The question to be resolved on this appeal is whether a collective bargaining agreement, entered into between a corporation and a union representing its employees, is necessarily terminated when all of the corporation's capital stock is sold and the new owner then changes the name of the corporation. The district court, relying on NLRB v. Burns Intern. Security Services, Inc.,1 dismissed the complaint on the ground that the labor agreement was so terminated, and the union has appealed.

Since the district court summarily dismissed the union's complaint,2 we must view the facts in the light most favorable to the plaintiff union. In 1967, a collective bargaining contract was entered into by the General Teamsters Local Union ('the Union') and Enick Trucking, Inc. ('ETI').3 That contract, by its terms, was to remain in force for a period that included January 19, 1972.4 ETI was a motor carrier, and prior to January 18, 1972, all of its issued and outstanding stock was owned by one Walter Enick.

By an agreement of sale dated January 18, 1972, Enick agreed to sell all of his stock in ETI to one William Fiore, for cash. The sale was consummated on that same day, and Fiore thereafter transferred all the ETI stock to Diamond Excavating and Hauling, Inc. Fiore was the sole stockholder of Diamond. On the date Enick sold his ETI stock to Fiore, the only assets of ETI were certificates of public convenience issued by the Pennsylvania Public Utility Commission, several tractors and trailers, and a truck. The agreement of sale provided that all liabilities incurred by ETI prior to the January 18, 1972 closing were to be the responsibility of Enick.

Within 30 days of the sale of ETI stock to Fiore, the name of the corporation was changed to Bill's Trucking, Inc. ('BTI'). BTI has engaged, since the sale, in the businesses of motor carriage, almost the identical business in which ETI was engaged.

The dispute in this case arises from the failure of BTI to retain in its employ nine truck drivers represented by the Union. These drivers had been employed by ETI, and the conditions of their employment were set forth in the collective bargaining contract between the Union and ETI. According to the complaint, the drivers were discharged by BTI on January 19, 1972, the day after the sale of ETI stock to Fiore.5

The Union brought a breach of contract action against BTI, availing itself of the jurisdiction conferred by section 301 of the Labor-Management Relations Act ('LMRA').6 The Union maintained that the collective bargaining contract between it and ETI survived the sale of the ETI stock to Fiore, that BTI thus was bound by that contract, and that the discharge of the nine drivers transgressed the terms of the contract. Accordingly, the Union sought damages for the allegedly wrongful discharge of the drivers.

BTI, besides controverting several of the factual allegations of the complaint, interposed a motion to dismiss. The district court, in dismissing the case, reasoned that since, under its view of Burns Security Services, supra, 'a successor employer is not bound by the contract between the Union and its predecessor,' BTI was not obligated to honor the provisions of a collective bargaining agreement entered into by ETI and the Union. In so holding, the district court appears to have misapprehended the thrust of the Burns decision and, perhaps, the implications for this case of the labor law doctrine of 'successorship.'7 Accordingly, we reverse.

Broadly stated, in the law of labor relations the successorship issue deals with the extent to which an employer is obligated to honor the legal relations established between another employer and a union. The question arises in various contexts,8 and no single formula for its resolution has been developed by the federal courts. The district court, in summarily rejecting the Union's claim, relied exclusively on the Supreme Court's recent treatment of the successorship concept in Burns Security Services, supra. As the Supreme Court emphasized,9 however, the decision in that case was an exceedingly narrow one. The pronouncements laid down in Burns, therefore, can hardly be read to settle every successorship problem that may arise.

In Burns, Wackenhut, an employer, was under contract to provide security services at an airport. A union, the UPGW was certified as exclusive bargain agent for the Wackenhut security employees, and negotiated a three-year collective bargaining agreement with Wackenhut. Wackenhut's contract with the airport operator expired shortly thereafter, and, after competitive bidding, Burns Security Services was awarded the security contract by the airport operator. Burns retained 27 of the 42 Wackenhut employees at the airport, but declined to honor the terms of the UPGW collective agreement with respect to the retained employees. In addition, Burns refused to recognize or bargain with the UPGW.

