed.

   Respectfully submitted.

   CHARLES FRIED

      Solicitor General

   LOUIS R. COHEN

      Deputy Solicitor General

   CHRISTOPHER J. WRIGHT

      Assistant to the Solicitor General

   ROSEMARY M. COLLYER

      General Counsel

   JOHN E. HIGGINS, JR.

      Deputy General Counsel

   ROBERT E. ALLEN

      Associate General Counsel

   NORTON J. COME

      Deputy Associate General Counsel

   LINDA SHER

      Assistant General Counsel

   ROBERT C. BELL, JR.

      Attorney National Labor Relations Board

   OCTOBER 1986

   /1/ Although in 1981 and 1982 Chace had been principally involved
in sales, while the day-to-day running of the plant was left to plant
manager Alfred Canuel, Chace participated in collective bargaining
with the Union and in handling employee grievances during his tenure
at Sterlingwale (J.A. 189, 232).

   /2/ Applications for employee and supervisory positions were
solicited through an advertisement placed in the local newspaper.  In
addition, Herbert Chace, petitioner's vice president and secretary,
personally contacted supervisors with whom he had worked at
Sterlingwale and asked them to work for petitioner.  J.A. 197-198.

   /3/ Board Member Hunter dissented from the Board's decision on the
ground that petitioner did not have a representative complement of
employees on the date that the Union demanded recognition and the
Union failed to renew its demand at the point when a representative
complement had been hired.

   /4/ Judge Torruella dissented (Pet. App. A17-A30).  In his view,
petitioner's bargaining obligation could not be determined until it
had reached its full complement of employees in April 1983 (id. at
A21-A25).  He also concluded that, on the facts of the case,
petitioner was not a successor to Sterlingwale because there was no
substantial continuity between the two enterprises (id. at A25-A27).
Finally, he found that, apart from whether it was reasonable for the
Board to have applied a "substantial and representative complement"
standard, it was improper to treat the Union's October request for
bargaining as a continuing demand (id. at A28-A30).

   /5/ However, where a contract has been negotiated, the union's
majority status continues immune for the term of the contract from
attack either by election or in defense to a refusal to bargain
charge, provided that the contract term does not exceed three years.
See General Cable Corp., 139 N.L.R.B. 1123 (1962);  Oilfield
Maintenance Co., 142 N.L.R.B. 1384, 1387 (1963);  Hexton Furniture
Co., 111 N.L.R.B. 342 (1955).

   /6/ Although the Court noted in Burns that the union had recently
been certified as the bargaining representative of the Wackenhut
employees who subsequently comprised a majority of Burns' workforce
(406 U.S. at 278, 281), the principle enunciated in that case is not
limited to that situation, as suggested by amicus Chamber of Commerce
(Br. 9, 15, 17).  The Burns Court cited with approval court of appeals
decisions which had found that the presumption of an incumbent union's
majority status survived changes in ownership that occurred long after
the union's initial certification or recognition as the employees'
bargaining representative.  See, e.g., NLRB v. Auto Ventshade, Inc.,
276 F.2d 303, 307 (5th Cir. 1960) (succession occurred seven years
after the union had been selected as bargaining representative) (cited
in Burns, 406 U.S. at 279);  Tom-A-Hawk Transit, Inc. v. NLRB, 419
F.2d 1025, 1026-1027 (7th Cir. 1969) (union had 30-year bargaining
relationship with the predecessor prior to the succession) (cited in
Burns, 406 U.S. at 281).  See also NLRB v. Denham, 469 F.2d 239, 243
(9th Cir. 1972);  vacated on other grounds, 411 U.S. 945 (1973)
(successor bargaining order enforced where the union had been
recognized for 30 years prior to the ownership change);  NLRB v.
Bachrodt Chevrolet Co., 468 F.2d 963, 968 (7th Cir. 1972), vacated on
other grounds, 411 U.S. 912 (1973) (14 years);  Zim's Foodliner, Inc.
v. NLRB, 495 F.2d 1131, 1134, 1139 (7th Cir.), cert, denied 419 U.S.
838 (1974) (incumbent union had been recognized for at least eight
years prior to the ownership change);  NLRB v. Edjo, Inc., 631 F.2d
604, 606 (9th Cir. 1980) (four years);  Potter's Drug Enterprises, 233
N.L.R.B. 15, 16 (1977), enforced, 584 F.2d 980 (9th Cir. 1978) (Table)
(10 years).

