Teledyne Economic v. NLRB

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
TELEDYNE ECONOMIC DEVELOPMENT,
Petitioner,
v. No. 96-1630
NATIONAL LABOR RELATIONS BOARD,
Respondent.
NATIONAL LABOR RELATIONS BOARD,
Petitioner,
v. No. 96-1790
TELEDYNE ECONOMIC DEVELOPMENT,
Respondent.
On Petition for Review and Cross-Application
for Enforcement of an Order
of the National Labor Relations Board.
(6-CA-27849, 6-RC-11227, 6-RC-11230)
Argued: January 29, 1997
Decided: March 6, 1997
Before WILKINSON, Chief Judge, ERVIN, Circuit Judge, and
HILTON, United States District Judge for the Eastern District of
Virginia, sitting by designation.
_________________________________________________________________
Enforced by published opinion. Chief Judge Wilkinson wrote the
opinion, in which Judge Ervin and Judge Hilton joined.
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COUNSEL
ARGUED: Robert B. Cottington, REED, SMITH, SHAW &
MCCLAY, Pittsburgh, Pennsylvania, for Teledyne. Richard A.
Cohen, NATIONAL LABOR RELATIONS BOARD, Washington,
D.C., for NLRB. ON BRIEF: Peter D. Post, REED, SMITH, SHAW
& MCCLAY, Pittsburgh, Pennsylvania, for Teledyne. Frederick L.
Feinstein, General Counsel, Linda Sher, Associate General Counsel,
Aileen A. Armstrong, Deputy Associate General Counsel, NATION-
AL LABOR RELATIONS BOARD, Washington, D.C., for NLRB.
_________________________________________________________________
OPINION
WILKINSON, Chief Judge:
This case presents the question of whether the National Labor
Relations Board may assert jurisdiction over a private employer
whose relationship with its employees is the subject of extensive reg-
ulation through a government contract. Teledyne Economic Develop-
ment challenges an NLRB order requiring Teledyne to bargain with
a union representing two groups of Teledyne employees at a Job
Corps Center. Teledyne argues that the extensive control exercised by
the Department of Labor over the terms and conditions of employ-
ment at the Center prohibits the Board from exercising jurisdiction
over Teledyne in this case. The plain language of the Act, however,
grants the Board the discretion to assert jurisdiction. See 29 U.S.C.
§§ 152(2) & 164(c)(1). Accordingly, we enforce the order of the
Board in this case.
I.
Teledyne Economic Development ("Teledyne") operates a Job
Corps Center in Pittsburgh, Pennsylvania pursuant to a contract with
the United States Department of Labor ("DOL"). The Center's statu-
tory purpose is to train severely disadvantaged youths between the
ages of 16 and 24 in order to provide them with the skills to find
meaningful employment.
2
Teledyne has operated the Center since its opening in 1971 under
a series of competitively bid contracts with the DOL. Under the most
recent contract, Teledyne may not increase reimbursable line-item
expenses by more than three percent per year. That limit applies to
aggregate employee salaries and wages. Additionally, Teledyne may
not increase any individual employee's wages by more than 9.9 per-
cent in any year. Within these limits, Teledyne is free to act without
DOL approval or input. However, if Teledyne exceeds these limits
without DOL approval, it will not be reimbursed. Although Teledyne
constructed its own fringe benefits package, the benefit costs had to
be approved by the DOL for Teledyne to be reimbursed. In addition,
personnel policies must be approved by the DOL, and, once
approved, cannot be changed without further DOL approval. Tele-
dyne must also submit any new personnel policies or procedures to
the DOL for approval before they may be implemented.
On August 7, 1995, the Service Personnel and Employees of the
Dairy Industry, Teamsters Local Union No. 205 ("the Union") filed
a petition with the NLRB's Pittsburgh Regional Office seeking to rep-
resent the instructors and counselors employed by Teledyne at the
Center. On August 18, 1995, the Union filed a second petition seeking
to represent the Center's licensed practical nurses. Teledyne argued
that the Board could not assert jurisdiction over Teledyne's operations
because the DOL exercised extensive control over personnel and
labor relations matters.
The Board's Regional Director issued a Decision and Direction of
Election in which he rejected Teledyne's argument, noting that it was
no longer the Board's policy to decline the exercise of its statutory
jurisdiction based on the considerations raised by Teledyne. Teledyne
requested an appeal, which the Board denied on October 5, 1995.
Elections took place among the employees in each of the two units
on October 6, 1995. A majority of each unit's employees cast ballots
in favor of union representation. Accordingly, the Board certified the
Union as the exclusive collective-bargaining representative of Tele-
dyne's instructors and counselors and its licensed practical nurses.
