Atrium of Princeton, LLC v. National Labor Relations Board

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Submitted December 6, 2011 Decided June 29, 2012
No. 10-1352
ATRIUM OF PRINCETON, LLC, PAVILIONS AT FORRESTAL,
PETITIONER
v.
NATIONAL LABOR RELATIONS BOARD,
RESPONDENT
Consolidated with 10-1408
On Petition for Review and Cross-Application
for Enforcement of an Order
of the National Labor Relations Board
David F. Jasinski was on the briefs for petitioner.
John H. Ferguson, Associate General Counsel, National
Labor Relations Board, Linda Dreeben, Deputy Associate
General Counsel, Robert J. Englehart, Supervisory Attorney,
and Steven B. Goldstein, Attorney were on the brief for
respondent.
Before: HENDERSON, Circuit Judge, and WILLIAMS and
GINSBURG, Senior Circuit Judges.
2
Opinion for the Court filed by Senior Circuit Judge
GINSBURG.
GINSBURG, Senior Circuit Judge: Atrium at Princeton
owns and operates the nursing home Pavilions at Forrestal.
The National Labor Relations Board held Atrium committed
various unfair labor practices in connection with its
negotiations for a new collective bargaining agreement (CBA)
with SEIU 1199 New Jersey Health Care Union. The Board
concluded Atrium did not bargain in good faith with the
Union because the parties were not at an impasse when
Atrium refused to bargain any further. We deny the
Employer’s petition for review and grant the Board’s cross-
application for enforcement.
I. Background
This is the last in a tetralogy* of related cases to come
before the court this term. Each case began with the Union
filing an unfair labor practice charge (refusal to bargain)
against a nursing home in New Jersey, and in each case the
employer defended itself on the ground that the parties had
reached an impasse in bargaining. Larry Alcoff was the
Union’s chief negotiator in all four cases and David Jasinski
was the chief negotiator for the employer in three of the four,
including this one. Jasinski has also served as appellate
counsel for the nursing home petitioners in each of the four
cases.
*
In Attic drama, a tetralogy was a series of four related plays —
three tragedies followed by a satyr-play. Like other modern
variants, such as Shakespeare’s Henriad, the present tetralogy does
not fit neatly into the classical taxonomy.
3
In each case the employer has argued the Union failed to
bargain in good faith because it patterned its bargaining
proposals in important respects after an agreement that had
been the basis for nearly identical CBAs the Union had
previously signed with some 20 other nursing homes in New
Jersey and it would not move meaningfully off the terms of
that agreement. The nursing homes all argued that, because
the pattern agreement contained a “most-favored nation”
clause, the Union directed its bargaining representatives not to
deviate from the terms of that agreement in making proposals
to other nursing homes in New Jersey. Accordingly, each
employer claimed it was justified in declaring an impasse,
refusing to bargain further with the Union, and implementing
its last, best offer.
In Wayneview Care Center v. NLRB, 664 F.3d 341, 348–
50 (D.C. Cir. 2011), and Monmouth Care Center v. NLRB,
672 F.3d 1085, 1091–92 (D.C. Cir. 2012), we held substantial
evidence supported the Board’s finding the parties had not
reached an impasse in bargaining because in each case the
Union had made substantial concessions departing from its
initial bargaining position based upon the pattern agreement.
In Laurel Bay Health & Rehabilitation Center v. NLRB, 666
F.3d 1365, 1376–77 (D.C. Cir. 2012), by contrast, we held the
Union’s professions of flexibility did not preclude the
employer’s declaring an impasse because the objective
evidence showed the Union maintained a fixed bargaining
position tied to the pattern agreement. In the present case, the
dispute turns not upon whether the parties reached an impasse
but upon whether later events broke any impasse they may
have reached.
Atrium’s predecessor in ownership of the nursing home
met and bargained with the Union on numerous occasions in
2005. By mid-year the parties had reached or neared
4
agreement on many subjects but were essentially deadlocked
over the rate at which the Employer would contribute to the
Greater New York Benefit Fund, an employee benefit fund
(EBF) that provided health benefits to the employees. Under
their prior CBA, the nursing home had contributed to the
Fund at the rate of about 13 percent of its gross payroll but the
Union proposed that the Employer increase the rate to 22.33
percent, as provided in the pattern agreement. The Employer
proposed keeping its contribution at roughly the rate it had
paid under the prior agreement. In August the Employer
made what it claimed was its “final, last and best offer,”
which included an increase in the proposed contribution to a
rate of 16 percent of its gross payroll. The Union, however,
continued to insist upon 22.33 percent.