   /7/ The Court held in Golden State that a new employer who acquired
and continued a business with knowledge that its predecessor had
unlawfully discharged an employee could be ordered to reinstate the
employee with backpay.  Failure of the successor to remedy the unfair
labor practice, the Court stated, would disappoint the legitimate
expectations of employees and lead them to believe that their
collective efforts in dealing with their employer were futile.  414
U.S. at 184-185.

   /8/ While protecting legitimate employee expectations where there
is continuity in employment conditions and workforce across a change
of ownership, the Burns successorship principle also duly safeguards
"'the rightful prerogative of owners independently to rearrange their
business.'" Golden State Bottling Co., 414 U.S. at 182 (quoting John
Wiley & Sons, Inc. v. Livington, 376 U.S. 543, 549 (1964));  see
Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 263-264 (1974).
For, as the Court held in Burns, even where new employers maintain
continuity so as to incur a bargaining obligation, they "are not bound
by the substantive provisions of a collective-bargaining contract
negotiated by their predecessors" unless they agree to be bound, and a
new employer also "is ordinarily free to set initial terms on which it
will hire the employees of a predecessor" without first bargaining.
406 U.S. at 284, 294.  In addition, while holding that a bargaining
obligation will attach only where the new employer chooses to retain
its predecessor's employees as a majority of its workforce, the Court
made clear that an employer is under no obligation to hire any of the
predecessor's employees if it chooses not to, subject only to the
requirement of Section 8(a)(3) of the Act, 29 U.S.C. 158(a)(3), that
it not discriminate against the predecessor's employees because of
their union membership.  406 U.S. at 280, 282 & n.5.  Accord, Howard
Johnson Co. v. Hotel Employees, 417 U.S. at 262 & n.8.  Properly
applied, the Burns successorship principle thus "may permit and even
facilitate orderly transfers of capital and assets that take due
account of appropriate interests of employees and thus by providing
transitions with a minimum of disruption may advance the cause of
industrial peace." International Ass'n of Machinists, District Lodge
94 v. NLRB, 414 F.2d 1135, 1139 (D.C. Cir. 1969) (Leventhal, J.,
concurring).

   /9/ The Chamber of Commerce is wide of the mark in suggesting (Br.
17 n. 13) that the force of the Burns decision may have been blunted
by the Court's subsequent decision in Linden Lumber Division v. NLRB,
419 U.S. 301 (1974).  While the latter decision holds that an employer
in an initial recognition situation is free to require that the union
establish its majority status in a Board election, nothing in that
decision indicates that the Court intended to upset the settled
presumption of continued majority status that attaches to an incumbent
union that has once demonstrated that it had the support of a majority
of the unit employees, or the application of that presumption in a
successorship situation.  Indeed, in Bildisco, decided subsequent to
Linden Lumber, the Court cited Burns in support of its conclusion that
in debtor-in-possession must bargain with the union representing its
employees even though the debtor-in-possession may unilaterally reject
the collective bargaining agreement (464 U.S. at 534).

   /10/ Accord:  NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 464
(9th Cir. 1985);  Premium Foods, Inc. v. NLRB, 709 F.2d 623, 627 (9th
Cir. 1983);  NLRB v. Jarm Enterprises, Inc., 785 F.2d at 199;
International Union of Electrical Workers v. NLRB, 604 F.2d at 694,
Saks & Co. v. NLRB, 634 F.2d 681, 687 (2d Cir. 1980);  NLRB v. Hudson
River Aggregates, 639 F.2d 865, 869 (2d Cir. 1981);  NLRB v. Band-Age,
Inc., 534 F.2d 1, 4-6 (1st Cir.), cert. denied, 429 U.S. 921 (1976);
Zim's Foodliner, Inc. v. NLRB, 495 F.2d 1131, 1140-1141 (7th Cir.
1974), cert. denied, 419 U.S. 838, NLRB v. Interstate 65 Corp., 453
F.2d 269, 273 (6th Cir. 1971);  NLRB v. Zayre Corp., 424 F.2d 1159,
1162 (5th Cir. 1970);  NLRB v. Armato, 199 F.2d 800, 803 (7th Cir.
1952).

