ARAMARK Corporation v. NLRB

F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
MAY 28 1999
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
ARAMARK CORPORATION,
Petitioner,
v.
NATIONAL LABOR RELATIONS
BOARD, No. 97-9535
Respondent, No. 97-9550
THE FLORIDA PUBLIC
EMPLOYEES COUNCIL 79,
AFSCME (UNION),
INTERNATIONAL UNION OF
OPERATING ENGINEERS, LOCAL
465, AFL-CIO,
Intervenors.
ON PETITION FOR REVIEW AND CROSS-APPLICATION
FOR ENFORCEMENT OF AN ORDER OF
THE NATIONAL LABOR RELATIONS BOARD
(Petition Nos. 12-CA-18704 and 11-CA-17497)
David W. Miller, of Baker & Daniels, Indianapolis, Indiana, (Philip J. Gibbons,
Jr. with him on the briefs), for Petitioner.
Howard E. Perlstein, Deputy assistant General Counsel, National Labor Relations
Board, Washington, D.C., (Frederick L. Feinstein, General Counsel, Linda Sher,
Associate General Counsel, and Aileen A. Armstrong, Deputy Associate General
Counsel, with him on the briefs), for Respondent.
Marsha S. Berzon, Altshuler, Berzon, Nussbaum, Berzon & Rubin, San Francisco,
California, (Jonathan P. Hiatt, AFL-CIO, Washington, D.C., John C. Dempsey,
Larry P. Weinberg, and Margaret A. McCann, AFSCME, Washington, D. C.,
Richard Griffin and Helen L. Morgan, International Union of Operating
Engineers, Washington, D.C., with her on the briefs), for Intervenors.
Before SEYMOUR, Chief Judge, PORFILIO, ANDERSON, TACHA,
BALDOCK, BRORBY, EBEL, KELLY, HENRY, BRISCOE, LUCERO and
MURPHY, Circuit Judges.
MURPHY, Circuit Judge.
I. INTRODUCTION
These matters originally came before the court on the cross-petitions of
Aramark Corporation (Aramark) and the National Labor Relations Board (the
Board). The Board sought enforcement of two orders finding that Aramark had
committed unfair labor practices when it had refused to bargain with the Florida
Public Employees Council 79, AFSCME (Council 79) and the International Union
of Operating Engineers, Local 465, AFL-CIO (Local 465) (collectively, the
Unions). The Unions intervened to support the Board’s petition. Aramark, the
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employer, argued that the Board was without jurisdiction in these matters
because: (1) the operations at issue are exempt from Board jurisdiction under the
“political subdivision exemption” 1 to the National Labor Relations Act (the Act);
and (2) Aramark’s government contracts do not leave it sufficient control over its
labor relations to enable it to bargain meaningfully with a labor union.
A panel of this court denied enforcement of the Board’s orders. See
Aramark Corp. v. NLRB, 156 F.3d 1087, 1098 (10 th Cir. 1998). The panel began
by rejecting Aramark’s contention that it is an exempt political subdivision. See
id. at 1092-95. Nevertheless, concluding it was bound by the Memorial Hospital
line 2 of circuit precedent, the panel held that the Board lacked jurisdiction over an
employer operating under a government contract unless that employer retained
sufficient control over the employment relationship to engage in meaningful
collective bargaining (the so-called “governmental control test”). See id. at 1095-
98. Because the Board had not applied the governmental control test to the
operations at issue here, the panel denied enforcement of the Board’s orders and
remanded the case to the Board for further proceedings. See id. at 1098.
1
Section 2(2) of the Act exempts from the Act’s coverage “any State or
political subdivision thereof.” 29 U.S.C. § 152(2).
2
See Board of Trustees of Mem’l Hosp. v. NLRB, 624 F.2d 177, 185 (10 th
Cir. 1980); R.W. Harmon & Sons, Inc. v. NLRB, 664 F.2d 248, 251 (10 th Cir.
1981); Jefferson County Community Ctr. for Developmental Disabilities, Inc. v.
NLRB, 732 F.2d 122, 126 (10 th Cir. 1984); Denver Post of Nat’l Soc’y of
Volunteers of Am. v. NLRB, 732 F.2d 769, 774 (10 th Cir. 1984).
-3-
Both the Board and the Unions filed petitions for rehearing, requesting that
the en banc court repudiate the Memorial Hospital line of cases. The en banc
court ordered the cases reheard. Upon review of the Act and applicable
authorities, the en banc court holds that the Board need not apply the
governmental control test before exercising jurisdiction under § 2(2) of the Act.
