Finley Hosp. v. Nat'l Labor Relations Bd.
| Decision Date | 27 June 2016 |
| Docket Number | No. 15-2285, No. 15-2592,15-2285 |
| Citation | 827 F.3d 720 |
| Parties | The Finley Hospital, Petitioner v. National Labor Relations Board, Respondent Service Employees' International Union, Local 199, Intervenor. The Finley Hospital, Respondent v. National Labor Relations Board, Petitioner Service Employees' International Union, Local 199, Intervenor. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the petitioner/cross-respondent was G. Roger King, of Washington, DC. The following attorneys also appeared on the brief; Kami M. Lang, of Des Moinces, IA., Noel J. Franciso, of Washington, DC., James M. Burnham, of Washington, DC., Tonya B. Braun, of Columbus, OH., Christopher Rapking, of Columbus, OH.
Counsel who presented argument on behalf of the respondent/cross-petitioner was Kellie Isbell, of Washington, DC. The following attorneys also appeared on the brief; Robert J. Englehart, of Washington, DC., Douglas Callahan, of Washington, DC.
Counsel who presented argument on behalf of the intervenor was LaRell D. Purdie, of Washington, DC. The following attorneys also appeared on the brief; Nicole Berner, of Washington, DC., Jim Jacobson, of North Liberty, IA.
Before MURPHY, BEAM, and GRUENDER, Circuit Judges.
BEAM
, Circuit Judge.
The Finley Hospital (the Hospital) appeals the National Labor Relation Board's (the Board's) decision affirming an administrative law judge's (ALJ's) finding that the Hospital violated §§ 8(a)(5) and (1) of the National Labor Relations Act (NLRA) by (1) unilaterally discontinuing annual pay raises negotiated in a one-year collective bargaining agreement (CBA) without bargaining with the Service Employees' International Union, Local 199 (the Union) on behalf of the nurses, and (2) by informing the Union it was discontinuing the pay raises. For the reasons discussed below, we reverse.
The Hospital is an acute-care hospital with three facilities in Iowa. The Board certified the Union as the exclusive bargaining representative of full-time and regular part-time nurses. On June 20, 2005, the Hospital entered into a one-year CBA with the Union. Article 20.3 of the CBA states the Hospital's policy regarding pay raises: The CBA expired by its own terms one year after the initial effective date. Pursuant to the agreement, the Hospital gave a single raise to each of its nurses on his or her anniversary date during the one-year term.
Negotiations for a new agreement began on March 28, 2006, but a new agreement had not been reached when the CBA expired on June 20, 2006. The Hospital sent a letter to all Union employees stating that it would not provide raises to nurses whose anniversary date fell after the date of contract expiration until the parties reached a new agreement. On June 29, 2006, the Hospital submitted a proposal that would provide a 3% increase in wages. The Union voted to strike on July 6, 7, and 8. The Hospital then told the Union it would not make wage increases in the new CBA retroactive to June 21, 2006. The Union filed a complaint arguing that the Hospital's refusal to give automatic 3% raises after the expiration of the CBA amounted to a refusal to bargain in violation of 29 U.S.C. § 158(a)(5) and (1)
.1
On June 3, 2015, the Board found, in agreement with the ALJ, that the Hospital violated 29 U.S.C. § 158(a)(5) and (1)
by declining to give its nurses additional raises after the CBA expired. The Board conceded that the Hospital's contractual obligation to provide annual raises expired at the end of the one-year term. However, because it found that the one-year CBA created a status quo of annual pay raises, it held that the Hospital had a statutory obligation under the NLRA to continue annual pay raises until a new CBA was reached or the parties bargained to an impasse. The Board also found nothing in Article 20.3 of the CBA or in the CBA in general that clearly and unmistakably waived the employer's statutory duty to continue granting annual raises after the expiration of the CBA. Member Harry Johnson dissented.
The Hospital now appeals the Board's decision, arguing that the one-year-long CBA did not establish a status quo of annual, compounded raises after the agreement expired. Alternatively, the Hospital argues that the Union waived its statutory right to post-expiration raises.
