Key Points

• In Hospital Menonita de Guayama, Inc. v. NLRB, No. 22-1163 (D.C. Cir. July 21, 2026) (Hospital Menonita II), the D.C. Circuit vacated the National Labor Relations Board’s (NLRB’s) “successor bar” doctrine, holding it violates the National Labor Relations Act’s (NLRA’s) protections of employee free choice.
• The decision strikes down a substantive NLRB doctrine on Loper Bright grounds, signaling possible vulnerability for Board-created rules previously shielded by the deference courts apply to administrative decisions.

A recent D.C. Circuit ruling in a case involving an NLRB rule that governs management-labor relations following a change in the ownership of a business has significant implications for unions, employers and future challenges to Board rules under Loper Bright.

The “successor bar” is a rule the NLRB adopted in UGL-UNICCO Service Co., 357 NLRB 801 (2011), that compels the new owner of a business to recognize and bargain with an incumbent union for up to a year, regardless of whether that union has majority employee support. It creates an irrebuttable presumption of majority support, barring any challenge by the new employer, employees, or a rival union.

In 2024, the Supreme Court in Loper Bright Enterprises v. Raimondo, 144 S. Ct. 2244 (2024) held that courts must independently interpret statutes rather than defer to agency constructions. The Court then granted certiorari in Hospital Menonita I, vacated the D.C. Circuit’s prior judgment in that case — which had upheld the successor bar — and remanded it for reconsideration in light of Loper Bright. On July 21, 2026, in Hospital Menonita II, the D.C. Circuit rejected the successor bar on multiple grounds, including:

The court held that Loper Bright compelled it to independently evaluate the Board’s statutory authority rather than defer to the agency’s interpretation, as it had in its prior decision (in Hospital Menonita I).
The court held the successor bar violated the NLRA because it suspends employees’ statutory right to be represented only by a union with demonstrated majority support. According to the court, the bar improperly “nullifies these statutory protections for up to a year after a successor employer assumes control of a business.”
The court rejected the Board’s argument that its authority to enforce unfair labor practices justified the bar. The court found that “reasonable” policy goals cannot overcome the absence of statutory authorization to suspend employee rights.

The Dissent

Senior Circuit Judge Randolph dissented, arguing that the original panel decision in Hospital Menonita I did not rely on judicial deference to the successor bar but on the NLRA-specific principle that Congress delegated primary authority for developing national labor policy to the Board — authority he contended survives Loper Bright.

Loper Bright’s Reach

This decision’s significance extends beyond the successor bar itself. The decision could be used as a roadmap by NLRB stakeholders to challenge other Board-created rules that were upheld because courts deferred to the agency’s “reasonable” policymaking judgment.

For employers, successor businesses in materially similar circumstances can challenge in the D.C. Circuit and other courts the NLRB requirement that they bargain with a union that lacks majority support. More broadly, the decision confirms that Loper Bright can underpin the basis to strike down Board doctrines that rest on deference rather than statutory text.
For unions, the successor bar, a key protection during ownership transitions, is no longer available in the D.C. Circuit. Under Hospital Menonita II, unions must demonstrate actual majority support rather than relying on an irrebuttable presumption.
For all NLRB stakeholders, Board-created rules upheld primarily because courts previously deferred to the Board’s “reasonable” judgment, rather than independently determining consistency with the NLRA, are now potentially vulnerable to challenge. Parties can evaluate whether existing Board rules affecting their interests can survive judicial scrutiny under Loper Bright.

Employers navigating these developments should consult experienced labor counsel to assess how this ruling and the broader post-Loper Bright landscape affect pending or anticipated NLRB matters.

For more information, please contact Mark Eskenazi at 202.461.3109 or meskenazi@foxrothschild.com, or another member of Fox Rothschild’s Labor & Employment Department. Listen to Mark’s podcast, “Labor Law Lineup”, on Spotify, Apple or wherever you get your podcasts.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the author and not necessarily this law firm or its clients.