After that meeting, Jasinski declared the parties were at
an impasse and the Employer was therefore relieved of any
further obligation to meet and to bargain with the Union.
Subsequent events, however, complicated the situation. In
December 2005, Atrium at Princeton bought the nursing
home and retained Jasinski as the Employer’s chief
negotiator. Around that time the Union discovered the Fund
had cancelled the employees’ health benefits on December 1
because Atrium’s predecessor had been delinquent in its in
payments. In January 2006, the Union also learned Atrium
had implemented a replacement health care plan for its
employees without informing the Union. Alcoff then asked
for information about the new health plan and proposed to
meet with the Employer on any of several specific dates.
Jasinski did not respond to the Union’s request for
information and refused all but one of Alcoff’s numerous
requests for meetings on the ground the Union’s bargaining
position was “unyielding” and the parties were at an impasse.
(The two men did schedule one meeting in 2006, but Alcoff
cancelled it because he was busy with an internal Union
5
election, and Jasinski refused to agree to any additional
meeting.)
The Union filed charges with the Board alleging Atrium
and its predecessor had committed various unfair labor
practices, and in December 2006 the Board’s General Counsel
filed a complaint against both Atrium and its predecessor. An
Administrative Law Judge held a hearing and concluded both
Atrium and its predecessor had violated the National Labor
Relations Act, in Atrium’s case by refusing to meet and to
bargain with the Union, refusing to comply with the Union’s
requests for information relevant to bargaining, and making
various unilateral changes to the terms and conditions of
employment, including implementing a new health plan. The
ALJ rejected Atrium’s defense that the Fund had acted as the
Union’s agent in cancelling the employees’ health plan,
thereby allegedly justifying the Employer’s unilateral
implementation of a replacement plan. The ALJ also rejected
Atrium’s defense that the parties had reached an impasse in
bargaining. Although he found “all the elements of a genuine
impasse in bargaining were in place” as of December 2005,
Atrium at Princeton, LLC, 353 N.L.R.B. 540, 561 (2008)
(ALJ Op.), he held the Employer’s failure to comply with the
Union’s requests for relevant information precluded its
declaring an impasse.
The Board affirmed the ALJ’s decision but found it
“unnecessary to decide whether the parties had reached a
genuine impasse in their negotiations” because the Fund’s
“cancellation of the existing health insurance plan and the
necessity of [the Employer’s] obtaining alternate coverage
changed the backdrop of negotiations and created the
possibility of productive bargaining,” thereby breaking any
impasse that may have existed. Id. at 541 (Board Op.). Had
Atrium given the Union “notice and an opportunity to bargain
6
prior to implementing the new health insurance plan and/or”
responded to related information requests, “it may have led to
informed bargaining and an earlier offer by the Union to
consider alternate plans.” Id. Therefore, an “impasse, if any,
no longer existed on January 19, 2006, when the Union
requested information and demanded bargaining concerning
the new plan.” Id. *
II. Analysis
Atrium petitions for review of the Board’s order holding
it violated §§ 8(a)(1) and (5) of the NLRA, 29 U.S.C. §§
158(a)(1) & (5). Rather than seriously contesting the factual
underpinnings for the prima facie case against it, however, the
Employer primarily relies upon two affirmative legal
defenses. First, it contends the Union caused the Fund to
cancel the health plan in order to force the Employer to
accede to the Union’s bargaining demands, thereby justifying
the Employer’s unilaterally implementing a replacement
healthcare plan. Second, it argues the Board erred in finding
any impasse in bargaining had been broken, and the
continuing impasse relieved it of the duty to bargain with the
Union and to provide the Union with information regarding
the new healthcare plan.
*
After the Supreme Court held a decision by a two-member panel
of the Board is invalid, New Process Steel, L.P. v. NLRB, 130 S. Ct.
2635 (2010), we vacated the Board’s order and remanded this case
for further proceedings before a lawfully constituted panel, Atrium
at Princeton, LLC v. NLRB, Nos. 08-1399 & 09-1043, 2010 WL
6428501 (D.C. Cir. Sept. 20, 2010). A three-member panel of the
Board then issued a new decision, substantially incorporating the
decision previously adopted by the two members. Atrium at
Princeton, 356 N.L.R.B. No. 6, 2010 WL 4318370 (Oct. 22, 2010).
7
A. Was the Fund acting as the Union’s agent?
The Employer contends the Board lacked substantial
evidence for its conclusion the Union was not responsible for
the Fund’s cancellation of the Employer’s health benefits plan
because the Union dominated the Fund and caused the Fund
to cancel the employees’ health benefits in the hope of forcing
the Employer to accept the Union’s bargaining demands. The
Board responds the Employer provided insufficient evidence
to show the Fund acted as the Union’s agent.
