NLRB Advice Memoranda, Arcadia Medical Resort of Talbot, National Labor Relations Board, (Apr 25, 2022)

Case 19-CA-280611. April 25, 2022. 347-6040-7500; 530-4825-6700; 530-4850-6700 and 530-6067-4000.

Ronald K. Hooks, Regional Director Region 19

Richard A. Bock, Associate General Counsel Division of Advice

The Region submitted this case for advice as to whether a nursing home owner-operator is a "perfectly clear" successor under Spruce Up Corp. [1] and, if so, whether the Employer's purchase of the Predecessor's assets "free and clear" of the Predecessor's collective-bargaining agreement, pursuant to Section 363 of the Bankruptcy Code, [2] relieves the Employer of its obligation to bargain with the Union over initial terms and conditions of employment. [3] We conclude that the Employer is a "perfectly clear" successor under extant law and that the bankruptcy court's "free and clear" sale order does not insulate the Employer from its bargaining obligations, which arose from its own post-sale conduct. Given that the Employer forfeited the right to set initial terms under current Board law, this case is an appropriate vehicle to urge the Board to overrule Spruce Up and adhere to the plain language of the Supreme Court's "perfectly clear" caveat in Burns. [4] Alternatively, we conclude that even if the Employer were only an ordinary Burns successor, some, if not all, of its changes were unlawful because they were not announced as part of employees' initial terms. Additionally, since the Employer unilaterally ceased dues checkoff upon taking over operations, if warranted, the Region should use this case to argue that the Board should overrule Valley Hospital Medical Center [5] and return to the holding of Lincoln Lutheran of Racine. [6]

FACTS

WA3 OP Talbot LLC d/b/a Arcadia Medical Resort of Talbot ("the Employer") operates a nursing home and rehabilitation center located in Renton, Washington. Prior to March 2021, Talbot Rehabilitation Center, LLC ("the Predecessor") operated the facility. Under the Predecessor, Local 775 of the Service Employees International Union ("the Union") represented a unit that included restorative aides, certified nursing assistants, and licensed practical nurses. The parties had negotiated a collective-bargaining agreement, which was effective September 17, 2020 through August 31, 2022.

I. Bankruptcy Proceedings

In September 2020, Goldner Capital Management LLC ("Goldner") offered to buy the Predecessor along with two other nonunionized companies. Under an agreement negotiated between Goldner and the three companies, each facility would file for Chapter 11 bankruptcy, move to have their individual cases jointly administered, and then sell their assets to Goldner "free and clear" of all liabilities and obligations pursuant to Section 363 of the Bankruptcy Code. [7] Goldner set up three limited liability corporations, including the Employer, to act as purchasers. On December 18, 2020, the Predecessor and the other two companies (collectively, "the Debtors") filed separate petitions for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Western District of Washington. The Predecessor failed to give the legally-required notice of the bankruptcy to the Union at the outset of the bankruptcy proceeding. [8] Similarly, although its collective-bargaining agreement with the Union was still in effect, the Predecessor failed to list it as an executory contract in its initial filings.

On December 22, 2020, the Debtors filed a motion seeking the Bankruptcy Court's permission to sell their assets free and clear of all liens, claims, encumbrances, and other interests ("Sale Motion"). Attached was the Asset Purchase Agreement and Operations Transfer Agreement ("Purchase Agreement") to which the Debtors and the Employer were parties. In relevant part, the Purchase Agreement states:

Except with respect to the Collective Bargaining Agreement by and between [the Predecessor] and SEIU 775 (the "CBA"), the Business is not subject to any collective bargaining agreements. Sellers are not in default in any of their obligations under the CBA and the CBA is in full force and effect. Sellers have provided a true and correct copy of the CBA to Buyers. Sellers will provide any notice required to be provided under the CBA in connection with the transaction contemplated by this Agreement and will provide a copy of such notice to Buyers.

On February 5, 2021, the Bankruptcy Court issued an order ("Sale Order") approving the Sale Motion. [9] In relevant part, the Sale Order states that the purchased assets of the Debtors, including the Predecessor's facility, "shall be sold free and clear of … collective bargaining agreements and obligations …." The Sale Order also declares that "the Buyers shall have no successor or vicarious liabilities of any kind or character, including, but not limited to any theory of … labor law … now existing or hereafter arising … with respect to the Debtors, or any obligations of the Debtors arising prior to and including the Closing Date."

The Predecessor did not provide notice to the Union of the impending sale or the Sale Motion at any point during the bankruptcy proceeding, notwithstanding that Article 25 of the collective-bargaining agreement required it to give notice of a sale "as soon as possible, but in no case later than thirty (30) days" prior to the sale.

II. The Employer's Takeover of the Predecessor's Operations

Prior to taking over operations, the Employer did not communicate with employees nor announce any changes to terms and conditions of employment. On March 9, the Predecessor's administrator emailed the Union's representative that the facility had "just received notification that the new management/owners are starting on Monday, 3/15," and promised to engage in any further discussions necessary "to ensure a seamless transition." At the time, the Predecessor and the Union were in the midst of processing grievances that had arisen, in part, due to the Predecessor changing payroll servicers in 2020. These grievances concerned the failure to deduct and remit dues, the failure to properly reflect pay rates and leave accrual, as well as an unrelated discharge of a nurse. Between March 15 and March 23, the Union and the Predecessor met regularly to resolve these grievances, with the Predecessor stating that the "new owners/management" would remedy them. On March 15, the Predecessor posted a flyer next to the timeclock informing employees that it was again switching payroll servicers, that paid time off amounts would carry over to the new provider, and that no time would be lost.

The Employer held a post-transition meeting with employees at some point in March or April. During that meeting, the Employer's new administrator announced that employees would only be able to carry over 40 hours of paid time off and, as of August 1, hours in excess of that amount would be lost. The Employer did not communicate any other changes in employment terms at this meeting.

On March 23, the Predecessor's administrator [10] informed the Union representative that the new payroll company stated it would not be deducting Union dues until "they" renew the "contract" with the Employer. [11] The administrator also noted that the license had been processed the day before "to approve the ownership." [12]

On April 9, the Employer's attorney called the Union representative regarding the new ownership of the Talbot facility. The attorney requested a copy of the collective-bargaining agreement and the Union representative asked about the grievance regarding the discharged nurse. The Employer's attorney responded that the discharge occurred during the Predecessor's operation of the facility and the new owner had neither the capability nor the interest in returning the nurse to work.

There was no hiatus between the Predecessor's and the Employer's operations and the Employer did not go through any formal hiring process, such as requiring that the Predecessor's employees submit applications, interview for positions, or provide proof of their credentials. Employees simply showed up for their shifts as usual and performed their duties just as they had under the Predecessor. However, sometime after the transition, the Union representative learned that the Employer directed employees to fill out paperwork through an online portal and that many employees were struggling with it. Employees worried that, if they did not submit job applications through the online portal, they would be discharged. It was also around this time that the Union discovered that employees were either not receiving their anniversary wage increases or that their wage increases had been rescinded. On May 12, the Union representative emailed the administrator about the difficulties employees were having with the online portal. The Union representative also protested the Employer's failure to pay anniversary wage increases provided for in the collective-bargaining agreement. On May 13, the Union representative emailed the administrator again about these issues, noting that the Union was "more than willing to meet and bargain." The administrator subsequently called the Union representative and explained that the Employer's online portal was for employee onboarding and not for employees to apply for jobs. In the end, the Employer only asked employees to provide W-4 forms.

On May 15, the Union filed a grievance with the Employer over its changes to how much paid time off employees could accrue, its refusal to cash out paid time off that was lost, and its reduction of paid time off accrual rates. The Employer ignored these grievances. On May 19, the Union renewed its grievance regarding dues checkoff because the Employer was, like the Predecessor, failing to collect and remit dues. The Employer refused to discuss the grievance, insisting that any discussion of setting up dues checkoff be part of bargaining for a new collective-bargaining agreement. On June 28, the Union representative issued a formal bargaining demand to the Employer, reiterating its May request. Since then, the parties have held a number of bargaining sessions to negotiate a new collective-bargaining agreement. However, they have not yet reached agreement on a contract.

ACTION

We conclude that the Employer is a "perfectly clear" successor that had an obligation to bargain with the Union prior to setting initial terms and conditions and that the bankruptcy court's "free and clear" sale does not relieve the Employer of this obligation. Accordingly, the Employer violated Section 8(a)(5) by unilaterally reducing paid time off accrual amounts, reducing paid time off accrual rates, eliminating paid time off cashouts, eliminating anniversary wage increases, and refusing to process grievances. Alternatively, we conclude that some, if not all, of these changes were likewise unlawful even if the Employer were only an ordinary Burns successor because they were not announced as part of employees' initial terms. Finally, we conclude that, because the Employer did not bargain with the Union prior to the cessation of dues checkoff, if warranted, [13] the Region should use this case to urge the Board to overrule Valley Hospital. [14]

I. Perfectly Clear Successorship

a. The Employer is a “perfectly clear” successor under Spruce Up

Upon acquiring a business, a new employer has an obligation to bargain with the union that represented its predecessor's employees if the new employer continues its predecessor's business in substantially the same form and if a majority of its workforce was formerly employed by the predecessor. [15] However, a new employer is not bound by the predecessor's collective-bargaining agreement or its substantive terms and ordinarily may unilaterally set initial terms and conditions of employment. [16]

Upon acquiring a business, a new employer has an obligation to bargain with the union that represented its predecessor's employees if the new employer continues its predecessor's business in substantially the same form and if a majority of its workforce was formerly employed by the predecessor. [17] However, a new employer is not bound by the predecessor's collective-bargaining agreement or its substantive terms and ordinarily may unilaterally set initial terms and conditions of employment. [18]

