49 F.3d 795

148 L.R.R.M. (BNA) 2641, 63 USLW 2592,
129 Lab.Cas. P 11,290

NATIONAL LABOR RELATIONS BOARD, Petitioner,
v.
HORIZONS HOTEL CORPORATION D/B/A Carib Inn of San Juan, Respondent.
HORIZONS HOTEL CORPORATION D/B/A Carib Inn of San Juan, Petitioner,
v.
NATIONAL LABOR RELATIONS BOARD, Respondent.

Nos. 94-1294, 94-1303.

United States Court of Appeals,
First Circuit.

Heard Nov. 7, 1994.
Decided March 3, 1995.

1

Luis F. Padilla, for Horizons Hotel Corp.

2

David Habenstreit, Atty., N.L.R.B., with whom Frederick L. Feinstein, General Counsel, Linda Sher, Acting Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and Linda Dreeben, Supervisory Atty., were on brief for N.L.R.B.

3

Before TORRUELLA, Chief Judge, CAMPBELL, Senior Circuit Judge, and BOYLE,* Senior District Judge.

4

FRANCIS J. BOYLE, Senior District Judge.

5

This case presents issues concerning a final order of the National Labor Relations Board (the Board) which concluded that Horizons Hotel Corporation d/b/a Carib Inn of San Juan (Horizons) engaged in unfair labor practices in violation of Secs. 8(a)(1), (3), and (5) of the National Labor Relations Act (the Act), 29 U.S.C. Sec. 158(a)(1), (3), (5). The claims of unfair labor practices arose in part from the conduct of a bankruptcy trustee who was in possession of the hotel at the time Horizons purchased it. The Board petitions us under Sec. 10(e) of the Act, 29 U.S.C. Sec. 160(e), to enforce its order, which adopted with modification the opinion and recommended order of the administrative law judge (ALJ). 312 N.L.R.B. No. 200 (Nov. 22, 1993). Horizons petitions us under Sec. 10(f) of the Act, 29 U.S.C. Sec. 160(f), to review and vacate the Board's order, asserting the following: the Board lacked jurisdiction to act in this case; the conclusions of the ALJ and the Board are contrary to law; and the factual determinations of the ALJ, adopted by the Board, are not supported by substantial evidence. We conclude that the Board's order adopting the ALJ's opinion and proposed order is without error and is to be enforced as it stands. See 29 U.S.C. Sec. 160(e), (f).

I. STANDARD OF REVIEW

6

The appropriate standard of review is provided in Sec. 10(e) of the Act, 29 U.S.C. Sec. 160(e): "The findings of the Board with respect to questions of fact if supported by substantial evidence on the record considered as a whole shall be conclusive." Thus, a finding of the Board that the Act has been violated is upheld "as long as the finding is supported by substantial evidence ... even if we would have reached a different conclusion." 3-E Co., Inc. v. NLRB, 26 F.3d 1, 3 (1st Cir.1994) (citing 29 U.S.C. Sec. 160(e)). In reviewing a Board decision, great weight is afforded the credibility determinations of the ALJ, as he or she had the opportunity to observe the witnesses testify, see id.; Holyoke Visiting Nurses Ass'n v. NLRB, 11 F.3d 302, 308 (1st Cir.1993); therefore, credibility determinations are disturbed only where it is apparent that the ALJ "overstepped the bounds of reason." 3-E Co., Inc., 26 F.3d at 3; Holyoke Visiting Nurses Ass'n, 11 F.3d at 308 (citing NLRB v. American Spring Bed Mfg. Co., 670 F.2d 1236, 1242 (1st Cir.1982)).

II. BACKGROUND

7

The record supports the ALJ's finding of the following facts, adopted by the Board. See 3-E Co., Inc., 26 F.3d at 2 (citing Cumberland Farms, Inc. v. NLRB, 984 F.2d 556, 558 (1st Cir.1993)).

