The National Labor Relations Board exceeded its authority when it issued the “successor bar” rule, which requires acquiring companies to bargain with incumbent unions representing the employees of acquired firms regardless of whether those unions have majority employee support, the U.S. Circuit Court of Appeals for the D.C. Circuit held Tuesday.
Judge Neomi Rao authored the court’s 2-1 majority opinion in Hospital Menonita de Guayama, Inc. v. NLRB, writing that the rule effectively suspended the National Labor Relations Act’s guarantee of employee freedom and majority rule in collective bargaining. It also unlawfully prevented any claim that an incumbent union lacked the majority support required under the law in order to be recognized as the exclusive bargaining representative for a particular employee unit.
The decision marks a reversal from 2024, when a panel of the D.C. Circuit initially sided with NLRB on the issue. The court had held that the employer, a Puerto Rico hospital, violated the NLRA by refusing to recognize and bargain with a union of an acquired workplace.
But that ruling came down months before the U.S. Supreme Court issued its landmark Loper Bright Enterprises v. Raimondo decision, which overturned the high court’s long-standing Chevron doctrine. In Loper Bright, SCOTUS clarified that the Administrative Procedure Act requires courts to exercise independent judgment in determining whether a federal agency has acted within the scope of its statutory authority — rather than deferring to an agency’s interpretation of ambiguous legal statutes, as outlined in the Chevron doctrine.
Months later, the Supreme Court vacated the D.C. Circuit’s Hospital Menonita Guayama decision and remanded it to the circuit for further consideration in light of Loper Bright. Rao said the court specifically would need to consider, independently of NLRB’s own determination, whether the successor bar was inconsistent with its authority.
The majority answered in the affirmative. It did so over the board’s objection that the rule was a reasonable interpretation of the NLRA independent of Chevron deference. However reasonable the agency’s policy goals may have been at the time of the rule’s adoption, they “cannot overcome its lack of statutory authority,” Rao said.
In a dissenting opinion, Judge A. Raymond Randolph wrote that the majority incorrectly decided the case because the original three-judge panel of the D.C. Circuit did not rely upon Chevron deference in initially upholding the successor bar rule. Randolph concluded that that panel’s decision should have been reinstated.
NLRB declined to comment.