Under Burns, a successor must "initially consult with the employees' bargaining representative before [it] fixes terms" if it is "perfectly clear that the new employer plans to retain all of the employees in the unit." [19] The Board has limited the "perfectly clear" exception to situations where the new employer actively or tacitly misleads employees or their union into believing that the employees will be retained by the successor under the same terms and conditions, [20] or at least fails to "clearly announce" its intent to establish new terms and conditions prior to or simultaneous with its invitation to accept employment. [21] Thus, an employer becomes a "perfectly clear" successor if it is silent as to changing the existing working conditions at the time it indicates to employees or their union that it intends to hire the predecessor's employees, [22] or fails to give "sufficiently clear" notice that employees' existing working conditions will change. [23] For example, an announcement of new terms and conditions that is "general" or "speculative" will not suffice. [24]

In Specialty Envelope Co., [25] the Board found that an employer was a "perfectly clear" successor where it assumed operations with the predecessor's workforce and only thereafter announced changes in terms and conditions of employment. Viewing the circumstances from the employees' perspective, the Board found that the successor conveyed an intent to employ the predecessor's workforce by having employees report to work as usual without being required to complete employment applications or even ask to be employed by the successor. [26] As in Specialty Envelope, here the Employer never required employees to apply for their jobs. It simply asked them to provide W-4 forms after they had already been hired. [27] Indeed, in response to employees' fear that they may be discharged if they did not complete the Employer's online forms, the Employer's administrator explicitly denied that the Employer was requiring job applications. Instead, the online platform was described as "employee onboarding," something that, by definition, is only necessary after an employee has been hired. This absence of any genuine hiring process, combined with the Employer assuming operations by bringing in the Predecessor's employees to report to work as usual, makes it "perfectly clear" that the Employer intended to retain the Predecessor's workforce.

And, as in Specialty Envelope, the Employer here waited to announce changes to terms and conditions until after the Predecessor's employees reported to work as usual. The Employer made this decision despite ensuring that it would have the opportunity to make such an announcement before assuming operations. In negotiating the Purchase Agreement, the Employer secured for itself the right to access the Predecessor's premises before the sale to "advise [employees] of [the Employer's] proposed plans with respect to the hiring of employees" and "the benefits which will be offered." But the Employer chose not to avail itself of this right. Instead, the Employer waited to announce its initial terms until after it assumed operations with the Predecessor's workforce. It was not until after adopting the Predecessor's workforce as its own that the Employer announced that employees could no longer accrue as much paid time off and that they would lose any paid time off in excess of 40 hours within mere months. Other changes, such as eliminating anniversary wage increases, were never announced at all. Rather, the Employer tacitly allowed employees to believe that these terms and conditions of employment were unchanged. Only later did employees discover that their employment with the Employer was under materially different terms than those of the Predecessor. By having the Predecessor's employees return to work while remaining silent as to intended changes to terms and conditions of employment, the Employer forfeited its right to set initial terms. [28]

b. The Bankruptcy Court's "Free and Clear" Sale Order Does Not Extinguish the Employer's Bargaining Obligation as a "Perfectly Clear" Successor Under the Act

Having found that the Employer is a "perfectly clear" successor, the issue remains whether the Bankruptcy Court's Sale Order nonetheless shields the Employer from liability under the Act. We conclude that it does not because the Bankruptcy Court's Sale Order only extinguishes liabilities of the Debtors, not those of the Employer that arose because of its own post-sale conduct.

Where two statutes are capable of coexistence, it is the duty of the courts to regard each as effective, absent a clear expression of congressional intent to the contrary. [29] When circumstances arise that present a conflict between the underlying purposes of the Act and the Bankruptcy Code, the issue "must be resolved in a way that accommodates the policies of both Federal statutes." [30]

It is well settled that the Board is the exclusive public agent chosen by Congress to enforce the Act, subject only to review in the United States Courts of Appeals. [31] Accordingly, "the institution of bankruptcy proceedings generally does not deprive the Board of jurisdiction or authority to entertain and process" unfair labor practice cases. [32] The determination of whether an employer is a successor under the Act is a question of substantive labor law over which the Board has primary jurisdiction. [33] Assessing whether a purchaser is a successor-whether an ordinary Burns successor or a "perfectly clear" successor under the Burns caveat-depends upon several factors that establish a "substantial continuity," including the makeup of the successor's employee complement, the extent to which employees of the new company perform the same jobs under the same employment conditions and supervision, and the degree of similarity between the products or services offered, the production process, and the customers. [34] The Board applies the Burns successorship doctrine in the same manner where a successor employer purchases a predecessor's assets through bankruptcy as it does where a successor acquires a business by other means. [35] This flows from the fact that the duties of a successor arise where a "new employer makes the conscious decision to maintain generally the same business" and to retain the predecessor's workforce, or at least hire a majority of its employees from the predecessor, all of which generally occurs post-sale. [36] By their very nature, the Burns factors cannot be measured before a business has been sold to, or operated by, a putative successor.

The Bankruptcy Code, conversely, focuses on eliminating liabilities that a bankrupt business incurs before selling its assets. The primary goals of Chapter 11 of the Code are "the preservation of the business as a going concern and the maximization of the assets recoverable to satisfy claims." [37] Consequently, when a debtor seeks to sell its business "free and clear" under Chapter 11, [38] the goal is to maximize the purchase price of the debtor's assets to benefit creditors of the bankrupt business. [39] But while a bankruptcy court may permit assets to be sold "free and clear" of any interest against the bankruptcy estate under Section 363(f) of the Code, it cannot insulate a purchaser's liability where the claim arose after the sale due to the purchaser's own conduct. [40] Thus, while a bankruptcy court may discharge obligations under the Act that arose before a predecessor's bankruptcy petition, a successor's post-sale conduct can create new obligations. [41]

The Board's 2005 decision in Foodbasket Partners [42] demonstrates how the Board's successorship principles, which are based on the successor's own conduct, do not interfere with the policy underpinnings of the Bankruptcy Code's "free and clear" sale rules protecting an asset purchaser from liability for the predecessor's misconduct. In Foodbasket Partners, the predecessor had filed for bankruptcy, its assets were sold to one of its creditors pursuant to a "free and clear" bankruptcy court order, and then the respondent employer subsequently purchased six of the bankrupt employer's stores. [43] The Board adopted the ALJ's conclusion that the free and clear sale did not privilege the employer to ignore its Burns bargaining obligation. [44] The ALJ explained that the employer incurred its bargaining obligation as a successor based on its own conduct, rather than that of the predecessor. [45] The ALJ also explained that the employer's post-bankruptcy third-party purchase of the predecessor's assets, upon which its Burns bargaining obligation was premised, was not the kind of pre-bankruptcy "liability" the Bankruptcy Code was designed to extinguish. [46]

Similarly, in NLRB v. Horizons Hotel, [47] an employer filed for bankruptcy and sold its assets "free and clear" of liabilities and encumbrances pursuant to a bankruptcy court's order. The purchaser then refused to hire a unit of the predecessor's employees because of their union affiliation and, with regard to another unit, refused to recognize and bargain with the union even where it had hired a majority of the predecessor's employees. [48] The First Circuit upheld the Board's determination that the purchaser was a Burns successor and had violated Section 8(a)(1), (3), and (5) of the Act, specifically rejecting the purchaser's argument that the free and clear bankruptcy sale protected it from such liability. In reaching this conclusion, the court declared that the purchaser was "not here being held responsible … for the conduct or liability of a prior owner" but was being held "responsible for its own unlawful acts." [49]

The rationale underpinning these cases is equally applicable to the "perfectly clear" successorship context. [50] The Employer here created its own liability, independent of Predecessor's liability that was discharged through the "free and clear" sale. First and foremost, the Employer alone is responsible for failing to consult the Union over initial employment terms. The Employer would not be facing liability under the Act had it abided by its bargaining obligation as a "perfectly clear" successor. Indeed, the Employer was well aware that the workforce was represented because the Purchase Agreement specifically mentioned the bargaining relationship and acknowledged that the Employer had received a copy of the most recent labor agreement. And there was ample time to bargain over establishing different employment terms than those offered by the Predecessor between early February, when the Bankruptcy Court approved the sale, and its takeover of operations in mid-March. Instead, the Employer made no effort to consult with the employee's representative prior to setting initial terms. Thus, as in Horizons Hotel, the Employer's own unlawful post-sale actions create the need for relief under the Act.