8

A. Hotel in Bankruptcy: November 1981-May 14, 1986

9

In 1981, the Carib Inn hotel and casino in San Juan, Puerto Rico, was owned by the Carib Inn of San Juan Corporation (Carib Inn Corporation). In November 1981, Carib Inn Corporation filed a petition for bankruptcy in the U.S. Bankruptcy Court for the District of Puerto Rico under chapter 11 of Title 11, 11 U.S.C. Sec. 1101, et seq. The chapter 11 proceeding was converted to a chapter 7, 11 U.S.C. Sec. 701 et seq., proceeding in November 1985. On November 21, 1985, the Bankruptcy Court appointed Hector Rodriguez-Estrada (Rodriguez) trustee under 29 U.S.C. Sec. 1104. As trustee, Rodriguez was ordered to liquidate the assets of the bankruptcy estate.

10

At all relevant times, employees of the hotel's service and casino units1 were represented by Union de Trabajadores de la Industria Gastronomica de Puerto Rico, Local 610, Hotel Employees and Restaurant Employees International Union, AFL-CIO (the Union). The service- and casino-unit employees were employed under the terms of a collective bargaining agreement.2

11

In November or December 1985, Horizons considered the prospect of purchasing the Carib Inn. Horizons submitted a bid for the bankruptcy estate in February 1986. Prior to the bid, Horizons's president, Benito Fernandez, spent time at the hotel, investigating its operation and its physical grounds. At some point, Fernandez began to occupy an office at the hotel. The office was located next to that of Rodriguez. Fernandez and Rodriguez shared a secretary.

12

On April 3, Rodriguez met with Ileana Quinones, general manager of Professional Employment Center (PEC), a local employment agency. At the meeting, Rodriguez told Quinones that PEC's services were needed because the hotel was operating under new management which sought to hire new employees. He asked her if there was a possibility that employees hired through PEC would be union workers. She responded that they would not. Rodriguez told Quinones that he would consider retaining PEC if she could guarantee him that there would be no risk of a union at the hotel. He requested that Quinones indicate in writing that there was no possibility of a union presence.

13

The following day, April 4, 1986, Quinones sent a letter to Rodriguez. The letter was addressed as follows: "Sr. Hector M. Rodriguez-Estrada[,] Horizons Hotel"--Quinones was of the belief that Rodriguez was employed as a manager of Horizons. A summary of the items discussed at the previous day's meeting was included with the letter. The first item listed was as follows: "1. There is no possibility for a Union."

14

On May 12 or 13, 1986, Frankie Rosado-Garcia (Rosado), a waiter in one of the hotel's restaurants, and a union steward, while on duty, served the Union's president, who was seated at a table. After Rosado waited on him, Rodriguez, who was present in the restaurant, approached Rosado, and said: "[A-ha] ... you betrayed me." Rosado later went to Rodriguez' office to question him about the comment. Rodriguez asked Rosado if the Union's president had come "to stop the hotel." He then told Rosado that if the Union continued to bother him, he would fire all union employees. On another occasion in May, Rodriguez told Rosado that the Union was not backing the hotel employees. He said that the Union had failed to collect from the Federal court money owed to the employees. He further stated that there was no union in Puerto Rico that would defend the employees.

15

B. Sale of the Hotel: May 14, 1986--May 31, 1986

16

On May 14, 1986, a deed was executed whereby Horizons purchased the Carib Inn from Rodriguez. The deed provided that possession of the hotel property would be turned over to Horizons on May 31, 1986.

17

On May 19, 1986, Rodriguez hired Juan Rafael Gomez (Gomez) as resident manager. That day, Rodriguez circulated a memorandum (May 19 memorandum) announcing the same. Fernandez had signed the memorandum, expressly indicating his approval of Gomez' hiring.

18

On May 21, 1986, Rodriguez circulated a memorandum (May 21 memorandum) to all employees of the Carib Inn, notifying them that Horizons would assume control of the hotel on June 1, 1986, and that all employees would be terminated on May 31, 1986. The memorandum advised the employees that they could apply for positions with Horizons by submitting applications at a recruiting office set up by Horizons in a nearby condominium. The recruiting office would accept applications for two days only.