   /11/ The Chamber of Commerce contends (Br. 14) that the Board has
misapplied the Burns rationale by basing "successor bargaining
obligations on simple headcounts of the predecessor's employees in the
successor's workforce, with no attention to whether there is any
factual basis for presuming that those employees desire representation
by the predecessor's union," and that it committed that error here
(id. at 17-18).  This contention ignores the Board's finding, which we
have shown was fully warranted by the facts here, that petitioner not
only hired a workforce of which a majority were former Sterlingwale
employees but continued essentially the same business operation.

   /12/ The operational changes relied on by petitioner (Br. 17-19,
20) -- in purchasing, sales, marketing, and financing, all of which
related to the change to a pure commission operation -- had no
significant effect on the continuity of the basic employer-employee
relationship or on "employee attitudes toward representation." NLRB v.
Jeffries Lithograph Co., 752 F.2d at 464;  see NLRB v. Interstate 65
Corp., 453 F.2d 269, 273 (6th Cir. 1971) (motel's change in banking
facilities, record keeping systems, and advertising had no
"meaningful" effect on the employer-employee relationship).
Similarly, the fact that petitioner did not assume Sterlingwale's
corporate liabilities or trade name is of no consequence to the
determination whether employees could legitimately expect to continue
to have the same bargaining representative.  See NLRB v. Band-Age,
Inc., 534 F.2d 1, 5 (1st Cir. 1976);  Zim's Foodliner, Inc., 495 F.2d
at 1133-1134;  Tom-A-Hawk Transit, Inc. v. NLRB, 419 F.2d 1025,
1026-1027 (7th Cir. 1969).  Finally, the Board properly concluded that
the change from three shifts to two and the reduction in the size of
the operation, not a fundamental change in the nature of the
enterprise sufficient to defeat employees' expectations of continuity
in their dealings with their employer.  See NLRB v. Middleboro Fire
Apparatus, Inc., 590 F.2d 4, 7-8 (1st Cir. 1978).

   /13/ See e.g., Radiant Fashions, Inc., 202 N.L.R.B. 938, 940
(1973);  Norton Precision, Inc., 199 N.L.R.B. 1003, 1007-1008 (1972);
Glading Corp., 192 N.L.R.B. 200, 210-202 (1972);  Ellary Lace Corp.,
178 N.L.R.B. 73, 74-78 (1969) (substantial hiatus accompanied by other
substantial changes in the operations and direction of the
enterprise);  Mondovi Foods Corp., 235 N.L.R.B. 1080, 1082 (1978)
(lengthy hiatus may diminish employees' expectations of rehire).

   /14/ Thus, contrary to petitioner's suggestion (Br. 17, 22), the
fact that petitioner hired former Sterlingwale employees through the
newspaper, and not from Sterlingwale directly, is of no moment.  For
it is clear that petitioner acquired Sterlingwale's assets with the
intention of employing a substantial number of its former employees;
that it knew of their availability;  and that is also knew that they
were likely to respond favorably to an offer to return to their old
jobs, whatever form the offer took.

   /15/ Accord:  NLRB v. Zayre Corp., 424 F.2d 1159, 1161 (5th Cir.
1970) (purchases of assets from Chapter XI creditors' committee);
Aircraft Magnesium, A Division of Griso Corp., 265 N.L.R.B. 1344, 1346
n.13 (1982), enforced, 730 F.2d 767 (9th Cir. 1984) (Table) (same);
NLRB v. Pine Valley Div. of Ethan Allen, Inc., 544 F.2d 742, 743, 744,
745 (4th Cir. 1976) (foreclosure and resale of assets by bank to
successor);  NLRB v. Hot Bagels & Donuts, 622 F.2d 1113, 1115-1116 (2d
Cir. 1980) (foreclosure and lease of assets by bank to successor);
NLRB v. Interstate 65 Corp., 453 F.2d 269, 273, 274 (6th Cir. 1971)
(reacquisition of assets by foreclosure).

   /16/ Four Justices dissented from the imposition of a bargaining
obligation in Burns primarily because, in their view, such an
obligation may properly be imposed only where, at a minimum, "the new
employer continues to make use of tangible or intangible assets used
in carrying on the business of the first employer." Burns, 406 U.S. at
302 (Rehnquist, J., concurring in part and dissenting in part).  In
Burns, the new employer did not succeed to any assets of the prior
employer, but rather replaced the predecessor, a direct competitor, as
the successful bidder on a service contract.  Here, by contrast,
petitioner succeeded to virtually all of its predecessor's assets and
continued to use them in substantially the same fashion.

