N.L.R.B. v. Austin Developmental Center, Inc., 78-2130

CourtUnited States Courts of Appeals. United States Court of Appeals (7th Circuit)
Citation606 F.2d 785
Docket NumberNo. 78-2130,78-2130
Parties102 L.R.R.M. (BNA) 2642, 54 A.L.R.Fed. 608, 87 Lab.Cas. P 11,609 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. AUSTIN DEVELOPMENTAL CENTER, INC., Respondent.
Decision Date12 October 1979

Christopher Katzenbach, N.L.R.B., Washington, D. C., for petitioner.

John W. Powers, Chicago, Ill., for respondent.

Before CASTLE, Senior Circuit Judge, and SPRECHER and BAUER, Circuit Judges.

SPRECHER, Circuit Judge.

This is an application by the National Labor Relations Board (Board) for enforcement of its order entered against the Austin Developmental Center, Inc. (ADC). The Board found that ADC violated sections 8(a)(1), 8(a)(3), and 8(a) (5) of the National Labor Relations Act (NLRA), 29 U.S.C. §§ 158(a)(1), (a)(3), (a)(5), by engaging in various unfair labor practices. 1 ADC does not contest the Board's findings as to the unfair labor practices; instead, ADC urges this court to deny enforcement of the order because the Board lacked jurisdiction in this case.

ADC's jurisdictional challenge presents the following issues for resolution by this court: (1) whether the exclusion of "political subdivisions" from the definition of "employer" in section 2(2) of the Act, 29 U.S.C. § 152(2) applies to ADC, thereby depriving the Board of statutory jurisdiction; and (2) if section 2(2) does not deprive it of jurisdiction, whether the Board abused its discretion by not declining to assert its statutory jurisdiction because of ADC's relationship to agencies of state and local government. We find that the Board has statutory jurisdiction over ADC and did not abuse its discretion in choosing to exercise it. Accordingly, we grant the Board's petition for enforcement of its order.


ADC is an Illinois nonprofit corporation engaged in providing educational and counseling services to school age children. ADC's students are children designated by the Chicago Board of Education as socially maladjusted and incapable of functioning within the normal public school classroom. ADC attempts to educate these children so they can return to the public schools. This is accomplished through an unstructured program which allows ADC to deal with the children on a highly individualized basis. 2 The children are served breakfast and lunch at the Center and return home at the end of the school day. ADC also provides counseling services for the children and for members of their families. ADC provides no counseling services for adults unrelated to its pupils; unrelated adults who come to the Center seeking aid are referred to a local hospital for counseling (Tr.Rep. 22). 3

The Center has been in existence since 1969. From 1969 to 1974, it was operated by the Illinois Department of Mental Health; in 1974, it assumed its present form as a private nonprofit corporation. ADC is governed by a Board of Trustees with day-to-day control vested in an Executive Director. Neither the Department of Mental Health nor the Chicago Board of Education has any role in the selection of ADC's trustees or other management personnel. These agencies are, however, the primary sources of ADC's funding. Of the 1975 total budget of $309,676, Department of Mental Health grants accounted for $236,837, in-kind contributions provided another $56,954, and Board of Education tuition reimbursements amounted to $11,698. 4

In 1975, Union organizing activities began which led ultimately to the unfair labor practices which are the subject of the Board's order in this case. 5 In August, 1975, the Union filed its petition to commence the representation case. In that case, ADC argued that the Board lacked jurisdiction and convinced the Regional Director to dismiss the proceeding on that basis. 6 On review by the Board, that decision was reversed and jurisdiction asserted. In the subsequent unfair labor practice proceeding, ADC attempted to relitigate the jurisdictional issue. The Administrative Law Judge refused ADC's offer to prove, through state regulations and other documents, that it had an "intimate connection" with the State of Illinois, finding that the Board's earlier ruling on jurisdiction precluded further argument on that issue. The Board affirmed this ruling, noting that all of the evidence offered by ADC had been available at the time of the representation case and that ADC offered no explanation for its failure to present the evidence at that time. 236 N.L.R.B. No. 83 at n. 2. The Board went on to adopt the Administrative Law Judge's opinion with minor modification.


At the outset, we must determine whether the Board properly precluded ADC from presenting further evidence relevant to the jurisdictional issue. It is well settled that issues which were or could have been litigated in an earlier Board proceeding may not be relitigated in an unfair labor practice case absent compelling circumstances. Pittsburgh Plate Glass Co. v. N.L.R.B., 313 U.S. 146, 159-62, 61 S.Ct. 908, 85 L.Ed. 1251 (1941); Baker Canning Co. v. N.L.R.B., 505 F.2d 574, 578 (7th Cir. 1974); N.L.R.B. v. Children's Baptist Home, 576 F.2d 256, 259, 261 (9th Cir. 1978). The discovery of new evidence is a compelling circumstance justifying relitigation. Children's Baptist Home, supra, 576 F.2d at 259. The proffer of evidence not presented earlier, however, will not justify relitigation where it is not shown that the evidence was unavailable at the time of the prior proceeding. N.L.R.B. v. Tri-City Linen Supply, 579 F.2d 51, 55 (9th Cir. 1978).