19

Later that day, May 21, Felix Ramirez, the Union's general steward, and Valentin Hernandez, the Union's secretary and treasurer, went to Rodriguez' office to discuss with him the memorandum. Rodriguez threatened not to meet with them. He told them that he didn't have to talk with them because they no longer represented the hotel's employees. He stated: "[T]he Union is out," and "Horizons has nothing to do with the Union." Rodriguez finally agreed to meet with them, however, after Hernandez threatened to report his conduct to the Secretary of Labor for the Commonwealth of Puerto Rico. During the meeting, however, Rodriguez told Ramirez and Hernandez that they should discuss with Gomez any concerns they may have concerning hotel administration.

20

Prior to the May 21 memorandum, PEC had begun soliciting applications for positions at the hotel. Quinones understood that PEC was to be responsible for hiring Horizons's new employees. It advertised in a local newspaper and collected applications and relevant information on potential employees. It conducted interviews and informed Rodriguez of appealing candidates. Rodriguez, however, advised Quinones that PEC would do no independent hiring, but rather would hire only those individuals whom it was instructed to hire.

21

Horizons's recruiting program, announced in the May 21 memorandum, was carried out. A representative of PEC was present throughout. Several days after the program, Rodriguez provided Gomez a list of individuals to interview. Interviews were thereafter conducted at the hotel. A representative of PEC was present during the interviews. Not one employee of the Carib Inn was interviewed. At one point, Rodriguez told a Carib Inn employee that he had been authorized to hire new employees for Horizons.

C. Transfer of Control: June 1, 1986

22

On June 1, 1986, Horizons assumed possession of the hotel property. Since that date, Horizons has continued the business operations previously conducted by Rodriguez as trustee, and by the Carib Inn Corporation, using substantially the same facilities and equipment, and providing the same services, with the exception of the casino, which ceased operation on June 23, 1986.

23

After the transfer of possession, no service-unit employees previously employed at the hotel were employed by Horizons, with the exception of several former unit employees hired in a supervisory or managerial capacity. See 312 N.L.R.B. No. 200 n. 2. Fourteen of Horizons's twenty-four casino unit employees, however, were previously employed at the hotel. At no time did Horizons negotiate or enter into a bargaining agreement with the Union.

24

On June 1, 1986, Horizons hired Rodriguez as a consultant. He later became Horizons's general manager.

25

The Bankruptcy Court confirmed the sale of the Carib Inn to Horizons by order dated June 6, 1986.

D. The Present Action

26

The Union pursued claims against Horizons in August 1986. The Board issued a complaint and notice of hearing on September 30, 1987; an amended complaint and notice of hearing was issued on December 21, 1987. The amended complaint includes the following allegations: that Horizons interfered with, restrained, and coerced employees in the exercise of their rights in violation of Sec. 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a)(1), by creating the impression of surveillance of employees' union activities, threatening employees with discharge because of their union activities, and attempting to denigrate the Union in the eyes of employees; that Horizons refused to hire former service unit employees in violation of Sec. 8(a)(3) of the Act, 29 U.S.C. Sec. 158(a)(3); and that Horizons refused to bargain collectively with representatives of the Union in violation of Sec. 8(a)(5) of the Act, 29 U.S.C. Sec. 158(a)(5). The amended complaint alleges that much of the improper conduct was carried out by Rodriguez, acting as an agent of Horizons.

27

An ALJ conducted hearings on various dates from March 1989 through March 1991. The decision and proposed order issued on January 15, 1993. The ALJ concluded that Horizons violated Secs. 8(a)(1), (3), and (5) of the Act, 29 U.S.C. Secs. 158(a)(1), (3), (5). The Board, with modification, adopted the ALJ's rulings, findings, and conclusions. In re: Horizons Hotel Corp., et al., 312 N.L.R.B. No. 200 (Nov. 22, 1993). It amended the ALJ's proposed remedy and order, and ordered the following: that Horizons cease and desist from engaging in unfair labor practices; that it offer positions of employment to the 65 former hotel employees who were not hired by Horizons in violation of the Act; that it bargain collectively with the Union on request; that, on request, it cancel any changes in employment conditions which may have been instituted since it purchased the Carib Inn; that, in the event the casino resumes operation, it bargain with the Union concerning casino employees, and it offer positions to those identified former casino employees who were not hired; and that it preserve records and publish notice of the order.

