NLRB v. New Assocs. d/b/a Hospitality Care Center , 35 F.3d 828 ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
9-16-1994
NLRB v. New Assocs. d/b/a Hospitality Care
Center
Precedential or Non-Precedential:
Docket 93-3111
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 93-3111 and 3147
NATIONAL LABOR RELATIONS BOARD,
Petitioner in 93-3111,
v.
NEW ASSOCIATES d/b/a HOSPITALITY CARE CENTER,
Respondent.
NEW ASSOCIATES, d/b/a Hospitality Care,
Petitioner in 93-3147,
v.
NATIONAL LABOR RELATIONS BOARD,
Respondent.
On Appeal from a Decision of the
National Labor Relations Benefits Review Board
D.C. Civil Action Nos. 22-CA-17250 and 22-CA-17402
Argued on October 25, 1993
Before: BECKER, ROTH, and LEWIS, Circuit Judges
(Opinion Filed: September 16, 1994)
Charles P. Donnelly, Esquire (Argued)
Jerry M. Hunter,
General Counsel
Yvonne T. Dixon,
Acting Deputy General Counsel
Nicholas E. Karatinos,
Acting Associate General Counsel
Aileen A. Armstrong,
Deputy Associate General Counsel
Deborah Schrager, Esquire
National Labor Relations Board
1099 14th Street, N.W.
Washington, D.C. 20570-0001
Attorneys for Petitioner/
Cross-Respondent
Elliot J. Mandel, Esquire (Argued)
Peter A. Schneider, Esquire
Carmelo Grimaldi, Esquire
Kaufman, Naness, Schneider & Rosenweig
425 Broad Hollow Road
Suite 315
Melville, NY 11747-4730
Attorneys for Respondent/
Cross-Petitioner
OPINION OF THE COURT
ROTH, Circuit Judge:
The National Labor Relations Board (NLRB or the Board)
petitions to enforce its July 6, 1992, order against employer New
Associates d/b/a Hospitality Care (Hospitality Care). The order
requires Hospitality Care to recognize 1115 Nursing Home and
Hospital Employees Union (the Union), a division of 1115 Joint
Board, as the exclusive bargaining representative of a certain
unit of Hospitality Care employees and to cease and desist from
certain unfair labor practices. Hospitality Care cross-petitions
for review of the order.
The issue for our consideration is whether Hospitality
Care was guilty of an unfair labor practice when, due to a
pending decertification petition, it withdrew from further
collective bargaining and it refused the Union's request for
certain employee and financial records. For the reasons set out
below, we will deny the NLRB's petition for enforcement of its
order, we will grant Hospitality Care's petition for review, and
we will remand this case to the NLRB to permit it to determine
whether, under the rule we adopt here, the Board chooses to
inform Hospitality Care of the percentage of employees who signed
the decertification petition.
I.
Hospitality Care operates a nursing home facility in
Newark, New Jersey. Through several collective bargaining
agreements (CBAs), Hospitality Care has recognized the Union as
the exclusive bargaining representative of a unit of Hospitality
Care employees. On May 1, 1990, pursuant to the terms of the
then existing CBA, the Union sought to reopen and negotiate wages
and other general terms and conditions of employment. It asked
Hospitality Care for the names, addresses, dates of hire,
categories, and wage rates of all employees covered by the CBA in
order to formulate future bargaining demands and to make the
employees aware of their eligibility for benefits and raises.
Apparently, there was some confusion regarding the request and
Hospitality Care did not supply the information.
On June 1, 1990, the Union sent Hospitality Care a list
of demands for a new CBA. The list requested a wage increase for
each year of the proposed agreement as well as other increases
and benefits. Thereafter, the parties conducted three
negotiating sessions. At each meeting, Hospitality Care rejected
the Union's demands stating that, because it was having
difficulty obtaining reimbursement from the state of New Jersey,
it needed to have a total wage freeze for the first year of the
new agreement. While the Union agreed to wage reductions in the
third year, it would not agree to the first year wage freeze.