Accordingly, we vacate sections II.B. and III. of the panel opinion and enforce
the Board’s orders. 3
II. BACKGROUND
A. The Evolution and Eventual Abandonment of the Governmental Control Test
Section 2(2) of the Act exempts from Board jurisdiction “the United States
or any wholly owned Government corporation, . . . or any State or political
subdivision thereof.” 29 U.S.C. § 152(2). By its plain terms, this exemption
applies only to governmental entities. See Teledyne Econ. Dev. v. NLRB, 108
F.3d 56, 59 (4 th Cir. 1997) (“There is nothing ambiguous about this language. By
its terms, section 2(2) exempts only government entities or wholly owned
government corporations from its coverage—not private entities acting as
3
The en banc court has not reconsidered section II.A. of the panel opinion,
which rejects Aramark’s claim that it qualifies as a political subdivision under
§ 2(2) of the Act. See Aramark Corp. v. NLRB, 156 F.3d 1087, 1092-95 (10 th Cir.
1998). That section of the opinion thus remains in effect.
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contractors for the government.”). Nevertheless, the Board has historically
declined to assert jurisdiction over governmental contractors, if the contracting
governmental entity effectively controlled the basic terms of employment. See
infra pages 5-10 (discussing rise and fall of “intimate connection” and
“governmental control” tests).
For instance, prior to 1979, the Board utilized the intimate connection test
for deciding whether to assert jurisdiction over private employers who had
contracted with exempt governmental entities. See National Transp. Serv., Inc.,
240 N.L.R.B. 565, 1979 WL 8831, at *1-*2 (discussing and overruling intimate
connection test). The intimate connection test had two distinct aspects. First, the
Board queried whether an “exempt [governmental] employer exercises substantial
control over the services and labor relations of the nonexempt [private]
contractor, so that the latter is left without sufficient autonomy over working
conditions to enable it to bargain efficaciously with the union.” Rural Fire
Protection Co., 216 N.L.R.B. 584, 1975 WL 5421, at *3. If the answer to that
question was “yes,” the Board would decline jurisdiction. Id. If the answer was
“no,” however, the Board would move on to examine “the relationship of the
services performed [by the nonexempt private contractor] to the exempted
functions of the [governmental] institution to whom they were provided.” Id. at
*4; see also National Transportation, 240 N.L.R.B. 565, 1979 WL 8831, at *2
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(discussing Rural Fire Protection and describing it as a “leading case enunciating
the ‘intimate connection’ test”). If the nonexempt employer provided services to
the exempt entity which related directly to the entity’s governmental purpose, the
Board would decline to assert jurisdiction. See Rural Fire Protection, 216
N.L.R.B. 584, 1975 WL 5421, at *4 (holding that firefighting services provided
by nonexempt employer to exempt city were so intimately connected to city’s
“municipal purposes” as to justify declination of jurisdiction). As far back as
1969, the D.C. Circuit recognized that the Board considered the intimate
connection test a tool to help the Board exercise its discretion to decline
jurisdiction in cases where “it believes the policies of the Act will not be
effectuated by an exercise of its authority.” Herbert Harvey, Inc. v. NLRB, 424
F.2d 770, 773-74 (D.C. Cir. 1969).
In 1979, the Board jettisoned the intimate connection test in favor of the
governmental control test. See National Transportation, 240 N.L.R.B. 565, 1979
WL 8831, at *2. In so doing, the Board concluded that “the first aspect of the
[intimate connection] test—i.e., whether the employer would be able to bargain
effectively about the terms and conditions of employment of its employees—is by
itself the appropriate standard for determining whether to assert jurisdiction.” Id.Significantly, the Board characterized the intimate connection test as a tool
created by the Board to help channel its discretion to decline jurisdiction under
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§ 14(c)(1) of the Act. 4 Id. According to the Board, the intimate connection test
had failed miserably at achieving this function. See id. (“The test does not aid the
Board in determining whether the assertion of jurisdiction is appropriate in a
given situation; on the contrary, the attempts to define the criteria of ‘intimate
connection’ in cases subsequent to Rural Fire Protection . . . only indicate the
difficulties inherent in applying so vague a standard.”). In the view of the Board,
the governmental control test provided “a more objective, precise, and definitive
standard for determining discretionary jurisdictional issues” because it focused
solely on the utility of collective bargaining in a given employment environment.