Furthermore, the Employer could have avoided being classified as a "perfectly clear" successor altogether but chose not to take the steps necessary to do so. Rather than adopting the predecessor's workforce as its own, it could have advertised positions and conducted a genuine hiring process. Although the Purchase Agreement required that the Employer retain two-thirds of the 329 staff members employed across all three nursing homes it purchased, the bargaining unit at the Predecessor's facility was only 70 employees. This meant the Employer could have refused to hire some or all of the Predecessor's employees on a non-discriminatory basis, avoided becoming a "perfectly clear" successor (and maybe even a Burns successor), and still complied with the terms of the Purchase Agreement. Likewise, the Employer could have prevented "perfectly clear" successorship from attaching if it had clearly announced new terms and conditions to the Predecessor's employees. [51] Indeed, the Purchase Agreement explicitly preserved its right to communicate with employees about hiring and benefits, yet the Employer chose not to avail itself of that opportunity. Instead of running the risk of losing the Predecessor's experienced employees and needing to hire replacements during a nationwide shortage of nurses, the Employer silently adopted the Predecessor's workforce as its own and allowed employees to believe nothing would change. [52] In short, the Employer had a clear chance here to avoid a bargaining obligation over initial terms: it could have looked beyond the predecessor's workforce for hiring and it had the right to meet with existing employees to announce initial terms that deviated from the preexisting terms. But the Employer made "the conscious decision" not to do either. [53]

The Employer argues that it cannot be a "perfectly clear" successor because the Sale Order extinguished any obligation that the Employer be bound by the Predecessor's collective-bargaining agreement. [54] But this defense misses the mark. Even a "perfectly clear" successor is "not required as a legal matter to adopt their predecessor employer's collective-bargaining agreement." [55] Rather, it is only required-as a statutory matter, not a contractual one-to maintain the status quo until bargaining with the union to agreement or impasse. [56]

Further, the cases cited by the Employer in support of its position are inapposite. For example, the Employer primarily relies on Local Joint Executive Board v. Hotel Circle, Inc., [57] which held that "the unique features of labor agreements do not overcome the plain language of the Bankruptcy Act" and that a debtor could reject an "onerous and burdensome" collective-bargaining agreement. The Employer argues that, by allowing a debtor to reject a collective-bargaining agreement, the court implicitly sanctioned rejecting such agreements through "free and clear" sales as well. But that decision predates the Supreme Court's landmark decision in Bildisco, [58] which was in turn abrogated by the Bankruptcy Amendments and Federal Judgeship Act of 1984, which imposed a strict set of requirements on debtors seeking to reject collective-bargaining agreements. [59] Similarly, in Auto Workers v. Morse Tool, Inc. [60] the district court denied a union's appeal from a bankruptcy court decision allowing the sale of a debtor's assets "free and clear" of the collective-bargaining agreement, but only on the basis of mootness. And while the bankruptcy court in In re Lady H Coal Co. [61] held that a debtor could sell its assets "free and clear" of a collective-bargaining agreement even after failing to satisfy the strict requirements contained in Section 1113 of the Bankruptcy Code, the court declined to make any findings of fact or conclusions of law "as to objections raising successor liability based on other bodies of federal law."

The particular circumstances of this case make imposing a duty to bargain over initial terms especially compelling. The Debtors did not file a motion pursuant to Section 1113 to reject the Predecessor's collective-bargaining agreement and thus never met the strict requirements necessary to do so. [62] Indeed, the Debtors failed to give notice of the bankruptcy to the Union or the Board and, therefore, neither had opportunity to object to the Debtors' Sale Motion seeking to abrogate the collective-bargaining agreement. Though it was technically the Debtors' responsibility to notify the Union of the bankruptcy "free and clear" sale under Section 363, [63] the Employer's hands are not entirely clean either. As noted above, it clearly knew of the Union's representational status and the collective-bargaining agreement but said nothing until after the sale went through.

Based on the foregoing, it is wholly appropriate to seek relief under the Act for the Employer's failure to honor its obligation to bargain over initial terms of employment after adopting the Predecessor's workforce as its own.

II. Alternative Burns Theory

Alternatively, even assuming the Employer was not a "perfectly clear" successor, it still had an obligation to bargain with the Union before implementing unilateral changes that were not announced as part of its initial terms.

While an ordinary Burns successor is free to set initial terms and conditions of employment without bargaining with the union, a bargaining obligation then attaches as to subsequent changes the successor wishes to make. [64] In 301 Holdings, LLC, [65] the successor set initial terms by telling employees that work schedules would change, but omitted the fact that it would also reduce wages and discontinue health and welfare benefits. [66] The Board found that the successor had a duty to bargain with the union over these unannounced changes because, by telling employees that schedules would change, the successor implied "that all other terms and conditions would remain the same" and "could not thereafter unilaterally depart from those other terms and conditions." [67] Accordingly, 301 Holdings stands for the principle that "when a Burns successor announces a limited number of specific changes from the predecessor's terms and conditions of employment, it is those changes that define the permissible setting of initial terms: employees are entitled to conclude that all other terms will remain the same." [68] Thus, even where a successor lawfully sets initial terms, it may not unilaterally implement other changes that were not announced as part of initial terms. [69]

Here, the Employer held a post-transition meeting where it announced that employees could only carry over 40 hours of paid time off and that they would lose any balance over that amount on August 1. But even assuming this meeting occurred upon commencement of operations such that the announced caps on paid time off were part of initial terms, [70] the Employer did not convey that it would be implementing the other changes it subsequently made. It did not announce that it would stop cashing out lost paid time off, reduce paid time off accrual rates, or eliminate anniversary wage increases. Nor did the Employer announce that it would cut employees off from their Union by refusing to process grievances and ceasing dues checkoff. Instead, the Employer simply let employees discover these changes when they received their paychecks. Because it did not include these unilateral changes to terms and conditions of employment as part of its initial terms, the Employer was not privileged to make them without first bargaining with the Union.

To the extent the Employer may argue that it acted lawfully as to any changes implemented prior to the Union's bargaining demand, we would reject such a defense because its bargaining obligation attached immediately upon its takeover of operations. Although Fall River Dyeing envisioned that a union would need to make a bargaining request before a bargaining obligation could attach, this requirement developed in circumstances where there was a "start-up period by the new employer while it gradually builds its operations and hires employees." [71] Such a requirement is not appropriate where "there is a rapid transition period with the immediate hiring of a full employee complement" because it is clear in those circumstances that a majority of its workforce consists of its predecessor's former employees and thus the successor can "easily discern its obligation" to assume that the incumbent union continues to enjoy majority status. [72] Indeed, in 301 Holdings, the Board found that the unannounced changes to wages and benefits were unlawful even though the union's demand for recognition did not come until well after they had been implemented. [73] Thus, the Employer cannot successfully defend any changes that were never announced to employees as a part of initial terms and were implemented unilaterally subsequent to the takeover, even assuming it was only a Burns successor. [74]

III. The Region Should Urge the Board to Overrule Valley Hospital and Return to Lincoln Lutheran

Finally, we conclude that, because the Employer unilaterally ceased deducting and remitting dues, the Region should use this case if warranted [75] as a vehicle to urge the Board to overrule Valle Hospita1 [76] The General Counsel has taken the position that the Board should restore the Board's well-reasoned prior holding in Lincoln Lutheran [77] that dues checkoff is not exempt from the basic rule that an employer may not unilaterally alter terms and conditions of employment. Although Lincoln Lutheran and Valley Hospital involved an employer's conduct after an existing collective-bargaining agreement had expired, the principle that an employer may not alter preexisting terms and conditions of employment without first bargaining with the union applies with equal force in the context of "perfectly clear" Burns successorship. [78]

Here, the Employer is a "perfectly clear" successor that was obligated to bargain to agreement or impasse before setting initial terms of employment and making any changes thereafter. [79] Although the Predecessor's collective-bargaining agreement provided for dues checkoff, the Employer deviated from that status quo by ceasing the collection and remittance of dues to the Union and did so without consulting the Union. [80] Not only that, the Employer refused to discuss the Union's renewed grievance regarding dues checkoff, instead insisting on bargaining over a dues-checkoff arrangement as part of a new collective-bargaining agreement. The Employer's discontinuation of dues checkoff cut employees off from their chosen representative at a time when the Union and employees were in a "peculiarly vulnerable position." [81] Accordingly, this case would be a good vehicle to argue for a return to Lincoln Lutheran.

For the foregoing reasons, the Region should issue complaint, absent settlement, concerning the unilateral changes set forth above, seek to overrule Spruce Up, and, if appropriate, [82] urge the Board to overturn Valley Hospital.

/s/
R.A.B.

