Kuskokwim Health Corp. v. Nat'l Labor Relations Bd.

• Decision Date: 19 December 2000
• Docket Number: No. 99-1440,99-1440
• Citation: 234 F.3d 714,344 U.S.App. D.C. 133
• Parties: (D.C. Cir. 2000) Yukon-Kuskokwim Health Corporation, Petitioner v. National Labor Relations Board, Respondent
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 714

234 F.3d 714 (D.C. Cir. 2000)

Yukon-Kuskokwim Health Corporation, Petitioner v. National Labor Relations Board, Respondent

No. 99-1440

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2000

Decided December 19, 2000

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

James E. Glaze argued the cause for petitioner. With him on the briefs were Lloyd Benton Miller, Donald J. Simon, Stephen H. Hutchings and Douglas S. Burdin.

Sharon I. Block, Attorney, National Labor Relations Board, argued the cause for respondent. With her on the brief were Leonard R. Page, General Counsel, Linda Sher, Associate General Counsel, Aileen A. Armstrong, Deputy Associate General Counsel, and Charles Donnelly, Supervisory Attorney.

Before: Ginsburg, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Separate statement dissenting in part filed by Circuit Judge Randolph.

Ginsburg, Circuit Judge:

The Yukon-Kuskokwim Health Corporation (Yukon), a non-profit organization controlled by Alaska Native tribes, challenges the National Labor Relations Board's assertion of jurisdiction over a hospital that Yukon operates. The Board properly rejected the employer's claim to be exempt pursuant to S 2(2) of the National Labor Relations Act (NLRA) on the ground that it is an Indian tribe acting in a governmental capacity. The Board failed, however, to consider the employer's argument that it is entitled to exemption under S 2(2) because the Indian Self Determination Act (ISDA) authorizes it to act as an arm of, and thus to share in the exemption of, the United States. Accordingly, we remand this matter to the Board for further proceedings.

I. Background

A group of Alaska Native tribes formed Yukon in 1969 to provide health services, primarily to Alaska Natives, in Southwestern Alaska. Yukon is controlled by a board of directors elected by the tribal councils of the 58 tribes in the region.

In 1975 the Congress enacted the ISDA, 25 U.S.C. SS 450 et seq., to bring about "an orderly transition from the Federal domination of programs for, and services to, Indians to effective and meaningful participation by Indian people in the planning, conduct, and administration of those programs and services." 25 U.S.C. S 450a(b). The federal government recognized Yukon as an "Indian tribe" for purposes of the ISDA and, pursuant to that statute, Yukon began to assume responsibility from the Indian Health Service, an agency within the U.S. Department of Health and Human Services, for the operation of clinics in native villages throughout Southwestern Alaska.

In 1991 Yukon took over a hospital previously operated by the IHS in Bethel, Alaska, the largest town in the region. Most of the federal employees at the hospital, including 40 nurses, remained on staff. In 1996 the Board received an election petition from a union seeking to represent the nurses. Yukon opposed the petition on the basis of S 2(2) of the NLRA, which excludes from the definition of "employer" "the United States or any wholly owned Government corporation ... or any State or political subdivision thereof." 29 U.S.C. S 152(2). Yukon argued that it qualified for exemption under S 2(2) both as a political subdivision (because it is an Indian tribe acting in a governmental capacity) and as an arm of the United States (because it operates a federal hospital pursuant to the ISDA).

The Board overruled Yukon's objection on the ground that the Board had never applied the exemption in S 2(2) to the activities of an Indian tribe not conducted on an Indian reservation. The Board certified the union and Yukon took a refusal to bargain charge so that it could get judicial review of the Board's order under SS 10(e) and (f) of the NLRA. 29 U.S. SS 160(e) and (f).

II. Analysis

Yukon advances two arguments for the proposition that its hospital is not subject to the NLRA. First, Yukon argues that it qualifies under S 2(2) as a "State or political subdivision" because it is an Indian tribe acting in a governmental capacity. Second, Yukon argues that it shares in the exemption that S 2(2) grants to the federal government because the ISDA authorizes it to operate a federal hospital pursuant to a government-to-government compact with the United States.

A. Governmental Capacity

Yukon argues that the Board acted arbitrarily in limiting the exemption afforded to Indian tribes under S 2(2) to activities conducted on a reservation, rather than limiting the exemption to "governmental activities" of Indian tribes, wherever conducted. In our review of the Board's decision, we "must accept the Board's position unless it conflicts with the 'unambiguously expressed intent' of the Congress or is [otherwise] not 'a permissible construction of the statute.' " Hormel v. NLRB, 962 F.2d 1061, 1065 (D.C. Cir. 1992) (quoting Chevron v. NRDC, 467 U.S. 837, 843 (1984)).