   /17/ The Burns opinion raises an initial question as to whether the
appropriate measure of workforce continuity might not instead be the
proportion of the predecessor's employees who were hired by the
successor.  Compare Burns, 406 U.S. at 281 ("a majority of the
employees hired by the new employer are represented by a recently
certified bargaining agent") with id. at 278 ("the union had been
designated bargaining agent for the employees in the unit and a
majority of these employees had been hired by Burns").  See also
Howard Johnson Co. v. Hotel Employees, 417 U.S. 249, 263 (1974);
Golden State Bottling Co. v. NLRB, 414 U.S. 168, 184 n.6 (1973).  The
Board, upheld by the courts of appeals, has adopted as the appropriate
measure of workforce continuity for purposes of a successor bargaining
obligation whether the predecessor's employees were a majority of the
new workforce, regardless of whether the new employer hired a majority
of the predecessor's employees.  See Spruce Up Corp., 209 N.L.R.B. 194
196 (1974), enforced per curiam, 90 L.R.R.M. 2525 (4th Cir. 1975);
United Maintenance & Mfg. Co., 214 N.L.R.B. 529, 533-534 (1974).  In
the view of the Board, the courts, and commentators, that measure is
appropriate because "the basic question to be resolved * * * is simply
whether the union represents a majority of the successor's employees."
Boeing Co. v. International Ass'n of Machinists, 504 F.2d 307, 319
(5th Cir. 1974);  see Saks & Co. v. NLRB, 634 F.2d 681, 685-686 & nn.2
& 3 (2d Cir. 1980) (and cases cited therein);  Note, The Bargaining
Obligations of Successor Employers, 88 Harv. L. Rev. 759, 771-774 &
771 n.76 (1976);  Slicker, A Reconsideration of the Doctrine of
Employer Successorship -- A Step Toward A Rational Approach, 57 Minn.
L. Rev. 1051, 1054-1055, 1095, 1103 (1973);  Goldberg, The Labor Law
Obligations of A Successor Employer, 63 Nw. U.L. Rev. 735, 793-794
(1969).  No issue concerning the propriety of the Board's position in
this regard is presented here.

   /18/ In a related context, involving the circumstances under which
its "contract bar" rule will preclude an election where the unit has
expanded substantially after the signing of a contract, the Board
holds that the "contract will bar an election only if at least 30
percent of the complement employed at the time of the hearing had been
employed at the time the contract was executed, and 50 percent of the
job classifications in existence at the time of the hearing were in
existence at the time the contract was executed." General Extrusion
Co., 121 N.L.R.B. 1165, 1169 (1958).  In election cases not involving
a contract bar issue, the Board has not applied the strict,
mathematical General Extrusion formula.  Clement-Blythe, 182 N.L.R.B.
at 502 n.4.

   /19/ In NLRB v. Pre-Engineered Building Products, although the
predecessor had employed as many as 41 employees, the Board determined
that the successor had a duty to bargain based on the fact that the
first four employees hired by the successor had been employed by the
predecessor (603 F.2d at 136).  The court ordered the Board to reopen
the hearing to consider the employer's contention that it had
"subsequently hired many employees who were not associated with the
predecessor" (ibid.).  While the court thus declined to enforce the
Board's order and stated that the Board must determine whether the
successor employer has a duty to bargain at the point at which it had
hired a "full complement" of employees, it acknowledged the necessity
of "balancing 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," and rejected a
rigid definition of "full complement" that would unduly postpone the
determination of whether a majority of the employees hired by a
successor had been represented by its predecessor (ibid. (footnote
omitted)).

