Puerto Rico Local Wins Important Legal Victory in Bankruptcy Case

April 17, 2018 – The Puerto Rico local (UPAGRA) of The NewsGuild-CWA recently won an important legal victory with implications for locals dealing with the fallout of bankruptcies. As a result of the ruling, the workers retained their right to union representation.

In a March 30 order, the Court of Appeals enforced the National Labor Relations Board’s 2017 decision that Publi-Inversiones violated federal law after it purchased a bankrupt newspaper, retained numerous employees, but refused to negotiate with the union.

After the NLRB upheld the union’s “unfair labor practice” complaint over management’s refusal to bargain as the successor employer to the bankrupt business, the company immediately petitioned for review with the Court of Appeals for the District of Columbia Circuit.

The court ruled for the union, noting that the Supreme Court has endorsed the NLRB’s “presumption of majority support for a union” when three criteria are met:

  • There is “substantial continuity” between the bankrupt company and the new enterprise;
  • There is a bargaining unit comprised of a majority of employees who worked for the predecessor company, and
  • There is an ongoing demand for collective bargaining by the union.

“Although Petitioner makes much of superficial changes in its business model, we are quite unimpressed,” the court wrote. “Certainly that it changed the Board of Directors, adopted a new title for reporters (… “mega reporters”), purchased a new copy machine, and adopted a new motto for the paper cannot possibly be thought the kind of business changes that defeat a finding of continuity.”

The court found “slightly more substantial” the company’s argument that by hiring part-time inserters to replace the contractors who had previously performed the inserting function, it expanded the number of employees in the bargaining unit so that a majority are new employees.

However, the court said the NLRB “is never required to determine the most appropriate bargaining unit, only an appropriate unit.”

The inserters work under significantly different conditions, the court ruled. They are less skilled, part-time employees who are not covered under the company’s health plan, and their wages are almost 50 percent lower than the lowest paid prior bargaining unit employee.

The Board is entitled to consider the prior bargaining history to determine whether a bargaining unit is “an appropriate unit,” the court said. “In most cases, a historical unit will be found appropriate if the predecessor employer recognized it, even if the unit would not be appropriate under Board standards if it were being organized for the first time,” the court ruled.

“In other words, in a successorship case, as in any representation case, a historical unit can be rejected only if ‘truly inappropriate,’” the court ruled.

“This is an important win for the workers of Publi-Inversiones, for the Puerto Rico Local and for the union,” said NewsGuild President Bernie Lunzer.