Id. Accordingly, from that point forward, the Board would simply “determine
whether the employer itself meets the definition of ‘employer’ in Section 2(2) of
the Act and, if so, determine whether the employer has sufficient control over the
employment conditions of its employees to enable [the employer] to bargain with
a labor organization [acting] as [the employees’] representative.” Id. at *1.
4
Section 14(c)(1) provides as follows: “The Board, in its discretion, may,
by rule of decision or by published rules . . ., decline to assert jurisdiction over
any labor dispute involving any class or category of employers, where, in the
opinion of the Board, the effect of such labor dispute on commerce is not
sufficiently substantial to warrant the exercise of its jurisdiction.” 29 U.S.C. §
164(c)(1).
-7-
The Board refined and reaffirmed the governmental control test in 1986.
See Res-Care, Inc., 280 N.L.R.B. 670, 1986 WL 53982, at *4-*6. The Board
began by noting that
In reviewing National Transportation and its progeny, we find
that the Board has not set forth a clear or consistent explanation of
the elements of effective or meaningful bargaining. In particular, the
decisions have failed to define (a) those areas of an employer’s labor
relations that are sufficiently important that the employer cannot
bargain meaningfully if the exempt entity removes or severely
restricts the employer’s discretion, and (b) the circumstances under
which the government entity will be deemed to have removed or
severely restricted such discretion.
Id. at *4. Despite this lack of clarity, the Board concluded that the governmental
control test continued to provide the best guidepost for the Board’s discretionary
declinations of jurisdiction under § 14(c)(1). See id. at *1 n.1, *4. 5 Nevertheless,
5
In so doing, the Board once again affirmed that the governmental control
test is not a jurisdictional element inherent in § 2(2) of the Act. According to the
Board,
Res-Care and our dissenting colleague both contend that we should
base our determination on Sec. 2(2) of the Act. We do not agree. As
the Board stated in National Transportation, our inquiry is twofold,
i.e., “whether the employer itself meets the definition of ‘employer’
in Section 2(2) of the Act and, if so . . . whether the employer has
sufficient control over the employment conditions of its employees to
enable it to bargain with a labor organization as their representative.”
It is clear . . . that Res-Care itself is not a Federal Government
agency, and is thus not exempt from our jurisdiction under Sec. 2(2)
of the Act. It is also clear that Res-Care employs “employees” as
that term is defined in Sec. 2(3). Our only inquiry, therefore, is
whether, in exercising our discretion, we should decline to assert
jurisdiction because of the extent to which DOL, an entity exempt
(continued...)
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in an effort to refine the governmental control test, the Board held that it would
decline jurisdiction whenever an employer lacked ultimate authority over “a core
group of ‘basic bargaining subjects.’” Id. at *6. This core group specifically
included employee-compensation issues such as “wages and fringe benefits.” Id.
Thus, under Res-Care’s refined governmental control test, the Board continued to
decline jurisdiction over governmental contractors who lacked final authority over
wages and benefits, even if the contractors maintained exclusive power to hire,
fire, promote, and demote. See id.
In 1995, however, the Board overruled the governmental control test and, in
Management Training Corp., announced that “in determining whether the Board
should assert jurisdiction, the Board will only consider whether the employer
meets the definition of ‘employer’ under Section 2(2) of the Act, and whether
such employer meets the applicable monetary jurisdictional standards.” 317
N.L.R.B. 1355, 1995 WL 451936, at *6. The Board reasoned that focusing on
control over economic terms and conditions of employment under the
governmental control test oversimplified the bargaining process and improperly
(...continued)
5
from our jurisdiction, controls the employment conditions of
Res-Care's employees. We answer that question today in the
affirmative on the ground that the policies of the Act would not be
effectuated by our assertion of jurisdiction in this case.
Res-Care, Inc., 280 N.L.R.B. 670, 1986 WL 53982, at *1 n.1.
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involved the Board in the substantive aspects of that process. See id. at *4-*5. In
addition, the Board noted that the governmental control test led to lengthy
litigation. See id. at *5. The Board determined that it should not “be deciding as
a jurisdictional question which terms and conditions of employment are or are not
essential to the bargaining process,” and stated that “whether there are sufficient
employment matters over which unions and employers can bargain is a question
better left to the parties at the bargaining table and, ultimately, to the employee
voters in each case.” Id. at *3, *1. The Board further stated that meaningful
bargaining can occur even when
the employer’s ability to respond to union demands [is] restricted by
its contract with the exempt entity. The fact that some matters have
to be approved by the contracting government agency does not mean
that bargaining is meaningless; there are, after all, proposals to be
drafted—if not in the extant contract, then in future ones—as well as
other matters to be negotiated which do not require contractual
approval.
