author: PARKER, Circuit Judge:

text:
    S.Q.K.F.C., INC., Plaintiff-Appellant, v. BELL ATLANTIC TRICON LEASING CORPORATION, Defendant-Appellee.
    No. 775, Docket 95-7533.
    United States Court of Appeals, Second Circuit.
    Argued Dec. 21, 1995.
    Decided May 28, 1996.

      Stephen T. Mangiaracina, Howard Beach, NY, for Plaintiff-Appellant.
    Douglas J. Good, Mineóla, N.Y. (Ruskm, Moscou, Evans & Faltischek, P.C., Mineóla, NY, David T. Maddox, Timothy Berg, Kendis K. Muscheid, and Fennemore Craig, Phoenix, AZ, on the brief), for Defendant-Appel-lee.
    Before KEARSE, MAHONEY and PARKER, Circuit Judges.
   PARKER, Circuit Judge:

Plaintiff S.Q.K.F.C. is a family-held corporation that owns and operates eleven Kentucky Fried Chicken franchises. After twice attempting to obtain a commercial loan from Bell Atlantic TriCon Leasing Corporation (“TriCon”), S.Q.K.F.C. brought this action against TriCon in the United States District Court for the Eastern District of New York, Eugene H. Nickerson, Judge, alleging: (1) violations of § 1962(e) of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961 et seq.; (2) common law fraud in the inducement to contract; and (3) violations of New York General Business Law § 349 (McKinney 1996). According to the complaint, TriCon defrauded S.Q.K.F.C. and other similarly situated consumers by offering unrealistically generous preliminary loan terms to lure them into exclusive negotiations. The district court dismissed the complaint pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6). Because S.Q.K.F.C. failed to adequately allege a fraudulent or deceptive practice on the part of TriCon, we affirm.

I. BACKGROUND

In April of 1993, S.Q.K.F.C. contacted Bell Atlantic TriCon Leasing, then a wholly-owned subsidiary of Bell Atlantic Capital Corporation, to discuss the possibility of borrowing money to expand and improve its restaurants, and to refinance loans made by family members. The parties arranged for a meeting between Joseph R. Panzarella, S.Q.K.F.C.’s president, and Charles Fletcher, an account executive for TriCon. At the meeting, which took place on May 6, Panza-rella explained to Fletcher that S.Q.K.F.C. wanted to obtain a loan without executing individual guaranties. Fletcher told Panza-rella that he thought this was possible, though he would have to check with his boss.

On May 7, S.Q.K.F.C. received a mailing from TriCon, which included materials described as a standard document loan package and a sample individual guaranty. Shortly thereafter, Fletcher telephoned Panzarella to tell him that TriCon had reviewed S.Q.KF.C.’s financial records and the Kentucky Fried Chicken franchise documents, and had determined that no individual guaranty would be required as a condition of the loan agreement.

On May 27, TriCon sent two written loan proposals to S.Q.K.F.C., the first to finance the construction of a new franchise, the second to finance a franchise renovation and an additional new project. Consistent with Fletcher’s oral representation, each proposal stated that “[n]o personal guaranties will be required with this loan.” However, the proposals were explicitly subject to several “terms and conditions.” For example, they stated that commitment would only issue upon written approval of the Senior Review Committee as to “pricing, term, structure, credit and other conditions, including but not limited to requirements and guarant[ie]s and/or other collateral to secure the obligations.” (emphasis added). The proposals also contemplated the possibility of an outright rejection of S.Q.KF.C.’s loan application: “If we do not approve your application, the application fee will be refunded....” And each explicitly stated that “[tjhis letter does not constitute a commitment by [TriCon].” In addition, although the proposals at one point stated that personal guaranties would not be required, at another point they indicated that “all of your obligations to us shall be unconditionally guaranteed by: To be determined.”

On July 2, Panzarella executed the loan proposals on behalf of S.Q.K.F.C. and mailed them to TriCon along with a check for fees in the amount of $11,600.

On August 22, prior to issuance of any commitment from TriCon, the company notified Panzarella by telephone, facsimile, and mail that personal guaranties would be necessary in order for the loans to close. S.Q.K.F.C. refused to provide the guaranties, and the deal fell through. TriCon returned plaintiff’s check in full on September 1.

Three months later, S.Q.K.F.C.’s shareholders once again decided to attempt to obtain a loan through TriCon, even if personal guaranties would be required. Panzarella called Fletcher, who indicated that a loan could be completed within as few as thirty days. Fletcher did not send plaintiff a new set of sample loan documents. TriCon sent a Commitment Letter to plaintiffs on January 25. It differed from the July loan proposal in several respects, most notably in that it listed Joseph R. and Angela Panzarella as personal guarantors. Panzarella executed the proposal under a notation “Agreed and Accepted” and mailed a check.

By February 11, TriCon was prepared to close the loan. Its attorneys mailed numerous documents to S.Q.K.F.C.’s attorney, including a proposed form of individual guaranty. According to S.Q.KJF.C.’s complaint, this individual guaranty was materially different from the sample guaranty received by S.Q.K.F.C. on May 7, 1998. It allegedly contained four new terms: a guarantor waiver of rights, covenants of guarantor, events of default, and a New Jersey forum selection clause. S.Q.K.F.C. alleges that, in spite of its protests, TriCon refused to remove these terms. An attorney for TriCon told S.Q.K.F.C. that the company had been using the individual guaranty form “for years and years [and] for hundreds and hundreds of loans.” Because the Panzarellas refused to sign the individual guaranty, the loan was never finalized.

S.Q.K.F.C. obtained a loan elsewhere, but only after incurring great expense in reliance on its negotiations with TriCon. . It filed suit alleging that TriCon had: 1) violated § 1962(c) of RICO, 18 U.S.C. §§ 1961 et seq., by engaging in a pattern of racketeering; 2) committed common law fraud in the inducement to contract, and 3) violated § 349 of New York General Business Law, by customarily defrauding consumers. The district court dismissed these claims pursuant to Federal Rules of Civil Procedure 12(b)(6) and 9(b), on the ground that plaintiff had not alleged fraud with sufficient particularity, and, for purposes of the New York General Business Law claim, had not alleged that TriCon’s misrepresentations affected the public interest and were recurring in nature. This appeal followed.

II. DISCUSSION

A. Plaintiff’s RICO and Common Law Fraud Claims

In order to state a RICO racketeering claim, a plaintiff must allege that a defendant, “employed by or associated with” an enterprise affecting interstate or foreign commerce, conducted or participated in the conduct of this enterprise’s affairs “through a pattern of racketeering activity.” 18 U.S.C. § 1962(c); Moss v. Morgan Stanley Inc., 719 F.2d 5, 17 (2d Cir.1983), cert. denied, 465 U.S. 1025, 104 S.Ct. 1280, 79 L.Ed.2d 684 (1984). The RICO statute defines “racketeering activity” to include acts which are indictable under 18 U.S.C. § 1341, relating to mail fraud, or 18 U.S.C. § 1343, relating to wire fraud. 18 U.S.C. § 1961(1)(B).

S.Q.K.F.C. based its RICO claim on allegations that TriCon engaged in. mail and wire fraud when it made “fraudulent and misleading representations, intending to induce plaintiff to borrow money from defendant.” A complaint alleging mail and wire fraud must. show (1) the existence of a scheme to defraud, (2) defendant’s knowing or intentional participation in the scheme, and (3) the use of interstate mails or transmission facilities in furtherance of the scheme. United States v. Gelb, 700 F.2d 875, 879 (2d Cir.), cert. denied, 464 U.S. 853, 104 S.Ct. 167, 78 L.Ed.2d 152 (1983). S.Q.KF.C. also alleged that TriCon committed common law fraud. To successfully plead a common law fraud claim, plaintiff must allege a “material, false representation, an intent to defraud thereby, and reasonable reliance on the representation, causing damage to the plaintiff.” Katara v. D.E. Jones Commodities, 835 F.2d 966, 970-71 (2d Cir.1987).

Since the district court dismissed these claims pursuant to Federal Rules of Civil Procedure 9(b) and 12(b)(6), this court engages in a de novo review of the pleadings. Rent Stabilization Ass’n v. Dinkins, 5 F.3d 591, 593 (2d Cir.1993) (citation omitted). The pleadings are deemed to include both the complaint, and any documents attached to it as exhibits. Goldman v. Belden, 754 F.2d 1059, 1065-66 (2d Cir.1985).

S.Q.K.F.C. claims to have been defrauded by a “bait and switch” tactic employed by TriCon. According to this theory, TriCon lured S.Q.K.F.C. into negotiating exclusively with TriCon by making false promises and providing preliminary loan proposals with attractive terms. Then, at the last minute, after S.Q.K.F.C. had “invested time and resources in gathering the required financial documents and sent thousands of dollars to [TriCon]”, TriCon changed the terms of the loan to the detriment of S.Q.K.F.C. S.Q.K.F.C. points to two examples of such allegedly fraudulent behavior. The first is when, during the first round of loan negotiations, TriCon “purposefully misled” S.Q.K.F.C. into believing that no personal guaranties would be required so that S.Q.K.F.C. would not seek out another lender.

In order to successfully plead this fraud claim, S.Q.K.F.C.’s complaint must specify the circumstances constituting fraud “with particularity.” Fed.R.Civ.P. 9(b). In addition, it must allege facts that give rise to a strong inference of fraudulent intent. Shields v. Citytrust Bancorp, Inc., 25 F.3d 1124, 1128 (2d Cir.1994). It can do so by (1) alleging facts to show that defendants had both motive and opportunity to commit fraud, or by (2) alleging facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness. Id.

A review of the documents relating to the initial negotiations, which are attached to S.Q.K.F.C.’s complaint, severely undercuts any inference of fraudulent intent on the part of TriCon. After their initial meeting, Fletcher is alleged to have told Panzarella that personal guaranties would not be required to finalize the loan. However, he followed up with a written proposal that made it clear that several conditions had to be met before TriCon could make a firm offer. The proposal explicitly stated that it did not constitute a commitment by TriCon, and that several conditions would have to be met before a loan was approved. Most notable among these was “written approval of our Senior Review Committee, as to pricing, term, structure, credit and other conditions, including but not limited to requirements and guarant[ie]s and/or other collateral to secure the obligations.” (emphasis added). Although in one place the proposal stated that “no personal guaranties [would] be required with th[e] loan,” in another place it said that “all of your obligations to us shall be unconditionally guaranteed by: To be determined.” The proposal also contemplated the possibility of S.Q.K.F.C. failing the credit check altogether: “If we do not approve your application, the application fee will be refunded....” Finally, the proposal specifically stated that the “letter does not constitute a commitment by us.” The very conditional nature of this proposal undermines the allegation that TriCon was trying to mislead S.Q.K.F.C. into believing that the deal was final. These allegations alone do not provide a sufficiently strong inference of fraudulent intent to satisfy the heightened pleading requirements of Rule 9(b).