   /20/ The Chamber of Commerce errs in contending (Br. 17-18) that it
cannot be presumed that any of these employees supported the Union
because there is no showing that they had ever expressed their views
concerning the Union.  This contention, which is similar to an
argument made by the dissenters in Burns (406 U.S. at 297), was
expressly rejected by a majority of the Court in Burns.  There the
Court recognized that, where there is continuity in employment
conditions and workforce across a change of ownership, it is proper to
apply to the successor employer the same presumption of the union's
continued majority status that would have been applied had there been
no change of employers.  Thus, with respect to a union that has once
demonstrated that it is supported by a majority of employees, the
presumption that it continues to enjoy that status is not destroyed by
changes in the workforce occasioned by normal employee turnover or by
the addition of new employees to the bargaining unit.  Lammert
Industries v. NLRB, 578 F.2d 1223, 1226 n.6 (7th Cir. 1978);  National
Cash Register Co. v. NLRB, 494 F.2d 189, 193-195 (8th Cir. 1984);
NLRB v. Washington Manor, Inc., 519 F.2d 750, 753 (6th Cir. 1975).
Accordingly, in Burns the Court imposed a successor bargaining
obligation despite the lack of mathematical proof that the particular
current employees carried over from the predecessor had selected the
incumbent union.

   /21/ The court of appeals noted that petitioner's production
process required a two-shift operation (Pet. App. A5).  However, the
evidence shows that two shifts were required only after a certain
production level was reached (J.A. 227) and that expansion of the
second shift to full capacity was dependent on the growth of the
business (J.A. 208).

   /22/ In Burns the Court found that a bargaining obligation arose
following the change of employers, and that the incumbent union
thereafter would be presumed to enjoy majority status, notwithstanding
the successor's assertion that it no longer employed the predecessor's
employees as a majority of its workforce six months after the change
in ownership.  See NLRB v. Burns International Security Services,
Inc., 404 U.S. 822 (1971) (granting certiorari to review the question
whether a new employer may be ordered to bargain with the union
representing the predecessor's employees where "within six months * *
* the (predecessor's) employees constitute less than a majority of
employees employed at the facility").

   /23/ Moreover, the remark on which petitioner and the Chamber of
Commerce rely was addressed to the issue of whether the employer in
that case had a duty to bargain with the union that represented its
predecessor's employees before it set the initial terms on which it
would hire employees.  The Court had already stated its conclusion
(406 U.S. at 277-281) that the employer in Burns had violated Section
8(a)(5) by refusing to bargain with the union after setting those
terms, and it had also concluded (406 U.S. at 281-291) that the
employer was not bound by the terms of the collective bargaining
agreement that the union had negotiated with the predecessor employer.
 The Court recognized that, although it had overturned the Board's
determination that the new employer was required to make whole its
employees for any losses suffered because it had refused to abide by
the terms of the collective bargaining agreement, the Board's
make-whole remedy might nevertheless be upheld because the new
employer had failed to consult with the union before fixing the
initial terms on which it would hire employees.  The Court did not
uphold the make-whole remedy on that theory, concluding instead that
"a successor employer is ordinarily free to set (the) initial terms on
which it will hire the employees of a predecessor" (id. at 294).  The
Court noted, however, that "there will be instances in which it is
perfectly clear that the new employer plans to retain all of the
employees in the unit and in which it will be appropriate to have him
initially consult with the employees' bargaining representative before
he fixes terms" (id. at 294-295).  The Court then made the statement
on which petitioner and the Chamber of Commerce rely.

   In Pacific Hide & Fur Depot, Inc. v. NLRB, 553 F.2d 609, 613
(1977), the Ninth Circuit recognized that "the 'full complement'
statement appears in the part of the Burns opinion dealing with a
claim that Burns had improperly made unilateral changes in terms of
employment (part IV of the opinion, 406 U.S. at 292-96 * * *)," but
nevertheless disagreed with an administrative law judge that the
remark was limited to that context.  However, the court recognized
that a "full complement" could be defined "only by considering the
facts of each case in light of the general goal which is sought"
(ibid.).  And that circuit has since made clear that in its view the
"substantial and representative complement" standard "embodies the
balance between early representation and maximum participation that
lies at the heart of the 'full complement' concept" of Burns.  Premium
Foods, Inc. v. NLRB, 709 F.2d at 628 (footnote omitted);  NLRB v.
Jeffries Lithograph Co., supra.  Thus, as the court below recognized
(Pet App. A10), the Ninth Circuit, while insisting that the remark on
which petitioner and the Chamber of Commerce rely has relevance beyond
cases involving a claim that an employer was required to bargain prior
to setting the initial terms on which it hired employees, has
nevertheless approved the Board's use of the representative complement
standard.