The parties held their last meeting on August 9, 1990.
The Union again requested the employee information it had been
seeking since May. Hospitality Care indicated that it was still
in the process of compiling the information. The meeting ended
without an agreement and without a date for further negotiations.
Shortly after the August 9 meeting, the Union contacted
Hospitality Care and requested the employee information as well
as permission to audit Hospitality Care's financial records in
order to verify that Hospitality Care was unable to afford a
first year wage increase. Despite the Union's repeated requests,
Hospitality Care failed to supply any of the information.
On August 23, 1990, a Hospitality Care employee filed a
decertification petition with the NLRB asserting that at least
thirty percent of the employees no longer recognized the Union as
their official bargaining representative. See National Labor
Relations Act (NLRA), 29 U.S.C. § 159(c)(1)(A)(ii). Generally,
an employee will file such a petition with a Regional Office of
the NLRB in order to terminate the recognized union's status as
bargaining representative. If the petition is supported by at
least thirty percent of the unit employees and if the NLRB finds
reasonable cause to believe that there is merit to the petition,
the Regional Director will conduct a hearing. Id. at §
159(c)(1). If the hearing demonstrates that there is a serious
question of the union's representative status, the NLRB will hold
a decertification election within the bargaining unit. Id.
In this case, although the NLRB made an initial
determination that the prescribed minimum number of employees no
longer supported the Union, it did not release the exact
percentage of non-supporting employees to Hospitality Care. As a
result, Hospitality Care did not know whether a majority of the
employees sought decertification. Hospitality Care withdrew from
further collective bargaining based on its assertion that the
filing of the petition demonstrated a substantial showing of lack
of support for the Union.
On September 12, 1990, while the decertification
petition was still pending, the Union filed an unfair labor
practice charge with the NLRB. The Union alleged that
Hospitality Care had failed to bargain collectively in good faith
because it refused to contribute to the Union's funds and to
submit accurate lists of employees. After filing the charge, the
Union attempted to schedule another bargaining session with
Hospitality Care and requested audited financial statements
covering several years. At the NLRB hearing, Hospitality Care
indicated that it had denied the Union's requests due to the
pending decertification petition. Hospitality Care argued that
it had properly withdrawn from bargaining because a substantial
number of employees no longer recognized the Union as their
legitimate bargaining representative.
On September 19, 1991, Administrative Law Judge Fish
concluded that Hospitality Care had violated sections 8(a)(1) and
(5) of the NLRA, 29 U.S.C. §§ 158(a)(1),(5), by failing to meet
and bargain with the Union. Judge Fish found in addition that
Hospitality Care had engaged in an unfair labor practice by
failing to furnish information relevant to collective bargaining
and by refusing to permit an audit of its financial records.
Judge Fish recommended that Hospitality Care cease and desist
from refusing to bargain collectively with the Union. He held
that, upon the Union's request, Hospitality Care should furnish
the names, addresses, dates of hire, categories, and wage rates
of unit employees. Moreover, Hospitality Care should provide
the Union with audited financial statements or permit the Union
to audit its financial records. Hospitality Care filed
exceptions to Judge Fish's recommended order.
While the NLRB was considering Judge Fish's decision
and Hospitality Care's exceptions to it, the parties resumed
collective bargaining. On January 8, 1992, they executed a new
agreement effective through December 23, 1995. The NLRB
subsequently issued an order on July 6, 1992, adopting Judge
Fish's determination. Hospitality Care has refused to provide
the Union with its audited financial statements or to permit the
Union to conduct an audit of its financial records. Hospitality
Care maintains that such information is moot due to the new
collective bargaining agreement. To date, Hospitality Care has
not fully complied with the NLRB order.1
The NLRB filed an application for enforcement of its
order with this Court. Hospitality Care filed a cross petition
for review of the order. The NLRB has held the decertification
petition in abeyance pending the outcome of this case.