28

Both the Board and Horizons petition this Court to act. The Board petitions us to enter an order enforcing its order. Horizons petitions us to review and vacate the Board's opinion and order. As grounds, Horizons asserts that exclusive jurisdiction over this matter lies with the bankruptcy court, because much of the allegedly improper conduct was committed by a bankruptcy trustee. Horizons further asserts that as a matter of law it cannot be held accountable for any improper conduct of Rodriguez, the bankruptcy trustee. Finally, Horizons argues that there is insufficient evidence to support the findings that Rodriguez was an agent of Horizons, and that Horizons violated Secs. 8(a)(1), (3), and (5) of the Act, 29 U.S.C. Secs. 158(a)(1), (3), (5).

29

We examine the issues.

III. JURISDICTION

30

Horizons asserts that, because this action concerns conduct of a bankruptcy trustee, it is within the exclusive jurisdiction of the bankruptcy court. In so arguing, it characterizes the present action as a "suit[ ] against the trustee." Horizons's argument is without merit. The issue was determined in In re: Carib-Inn of San Juan Corp., 905 F.2d 561 (1st Cir.1990), a related action commenced by Horizons in the bankruptcy court to enjoin the Board from pursuing the present case. In Carib-Inn, we concluded that the Board had exclusive jurisdiction to determine the merits of the present case, as "[t]he [Board's] complaint ... is directed solely at Horizons and seeks no remedy against the bankruptcy estate." Id. at 562. The cases cited by Horizons are inapposite. See Baron v. Barbour, 104 U.S. 126, 128, 131, 26 L.Ed. 672 (1881) (court of the District of Columbia has no jurisdiction to entertain suit against receiver appointed by a court of the State of Virginia without leave of the appointing court); Leonard v. Vrooman, 383 F.2d 556, 560 (9th Cir.1967), cert. denied, 390 U.S. 925, 88 S.Ct. 856, 19 L.Ed.2d 985 (1968) (bankruptcy court has no jurisdiction to enjoin state action against trustee in bankruptcy for illegally seizing and possessing plaintiff's real property); Vass v. Conron Bros. Co., 59 F.2d 969, 970 (2d Cir.1932) (bankruptcy court may enjoin action in state court against receiver in bankruptcy where not commenced with leave of the appointing court); In re: Campbell, 13 B.R. 974, 976 (D.Idaho 1981) (permission of the bankruptcy court is a prerequisite for state-court action against trustee in bankruptcy for acts done within his authority as trustee). Each concerns an action against a trustee or receiver in bankruptcy; the present case is not an action against the trustee in bankruptcy, Rodriguez, but rather against the purchaser of a bankruptcy estate, Horizons.

31

The Board acted within its jurisdiction under Sec. 10 of the Act, 29 U.S.C. Sec. 160, in pursuing the present claims, and under Secs. 10(e) and (f), 29 U.S.C. Sec. 160(e), (f), this Court has jurisdiction "of the proceeding and the question determined therein," and has the power "to make and enter a decree enforcing, modifying, and enforcing as so modified, or setting aside in whole or in part the order of the Board."

IV. ANALYSIS

A. Rodriguez As Agent of Horizons

32

Horizons presents two objections to the ALJ's determination, adopted by the Board, that Rodriguez, the trustee in bankruptcy, acted as agent for Horizons prior to June 1, 1986, the date on which possession of the Carib Inn was transferred to Horizons. First, Horizons argues that as a matter of law, as purchaser of a bankruptcy estate it cannot be held accountable for the conduct of the bankruptcy trustee, Rodriguez, which occurred prior to the transfer of the estate. Second, it argues that the finding that Rodriguez was acting as agent for Horizons is not supported by substantial evidence.