Id. at *4.
B. These Enforcement Proceedings
Aramark is a Delaware corporation providing food services nationwide. 6
Aramark manages food-service operations in the Duval County School District
(“School District”) in Jacksonville, Florida, and at The Citadel in Charleston,
For a detailed recitation of the facts leading up to these enforcement
6
proceedings, see Aramark, 156 F.3d at 1089-92.
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South Carolina. The challenged Board orders arose out of Aramark’s refusal to
recognize and bargain with the Unions who represent Aramark’s food service
employees in Duval County and at The Citadel. 7
In July 1990, Aramark contracted with the Duval County School Board to
manage all of the School District’s food-service operations. Prior to this time, the
School District had operated and managed its own food service program, which
was staffed solely by public employees. Under the parties’ contract, employees in
the food service operation as of the contract date, July 1, 1990, remained
employees of Duval County and retained civil-service status. The employees
were in a public-sector collective-bargaining unit represented by Council 79. All
food service employees hired after July 1, 1990, were Aramark employees and
were not members of the public-sector collective-bargaining unit.
Since the mid-1960s, Aramark and its predecessor, ARA Services, Inc.,
have contracted with the State of South Carolina to provide food services at The
Citadel in Charleston, South Carolina. The Citadel is a military college owned
and operated by the State of South Carolina.
7
This court’s jurisdiction to review the Board’s orders arises under
subsections (e) and (f) of § 10 of the Act. See 29 U.S.C. § 160(e), (f) (providing
that the Board may petition for enforcement, and any aggrieved person may
petition for review, of any order of the Board to the court of appeals for any
circuit wherein an aggrieved person resides or transacts business).
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Council 79 and Local 465 each filed separate petitions with the Board,
seeking to represent Aramark’s food-service employees in Duval County and at
The Citadel. Aramark resisted each petition, arguing that the Board lacked
jurisdiction because Aramark’s contracts with the School District and with The
Citadel, respectively, did not give it sufficient control over the essential terms and
conditions of employment to bargain meaningfully with a union. In each case,
however, the Board’s Regional Director concluded that the Board had jurisdiction
under the Management Training test, as Aramark was an “employer” with the
meaning of § 2(2) and met the Board’s own monetary jurisdictional requirements.
In each case, the Regional Director ordered an election, which both unions won.
The Board in each case rejected Aramark’s request to reverse the assumption of
jurisdiction and election order. After Aramark refused to bargain with the duly
elected unions, the Board issued an order in each case finding that Aramark had
committed an unfair labor practice and ordering it to bargain. See Aramark
Corp., 323 N.L.R.B. 256, 1997 WL 101268 (Duval County proceedings); Aramark
Corp., 324 N.L.R.B. No. 10, 1997 WL 422767 (The Citadel proceedings). The
cross-petitions to enforce and for review of those orders followed.
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III. ANALYSIS
This case presents the en banc court with a very narrow legal question: Is
the National Transportation/Res-Care governmental control test a jurisdictional
prerequisite mandated by § 2(2) of the Act? Based on the plain language of
§ 2(2) and the substantial deference due the Board’s determination of its own
statutory jurisdiction, 8 this court answers the question in the negative. In so
doing, we join the Fourth and Sixth Circuits in holding that the governmental
control test is not statutorily mandated 9 and repudiate contrary precedent from this
circuit. 10
In accordance with the first principle of statutory construction, this court
begins its analysis with the plain language of § 2(2). See Bailey v. United States,
516 U.S. 137, 144 (1995). Section 2(2) exempts from coverage of the Act “the
United States or any wholly owned Government corporation, . . . or any State or
“The Board has initial responsibility for determining who is an employer
8
for purposes of the Act . . . and its construction of its own statutory jurisdiction is
entitled to great respect.” Jefferson County, 732 F.2d at 124 (citing, inter alia,
NLRB v. E.C. Atkins & Co., 331 U.S. 398, 403 (1947) and NLRB v. Natural Gas
Utility Dist., 402 U.S. 600, 605 (1971)).