We review factual findings for substantial evidence. NLRB v. Am. Firestop Solutions, Inc. , 673 F.3d 766, 767 (8th Cir. 2012)
. “ ‘Substantial evidence’ is evidence that ‘a reasonable mind might accept as adequate to support’ a finding.” Id. at 768 (quoting Universal Camera Corp. v. NLRB , 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951) ). We review legal questions to ensure the Board “correctly applied the law.” Id. Under this standard, “the NLRB must be sustained if: (1) it started with the currently controlling law; (2) it correctly applied this law; and (3) substantial evidence supports its finding.” Cedar Valley Corp. v. NLRB , 977 F.2d 1211, 1215 (8th Cir. 1992)
. For contractual questions not based on policy under the NLRA, we review the Board's decision de novo. Am. Firestop Solutions , 673 F.3d at 768. Although the Board has authority to interpret CBAs in regards to unfair labor practices, “courts are still the principal sources of contract interpretation.” Litton Fin. Printing Div. v. NLRB , 501 U.S. 190, 202, 111 S.Ct. 2215, 115 L.Ed.2d 177 (1991) [hereinafter Litton Fin. ] (quoting NLRB v. Strong , 393 U.S. 357, 360–61, 89 S.Ct. 541, 21 L.Ed.2d 546 (1969) ). If the Board were given authority to interpret contracts, “[w]e would risk the development of conflicting principles.” Id. at 203, 111 S.Ct. 2215.
The Hospital argues that the Board erred in holding that the one-year-long CBA with the Union established a status quo of annual, compounded raises that, under the NLRA, must be continued after the agreement's expiration. We agree. It is an unfair labor practice under the NLRA for an employer “to refuse to bargain collectively with the representatives of his employees.” 29 U.S.C. § 158(a)(5)
. The obligation to bargain collectively means that the employer must “meet at reasonable times and confer in good faith with respect to wages, hours, and other terms and conditions of employment.” Id. § 158(d).
The unilateral change doctrine states that “an employer's unilateral change in conditions of employment under negotiation is ... a violation of § 8(a)(5), for it is a circumvention of the duty to negotiate which frustrates the objectives of § 8(a)(5) much as does a flat refusal.” NLRB v. Katz , 369 U.S. 736, 743, 82 S.Ct. 1107, 8 L.Ed.2d 230 (1962)
. Even an increase in wages without negotiation constitutes an unfair labor practice. Id. at 746, 82 S.Ct. 1107. The only exception is if the pay raises are “in line with the company's long-standing practice of granting” raises, which would then make the practice “a mere continuation of the status quo.” Id. Wage increases that fit within this exception are generally “automatic increases to which the employer has already committed himself.” Id.
The terms and conditions that continue as part of the status quo under the unilateral change doctrine “are no longer agreed-upon terms; they are terms imposed by law.” Litton Fin. , 501 U.S. at 206, 111 S.Ct. 2215
. This is so because “an expired contract has by its own terms released all its parties from their respective contractual obligations.” Id. The “rights and duties under the expired agreement[, however,] ‘retain legal significance because they define the status quo ’ for purposes of the prohibition on unilateral changes.” Id. (quoting Derrico v. Sheehan Emergency Hosp. 844 F.2d 22, 25–27 (2d Cir. 1988) ).
All parties agree that because the CBA had expired, the Hospital no longer had any contractual obligations. As such, “[t]he critical inquiry is whether there existed an established practice or status quo” that created a statutory obligation of compounded, annual raises. NLRB v. Talsol Corp. , 155 F.3d 785, 794 (6th Cir. 1998)
. The Board relied solely on its interpretation of Article 20.3 of the CBA to conclude that continuing 3% pay increases were part of the status quo. However, rather than discussing exactly how the language of Article 20.3 established a status quo of annual pay raises, the Board simply assumed that because the CBA authorized a one-time 3% pay raise, annual 3% raises automatically became part of the status quo that must be maintained during negotiations.
As Member Johnson pointed out in his dissent, “[b]y effectively deleting the time constraint that was an inherent part of the wage increase obligation, the majority makes a time-bound obligation into a perpetual one.” The Board's decision allows “any incrementalist or decrementalist term [to] control over the actual language used in the contract.” The purpose of the NLRA was surely not to make all wage terms in every employment agreement last beyond the tenure of the bargained-for agreement.
“We interpret collective-bargaining agreements ... according to ordinary principles of contract law, at least when those principles are not inconsistent with federal labor policy.” M & G Polymers USA, LLC v. Tackett , ––– U.S. ––––, 135 S.Ct. 926, 933, 190 L.Ed.2d 809 (2015)
. The Restatement (Second) of Contracts § 202(1) states, “Words and other conduct are interpreted in the light of all the circumstances, and if the principal purpose of the parties is ascertainable it is given great weight.” “Unless a different intention is manifested, where language has a generally prevailing meaning, it is interpreted in accordance with...
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