Fernbach ex rel. Nat'l Labor Relations Bd. v. Sprain Brook Manor Rehab, LLC
| Decision Date | 09 March 2015 |
| Docket Number | No. 14–cv–9859 RJS.,14–cv–9859 RJS. |
| Citation | 91 F.Supp.3d 531 |
| Parties | Karen P. FERNBACH, Regional Director, Region 2, National Labor Relations Board, for and on Behalf of the NATIONAL LABOR RELATIONS BOARD, Petitioner, v. SPRAIN BROOK MANOR REHAB, LLC; Budget Services, Inc.; Pinnacle Dietary, Inc.; and Local 713, International Brotherhood of Trade Unions, Respondents. |
| Court | U.S. District Court — Southern District of New York |
Julie Polakoski and Julie Ulmet of the National Labor Relations Board, New York, NY, for Petitioner.
Jeffrey Meyer of Kaufman, New York, NY, for Respondent.
Avrom Vann of Avrom R. Vann, New York, NY, for Respondent.
Karen P. Fernbach, Regional Director for Region 2 of the National Labor Relations Board (“Petitioner”), brings this actionagainst Respondents Sprain Brook Manor Rehab, LLC (“SBM Rehab”), Pinnacle Dietary, Inc. (“Pinnacle”), Budget Services, Inc. (“Budget”), and Local 713, International Brotherhood of Trade Unions (“Local 713”) (collectively, “Respondents”) pursuant to Section 10(j) of the National Labor Relations Act (“NLRA”). (Doc. No. 2.) Now before the Court is Petitioner's motion for a temporary injunction pending resolution of the parallel administrative hearing currently proceeding before an administrative law judge. (Doc. No. 4.) Also before the Court is a motion from Budget seeking to stay the proceedings before this Court. (Doc. No. 23.) The Court heard argument on the motions on January 28, 2015. For the reasons set forth below, Petitioner's motion is granted and Budget's motions are denied.
Prior to 2009, Sprain Brook Manor Nursing Home LLC (“SBM Nursing Home”) operated a nursing home located at 77 Jackson Avenue, Scarsdale, New York (the “Facility”). The Facility was staffed by approximately 85–100 employees, who provided dietary, recreational therapy, and residential services to the approximately 120 residents of the Facility. On June 29, 2006, 1199 SEIU United Healthcare Workers East (“1199 SEIU”) was certified as the exclusive bargaining representative of a particular group of non-professional employees at the Facility. Sprain Brook Manor Nursing Home, LLC, 351 NLRB 1190, 1196 (2007).
In 2007, SBM Nursing Home began negotiating the sale of the Facility to SBM Rehab, and, on August 18, 2009, the parties entered into a Sale Agreement. (Pet. Ex. 9.) The Sale Agreement effectively transferred all of SBM Nursing Home's assets to SBM Rehab and stated that “[SBM Rehab] shall be entitled to any profit accrued with respect to the period from and after [January 1, 2007] and shall bear any loss with respect to the period from and after [January 1, 2007].” (Pet. Ex. 7 at 32.) The Sale Agreement identified Sam Strulovitch, Lazer Strulovitch, Moses Friedman, Allan Stein, and Leopold Schwimmer as the principals of SBM Rehab, and provided that these individuals would have management responsibility over the Facility pending the sale's closing. (Pet. Ex. 7.) Specifically, the Sale Agreement provided that the parties would “cooperate with one another to operate the business of the Facility in the ordinary course.” (Pet. Ex. 7 at 44–45.)
On November 25, 2009, SBM Rehab submitted a Certificate of Need Application to the Department of Health Bureau of Project Management, seeking New York State Public Health Council approval to establish itself as the new operator of the Facility. (Pet. Ex. 9.) In its application, SBM Rehab asserted that it understood “the importance of maintaining staff continuity,” and that it would enact a plan of action related to the “retention of existing staff” to foster “the best possible working conditions” and “maintain a competitive salary and benefit structure” for the next two years “based on existing staffing pattern.” (Id. ) To this end, principals of SBM Rehab participated in bargaining sessions with 1199 SEIU in November 2008, March 2009, July 2009, September 2009, October 2009, August 2010, and June 2011. (Pet. Ex. E.) Throughout, SBM Rehab's principals consistently presented themselves as representing the employer and manager of 1199 SEIU members. (Id. )
On April 6, 2012, the New York State Public Health and Health Planning Council issued final non-contingent approval to SBM Rehab, which under the Sale Agreement, triggered the ninety-day period by which the closing of the sale was required to take place. (Pet. Ex. 14.) On June 15, 2012, a few weeks before the ninety-day deadline, Allan Stein attested to Medicare that the change of ownership had taken place that day. (Pet. Ex. 15.) Although SBM Rehab continued to act as the employer and operator of the Facility, as it had been for several years, SBM Rehab did not inform 1199 SEIU or the employees of the Facility that the change in ownership was formally and legally finalized until September 12, 2012, when it unilaterally made several substantial changes to the working conditions of Facility employees. (Pet. Exs. C & E.)