   /24/ Petitioner (Br. 25) and the Chamber (Br. 6-7 nn. 7, 8, 22)
suggest that two petitions withdrawing support for the Union signed by
a number of employees on April 29, 1983, three days before the unfair
labor practice hearing commenced, demonstrate the inequity of the
Board's position.  The Board, upheld by the court of appeals (Pet.
App. A15), refused to consider those petitions in determining whether
petitioner was a successor employer, explaining that petitioner could
not, in defending against its refusal to bargain in mid-January, rely
on events in mid-April.  Terrell Machine Co. v. NLRB, 427 F.2d 1088,
1090 (4th Cir.), cert. denied, 398 U.S. 929 (1970);  NLRB v. Gulfmont
Hotel Co., 362 F.2d 588, 589 (5th Cir. 1966).  See also Franks Bros.
Co. v. NLRB, supra.  Accordingly, the authenticity of the petitions
has not been determined and hence there is no credited evidence on
this record that the employees in April no longer supported the Union.
 Moreover, it is clear that the petitions were prompted, at least in
part, by the employees' concern that the Board proceedung would delay
a wage increase.  Employee Norman Rego, who had been secretary of the
Union at the time Sterlingwale suspended operations (J.A. 179),
testified that, after a meeting with Vice President Chace, he told the
other employees that "it's going to take until May 2 (the date of the
hearing) till we find out if we're going to get a raise or not" (J.A.
173).  He also testified (J.A. 194-195) that, when they asked him to
draw up the petitions, the employees were "upset" over the possibility
of missing a raise and that they thought the unfair labor practice
hearing might be blocking it.  Rego testified to his own impression
that, with appeals by the losing party, "this could go on for three
years" and he stated that "the guys think they're not going to get a
raise for three years" (J.A. 183).  Thus, rather than demonstrating
that the employees did not want to be represented by the Union, the
petitions instead merely show that the employees thought that they had
to disavow support for the Union to get a raise.

   /25/ In another offer of proof, petitioner asserted that Chace
would testify that, when the Company resumed operations at the plant
in September 1982, "a number of employees" had indicated to him that
they were "extremely displeased" with the Union and wanted nothing to
do with it (J.A. 233-234).  This offer was properly rejected by the
Board since there was no indication of the number of employees making
such statements to Chace, and petitioner never asserted that it
possessed a good faith doubt of union majority on January 15, 1983,
when the Board found that a representative complement had been hired.

   /26/ Section 8(a)(2) of the Act makes it an unfair labor practice
for an employer to "contribute * * * support" to a labor organization.
 It is settled that an employer's grant of initial recognition to a
union representing only a minority of employees constitutes unlawful
support under Section 8(a)(2) "because the union so favored is given
'a marked advantage over any other in securing the adherence of
employees.'" International Ladies' Garment Workers' Union v. NLRB, 366
U.S. 731, 738 (1961) (quoting NLRB v. Pennsylvania Greyhound Lines,
303 U.S. 261, 267 (1938)).

   /27/ We are not aware of any case in which the Board has found a
Section 8(a)(2) violation where a successor employer recognized an
incumbent union before a representative complement of employees had
been hired.  In such a situation, the concerns underlying Section
8(a)(2) -- that an employer not give assistance to a theretofore
unrecognized union that has not in fact demonstrated its support among
unit employees -- appear to be absent.  See Colonial Haven Nursing
Home, 218 N.L.R.B. 1007, 1010 (1975);  Anaconda Co., 225 N.L.R.B. 953,
954-956 (1976).

   /28/ As the Court stated in International Ladies' Garment Workers'
Union, 366 U.S. at 740 (footnote omitted), in upholding the finding of
a Section 8(a)(2) violation where the parties, in good faith, guessed
wrong as to the union's majority status:

      (N)o penalty is attached to the violation.  Assuming that an
      employer in good faith accepts or rejects a a union claim of
      majority status, the validity of his decision may be tested in
      an unfair labor practice proceeding.  If he is found to have
      erred in extending or withholding recognition, he is subject
      only to a remedial order requiring him to conform his conduct to
      the norms set out in the Act, as was the case here.  No further
      penalty results.