S.Q.K.F.C.’s fraud claim was also based on its claim that the sample guaranty it received from TriCon through the mail on May 7, 1993 contained more favorable terms than the actual individual guaranty offered to the Panzarellas in February 1994. Specifically, S.Q.K.F.C. alleges that “[t]he sample Individual Guaranty did not include paragraph 3(d) (Guarantor waiver of rights), paragraph 7 (Events of Default), Paragraph 13 (Covenants of Guarantor) and paragraph 17 (Venue-agreement to be sued in New Jersey).”

This allegation does not suffice to state a fraud claim for several reasons. First, TriCon had not told S.Q.K.F.C. that the May 7, 1993 sample guaranty forms, which had been provided to S.Q.K.F.C. in connection with the first set of loan negotiations, were relevant to the second set of negotiations. (The first round of negotiations was terminated in August, 1993, resulting in the refund of S.Q.K.F.C.’s deposit. The second set of negotiations began in December, 1993.) S.Q.K.F.C. had reason to question the continuing significance of TriCon’s earlier representations — the January Commitment Letter signed by S.Q.K.F.C. specifically “canceled] and supersede^] all previous commitment/proposal letters.” Second, the January Commitment Letter was conditioned on the “approval of our counsel of all documentation and other requirements set forth herein.” Finally, TriCon had notified S.Q.KF.C. that the May 7 sample documents represented standard real estate loan documents. The loan negotiated between S.Q.KF.C. and TriCon in January involved three transactions, one for real estate, and two for equipment and leasehold improvement. Thus, S.Q.KF.C. had reason to believe that the individual guaranty might well differ from the sample provided during its initial negotiations with TriCon.

Furthermore, a comparison of the May 7 sample guaranty with the actual guaranty presented to S.Q.KF.C. in February reveals that S.Q.KF.C.’s misrepresentation claim is extremely misleading. The sample guaranty in fact contained most of the terms challenged by S.Q.K.F.C., albeit in slightly different form.

For example, in regard to a guarantor waiver of rights, the actual guaranty provided that “[guarantor expressly waives any and all rights of subrogation, reimbursement, indemnity, exoneration, contribution or any other claim which Guarantor may now or hereafter have....” The sample guaranty contained a very similar term: “Guarantor shall have no right of subrogation, reimbursement or indemnity whatsoever and no right of recourse to or with respect to any assets or property of the Debtor....” S.Q.KF.C. complains that the actual individual guaranty “is unreasonable and unconscionable. It requires the guarantor to re-lin[q]uish all rights to reimbursement from the debtor corporation or anyone else, thus precluding contribution from the co-guarantor and/or indemnification agreements with the other shareholders.” However, the sample guaranty terms had virtually the same effect.

S.Q.KF.C.’s claim that the sample guaranty did not contain a New Jersey forum selection clause is a blatant misstatement. Although there was not a section specifically entitled “Venue,” the sample provided that:

[t]his instrument shall for all purposes be governed by and interpreted in accordance with the laws of the State of New Jersey. Guarantor consents to the jurisdiction of any Federal Court in the State of New Jersey or any State Court located in Bergen County, New Jersey with respect to any legal action commenced hereunder.

In addition, the “Events of Default” clause in the actual individual guaranty was almost identical to a term found in the sample guaranty. The individual guaranty itself provided that:

If Guarantor or Debtor should at any time become insolvent or make a general assignment for the benefit of creditors, or if a proceeding shall be commenced by, against or in respect of Guarantor or Debt- or under the Federal Bankruptcy Code or any state insolvency law, or if any individual Guarantor dies, any and all of Guarantor’s obligations under this Guaranty shall, at TriCon’s option, forthwith become due and payable without notice.

The Sample Guaranty did not have a separate “Events of Default” paragraph. Nevertheless, its paragraph entitled “Primary Nature of Guaranty” contained almost identical language. The principal difference between the two provisions is that the sample did not contain the phrase “or if any individual Guarantor dies.” At oral argument, TriCon provided an explanation for this modification: the sample guaranty form contemplated only one guarantor. The addition of a second guarantor leads to the inclusion of an additional term. In fact, it is not clear that this explanation is satisfactory, as there are not one, but two signature lines on the sample guaranty form. However, as indicated above, TriCon had not told S.Q.KF.C. that the sample documents provided in connection with the first round of loan negotiations were relevant to the second round. In addition, the Loan Commitment Letter provided to S.Q.KF.C. made it clear that none of the documents were final.

Only one section of the individual guaranty cited by S.Q.KF.C. was, in fact, entirely absent from the sample guaranty: the “Covenants of Guarantor.” This provision states that the guarantor represents that all financial and other information furnished to TriCon was, at the time of delivery, true and correct. It also requires the guarantor to provide TriCon with annual financial statements within ninety days of the end of each calendar year and other such financial or credit information “as TriCon reasonably requests” until the loan is paid in full.

So, aside from the addition of this clause and the “death of a guarantor” event of default provision, the sample guaranty S.Q.K.F.C. received on May 7 contained terms very much like those S.Q.K.F.C. claims were divulged at the last minute—a similar waiver of rights, a nearly identical “Events of Default” clause, and a clear New Jersey forum selection clause. Thus, insofar as S.Q.KF.C.’s fraud claim is grounded in the May 7 sample guaranty form, it can only be based on the addition of these two contract terms.

We find that the addition of these terms does not suffice to raise a “strong inference of fraudulent intent” on the part of TriCon. As for the “Covenants of Guarantor”, it seems unlikely that a borrower would back out of a loan based only on a requirement that the guarantor provide periodic financial data to the lender. Consequently, TriCon had no motive to purposefully and fraudulently conceal this term until the last minute. The “death of a guarantor” clause might well be of greater concern to potential borrowers. However, given that the sample relied on by S.Q.K.F.C. was provided by TriCon in conjunction with a different loan negotiation, that it specifically stated that it was for real estate loans, and that the Loan Commitment Letter was explicitly conditional, the addition of this term does not give rise to a strong inference of fraudulent intent.

S.Q.K.F.C. has failed to meet the heightened pleading standards of Rule 9(b). Therefore, the district court correctly dismissed its RICO and common law fraud claims.

B. New York General Business Law § 349

Section 349 of New York State’s General Business Law provides a private right of action for injuries to consumers resulting from deceptive practices. To state a claim under this section, a plaintiff must allege that (1) defendant has engaged in an act or practice that is deceptive or misleading in a material way, and (2) plaintiff has been injured by reason thereof. Oswego Laborers’ Local 214 Pension Fund v. Marine Midland Bank, N.A, 85 N.Y.2d 20, 25, 623 N.Y.S.2d 529, 582, 647 N.E.2d 741, 744 (N.Y.1995). The first element requires a showing that a reasonable consumer would have been misled by the defendant’s conduct. Id. at 26, 623 N.Y.S.2d at 533, 647 N.E.2d at 745.

The district court dismissed S.Q.KF.C.’s § 349 claim on the ground that S.Q.K.F.C. failed to plead facts suggesting that TriCon’s alleged misrepresentations affect the public interest and are recurring in nature. In so holding, the district court overlooked the New York Court of Appeals’ recent decision in Oswego, in which the court held that “[p]laintiff ... need not show that the defendant committed the complained-of acts repeatedly—either to the same plaintiff or to other consumers—but instead must demonstrate that the acts or practices have a broader impact on consumers at large.” Id. at 25, 623 N.Y.S.2d at 532, 647 N.E.2d at 744; cf. Securitron Magnalock Corp. v. Schnabolk, 65 F.3d 256, 264 (2d Cir.1995) (“The critical question [under § 349] is whether the matter affects the public interest in New York, not whether the suit is brought by a consumer or a competitor.”), cert. denied, — U.S.-, 116 S.Ct. 916, 133 L.Ed.2d 846 (1996). This requires a finding of conduct that is “consumer-oriented,” defined as conduct that “potentially affect[s] similarly situated consumers.” Id. at 26, 623 N.Y.S.2d at 533, 647 N.E.2d at 745. In this case, TriCon’s alleged conduct potentially affects franchisees that, like S.Q.K.F.C., are interested in obtaining a commercial loan. It is unclear whether franchisees qualify as consumers for the purpose of this statute, which was not intended to be a “sword to be wielded in business-versus-business disputes ... where the party asserting the claim is not acting in a consumer role.” Richard E. Givens, Overall Scope of General Business Law §§ 349-350, Supplementary Practice Commentaries 166, 167 (McKinney Supp.1996).

Nevertheless, the district court’s dismissal of this claim should be affirmed on alternate grounds: a reasonable consumer would not have been misled by TriCon’s conduct. We begin by reiterating that the majority of S.Q.KF.C.’s allegations are belied by the exhibits attached to their complaint. TriCon’s sample guaranty contained extensive waivers, a lengthy list of events of default, and a New Jersey forum selection clause. Thus, S.Q.KF.C.’s § 349 claim can only rest (1) on Fletcher’s initial representation that no individual guaranties would be required, (2) on the absence of the “Covenants of Guarantor” section in the sample guaranty, and (3) on the addition of the “death of a guarantor” provision in the actual guaranty.

These facts alone do not sufficiently allege a deceptive practice on the part of TriCon. As for the first claim, Fletcher followed-up his initial statement that no guaranties would be required with written correspondence maldng it very clear that several conditions had to be met before TriCon could commit to any loan terms, including the potential need for guaranties. In the presence of these clear disclaimers, a reasonable consumer would not have been misled by Fletcher’s oral representation. The addition of the “Covenants of Guarantor” Clause is not alleged to have caused S.Q.K.F.C. any specific injury. Thus, it cannot contribute to a § 349 claim, as some injury, although not necessarily pecuniary, is necessary for recovery under § 349. See Hart v. Moore, 155 Misc.2d 203, 207, 587 N.Y.S.2d 477, 480 (Sup.Ct.1992). Finally, S.Q.K.F.C. cannot rely solely on the addition of the “death of a guarantor” clause to state a claim under § 349. TriCon did not in any way suggest to S.Q.K.F.C. that the sample guaranty forms from the first round of negotiations were controlling when S.Q.K.F.C. contacted it for a second round of loan discussions. In addition, at the time it learned of this term, S.Q.K.F.C. was still free to decline to accept TriCon’s terms and to receive a refund of its deposit money (as it did), and to seek more favorable terms with another lender.