The UPGW filed an unfair labor practice complaint with the Board pursuant to section 8 of the National Labor Relations Act, alleging that Burns was a 'seccessor' to Wackenhut, and that therefore its refusal to honor the terms of the collective agreement, or to recognize and bargain with the Union, constituted unfair labor practices under section 8 of the National Labor Relations Act ('NLRA').10

After proceedings before the NLRB and in the court of appeals, the Supreme Court held, first, that Burns was obligated to recognize and bargain with the UPGW. This holding was predicated upon the fact that NLRB had certified the bargaining unit as an appropriate one, and the fact that Burns had retained a majority of the old Wackenhut employees.11

The Supreme Court then focused upon the other question in dispute: whether Burns 'was bound to observe the substantive terms of the collective-bargaining contract that the union had negotiated with Wackenhut and to which Burns had in no way agreed.'12 The Court, relying principally on the history and evident purpose of section 8(d) of the National Labor Relations Act,13 held that Burns was not bound by the terms of the UPGW-Wackenhut agreement. It stated that:

'Holding either the union or the new employer bound to the substantive terms of an old collective-bargaining contract may result in serious inequities.'14

The district court here seized upon this holding in Burns, and magnified it into a sweeping interdiction against the enforcement of labor agreements against any putative 'successor' employer. Analysis of the Burns opinion convinces us, however, that its significance is largely limited to the particular facts of that case and, in any event, that it is not controlling in the circumstances presented here.

Burns, it will be recalled, was an unfair labor practice case, not a suit under section 301 of the LMRA for breach of a labor agreement. The Supreme Court thus grounded its Burns decision, at least in part, on the policy voiced in section 8 of the National Labor Relations Act which expressly declines to 'compel either party (to a labor negotiation) to agree to a proposal or require the making of a concession.'15 Section 8, of course, governs unfair labor practice proceedings, and thus the result in Burns may be viewed as following directly from the explicit statutory policy. The present proceeding, on the other hand, is not a section 8 case, and, though the policies embedded in that section may have some residual effect,16 they would not appear to be directly controlling in this breach of contract action.

Moreover, the prior and subsequent employers in Burns were, as the Supreme Court noted, entirely unrelated-- there was no 'succession' to the assets, stock or other corporate aspects of the prior employer. Indeed, even after Burns took over the security operation at the airport, both Burns and Wackenhut continued as ongoing enterprises. These factual circumstances further limit the impact of Burns on the doctrine of successorship in general.17

That there is no absolute bar to the enforcement of labor agreements against 'successor' employers in section 301 actions, such as this, is amply illustrated by the decision in John Wiley and Sons, Inc. v. Livingston.18

In Wiley a union brought an action pursuant to section 301 to compel arbitration under a collective bargaining agreement executed by a company which the defendant had acquired by merger. The Court, basing its decision in generous part on the strong national policy favoring arbitration,19 held that, in some circumstances, the terms of a predecessor's labor agreement may be enforced against a successor employer in section 301 actions.20

That the ramifications of Wiley survive Burns cannot be doubted.21 True, the Court in the latter case found no support in Wiley for the proposition that 'Burns be treated under the collective-bargaining contract exactly as Wackenhut would have been if it had continued protecting the (airport).'22 But it was specifically emphasized in Burns that 'Wiley arose in the context of a 301 suit to compel arbitration, not in the context of an unfair labor practice proceeding where the Board is expressly limited by the provisions of 8(d).'23

Burns, then, cannot be read to foreclose absolutely the imposition upon a successor employer of the contract obligations entered into by its predecessor. The district court apparently thought otherwise, notwithstanding intimation by the Burns Court that a contract may survive 'in a variety of circumstances involving a merger, stock acquisition, reorganization, or assets purchase . . ..'24

The district court's misapprehension of the force of Burns led, understandably, to its belief that, regardless of what might be proved at trial, the Union could not enforce against BTI its contract with ETI. Wiley and other cases seem to weigh in favor of remanding this case for a trial to determine first, whether BTI was, in fact, the same corporation with which the Union had a contract or, if not, whether there nonetheless existed such 'substantial continuity of identity in the business enterprise'25 before and after the sale to Fiore that the terms of the contract may appropriately be deemed to have weathered that sale.26

The Union's pleadings and affidavits indicate that BTI, far from being a distinct corporate entity, was the 'same corporation' as ETI. Were the district court to find, after considering the evidence, that such absolute identity of business enterprise existed, both our national labor law and general corporate law27 -- and perhaps plain common sense would require the enforcement against BTI of the Union-ETI contract.28 Should the district court determine that BTI was not the 'same' corporation as ETI, the doctrine of successorship, properly applied, may still require the imposition upon BTI of the contract terms.