ADV.19-CA-280611.Response.Arcadia Medical Resort of Talbot

cc: Injunction Litigation Branch

¹	209 NLRB 194 (1974), enforced mem., 529 F.2d 516 (4th Cir. 1975).
²	11 U.S.C. §363.
³	The Region also asked whether Section 10(j) relief is appropriate and warranted in this case. The propriety and warrant of Section 10(j) relief will be addressed in a separate memorandum.
⁴	NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 294-95 (1972). See infra n.19.
⁵	368 NLRB No. 139 (2019), rev. granted sub nom. Local Joint Executive Bd. of Las Vegas v. NLRB, 840 F. App'x 134 (9th Cir. 2020).
⁶	362 NLRB 1655 (2015).
⁷	11 U.S.C. §363.
⁸	See 11 U.S.C. §1109(b); Fed. R. Bankr. P. 2002; see generally 5 William L. Norton III, Norton Bankruptcy Law and Practice §100:2 (3d ed. 2008 & Supp. 2022) (labor unions are parties in interest, with a right to notice and hearing, where their rights are affected by a Chapter 11 bankruptcy case).
⁹	All dates hereafter are in 2021, unless otherwise noted.
¹⁰	The Predecessor's administrator did not continue on in that role with the Employer, but it is not known whether this person was retained by the Employer in some other capacity.
¹¹	It is not clear whether the administrator was referring to renewal of the payroll contract or execution of a new collective-bargaining agreement.
¹²	The precise date of transition from the Predecessor to the Employer is unclear. Initially, the Predecessor's administrator stated that the "new owners/management" would start on March 15. But the Predecessor's administrator later indicated that the actual transfer of ownership occurred March 22. In its position statement, the Employer asserts that it assumed operations on March 19. For purposes of this memorandum, we rely upon March 19 as the transition date.
¹³	See infra n.73.
¹⁴	368 NLRB No. 139.
¹⁵	Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41 (1987); Burns, 406 U.S. at 279-81.
¹⁶	See Nexeo Solutions, LLC, 364 NLRB 570, 574 (2016) (citing Burns, 406 U.S. at 281-95); Monterey Newspapers, 334 NLRB 1019, 1020 (2001).
¹⁷	Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41 (1987); Burns, 406 U.S. at 279-81.
¹⁸	See Nexeo Solutions, LLC, 364 NLRB 570, 574 (2016) (citing Burns, 406 U.S. at 281-95); Monterey Newspapers, 334 NLRB 1019, 1020 (2001).
¹⁹	Burns, 406 U.S. at 294-95.
²⁰	See, e.g., Fremont Ford, 289 NLRB 1290, 1296-97 (1988) (employer was "perfectly clear" successor where it indicated to union that employees would be retained, engaged in a misinformation campaign that terms and conditions would remain the same, and only revealed changes after hiring process had begun); Nexeo Solutions, 364 NLRB at 577-78 (employer was "perfectly clear" successor where employees were "lulled" into believing terms and conditions would be comparable to predecessor's when employer indicated plan to retain them but then formal offer letters reflected different terms).
²¹	Spruce Up, 209 NLRB at 195 (employer that indicated intent to retain predecessor's employees while simultaneously announcing new wage rate was not a "perfectly clear" successor). The General Counsel disagrees with Spruce Up and has taken the position that the Board should adhere to the plain language of the Supreme Court's "perfectly clear" caveat in Burns, 406 U.S. at 294-95. Applying the plain language of Burns to the instant case, we conclude that it was "perfectly clear" that the Employer intended to retain the Predecessor's employees. The Employer had the Predecessor's employees show up for their shifts as usual and did not require employees to submit job applications or go through any genuine hiring process. Rather than seek out other job applicants or advertise open positions, the Employer simply adopted the Predecessor's workforce as its own. Accordingly, the Region should use this case as a vehicle to urge the Board to overrule Spruce Up as set forth in Arcadia Medical Resort of Parkside, Case 19-CA-280613, Advice Memorandum dated Apr. 5, 2022.
²²	See, e.g., Canteen Co., 317 NLRB 1052, 1052-54 (1995) (employer became "perfectly clear" successor when it informed union of its plan to retain predecessor employees without announcing changes in working conditions), enforced, 103 F.3d 1355 (7th Cir. 1997); Roman Catholic Diocese of Brooklyn, 222 NLRB 1052, 1055 (1976) (successor forfeited right to set initial terms under "perfectly clear" exception where new employer made unequivocal statement to union of intent to hire all of the predecessor's lay teachers without mentioning any changes in terms and conditions of employment, which only became known later when it distributed an employment contract), enforcement denied in relevant part sub nom. Nazareth Reg'l High Sch. v. NLRB, 549 F.2d 873 (2d Cir. 1977).
²³	Creative Vision Resources, LLC, 364 NLRB 1299, 1302 n.12 (2016) (where predecessor employees were classified as independent contractors, successor's inclusion of W-4 forms with job applications was not "sufficiently clear" announcement of new terms), enforced, 882 F.3d 510 (5th Cir. 2018); see also Canteen, 317 NLRB at 1053-54 (requiring predecessor employees to serve a probationary period did not preclude a finding of "perfectly clear" successorship). But see Banknote Corp. of America, 315 NLRB 1041, 1043 (1994) (employer's disavowal of predecessor's statement that it had agreed to be bound by the terms and conditions of the predecessor's collective-bargaining agreement-clarifying that it had "not made any such commitments"-put employees on notice that it intended to make changes), enforced, 84 F.3d 637 (2d Cir. 1996).
²⁴	Windsor Convalescent Center of North Long Beach, 351 NLRB 975, 982 (2007) ("A general statement that new terms will subsequently be set is not sufficient to fulfill the [employer's] Spruce Up obligation to announce new terms prior to or simultaneous with takeover"), enforcement denied in relevant part, 570 F.3d 354 (D.C. Cir. 2009); East Belden Corp., 239 NLRB 776, 793 (1978) (finding employer to be a "perfectly clear" successor where its announcement of unspecified changes in the future, couched in "generalized and speculative terms," did not clearly inform employees of the nature of the intended changes), enforced mem., 634 F.2d 635 (9th Cir. 1980).
²⁵	321 NLRB 828, 830-31 (1996), enforcement denied in relevant part sub nom. Peters v. NLRB, 153 F.3d 289 (6th Cir. 1998).
²⁶	Id.
²⁷	See Creative Vision Resources, 364 NLRB at 1302-03 (inclusion of tax forms with applications demonstrated successor's intent to hire predecessor's employees since job applicants typically do not fill out such forms until hired); Cadillac Asphalt Paving Co., 349 NLRB 6, 11 (2007) (finding that "by offering job applications and W-4 forms to [the predecessor's] employees … [the successor] invited the employees to accept employment").
²⁸	The Region should not rely upon the March 15 payroll flyer or the Predecessor administrator's statement to the Union regarding a "seamless transition" in operations to establish "perfectly clear" successorship because there is insufficient evidence that the flyer was posted at the direction of the Employer or that the Predecessor's administrator was acting as an agent of the Employer or on behalf of the Employer. Regarding the March 15 payroll flyer, it directed employees to contact the Predecessor's human resources manager, who did not continue in that role with the Employer, and the flyer did not mention the Employer in any way. Similarly, there is no evidence that would indicate that the Predecessor's administrator was speaking on behalf of the Employer. There is no evidence that the Employer instructed the administrator to make statements to employees, that the Employer had already offered the administrator the opportunity to continue on in their position at the time the "seamless transition" statement was made, or that the Employer later ratified or adopted the administrator's statement as its own. Compare Bekins Moving & Storage Co., 330 NLRB 761, 761 n.1 (2001) (General Counsel failed to establish that predecessor's manager was an agent of the successor when he communicated that employees would probably be retained where there was no evidence that he had been offered and accepted any position with the successor or had been directed to contact employees on behalf of the successor at the time of his statement), with Nexeo Solutions, 364 NLRB at 578-80 (finding predecessor president's communications to employees attributable to successor because, among other things, purchase agreement contemplated retention of president and successor review of pre-takeover communications to employees, successor's consultants were involved in drafting and editing communications, and president gave impression that he would continue as manager under new owner), and Lemay Caring Center, 280 NLRB 60, 65-67 (1986) (attributing unlawful statements to successor where predecessor's manager informed employees of successor's future operational plans after he had been selected by the successor to continue in a managerial role and successor failed to repudiate his actions or to inform employees that he was not speaking on its behalf), enforced sub nom. Dasal Caring Ctrs. v. NLRB, 815 F.2d 711 (8th Cir. 1987).
²⁹	See generally Morton v. Mancari, 417 U.S. 535, 551 (1974).
³⁰	Direct Press Modern Litho, Inc., 328 NLRB 860, 861 (1999) (citing NLRB v. Bildisco & Bildisco 465 U.S. 513, 535, 541 (1984) (Justice Brennan, concurring in part and dissenting in part)).
³¹	San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 245 (1959); Nathanson v. NLRB, 344 U.S. 25, 27 (1952).
³²	Image Systems, 285 NLRB 370, 371 (1987) (citing Olympic Fruit & Produce Co., 261 NLRB 322, 323 (1982)).
³³	See In re Goodman, 873 F.2d 598, 602-03 (2d Cir. 1989) (Board, not bankruptcy court, has jurisdiction to decide whether a new employer is a successor or alter ego of an earlier employer for purposes of liability under the Act), overruled on other grounds, Germain v. Conn. Nat'l Bank, 926 F.2d 191 (2d Cir 1991); cf. In re Bel Air Chateau Hosp., Inc., 611 F.2d 1248, 1251 (9th Cir. 1979) (whether receiver was alter ego of hospital's former operators was a question exclusively for the Board to answer).
³⁴	Fall River Dyeing, 482 U.S. at 43.
³⁵	See Nephi Rubber Products Corp., 303 NLRB 151, 153 (1991) (16-month hiatus and bankruptcy proceedings did not preclude a finding of successorship), enforced, 976 F.2d 1361 (10th Cir. 1992); Jersey Juniors, Inc., 230 NLRB 329, 332-33 (1977) (applying Burns where successor purchased predecessor's assets in a Chapter 11 bankruptcy sale).
³⁶	Fall River Dyeing, 482 U.S. at 41. Accord Burns, 406 U.S. at 279-81.
³⁷	In re Cedar Funding, Inc., 419 B.R. 807, 817 (B.A.P. 9th Cir. 2009) (citing Bank of Am. Nat'l Trust & Sav. Ass'n v. 203 N. LaSalle St. P'ship, 526 U.S. 434, 453 (1999)); see also In re New Invs., Inc., 840 F.3d 1137, 1142 (9th Cir. 2016) (Chapter 11 "strikes a balance" between a business's interest in "reorganizing and restructuring its debts" and creditors' "interest in maximizing the value of the bankruptcy estate" (quoting Fla. Dep't of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 51 (2008))).
³⁸	11 U.S.C. §363.
³⁹	In re Realia, Inc., No. ADV. 2:10-00962, 2012 WL 833372, at 10 (B.A.P. 9th Cir. Mar. 13, 2012) (purpose of "free and clear" language is to maximize recovery on debtor's assets in the marketplace), aff'd mem., 569 F. App'x 544 (9th Cir. 2014); In re Med. Software Sols., 286 B.R. 431, 446 (Bankr. D. Utah 2002) ("Without adequate protection, purchasers would bid nominal amounts for assets to compensate for the risk of uncertainty thereby impairing the debtor's creditors with a lower sales amount."). See generally In re WBQ P'ship*, 189 B.R. 97, 108 (Bankr. E.D. Va. 1995) (discussing policy underlying Bankruptcy Code's "free and clear" provision in Section 363(f)).
⁴⁰	See In re NE Opco, Inc., 513 B.R. 871, 877-78 (Bankr. D. Del. 2014) (purchaser could not use bankruptcy "free and clear" sale order to escape liability for employment discrimination claims that were based on purchaser's post-sale refusal to hire); see also Ninth Ave. Remedial Grp. v. Allis-Chalmers Corp., 195 B.R. 716, 732 (N.D. Ind. 1996) (bankruptcy courts lack power to sell assets free and clear of "future claims that did not arise until after the bankruptcy proceedings concluded"); In re AutoStyle Plastics, Inc., 227 B.R. 797, 800 (Bankr. W.D. Mich. 1998) (same); In re Motors Liquidation Co., 568 B.R. 217, 230-31 (Bankr. S.D.N.Y. 2017) ("free and clear" sale of assets of Chapter 11 debtor could not bar failure-to-warn and failure-to-recall-and-retrofit claims based not on the conduct of the debtor-manufacturer but on the conduct of the purchaser), aff'd in relevant part, 590 B.R. 39 (S.D.N.Y. 2018), aff'd, 943 F.3d 125 (2d Cir. 2019), aff'd, 792 F. App'x 28 (2d Cir. 2019), and aff'd, 957 F.3d 357 (2d Cir. 2020); cf. Ingman v. FCA US LLC, No. CV-17-00069-GF-BMM, 2017 WL 5465521, at *3-4 (D. Mont. Nov. 14, 2017) (remanding product liability lawsuit to state court because purchaser's post-bankruptcy sale conduct was not "related to" bankruptcy so as to confer federal court jurisdiction).
⁴¹	Erica, Inc. v. NLRB, 200 F. App'x 344, 347 (5th Cir. 2006), enforcing Foodbasket Partners, 344 NLRB 799 (2005); see also In re Carib-Inn of San Juan Corp., 905 F.2d 561, 562 (1st Cir. 1990) (finding Board, not bankruptcy court, had jurisdiction to decide merits of unfair labor practice charge since Board complaint was directed solely at purchaser and sought no remedy against bankrupt estate); In re Goodman, 873 F.2d at 602 (finding that bankruptcy court's discharge of debts could not serve to insulate against liability for post-petition conduct).
⁴²	344 NLRB 799.
⁴³	See id. at 800.
⁴⁴	See id. at 800-01.
⁴⁵	See id. at 801. See also Erica, 200 F. App'x at 347 (Foodbasket Partners "had a duty to bargain with the union under the NLRA because of its conduct after the purchase of [predecessor's business]").
⁴⁶	See Foodbasket Partners, 344 NLRB at 801.
⁴⁷	49 F.3d 795, 800, 803 (1st Cir. 1995), enforcing 312 NLRB 1212 (1993).
⁴⁸	Id. at 804-06.
⁴⁹	Id. at 803 (citing In re Carib-Inn, 905 F.2d at 563-64).
⁵⁰	Cf. Massey Energy Co., 358 NLRB 1643, 1648 n.21 (2012) (Noel Canning Board) (rejecting contention that imposing a duty to bargain over initial terms would negate the bankruptcy court's "free and clear" order setting aside the collective-bargaining agreement because successor's "own post-sale conduct-its continuation of [the predecessor's] business, its discriminatory refusal to hire the predecessor's employees, and its announcement to prospective employees that [the successor] would be nonunion-triggered [that] obligation to bargain"). Although Massey Energy was issued by a panel that, under NLRB v. Noel Canning, 573 U.S. 513 (2014), was not properly constituted, it is the General Counsel's position that this case was soundly reasoned. The Region should therefore urge the ALJ and the Board to extend the principles set forth in that case to the instant matter. See DHL Express, Inc. v. NLRB, 813 F.3d 365, 377 n.2 (D.C. Cir. 2016) (noting that the rationale in a voided, two-member decision was "instructive").
⁵¹	As noted above, however, the Region should also seek to overturn Spruce Up in this case. See supra n.19.
⁵²	See S & F Market Street Healthcare, 570 F.3d at 359 (holding that, "at bottom, the ‘perfectly clear’ exception is intended to prevent an employer from inducing possibly adverse reliance on the part of employees it … lulled into not looking for other work").
⁵³	Fall River Dyeing, 482 U.S. at 41.
⁵⁴	While the plain language of the Sale Order appears broad enough to extinguish the Employer's obligations as a successor, such an outcome would run counter to the purposes of the Bankruptcy Code: to extinguish liabilities arising from claims against the debtor arising before the debtor sells its assets. Thus, we construe the Sale Order's language more narrowly than its plain language might suggest-an interpretation the Employer effectively acknowledges by bargaining with the Union for a new collective-bargaining agreement as an ordinary Burns successor.
⁵⁵	First Student, Inc., a Division of First Group America, 366 NLRB No. 13, slip op. at 3 (2018), enforced, 935 F.3d 604 (D.C. Cir. 2019).
⁵⁶	Id. Cf. Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 206 (1991) ("Under Katz, terms and conditions continue in effect by operation of the NLRA. They are no longer agreed-upon terms; they are terms imposed by law, at least so far as there is no unilateral right to change them.").
⁵⁷	613 F.2d 210 (9th Cir. 1980).
⁵⁸	Bildisco, 465 U.S. at 525-26 (collective-bargaining agreements are executory contracts that can be rejected pursuant to the then-existing bankruptcy laws, but their special nature requires that bankruptcy courts apply a stricter standard than the "business judgment" standard for rejection).
⁵⁹	See 11 U.S.C. §1113 (requiring that debtor first take certain steps, such as bargaining in good faith with the union over possible contract modifications, before seeking rejection of a collective-bargaining agreement and setting forth specific requirements for bankruptcy court to approve such rejection); see also In re Wheeling-Pittsburgh Steel Corp., 52 B.R. 997, 998-99 (W.D. Pa. 1985) (describing amendments to bankruptcy code in response to Bildisco), vacated on other grounds, 791 F.2d 1074 (3d Cir. 1986).
⁶⁰	85 B.R. 666, 667 (D. Mass. 1988).
⁶¹	193 B.R. 233, 236 (Bankr. S.D.W. Va. 1996).
⁶²	See 11 U.S.C. §1113 (permitting rejection of a collective-bargaining agreement only if the court finds that (1) the debtor proposed contract modifications to the union necessary to permit the reorganization of the debtor; (2) the union refused to accept such proposal without good cause; and (3) the balance of equities clearly favors rejection of the labor agreement).
⁶³	See 11 U.S.C. §363(b)(1); Fed. R. Bankr. P. 6004(a); see generally 2 William L. Norton III, Norton Bankruptcy Law and Practice §44:18 (3d ed. 2008 & Supp. 2022) (for sale of property outside the ordinary course of business, proper notice of transaction must be given to parties with interest in the property).
⁶⁴	See, e.g., Banknote, 315 NLRB at 1044 n.9, 1049 (ordinary Burns successor was not privileged to unilaterally change health benefits after it commenced operations because those changes were inconsistent with pre-takeover promise to continue benefits as-is for 60 days).
⁶⁵	340 NLRB 366 (2003).
⁶⁶	Id. at 367.
⁶⁷	Id. at 368.
⁶⁸	Paragon Systems, Inc., 362 NLRB 1385, 1388 n.2 (2015) (Member McFerran, dissenting) (disagreeing with majority as to whether 301 Holdings was distinguishable). Notably, the Paragon Systems majority did not disagree with Member McFerran's characterization of the principle established in 301 Holdings so much as whether the announcement in that case reasonably encompassed a specific change such that the change was part and parcel of the Burns successor's lawfully-imposed initial terms. Id. at 1386.
⁶⁹	Compare Windsor Convalescent Home, 351 NLRB at 982 n.31 (even assuming successor's letter to employees was a sufficiently clear announcement of new employment terms such that it was not a "perfectly clear" successor, it still had an obligation to bargain over any unannounced terms, including dismantling of bulletin board and issuing new handbooks), and Specialty Envelope, 321 NLRB at 832 (though successor lawfully set its own initial terms, change in attendance policy announced one month after takeover was unlawful), with Paragon, 362 NLRB at 1386-87 (finding reduction in shift-transition time to be lawful initial term where it was reasonably encompassed by announcement that shift schedules would be subject to operational needs).
⁷⁰	If the Region determines that the paid time off caps were not announced shortly after takeover, even that announced change would be unlawful because it would no longer be considered part of "initial terms."
⁷¹	Fall River Dyeing, 482 U.S. at 47.
⁷²	Banknote, 84 F.3d at 645-46 (adopting Board's position on appeal that no bargaining demand was required).
⁷³	340 NLRB at 366-68, 375 (successor unlawfully reduced wages and discontinued benefits "immediately" after takeover in September while the union did not demand recognition until mid-October).
⁷⁴	The Employer, of course, had a duty to bargain with the Union as a Burns successor notwithstanding the "free and clear" language in the Sale Order. See Foodbasket Partners, 344 NLRB at 800-01 (a Burns successor's obligation to bargain with an incumbent union is not disposed of by a "free and clear" sale because this post-sale obligation is not the kind of liability the Bankruptcy Code was designed to extinguish).
⁷⁵	In this regard, the Region should confirm that the dues checkoff authorization cards included language permitting the authorization to roll over to a successor employer, and if so, that the Employer possessed such cards when it took over operations so as to permit dues deduction under Section 3020(4).
⁷⁶	368 NLRB No. 139.
⁷⁷	362 NLRB at 1655.
⁷⁸	See Specialty Envelope, 321 NLRB at 831 n.8 (1996) (reversing ALJ's finding that a "perfectly clear" successor violated Section 8(a)(5) by ceasing dues checkoff based on view that "a dues-checkoff provision is solely a creature of the contract") (citing Bethlehem Steel Co., 136 NLRB 1500 (1962), enforced in relevant part, 320 F.2d 615 (3d Cir. 1963)); Nexeo Solutions, 364 NLRB at 573, 582 ("perfectly clear" successor unlawfully implemented unilateral changes in unit employees' preexisting terms when it set initial terms); Cadillac Asphalt Paving, 349 NLRB at 9-11 ("perfectly clear" successor failed to continue terms maintained by predecessor at the time of succession).
⁷⁹	See Nexeo Solutions, 364 NLRB at 581, 582 n.38 (Board "decisions have consistently interpreted Burns as imposing a requirement that a "perfectly clear" successor bargain with the incumbent union to agreement or impasse before establishing initial terms; no reviewing court has disagreed"); Creative Vision Resources, 364 NLRB at 1301 n.8, 1305 (in light of "perfectly clear" successor finding, unilateral changes implemented on or after first day of operations were unlawful).
⁸⁰	Although the Predecessor had ceased deducting and remitting dues, the result of a change in payroll providers that occurred before the sale of its assets, the Union filed a grievance over the failure and the Union and the Predecessor were working to remedy the issue at the time the Employer took over operations. The Union then re-filed its dues checkoff grievance with the Employer but, unlike the Predecessor, it refused to respond to the grievance. Because the Union was making efforts to ensure that the Predecessor resumed dues checkoff, persisted in these efforts after the Employer took over operations, and the Employer was clearly aware of these efforts, dues checkoff was a term and condition of employment that the Employer was not free to unilaterally change. See Jersey Juniors, Inc., 230 NLRB 329, 334 (1977) (where predecessor acknowledged obligation to make pension contributions but was unable to do so because of financial inability, union was making efforts to collect such contributions, and successor was aware of those efforts, successor could not "unilaterally disavow observance of such a term of employment").
⁸¹	Fall River Dyeing, 482 U.S. at 39.
⁸²	See supra n.73.