Since a reasonable consumer would not have been deceived or defrauded by TriCon’s actions, we affirm the district court’s dismissal of S.Q.K.F.C.’s § 349 claim.

III. CONCLUSION

The judgment of the district court is affirmed in its entirety.

      . TriCon Leasing has since been merged into FINOVA Capital Corporation, a wholly-owned subsidiary of the FINOVA Group, Inc.


source: Caselaw Access Project

author: JOSÉ A. CABRANES, Circuit Judge.

license: Public Domain

text:
    BANKNOTE CORPORATION OF AMERICA, INC., Petitioner-Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner.
    Nos. 643, 880, Docket 95-4017, 95-4041.
    United States Court of Appeals, Second Circuit.
    Argued Jan. 12, 1996.
    Decided May 29, 1996.

      Lewis B. Gardner, Houston, Texas (John P. Campbell, J. Richard Hammett, Brown McCarroll & Oaks Hartline, Houston, Texas, of counsel), for petitioner-cross-respondent.
    David Fleischer, Washington, D.C. (Frederick L. Feinstein, General Counsel, Linda Sher, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, National Labor Relations Board, of counsel), for respondent-eross-petitioner.
    Before: VAN GRAAFEILAND, MINER and CABRANES, Circuit Judges.
   JOSÉ A. CABRANES, Circuit Judge.

Banknote Corporation of America, Inc. (“BCA”) seeks review and the National Labor Relations Board (“NLRB” or “the Board”) cross-petitions for enforcement of an order entered pursuant to subsections 8(a)(1) and (a)(5) of the National Labor Relations Act (“NLRA”) (codified at 29 U.S.C. § 158(a)(1) and (a)(5)), concluding that BCA engaged in unfair labor practices. Banknote Corp. of America, 315 N.L.R.B. 1041, 1994 WL 727612 (1994). The Board found that BCA, which acquired a high-security printing facility in Suffern, New York, on February 27, 1990, became a legal successor to the facility’s prior owner as of April 19, 1990, when it hired nearly its full complement of workers from among the prior owner’s work force. The Board found that on April 23, 1990, BCA changed certain terms and conditions of employment, without notice to or bargaining with the three charging party unions: the New York Lithographers & Photoengravers Union, # 1-P, Graphic Communications International Union (“Local 1-P”); District 15, International Association of Machinists & Aerospace Workers (“District 15”); and the Graphic Communications International Union, Local 119B — 13B, New York (“Local 119B-43B”). Id. at 1044. The Board’s order, issued on December 16, 1994, requires BCA to recognize and bargain with the three unions, to rescind the April 23 changes, and to make the affected employees whole for any losses incurred by virtue of the changes. Id. at 1044, 1047.

BCA petitions for review on the ground that two of the Board’s findings — that the bargaining units that the charging party unions seek to represent in this ease are “appropriate”; and that the announcement of terms and conditions of employment on April 23 constituted an unlawful unilateral change — reflect improper application of legal principles and are contrary to the record evidence. We find merit in neither of BCA’s contentions. We therefore deny BCA’s petition for review and grant the General Counsel’s cross-petition for enforcement.

I. Facts

The following facts of record are drawn primarily from the Administrative Law Judge’s decision of March 3, 1992, affirmed by a divided panel of the Board in a Decision and Order dated December 16,1994.

This labor dispute stems from BCA’s acquisition in early 1990 of a high-security printing facility located in Suffem, New York. The facility was formerly owned by American Banknote Company (“ABN”), one of the two major U.S. firms engaged in the printing of security documents (e.g., stocks, bonds, visas, traveler’s checks). In June 1989, ABN’s competitor, United States Banknote Company (“USBN”), made a tender offer for ABN’s parent company. The Justice Department raised antitrust objections to the proposed tender offer and required, as a condition of its approval of the transaction, the sale of an ABN printing facility to an independent third party. USBN entered into negotiations with a French security printing firm, Frangois-Charles Oberthur Fi-dueiare (“FCO”), for the sale of ABN’s Suf-fern facility. FCO formed an American subsidiary, BCA, to consummate the transaction. On December 15, 1989, USBN and BCA entered into a purchase agreement under which BCA would acquire substantially all of ABN’s assets at the facility.

Under the terms of the purchase agreement, BCA was required to elect to receive either a “closed” plant or an “operating” plant after USBN completed its tender offer for ABN’s parent company. If BCA chose an operating plant, it would interview ABN employees and, within thirty days, provide USBN with a list of the employees it wished to hire. On January 9,1990, despite the fact that USBN had not yet gained control of ABN’s parent, BCA announced its intention to receive an operating plant. USBN completed its tender offer for ABN’s parent company on February 27. The sale of the Suf-fem facility assets to BCA closed on the same day.

ABN’s approximately 100 production employees were divided into eleven bargaining units to reflect the diversity of its work force, which included individuals with a variety of skills involved in the high-security printing process — designers, engravers, photoengravers, plate finishers, machinists, and so on. Because of the delay in USBN’s acquisition of ABN’s parent company, BCA officers were not able to gain access to the facility to interview employees as contemplated by the purchase agreement. Accordingly, on March 13, BCA supplied USBN with a list of those employees it wished to hire without having interviewed the employees. USBN “rejected” the employee list because it purportedly created difficulties under the seniority provisions of the collective bargaining agreements between ABN and the labor unions representing employees at the plant. When BCA officers began to discuss the rejection of the employee list with USBN officers, they discovered that there had been a communication by the human resources director of ABN to union representatives at the facility on March 1 to the effect that “[FCO] has agreed to recognize the Unions who are party to collective bargaining agreements at the ... plant and to be bound to the terms of the existing collect[ive] bargaining agreements.” BCA retained labor counsel, who subsequently wrote a letter to union representatives indicating that the statements in the March 1 letter were not authorized, that BCA had made no commitment to recognize the unions or to be bound by the collective bargaining agreements, and that BCA intended to “attempt to hire its initial work force from among the employees currently working at the ... facility.” BCA’s president, Martin Ferenczi, met with union representatives on April 11, 1990. At that meeting, he announced that: (1) ABN would close its Suf-fem facility on April 13; (2) all ABN employees in Suffem would receive applications for employment with BCA; (3) BCA officers would conduct interviews with the former ABN employees on April 16 and 17; (4) the facility would reopen on April 19; and (5) BCA would not honor the collective bargaining agreements existing between ABN and the unions. Ferenczi also stated that BCA intended to introduce greater “flexibility” in operations at the plant, and that employees’ existing health benefits would continue for a period of sixty days. He did not otherwise discuss the terms or conditions of employment.

As planned, BCA distributed employment applications to ABN employees prior to the closing of the plant. BCA interviewed 102 ABN employees on April 16 and 17, and extended offers of employment to fifty ABN production workers and four ABN supervisors, all of whom began work on April 19. BCA also hired two maintenance workers not previously employed by ABN. On April 23, BCA announced certain terms and conditions of employment, with the result that as of that date all employees worked the same hours, participated in the same pension, vacation, and sick pay plans, received the same health and welfare benefits, and observed new company holidays. BCA also voluntarily recognized two of the eleven unions that had previously represented ABN employees.

Five unions filed charges against the company for violations of subsections 8(a)(1) and (a)(5) of the NLRA, claiming that BCA had improperly failed to recognize and bargain with them prior to changing the terms and conditions of employment on April 23. The Board’s regional enforcement counsel issued a consolidated complaint on behalf of all five unions in September 1990. In March 1991, the Board severed and withdrew complaints filed on behalf of two of the unions because each sought to represent only one employee. The Board filed amended complaints on behalf of the three remaining unions, Local 1-P, District 15, and Local 119B^3B. The case was heard before Administrative Law Judge D. Barry Morris on April 15-19, 1991. On March 3, 1992, the ALJ issued a decision and recommended order.

The ALJ found that, as of April 19, 1990, when BCA had hired nearly its full complement of employees from ABN’s work force, BCA acquired a duty to bargain with the three charging party unions. The ALJ concluded that, despite the fact that BCA had hired only half of ABN’s employees and had indicated its intent to introduce greater “flexibility” in its operations, BCA was a legal successor to ABN. As a prerequisite for the finding that BCA was a legal successor with a duty to bargain with the charging party unions, the ALJ assessed whether the three units involved in the proceedings were “appropriate” bargaining units under BCA’s operations. The ALJ found that BCA had failed to sustain its burden of demonstrating that the bargaining units the charging party unions sought to represent were inappropriate. As a result, BCA’s duty to bargain attached no later than April 19. The duty to bargain carried with it a duty not to institute unilateral changes in the terms and conditions of employment without providing notice to or bargaining with the charging party unions. BCA therefore engaged in an unfair labor practice in announcing terms and conditions of employment on April 23 without consulting the unions.

BCA, the Board’s General Counsel, and Local 119B-43B filed exceptions to the ALJ’s decision. On December 16, 1994, a panel of the NLRB, by a vote of 2-1, affirmed the ALJ’s rulings, findings, and conclusions and adopted the recommended order. BCA, 315 N.L.R.B. at 1041. The majority concluded that the bargaining units the charging party unions sought to represent remained “appropriate” under BCA’s operations, and that, as of April 19, BCA was a legal successor with a duty to bargain before altering the terms and conditions of employment. In dissent, Member Stephens concluded that changes instituted by BCA immediately upon its takeover of the plant—including the introduction of greater flexibility in the roles of the various production employees—rendered the historical bargaining units inappropriate. Id. at 1045.

On February 7, 1995, BCA filed a petition for review of the Board’s decision and order, arguing that (1) the historical bargaining units that the charging party unions sought to represent were not appropriate under BCA’s operations, and BCA therefore had no duty to recognize or bargain with the unions; and (2) BCA’s announcement of terms and conditions of employment on April 23 did not constitute an unlawful unilateral change. The General Counsel cross-petitioned for enforcement.

II. Discussion

An employer’s collective bargaining obligation derives from subsection 8(a)(5) of the NLRA which prohibits an employer from refusing “to bargain collectively with the representatives of his employees, subject to the provisions of [subsection 9(a) of the Act].” 29 U.S.C. § 158(a)(5). Subsection 9(a) identifies the representative designated by a majority of the employees in a unit appropriate for collective bargaining purposes as the exclusive bargaining representative of those employees. 29 U.S.C. § 159(a). By conjunctive application of these two subsections, the union designated by a majority of employees in an “appropriate” bargaining unit may compel the employer to negotiate as to the terms and conditions under which employees of that bargaining unit will work. In the instant case, the charging party unions had collective bargaining relationships with ABN, not BCA. Nevertheless, it has long been held that under certain circumstances a “successor” employer may be required to presume that the representative of a bargaining unit continues to enjoy the support of a majority of the employees in that unit and to negotiate with the unit’s bargaining representative.

