Partners Patrick Muldowney and Meagan Martin represented Hospital Menonita de Guayama of Puerto Rico in the U.S. Court of Appeals for the District of Columbia as they challenged the National Labor Relations Board’s practice of requiring employers who acquire businesses to recognize and bargain with unions who had represented employees of the acquired business. The NLRB had found that the incoming hospital administration committed an unfair labor practice when it refused to bargain with the incumbent union – even though it was apparent that the union had lost majority support from the employees.
A three-judge panel ruled 2-1 in favor of the hospital, saying that the agency’s “successor bar” – which prohibits challenges to an incumbent union’s representation status for up to one year after a business changes ownership – was inconsistent with the National Labor Relations Act and removed the act’s core guarantees of employee freedom and majority rule in collective bargaining.
Although the D.C. Circuit originally sided with the NLRB in 2024, the U.S. Supreme Court vacated that decision and remanded the case following its ruling in Loper Bright Enterprises v. Raimondo, the 2024 decision that ended the so-called Chevron doctrine’s requirement that courts give deference to agency interpretation of ambiguous laws.
The majority also explained that the D.C. Circuit’s original (2024) ruling in Hospital Menonita used deferential analysis of the successor bar that relied on Chevron, which conflicts with Loper Bright‘s mandate that courts must determine whether agencies acted within the authority delegated by Congress.