NLRB Advice Memoranda, Arcadia Medical Resort of Talbot, National Labor Relations Board, (Apr 25, 2022)

Case 19-CA-280611. April 25, 2022. 347-6040-7500; 530-4825-6700; 530-4850-6700 and 530-6067-4000.

Ronald K. Hooks, Regional Director Region 19

Richard A. Bock, Associate General Counsel Division of Advice

FACTS

I. Bankruptcy Proceedings

Except with respect to the Collective Bargaining Agreement by and between [the Predecessor] and SEIU 775 (the "CBA"), the Business is not subject to any collective bargaining agreements. Sellers are not in default in any of their obligations under the CBA and the CBA is in full force and effect. Sellers have provided a true and correct copy of the CBA to Buyers. Sellers will provide any notice required to be provided under the CBA in connection with the transaction contemplated by this Agreement and will provide a copy of such notice to Buyers.

II. The Employer's Takeover of the Predecessor's Operations

ACTION

I. Perfectly Clear Successorship

a. The Employer is a “perfectly clear” successor under Spruce Up

Upon acquiring a business, a new employer has an obligation to bargain with the union that represented its predecessor's employees if the new employer continues its predecessor's business in substantially the same form and if a majority of its workforce was formerly employed by the predecessor. [17] However, a new employer is not bound by the predecessor's collective-bargaining agreement or its substantive terms and ordinarily may unilaterally set initial terms and conditions of employment. [18]

b. The Bankruptcy Court's "Free and Clear" Sale Order Does Not Extinguish the Employer's Bargaining Obligation as a "Perfectly Clear" Successor Under the Act

II. Alternative Burns Theory

III. The Region Should Urge the Board to Overrule Valley Hospital and Return to Lincoln Lutheran

/s/
R.A.B.