Many of the principles governing the inquiry into whether and at what point an employer becomes a legal successor with a duty to recognize and bargain with an “incumbent” union were established in NLRB v. Burns International Security Services, Inc., 406 U.S. 272, 92 S.Ct. 1571, 32 L.Ed.2d 61 (1972), and Fall River Dyeing and Finishing Corp. v. NLRB, 482 U.S. 27, 107 S.Ct. 2225, 96 L.Ed.2d 22 (1987). A finding of legal successorship first requires a finding of “substantial continuity” between the predecessor’s enterprise and that of the successor. Fall River Dyeing, 482 U.S. at 43, 107 S.Ct. at 2236 (quotation marks omitted); see Burns, 406 U.S. at 280 n. 4, 92 S.Ct. at 1578 n. 4. Related to this inquiry is whether the bargaining unit that a union seeks to represent remains “appropriate” under the successor’s operations. See Burns, 406 U.S. at 280, 92 S.Ct. at 1578. Subsections 8(a)(5) and 9(a) of the NLRA read together, only require a successor to bargain with the representative of an “appropriate” bargaining unit.

More complicated is the question of when a legal successor’s duty to bargain will attach. In Bums, the Court rejected the Board’s rule that a successor must in all circumstances bargain with an incumbent union before instituting employment terms different from those prevailing under the predecessor’s collective bargaining contract. The Court thus concluded that ordinarily a successor may set the initial terms and conditions of employment—different from the substantive terms of the previously negotiated collective bargaining agreement—without bargaining. Id. at 281-86, 92 S.Ct. at 1579-82. The exception to this general rule, stated in dictum in Bunts and developed by the Board and courts of appeals thereafter, is that a successor employer may be required to bargain as to the initial terms and conditions of employment when the successor makes it “perfectly clear” that it will retain its predecessor’s work force and operate on substantially the same terms as the predecessor. See id. at 294-95, 92 S.Ct. at 1585-86; International Ass’n of Machinists & Aerospace Workers v. NLRB, 595 F.2d 664, 671-74 (D.C.Cir.1978), cert. denied, 439 U.S. 1070, 99 S.Ct. 839, 59 L.Ed.2d 36 (1979); Spruce Up Corp., 209 N.L.R.B. 194, 195, 1974 WL 4741 (1974), enfd per curiam on other grounds, 529 F.2d 516 (4th Cir.1975); see also Nazareth Regional High School v. NLRB, 549 F.2d 873, 881 (2d Cir.1977). Even if an employer states its plan to retain employees from its predecessor’s work force, its simultaneous announcement that it will operate on terms different from those of its predecessor raises the real possibility that the predecessor’s employees will not wish to work on the new terms. See Spruce Up, 209 N.L.R.B. at 195. In such circumstances, it will not be “perfectly clear” prior to hiring what portion of the successor’s employees will be drawn from the predecessor’s work force. See id.

Although an ordinary successor — i.e., one that does not make it “perfectly clear” that it intends to retain its predecessor’s employees — may unilaterally set the initial terms and conditions of employment, the Bums Court concluded that a successor may ultimately acquire a duty to recognize and bargain with the representative of the predecessor’s employees. In Bums, that duty was found to attach because a majority of the successor’s employees in an appropriate bargaining unit had been employed by the predecessor. 406 U.S. at 278-79, 92 S.Ct. at 1577-78; see Saks & Co. v. NLRB, 634 F.2d 681, 685-86 (2d Cir.1980). In Fall River Dyeing, the Court addressed the question of when the determination of the presence of a majority in the successor’s work force is to be made. The Court rejected the view that the determination of majority presence is appropriate only when the successor has hired the “full complement” of its employees, and instead adopted the Board’s rule that the appropriate time to assess majority presence is when the successor has hired a “substantial and representative complement” of its employees. 482 U.S. at 47-52, 107 S.Ct. at 2238-41. Fall River Dyeing also makes clear, however, that “[t]he successor’s duty to bargain at the ‘substantial and representative complement’ date is triggered only when the union has made a bargaining demand.” Id. at 52, 107 S.Ct. at 2240-41 (emphasis supplied).

In the instant case, the Board concluded that BCA was not a “perfectly clear” successor to ABN. Because BCA had communicated to ABN’s unions in March and early April 1990 that it intended to make certain changes in the terms and conditions of employment, there existed a real question as to whether ABN’s employees would accept the offered terms and enter into an employment relationship with BCA. Thus, it could not be “perfectly clear” from the outset that BCA would ultimately draw a majority of its employees in the bargaining units in question from ABN’s work force. As of April 19, however, BCA had completed its hiring. Nearly all of BCA’s employees were then former ABN employees. The Board concluded that, under these circumstances, BCA had a duty to bargain with the charging party unions as of April 19. The duty to bargain encompassed a duty not to impose unilateral changes in the terms and conditions of employment' without notice to or bargaining with unions that are presumed to enjoy majority support among employees in a bargaining unit. The Board therefore found that BCA committed an unfair labor practice when it introduced terms and conditions of employment on April 23 without giving the unions prior notice and an opportunity to negotiate.

To sustain and enforce the Board’s order, we must accept two disputed conclusions underlying the Board’s holding that BCA acquired a duty to bargain as of April 19. First is the Board’s factual determination that the three bargaining units that the charging party unions seek to represent remained “appropriate” bargaining units under the operational structure and practices introduced by BCA. Second is the legal conclusion — implicit in the Board’s finding of a duty to bargain — that the charging party unions need not have made a demand that BCA bargain with them in order to preserve their right to challenge BCA’s unilateral institution of terms and conditions of employment on April 23.

We review these conclusions in reverse order. We find no merit in BCA’s argument that, in the absence of a demand by the charging party unions for recognition or bargaining, no collective bargaining relationship would have existed between BCA and the unions. We then consider BCA’s argument that the Board’s finding of unit appropriateness is unsupported by the record evidence. We reject this contention as well.

A. Significance of Bargaining Demand in Ordinary Successorship Cases

As previously noted, in Fall River Dyeing the Court addressed the question of when a successor’s obligation to bargain with an “incumbent” union attaches. The Court upheld the Board’s conclusion that a bargaining obligation attached in that case although the union had made a premature bargaining demand — that is, it had demanded bargaining prior to the successor’s hiring of a substantial and representative complement of employees. The Board’s conclusion was based on its finding that the union’s bargaining demand was “continuing in nature.” The Court reasoned as follows:

[T]he Board’s “continuing demand” rule is reasonable in the successorship situation. The successor’s duty to bargain at the “substantial and representative complement” date is triggered only when the union has made a bargaining demand. Under the “continuing demand” rule, when a union has made a premature demand that has been rejected by the employer, this demand remains in force until the moment when the employer attains the “substantial and representative complement.”

Id. at 52, 107 S.Ct. at 2240-41. Relying on this language, as well as similar pronouncements of courts of appeals, BCA argues that it could not have acquired a duty to bargain in the absence of any request for recognition or bargaining by the charging party unions. If no duty to bargain attached prior to BCA’s introduction of new terms and conditions of employment on April 23, BCA’s action could not have constituted an unlawful unilateral change.

We are unpersuaded. To be sure, several courts of appeals and Board cases applying Fall River Dyeing unequivocally state that the concurrence of two circumstances is required to trigger a bargaining obligation on the part of an “ordinary” (i.e., not “perfectly clear”) successor: (1) the hiring of a “substantial and representative complement” of employees, a majority of whom were employed by the predecessor; and (2) the existence of an outstanding demand by the union for recognition or bargaining. See Nephi Rubber Prods. Corp. v. NLRB, 976 F.2d 1361, 1365 n. 6 (10th Cir.1992) (determination of whether successor employer has duly to bargain requires analysis of whether successor has hired substantial and representative complement of employees at time of union’s bargaining demand); Williams Enters., Inc. v. NLRB, 956 F.2d 1226, 1232 (D.C.Cir.1992) (“The presumption of majority support that creates a successor’s duty to bargain arises ... only when ... the new employer has hired a ‘substantial and representative complement’ of its workforce and a majority of that workforce is composed of predecessor employees; and the incumbent union has, at some time, issued a valid bargaining demand to the new employer.”), decision supplemented by 312 N.L.R.B. 937, 1993 WL 402910 (1993), enf'd, 50 F.3d 1280 (4th Cir.1995); Briggs Plumbingware, Inc. v. NLRB, 877 F.2d 1282, 1286-87 (6th Cir.1989) (“The concurrence of two events is necessary to obligate the successor employer to bargain with the union: the successor’s employment of a ‘substantial and representative complement’ of the predecessor’s employees and the union’s demand for recognition.”); see also Capitol Steel & Iron Co., 299 N.L.R.B. 484, 496 (1990); Royal Midtown Chrysler Plym outh, Inc., 296 N.L.R.B. 1039, 1040,1989 WL 224383 (1989). As the Board stated in Royal Midtown Chrysler Plymouth:

Suceessorship does not automatically carry with it the obligation to bargain with the union that represented the predecessor’s employees. Nor does the fact that the union represents a majority of the successor’s employees in an appropriate unit operate alone to invoke the bargaining obligation; and this is so even when the successor has attained a “substantial and representative complement” of employees. The bargaining obligation — albeit potentially present when suceessorship and representative complement are established— must be triggered by a demand for recognition or bargaining.

296 N.L.R.B. at 1040 (emphasis supplied).

Neither the ALJ nor the Board discussed the requirement of a bargaining demand in this case. In defending the Board’s decision, the General Counsel does not argue that the charging party unions demanded recognition prior to the employer’s April 23 action allegedly altering the terms and conditions of employment. Rather, the General Counsel argues that no bargaining demand was required. First, the General Counsel contends that a successor has an obligation to bargain over terms and conditions of employment once it is clear that the majority of the employees in a bargaining unit were drawn from the predecessor’s work force, regardless of whether the union has made a valid bargaining demand. Second, the General Counsel claims that no specific bargaining demand is required where an employer imposes, without notice, changes to the terms and conditions of employment. That is, where a union did not receive prior notice of possible changes as to a mandatory subject of collective bargaining, it cannot be thought to have waived its right to bargain as to such changes by failing to make a bargaining demand. Because we accept a variant of the first argument, we need not address the second.