The NLRA does not provide much guidance on the
application of agency law. Section 2(13) of the NLRA simply
provides: “In determining whether any person is acting as an
‘agent’ of another person so as to make such other person
responsible for his acts, the question of whether the specific
acts performed were actually authorized or subsequently
ratified shall not be controlling.” 29 U.S.C. § 152(13). This
provision incorporates into the NLRA the “ordinary common
law rules of agency.” Int’l Longshoremen’s Ass’n, AFL-CIO
v. NLRB, 56 F.3d 205, 212 (D.C. Cir. 1995) (internal
quotation marks and citation omitted). Because the Congress
“did not delegate to the Board the power to interpret [this]
section,” Overnite Transp. Co. v. NLRB, 140 F.3d 259, 265
(D.C. Cir. 1998), we do not defer to the Board’s application
of agency principles, though we would give “due weight to
the Board’s judgment to the extent that it made a choice
between two fairly conflicting views,” Int’l Longshoremen’s
Ass’n, 56 F.3d at 212 (internal quotation marks and citation
omitted). And, of course, to the extent “an agency
relationship is a factual matter,” we must uphold the Board’s
finding if it is supported by substantial evidence on the record
considered as a whole. Garvey Marine, Inc. v. NLRB, 245
F.3d 819, 824 (D.C. Cir. 2001) (internal quotation marks and
citation omitted).
8
Ordinarily “an agency relationship arises only where the
principal ‘has the right to control the conduct of the agent
with respect to matters entrusted to [the agent],’” Int’l
Longshoremen’s Ass’n, 56 F.3d at 213 (quoting
RESTATEMENT (SECOND) OF AGENCY § 14 (1958)). The same
rule applies when determining whether a trustee is an agent.
RESTATEMENT (THIRD) OF AGENCY § 1.04(10) (2006)
(denominating “a trustee subject to the control of the settlor or
of one or more beneficiaries” an “agent-trustee”). Moreover,
“[t]he party asserting that a relationship of agency exists
generally has the burden in litigation of establishing its
existence”). RESTATEMENT (THIRD) OF AGENCY § 1.02 cmt. d
(2006). In applying these principles we must, however, be
“sensitiv[e] to the particular circumstances of industrial labor
relations.” Local 1814, Int’l Longshoremen’s Ass’n v. NLRB,
735 F.2d 1384, 1394 (D.C. Cir. 1984). No case in this Circuit
has considered whether an EBF acted as an agent either of an
employer or of a union.
In rejecting Atrium’s defense that the Fund acted as the
Union’s agent, the ALJ distinguished Service Employees
Local 1-J, see 353 N.L.R.B. at 563 (citing 273 N.L.R.B. 929(1984)), in which the Board said it would attribute to the
union an act of the trustees of an EBF if that act was “directed
by union officials” or “undertaken in their capacities as union
officials rather than as trustees,” or if the CBA limited the
trustees’ “discretion to administer the funds solely for the
benefit of the employees,” 273 N.L.R.B. at 931 (incorporating
standard from Griffith Co. v. NLRB, 660 F.2d 406, 410 (9th
Cir. 1981)). To the extent that case held a finding of control
was a sufficient condition to establish an agency relationship
between a union and an EBF, however, it is in tension with
the Supreme Court’s decision in NLRB v. Amax Coal Co., 453
U.S. 322, 334 (1981): “[A]n employee benefit fund trustee is
9
a fiduciary whose duty to the trust beneficiaries must
overcome any loyalty to the interest of the party that
appointed him.” As the Second Circuit reads this case, and
we agree, EBF “trustees acting within their authority cannot,
as a matter of law, be considered union agents”; the trustees
are agents of the union only if they are “violating their
fiduciary duty as Fund trustees, and doing so to further the
collective bargaining aims of the Union.” NLRB v. Local 449,
Int’l Bhd. of Teamsters, 728 F.2d 80, 87 (2d Cir. 1984); cf.
also Hearn v. McKay, 603 F.3d 897, 902 (11th Cir. 2010)
(“The Supreme Court has been explicit about the undivided
nature of an ERISA trustee’s role and duties”); NLRB v.
