Fall River Dyeing & Finishing Corp. v. National Labor Relations Board

For 30 years, Sterlingware Corporation operated a textile dyeing and finishing plant that bought and sold its own textiles as well as dyed and finished textiles on commission for others. The United Textiles Workers of America (plaintiff) had always represented the plant’s workers and had a collective-bargaining agreement (CBA) with the company that expired in 1982. In February 1982, Sterlingware laid off the production employees, then liquidated the company’s assets. Sterlingware’s former top sales executive teamed up with the president of a major customer and formed Fall River Dyeing & Finishing Corporation (defendant) to acquire most of Sterlingware’s assets at auction, including the plant,machinery, and equipment. Fall River resumed dyeing and finishing operations in September 1982, but only on commission. The company posted newspaper ads for employees and supervisors with an initial start-up goal of staffing one shift of 55 employees, with plans to hire a second shift if business went well. Most initial hires and all but one supervisor had been laid off from Sterlingware. In October 1982, the union requested recognition as the workers’ bargaining agent. Fall River refused, even though at the time, 18 of its 21 employees had worked for Sterlingware. By November, Fall River had hired employees filling a complete range of positions and was taking and producing customer orders. Over half its business came from former Sterlingware customers. Fall River attained its goal of a full shift of 55 workers by mid-January 1983. At that point, more than half were former Sterlingware employees. That majority continued until mid-April, when Fall River staffed a second shift. Then ex-Sterlingware employees became the minority, but only by two or three employees. Meanwhile, the union filed charges with the National Labor Relations Board (NLRB), accusing Fall River of failing to bargain. The NLRB found Fall River qualified as Sterlingware’s successor and had a duty to bargain with the union as of mid-January 1983, when Fall River had hired a representative complement of employees. The appellate court affirmed, and the Supreme Court granted review.