Key Takeaways:
- The D.C. Circuit Court of Appeals has held that the successor bar (“Successor Bar”) is inconsistent with the National Labor Relations Act (“Act”).
- The Successor Bar requires successor businesses to bargain with incumbent unions for up to one year. The National Labor Relations Board (“Board”) established the doctrine in 2011.
- The D.C. Circuit’s decision allows successor businesses to challenge incumbent unions’ status immediately.
- It also demonstrates that Board interpretations of the Act are susceptible to challenges post Loper Bright.
On July 21, 2026, the D.C. Circuit Court of Appeals rejected the Board’s Successor Bar doctrine, explaining it is inconsistent with the protections in the Act. Hospital Menonita de Guayama, Inc. v. National Labor Relations Board, No. 22-1163 (D.C. Cir. 2026). Specifically, the Court explained that by preventing any challenge to incumbent union status for up to a year, the Successor Bar ran afoul of the Act’s provisions that allow employees to bargain through representatives of their choosing. The decision allows successor businesses the option to challenge incumbent union status when the facts support it. More broadly, it also indicates that Board decisions and interpretations not found in the express text of the Act may be vulnerable to legal challenge.
Background of the Dispute
Hospital Menonita de Guayama, Inc. (“Hospital Menonita” or “Hospital”) became a successor employer in 2017. The incumbent union (“Union”) claimed to represent the Hospital’s five bargaining units (although the Union had never negotiated a bargaining agreement for two of the units and the agreements for the other three had expired years before the change in ownership). Although the Hospital initially recognized the Union, it withdrew recognition when it received evidence that the Union did not have employee support.
The Board charged the Hospital with unfair labor practices. An Administrative Law Judge (“ALJ”) sided with the Board based on application of the Successor Bar. The ALJ refused to even consider the Hospital’s evidence that the Union no longer represented a majority of employees. The Board adopted the ALJ’s findings and conclusions, and ordered the Hospital to bargain with the Union.
Hospital Menonita appealed the Board’s decision to the D.C. Circuit. On February 27, 2024, the D.C. Circuit rejected the Hospital’s challenge, ruling that the Board is “entitled to deference” and that the Successor Bar is “within the scope of reasoned interpretation of the NLRA.” (“Hospital Menonita 1”).
Just a few months later the Supreme Court issued Loper Bright, which overruled Chevron, held that courts should no longer defer to agencies on interpretations of law, and explained that courts must “interpret statutes, no matter the context, based on the traditional tools of statutory construction.” On December 16, 2024, the Supreme Court vacated the D.C. Circuit’s decision in Hospital Menonita 1 and remanded the case back to the Circuit court for further reconsideration in light of Loper Bright.
The D.C. Circuit’s Decision
On July 21, 2026, the D.C. Circuit held, on reconsideration, that the NLRB’s Successor Bar is inconsistent with the Act.
The Hospital argued the Successor Bar “contravenes the Act, and the Board therefore has no statutory authority to impose it.” The Court explained that Loper Bright required the Court to “independently” answer this question without deferring to the Board’s prior legal conclusion that the Successor Bar was lawful.
The Court concluded that, by prohibiting challenges to a union’s status, the Successor Bar violates the Act in two ways. First, it runs afoul of Section 7, which provides employees with the right to bargain collectively through representatives of their own choosing. Second, it is inconsistent with Section 9, which conditions a union’s status as the exclusive bargaining representative on having the support of the majority of employees. The Court explained that the Successor Bar “nullifies these statutory protections for up to a year after a successor employer assumes control of a business.” The Court remanded the case to the Board for further proceedings.
Takeaways
As a practical matter, the D.C. Circuit’s decision allows successor businesses to challenge the validity of union representation if the facts indicate that the union does not in fact enjoy majority support. For more than a decade, the Successor Bar prohibited successor businesses from making this challenge for at least a year.
From a broader perspective, this case reaffirms that Courts will independently interpret the Act post-Loper Bright. As a result, prior Board interpretations that are not supported by the clear text of the Act may be vulnerable to legal challenges.
If you have questions about the impact of this decision on your organization or any other labor related questions, please reach out to your local Dinsmore labor and employment attorney.