Following the certifications, Teledyne refused the Union's requests
for recognition and bargaining. The Union filed an unfair labor prac-
3
tice charge, and the Board's General Counsel issued a complaint,
alleging that Teledyne's refusals to bargain violated sections 8(a)(5)
and (1) of the National Labor Relations Act, 28 U.S.C. § 158(a)(5)
and (1). Teledyne disputed the validity of the underlying union certifi-
cations. The Board issued an order requiring Teledyne to cease and
desist from refusing to bargain with the Union. Teledyne filed a peti-
tion for review to this court, and the Board filed a cross-application
for enforcement.
II.
Teledyne asserts that it is exempt from coverage by section 2(2) of
the National Labor Relations Act. That section exempts from the
Act's provisions "the United States or any wholly owned Government
corporation, . . . or any State or political subdivisions thereof." 29
U.S.C. § 152(2). Prior to 1995, the Board had extended this exemp-
tion to private employers providing services for exempt governmental
entities where the exempt entity exercised effective control of the pri-
mary terms of employment. See Res Care, Inc., 280 N.L.R.B. 670
(1986).
In Management Training Corp., 317 N.L.R.B. 1355 (1995), the Board
declared it would no longer apply the Res Care governmental control
test. The Board explained that instead, when election petitions involv-
ing private employers who were arguably controlled by exempt enti-
ties were filed, it would exercise its statutory jurisdiction to the fullest
extent possible. Accordingly, it would thereafter"only consider
whether the employer meets the definition of ``employer' under Sec-
tion 2(2) of the Act and whether such employer meets the applicable
monetary jurisdictional standards." Id. at 1358-59. Teledyne pos-
sesses the authority to hire, fire, direct, and discipline its employees
in accordance with its formulated policies. As a statutory employer,
see 29 U.S.C. § 152(2), Teledyne fell within the Board's jurisdiction
under the Management Training rule.
A.
Teledyne first contends that the Board is bound by section 2(2) of
the NLRA to extend the governmental exemption to private employ-
ers where an exempt governmental entity effectively controls the
4
basic terms of employment. We reserved this issue in ARA Services,
Inc. v. NLRB, 71 F.3d 129, 136 (4th Cir. 1995), noting that "there
exists a question as to the [Management Training rule's] statutory
validity."1 We now resolve that question, holding that the
Management Training rule is a valid exercise of the Board's discre-
tion under the plain language of the NLRA.
We begin our review with the actual language of the exemption in
section 2(2) of the NLRA. If a statute's meaning is plain, courts and
agencies "must give effect to the unambiguously expressed intent of
Congress." Chevron U.S.A., Inc. v. National Resources Defense
Council, Inc., 467 U.S. 837, 843 (1984). Section 2(2) of the NLRA
exempts from its coverage, and from the Board's jurisdiction, "the
United States or any wholly owned Government corporation, . . . or
any State or political subdivisions thereof." 29 U.S.C. § 152(2).
There is nothing ambiguous about this language. By its terms, sec-
tion 2(2) exempts only government entities or wholly owned govern-
ment 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 gov-
ernmental entities from the Act.
Congress permitted the Board to exercise broad discretion in decid-
ing whether to exercise its statutory jurisdiction. Section 14(c)(1) of
the NLRA provides that the Board, in its discretion, may decline to
assert jurisdiction over "any class or category of employers, where, in
the opinion of the Board, the effect . . . on commerce is not suffi-
ciently substantial to warrant the exercise of its jurisdiction." 29
U.S.C. § 164(c)(1). Where, as in this case, the Board chooses to assert
_________________________________________________________________
1 In ARA Services, we did not address the statutory validity of the
Management Training rule. We held, however, that"the retroactive
application of the Management Training rule would be manifestly
unjust." ARA Services, 71 F.3d at 135.
5
its jurisdiction rather than recognizing an exemption not compelled by
section 2(2), the Board is within its authority. 2
Other courts have recognized that the Res Care governmental con-
trol test which the Board applied prior to the adoption of Management
Training was an exercise of the Board's discretion. In NLRB v. Kem-
merer Village, Inc., 907 F.2d 661, 663 (7th Cir. 1990), the Seventh
Circuit noted that the Res Care control test was "a reasonable system-
atization of the Board's inherent discretion to allocate its limited
resources efficiently." Furthermore, Kemmerer emphasized that the
Res Care rule was not "a rule of law" but rather was a "discretionary
doctrine." Id. at 664; see also Human Development Assoc. v. NLRB,
937 F.2d 657, 660 (D.C. Cir. 1991). But see Board of Trustees of
Memorial Hospital v. NLRB, 624 F.2d 177, 185 (10th Cir. 1980);
NLRB v. Pope Maintenance Corp., 573 F.2d 898, 902 (5th Cir. 1978).