Although the rule invoked by BCA here— that the concurrence of the hiring of a substantial and representative complement of employees, a majority of whom had been employed by the predecessor, and a bargaining demand is required to trigger an employer’s duty to bargain — has been broadly stated, it developed within a specific factual context: where “there is a start-up period by the new employer while it gradually builds its operations and hires employees.” Fall River Dyeing, 482 U.S. at 47, 107 S.Ct. at 2238. If an employer builds its work force gradually, assessing whether a majority of the successor’s employees were drawn irom the predecessor’s work force once the employer has hired a substantial and representative complement — rather than when the employer has hired its full employee complement — serves the interest of the employees in being represented as soon as possible in the relationship with their new employer. Id. at 48, 107 S.Ct. at 2238. Requiring the confluence of a majority presence in a substantial and representative complement of employees and a bargaining demand, among other things, eases the burden of uncertainty on the employer: “Once the employer has concluded that it has reached the appropriate complement, then, in order to determine whether its duty to bargain will be triggered, it has only to see whether the union already has made a demand for bargaining.” Id. at 52-63, 107 S.Ct. at 2240-41.

While the two-pronged rule of Fall River Dyeing may be appropriate in a situation involving the staggered or gradual hiring of employees during a start-up period, or even the hiring of employees after a prolonged delay between the closing and reopening of a business, we do not find it appropriate here. Where a successor rebuilds an operation over a period of time or where there is a hiatus between the closing and reopening of an enterprise, there may be considerable doubt as to whether a union that enjoyed the support of a majority of a predecessor’s bargaining unit continues to do so under the successor’s operation. Here, however, the employer hired its full complement of employees at once, shortly after the change in ownership of the business. Accordingly, the fact that the majority of the employees in each bargaining unit were former ABN employees was immediately clear to BCA. BCA could easily discern its obligation to presume that the representatives of ABN’s employees continued to enjoy majority status. We see no reason to adopt BCA’s formalistic approach where the requirement of a demand would have supplied it with no additional certainty regarding this obligation.

We therefore find those cases involving gradual hiring over a start-up period or involving a hiatus in operations, in which courts and the Board have linked a determination of a duty to bargain with a bargaining demand, sufficiently distinguishable from the instant case to warrant application of a different rule here. Cf. Nephi Rubber Prods., 976 F.2d at 1365 (concluding that, after sixteen-month hiatus in operations, employer had hired substantial and representative complement of employees as of date of bargaining demand); Williams Enters., 956 F.2d at 1230, 1232-34 (remanding to Board for determination of whether bargaining demand coincided with hiring of substantial and representative complement; successor immediately rehired nearly twenty percent of predecessor’s employees and then “continually increased the size of its production staff” throughout next two months); Briggs Plumbingware, 877 F.2d at 1284, 1287 (requiring concurrence of bargaining demand and majority presence in substantial and representative complement where successor first hired some of predecessor’s employees for pre-production work and began actual production with additional workers two months later); Capitol Steel & Iron, 299 N.L.R.B. at 485, 486 (examining whether successor to employer that ceased operations in January 1986 had duty to bargain, based on whether substantial and representative complement existed as of union’s October 1987 bargaining demand). To the extent that other cases can be read to suggest that a bargaining demand is required even where the successor can immediately discern that a majority of its employees were employed by the predecessor, we simply disagree that Fall River Dyeing compels any such result. Cf. NLRB v. Houston Bldg. Serv., Inc., 936 F.2d 178, 180 (5th Cir.1991) (noting, in ease where employer immediately hired all of predecessor’s employees and union had made bargaining demand, that obligation to bargain arises where ‘“a majority of the successor’s employees had been employed by its predecessor,’ ” “assuming that the union has made a bargaining demand” (quoting Fall River Dyeing, 482 U.S. at 47, 107 S.Ct. at 2238)), cert. denied, 502 U.S. 1090, 112 S.Ct. 1159, 117 L.Ed.2d 407 (1992); Royal Midtown Chrysler Plymouth, 296 N.L.R.B. at 1039 (holding that no bargaining obligation attached where successor hired three of four employees from predecessor’s bargaining unit one week after change in ownership, but union made demand after predecessor’s employees no longer formed majority in successor’s bargaining unit). Indeed, Fall River Dyeing itself suggests the possibility that the composition of the successor’s work force alone may in some circumstances be sufficient to trigger an employer’s duty to bargain: in describing the holding of Bums, the Fall River Dyeing Court stated that in that case “[t]he ‘triggering’ fact for the bargaining obligation was [the] composition of the successor’s work force” — specifically, the fact that a majority of the successor’s employees had previously been employed by the predecessor. Fall River Dyeing, 482 U.S. at 46, 107 S.Ct. at 2237.

We therefore conclude that the absence of a bargaining demand in this case— which involves neither a prolonged start-up period and gradual or staggered hiring of employees nor a significant hiatus in operations, but rather, a rapid transition period with the immediate hiring of a full employee complement — does not preclude a finding of a duty to bargain on the part of BCA. Assuming that the remaining prerequisites for suceessorship and a duty to bargain were met (a topic to which we shall return shortly), BCA’s duty to bargain would have attached as of April 19,1990, when BCA hired its employees. BCA was thereafter no longer free to act unilaterally with respect to mandatory subjects of collective bargaining and BCA’s imposition of new terms and conditions of employment on April 23 was unlawful.

We turn to BCA’s remaining contentions. We address at length only BCA’s argument that the ALJ and the Board erred in concluding that the bargaining units the charging party unions sought to represent remained “appropriate” under BCA’s operations, finding the remainder of BCA’s contentions to be insubstantial.

B. Unit Appropriateness Under BCA’s Operations

BCA challenges on two grounds the determination that the bargaining units in question remained appropriate after BCA took over the plant. First, BCA contends that the Board improperly applied a rebuttable presumption in this case in favor of the appropriateness of historical bargaining units. BCA argues that the Board should instead have conducted the “community-of-interest” analysis that it typically employs in determining whether a bargaining unit is appropriate; bargaining history is only one of several factors considered under that approach. Second, BCA suggests that it succeeded in overcoming the presumption in any event.

We examine each argument in turn.

1. Board’s Use of a Rebuttable Presumption in Favor of Historical Units

In concluding that BCA had failed to demonstrate that the three bargaining units the charging party unions sought to represent were inappropriate, the Board reasoned as follows:

[T]he Board has consistently held that long-established bargaining relationships will not be disturbed where they are not repugnant to the Act’s policies. The Board places a heavy evidentiary burden on a party attempting to show that historical units are no longer appropriate.

315 N.L.R.B. at 1043 (footnote omitted); see Great Atlantic & Pacific Tea Co., 153 N.L.R.B. 1549, 1550 (1965); Columbia Broadcasting Sys., Inc., 214 N.L.R.B. 637, 642-43, 1974 WL 5466 (1974). BCA contends that the proper inquiry into whether a bargaining unit remains appropriate under a successor employer involves application of the Board’s “community-of-interest” test. See Kalamazoo Paper Box Corp., 136 N.L.R.B. 134, 137 (1962); NLRB v. Indianapolis Mark Sales & Serv., 802 F.2d 280, 283-84 (7th Cir.1986). Under that test, an assessment of unit appropriateness depends upon the degree to which a group of employees share a “community of interests” distinct from the interests of other employees of the company. The degree to which employees share a community of interests is measured by a number of factors, including whether, in relation to other employees, they have different methods of compensation, hours of work, benefits, supervision, training and skills; if their contact with other employees is infrequent; if their work functions are not integrated with those of other employees; and if they have historically been part of a distinct bargaining unit. Kalamazoo Paper Box, 136 N.L.R.B. at 137; see also Staten Island Univ. Hosp. v. NLRB, 24 F.3d 450, 455 (2d Cir.1994). BCA contends that, in giving great weight to the “long-established bargaining relationships” in this case, the Board improperly elevated a single factor in the community-of-interest test—bargaining history—over all others, thereby creating a re-buttable presumption of the appropriateness of historical bargaining units and abdicating its duty under subsection 9(b) of the Act to decide “in each case” what “unit [is] appropriate for purposes of collective bargaining.” 29 U.S.C. § 159(b).

We find BCA’s argument unpersuasive. We have previously acknowledged the power of the Board to apply rebuttable presumptions regarding the appropriateness of bargaining units. Most recently, in Staten Island University Hospital, we found that power to be “beyond dispute,” recognizing that the Board “is not required to exercise ‘standardless discretion in each case’” and “has authority to ‘resolve certain issues of general applicability unless Congress clearly expresses an intent to withhold that authority.’ ” 24 F.3d at 456-57 (quoting American Hosp. Ass’n v. NLRB, 499 U.S. 606, 612, 111 5.Ct. 1539, 1543, 113 L.Ed.2d 675 (1991)).

A rule such as the one invoked by the Board here—favoring long-established bargaining relationships—is “reviewable for consistency with the Act, and for rationality.” Beth Israel Hosp. v. NLRB, 437 U.S. 483, 501, 98 S.Ct. 2463, 2473-74, 57 L.Ed.2d 370 (1978). The Board’s invocation of a presumption in favor of historical bargaining units simply is not, as a general matter, inconsistent with the requirement of § 9(b) of the NLRA that the Board “decide in each case” the appropriateness of a bargaining unit.

BCA contends, however, that the Board’s reliance on the presumption was improper in this case. Specifically, BCA claims that the application of a presumption in favor of historical bargaining units is not rational here, where the historical bargaining units have long gone unchallenged despite significant changes in the technology of the high-security printing industry.

The rationality of applying a particular presumption need not be demonstrated by reliance on testimonial evidence in the case in which the Board invokes the presumption, Big Y Foods, Inc. v. NLRB, 651 F.2d 40, 46 (1st Cir.1981)—indeed, such a requirement would undercut the ability of the NLRB to resolve issues of general applicability. Rather, the Board may draw upon its past experience in like cases in deciding whether to apply a presumption, and in such cases the application “is likely to be rational.” Id.; see Republic Aviation Corp. v. NLRB, 324 U.S. 793, 804-05, 65 S.Ct. 982, 988-89, 89 L.Ed. 1372 (1945). Nonetheless, if it were the case that BCA had introduced significant evidence that ABN’s units had been rendered obsolete by industry shifts or developments at ABN, and the Board had applied the presumption in favor of long-established units in disregard of this evidence, we would not hesitate to find the application of the presumption irrational. Here, however, we find that BCA fails to carry the argument. The record does suggest that ABN underwent significant changes in structure over several decades, including shifting its operations in 1984 from one central plant to three smaller plants, of which the Suffern facility was one. The record also suggests that at the time the Suffern facility was transferred to BCA, ABN employed at that facility a fraction of the workers that it had once employed at a central plant in the Bronx, New York: ABN’s Bronx facility at one time had 2,000 workers; in early 1990, ABN’s Suffern facility had approximately 100 production employees. Yet the record is virtually devoid of testimony or documentary evidence that the changes in structure and size in any way affected the working conditions, essential functions, and interaction of the employees of the different ABN units. BCA argues strenuously that a blurring of craft lines has over time rendered traditional unit designations in the printing industry obsolete. That may well be so, but absent evidence to that effect, BCA cannot demonstrate that application of a presumption in favor of long-established bargaining relationships is inappropriate in this case. We discern no error in this aspect of the Board’s decision and order.

