Labor & Employment Law Daily Wrap Up, LABOR—UNFAIR LABOR PRACTICES—D.C. Cir.: Appeals court invalidates NLRB’s ‘successor bar’ rule in view of Loper Bright, (Jul 22, 2026)

By Jason Albright, J.D.

“Loper Bright reaffirmed that courts have an independent obligation to interpret statutes and not defer to an agency’s interpretation of the scope of its statutory authority.”

The NLRB erred in establishing and applying its “successor bar” doctrine, which had compelled the new owner of a business to recognize and bargain with an incumbent union for up to a year irrespective of the union’s majority support among employees, the D.C. Circuit held. Reconsidering one of its own prior decisions in an unfair-labor-practice case in view of the U.S. Supreme Court’s ruling in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024), the federal appeals court observed that Section 7 of the NLRA provides employees with the unqualified right “to bargain collectively through representatives of their own choosing” or “to refrain” from such activity; Section 9(a) conditions a union’s status as the “exclusive” bargaining representative on having the support of “the majority of the employees”; and the successor bar nullifies these statutory protections for up to a year after a successor employer assumes control of a business. Senior Judge Randolph dissented (Hospital Menonita de Guayama, Inc. v. NLRB, Nos. 22-1163 and 22-1180 (D.C. Cir. July 21, 2026)).

“Successor bar.” The hospital challenged the lawfulness of the NLRB’s “successor bar,” which prohibits any challenge to an incumbent union’s representation status for up to one year after a business changes ownership. Adopted in an adjudication by a divided Board in 2011, the successor bar creates an irrebuttable presumption that an incumbent union retains majority support when a new owner assumes control of a business and retains a majority of the existing employees. The bar “prevent[s] any challenge to the union’s status, whether … by the employer, by employees, or by a rival union.” And successor employers must recognize and bargain with an incumbent union for up to one year regardless of whether the union continues to represent a majority of employees.

Justification and criticism. The Board justified the successor bar as a “policy choice” necessary to “preserve … the stability of the existing collective-bargaining relationship.” Dissenting Member Hayes, in turn, criticized the successor bar at the time as denying employees “an opportunity to exercise their right of free choice on the question of collective-bargaining representation” and enabling incumbent unions to “operate free from any electoral challenge.”

The hospital. Hospital Menonita de Guayama, Inc., became a successor employer in 2017. The incumbent union, Unidad Laboral de Enfermeras (os) y Empleados de la Salud, claimed to represent the hospital’s employees for all five of its existing collective bargaining units. The union had never negotiated a collective bargaining agreement (CBA) for two of the units, and the CBAs it negotiated for the other three had expired more than four years before the change in ownership.

The hospital initially recognized the union but later received evidence showing that, in each of the five bargaining units, a majority (and in one unit all) of the employees rejected the union as their representative. The hospital thereafter refused to bargain and ultimately withdrew recognition of the union for all five units.

ULP charges. The NLRB charged the hospital with unfair labor practices under Sections 8(a)(1) and (5), principally alleging the hospital unlawfully withdrew recognition and refused to bargain with the union. An administrative law judge (ALJ) ruled against the hospital. Applying the successor bar, the ALJ refused to consider the hospital’s evidence that the union no longer represented a majority of the employees.

Board’s decision. Before the Board, the hospital argued that the successor bar contravenes the NLRA, and that the hospital must be allowed to put forward evidence that its refusal to bargain was lawful because the union was not a majority representative. A divided three-member Board panel adopted the ALJ’s findings and conclusions and rejected the hospital’s challenge to the successor bar. The Board ordered the hospital to “recognize and, on request, bargain in good faith with the Union.”

Ring’s dissent. Member Ring dissented, arguing that the Board should abandon the successor bar because it “imposes an unwarranted restriction on employees’ Section 7 rights.”

Hospital Menonita I. The hospital petitioned the D.C. Circuit for review. It primarily argued that the successor bar contravenes the Act. In Hospital Menonita I, the appeals court rejected the statutory challenge, holding that “the Board is entitled to deference.” Hosp. Menonita de Guayama, Inc. v. NLRB, 94 F.4th 1, 14—15 (D.C. Cir. 2024).