In the past, the Board has interpreted the exemption under S 2(2) for "any State or political subdivision thereof," to include "entities that are either (1) created directly by the State, so as to constitute departments or administrative arms of the government, or (2) administered by individuals who are responsible to public officials or to the general electorate." NLRB v. Natural Gas Utility District of Hawkins County, Tennessee, 402 U.S. 600, 604-605 (1971). In Fort Apache Timber Co. v. NLRB, 1976-77 NLRB Dec. (CCH) p 17,475 (Oct. 19, 1976), the Board applied this test to conclude that because "the Fort Apache Timber Company is an entity administered by individuals directly responsible to the Tribal Council ... [it is] exempt as a governmental entity recognized by the United States, to whose employees the Act was never intended to apply." Id. at 28,876 n.22.

More recently, in Southern Indian Health Council v. NLRB, 1988-89 NLRB Dec. (CCH) p 15,052 (July 29, 1998), the Board applied the "direct responsibility" test to a hospital located on a reservation and operated by a consortium of seven tribes. The Board concluded that the hospital was exempt from the NLRA pursuant to the "State or political subdivision" exemption because "the directors of the Employer are directly appointed by, and subject to removal by, the governing bodies of the member tribes." Id. at 28,226.

Later, in Sac & Fox Industries v. NLRB, 1992-93 NLRB Dec. (CCH) p 17,250 (Apr. 24, 1992), the Board modified its test for application of the "State or political subdivision" exemption to Indian tribes. In that case the tribe had secured a $30 million supply contract with the Department of Defense, for which it had built or acquired four factories not on its reservation. Many of the workers employed at the acquired factories previously had been represented by a union, but the tribe argued that its substitution as the employer made the operation exempt from the NLRA and, hence, from the obligation to bargain with the union. The Board rejected this claim, explaining that "[a]lthough the Board's decision in Fort Apache [ ] contains statements to the contrary ... we read that decision as limited to situations in which the tribal enterprise is located on the reservation." Id. at 32,416.

Yukon argues that the Board should read Sac & Fox as having denied exemption to the off-reservation factories in material part because of their commercial nature, not simply because of their location off the reservation. The Board, however, has never drawn a distinction based upon the nature of the Indian enterprise. The Board first said somewhat tentatively in Sac & Fox that the "exemption in Section 2(2) for a 'political subdivision' of a 'State' does not clearly include an off-reservation tribal enterprise." Id. Now, the Board has firmly concluded that an Indian tribe does not qualify as a "State or political subdivision" for purposes of S 2(2) when it conducts activities off its reservation. We can hardly say that position is unreasonable.

An Indian tribe, like any other governmental unit, typically operates in its governmental capacity only within its geographical jurisdiction. There are, to be sure, exceptions to that general rule, as recognized, for example, in the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. S 1605(a)(2). The distinction between commercial and governmental activities, however, is often elusive, see Princz v. Federal Republic of Germany, 26 F.3d 1166, 1172 (D.C. Cir. 1994) (noting that FSIA, rather than attempting to define "commercial" and "governmental" activity, leaves to courts the task of distinguishing between the two), and the Board has long and reasonably preferred bright line rules in order to avoid disputes over its jurisdiction. See, e.g., Siemons Mailing Service, 122 N.L.R.B. 81, 85 (1958) (setting dollar threshold for the "effect on commerce" sufficient to support Board jurisdiction). Accordingly, we defer to the Board's interpretation and reject Yukon's argument to the contrary.

B. The ISDA

Yukon also argues that it is exempt from the NLRA pursuant to S 2(2) because that provision exempts "the United States" and here Yukon "stepped into the shoes of" and "acts exactly for, and as, the United States" because it operates a federal hospital pursuant to a government-togovernment compact authorized under the ISDA.^* Additionally, Yukon argues that for the Board to assert jurisdiction over it would undermine the purpose of the ISDA, namely, to increase tribal self-governance.

In the decision under review the Board mentioned but dismissed the ISDA in a single sentence:

We further reject the Employer's contention that it is exempt from coverage because in light of the government-to-government Compact delegating Federal functions to the tribes on Federal property reserved and intended for that purpose, the Employer functions as an arm to [sic] the United States, and is, thus, an 'integral part of the government of the United...