2. Board’s Finding that BCA Failed To Overcome Presumption in Favor of Existing Bargaining Units

BCA contends that even if the Board rationally applied here a presumption that long-established bargaining units remain appropriate, BCA has overcome that presumption. BCA claims that, upon reopening the plant, it significantly restructured the workplace. As a result, “[n]ot one of the [charging party] unions sought to represent a properly severable group of employees.” Brief of Petitioner-Cross-Respondent at 31. BCA first emphasizes that it made clear prior to hiring its employees that it intended to develop a more “flexible” production process; it launched a program of “cross-utilization” almost immediately, as a result of which employees of the bargaining units in question performed functions largely indistinguishable from those performed by other BCA employees. Second, BCA claims that all BCA employees were paid on the same hourly scale, were covered by the same benefit plans, and worked the same hours.

In relying on the fact that all BCA employees had the same hours, wages, and benefits, BCA refers to the state of affairs following the April 23 institution of terms and conditions of employment. Like the Board and the ALJ, we decline to consider those changes in determining unit appropriateness. Based on the testimony of several ABN employees, the ALJ and the Board found that the only changes BCA officers announced as terms and conditions of employment were that employee health benefits would be extended for a period of sixty days and that BCA intended to introduce greater flexibility in the plant’s operations. 315 N.L.R.B. at 1043 n. 5; id. at 1049 (decision of ALJ). We cannot say that this finding is contrary to the record evidence. The introduction of terms and conditions of employment on April 23 therefore cannot, as BCA claims, be cast as an introduction of “initial” terms and conditions, rather than as a change in the existing terms and conditions of employment.

We turn to BCA’s argument that it restructured the workplace, integrating the functions of various employees and rendering the bargaining units in question — which had developed along strict craft lines — inappropriate. The Board rejected BCA’s position, concluding that the employees in the three bargaining units at issue in this case “continued performing the same or substantially the same work as they had prior to the change in ownership, only occasionally filling in as needed on tasks otherwise assigned to employees in other bargaining units.” 315 N.L.R.B. at 1043. An examination of the evidence as to each bargaining unit leads us to the conclusion that substantial evidence on the record as a whole supports the Board’s finding.

a. Local 1-P

Local 1-P represented six photoengravers employed by ABN. ABN’s photoengravers prepared film images of designs for transfer to plates used on the facility’s printing presses. Three of the six workers represented by Local 1-P were rehired by BCA. BCA contends that it immediately expanded the duties of the photoengravers and submitted as evidence a chart suggesting that photoengravers’ new duties included tasks of other engraving department employees — such as creating models, designing support material, and preparing lithographic plates. The testimony of two Local 1-P photoengravers, however, indicates that: (1) in interviews with BCA officers after the closing of the plant, the photoengravers were told that, if hired, they would perform largely the same functions under BCA as they had under ABN; (2) to the extent that they performed additional functions, they did not begin to do so until December 1990 or January 1991, several months after they were rehired by BCA Although BCA’s chart indicates that the employees Local 1-P sought to represent immediately performed the same tasks as other engraving department employees, it is directly contradicted by the testimony of these employees. The ALJ was entitled to credit that testimony, and the Board was entitled to accept it as demonstrating that any performance of duties across unit lines was, during the relevant time period, sporadic.

b. District 15

District 15 represented four ABN machinists. They were responsible for preparing plates for use on the printing presses, by “grinding” the back of the plates, bending the plates to the shape of the press, and punching holes in the plates for press clamps. In addition, the machinists maintained and repaired the presses, building parts when necessary. BCA hired two District 15 employees. BCA contends that other employees share machinists’ duties: those who operate the presses are responsible for more maintenance than they had been under ABN, and others grind and bend plates, a task previously performed exclusively by machinists. Again, BCA’s contention that many other employees perform tasks traditionally assigned to the machinists is contradicted by the relevant employee testimony. Both BCA machinists testified that they perform the same duties under BCA as they did under ABN. One machinist testified that, beginning in November or December 1990, he was trained to apply serial numbers to documents (such as visas). The testimony suggests that only the machinists grind plates and that others bend and punch plates only if the machinists are “overloaded.”

c. Local 119B-USB

Local 119B-43B represented 13 workers engaged in finishing operations at ABN. ABN’s finishing workers would count and examine printed sheets containing multiple documents, remove those with imperfections, and cut or otherwise separate the documents. Nine of the workers represented by Local 119B^13B were rehired by BCA BCA contends that it immediately introduced changes so that former finishing workers of ABN— characterized, along with other employees in BCA’s printing department, as “General Workers” — began to perform a variety of other tasks, and that other employees began to perform tasks formerly exclusively performed by the finishing workers. Specifically, according to BCA, finishing workers now perform tasks further along in the production process (such as shrink-wrapping, packing, and storing products) as well as tasks performed earlier in the production process (such as “unwinding” — meaning unrolling metal printing plates from the spool on which they are shipped). As with Local 1-P and District 15 employees, the Local 119B — 43B employees do not appear to have performed additional duties until several months after the reopening of the facility, or to have performed those duties regularly. Thus, a 119-43B employee testified that after five months she was trained to work on the unwinding machine and had done so on two or three occasions.

Based on our review of the record, we conclude that substantial evidence supports the Board’s finding that employees in the units in question continued for some time to perform substantially the same work as they had prior to the change in ownership of the facility, only occasionally performing tasks assigned to employees in other bargaining units and being trained to perform other tasks several months after BCA reopened the plant. We are unpersuaded by the dissenting Board Member’s suggestions that significant changes in the allocation tasks were “already in the works before [BCA] hired its employee complement” and that BCA “implemented these changes in job functions from the start.” 315 N.L.R.B. at 1046. Even testimony by BCA supervisors and officers regarding instances of “cross-utilization” does not contradict the testimony of BCA employees that they were not trained to perform new functions until December 1990 or January 1991.

Nonetheless, we do not mean to suggest that the record would admit only of one finding. Some of BCA’s documentary evidence on the distribution of work responsibilities under ABN and BCA at the facility appears to be corroborated by testimony of supervisors or officers of BCA. However, we are mindful that in reviewing a decision of the Board as to unit appropriateness, our task is not to substitute our judgment for that of the Board, but to determine whether the Board’s conclusion is supported by substantial evidence on the record as a whole. We may not “displace the Board’s choice between two fairly conflicting views.” Universal Camera Corp. v. NLRB, 340 U.S. 474, 488, 71 S.Ct. 456, 464-65, 95 L.Ed. 456 (1951).

We recognize that, in upholding the Board’s findings and conclusions, we sustain an agency order requiring BCA to recognize three unions that together claim to represent only one quarter of BCA’s employees. As a result, BCA may encounter additional obstacles in its efforts to achieve further integration of its operations, if that is indeed its goal. In its decision, the Board alluded to these difficulties, recognizing that unit fragmentation may result from technological changes in the printing industry and emphasizing that the Board’s unit clarification procedures provide a mechanism for “ensuring that bargaining units continue to reflect the reality of the workplace.” 315 N.L.R.B. at 1044. We simply note that the outcome here was by no means inevitable. The Board’s successorship doctrine recognizes the interest of a successor in altering the structure of an inefficient or moribund business beyond the confines of its predecessor’s labor agreement. See Fall River Dyeing, 482 U.S. at 40, 107 S.Ct. at 2234. That interest is served by permitting an employer to set the initial terms on which it will hire the predecessor’s employees, not bound by the provisions of the predecessor’s bargaining agreement. The ALJ and the Board majority were unable to discern on the part of BCA a concrete plan to restructure the printing facility, or evidence of implementation of such a plan prior to BCA’s hiring of the ABN employees. It was fully within BCA’s control to avoid the difficulty here: it could easily have made plain to the ABN employees, prior to hiring them, that it intended to integrate the employees into a more cohesive group by instituting new hours, benefits, and a new pay scale.

Conclusion

To summarize:

1. We find this case sufficiently distinguishable from Fall River Dyeing and its progeny to warrant the conclusion that the charging party unions need not have demanded recognition and bargaining to trigger BCA’s duty to bargain in this ease. Instead, the bargaining obligation was triggered by BCA’s virtually immediate hiring of a full complement of employees, nearly all of whom were former ABN employees.

2. We likewise reject BCA’s claim that the Board erred in concluding that the bargaining units the charging party unions seek to represent were appropriate.

a. We find no error in the Board’s application of a presumption in favor of the appropriateness of long-established bargaining units.

b. We conclude that the Board’s finding that BCA failed to overcome this presumption was supported by substantial evidence on the record as a whole.

3. We have considered the remainder of BCA’s arguments and find them to be without merit.

Accordingly, the petition for review is denied and the petition for cross-enforcement is granted.

      . The General Counsel and Local 119-43B challenged the ALJ's conclusion that BCA was not a "perfectly clear" successor to ABN — that is, that BCA had no duty to bargain with the unions prior to establishing its initial terms of employment. See discussion infra p. 643.

      . Bums actually contained conflicting language as to whether the proper inquiry required (1) a determination of whether a majority of the employees in the successor's bargaining unit had been employed by the predecessor; or (2) a determination of whether a majority of the employees in the predecessor’s bargaining unit were hired by the successor. Compare 406 U.S. at 281, 92 S.Ct. at 1579 with id. at 278, 92 S.Ct. at 1577. We addressed this question in Saks & Co., following other circuits in adopting the former approach. See 634 F.2d at 685-86.

      . The union in Bums did make a bargaining demand prior to the successor’s hiring of the predecessor's employees. Nevertheless, neither the Bums Court nor the Fall River Dyeing Court, in its exposition of Bums, appeared to attach legal significance to that fact.