33

The Act guarantees employees the right "to self-organize, to form, join, or assist labor organizations, to bargain collectively ... and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection." 29 U.S.C. Sec. 157. The Act precludes employers from conducting unfair labor practices, as that term is defined in Sec. 8 of the Act, 29 U.S.C. Sec. 158. Employers may be liable for the unfair labor practices of their agents. See International Ass'n of Machinists v. NLRB, 311 U.S. 72, 80, 61 S.Ct. 83, 88, 85 L.Ed. 50 (1940); 3-E Co., Inc., 26 F.3d at 3-4; NLRB v. Union Nacional de Trabajadores, 540 F.2d 1, 8-9 (1st Cir.1976), cert. denied, 429 U.S. 1039, 97 S.Ct. 736, 50 L.Ed.2d 750 (1977). Agents for whose unlawful conduct employers are responsible need not be employees. See Cagle's, Inc. v. NLRB, 588 F.2d 943, 947-49 (5th Cir.1979); Union Nacional, 540 F.2d at 8-9.

34

An employer need not have actually authorized or subsequently ratified the conduct of its agent for it to be liable. 29 U.S.C. Sec. 152(13). Rather, an employer is liable for the unlawful conduct of its agent when, under all the circumstances, employees could reasonably believe that the agent was acting for and on behalf of management. See American Press, Inc. v. NLRB, 833 F.2d 621, 625 (6th Cir.1987) (citation omitted); Union Nacional, 540 F.2d at 8-9.

35

Horizons contends that as a matter of law, a trustee in bankruptcy cannot be deemed an agent of the purchaser of the estate for whose unlawful conduct the purchaser is liable. Horizons argues that the trustee's duties to the bankruptcy estate, and the transfer of the property "free and clear" of encumbrances, preclude the possibility. Horizons points to no authority whatever to support its contention. We find its argument unpersuasive. That Rodriguez may have been duty bound to act for the benefit of the bankruptcy estate is irrelevant and has no bearing on whether he acted on behalf of Horizons. Cf. Cagle's, Inc., 588 F.2d at 947 (private employer liable for the conduct of city chamber of commerce director). The fact that Horizons purchased the hotel "free and clear" of liens and encumbrances and that it did not expressly assume liability for the conduct of any prior owner of the estate is also irrelevant. See In Re: Carib-Inn, 905 F.2d at 563-64. Horizons is not here being held responsible simply for the conduct or liability of a prior owner; it is being held responsible for its own unlawful acts, which were carried out through its agent, Rodriguez, who happened to control the property prior to the transfer of its possession to Horizons.

36

Horizons next argues that the finding that Rodriguez acted as its agent is not supported by substantial evidence. On the record before us, we are satisfied that the ALJ's determination, adopted by the Board, that Rodriguez acted as agent for Horizons is supported by substantial evidence. Rodriguez occupied an office in the hotel next to that of Fernandez, Horizons's president, and the two shared a secretary; Rodriguez solicited the services of PEC, an employment agency, to recruit employees for Horizons; the May 19 memorandum indicated that Rodriguez acted with the approval of Fernandez when he hired Gomez as resident manager; Rodriguez announced to union representatives that Horizons "has nothing to do with the Union"; he told an employee that he was responsible for determining whom Horizons would hire; and he provided to Gomez a list of applicants to interview for positions with Horizons. On the basis of these facts, it is clear that employees of the Carib Inn could reasonably have believed that Rodriguez was acting for and on behalf of Horizons. Furthermore, Horizons never disavowed Rodriguez' conduct; On the contrary, Horizons hired Rodriguez after possession of the hotel was transferred on June 1.

37

Substantial evidence on the record as a whole supports the ALJ's finding, adopted by the Board, that Rodriguez was acting as an agent of Horizons prior to the transfer of the Carib Inn on June 1. See 3-E Co., Inc., 26 F.3d at 3.