ADV.19-CA-280611.Response.Arcadia Medical Resort of Talbot

cc: Injunction Litigation Branch

¹	209 NLRB 194 (1974), enforced mem., 529 F.2d 516 (4th Cir. 1975).
²	11 U.S.C. §363.
³	The Region also asked whether Section 10(j) relief is appropriate and warranted in this case. The propriety and warrant of Section 10(j) relief will be addressed in a separate memorandum.
⁴	NLRB v. Burns Int'l Sec. Servs., Inc., 406 U.S. 272, 294-95 (1972). See infra n.19.
⁵	368 NLRB No. 139 (2019), rev. granted sub nom. Local Joint Executive Bd. of Las Vegas v. NLRB, 840 F. App'x 134 (9th Cir. 2020).
⁶	362 NLRB 1655 (2015).
⁷	11 U.S.C. §363.
⁸	See 11 U.S.C. §1109(b); Fed. R. Bankr. P. 2002; see generally 5 William L. Norton III, Norton Bankruptcy Law and Practice §100:2 (3d ed. 2008 & Supp. 2022) (labor unions are parties in interest, with a right to notice and hearing, where their rights are affected by a Chapter 11 bankruptcy case).
⁹	All dates hereafter are in 2021, unless otherwise noted.
¹⁰	The Predecessor's administrator did not continue on in that role with the Employer, but it is not known whether this person was retained by the Employer in some other capacity.
¹¹	It is not clear whether the administrator was referring to renewal of the payroll contract or execution of a new collective-bargaining agreement.
¹²	The precise date of transition from the Predecessor to the Employer is unclear. Initially, the Predecessor's administrator stated that the "new owners/management" would start on March 15. But the Predecessor's administrator later indicated that the actual transfer of ownership occurred March 22. In its position statement, the Employer asserts that it assumed operations on March 19. For purposes of this memorandum, we rely upon March 19 as the transition date.
¹³	See infra n.73.
¹⁴	368 NLRB No. 139.
¹⁵	Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41 (1987); Burns, 406 U.S. at 279-81.
¹⁶	See Nexeo Solutions, LLC, 364 NLRB 570, 574 (2016) (citing Burns, 406 U.S. at 281-95); Monterey Newspapers, 334 NLRB 1019, 1020 (2001).
¹⁷	Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 41 (1987); Burns, 406 U.S. at 279-81.
¹⁸	See Nexeo Solutions, LLC, 364 NLRB 570, 574 (2016) (citing Burns, 406 U.S. at 281-95); Monterey Newspapers, 334 NLRB 1019, 1020 (2001).
¹⁹	Burns, 406 U.S. at 294-95.
²⁰	See, e.g., Fremont Ford, 289 NLRB 1290, 1296-97 (1988) (employer was "perfectly clear" successor where it indicated to union that employees would be retained, engaged in a misinformation campaign that terms and conditions would remain the same, and only revealed changes after hiring process had begun); Nexeo Solutions, 364 NLRB at 577-78 (employer was "perfectly clear" successor where employees were "lulled" into believing terms and conditions would be comparable to predecessor's when employer indicated plan to retain them but then formal offer letters reflected different terms).
²¹	Spruce Up, 209 NLRB at 195 (employer that indicated intent to retain predecessor's employees while simultaneously announcing new wage rate was not a "perfectly clear" successor). The General Counsel disagrees with Spruce Up and has taken the position that the Board should adhere to the plain language of the Supreme Court's "perfectly clear" caveat in Burns, 406 U.S. at 294-95. Applying the plain language of Burns to the instant case, we conclude that it was "perfectly clear" that the Employer intended to retain the Predecessor's employees. The Employer had the Predecessor's employees show up for their shifts as usual and did not require employees to submit job applications or go through any genuine hiring process. Rather than seek out other job applicants or advertise open positions, the Employer simply adopted the Predecessor's workforce as its own. Accordingly, the Region should use this case as a vehicle to urge the Board to overrule Spruce Up as set forth in Arcadia Medical Resort of Parkside, Case 19-CA-280613, Advice Memorandum dated Apr. 5, 2022.
²²	See, e.g., Canteen Co., 317 NLRB 1052, 1052-54 (1995) (employer became "perfectly clear" successor when it informed union of its plan to retain predecessor employees without announcing changes in working conditions), enforced, 103 F.3d 1355 (7th Cir. 1997); Roman Catholic Diocese of Brooklyn, 222 NLRB 1052, 1055 (1976) (successor forfeited right to set initial terms under "perfectly clear" exception where new employer made unequivocal statement to union of intent to hire all of the predecessor's lay teachers without mentioning any changes in terms and conditions of employment, which only became known later when it distributed an employment contract), enforcement denied in relevant part sub nom. Nazareth Reg'l High Sch. v. NLRB, 549 F.2d 873 (2d Cir. 1977).
²³	Creative Vision Resources, LLC, 364 NLRB 1299, 1302 n.12 (2016) (where predecessor employees were classified as independent contractors, successor's inclusion of W-4 forms with job applications was not "sufficiently clear" announcement of new terms), enforced, 882 F.3d 510 (5th Cir. 2018); see also Canteen, 317 NLRB at 1053-54 (requiring predecessor employees to serve a probationary period did not preclude a finding of "perfectly clear" successorship). But see Banknote Corp. of America, 315 NLRB 1041, 1043 (1994) (employer's disavowal of predecessor's statement that it had agreed to be bound by the terms and conditions of the predecessor's collective-bargaining agreement-clarifying that it had "not made any such commitments"-put employees on notice that it intended to make changes), enforced, 84 F.3d 637 (2d Cir. 1996).
²⁴	Windsor Convalescent Center of North Long Beach, 351 NLRB 975, 982 (2007) ("A general statement that new terms will subsequently be set is not sufficient to fulfill the [employer's] Spruce Up obligation to announce new terms prior to or simultaneous with takeover"), enforcement denied in relevant part, 570 F.3d 354 (D.C. Cir. 2009); East Belden Corp., 239 NLRB 776, 793 (1978) (finding employer to be a "perfectly clear" successor where its announcement of unspecified changes in the future, couched in "generalized and speculative terms," did not clearly inform employees of the nature of the intended changes), enforced mem., 634 F.2d 635 (9th Cir. 1980).
²⁵	321 NLRB 828, 830-31 (1996), enforcement denied in relevant part sub nom. Peters v. NLRB, 153 F.3d 289 (6th Cir. 1998).
²⁶	Id.
²⁷	See Creative Vision Resources, 364 NLRB at 1302-03 (inclusion of tax forms with applications demonstrated successor's intent to hire predecessor's employees since job applicants typically do not fill out such forms until hired); Cadillac Asphalt Paving Co., 349 NLRB 6, 11 (2007) (finding that "by offering job applications and W-4 forms to [the predecessor's] employees … [the successor] invited the employees to accept employment").
²⁸	The Region should not rely upon the March 15 payroll flyer or the Predecessor administrator's statement to the Union regarding a "seamless transition" in operations to establish "perfectly clear" successorship because there is insufficient evidence that the flyer was posted at the direction of the Employer or that the Predecessor's administrator was acting as an agent of the Employer or on behalf of the Employer. Regarding the March 15 payroll flyer, it directed employees to contact the Predecessor's human resources manager, who did not continue in that role with the Employer, and the flyer did not mention the Employer in any way. Similarly, there is no evidence that would indicate that the Predecessor's administrator was speaking on behalf of the Employer. There is no evidence that the Employer instructed the administrator to make statements to employees, that the Employer had already offered the administrator the opportunity to continue on in their position at the time the "seamless transition" statement was made, or that the Employer later ratified or adopted the administrator's statement as its own. Compare Bekins Moving & Storage Co., 330 NLRB 761, 761 n.1 (2001) (General Counsel failed to establish that predecessor's manager was an agent of the successor when he communicated that employees would probably be retained where there was no evidence that he had been offered and accepted any position with the successor or had been directed to contact employees on behalf of the successor at the time of his statement), with Nexeo Solutions, 364 NLRB at 578-80 (finding predecessor president's communications to employees attributable to successor because, among other things, purchase agreement contemplated retention of president and successor review of pre-takeover communications to employees, successor's consultants were involved in drafting and editing communications, and president gave impression that he would continue as manager under new owner), and Lemay Caring Center, 280 NLRB 60, 65-67 (1986) (attributing unlawful statements to successor where predecessor's manager informed employees of successor's future operational plans after he had been selected by the successor to continue in a managerial role and successor failed to repudiate his actions or to inform employees that he was not speaking on its behalf), enforced sub nom. Dasal Caring Ctrs. v. NLRB, 815 F.2d 711 (8th Cir. 1987).
²⁹	See generally Morton v. Mancari, 417 U.S. 535, 551 (1974).
³⁰	Direct Press Modern Litho, Inc., 328 NLRB 860, 861 (1999) (citing NLRB v. Bildisco & Bildisco 465 U.S. 513, 535, 541 (1984) (Justice Brennan, concurring in part and dissenting in part)).
³¹	San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 245 (1959); Nathanson v. NLRB, 344 U.S. 25, 27 (1952).
³²	Image Systems, 285 NLRB 370, 371 (1987) (citing Olympic Fruit & Produce Co., 261 NLRB 322, 323 (1982)).
³³	See In re Goodman, 873 F.2d 598, 602-03 (2d Cir. 1989) (Board, not bankruptcy court, has jurisdiction to decide whether a new employer is a successor or alter ego of an earlier employer for purposes of liability under the Act), overruled on other grounds, Germain v. Conn. Nat'l Bank, 926 F.2d 191 (2d Cir 1991); cf. In re Bel Air Chateau Hosp., Inc., 611 F.2d 1248, 1251 (9th Cir. 1979) (whether receiver was alter ego of hospital's former operators was a question exclusively for the Board to answer).
³⁴	Fall River Dyeing, 482 U.S. at 43.
³⁵	See Nephi Rubber Products Corp., 303 NLRB 151, 153 (1991) (16-month hiatus and bankruptcy proceedings did not preclude a finding of successorship), enforced, 976 F.2d 1361 (10th Cir. 1992); Jersey Juniors, Inc., 230 NLRB 329, 332-33 (1977) (applying Burns where successor purchased predecessor's assets in a Chapter 11 bankruptcy sale).
³⁶	Fall River Dyeing, 482 U.S. at 41. Accord Burns, 406 U.S. at 279-81.
³⁷	In re Cedar Funding, Inc., 419 B.R. 807, 817 (B.A.P. 9th Cir. 2009) (citing Bank of Am. Nat'l Trust & Sav. Ass'n v. 203 N. LaSalle St. P'ship, 526 U.S. 434, 453 (1999)); see also In re New Invs., Inc., 840 F.3d 1137, 1142 (9th Cir. 2016) (Chapter 11 "strikes a balance" between a business's interest in "reorganizing and restructuring its debts" and creditors' "interest in maximizing the value of the bankruptcy estate" (quoting Fla. Dep't of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33, 51 (2008))).
³⁸	11 U.S.C. §363.
³⁹	In re Realia, Inc., No. ADV. 2:10-00962, 2012 WL 833372, at 10 (B.A.P. 9th Cir. Mar. 13, 2012) (purpose of "free and clear" language is to maximize recovery on debtor's assets in the marketplace), aff'd mem., 569 F. App'x 544 (9th Cir. 2014); In re Med. Software Sols., 286 B.R. 431, 446 (Bankr. D. Utah 2002) ("Without adequate protection, purchasers would bid nominal amounts for assets to compensate for the risk of uncertainty thereby impairing the debtor's creditors with a lower sales amount."). See generally In re WBQ P'ship*, 189 B.R. 97, 108 (Bankr. E.D. Va. 1995) (discussing policy underlying Bankruptcy Code's "free and clear" provision in Section 363(f)).