See Pikeville United Methodist Hosp. of Ky., Inc. v. United Steelworkers of
9
Am., 109 F.3d 1146, 1152-53 (6 th Cir. 1997); Teledyne Econ. Dev. v. NLRB, 108
F.3d 56, 59 (4 th Cir. 1997).
10
See supra note 2 (setting forth Memorial Hospital line of cases).
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political subdivisions thereof.” 29 U.S.C. § 152(2). As aptly noted by the Fourth
Circuit,
There is nothing ambiguous about this language. By its terms,
section 2(2) exempts only government entities or wholly owned
government corporations from its coverage—not private entities
acting as contractors for the government. When enacting section
2(2), Congress was surely aware that private employers contracted
with government entities to provide needed goods and services.
Congress could not have intended to compel the Board to decline
jurisdiction over private employers based upon constraints that their
government contracts might impose upon the collective bargaining
process. If it had so intended, it would have exempted private
contractors as well as governmental entities from the Act.
Teledyne, 108 F.3d at 59; see also Pikeville United Methodist Hosp. of Ky., Inc. v.
United Steelworkers of Am., 109 F.3d 1146, 1152 (6 th Cir. 1997) (“[Section] 2(2)
simply and straightforwardly exempts only certain named governmental units and
other organizations from the reach of the NLRB.”).
This court agrees with the Fourth and Sixth Circuits that the meaning of
§ 2(2) is plain and unambiguous. Accordingly, both the Board and this court
“‘must give effect to the unambiguously expressed intent of Congress.’” Holly
Farms Corp. v. NLRB, 517 U.S. 392, 398 (1996) (quoting Chevron, U.S.A., Inc. v.
Natural Resources Defense Council, Inc., 467 U.S. 837, 843 (1984)). Thus,
because Congress has unambiguously limited the reach of the exemption in § 2(2)
to governmental entities and wholly owned government corporations, this court
will not extend the exemption to government contractors. See id. at 1401-02
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(holding that exemptions from jurisdiction contained in the Act should not be “so
expansively interpreted as to deny protection to workers the Act was designed to
reach”).
This reading of § 2(2) is entirely consistent with the Board’s interpretation
of the Act. As noted at length above, although the Board has historically declined
to assert jurisdiction over the employees of governmental contractors, it has
consistently maintained that such declinations of jurisdiction were undertaken
solely as a matter of Board discretion pursuant to § 14(c)(1) of the Act. 11 See
11
The Unions agree that, prior to Management Training, the Board
purported to exercise its discretionary powers under § 14(c)(1) when it declined to
assert jurisdiction over government contractors under the governmental control
test. They vigorously contest, however, whether § 14(c)(1) actually empowers the
Board to decline jurisdiction in such cases. Nevertheless, as conceded by the
Unions, the resolution of that question is unnecessary to the determination of this
case.
Aramark also asserts that § 14(c)(1) does not vest in the Board a grand
reservoir of discretion to decline to exercise its statutory jurisdiction. Instead,
according to Aramark, the legislative history of § 14(c)(1) “‘establishes that the
purpose of that section was to eliminate the so-called “no man’s land,” that
category of cases involving employers doing less than a certain volume of
business and over which the Board had refused to exercise jurisdiction.’”
Appellant’s Supplemental en banc Br. at 13 (quoting National Transportation,
240 N.L.R.B. 565, 1979 WL 8831, at *2 n.6). Thus, according to Aramark, the
governmental control test could not have been based on § 14(c)(1). As the final
piece of this syllogism, Aramark asserts that because the governmental control
test could not legitimately be based upon § 14(c)(1), it must have been based on
§ 2(2) all along.
Even assuming the merits of Aramark’s contentions regarding the extent of
the discretion granted the Board in § 14(c)(1), Aramark’s ultimate conclusion
simply does not follow. In such an assumed state of affairs, it would be equally
(continued...)
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supra Section II.A. (discussing evolution and eventual demise of governmental
control test and noting Board’s position that test was purely discretionary). 12 The
Board’s consistent view that governmental contractors fall outside § 2(2)’s
political subdivision exemption and inside that provision’s definition of an
11
(...continued)
logical to conclude that the Board’s promulgation of the governmental control test
was an ultra vires act rather than an implicit agency interpretation of the contours
of § 2(2). This is especially true given the Board’s consistent statements during
the relevant period that the governmental control test was discretionary, rather
than statutory, in nature. See supra Section II.A.