   /29/ The reliance of petitioner and the Chamber on Hedstrom Co. v.
NLRB (Hedstrom I), 558 F.3d 1137, 1146-1148 (3d Cir. 1977), on reh'g
en banc, 629 F.2d 305 (1980), cert, denied, 450 U.S. 966 (1981), is
misplaced.  In Hedstrom, the court rejected the continuing demand
concept only in an initial recognition context where the obligation to
recognize the union is dependent upon its showing of majority support
and the employer is ordinarily entitled to insist on an election.  In
that situation, it is the union, not the employer, that is in the best
position to know that facts that trigger the bargaining obligation.

   Moreover, since the panel decision in Hedstrom I, the Third Circuit
has made clear that use of the continuing demand rule may be
appropriate in certain circumstances even in an initial recognition
context.  In Hedstrom I, the panel had denied enforcement to a
"Gissel" bargaining order (see NLRB v. Gissel Packing Co., 395 U.S.
575 (1969)) -- i.e., the Board found that the employer's unfair labor
practices had seriously impaired the electoral process and dissipated
the union's majority -- where the Board had imposed a bargaining
obligation as of the date the union attained a card majority, even
though the union's request to bargain preceded that majority date and
was not renewed.  Following a remand to the Board, the Third Circuit,
sitting en banc, ultimately enforced the Board's order and held that
in circumstances in which an election is not appropriate because of an
employer's unfair labor practices and in which the union has otherwise
demonstrated its majority status, the Board may impose a bargaining
obligation from the date the majority was achieved and the unfair
labor practices began, whether or not at that time the union had made
a demand for bargaining.  Hedstrom Co. v. NLRB (Hedstrom II), 629 F.2d
305, 318-319 (3d Cir. 1980) (en banc), cert. denied, 450 U.S. 996
(1981).  Accord:  NLRB v. Daybreak Lodge Nursing & Convalescent Home,
Inc., 585 F.2d 79, 82-83 (3d Cir. 1978);  NLRB v. Eagle Material
Handling, Inc., 558 F.2d 160, 170 (3d Cir. 1977).

   /30/ There is no merit to petitioner's suggestion (Br. 32-33) that
it was improper for the Board to find an unlawful refusal to bargain
as of January 1983, even though the unfair labor practice complaint
was issued prior to that time, on December 21.  It is well settled
that "administrative * * * adjudication may be based on facts arising
subsequent, as well as prior, to the filing of th(e)" complaint, so
long as the responding party is on notice at the hearing of the
allegations against it and is not prejudiced in its ability to
litigate those allegations.  Curtiss-Wright Corp., Wright Aero Div. v.
NLRB, 347 F.2d 63, 73 (3d Cir. 1965).  Accord:  American Newspaper
Publishing Ass'n v. NLRB, 193 F.2d 782, 800 (7th Cir. 1951).
Petitioner does not contend that it was not on notice in the unfair
labor practice proceeding of the General Counsel's theory that it
violated the Act by refusing to recognize and bargain with the Union
once it was clear that it was employing a predecessor majority in a
substantial and representative employee complement.  Moreover, the
Board's order requires only that petitioner recognize and bargain with
the Union, and imposes no obligation on petitioner with respect to its
conduct prior to the time the bargaining obligation actually arose.

   /31/ In NLRB v. Financial Institution Employees the Court, while
overturning the Board's rule that nonunion employees must be allowed
to vote in elections determining the affiliation of a local union
before it would order an employer to bargain with a union that had
changed its affiliation, reiterated that it "deferred to Board
decisions that are not irrational or inconsistent with the Act" (slip
op. 9).  The Court concluded that the Board's rule was inconsistent
with the decertification procedures and the election procedures
established by the Act (id. at 11), and noted that it therefore did
not have to address the issue whether the Board's rule was irrational
(id. at 17 n.13).

   /32/ Petitioner erroneously suggests (Br. 15) that the Board's
factual analysis in successorship cases is entitled to less deference
on appellate review than are its fact findings in other types of
cases.  As the case that petitioner cites makes clear, in the
successorship context no less than in other areas the responsibility
of applying broad legal principles to particular cases is "committed
primarily to the Board," and the Board's decisions in successorship
cases are entitled to deference as long as they are compatible with
"the spirit as well as the language" of the Court's decision in Burns.
 International Ass'n of Machinists v. NLRB, 595 F.2d 664, 673 n.41
(D.C. Cir. 1978), cert. denied, 439 U.S. 1070 (1979).