335 F.3d 1079 (D.C. Cir. 2002), 01-1432, Community Hospitals of Central California v. N.L.R.B.

Docket Nº:01-1432
Citation:335 F.3d 1079
Party Name:Community Hospitals of Central California v. N.L.R.B.
Case Date:July 09, 2002
Court:United States Courts of Appeals, Court of Appeals for the District of Columbia Circuit

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335 F.3d 1079 (D.C. Cir. 2002)

COMMUNITY HOSPITALS OF CENTRAL CALIFORNIA, d/b/a University Medical Center, Petitioner,




No. 01-1432.

United States Court of Appeals, District of Columbia Circuit

July 9, 2002.

Argued Dec. 9, 2002.

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[Copyrighted Material Omitted]

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On Petition for Review and Cross-Application for Enforcement of an Order of the National Labor Relations Board.

G. Roger King argued the cause for petitioner. With him on the brief was Daniel H. Bromberg.

James M. Oleske, Jr., Attorney, National Labor Relations Board, argued the cause for respondent. With him on the brief were Arthur F. Rosenfeld, General Counsel, John H. Ferguson, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and David Habenstreit, Supervisory Attorney. Anne M. Lofaso, Attorney, entered an appearance.

Before: GINSBURG, Chief Judge, and ROGERS and TATEL, Circuit Judges.

GINSBURG, Chief Judge:

A union representing nurses charged the new owner of a hospital with an unfair labor practice when it refused to recognize and to bargain with the union. The National Labor Relations Board held the new owner was a successor employer, the nurses at the hospital constituted an appropriate bargaining unit, and the employer, in declining to deal with the union, did not rely upon a good-faith reasonable doubt about the union's majority status. The Board also held certain provisions of the employer's handbook for employees likely to chill protected activity and therefore unlawful. We uphold the decision of the Board and grant its application for enforcement with respect to all matters except the employee handbook, as to which we grant the employer's petition for review.

I. Background

For some years Community Hospitals of Central California (Community), a private non-profit company, operated two hospitals in the Fresno, California area, while the County of Fresno operated Valley Medical Center (VMC) and other medical facilities in the County. Nurses working at VMC were the majority of bargaining Unit 7, which included nurses at other facilities operated by the County. Unit 7 was represented by the California Nurses Association (CNA or the Union) for more than 20 years.

In October 1996 Community acquired VMC and renamed it University Medical Center (UMC). In connection with the acquisition, Community instituted various changes at UMC. In brief, Community

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consolidated many administrative and support services with those of its other hospital facilities, and by its own account "replaced VMC's traditional, hierarchical facility-based management model with a flattened, service-based system-wide 'shared governance' management structure." Community also allowed nurses to transfer between UMC and its other facilities.

In August 1996, when it was becoming apparent that Community might acquire VMC, the Union demanded that Community recognize and bargain with it. Community acknowledged receipt of the demand, but refused to recognize or to bargain with the Union. The Union filed an unfair labor practice charge and the General Counsel issued a complaint alleging that Community had violated § 8(a)(5) of the National Labor Relations Act, 29 U.S.C. § 158(a)(5). The Regional Director on his own initiative added an allegation that the maintenance of certain provisions in Community's employee handbook was an unfair labor practice in violation of § 8(a)(1) of the Act.

An Administrative Law Judge held (1) Community was a successor employer to the County, contrary to Community's argument that there was not "substantial continuity" between VMC and UMC; (2) the Unit 7 nurses at UMC constituted an appropriate bargaining unit, notwithstanding Community's argument that the Unit 7 nurses at UMC shared a community of interest with the nurses at its other hospitals; and (3) in failing to recognize the Union, Community did not have or rely upon a good-faith reasonable doubt regarding the Union's majority status. Cmty. Hosps. of Cent. Cal., 335 N.L.R.B. No. 87, at 15-24, 2001 WL 1158836 (2001) (Order). The ALJ also held that (4) Community's handbook violated the Act, as alleged. Id. at 24-25. The Board affirmed and substantially adopted the findings and decision of the ALJ, [*] id. at 1-6, over Chairman Hurtgen's dissent with regard to the employee handbook issue. Id. at 6-9.

II. Analysis

"A [1] successor employer is required to recognize and negotiate with the bargaining agent of the predecessor's employees if [2] the bargaining unit remains appropriate and [3] the successor does not have a good faith doubt of the union's continuing majority support." Trident Seafoods, Inc. v. NLRB, 101 F.3d 111, 114 (D.C. Cir. 1996). Community challenges the Board's application of each element in this formula, arguing (1) it was not a successor employer; (2) Unit 7 was not an appropriate bargaining unit after the acquisition; and (3) Community did have and did rely upon a good-faith reasonable doubt in refusing to recognize or to bargain with the Union. Community also claims the Board lacked jurisdiction to rule upon the propriety of its employee handbook, and that in any event the relevant provisions were not unlawful.

We must affirm the Board's order unless "the Board's [factual] findings are not supported by substantial evidence, or ... the Board acted arbitrarily or otherwise erred in applying established law to

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the facts of the case." Tradesmen Int'l, Inc. v. NLRB, 275 F.3d 1137, 1141 (D.C. Cir. 2002). Questions of law we review with deference to the Board's expertise. NLRB v. City Disposal Sys., Inc., 465 U.S. 822, 829, 104 S.Ct. 1505, 1510, 79 L.Ed.2d 839 (1984).

A. Successorship

A new employer is a successor to a former employer "if there is substantial continuity between the enterprises" of the two, Pa. Transformer Tech., Inc. v. NLRB, 254 F.3d 217, 222 (D.C. Cir. 2001) (internal quotation marks omitted). The Board's standard for determining substantial continuity is set forth in Fall River Dyeing & Finishing Corp. v. NLRB, 482 U.S. 27, 43, 107 S.Ct. 2225, 2236, 96 L.Ed.2d 22 (1987). There the Court stated with approval the factors the Board uses:

whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers.

The Board assesses these factors, no single one of which is dispositive, from the perspective of the employees involved. Id. In this case the Board found Community "operates an acute care health facility, in the same location, using essentially the same equipment [as had the County]. The general pool of patients remains the same and they are treated in the same [treatment units]." Order at 15. Furthermore, there was no hiatus between the closing of VMC and the opening of UMC, id., and the two organizations employed many of the same supervisors. Id. at 16.

In arguing it was not a successor employer, Community does not deny the factual predicate upon...

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