In Golden State Bottling Co. v. NLRB,29 decided after Burns, the Supreme Court noted that:

'When a new employer . . . has acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations, those employees who have been retained will understandably view their job situations as unaltered.'30

Likewise, when one person simply purchases all the capital stock of a company with outstanding labor contract obligations, the employees of the purchased company will naturally view their 'job situations as unaltered.'31 In such a case-- where an absolute identity or a 'substantial continuity' of the business enterprises exists-- those employees, except in unusual circumstances, may well be entitled to the contractual benefits of their pact with the prior employer.

The possible consequences of a contrary view could have disturbing implications. For example, an employer dissatisfied with the terms of a validly negotiated labor agreement might seek to avoid them by a sale of his business to a third party, in effect working a unilateral termination of the employees' contract rights.32 This Court and other courts, aware of such possibility, have consistently held, in breach of contract cases under section 301, that a finding of 'substantial continuity' may warrant the conclusion that a successor is bound by the terms of a prior employer's labor contract.33

In United Steelworkers v. Reliance Universal, Inc.,34 a section 301 action brought by a union, this Court held that a collective bargaining agreement between a union and an employer 'remained the basic charter of labor relations,' as against a successor employer.35 The groundwork of the holding in Reliance was furnished by the fact that, after the sale of a plant to the successor, the business operation 'continued without significant change.' Moreover, the Court imposed contractual obligations on the successor in the face of a provision in the agreement of sale that the 'Buyer shall not assume any obligation of the . . . seller under any collective bargaining agreement . . ..'36

The Ninth Circuit has consistently honored the principle that, in section 301 actions, a substantial continuity of business enterprise may justify the imposition of contract terms upon a successor employer. Thus in Wackenhut Corp. v. Int'l Union, United Plant Guard Workers,37 there was enforced against a successor an arbitration provision negotiated by the prior employer, whose business and assets had been purchased by the successor.38 Likewise, in Teamsters, Chauffeurs, Warehousemen and Helpers v. Billington,39 another 301 case, the Ninth Circuit held a corporation bound to the labor contract of its predecessor, a sole proprietorship whose assets had been bought by the corporation.

These cases, read in the illumination provided by Wiley, Golden State Bottling, and the Supreme Court's admonition that Burns be construed narrowly, convince us that the district court erred in holding that the Union could not conceivably prove a set of facts that would justify the imposition upon BTI of some or all of ETI's labor obligations. The Union's allegations, taken together, assert facts which, if found at trial to be true, indicate that ETI was in reality the same corporation with which the Union had a contract, or that BTI at least represented a 'substantial continuity' of business enterprise from ETI to BTI. These factual circumstances, in a section 301 suit for breach of contract, would be sufficient foundation for a conclusion that the discharged drivers may recover whatever damages the contract terms provide.

This is not to suggest, of course, that in every case a successor employer may properly be held to the provisions of his predecessor's labor contract. Thus, for example where a manufacturing company acquires the assets of another company, intending to put them to use in an entirely new enterprise, it might be inappropriate to bind the acquirer to contracts negotiated with unions whose members' skills are of no utility in the new industry. But where, as here alleged, there is a simple purchase of stock, followed only by a change in corporate name and some minor changes in business operations, the policies of our national labor law weigh heavily in favor of a doctrine that preserves intact the employees' bargained-for rights and duties,40 or at least a portion of them. Moreover, enjoyment of the fruits of the collective bargaining process-- a surcease of industrial strife, the unimpeded flow of commerce-- should not be made to turn on the wooden concept that labor contracts are terminated by any change in corporate identity, no matter how slight and insubstantial.

Summary judgment under Rule 56, Federal Rules of Civil Procedure, is available only when no genuine issue of material fact remains in a litigation.41 Here, it remains to be decided whether there existed an identity or continuity of enterprise between ETI and BTI. Such determination may be made only after a hearing to determine the pertinent facts of this case.

Accordingly, the judgment of the district court will be reversed, and the case remanded for treatment consistent with this opinion.