II.
1
. We note that Hospitality Care has filed a motion to expand
the record to include evidence that it partially complied with
the order by providing the Union with, inter alia, the names,
addresses, and dates of hire of employees in the bargaining unit.
Because the evidence does not influence our decision, we will
grant the motion.
The NLRB had subject matter jurisdiction pursuant to
section 10(a) of the NLRA. 29 U.S.C. § 160(a). This Court has
jurisdiction over both the NLRB's application for enforcement of
its final order and Hospitality Care's cross-petition for review
pursuant to sections 10(e) and (f) of the NLRA. 29 U.S.C.
§§ 160(e),(f).
In reviewing a rule adopted by the NLRB, we will give
deference to the Board's interpretation of the NLRA provided that
the rule is rational and consistent with the Act. See Fall River
Dyeing & Finishing Corp. v. N.L.R.B., 482 U.S. 27, 42 (1987). We
will set aside the NLRB's factual findings only if they are not
supported by substantial evidence. Systems Management, Inc. v.
N.L.R.B., 901 F.2d 297, 300 (3d Cir. 1990) (citing Graham
Architectural Products Corp. v. NLRB, 697 F.2d 534, reh'g denied,
706 F.2d 441 (3d Cir. 1983)).
III.
The NLRA is designed to foster collective bargaining
and industrial stability by providing a procedural framework for
employers and employees to resolve conflicts and negotiate toward
suitable working and contractual conditions. 29 U.S.C. § 157;
NLRB v. Pincus Bros., Inc.-Maxwell, 620 F.2d 367, 376 (3d Cir.
1980); Brockway Motor Trucks, Div. of Mack Trucks, Inc. v. NLRB,
582 F.2d 720, 727 (3d Cir. 1978). It expressly confers a duty on
employers to bargain in good faith with union representatives.
Specifically, section 8 of the Act provides,
(a) It shall be an unfair labor practice for an
employer --
(1) to interfere with, restrain, or coerce
employees in the exercise of the rights guaranteed
in section 157 of this title;. . .2
(5) to refuse to bargain collectively with the
representatives of his employees.
29 U.S.C. §§ 158(a)(1),(5). In order to advance the bargaining
process, an employer has an affirmative obligation to furnish the
recognized employee representative with information relevant to
an agreement. NLRB v. Acme Indus. Co., 385 U.S. 432, 435-36
(1967); NLRB v. New Jersey Bell Tel. Co., 936 F.2d 144, 150 (3d
Cir. 1991).
In this case, Hospitality Care admits that it refused the
Union's requests for employee and financial data. It
acknowledges that under certain circumstances such a refusal can
constitute a failure to bargain in good faith. See NLRB v.
Truitt Mfg. Co., 351 U.S. 149, 152 (1956) (holding that when an
employer asserts that he cannot afford to pay a wage increase,
the Union has a right to inspect his financial records). See
2
. Section 7 of the Act states:
Employees shall have the right to
self-organization, to form, join, or assist
labor organizations, to bargain collectively
through representatives of their own
choosing, and to engage in other concerted
activities for the purpose of collective
bargaining or other mutual aid or protection.
. . .
29 U.S.C. § 157.
also C-B Buick, Inc. v. NLRB, 506 F.2d 1086, 1091 (3d Cir. 1974)
(employer failed to bargain in good faith when it claimed that it
could not afford to meet union demands and then refused union's
request for financial data); Facet Enters., Inc. v. NLRB, 907
F.2d 963, 980 (10th Cir. 1990) (employer's offer of financial
data after it claimed economic hardship was insufficient to meet
the good faith bargaining standard because it did not provide a
meaningful picture of the employer's financial condition).
Hospitality Care further admits that it withdrew from all
negotiations with the Union. While such actions might be
considered violations of sections 8(a)(1) and (5) of the NLRA,
Hospitality Care argues against enforcement of the instant order
stating that it was no longer under a duty to bargain with the
Union because the pending decertification petition raised a
serious question as to the Union's representative status.3
3
. Hospitality Care also contends that the order should not be
enforced because the new collective bargaining agreement renders
the requested financial information moot. See C-B Buick, Inc. v.