On September 12, 2012, SBM Nursing Home sent letters to Facility employees stating that “[e]ffective 9/13/12 a change of ownership will occur” and that therefore “your position with [SBM Nursing Home] has been terminated.” (Pet. Ex. 22 at 22–23; Pet. Ex. 23 at 32.) On the same day, SBM Rehab sent its own set of letters informing employees that they had the opportunity to be immediately rehired, with the same work schedule, by a subcontractor. SBM Rehab referred housing and maintenance employees to Confidence Management System (CMS) (Pet. Ex. 22 at 24), dietary employees to Pinnacle Dietary (Pet. Ex. 22 at 25), and nursing employees to Budget (Pet. Ex. 23 at 33). As a result of SBM Rehab's subcontracting to Budget, Pinnacle, and CMS, Facility employees' terms and conditions—including wages, paid sick and vacation leave, and health insurance—materially changed. (Pet. Exs. C & D.) SBM Rehab hired these subcontractors three months after it took formal ownership of the Facility, three years after it began managing and operating the Facility, and without any input from 1199 SEIU. (Pet. Exs. 16, 17 & 19.) Moreover, with respect to the changes implemented by these subcontracting contracts, 1199 SEIU requested the opportunity to bargain with SBM Rehab and the subcontractors, but was rebuffed. (Pet. Exs. 45–50.)
Instead, SBM Rehab cultivated a relationship with another union, Local 713, for itself and for its contractors. Specifically, SBM Rehab allowed Local 713 to recruit employees at the Facility; Pinnacle distributed Local 713 membership and insurance cards to dietary employees, telling them that their jobs were contingent on completing the Local 713 paper work; and Budget signed an agreement that recognized Local 713 as representing Budget's dietary employees at the Facility. (Pet. Exs. 52, 54 & 55.) To further establish support for Local 713 and erode support for 1199 SEIU, SBM Rehab discharged three Facility employees—Clarisse Nogueira, Alvin Nicholson, and Vernon Warren—because they were 1199 SEIU supporters. Although Warren was ultimately reinstated, Nicholson and Noguiera remain unemployed. (Pet. Exs. C, D & E.)
On September 19, 2012, 1199 SEIU filed charges with the National Labor Relations Board (“Board”), alleging that SBM Rehab violated Sections 8(a)(1), (2), (3), (4), and (5) of the NLRA. On November 27, 2012, July 15, 2013, and July 22, 2013, 1199 SEIU filed amended charges with the Board.
On December 28, 2012, 1199 SEIU filed a second action with the Board, alleging that Local 713 violated Sections 8(b)(1)(A) and (2) of the NLRA. On January 30, 2013 and July 22, 2013, 1199 SEIU filed amended charges in that action.
Petitioner then commenced an investigation of the charges, and on July 31, 2014, filed a Complaint with the Board alleging that Respondents SBM Rehab and Pinnacle engaged in, and are engaging in, unfair labor practices within the meaning of Section 8(a)(1), (2), (3), and (5) of the NLRA, and that Local 713 engaged in, and is engaging in, unfair labor practices within the meaning of Section 8(b)(1)(A) of the NLRA. On October 6, 2014 and November 17, 2014, Petitioner filed amended pleadings with the Board, adding Budget as a Respondent. On October 6, 2014, administrative hearings began before Administrative Law Judge Kenneth W. Chu (“Judge Chu”). Hearings continued until October 10, 2014 and then recessed until December 15–16, 2014. Additional hearing dates are scheduled through March 2015.
On December 12, 2014, during the pendency of the administrative proceedings, Petitioner filed a petition for a temporary injunction pursuant to section 10(j) of the NLRA. (Doc. No. 2.) On January 12, 2015, Respondents SBM Rehab, Pinnacle, and Budget filed their opposition briefs (Doc. Nos. 14, 20 & 21), and on January 23, 2015, Petitioner filed its reply in support of its petition for temporary injunction (Doc. No. 30).
On January 19, 2015, Budget filed a proposed order to show cause, seeking the recusal of Judge Chu in the administrative proceedings and a stay of the proceedings before this Court. (Doc. No. 23.) On January 26, 2015, Petitioner filed its opposition to Budget's motions (Doc. No. 32), and on January 28, 2015, Budget filed its reply (Doc. No. 34). The Court heard oral argument on Petitioner's and Budget's motions on January 28, 2015.
Pursuant to section 10(j) of the NLRA, the Board “shall have power, upon issuance of a complaint ... charging that any person has engaged in or is engaging in an unfair labor practice, to petition any United States district court, ... for appropriate temporary relief or restraining order ... and [such district court] shall have jurisdiction to grant to the Board such temporary relief or restraining order as it deems just and proper.” 29 U.S.C. § 160(j). The Second Circuit employs a two-pronged inquiry when determining whether to grant section 10(j) injunctive relief. ...
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