Constr. & Gen. Laborers’ Union Local 1140, 887 F.2d 868,
871 (8th Cir. 1989) (“Amax Coal relieves [respondent] of any
obligation as a Fund Trustee to the Union that appointed
him”); NLRB v. Driver Salesmen Local 582, 670 F.2d 855,
858 (9th Cir. 1982) (“[T]rustees ... [must] be independent
[both] of the union [and of] the employer”). But see Griffith
Co., 660 F.2d at 410–11 (attributing act of trustees to union
based upon either factual or legal control over trust without
considering whether trustees violated fiduciary duty to
beneficiaries).
Taken together, these cases suggest a two-step analysis:
In order to show an EBF acted as an agent of the union, the
employer (or the Board, as the case may be) must establish:
(1) the union exercised control over the fund, and (2) the
trustees of the fund served the interests of the union in breach
of their fiduciary duty to the employee beneficiaries. The
proponent may prove control either generally or with regard
to a specific material act. Control may arise from the union
pressuring the employer-nominated trustees, see Teamsters,
728 F.2d at 88, or out of a contract, for example, where the
CBA denies the trustees “the discretion to administer the
10
funds solely for the benefit of the employees,” Griffith, 660
F.2d at 410.
Applying this test, we conclude the Board did not err in
finding the Fund was not, as Atrium contends, an agent of the
Union when it cancelled the employees’ health benefits; the
evidence the Employer offers is not nearly sufficient to meet
its burden at either step in the analysis. As to control, Atrium
first points to what it says is the undisputed testimony of its
chief negotiator and appellate counsel that there were more
union trustees than employer trustees of the Fund. In fact,
however, his testimony was directly contradicted by that of
Odette Machado, a former official of the Union, as well as by
the ALJ’s finding “[o]ne half of trustees are designated by the
Employers and one half are designated by the Union,” 353
N.L.R.B. at 556; see also Laurel Bay, 666 F.3d at 1368 n.3.
The other evidence Atrium offers fails even to suggest
the Union controlled the Fund. For example, that none of the
employer-nominated trustees was nominated by an employer
located in New Jersey speaks not at all to the Union’s control
of the Fund. That the president of the Union is also a trustee
of the Fund is neither surprising nor troubling in a system
where the unions that establish a fund and the employers that
contribute to it each pick half the trustees. See Atrium at
Princeton, 353 N.L.R.B. at 556. Finally, that several
employees of the Fund worked for a time in the offices of the
Union hardly evidences the Union’s control of the Fund
because, as the ALJ found, the Fund was then merely renting
office space from the Union. Id. at 562.
As to the interest the Fund served, there is likewise little
evidence to suggest the Fund pursued the Union’s interests
rather than those of the employee beneficiaries. The Union’s
direction to its staff to contact Atrium whenever it was behind
11
in its payments to the Fund may show the Union and the Fund
had a common interest in employers keeping their employees’
benefits fully funded, but there is no legal significance to such
a confluence of interests so long as the Fund does not disserve
the interests of the beneficiaries. The Employer also argues
the Fund was acting for the Union because the Fund cancelled
the employees’ health benefits even though its predecessor
had liquidated all of its delinquency by making a payment of
$240,100 in September 2005. The ALJ, however, found, and
the Employer conceded, it was $350,000 in arrears at the time
of that payment, 353 N.L.R.B. at 549–50; so far as the record
shows, therefore, the Employer was still $109,900 behind in
its payments when the Fund cancelled the employees’ health
benefits. In short, the Fund had a legitimate reason to cancel
the benefits and, in any event, the Employer has not proven
the Union caused the cancellation.
B. Did the lapse in health coverage break any impasse?
Atrium maintains the parties had reached an impasse that
persisted throughout the period during which it refused to
bargain with the Union. Therefore, it suggests the Board
erred in concluding Atrium violated the NLRA by refusing to
meet and to bargain with the Union, by refusing to provide the
Union with relevant information, and by making various
changes to the terms and conditions of employment.
The parties to an expired collective bargaining agreement
have a duty to bargain in good faith for a new agreement but
they are not required to reach an agreement; “when good faith
negotiations have exhausted the prospects of concluding an
agreement,” the parties have reached an impasse, TruServ
Corp. v. NLRB, 254 F.3d 1105, 1114 (D.C. Cir. 2001)
(internal quotation marks and citation omitted), which
“temporarily suspends the duty to bargain,” Serramonte
12
Oldsmobile, Inc. v. NLRB, 86 F.3d 227, 232 (D.C. Cir. 1996).
An impasse therefore relieves “the employer[] [of its]
statutory duty to maintain the status quo during postcontract
negotiations .... The employer then may make unilateral
changes that are reasonably comprehended within [its]
preimpasse proposals.” Mail Contractors of America v.
