asset acquisitions - Jackson Walker LLP

3. Labor, Employment & Benefits CasesIn the labor and employment context, the issue of successor liability has arisen in numerouscases, both in federal courts (up to and including the Supreme Court 72 ) and in administrativeproceedings held before the National Labor Relations Board (“NLRB”) 73 under various provisions ofthe National Labor Relations Act (the “Act”). 74 The labor and employment cases tend to utilize thecontinuity of enterprise analysis almost exclusively, focusing on the nature of the businessoperations both before and after the asset acquisition, including how many of the seller’s employeeswere retained by the purchaser, and what percentage those employees constitute of the purchaser’stotal workforce at the work site after the transaction is completed. 75Two other common themes in the labor and employment arena are whether or not thesuccessor had knowledge of the predecessor’s unfair labor practices, 76 and the nature of the remedysought by the plaintiff. 77 With respect to the issue of remedy, courts have generally, but notuniversally, determined that the successor will be liable if reinstatement is sought, since only thesuccessor can accomplish this, whereas if monetary damages are sought, the predecessor (if stillviable) can satisfy the remedy, thus reducing the need to find the successor liable. 78The other trend in this area is the number and diversity of statutes under which cases arebeing brought. Besides the National Labor Relations Act and the Labor Management Relations Act,cases alleging successor liability for labor, discrimination and benefits issues have been brought72737475767778See, for example, John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543 (1964); NLRB v. Burns Int’lSecurity Services, Inc., 406 U.S. 272 (1972); Golden States Bottling Co., Inc. v. NLRB, 414 U.S. 168(1973); Howard Johnson Co., Inc. v. Detroit Local Joint Executive Bd., 417 U.S. 249 (1974); and FallRiver Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27 (1987).See, for example, South Carolina Granite Co., 58 NLRB 1448, enforced sub nom. NLRB v. Blair Quarries,Inc., 152 F.2d 25 (4 th Cir. 1945); Alexander Milburn Co., 78 NLRB 747 (1947); and Perma Vinyl Corp.,164 N.L.R.B 968 (1967), enforced sub nom. United States Pipe & Foundry Co. v. NLRB, 398 F. 2d 544(Fifth Cir. 1968).29 U.S.C. §§151 et seq.But, as to this issue, there has been conflicting guidance from the courts. Compare the holding of Saks &Co. v. NLRB, 634 F.2d 681, 685 (2d Cir. 1980) (“the appropriate test of continuity is whether a majority ofthe successor’s bargaining unit is composed of the predecessor’s employees.”) with NLRB v. Bausch &Lomb, Inc., 526 F.2d 817, 824 (2d Cir. 1975) which held that a finding of successorship “requires retentionof at least a majority of the predecessor’s workforce.”See, for example, Alexander Milburn, supra, note 111, and Perma Vinyl, supra, note 111.See, for example, Perma Vinyl, supra, note 111, at 968-9.See, for example, EEOC v. MacMillan Bloedel Containers, Inc., 503 F.2d 1086 (6 th Cir. 1974); Trujillo v.Longhorn Mfg. Co., Inc., 694 F.2d 221 (10 th Cir. 1982); Bates v. Pacific Maritime Assn., 744 F.2d 705 (9 thCir. 1984); and Rojas v. TK Communications, Inc., 87 F.3d 745 (5 th Cir. 1996).Appendix C – Page 122525936v1