      . In so holding, we do not fully accept the General Counsel’s position on the question of when a bargaining demand is required to preserve a union’s right to object to the unilateral imposition of terms and conditions of employees. That position appears to be that BCA, though not initially a "perfectly clear” successor, developed or ripened into one after hiring its full complement of employees, nearly all of whom were drawn from ABN’s ranks. We agree with BCA that, absent indicia that an employer intends to retain its predecessor's employees on substantially the same terms, suceessorship is not perfectly clear. To apply that label to BCA on the theory that an employer can "ripen” into a perfectly clear successor is to ignore the legal significance that has attached to that term: a perfectly clear successor, unlike an ordinary successor, acquires a duty to bargain prior to hiring its predecessor’s employees. Nevertheless, we take the General Counsel's point to be that, once it is plain to an employer that a majority of the employees in a bargaining unit are former employees of the predecessor, the employer is required to presume that a union's majority status continues, regardless of whether the union has made a bargaining demand. Where, as here, there is a rapid transition from one employer to another and the predecessor's employees are rehired almost immediately, we agree.

      . Thus, we reject BCA’s argument that the terms of employment imposed on April 23 were “initial” terms of employment. Under principles established by the Board and sanctioned over many years by courts of appeals, a successor is not held to the terms of its predecessor’s contract, but to the terms on which it hired its employees. A successor must make clear, before its duty to bargain attaches, that it intends to vary its predecessor’s terms; in so doing, it establishes its "initial” terms. See International Ass'n of Machinists, 595 F.2d at 674-75. We accept the conclusion of the ALJ, adopted by the Board, that BCA established only two "initial” terms here: that it would continue employee health benefits for sixty days, and that it would introduce greater "flexibility” in the workplace. See BCA, 315 N.L.R.B. at 1043 n. 5; id. at 1049 (decision of ALJ).

      . BCA also argues that changes instituted since BCA’s takeover of the printing facility render the application of a presumption in favor of the appropriateness of long-established bargaining units improper in this case. Evidence of changes instituted by BCA would not cast doubt upon the rationality of applying the presumption, but would demonstrate that the presumption has been overcome in this case. We therefore postpone scrutiny of this evidence. Even if we thought BCA’s position relevant here, as will become clear, BCA fails to establish the factual predicate of this argument—namely that, upon its takeover of the plant, it immediately introduced a new operational structure, as a result of which functions were no longer divided along unit lines.


author: MAHONEY, Circuit Judge:

text:
    Aleta CHAPPELLE, Plaintiff-Appellant, v. BEACON COMMUNICATIONS CORP., Beacon Films, Inc., Ghiznost Productions, Inc. and Gregory Brown, Defendants-Appellees.
    No. 1177, Docket 95-7895.
    United States Court of Appeals, Second Circuit.
    Argued March 19, 1996.
    Decided May 29, 1996.
    Robert J. Berman, Hackensack, New Jersey, for Plaintiff-Appellant.
    Andrew J. Boling, New York City (Baker & McKenzie, New York City, of counsel), for Defendants-Appellees.
    Before FEINBERG, CARDAMONE, and MAHONEY, Circuit Judges.
   MAHONEY, Circuit Judge:

Plaintiff-appellant Aleta Chappelle appeals from an order entered November 15,1993 in the United States District Court for the Southern District of New York, Michael B. Mukasey, Judge, insofar as it dismissed, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, Chappelle’s claims against defendants-appellees Beacon Communications Corp. (“Beacon”) and Ghiznost Productions, Inc. (“Ghiznost”) for sexual discrimination under New York Executive Law § 296(l)(a), assault, and intentional infliction of emotional distress. Because Chappelle has consented to the dismissal of her action without prejudice pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure, she may not appeal the district court’s order. Accordingly, Chappelle’s appeal is dismissed for want of appellate jurisdiction.

Background

Chappelle, while engaged in the production of a movie on behalf of Beacon and Ghiznost, was allegedly sexually harassed by Brown, Ichaso, and Langlais, who were also involved in that production. Following the alleged incidents of harassment, Chappelle terminated her engagement and commenced this action. Chappelle’s complaint alleged various causes of action under New York, California, and federal law.

Beacon and Ghiznost moved to dismiss the claims against them for failure to state a claim upon which relief can be granted. By order entered November 15, 1993, the district court granted the motion in part, dismissing some, but not all, of Chappelle’s claims against Beacon and Ghiznost. See Chappelle v. Beacon Communications Corp., 92 Civ. 8987 (MBM), 1993 WL 465312 (S.D.N.Y. Nov. 10, 1993). This case was subsequently transferred to the Honorable Deborah A. Batts, who dismissed Chappelle’s claims against Ichaso for lack of diversity jurisdiction. See Chappelle v. Beacon Communications Corp., 863 F.Supp. 179 (S.D.N.Y.1994).

Wishing to pursue a unified action against all of the initial defendants in state court, see supra note 1, Chappelle requested a voluntary dismissal of her action without prejudice pursuant to Rule 41(a)(2), see supra note 2. By order entered May 10,1995, and amended August 16, 1995, the district court dismissed Chappelle’s action without prejudice. The court’s amended order stated that “as a consequence of this voluntary dismissal, [the order entered on November 15, 1993] shall become a final and appealable judgment.” Chappelle then filed the instant appeal, seeking reinstatement of the state law claims dismissed by the district court’s November 15,1993 order.

Discussion

We have recognized a number of circumstances in which a plaintiff may appeal following the voluntary dismissal of his or her action. “When the dismissal is with prejudice, ... plaintiffs have been allowed, in limited circumstances, to appeal from a voluntary dismissal when the plaintiffs’ ‘solicitation of the formal dismissal was designed only to expedite review of [a prior] order which had in effect dismissed [plaintiffs’] complaint.’” Empire Volkswagen, Inc. v. World-Wide Volkswagen Corp., 814 F.2d 90, 94 (2d Cir.1987) (quoting Raceway Properties, Inc. v. Emprise Corp., 613 F.2d 656, 657 (6th Cir.1980) (per curiam) (alterations in Empire Volkswagen)); cf. United States v. Procter & Gamble Co., 356 U.S. 677, 680-81, 78 S.Ct. 983, 985-85, 2 L.Ed.2d 1077 (1958) (government solicited dismissal of complaint for refusal to obey order to produce grand jury minutes, appeal from order to produce allowed); Bradley v. United States, 936 F.2d 707, 709 (2d Cir.1991) (defendants in suit by government to collect tax penalties entered into stipulation to forgo trial of and abandon defense of factual issues, immediate appeal of sole contested legal issue allowed).

Similarly, we have allowed a plaintiff to appeal an adverse ruling disposing of fewer than all of its claims following the plaintiffs voluntary relinquishment of its remaining claims with prejudice. In Empire Volkswagen, for example, the district court dismissed most of plaintiffs’ claims in a summary judgment ruling. The plaintiffs voluntarily dismissed their remaining claims with prejudice, and we allowed an appeal from the summary judgment. 814 F.2d at 94; see also Atlanta Shipping Corp. v. Chemical Bank, 818 F.2d 240, 246 (2d Cir.1987) (“A party who loses on a dispositive issue that affects only a portion of his claims may elect to abandon the unaffected claims, invite a final judgment, and thereby secure review of the adverse ruling.”).

In all these cases, however, there was either a dismissal with prejudice or its equivalent. Here, by contrast, Chappelle voluntarily dismissed her action without prejudice. Empire Volkswagen and Atlanta Shipping Corp. did not discuss whether the availability of an appeal of a ruling disposing of some but not all of a plaintiffs claims turns upon the fact that the dismissal of the remaining claims is with prejudice. The other courts of appeals are in disagreement over this question, with several of them displaying intra-circuit conflicts. Compare Chrysler Motors Corp. v. Thomas Auto Co., 939 F.2d 538, 540 (8th Cir.1991) (allowing party to appeal adjudicated claims following Rule 41(a) voluntary dismissal of unadjudicated claims without prejudice); Hicks v. NLO, Inc., 825 F.2d 118, 120 (6th Cir.1987) (per curiam) (same); Studstill v. Borg Warner Leasing, 806 F.2d 1005, 1007-08 (11th Cir.1986) (per curiam) (same); Division 241 Amalgamated Transit Union v. Suscy, 538 F.2d 1264, 1266 & n. 1 (7th Cir.) (per curiam) (same), cert. denied, 429 U.S. 1029, 97 S.Ct. 653, 50 L.Ed.2d 632 (1976), with Mesa v. United States, 61 F.3d 20, 22 & n. 5 (11th Cir.1995) (questioning Studstill and refusing to allow appeal); Dannenberg v. Software Toolworks Inc., 16 F.3d 1073, 1078 (9th Cir.1994) (dismissing appeal for lack of appellate jurisdiction when unadjudicated claim voluntarily dismissed without prejudice); Cook v. Rocky Mountain Bank Note Co., 974 F.2d 147, 148 (10th Cir.1992) (same); Horwitz v. Alloy Automotive Co., 957 F.2d 1431, 1435-36 (7th Cir.1992) (same); and Fassett v. Delta Kappa Epsilon (New York), 807 F.2d 1150, 1155 (3d Cir.1986) (allowing appeal of adverse summary judgment dismissing some of plaintiffs’ claims only when remaining claims had been “voluntarily and finally abandoned”), cert. denied, 481 U.S. 1070, 107 S.Ct. 2463, 95 L.Ed.2d 872 (1987). Cf. DuBose v. Minnesota, 893 F.2d 169, 171 (8th Cir.1990) (dismissal of some of plaintiffs claims without prejudice for failure to prosecute, pursuant to Fed.R.Civ.P. 41(b), did not render appealable prior adverse decision on plaintiffs other claims); Ryan v. Occidental Petroleum Corp., 577 F.2d 298, 302-03 (5th Cir.1978) (voluntary dismissal without prejudice of portion of complaint did not render appealable prior dismissal of another portion for failure to state a claim).

We agree with those courts that have precluded an appeal from a dismissal of some of a plaintiffs claims when the balance of his claims have been dismissed without prejudice pursuant to a Rule 41(a) dismissal of the action. A plaintiffs attempt to appeal a prior adverse determination following the dismissal of his remaining claims without prejudice necessarily implicates the policies of the final judgment rule. Allowing such an appeal following a voluntary dismissal with prejudice, as in Empire Volkswagen and Atlanta Shipping Corp., furthers the goal of judicial economy by permitting a plaintiff to forgo litigation on the dismissed claims while accepting the risk that if the appeal is unsuccessful, the litigation will end. By contrast, because a dismissal without prejudice does not preclude another action on the same claims, a plaintiff who is permitted to appeal following a voluntary dismissal without prejudice will effectively have secured an otherwise unavailable interlocutory appeal. As the Ninth Circuit explained:

If a litigant could refuse to proceed whenever a trial judge ruled against him, wait for the court to enter a dismissal [pursuant to Rule 41], and then obtain review of the judge’s interlocutory decision, the policy against piecemeal litigation and review would be severely weakened. This procedural technique would in effect provide a means to avoid the finality rule embodied in 28 U.S.C. § 1291.