B. Violations of the Act

38

1. Section 8(a)(1), 29 U.S.C. Sec. 158(a)(1)

39

The Board determined that certain statements of Rodriguez, attributable to Horizons, violated Sec. 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a)(1). Horizons asserts that the finding is not supported by substantial evidence.

40

Section 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a), provides that it is an unfair labor practice for an employer to "interfere with, restrain, or coerce" employees in the exercise of their rights guaranteed by the Act. "An employer violates Sec. 8(a)(1) by coercively interrogating employees about their union activities or sentiments, or about the activities or sentiments of others, and by either directly or indirectly threatening employees." 3-E Co., Inc., 26 F.3d at 3 (citing Cumberland Farms, Inc., 984 F.2d at 559; NLRB v. Otis Hospital, 545 F.2d 252, 256 (1st Cir.1976)). When examining assertedly violative conduct, courts must be mindful that "[i]t is the coercive tendency of employer statements, not their actual effect, that constitutes a violation of the Act." NLRB v. Marine Optical, Inc., 671 F.2d 11, 18 (1st Cir.1982) (citations omitted). The Board's inference of coercive tendency will not be disturbed if reasonable, even if susceptible of an alternative interpretation. Id. (citations omitted).

41

The Board's determination that Horizons violated Sec. 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a)(1), is supported by substantial evidence and stands without error. Rodriguez told a hotel employee, Rosado, that he (Rosado) had betrayed him by talking to the Union's president; he then questioned Rosado about his conversation. Thereafter, he told Rosado that all hotel employees would be fired if the Union continued to bother him. These statements are reasonably interpreted as coercive interrogation and direct threats. Considered in context, the statements could reasonably have interfered with or coerced hotel employees in the exercise of their organizational rights. See 3-E Co., Inc., 26 F.3d at 3; Cumberland Farms, Inc., 984 F.2d at 559.

42

2. Sections 8(a)(3) and (1), 29 U.S.C. Sec. 158(a)(1), (3)

43

The Board, in adopting the findings of the ALJ, found that Horizons's refusal to hire all but several of the hotel's former service-unit employees violated Secs. 8(a)(3) and (1) of the Act, 29 U.S.C. Secs. 158(a)(1), (3). Horizons argues that this determination is not supported by substantial evidence, and is therefore erroneous.

44

Section 8(a)(3) of the Act, 29 U.S.C. Sec. 158(a)(3), declares that it is an unfair labor practice for an employer "by discrimination in regard to hire or tenure of employment ... to encourage or discourage membership in any labor organization." Where an employer violates Sec. 8(a)(3) of the Act, 29 U.S.C. Sec. 8(a)(3), by discriminating in its hiring practices to discourage a union presence, it necessarily violates Sec. 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a)(1), which disallows employers to "interfere with, restrain, or coerce" employees in the exercise of their organizational rights. See, e.g., American Press, Inc., 833 F.2d at 624; NLRB v. Horizon Air Services, Inc., 761 F.2d 22, 26-28 (1st Cir.1985); Kallmann v. NLRB, 640 F.2d 1094, 1100 (9th Cir.1981).

45

Generally, a successor employer has the right to operate its business as it wishes. See Elastic Stop Nut Div. of Harvard Ind. v. NLRB, 921 F.2d 1275, 1279 (D.C.Cir.1990) (citing NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 287-88, 92 S.Ct. 1571, 1582, 32 L.Ed.2d 61 (1972)). Within this prerogative is the successor's freedom to hire its own work force: " 'nothing in the federal labor laws "requires that an employer ... who purchases the assets of a business be obligated to hire all of the employees of the predecessor...." ' " Id. (quoting Howard Johnson Co. v. Detroit Local Joint Executive Board, 417 U.S. 249, 261, 94 S.Ct. 2236, 2243, 41 L.Ed.2d 46 (1974) (citation omitted)). The successor employer may not, however, discriminate against union employees in its hiring. See Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 40, 107 S.Ct. 2225, 2234, 96 L.Ed.2d 22 (1987) (citations omitted).

