U.S. Court of Appeals Upholds Successorship Doctrine in Transportation Privatization Case

The U.S. Court of Appeals for the District of Columbia Circuit has ruled in favor of the Michigan Education Association in a case where it sought the right to bargain on behalf of its members who had been absorbed by a private sector employer after the Grand Rapids Public Schools outsourced its transportation services.

The issue in the case was whether, when Dean Transportation won the contract to provide bus service to GRPS and hired most of the school district’s drivers, it could incorporate the new hires into the union representing all of its other drivers, the Dean Transportation Employees Union, or instead had to bargain with the union to which they had belonged as district employees—the Grand Rapids Educational Support Personnel Association. In a challenge before the federal National Labor Relations Board, GRESPA argued the former GRPS drivers had not “accreted” to DTEU.

The NLRB, which allows accretion “only where the employees sought to be added to an existing bargaining unit have little or no separate identity and share an overwhelming community of interest with the preexisting unit,” agreed with an administrative law judge’s determination that there were insufficient facts to support accretion in this case. Noting the lack of shared supervision or employee interchange between drivers working at the GRPS location and other Dean drivers, the NLRB found that Dean’s refusal to recognize and bargain with GRESPA violated the National Labor Relations Act.

The D.C. Circuit, which hears appeals of NLRB decisions, rejected Dean’s contention that it was not a successor employer obligated to bargain with the union representing its predecessor’s employees. The court concluded that the ALJ’s finding of “substantial continuity” was in line with previous NLRB decisions. Citing Van Lear Equipment, Inc., 336 N.L.R.B. 1059 (2001), a similar school bus outsourcing case, the court also rejected two arguments Dean raised against substantial continuity: (1) that Dean only took over a GRPS facility and not the entire GRESPA unit, and (2) that GRPS public-sector employees governed by Michigan law were now private-sector employees subject to a different statutory scheme.

The court refused to consider a third argument—that the employees now will have the right to strike under the NLRA, a right that was unavailable to them as public employees under Michigan law—because Dean had failed to raise this in its filings before the NLRB.

Turning to Dean’s contention that the NLRB erred in finding an appropriate bargaining unit consisting only of employees at the GRPS facility, the court agreed with the ALJ’s conclusion that while Dean is a highly centralized operation, this did not undermine the NLRB’s “single-site presumption.” Onsite supervisors oversee day-to-day operations at the site, the court noted, and the drivers at the site are treated separately from drivers at Dean’s other facilities for job assignment and bidding purposes, the degree of interchange between the facilities is minimal, and the GRPS site is the only depot that employs a substantial number of general education drivers in addition to special education drivers.

In addition, the ALJ had given proper weight to the long history of the employees at the site being represented by GRESPA. While acknowledging that “recognizing a single-site union where another union otherwise has company-wide recognition may complicate bargaining for Dean,” the court found that “both the Supreme Court’s and the NLRB’s cases reflect the view that, in a successorship situation, industrial peace is best maintained by honoring the employees’ original choice of bargaining representative.” The court also agreed with the NLRB’s rejection of accretion.

This decision does not prevent privatization as a legal or practical matter. However, if a school district contracts with a private company to provide services, such as custodial, cafeteria, or transportation services, and the company reemploys a majority of the school districts’ former employees, the decision of the D.C. Court of Appeals would likely require the private company to, upon request, recognize and bargain collectively with the employees’ previous union, under the successorship doctrine, as interpreted by the National Labor Relations Board.

While the decision should not discourage school districts to consider and pursue outsourcing noninstructional support services to conserve educational dollars, schools may now find it more difficult to find willing private companies who wish to perform the services on behalf of the schools.