⁴⁰	See In re NE Opco, Inc., 513 B.R. 871, 877-78 (Bankr. D. Del. 2014) (purchaser could not use bankruptcy "free and clear" sale order to escape liability for employment discrimination claims that were based on purchaser's post-sale refusal to hire); see also Ninth Ave. Remedial Grp. v. Allis-Chalmers Corp., 195 B.R. 716, 732 (N.D. Ind. 1996) (bankruptcy courts lack power to sell assets free and clear of "future claims that did not arise until after the bankruptcy proceedings concluded"); In re AutoStyle Plastics, Inc., 227 B.R. 797, 800 (Bankr. W.D. Mich. 1998) (same); In re Motors Liquidation Co., 568 B.R. 217, 230-31 (Bankr. S.D.N.Y. 2017) ("free and clear" sale of assets of Chapter 11 debtor could not bar failure-to-warn and failure-to-recall-and-retrofit claims based not on the conduct of the debtor-manufacturer but on the conduct of the purchaser), aff'd in relevant part, 590 B.R. 39 (S.D.N.Y. 2018), aff'd, 943 F.3d 125 (2d Cir. 2019), aff'd, 792 F. App'x 28 (2d Cir. 2019), and aff'd, 957 F.3d 357 (2d Cir. 2020); cf. Ingman v. FCA US LLC, No. CV-17-00069-GF-BMM, 2017 WL 5465521, at *3-4 (D. Mont. Nov. 14, 2017) (remanding product liability lawsuit to state court because purchaser's post-bankruptcy sale conduct was not "related to" bankruptcy so as to confer federal court jurisdiction).
⁴¹	Erica, Inc. v. NLRB, 200 F. App'x 344, 347 (5th Cir. 2006), enforcing Foodbasket Partners, 344 NLRB 799 (2005); see also In re Carib-Inn of San Juan Corp., 905 F.2d 561, 562 (1st Cir. 1990) (finding Board, not bankruptcy court, had jurisdiction to decide merits of unfair labor practice charge since Board complaint was directed solely at purchaser and sought no remedy against bankrupt estate); In re Goodman, 873 F.2d at 602 (finding that bankruptcy court's discharge of debts could not serve to insulate against liability for post-petition conduct).
⁴²	344 NLRB 799.
⁴³	See id. at 800.
⁴⁴	See id. at 800-01.
⁴⁵	See id. at 801. See also Erica, 200 F. App'x at 347 (Foodbasket Partners "had a duty to bargain with the union under the NLRA because of its conduct after the purchase of [predecessor's business]").
⁴⁶	See Foodbasket Partners, 344 NLRB at 801.
⁴⁷	49 F.3d 795, 800, 803 (1st Cir. 1995), enforcing 312 NLRB 1212 (1993).
⁴⁸	Id. at 804-06.
⁴⁹	Id. at 803 (citing In re Carib-Inn, 905 F.2d at 563-64).
⁵⁰	Cf. Massey Energy Co., 358 NLRB 1643, 1648 n.21 (2012) (Noel Canning Board) (rejecting contention that imposing a duty to bargain over initial terms would negate the bankruptcy court's "free and clear" order setting aside the collective-bargaining agreement because successor's "own post-sale conduct-its continuation of [the predecessor's] business, its discriminatory refusal to hire the predecessor's employees, and its announcement to prospective employees that [the successor] would be nonunion-triggered [that] obligation to bargain"). Although Massey Energy was issued by a panel that, under NLRB v. Noel Canning, 573 U.S. 513 (2014), was not properly constituted, it is the General Counsel's position that this case was soundly reasoned. The Region should therefore urge the ALJ and the Board to extend the principles set forth in that case to the instant matter. See DHL Express, Inc. v. NLRB, 813 F.3d 365, 377 n.2 (D.C. Cir. 2016) (noting that the rationale in a voided, two-member decision was "instructive").
⁵¹	As noted above, however, the Region should also seek to overturn Spruce Up in this case. See supra n.19.
⁵²	See S & F Market Street Healthcare, 570 F.3d at 359 (holding that, "at bottom, the ‘perfectly clear’ exception is intended to prevent an employer from inducing possibly adverse reliance on the part of employees it … lulled into not looking for other work").
⁵³	Fall River Dyeing, 482 U.S. at 41.
⁵⁴	While the plain language of the Sale Order appears broad enough to extinguish the Employer's obligations as a successor, such an outcome would run counter to the purposes of the Bankruptcy Code: to extinguish liabilities arising from claims against the debtor arising before the debtor sells its assets. Thus, we construe the Sale Order's language more narrowly than its plain language might suggest-an interpretation the Employer effectively acknowledges by bargaining with the Union for a new collective-bargaining agreement as an ordinary Burns successor.
⁵⁵	First Student, Inc., a Division of First Group America, 366 NLRB No. 13, slip op. at 3 (2018), enforced, 935 F.3d 604 (D.C. Cir. 2019).
⁵⁶	Id. Cf. Litton Bus. Sys., Inc. v. NLRB, 501 U.S. 190, 206 (1991) ("Under Katz, terms and conditions continue in effect by operation of the NLRA. They are no longer agreed-upon terms; they are terms imposed by law, at least so far as there is no unilateral right to change them.").
⁵⁷	613 F.2d 210 (9th Cir. 1980).
⁵⁸	Bildisco, 465 U.S. at 525-26 (collective-bargaining agreements are executory contracts that can be rejected pursuant to the then-existing bankruptcy laws, but their special nature requires that bankruptcy courts apply a stricter standard than the "business judgment" standard for rejection).
⁵⁹	See 11 U.S.C. §1113 (requiring that debtor first take certain steps, such as bargaining in good faith with the union over possible contract modifications, before seeking rejection of a collective-bargaining agreement and setting forth specific requirements for bankruptcy court to approve such rejection); see also In re Wheeling-Pittsburgh Steel Corp., 52 B.R. 997, 998-99 (W.D. Pa. 1985) (describing amendments to bankruptcy code in response to Bildisco), vacated on other grounds, 791 F.2d 1074 (3d Cir. 1986).
⁶⁰	85 B.R. 666, 667 (D. Mass. 1988).
⁶¹	193 B.R. 233, 236 (Bankr. S.D.W. Va. 1996).
⁶²	See 11 U.S.C. §1113 (permitting rejection of a collective-bargaining agreement only if the court finds that (1) the debtor proposed contract modifications to the union necessary to permit the reorganization of the debtor; (2) the union refused to accept such proposal without good cause; and (3) the balance of equities clearly favors rejection of the labor agreement).
⁶³	See 11 U.S.C. §363(b)(1); Fed. R. Bankr. P. 6004(a); see generally 2 William L. Norton III, Norton Bankruptcy Law and Practice §44:18 (3d ed. 2008 & Supp. 2022) (for sale of property outside the ordinary course of business, proper notice of transaction must be given to parties with interest in the property).
⁶⁴	See, e.g., Banknote, 315 NLRB at 1044 n.9, 1049 (ordinary Burns successor was not privileged to unilaterally change health benefits after it commenced operations because those changes were inconsistent with pre-takeover promise to continue benefits as-is for 60 days).
⁶⁵	340 NLRB 366 (2003).
⁶⁶	Id. at 367.
⁶⁷	Id. at 368.
⁶⁸	Paragon Systems, Inc., 362 NLRB 1385, 1388 n.2 (2015) (Member McFerran, dissenting) (disagreeing with majority as to whether 301 Holdings was distinguishable). Notably, the Paragon Systems majority did not disagree with Member McFerran's characterization of the principle established in 301 Holdings so much as whether the announcement in that case reasonably encompassed a specific change such that the change was part and parcel of the Burns successor's lawfully-imposed initial terms. Id. at 1386.
⁶⁹	Compare Windsor Convalescent Home, 351 NLRB at 982 n.31 (even assuming successor's letter to employees was a sufficiently clear announcement of new employment terms such that it was not a "perfectly clear" successor, it still had an obligation to bargain over any unannounced terms, including dismantling of bulletin board and issuing new handbooks), and Specialty Envelope, 321 NLRB at 832 (though successor lawfully set its own initial terms, change in attendance policy announced one month after takeover was unlawful), with Paragon, 362 NLRB at 1386-87 (finding reduction in shift-transition time to be lawful initial term where it was reasonably encompassed by announcement that shift schedules would be subject to operational needs).
⁷⁰	If the Region determines that the paid time off caps were not announced shortly after takeover, even that announced change would be unlawful because it would no longer be considered part of "initial terms."
⁷¹	Fall River Dyeing, 482 U.S. at 47.
⁷²	Banknote, 84 F.3d at 645-46 (adopting Board's position on appeal that no bargaining demand was required).
⁷³	340 NLRB at 366-68, 375 (successor unlawfully reduced wages and discontinued benefits "immediately" after takeover in September while the union did not demand recognition until mid-October).
⁷⁴	The Employer, of course, had a duty to bargain with the Union as a Burns successor notwithstanding the "free and clear" language in the Sale Order. See Foodbasket Partners, 344 NLRB at 800-01 (a Burns successor's obligation to bargain with an incumbent union is not disposed of by a "free and clear" sale because this post-sale obligation is not the kind of liability the Bankruptcy Code was designed to extinguish).
⁷⁵	In this regard, the Region should confirm that the dues checkoff authorization cards included language permitting the authorization to roll over to a successor employer, and if so, that the Employer possessed such cards when it took over operations so as to permit dues deduction under Section 3020(4).
⁷⁶	368 NLRB No. 139.
⁷⁷	362 NLRB at 1655.
⁷⁸	See Specialty Envelope, 321 NLRB at 831 n.8 (1996) (reversing ALJ's finding that a "perfectly clear" successor violated Section 8(a)(5) by ceasing dues checkoff based on view that "a dues-checkoff provision is solely a creature of the contract") (citing Bethlehem Steel Co., 136 NLRB 1500 (1962), enforced in relevant part, 320 F.2d 615 (3d Cir. 1963)); Nexeo Solutions, 364 NLRB at 573, 582 ("perfectly clear" successor unlawfully implemented unilateral changes in unit employees' preexisting terms when it set initial terms); Cadillac Asphalt Paving, 349 NLRB at 9-11 ("perfectly clear" successor failed to continue terms maintained by predecessor at the time of succession).
⁷⁹	See Nexeo Solutions, 364 NLRB at 581, 582 n.38 (Board "decisions have consistently interpreted Burns as imposing a requirement that a "perfectly clear" successor bargain with the incumbent union to agreement or impasse before establishing initial terms; no reviewing court has disagreed"); Creative Vision Resources, 364 NLRB at 1301 n.8, 1305 (in light of "perfectly clear" successor finding, unilateral changes implemented on or after first day of operations were unlawful).
⁸⁰	Although the Predecessor had ceased deducting and remitting dues, the result of a change in payroll providers that occurred before the sale of its assets, the Union filed a grievance over the failure and the Union and the Predecessor were working to remedy the issue at the time the Employer took over operations. The Union then re-filed its dues checkoff grievance with the Employer but, unlike the Predecessor, it refused to respond to the grievance. Because the Union was making efforts to ensure that the Predecessor resumed dues checkoff, persisted in these efforts after the Employer took over operations, and the Employer was clearly aware of these efforts, dues checkoff was a term and condition of employment that the Employer was not free to unilaterally change. See Jersey Juniors, Inc., 230 NLRB 329, 334 (1977) (where predecessor acknowledged obligation to make pension contributions but was unable to do so because of financial inability, union was making efforts to collect such contributions, and successor was aware of those efforts, successor could not "unilaterally disavow observance of such a term of employment").
⁸¹	Fall River Dyeing, 482 U.S. at 39.
⁸²	See supra n.73.