In reaching this conclusion, the current majority reflected, the D.C. Circuit had “explicitly adopted the First Circuit’s reasons for upholding the successor bar, which rested on Chevron deference to the Board and a determination that the successor bar was a ‘reasonable’ construction of the Act. SeeNLRB v. Lily Transp. Corp., 853 F.3d 31, 35—38 (1st Cir. 2017).” Echoing the First Circuit, the court had also highlighted various policy considerations supporting the successor bar’s reasonableness, including the bar’s limited duration and the fact that a rebuttable presumption would “increase litigation time and expense.”

Loper Bright. Soon thereafter, the U.S. Supreme Court decided Loper Bright. It “overruled” Chevron, holding that reviewing courts should not defer to agencies when deciding questions of law. Instead, courts must “interpret statutes, no matter the context, based on the traditional tools of statutory construction.”

Supreme Court’s remand. The hospital then petitioned for certiorari, arguing Hospital Menonita I conflicted with Loper Bright because the panel failed to review de novo whether the successor bar violates the NLRA. The Supreme Court granted certiorari, vacated the panel’s judgment, and remanded for “further consideration in light of Loper Bright.” Hosp. Menonita de Guayama, Inc. v. NLRB, 145 S. Ct. 982 (2024).

Independent determination. On remand, the D.C. Circuit concluded that, because Loper Bright “prohibits us from deferring to the Board’s legal conclusions, on remand we must reconsider the Hospital’s statutory challenge and independently determine whether the successor bar is consistent with the Act.”

Violates the Act. Here, the federal appeals court found that the successor bar violates Sections 7 and 9 of the NLRA by requiring successor employers to recognize and bargain with an incumbent union, regardless of whether that union enjoys the support of a majority of employees. Section 7 provides employees with the unqualified right “to bargain collectively through representatives of their own choosing” or “to refrain” from such activity. And to effectuate employee freedom of choice, Section 9(a) conditions a union’s status as the “exclusive” bargaining representative on having the support of “the majority of the employees.”

“Employers must recognize and bargain with the exclusive representative chosen by a majority of employees,” the D.C. Circuit noted. “On the flip side, however, employers cannot recognize and bargain with a union that lacks majority support because that would unlawfully ‘impress[] that [union] upon the nonconsenting majority.’”

The successor bar, the appeals court concluded, “nullifies these statutory protections for up to a year after a successor employer assumes control of a business. The bar prevents any claim—by an employer, employees, or a rival union—that the incumbent union lacks the majority support required by the Act.” “By entrenching incumbent unions, irrespective of whether they enjoy majority support, the successor bar is inconsistent with section 7’s unqualified employee right to freedom of choice and section 9’s requirement of majority rule.”

Dissent. In his dissent, Senior Judge Randolph observed, “An accurate description is that Loper Bright rejected the view that courts may treat statutory ambiguity as an implicit delegation of discretionary interpretive authority to an agency.” “It follows,” he said, “that we must determine whether the original panel relied on statutory ambiguity as conferring discretionary interpretive authority on the NLRB—that is, whether it upheld the Board’s successor-bar rule by applying the Chevron framework.”

The original D.C. Circuit panel in this case, he noted, did no such thing. “Rather than Chevron’s two-step formula for resolving statutory ambiguity, the original panel relied on the Board’s discretionary authority under the NLRA.” And as Judge Friendly recognized a decade before Chevron, Randolph noted, “when Congress entrusts an agency with the responsibility to formulate and implement national policy, courts may reasonably infer a congressional intent to afford that agency discretion in executing that charge.” The original panel’s decision, Randolph argued, should be reinstated.

The case is Nos. 22-1163 and 22-1180.

Judge: Rao, N.

Attorneys: Patrick M. Muldowney (Baker & Hostetler) for Hospital Menonita De Guayama, Inc. Heather S. Beard for the NLRB.

Companies: Hospital Menonita De Guayama, Inc.

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