International House v. N.L.R.B.
| Decision Date | 09 April 1982 |
| Docket Number | Nos. 726,843,D,s. 726 |
| Citation | 676 F.2d 906 |
| Parties | 110 L.R.R.M. (BNA) 2206, 93 Lab.Cas. P 13,437 INTERNATIONAL HOUSE, Petitioner-Cross-Respondent, v. NATIONAL LABOR RELATIONS BOARD, Respondent-Cross-Petitioner. ockets 81-4170, 81-4200. |
| Court | U.S. Court of Appeals — Second Circuit |
Donald L. Cuneo, New York City (Jonathan L. Greenblatt, John Spelman, Shearman & Sterling, New York City, of counsel, Daniel B. Levin, New York City, on the brief), for petitioner.
Jonathan Saperstein, N. L. R. B., Washington, D. C. (William A. Lubbers, Gen. Counsel, John E. Higgins, Jr., Deputy Gen. Counsel, Robert E. Allen, Acting Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, John Burgoyne, Asst. Gen. Counsel, N. L. R. B., Washington, D. C., of counsel), for respondent.
Before WATERMAN, VAN GRAAFEILAND and MESKILL, Circuit Judges.
This appeal involves an order of the National Labor Relations Board finding International House ("IH") in violation of sections 8(a)(1), (3), and (5) of the National Labor Relations Act ("NLRA"), 29 U.S.C. § 158(a)(1), (3), (5) (1976). IH petitions to have the order set aside, and the Board cross-petitions for enforcement. The Board's order was premised upon a finding that IH was a joint employer of cafeteria workers represented by District 1199, National Union of Hospital and Health Care Employees, a/w Retail, Wholesale and Department Store Union, AFL-CIO ("Union"). Because this finding is not supported by substantial evidence, we grant IH's petition to review, set aside the Board's order and deny enforcement.
IH is a non-profit residence for students from around the world who attend graduate schools in New York City. Each of its 500 residents has a single room and access to a variety of other facilities including music practice rooms, a game room, laundry facilities, a pub, and a cafeteria. In addition, IH sponsors a "work-aid" program which enables residents to offset room and In December 1974, IH retained Dining and Kitchen Administration, Inc. ("Daka") to manage and to operate the cafeteria. Daka, a Massachusetts corporation, provided similar food services at approximately 160 other locations. The contract provided that Daka would operate "as an independent contractor on its own credit." IH's principal responsibilities under the contract were to furnish "completely equipped" facilities, utilities, and maintenance. The contract also authorized IH to set standards of "quality, cleanliness, safety, and health," and provided that IH and Daka would mutually determine "menus, prices, hours, service, and schedules of food service." The contract left Daka with all other principal duties, including day-to-day management and "hiring and supervision of all employees in the food service department." The agreement provided for automatic renewal each year and was terminable upon thirty days notice by either party.
board costs by performing work within the building. IH allows its residents to earn credit only up to the total value of room and board. Thus, resident workers are never paid in cash. 1
The contract originally provided for compensation on a "cost-plus basis":
DAKA will charge 3% of total operating revenue for general and administrative expense. DAKA will retain the first 3% profit defined as total operating revenue less food, labor, controlled and fixed expenses. Profit in excess of 3% will be divided on an equal basis between DAKA and (IH) on an annual basis at the end of each DAKA fiscal year. DAKA will have the sole responsibility for financial loss from the food service operation.
This compensation formula was revised for the 1978-79 year. The changes did not alter the cost-plus arrangement, but did, inter alia, call upon Daka to submit an annual fixed budget covering estimated operating costs for the entire fiscal year. Only actual food costs were to be excluded from the budget. IH paid Daka monthly for the agreed upon operating costs, including Daka's management fee, and for actual substantiated food expenses.
In addition to its regular staff of approximately ten, Daka employed a number of IH residents. These residents were not carried on Daka's payroll and did not receive the fringe benefits of regular staff workers. Instead, Daka merely recorded the number of hours worked by residents each week so IH could give appropriate credit against room and board. IH then deducted the value of the residents' labor from Daka's monthly compensation. The resident workers, however, were under the direct supervision of Daka personnel.