12
See also Pikeville, 109 F.3d at 1152 (“[T]he ‘control’ test elucidated in
Res-Care, Inc. is only a tool previously used by the Board to define the
parameters of the agency’s discretionary, as opposed to statutory, jurisdiction.
Only after jurisdiction pursuant to § 2(2) was established would the Board
examine the control exercised by the employer over aspects of employment
conditions to determine whether the NLRB would nevertheless choose to forego
examination of alleged labor law violations.”); Teledyne, 108 F.3d at 59 (“Other
courts have recognized that the Res-Care governmental control test . . . was an
exercise of the Board’s discretion.”); Human Dev. Ass’n v. NLRB, 937 F.2d 657,
660-61 (D.C. Cir. 1991) (“[The government contractor] is unquestionably an
‘employer’ within the statutory jurisdiction of the Board. Based upon the
exclusion of ‘any State or political subdivision thereof’ from the definition of an
employer, however, the Board may exercise its discretion, with respect to a
particular bargaining unit, not to assert jurisdiction over a statutory employer that
provides services exclusively to an exempt government entity.” (citation
omitted)); NLRB v. Kemmerer Village, Inc., 907 F.2d 661, 663, 664 (7 th Cir. 1990)
(describing governmental control test as “a reasonable systematization of the
Board’s inherent discretion to allocate its limited resources efficiently” and as a
discretionary “doctrine of prioritization” rather than a “rule of law”); Herbert
Harvey, Inc. v. NLRB, 424 F.2d 770, 773-74 (D.C. Cir. 1969) (holding that Board
clearly had statutory jurisdiction over government contractor qua government
contractor, but noting that Board “has traditionally reserved a discretion to
decline jurisdiction in particular cases where it believes the policies of the Act
will not be effectuated by an exercise of its authority”).
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employer “is entitled to great respect.” NLRB v. Natural Gas Utility Dist., 402
U.S. 600, 605 (1971). 13 Based on the Act’s plain language and the Board’s
consistent view of its statutory jurisdiction, 14 this court concludes that the
governmental control test is not a prerequisite to the Board’s exercise of
jurisdiction over a governmental contractor pursuant to § 2(2).
The plain language of § 2(2) aside, Aramark argues that the Supreme Court
incorporated the governmental control test into the Act in its decision in NLRB v.
E.C. Atkins & Co., 331 U.S. 398 (1947). Aramark reads far too much into the
E.C. Atkins opinion. See Teledyne, 108 F.3d at 59 n.2 (rejecting notion that E.C.
Atkins mandated governmental control test and noting that opinion instead
13
See also NLRB v. Town & Country Elec., Inc., 516 U.S. 85, 89-90 (1995)
(holding that “the Board often possesses a degree of legal leeway when it
interprets its governing statute, particularly where Congress likely intended an
understanding of labor relations to guide the Act’s application”); NLRB v. Curtin
Matheson Scientific, Inc., 494 U.S. 775, 786 (1990) (holding that Congress
delegated to Board “primary responsibility for developing and applying national
labor policy”); E.C. Atkins, 331 U.S. at 414 (holding, in statutory jurisdiction
case, that the “responsibility for representing the public interest in [labor] matters
and of reaching a judgment after giving due weight to all the relevant factors
lay[s] primarily with the Board”).
14
Because the Board has not altered its view of its statutory jurisdiction
under § 2(2), but has instead reconsidered the efficacy and wisdom of declining
jurisdiction over governmental contractors under § 14(c)(1), this court need not
consider the amount of deference due under Chevron when an administrative
agency alters its interpretation of a statute. See National Fed’n of Fed.
Employees v. Department of Interior, 119 S. Ct. 1003, 1015-16 (1999) (O’Connor,
J., dissenting) (arguing that agency interpretation is entitled to less deference in
such situations).
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“emphasized that the Board has considerable discretion in deciding whether to
exercise jurisdiction over non-exempt private entities”).
In E.C. Atkins, the Supreme Court analyzed whether the Board could
validly assert jurisdiction over a bargaining unit of private guards who were
employees of a governmental defense contractor, when the guards were required
to be civilian auxiliaries to the United States Army military police. See 331 U.S.
at 399. Military authorities reserved the right to veto the hiring and firing of
individual guards and “were authorized to take appropriate action through the
plant management to correct conditions which might result in defective or
inadequate performance by the guard forces of its ordinary protective duties.” Id.
at 407 (quotations omitted).
