Third Circuit rules at least part of an asset-purchase agreement must be disclosed to union if requested

The Third Circuit recently held in Crozer-Chester Medical Center v. NLRB that at least portions of an asset-purchase agreement must be disclosed to a union representing workers in the seller’s workforce upon request. The seller had announced its intent to be acquired through an asset purchase and, in doing so, advised that workers in the union’s bargaining unit would be offered employment by the buyer subject to the terms and conditions of a new collective bargaining agreement that the buyer intended to negotiate with their union. The union requested a complete unredacted copy of the asset-purchase agreement (APA). The seller objected that the request was overly broad. The NLRB ruled against the seller, finding that at least some parts were clearly relevant and that it was, therefore, incumbent on the seller to produce the entire agreement or negotiate with the union an agreement to produce only parts. The NLRB found that provisions involving “’employees,’ terms and conditions of employment, the name of the hospitals, the continuation or expansion of certain service lines, capital investments, standards of care, equipment and property,” because those terms, at least, were “relevant to the availability and location of unit work, the potential for layoffs and hiring, whether the pension plan would be fully funded, and whether non-unit employees were receiving pay or benefits the Union might want to negotiate.”

The company then argued that disclosure of the APA would violate its confidentiality provisions and the nondisclosure obligations it owed the buyer. The Third Circuit rejected this argument as well, holding that a seller cannot immunize itself against disclosure to a union by negotiating confidentiality with the buyer.