46

Thus, where a successor employer refuses to hire its predecessor's employees because of their union affiliation, it may violate Sec. 8(a)(3), 29 U.S.C. Sec. 158(a)(3). The test is as follows: If it is proved that the former employees' protected conduct was a substantial or motivating factor for the successor's refusal to hire, the refusal to hire violates Sec. 8(a)(3), 29 U.S.C. 158(a)(3), unless the successor proves by a preponderance of the evidence that it "would have taken the same action for wholly permissible reasons." NLRB v. Transportation Management Corp., 462 U.S. 393, 399, 103 S.Ct. 2469, 2473, 76 L.Ed.2d 667 (1983). See also Elastic Stop Nut Div. of Harvard Ind., 921 F.2d at 1280; Horizon Air Services, Inc., 761 F.2d at 27. "[I]f the employer [refuses to hire] an employee for having engaged in union activities and has no other basis for the discharge, or if the reasons that [it] proffers are pretextual, the employer commits an unfair labor practice." Transportation Management Corp., 462 U.S. at 398, 103 S.Ct. at 2472.

47

In the present case, the Board determined that the General Counsel sustained its burden of proving that the hotel's former service-unit employees' union affiliation was the substantial or motivating factor in Horizons's refusal to hire them. This determination is supported by substantial evidence: Rodriguez, Horizons's agent, indicated to Quinones that Horizons would utilize PEC's services only on the condition that there be no risk of a union at the hotel; Quinones responded with a letter confirming that "[t]here is no possibility for a Union"; Rodriguez told a Carib Inn union employee that all union employees would be fired if the Union continued to bother him; Rodriguez told union leaders that "Horizons has nothing to do with the Union"; not one union-affiliated former employee who submitted an application with Horizons was interviewed; with the exception of several individuals who were offered supervisory or managerial positions, no former service-unit employees were hired by Horizons.

48

The Board disqualified as a pretext Horizons's proffered lawful reason for refusing to hire the former employees. This determination also is supported by substantial evidence. Horizons asserted at the administrative proceedings that the former employees were not hired because many of them were not needed, and because they were not competent employees. Fernandez testified that the former employee's unfitness was determined after he personally observed them, and that their incompetence is evidenced by the fact that the hotel had gone into bankruptcy. The Board, adopting the ALJ's findings, discredited Fernandez' testimony and rejected Horizons's proffered justification, noting that Horizons submitted no evidence tending to prove that Fernandez personally observed each former employee, and that it failed to prove its contention that the service employees caused the hotel's bankruptcy. The Board concluded that Horizons's retention of PEC for recruiting services, and its solicitation of applications from former service-unit employees, was conduct intended as a smoke screen to conceal its scheme to keep the Union out of the Carib Inn. Again, this conclusion is well supported by substantial evidence.

49

The Board, in adopting the ALJ's findings, concluded that Horizons violated Secs. 8(a)(3) and (1) of the Act, 29 U.S.C. Secs. 158(a)(1), (3). This determination is supported by substantial evidence and stands without error.

50

3. Sections 8(a)(5) and (1), 29 U.S.C. Sec. 158(a)(1), (5)

51

The Board determined, in adopting the findings of the ALJ, that Horizons violated Secs. 8(a)(5) and (1) of the Act, 29 U.S.C. Secs. 158(a)(1), (5), by refusing to bargain collectively with the Union, which represented employees of the service and casino units. Horizons asserts that this finding is in error, unsupported by substantial evidence.

