In one of the most significant labor law decisions since the Supreme Court’s landmark Loper Bright decision, the U.S. Court of Appeals for the D.C. Circuit held that the National Labor Relations Board (NLRB or Board) exceeded its statutory authority by enforcing the Board’s longstanding “successor bar” doctrine. In Hospital Menonita de Guayama, Inc. v. NLRB, decided on July 21, 2026, the court concluded that the doctrine improperly restricts employees’ statutory right to choose – or reject – union representation and impermissibly compels successor employers to bargain with unions regardless of whether they continue to enjoy majority support.
For employers contemplating the acquisition of a unionized business, the decision could significantly alter the legal landscape. More broadly, it signals that courts may be increasingly willing to scrutinize (and invalidate) NLRB doctrines that cannot be grounded in the text of the National Labor Relations Act (“NLRA”).
What is the Successor Bar Doctrine?
Under the Supreme Court’s decision in NLRB v. Burns International Security Services, a purchaser of a unionized business may become a “successor employer” and, in many circumstances, must recognize and bargain with the incumbent union if it hires a majority of its workforce from the predecessor employer.
The successor bar is a separate, Board-created doctrine. Re-adopted by the Board in 2011, it prohibits successor employers, employees, and rival unions from challenging an incumbent union’s majority status for a “reasonable bargaining period” – generally six months to one year – following a change in ownership. During that period, the union enjoyed an irrebuttable presumption of majority support, even if a majority of employees no longer wished to be represented.
The Board justified the doctrine as promoting stability in newly established bargaining relationships. Critics, however, argued that it elevated labor-relations policy over the NLRA’s core principle of majority rule.
The D.C. Circuit Rejects the Doctrine
The Hospital Menonita de Guayama case arose after Hospital Menonita acquired a unionized hospital in Puerto Rico. The hospital initially recognized the incumbent union but later withdrew recognition after obtaining evidence that employees in each of the five bargaining units no longer supported the union.
The Board nevertheless found the hospital committed unfair labor practices because the successor bar doctrine prohibited the employer from challenging the union’s majority status during the reasonable bargaining period.
The D.C. Circuit originally upheld the Board’s decision. After the Supreme Court decided Loper Bright Enterprises v. Raimondo, however, the Court granted certiorari, vacated the judgment, and directed the D.C. Circuit to reconsider the case without relying on judicial deference to the agency’s interpretation of the statute.
On remand, the D.C. Circuit Court majority held that the successor bar doctrine conflicts with two fundamental protections contained in the NLRA:
- Section 7 – which guarantees employees the right to bargain collectively through representatives of their own choosing or to refrain from collective bargaining altogether; and
- Section 9 – which requires that a union represent a majority of employees before serving as their exclusive representative.
The D.C. Circuit Court found that the successor bar doctrine “effectively suspends the Act’s core guarantees of employee freedom and majority rule in collective bargaining” by requiring successor employers to bargain with unions even when they no longer enjoy majority support. The court further emphasized that the Board cannot rely on generalized policymaking authority to create rules that override the statutory rights Congress enacted.
Why Loper Bright Matters
Although the decision concerns successorship, its broader significance lies in the court’s application of Loper Bright.
For decades, courts frequently upheld Board interpretations of the NLRA under Chevron deference, so long as the Board’s interpretation was considered “reasonable.” Loper Bright eliminated that framework, reaffirming that courts – not agencies – must independently determine the meaning of federal statutes.
Applying that principle, the D.C. Circuit Court refused to defer to the Board’s policy judgment and instead asked a straightforward question: Does the NLRA authorize the successor bar? Its answer was no. The court concluded that policy considerations, even well-intentioned ones promoting labor stability, cannot justify a doctrine that conflicts with statutory text.
What California Employers Should Know
The Hospital Menonita de Guayama decision does not eliminate the traditional successorship obligations recognized by the Supreme Court in Burns and its progeny. Successor employers may still be required to recognize and bargain with an incumbent union under established successorship principles.
What has changed is the Board’s ability to prohibit challenges to the union’s majority status solely because a business recently changed hands.
For California employers considering acquisitions involving unionized businesses, the decision may create additional opportunities to evaluate whether an incumbent union actually continues to enjoy majority employee support before getting locked into extended bargaining obligations. Employers should proceed cautiously, however, because the Board has not yet abandoned the successor bar doctrine, and outside the D.C. Circuit, the doctrine may continue to be applied unless and until other courts, or ultimately the Supreme Court, reach the same conclusion.
The D.C. Circuit’s reasoning provides a roadmap to future challenges to Board-created doctrines that rely principally on policy considerations rather than just the text of the NLRA. As courts continue applying Loper Bright, employers can expect increased judicial scrutiny of NLRB rules and doctrines that have historically survived because courts deferred to the Board’s expertise rather than independently interpreting the statute.
If you’re considering acquiring a unionized workforce and have questions about the process, contact Shay Billington or Mark S. Spring in CDF’s labor management relations practice group.