So too is the Management Training statutory employer rule a dis-
cretionary doctrine. There is nothing to prevent the Board from
returning to the Res Care rule, or any other rule which is a rational
exercise of the Board's discretion under the NLRA. We merely hold
that the Management Training rule is a permissible exercise of the
Board's jurisdiction under the plain language of the NLRA -- not that
the rule is required by the terms of that statute.
Teledyne's argument that it should share the DOL's exemption
from the NLRA's coverage because Teledyne acts as a"joint
employer" with the DOL must also fail. The Management Training
rule expressly disavowed consideration of the degree of control an
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2 Teledyne relies on NLRB v. E.C. Atkins & Co., 331 U.S. 398 (1947),
for the proposition that the degree of control exercised by an exempt
entity over the terms and conditions of employment of a non-exempt
entity's employees limits the Board's jurisdiction. The Supreme Court,
however, prescribed no such strict rule, but rather emphasized that the
Board has considerable discretion in deciding whether to exercise juris-
diction over non-exempt private entities. Id . at 403. Indeed, the Court
went on to hold that the employer in that case was obligated to bargain
with the union despite the fact that the military reserved the right to veto
the hiring or firing of the plant guards represented by the union. Id. at
407.
6
exempt entity exerts over the employment relations of a private entity.
The cases upon which Teledyne relies for its proposed "joint
employer" doctrine are merely applications of the Board's then-
operative governmental control test. See, e.g., Lutheran Welfare Ser-
vices v. NLRB, 607 F.2d 777, 778 (7th Cir. 1979). We have already
found the Board's decision to abandon the control test valid under the
plain language of the NLRA. Therefore, under Management Training,
Teledyne's joint-employer argument has lost whatever relevance it
may once have had.
B.
Teledyne further contends that even if the Management Training
rule fits within the language of the NLRA, we should strike down the
rule because it is inconsistent with the policies behind the NLRA.
Teledyne maintains that the Management Training rule violates the
purposes of collective bargaining because the omnipresent possibility
of a DOL veto forecloses "effective" bargaining over the terms and
conditions of employment. Teledyne argues that, due to the DOL's
veto power, it could function only as a middleman between the Union
and the DOL. Furthermore, Teledyne raises the possibility that the
Union might call a strike if the DOL refused to approve its contract
demands. In such a situation, Teledyne argues it would be unable to
end the strike because it lacks the authority to institute changes to the
terms and conditions of employment without DOL approval. Lastly,
Teledyne asserts that union contract demands might lead to the termi-
nation of Teledyne's contract with the DOL if the DOL is unwilling
to accept the Union's demands when the contract comes up for
renewal.
The Board responds with its own salvo of policy arguments in sup-
port of the Management Training rule. First, the Board argues that if
it declined to exercise jurisdiction over employers like Teledyne, it
would be consigning the employees of such employers to a no-man's
land where they would not be covered by any labor relations statute.
Second, the Board disputes Teledyne's claim that it will be unable to
engage in "meaningful" bargaining. The Board contends that Tele-
dyne's claim is speculative because it has yet to attempt bargaining;
that Teledyne could bargain effectively simply by notifying the Union
of the possibility of a DOL veto; and that Teledyne could readily
7
implement agreed-upon terms which the DOL did not disapprove.
Third, the Board argues that Management Training represents a bright
line rule which is more easily applied than the case-by-case approach
of the Res Care governmental control test. Lastly, the Board dis-
misses as meritless Teledyne's argument that union demands might
cause Teledyne to lose its contract with the DOL. The Board argues
that Teledyne is situated no differently than the thousands of private
employers who have to take account of the economic pressures of col-
lective bargaining.
In the end, these arguments do not indicate that the Board's
Management Training rule is irrational or inconsistent with the
NLRA. They merely demonstrate that there are policy arguments on
both sides of the issue. It is not for the courts, however, to use such
arguments to amend Congress' clear statutory mandate from the
bench. Whatever reservations we might have about the Management
Training rule, Congress has left this particular judgment to the
Board's discretion. And, as the Supreme Court has made clear, we are
not to "substitute our judgment for those of the Board with respect to
the issues Congress intended the Board to resolve." Charles D. Bon-
nano Linen Services v. NLRB, 454 U.S. 404, 418 (1982).
If Teledyne wishes to press for the amendment of section 2(2), it
must present its case to Congress. If it fails in that forum, Teledyne
must persuade the Board to decline to exercise its jurisdiction under
section 14(c)(1) of the NLRA. This court, however, is charged with
interpreting statutes, not rewriting them. If we were to adopt Tele-
dyne's position, we would be adding to the exemption in section 2(2)
entities which Congress did not place there. The petition for review
must therefore be denied and the order of the Board enforced.
ENFORCED
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