Dannenberg, 16 F.3d at 1076-77 (internal quotations omitted, alteration added).

Conclusion

The appeal is dismissed for want of appellate jurisdiction.

      . Although a "Beacon Films, Inc." is listed as a defendant-appellee in the caption, no such entity exists. Additionally, Gregoiy Brown, a defendant in this action who is listed as a defendant-appellee in the caption, was not a party to the district court's November 15, 1993 order and is not involved in this appeal. That order decided motions to dismiss that were made only by Beacon and Ghiznost, and not by Brown. Leon Ichaso and Rudy Langlais were initially named as defendants, but the action has been dismissed as to them.

      . Rule 41(a) provides:
      (a) Voluntary Dismissal: Effect Thereof.
      (1) By Plaintiff; by Stipulation. Subject to the provisions of Rule 23(e), of Rule 66, and of any statute of the United States, an action may be dismissed by the plaintiff without an order of court (i) by filing a notice of dismissal at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever first occurs, or (ii) by filing a stipulation of dismissal signed by all parties who have appeared in the action. Unless otherwise stated in the notice of dismissal or stipulation, the dismissal is without prejudice, except that a notice of dismissal operates as an adjudication upon the merits when filed by a plaintiff who has once dismissed in any court of the United States or of any state an action based on or including the same claim.
      (2) By Order of Court. Except as provided in paragraph (1) of this subdivision of this rule, an action shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper.... Unless otherwise specified in the order, a dismissal under this paragraph is without prejudice.

      . It is appropriate to take a practical view of the dismissal. In Fassett, for example, the district court dismissed the plaintiffs’ claims against all but one defendant. The plaintiffs then stipulated to the dismissal of their claim against that defendant without prejudice. An appeal of the prior dismissal was nonetheless allowed, because the statute of limitations had run against the claim dismissed without prejudice. Thus, although nominally dismissed "without prejudice,” that claim had been "voluntarily and finally abandoned.” 807 F.2d at 1155.


author: PER CURIAM.

text:
    Harold YOURMAN, Ralph Bishop, William H. Dworkin, Frederick Ewald, John L. Henderickson, Richard Krepela, Robert P. McCarthy, Frank Meyer, Anthony Punzi, and Ronald L. Savitt, on behalf of themselves and all other employees similarly situated, Plaintiffs-Appellees-Cross-Appellants, v. David N. DINKINS, as Mayor of the City of New York, the New York City Housing Authority, the Board of Education of the City of New York, the City School District of the City of New York, and the New York City Health and Hospitals Corporation, Defendants-Appellants-Cross-Appellees.
    Nos. 1537, 1772, Dockets 95-7561, 95-7610XAP.
    United States Court of Appeals, Second Circuit.
    Argued May 1, 1996.
    Decided May 31, 1996.
    Timothy J. O’Shaughnessy, Office of the Corporation Counsel, New York City (Paul A. Crotty, Corporation Counsel, Kristin M. Helmers, Office of the Corporation Counsel, New York City, on the brief), for defendants-appellants-eross-appellees.
    Edward M. Scher, Asst. Atty. Gen., Albany, N.Y. (Dennis C. Vacco, N.Y. State Atty. Gen., Victoria A. Graffeo, Peter H. Schiff, Office of the N.Y. State Atty. Gen., Albany, N.Y., on the brief), for amici curiae State of New York.
    Joan Stem Kiok, New York City (Robert N. Felix, New York City, on the brief), for plaintiffs-appeUees-cross-appellants.
    (James E. Doyle, Atty. Gen., Richard Briles Moriarty, Asst. Atty. Gen., Wisconsin Dept, of Justice, Madison, WI, submitted a brief, for amicus curiae State of Wisconsin).
    (Arthur A. Hartinger, Liebert, Cassidy & Frierson, San Francisco, Cal., Louise H. Renne, Jonathan V. Holtzman, Darren W. Lee, City Atty.’s Office, San Francisco, Cal., submitted a brief, for amici curiae National League of Cities, et al.).
    (Richard Schoolman, Brooklyn, N.Y., submitted a brief for amicus curiae New York City Transit Authority).
    (Richard E. Casagrande, Lisa M. King, Albany, N.Y., submitted a brief, for amicus curiae New York State Public Employees Federation, AFL-CIO).
    Before: NEWMAN, Chief Judge, FEINBERG and OAKES, Circuit Judges.
   PER CURIAM.

This appeal presents an issue that continues to divide the federal courts: how to apply in the public sector the Department of Labor’s “salary basis” test, which is used to determine whether employees are managers and consequently not covered by the wage and overtime provisions of the Fair Labor Standards Act (“FLSA”), 29 U.S.C. §§ 201-219 (1994). Some courts have ruled that the “salary basis” test is not met and employees are therefore protected by FLSA require-mente where their pay is subject to reduction, even if no reduction has occurred. See Balgowan v. State of New Jersey, — F.3d - (3d Cir.1996); Carpenter v. City & County of Denver, 82 F.3d 353, 359 (10th Cir.1996); Bankston v. State of Illinois, 60 F.3d 1249, 1253 (7th Cir.1995); Barrier v. City of Novato, 17 F.3d 1256, 1262 (9th Cir.1994); Kinney v. District of Columbia, 994 F.2d 6, 11 (D.C.Cir.1993); Michigan Association of Governmental Employees v. Michigan Department of Corrections, 992 F.2d 82, 86 (6th Cir.1993). Other courts have ruled that the “salary basis” test is met and employees are therefore exempt from FLSA protections as long as no deductions from compensation have been made. See Auer v. Robbins, 65 F.3d 702, 711 (8th Cir.), petition for cert. filed, 64 U.S.L.W. 3428 (Dec. 7, 1995); McDonnell v. City of Omaha, 999 F.2d 293, 297 (8th Cir.1993), cert. denied, — U.S.-, 114 S.Ct. 1188, 127 L.Ed.2d 538 (1994); Atlanta Professional Firefighters Union v. City of Atlanta, 920 F.2d 800, 805 (11th Cir.1991).

Appellants, the Mayor of New York City, the City’s Board of Education, and its Health and Hospital Corp. (collectively, “the City”), appeal from the May 12, 1995, judgment of the District Court for the Southern District of New York (Loretta A. Preska, Judge), granting relief in the form of overtime pay under the FLSA to appellees, 435 of the City’s supervisory employees (“the employees”). The City contends that the “salary basis” test, as applied to public employers, is irrational and violates the Administrative Procedure Act, 5 U.S.C. §§ 551-596 (1994), and also violates the Tenth Amendment. Alternatively, the City claims that its employees are not “subject to” reduction in pay, a criterion of the “salary basis” test, because (with one small exception), no reductions in pay have actually occurred. The City also claims a defense of good faith under the Portal-to-Portal Act, 29 U.S.C. § 259 (1994). The employees cross-appeal from that portion of the judgment that denied them straight time pay for hours worked between 35 and 40 hours per week.

In a thorough and thoughtful opinion, the District Court ruled that the City’s express policies concerning deductions for discipline, court attendance, and temporary military leave placed the employees outside the managerial exemption. The District Court also reasoned that the employees were “subject to” pay reductions based on the City’s express policies, and therefore that the City was liable to all employees in that classification, whether or not the policies had actually been applied. Finally, the District Court rejected the City’s contention that the “salary basis” test, as applied, violates the Tenth Amendment and the Administrative Procedure Act, and also rejected the defense of good faith. Yourman v. Dinkins, 826 F.Supp. 736 (S.D.N.Y.1993).

On the employees’ cross-appeal, the District Court found in a separate opinion that the employees were not entitled to “gap time” pay because the parties’ employment agreement contemplated that the employees’ salary would compensate for all hours worked up to the overtime threshold, with a minimum of 35 hours per week. Yourman v. Dinkins, 865 F.Supp. 154 (S.D.N.Y.1994).

Though the issues raised are important, no purpose would be served by adding further discussion to the dispute, already fully aired in the conflicting decisions cited above. We agree with the conclusions reached by Judge Preska in her comprehensive opinions, and leave the ultimate resolution of the statutory dispute to the Supreme Court or the Congress.

As to both the City’s appeal and the employees’ cross-appeal, we affirm on the opinions of the District Court.


author: COWEN, Circuit Judge.

text:
    Richard M. BALGOWAN; Thomas M. Batz; Thomas Betten; Karl L. Blum; Raymond A. Burroughs; Dennis Carlson; John I. Corbo; Michael D. Cronin; Steffan Franklin; Herman J. Krieg; Joseph J. Lagullo; Chester J. Lyszczek; Albert M. Malatesta; Aram Mardekian; Ike Mardekian; William L. Munczinski; Alan S. Nass; Thomas M. Norris; Malcolm J. Palmer; John C. Powers; Francis F. Realini; Carl G. Rebbeck; Stanley F. Ripish; Emil H. Roessler; Wayne A. Rumsey; Richard F. Spoerl; Lawrence A. Sroka; John W. Stults; Robert L. Swain; Dennis R. Symons; John B. Taylor, Jr.; Charles A. Territo, Jr.; Peter W. Tomory; Alfred T. Woodrow; Daniel Yacovino; Charles W. Young; Richard Zolnowski, Appellants, v. STATE OF NEW JERSEY, DEPARTMENT OF TRANSPORTATION.
    95-5276.
    United States Court of Appeals, Third Circuit.
    July 9, 1996.
   ORDER

Before: STAPLETON, COWEN and GARTH, Circuit Judges.

COWEN, Circuit Judge.

The petition for panel rehearing filed by appellee in the above-entitled case is hereby granted, and the Opinion and Judgment filed on May 16, 1996, is hereby vacated. The parties are hereby ordered to comply with the following rebriefing schedule:

Appellants shall file their opening brief within 30 days from the date of this order; appellee shall file its answering brief 30 days thereafter and any reply by appellants shall be filed 15 days thereafter. Briefing shall be on all issues raised by the parties including, but not limited to, the issues raised in the Petition for Rehearing and the Answer filed to the Petition.

The court observes that appellants have requested transfer to the state court. Does such a procedure exist under New Jersey law? If appellants were to file in state court at this time, does New Jersey law toll the statute of limitations on plaintiffs’ cause of action for the period of time that the matter was pending in federal court?

In light of the briefing order entered herein which may encompass the subject of the June 28, 1996 letter motion it desired, that motion by appellee to supplement the record on the Petition for Rehearing En Banc is denied.