Despite the substantial control exercised by the military over the guards,
the Court affirmed the Board’s exercise of jurisdiction. See id. As a general
matter, it noted that
[T]he terms “employee” and “employer” in this statute carry with
them more than the technical and traditional common law definitions.
They also draw substance from the policy and purposes of the Act,
the circumstances and background of particular employment
relationships, and all the hard facts of industrial life.
And so the Board, in performing its delegated function of
defining and applying these terms, must bring to its task an
appreciation of economic realities, as well as a recognition of the
aims which Congress sought to achieve by this statute. This does not
mean that it should disregard the technical and traditional concepts of
“employee” and “employer.” But it is not confined to those
concepts. It is free to take account of the more relevant economic
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and statutory considerations. And a determination by the Board
based in whole or in part upon those considerations is entitled to
great respect by a reviewing court, due to the Board’s familiarity
with the problems and its experience in the administration of the Act.
Id. at 403-04. Applying these general precepts to the facts before it, the Court
concluded that jurisdiction was appropriate even though the military, an exempt
governmental entity, controlled many functions of the employment relationship.
According to the Court,
In this setting, it matters not that respondent was deprived of
some of the usual powers of an employer, such as the absolute power
to hire and fire the guards and the absolute power to control their
physical activities in the performance of their service. Those are
relevant but not exclusive indicia of an employer-employee
relationship under this statute. As we have seen, judgment as to the
existence of such a relationship for purposes of this Act must be
made with more than the common law concepts in mind. That
relationship may spring as readily from the power to determine the
wages and hours of another, coupled with the obligation to bear the
financial burden of those wages and the receipt of the benefits of the
hours worked, as from the absolute power to hire and fire or the
power to control all the activities of the worker. In other words,
where the conditions of the relation are such that the process of
collective bargaining may appropriately be utilized as contemplated
by the Act, the necessary relationship may be found to be present.
Id. at 413-14.
Consistent with E.C. Atkins, the Board’s decision to abandon the
governmental control test was made based on the “hard facts of [modern]
industrial life” and with reference to the question whether “the process of
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collective bargaining may appropriately be utilized as contemplated by the Act.”
Id. at 403, 414. As noted by the Board,
In retrospect, we think the emphasis in Res-Care on control of
economic terms and conditions was an over-simplification of the
bargaining process. While economic terms are certainly important
aspects of the employment relationship, they are not the only subjects
sought to be negotiated at the bargaining table. . . . In times of
downsizing, recession, low profits, or when economic growth is
uncertain or doubtful, economic gains at the bargaining table are
minimal at best. Here the focus of negotiations may be upon such
matters as job security, job classifications, employer flexibility in
assignments, employee involvement or participation and the like.
Management Training, 317 N.L.R.B. 1355, 1995 WL 451936, at *4; see also
Pikeville, 109 F.3d at 1153 (“In today’s labor market, the economic packages
offered to employees are no longer the sole prizes of a bargaining event.”). 15 We
find no support in E.C. Atkins for the proposition that the National
Transportation/Res-Care governmental control test is a prerequisite to the
Board’s exercise of jurisdiction under § 2(2).
15
For exactly these reasons, this court rejects Aramark’s claim that the
Board’s Management Training test constitutes an arbitrary and capricious exercise
of the Board’s jurisdiction. In particular, we agree with the Fourth Circuit that
for each policy argument advanced by employers in opposition to Management
Training, there is a corresponding policy argument in favor of the approach
offered by the Board. See Teledyne, 108 F.3d at 60. Congress left the resolution
of these policy disputes to the Board, not the courts. See Charles D. Bonanno
Linen Serv., Inc. v. NLRB, 454 U.S. 404, 418 (1982) (holding that courts must not
“substitute [their] judgment for those of the Board with respect to the issues that
Congress intended the Board should resolve”).
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As a final matter, Aramark contends that this court’s Memorial Hospital
line of cases, see supra note 2, was soundly decided and should guide our
resolution of this appeal. As set out at some length in the panel opinion, the
Memorial Hospital line clearly held that the governmental control test was a
jurisdictional element inherent in § 2(2) of the Act. See Aramark, 156 F.3d at
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1096-97. 16 For those reasons set out above, this court concludes that the
Memorial Hospital line of cases was wrongly decided.