52

Section 8(a)(5) of the Act, 29 U.S.C. Sec. 158(a)(5), provides that it is an unfair labor practice for an employer "to refuse to bargain collectively with the representatives of his employees." Where an employer violates Sec. 8(a)(5) of the Act, 29 U.S.C. Sec. 158(a)(5), by refusing to bargain collectively, it necessarily violates Sec. 8(a)(1) of the Act, 29 U.S.C. Sec. 158(a)(1), which disallows employers to "interfere with, restrain, or coerce" employees in the exercise of their organizational rights. See, e.g., Fall River Dyeing & Finishing Corp., 482 U.S. at 34 & n. 2, 107 S.Ct. at 2231 & n. 2. Under Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5), "an employer is obligated to bargain with the union representing its predecessor's employees if: (1) the new employer is a 'successor' to the old ... and (2) a majority of the successor's employees previously were employed by the predecessor." Asseo v. Centro Medico Del Turabo, 900 F.2d 445, 450-51 (1st Cir.1990) (citing Fall River Dyeing & Finishing Corp., 482 U.S. at 43-52, 107 S.Ct. at 2236-41). If these two criteria are satisfied, "a rebuttable presumption of majority status arises, leading to a consequent duty to bargain in good faith." Id. at 451.

53

Where a successor employer's unlawful hiring practices preclude the possibility of a majority status in its work force, however, the successor violates the Act by refusing to bargain collectively with the union that had represented the predecessor's employees. Elastic Stop Nut Div. of Harvard Ind., 921 F.2d at 1282. Thus, with regard to the former union employees of the hotel's service unit, our affirmance of the Board's determination that Horizons violated Sec. 8(a)(3) of the Act, 29 U.S.C. Sec. 158(a)(3), by refusing to hire them because of their union affiliation compels affirmance of the determination that Horizons violated Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5), as a duty to bargain with the employees' union representatives arose from the violation of Sec. 8(a)(3). See Elastic Stop Nut Div. of Harvard Ind., 921 F.2d at 1282.

54

With regard to the hotel's casino-unit employees, the Board's finding of a violation of Sec. 8(a)(5), 29 U.S.C. Sec. 158(a)(5), is supported by substantial evidence. The Board, in adopting the ALJ's findings, found that the casino continued operations after transfer of possession of the hotel to Horizons on June 1, and that Horizons operated the casino through June 23, 1986. The Board determined that, with respect to casino operations, Horizons was a successor employer. Fourteen of Horizons's twenty-four casino-unit employees were former union employees of the hotel's casino unit.

55

The fact that greater than one-half of the employees in Horizons's casino unit had been union employees of Horizons's predecessor raises a rebuttable presumption that there existed in the casino unit a "majority status." See Asseo, 900 F.2d at 450-51. Horizons does not assert that it was able to overcome this presumption. Horizons therefore had a duty to bargain with representatives of the former casino-unit employees. Its failure to do so violated Secs. 8(a)(5) and (1) of the Act, 29 U.S.C. Sec. 158(a)(1), (5).

C. The Board's Order

56

Horizons argues that the portion of the Board's order requiring it to "cancel, on request by the Union, any changes in wages and benefits that [Horizons] made when it began operations" is "inappropriate." After a review of the record, we conclude that the Board's order was a reasonable remedy fashioned to address Horizons's violations of Secs. 8(a)(1), (3) and (5) of the Act, 29 U.S.C. Secs. 158(a)(1), (3), (5). See Horizon Air Services, Inc., 761 F.2d at 32-33 (citations omitted) ("We respect the Board's special competence and expertise in fashioning remedies. And, where the Board's design is planned out with due regard to supportable findings, sensible reasoning, and an accurate view of the governing law, there is no room for judicial intervention.").

V. CONCLUSION

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The ALJ's findings, adopted by the Board, are supported by substantial evidence on the record as a whole and stand without error. Horizons's request for review is denied, and the Board's request for enforcement of its order is granted.

*

Of the District of Rhode Island, sitting by designation

1

For a list of the employment positions within the service and casino units, see ALJ's Decision and Proposed Order, appended to In re: Horizons Hotel Corp., et al., 312 N.L.R.B. No. 200 (Nov. 22, 1993)

2

On March 20, 1986, Rodriguez terminated the collective bargaining agreement pursuant to 11 U.S.C. Sec. 365. The propriety of this action is not in question