The state regulations and other documents offered by ADC at the unfair labor practice proceeding were not shown to have been unavailable at the time of the representation proceeding; in fact, the Board found that ADC conceded that it had been "aware" of them at that time. 236 N.L.R.B No. 83 at n. 2. In light of this, the Board properly refused to reopen the issue of its jurisdiction. This court, therefore, will focus its attention on the record of the representation proceeding.


ADC asserts that section 2(2), 29 U.S.C. § 152(2), which excludes "political subdivisions" from the coverage of the Act, deprives the Board of jurisdiction in this case. 7 ADC does not argue that it is itself a political subdivision of the state; rather, ADC argues that its close and intimate relationship with the state brings it within the scope of section 2(2). This argument confuses the distinction between statutory and discretionary limitations on the Board's jurisdiction.

The statutory limitation contained in section 2(2) has not been broadly construed. The Board defines "political subdivision" as (1) an entity created by the state so as to constitute an arm of government, or (2) an entity administered by persons who are responsible to the electorate or to public officials. N.L.R.B. v. Highview, Inc., 590 F.2d 174, 176 (5th Cir.), Modified on other grounds, 595 F.2d 339 (5th Cir. 1979); Compton v. National Maritime Union of America, AFL-CIO, 533 F.2d 1270, 1274 (1st Cir. 1976). The Supreme Court has acknowledged this two-part test but has indicated that it does not necessarily define the boundaries of the political subdivision exclusion. The Supreme Court will look at an entity's other attributes as well, such as a broad power of subpoena or eminent domain, in determining whether it is a political subdivision. N.L.R.B. v. Natural Gas Utility District of Hawkins County, 402 U.S. 600, 604-07, 91 S.Ct. 1746, 29 L.Ed.2d 206 (1971). See also N.L.R.B. v. Natchez Trace Electric Power Association, 476 F.2d 1042, 1044-45 (5th Cir. 1975).

Some courts have extended the statutory limitation somewhat further. Where a private employer, because of a contract with an exempt entity, retains so little control over its own labor relations that it cannot engage in meaningful collective bargaining, section 2(2) has been held to deprive the Board of jurisdiction because the exempt entity is deemed the true employer. Highview, Inc., supra, 590 F.2d at 177; N.L.R.B. v. Pope Maintenance Corp., 573 F.2d 898, 902 (5th Cir. 1978); Compton, supra, 533 F.2d at 1275. The Board has conceded that it lacks jurisdiction in such cases. ARA Services, Inc., 221 N.L.R.B. 64, 65 (1975); Chicago Youth Centers, 221 N.L.R.B. 1146, 1147 (1975).

The Board found that section 2(2) did not apply to exclude ADC from the coverage of the Act. The Board's rulings on its own statutory jurisdiction are entitled to great weight. N.L.R.B. v. E. C. Atkins & Co., 331 U.S. 398, 403-04, 414, 67 S.Ct. 1265, 91 L.Ed. 1563 (1947); Pope Maintenance, supra, 573 F.2d at 902. ADC presented no evidence satisfying the Board's two-part definition of "political subdivision," nor has it suggested the existence of any of the additional attributes considered relevant by the Supreme Court. Similarly, it has not shown that it lacks effective control over its own labor relations. 8 We find, therefore, that the Board possesses statutory jurisdiction in this case.


The Board is allowed broad discretion in choosing whether or not to exercise its statutory jurisdiction. Pope Maintenance, supra, 573 F.2d at 904; N.L.R.B. v. Anthony, Inc., 557 F.2d 692, 695 (9th Cir. 1977); Von Solbrig Hospital, Inc. v. N.L.R.B., 465 F.2d 173, 174 (7th Cir. 1972). The Board's decisions will not be reversed absent a showing that it acted unfairly and caused substantial prejudice to the affected employers. N.L.R.B. v. Children's Baptist Home, 576 F.2d 256, 260 (9th Cir. 1978); Anthony, Inc., supra, 557 F.2d at 695. In general, the Board must treat similar cases in a similar manner, Herbert Harvey, Inc. v. N.L.R.B., 137 U.S.App.D.C. 282, 292, 424 F.2d 770, 780 (D.C.Cir.1969), but it may depart from previously established guidelines when to do so will, in the Board's judgment, effectuate the purposes of the Act. Children's Baptist Home, supra, 576 F.2d at 260-61 n. 3; N.L.R.B. v. Wentworth Institute, 515 F.2d 550, 555 (1st Cir. 1975).


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