NLRB, 506 F.2d 1086 (3d Cir. 1974) (employer not required to
comply with union's request for financial information when
parties subsequently signed a new collective bargaining agreement
and information was deemed irrelevant to that agreement). We
decline to exercise jurisdiction over this claim because
Hospitality Care had the opportunity to raise the mootness issue
during the administrative hearing and failed to do so. See 29
U.S.C. § 160(e) (providing that, absent extraordinary
circumstances, a reviewing court shall not consider an objection
not raised before the Board). In declining to address this
issue, we are in no way making any ruling on the merits of the
argument that, under the circumstances of this case, the
execution of the new agreement absolved Hospitality Care of any
charge of an unfair labor practice that would be otherwise
applicable.
Hospitality Care contends that it would be a needless waste of
time and expense to continue bargaining for an agreement that
could be rendered void if the Union is later ousted in a
decertification election.
Hospitality Care urges the court to set aside the instant
order and apply the rationale articulated in Telautograph Corp.,
199 N.L.R.B. 892 (1972). That case addressed factually similar
circumstances in which an employer withdrew from bargaining based
solely on the filing of a decertification petition. The NLRB
concluded that, in the absence of any evidence of employer
misconduct, a decertification petition required the employer to
refrain from further bargaining because the petition itself
signified a genuine question as to the union's representative
status. The Board stated that the NLRA's decertification
procedure "assures employees the right to determine that a
currently recognized union is no longer the majority
representative . . .." Id. at 894.
In the years following Telautograph, the NLRB retreated from
its bright line rule that an employer could suspend bargaining
based on the filing of a decertification petition. See RCA Del
Caribe, Inc., 262 N.L.R.B. 963 (1982) (filing of a representation
petition by an outside union will not permit an employer to
withdraw from bargaining with the incumbent union). See also
National Cash Register Co., 201 N.L.R.B. 1034, 1035 (1973) (where it
appears that an employer's unfair labor practice precipitated the
decertification filing, employer must submit some other objective
evidence of loss of majority support). The NLRB eventually
overruled Telautograph, stressing its concern with promoting
increased stability in the bargaining relationship. Dresser
Indus., Inc., 264 N.L.R.B. 1088 (1982).
Although Dresser involved the same circumstances as
Telautograph, the NLRB held in Dresser that an employer could not
withdraw from bargaining while awaiting resolution of a
decertification proceeding. Id. at 1089. It conceded that
suspension of bargaining could be justified if, in addition to
the petition, the employer submitted some objective evidence that
the union had lost majority support. Id. at 1089 n.7. The
petition itself, however, only requires the signatures of thirty
percent of the unit employees and therefore, it "indicates
nothing more than the disaffection of a minority of unit
employees." Id. at 1088. The NLRB concluded that "[a] rule
permitting an employer to withdraw from bargaining solely because
a decertification petition has been filed does not give due
weight to the incumbent union's continuing presumption of
majority status and is not the best way to achieve employer
neutrality in the election." Id. at 1089.
Based on Dresser, the NLRB found that Hospitality Care
committed an unfair labor practice for refusing to provide
information to, or bargain with, the Union. The NLRB maintains
that Dresser is more effective than Telautograph as a means of
preserving the stability and continuity of the bargaining
relationship.
While several Circuits have followed Dresser, see Asseo v.
Centro Medico del Turabo, Inc., 900 F.2d 445, 452 (1st Cir.
1990), Briggs Plumbingware, Inc. v. NLRB, 877 F.2d 1282, 1288
(6th Cir. 1989), St. Agnes Medical Ctr. v. NLRB, 871 F.2d 137,
146 (D.C. Cir. 1989), Bryan Memorial Hospital v. NLRB, 814 F.2d
1259, 1262 (8th Cir.), cert. denied, 484 U.S. 849 (1987), this
circuit has not yet addressed the Dresser issue. But cf. NLRB v.