Furthermore, as persuasively argued by the Board, we conclude that the
Memorial Hospital line is founded on a mistaken failure to distinguish between
the Board’s statutory and discretionary jurisdiction. The Board is bound by its
16
In its separate petition for rehearing en banc, the Unions argue that the
panel erred when it concluded that it was bound by the Memorial Hospital line.
According to the Unions, the panel should have applied a special rule of relaxed
stare decisis applicable only in the administrative law context. Under this special
rule, “where an agency has articulated a new statutory interpretation, that
interpretation should ordinarily be reviewed on its merits, even where the circuit
has previously applied a different construction of the statute.” Intervenor’s Pet.
for Reh’g at 5 (citing NLRB v. Viola Indus.-Elevator Div., Inc., 979 F.2d 1384,
1394 (10 th Cir. 1992) (en banc); Mesa Verde Constr. Co. v. Northern Cal. Dist.
Council of Laborers, 861 F.2d 1124, 1134-36 (9 th Cir. 1988) (en banc)).
Whatever the merits of such a special rule of administrative stare decisis, a
question we need not and do not resolve here, it is inapplicable given the
particular facts of this case. As the panel noted at some length, see Aramark, 156
F.3d at 1096-98 & n. 15, and as conceded by the Board in its petition for
rehearing en banc, the Memorial Hospital line of cases cannot reasonably be read
as merely deferring to the governmental control test as simply one of a series of
reasonable interpretations to which § 2(2) was susceptible. Instead, those
opinions squarely, though erroneously, hold that § 2(2) mandates the
governmental control test as a prerequisite to the Board’s statutory jurisdiction.
See, e.g., Memorial Hospital, 624 F.2d at 185 (holding that when a “private
employer who has contracted to provide services to an exempt political
subdivision does not retain sufficient control over the employment relationship to
engage in meaningful collective bargaining, § 2(2) deprives the Board of
jurisdiction”); R.W. Harmon, 664 F.2d at 251 (“Courts have interpreted section
2(2) to prohibit the Board from asserting jurisdiction over private employers . . .
if the employer does not ‘retain sufficient control over the employment
relationship to engage in meaningful collective bargaining.’” (quoting Memorial
Hospital, 624 F.2d at 185)).
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own rules until it changes them, “including the rules that it has adopted in order
to channel what would otherwise be an essentially unreviewable discretion in the
deployment of its limited prosecutorial resources.” Kemmerer Village, Inc. v.
NLRB, 907 F.2d 661, 663 (7 th Cir. 1990); see also Burinskas v. NLRB, 357 F.2d
822, 827 (D.C. Cir. 1966) (holding that Board cannot “act arbitrarily nor can it
treat similar situations in dissimilar ways”). Because it had embraced the
governmental control test for several decades prior to the advent of the Memorial
Hospital line, the Board had no reason to object to the applicability of the test in
any of the cases in that lineage. Accordingly, it appears that both the Board and
this court focused on the applicability of the test to the facts of each particular
case without repeatedly intoning the test’s discretionary and potentially transitory
nature. The result appears to have been a blurring of the distinction in this
court’s opinions.
For instance, in Memorial Hospital, the court held that “[t]he governmental
subdivision’s substantial control over the labor relations policies of the party
contracting with the governmental agency requires the Board to decline to
assert jurisdiction.” 624 F.2d at 185 (emphasis added). While the word
“requires” implies a lack of statutory jurisdiction, the term “decline to assert”
implies an act of discretion. Similarly, in R.W. Harmon, the court cast the
petitioner’s claim in discretionary terms (“Petitioner . . . argues that the Board
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should decline to exercise jurisdiction . . . .”), yet decided the case in terms of a
statutory-jurisdictional bar (“Courts have interpreted section 2(2) to prohibit the
Board from asserting jurisdiction . . . .”). 664 F.2d at 248 (emphasis added)
(citing Memorial Hospital). By the time Jefferson County was decided, this court
recognized a distinction between the Board’s discretionary and statutory
jurisdiction, but concluded that the distinction had been rendered meaningless by
the decision in Memorial Hospital. See Jefferson County, 732 F.2d at 126.
Whatever the genesis of the Memorial Hospital line, this court is convinced
that the entire pedigree is faulty. Accordingly, those portions of each decision in
the Memorial Hospital line, see supra note 2, inconsistent with this opinion are
hereby overruled.
IV. CONCLUSION
The orders of the Board are hereby ENFORCED. Aramark’s petition for
review is DENIED. Sections II.B. and III. of the panel opinion are VACATED.
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