NLRB Advice Memoranda, Arcadia Medical Resort of Talbot, National Labor Relations Board, (Apr 25, 2022)

FACTS

I. Bankruptcy Proceedings

II. The Employer's Takeover of the Predecessor's Operations

ACTION

I. Perfectly Clear Successorship

a. The Employer is a “perfectly clear” successor under Spruce Up

b. The Bankruptcy Court's "Free and Clear" Sale Order Does Not Extinguish the Employer's Bargaining Obligation as a "Perfectly Clear" Successor Under the Act

II. Alternative Burns Theory

III. The Region Should Urge the Board to Overrule Valley Hospital and Return to Lincoln Lutheran

Footnotes

NLRB Advice Memoranda, Arcadia Medical Resort of Talbot, National Labor Relations Board, (Apr 25, 2022)

FACTS

I. Bankruptcy Proceedings

II. The Employer's Takeover of the Predecessor's Operations

ACTION

I. Perfectly Clear Successorship

a. The Employer is a “perfectly clear” successor under Spruce Up

b. The Bankruptcy Court's "Free and Clear" Sale Order Does Not Extinguish the Employer's Bargaining Obligation as a "Perfectly Clear" Successor Under the Act

II. Alternative Burns Theory

III. The Region Should Urge the Board to Overrule Valley Hospital and Return to Lincoln Lutheran

Footnotes