Wallkill Valley Gen. Hosp., 866 F.2d 632, 636 n.3 (3d Cir. 1989)
(after filing of decertification petition with Board, employer
may not avoid duty to bargain by demonstrating loss of union
majority status resulting from employer's own unfair labor
practice).
In order to better understand the impact of Dresser, it is
helpful to review current NLRB decertification procedures.4
According to section 9(a) of the NLRA, a union "designated or
selected for the purposes of collective bargaining by the
majority of the employees in a unit . . . shall be the exclusive
representative[] of all the employees in such unit for the
purposes of collective bargaining . . .." 29 U.S.C.
4
. For a general discussion of the decertification process, and
what the author considers to be the "chaotic" impact of Dresser
on that process, see Timothy Silverman, Comment, The Effect of a
Petition for Decertification on the Bargaining Process: The
Reversal of Dresser Industries, 25 San Diego L. Rev. 581 (1988).
§ 159(a). Once a union receives NLRB certification, there is an
irrebuttable presumption that the Union is the employee
bargaining representative. NLRB v. Frick Co., 423 F.2d 1327,
1330 (3d Cir. 1970); Terrell Mach. Co. v. NLRB, 427 F.2d 1088,
1090 (4th Cir. 1970), cert. denied, 398 U.S. 929 (1970); Celanese
Corp. of Am., 95 N.L.R.B. 664, 672 (1951). The employer may not
refuse to bargain with the representative for one year following
the date of certification. NLRB v. Burns Int'l Sec. Servs.,
Inc., 406 U.S. 272, 279 n.3 (1972); NLRB v. Gissel Packing Co.,
395 U.S. 575, 599 n.14 (1969). The presumption of majority
status only becomes rebuttable at the end of the certification
year or when the collective bargaining agreement has expired.
NLRB v. Pennco, Inc., 684 F.2d 340 (6th Cir.), cert. denied, 459
U.S. 994 (1982).
An employer, employee, group of employees, or labor
organization may challenge the certified union's representative
status by filing a decertification petition with an NLRB Regional
Office. 29 U.S.C. §§ 159(c)(1)(A) and (B). Upon receipt of such
a petition, the NLRB evaluates whether a "question of
representation . . . exists." Id. If its investigation shows
that a substantial number of employees support the petition, the
Regional Director conducts a hearing. A "substantial number" of
the employees supporting such a petition is defined by regulation
as "at least 30 percent." 29 CFR § 101.18(a). At the conclusion
of the hearing, the NLRB may direct a secret ballot election to
determine the union's representative status. Id. at § 159(c)(1).
In reviewing the petition to determine the percentage of
employee support, the Regional Director counts the number of
authorization cards or employee signatures in order to determine
whether there is a thirty percent showing of interest. Dresser
Indus., Inc., 264 N.L.R.B. 1088 (1982). It is NLRB policy not to
divulge this information to the employer. See Wallkill Valley
Gen. Hosp., 866 F.2d at 634 (NLRB refused employer's request for
showing of interest information stating that such information was
exempt from disclosure under the Freedom of Information Act, 5
U.S.C. § 552). Thus, while the NLRB is aware of whether or not a
majority of employees supports a petition, the employer does not
have the benefit of this information in assessing whether to
continue bargaining with a union whose representative status may
be in question.
The NLRB held that Hospitality Care was guilty of an unfair
labor practice because it withdrew from bargaining on the basis
of the decertification petition alone, without any further
objective evidence that the Union had lost majority status. See
Dresser, 264 N.L.R.B. at 1089 n.7. We conclude that such a result is
unsound when considered in combination with the NLRB's refusal to
disclose to the employer the percentage of employees who
supported the decertification petition. The NLRB possessed the
data which would have enabled Hospitality Care to make an
informed decision on whether the Union had lost majority support.