During all times relevant to this case, the cafeteria was open only to IH residents and their guests, and was located on IH's third floor. There were no outward indications that Daka operated the cafeteria-the workers' uniforms had no insignias, and no identifying signs were posted. As one Daka employee stated:
If you walked in there for the first time in your life you would probably not know that it was operated by DAKA because there was nothing to indicate. If you didn 't know what our uniform color was or what our standards were and how we dressed the counters and so forth, you would not know.
On September 6, 1978, the Union filed a certification petition with the Board's regional office, requesting an election among the "(s)ervice and (m) aintenance (e)mployees" employed by Daka at the IH cafeteria. There was never any indication during the representation proceedings that IH was considered a joint employer of the cafeteria workers. The petition named Daka as the sole employer at the representation hearings. An IH attorney attended the first day of hearings as an observer, and entered There is, as I understand, a relationship between (IH) and (Daka) for these kitchen employees. Does the Employer intend to raise at all an issue of joint employers?
a formal appearance for IH on the second day of hearings. However, IH did not otherwise participate in the proceedings. 2 In fact, the Hearing Officer at one point specifically asked Daka's attorney, John Coyne
J. App. Exh. Vol. at 95x. Mr. Coyne responded negatively.
Daka contended at the hearings that the cafeteria's resident workers should be included within the bargaining unit. Initially, the Union sought to exclude residents from the unit on the ground that they lacked a sufficient community of interests with full-time Daka employees, particularly with respect to fringe benefits and payroll matters. Eventually, the Union yielded to Daka's position, and an Agreement for Consent Election was signed, describing the unit as:
All full-time and regular part-time Kitchen and Dining Room employees employed by the Employer at its location at 500 Riverside Drive, New York, NY 10027.
J. App. at 11a. A majority of ballots cast in the election, held on October 26, 1978, were in favor of the Union. On November 3, 1978, the NLRB certified the Union.
The Union and Daka began to negotiate terms of a collective bargaining agreement in December 1978. Notably, the Union negotiated solely with Daka, neither serving its demands upon IH nor asking to meet with IH. The major stumbling block in the negotiations concerned the composition of the bargaining unit. Daka, which had insisted on including the IH residents during the certification proceedings, switched its position during the contract talks. 3 In June 1979, after the Union raised the possibility of a unit clarification petition, the parties met with IH's president to discuss the intricacies of IH's work-aid program. By June 6, 1979 the Union and Daka had reached a consensus on all terms and conditions of a two-year collective bargaining agreement, and had also agreed that the issue of unit placement of the residents would be submitted to arbitration.
On July 23, 1979, however, IH exercised its option to terminate Daka's contract effective August 23, ostensibly on the ground that IH could operate the cafeteria at a lower cost. Soon thereafter, Daka informed the Union of IH's action. Nonetheless, the Union demanded that Daka sign a contract containing the terms they had negotiated. Daka, having received its notice of termination, refused. The Union never sent a written contract to Daka, nor did it request that IH sign a contract.
On August 23, 1979, Daka's contract terminated. IH closed the cafeteria for a two-week period, spending $15,000 to refurbish and paint the facilities. IH has operated the cafeteria since it reopened. Daka offered employment to its full-time workers at other locations. In all, IH hired three of Daka's former full-time workers.
In August 1979, the Union filed separate unfair labor practice charges against Daka and IH, which, as amended, alleged that each had violated sections 8(a) (1), (3), and terminated its contract with (Daka) without giving proper notice to the charging party and without bargaining with it. (IH) terminated its contract with (Daka) because the latter's employees had selected the charging party as their bargaining representative.
(5), of the NLRA. The Union alleged that Daka had terminated its contract with IH "without giving proper notice to the Union and without bargaining with the Union." The amended charge further stated, "(Daka) has also refused to bargain with (the Union) or to sign a collective bargaining agreement with (the Union)." The second amended complaint against IH alleged that IH was a "joint employer ... of the employees in question," and that IH
The complaint charged further:
On or about August 17, 1979 (IH) refused to hire the employees in the bargaining unit because of their membership in and activities on behalf of (the Union).
By an order dated March 25, 1980, the Board's General Counsel consolidated the cases against Daka and IH and issued a consolidated complaint. The complaint alleged that Daka and IH "constitute a single integrated...
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