## Facts

- A union had collective-bargaining agreements (CBAs) with the prior operators of a Detroit restaurant and motor lodge; the CBAs contained arbitration clauses.
- Howard Johnson Company, Inc. purchased the business assets and leased the real property from the sellers.
- The asset purchase agreement expressly disclaimed assumption of the sellers’ obligations, including obligations under any CBA.
- After the purchase, Howard Johnson staffed the operation largely with a new workforce: it hired 45 employees, including 9 of the sellers’ 53 former employees and none of the former supervisors.
- The union filed a § 301 LMRA action claiming Howard Johnson’s failure to hire all former employees constituted a contractual “lockout” and sought injunctive relief and an order compelling arbitration involving Howard Johnson and the sellers.
- The district court compelled Howard Johnson to arbitrate but denied a preliminary injunction requiring Howard Johnson to hire the sellers’ employees; the Sixth Circuit affirmed the arbitration order.

## Issues

1. Whether an asset purchaser that expressly disclaimed assumption of the predecessor’s CBA obligations and hired a largely new workforce could be compelled under LMRA § 301 to arbitrate under the predecessor’s CBA as a “successor” employer.

## Decision

- The Supreme Court reversed (8–1).
- Howard Johnson could not be compelled to arbitrate under the predecessor’s CBAs.
- The Court found no substantial continuity of identity in the workforce and no express or implied assumption of the agreement to arbitrate.
- The union could not use a § 301 suit to circumvent the purchaser’s right to choose whom to hire; unfair labor practice theories, if any, belonged before the NLRB.

## Legal Principles

- A non-signatory employer is not bound to arbitrate under a predecessor’s CBA absent an express or implied assumption of the arbitration obligation.
- In determining whether a successor may be required to arbitrate, substantial continuity of the workforce is a key factor; minimal carryover weighs against imposing an arbitration duty.
- An asset purchase with an explicit non-assumption clause, combined with substantial workforce change, supports the conclusion that the purchaser did not assume the predecessor’s CBA or its arbitration clause.
- LMRA § 301 enforces contractual obligations; it does not create contract duties for a purchaser that did not agree to the CBA.
- A successor’s statutory bargaining obligations and alleged unfair labor practices are addressed through the NLRA/NLRB framework, not by compelling arbitration under a contract the successor did not accept.

## Conclusion

The Court held that an asset purchaser that neither assumed the predecessor’s CBA nor hired a substantially continuous workforce could not be compelled under LMRA § 301 to arbitrate under the predecessor’s arbitration clause, and that any labor-law claims outside the contract must proceed through the NLRA’s administrative process.


Howard Johnson Co. v. Detroit Loc. Joint Exec. Bd., 417 U.S. 249 (1974)