Dresser does not overturn the prior Board practice which
permitted an employer to withdraw recognition of a union if the
employer reasonably believed that a majority of the unit
employees no longer supported the union, See Terrell Mach. Co.,
173 N.L.R.B. 1480, 1481 (1969), enf'd 427 F.2d 1088 (4th Cir. 1970),
cert. denied, 398 U.S. 929 (1970). In the same light, the Board
continues to acknowledge that, if the decertification petition,
signed by a majority of the employees, is filed directly with the
employer, the employer has objective grounds to believe that the
union no longer has majority support and the employer need no
longer recognize the union as the bargaining representative. See
National Medical Hosp. of Orange d/b/a Los Alamitos Medical Ctr.,
287 N.L.R.B. 415 (1987). We conclude that it follows logically that
notification to the Board by a majority of unit employees should
also constitute objective evidence of a lack of union majority
support to the employer in the event that the employer learns of
the percentage of support for the petition. With knowledge of
majority support for the petition, the employer is justified in
ceasing to bargain with the union.
We conclude that such an outcome is consistent with the aim
of the NLRA to promote the resolution of conflict in the labor
arena. If the employer knows of the filing of the petition but
is not aware of the percentage of support, the employer faces the
dilemma of either continuing to bargain with the union, which may
lose its representational status, or of refusing to bargain and
exposing itself to an unfair labor practice charge. On the other
hand, if the union learns of the filing of a decertification
petition, the union can delay having to face an election by
seeking to bargain, having the employer deny that request, and
then filing an unfair labor charge against the employer. The
NLRB as a general practice will not schedule an election during
the pendency of an unfair labor practice charge. See
Telautograph, 199 N.L.R.B. at 893 n.4, (citing Columbia Pictures
Corp., 81 N.L.R.B. 1313, 1314 (1949)). With the filing of such a
"blocking charge," a majority of employees who have filed a
petition will not receive prompt resolution of the question of
representation -- a result which has occurred in this case if in
fact a majority of unit employees did sign the petition.
The NLRB contends, however, that the "showing of interest,"
e.g., the determination by the Board of the percentage of
employees supporting the petition, is intended only to enable the
Board to determine for itself whether further proceedings are
warranted. See In re O.D. Jennings & Co., 68 N.L.R.B. 516, 518
(1946) (showing of interest requirement is "to enable the Board
to determine for itself whether or not further proceedings are
warranted, and to avoid needless dissipation of the government's
time, effort and funds"). The NLRB maintains that, if it did
supply the employer with the percentage of employees supporting
the petition, a strictly administrative requirement could result
in the immediate termination of a union and compromise the right
of employees to test the union's support through a
decertification election.
We find that this contention lacks merit because the
disclosure to an employer of majority support for
decertification, if such should be the situation, meets the long
recognized Board position that the loss of such majority support
warrants the employer's withdrawal of recognition of the union as
the bargaining representative and justifies the scheduling of an
election. On the other hand, if a majority of the employees have
not joined in the petition, bargaining will continue.
Moreover, absent any existent charge that the employer's
unfair labor practices have caused the decertification petition
to be filed in the first place, we are not persuaded that such
disclosure places an undue burden on the NLRB. Because the
Regional Director must determine whether the petition is
supported by thirty percent of the employees in order to proceed
with a hearing and election, it appears that, without any
additional administrative costs, he could also calculate whether
over fifty percent of the employees advocate decertification.
IV.
Based on the foregoing analysis, we will grant Hospitality
Care's petition for review of the NLRB order. We find that the
Dresser holding is a rational interpretation of the governing
statute, but only in those situations where the employer has
requested from the NLRB information on the percentage of
employees who support the decertification petition and the NLRB
has informed the employer that the percentage is less than a
majority.
We acknowledge, however, that the NLRB may choose to
continue its policy of refusing to disclose the percentage of
employees supporting a decertification petition. If this should
b