NLRB, 514 F.3d 27, 31–32 (D.C. Cir. 2008) (internal
quotation marks, citations, and alteration omitted).
An impasse lasts until there are “changed circumstances
sufficient to suggest that future bargaining would be fruitful.”
Serramonte, 86 F.3d at 233 (emphasis omitted). The changed
circumstance may be brought about by a party’s change of
mind, Charles D. Bonanno Linen Service, Inc. v. NLRB, 454
U.S. 404, 412 (1982), by the application of economic force,
such as a strike or the employer’s unilateral implementation
of its final offer, see id.; Mail Contractors of America, 514
F.3d at 31–32, or by any other event that “alter[s] the
economic calculus of one of the sides,” NLRB v. McClatchy
Newspapers, Inc., 964 F.2d 1153, 1173 (D.C. Cir. 1992)
(Edwards, J., concurring).
Atrium, citing Serramonte, 86 F.3d at 233, first contends
the Board erred in finding any impasse in this case was
broken because the Union merely professed its flexibility
without making a new, concrete proposal. The Board,
however, did not find the impasse had been broken because
the Union changed its mind. Rather, the Board reasoned the
Fund’s “cancellation of the existing health insurance plan and
the necessity of obtaining alternate coverage changed the
backdrop of negotiations and created the possibility of
productive bargaining.” * 353 N.L.R.B. at 541.
*
The Board also argues in its brief that any impasse was broken by
the change in the ownership of the nursing home in December
13
We conclude the Board reasonably determined the
cancellation of the health plan broke any impasse. Atrium’s
non-payment and the resulting cancellation “alter[ed] the
economic calculus” of the Union, McClatchy Newspapers,
964 F.2d at 1173, by signaling a dramatically reduced
likelihood the Union could convince the Employer to
contribute significantly more to the Fund than it had offered,
much less the 22.33 percent the Union had repeatedly
demanded. Indeed, the cancellation led the Union to ask for
information about the replacement health plan Atrium had
implemented and eventually to tell the Employer it was
willing to consider plans other than the one offered by the
Fund. Because the principal issue in dispute between the
parties was the rate at which the Employer would contribute
to the Fund, the changed circumstance that led the Union to
consider other health plans was sufficient “to suggest that
future bargaining would be fruitful” and thereby to break any
impasse. The Employer, therefore, is left with no defense to
the Board’s conclusions it violated the NLRA by refusing to
meet and to bargain with the Union, by refusing to provide
2005. A majority of the Board, however, purposefully declined to
adopt that rationale, the Board’s only mention of which was to say
“Member Becker would also [unlike the majority, that is] find that
any impasse was broken by the imposition of a duty to bargain on a
new employer ....” Atrium at Princeton, 356 N.L.R.B. No. 6, 2010
WL 4318370, at *1 n.3. This argument, as counsel for the Board
surely knows, is foreclosed by the principle established in SEC v.
Chenery Corp., 318 U.S. 80, 88 (1943) (because “an order [of an
agency] is valid only as a determination of policy or judgment
which the agency alone is authorized to make and which it has not
made, a judicial judgment cannot be made to do service for an
administrative judgment”).
14
relevant information to the Union, and by unilaterally
implementing the replacement health plan. *
III. Conclusion
We conclude substantial evidence supports the Board’s
findings that the Union was not responsible for the Fund’s
cancellation of the employees’ health benefits and that the
cancellation broke any impasse in bargaining. For that
reason, and because the other defenses Atrium offers lack
merit, we hold Atrium violated §§ 8(a)(1) and (5) of the
NLRA by refusing to meet and to bargain with the Union,
refusing to comply with the Union’s information requests, and
making various unilateral changes to the terms and conditions
of employment. We therefore deny Atrium’s petition for
review and grant the Board’s cross-application for
enforcement of its order.
So ordered.
*
We reject Atrium’s last-ditch argument that even the Fund’s
cancellation of the health plan would not have led to productive
bargaining, had the Employer sought renewed negotiations, because
the cancellation was caused by the Union having acted in bad faith,
i.e., to pressure the Employer. As we have explained above, the
Employer failed to establish its premise that the Union is
responsible for the cancellation. The Employer’s arguments that it
did not violate the Act by cancelling an incentive pay program for
certain nurses and by limiting the Union’s right of access to nursing
home facilities do not warrant treatment in a published opinion.
Finally, insofar as Atrium seeks review of the Board’s holding that
its predecessor violated the Act by dealing directly with employees,
the issue is not properly before the court because the predecessor
did not petition for review.