N.L.R.B. v. 1199, Nat. Union of Hosp. and Health Care Employees, AFL-CIO

• Decision Date: 29 July 1987
• Docket Number: No. 86-1192,I,AFL-CI,86-1192
• Citation: 824 F.2d 318
• Parties: 126 L.R.R.M. (BNA) 2204, 107 Lab.Cas. P 10,107 NATIONAL LABOR RELATIONS BOARD, Petitioner, v. 1199, NATIONAL UNION OF HOSPITAL AND HEALTH CARE EMPLOYEES,ntervenor, v. SANDPIPER CONVALESCENT CENTER; Sandpiper Village, Respondent.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 318

824 F.2d 318

126 L.R.R.M. (BNA) 2204, 107 Lab.Cas. P 10,107

NATIONAL LABOR RELATIONS BOARD, Petitioner, v. 1199, NATIONAL UNION OF HOSPITAL AND HEALTH CARE EMPLOYEES, AFL-CIO, Intervenor, v. SANDPIPER CONVALESCENT CENTER; Sandpiper Village, Respondent.

No. 86-1192.

United States Court of Appeals, Fourth Circuit.

Argued March 2, 1987.

Decided July 29, 1987.

Don Terrance Carmody (Carmen M. DiRienzo; Carmody & DiRienzo, on brief) for respondent.

Marilyn Elaine Patrick, N.L.R.B. (Rosemary M. Collyer, Gen. Counsel, John E. Higgins, Jr., Deputy Gen. Counsel, Robert E. Allen, Associate Gen. Counsel, Elliott Moore, Deputy Associate Gen. Counsel, Peter Winkler, Supervisory Atty., Sandra Elligers, on brief), for petitioner.

Robert S. Giolito; Stanford, Fagan and Giolito, on brief, for intervenor.

Before PHILLIPS and WILKINSON, Circuit Judges, and YOUNG, United States District Judge for the District of Maryland, Sitting by Designation.

WILKINSON, Circuit Judge:

The National Labor Relations Board petitions for enforcement of its order requiring Sandpiper Convalescent Center and Sandpiper Village to bargain with the National Union of Hospital and Health Care Employees, AFL-CIO, and to reinstate six employees laid off while Sandpiper's objections to a representation election were pending. Sandpiper refused to bargain with the union on the ground that the representation election was invalid. It also claimed that the unilateral layoffs were permissible because, even if the election were valid, it had no duty to bargain until the union was certified.

The Board found that the employer violated sections 8(a)(5) and (1) of the National Labor Relations Act, 29 U.S.C. Sec. 158(a)(5), (a)(1). It issued a bargaining order and ordered reinstatement of the laid off employees. Because we believe that the union was properly certified and that the employer's duty to bargain runs from the date of the election, we order enforcement.

I.

The employer operates a convalescent center and retirement village at Mt. Pleasant South Carolina. On July 30, 1984, the union filed a representation petition for the employer's service and maintenance employees. The employer and union stipulated that the Center and Village were a joint employer and jointly met the criteria for the Board's jurisdiction. A representation election was held by secret ballot on September 28, 1984. The unit employees voted 44 to 35, with one challenged ballot, in favor of representation by the union.

The employer filed a timely objection to the election, alleging that a television newscast aired between the two polling periods tainted the process. The Regional Director recommended that the Board overrule the objection and certify the union. The employer filed exceptions, but the Board ultimately certified the union as bargaining representative on April 16, 1985.

On October 16, 1984, after the election but while the employer's objections were pending, the employer laid off six employees. It stated that Medicaid cuts precipitated the layoff. The union filed an unfair labor practice charge alleging that the employer violated sections 8(a)(5) and (1) of the Act by failing to bargain over the layoff. On April 23, 1985, after its certification, the union requested that the employer enter negotiations for a collective bargaining agreement. When the employer refused, the union again filed section 8(a)(5) and (1) charges. Complaints were issued for both charges.

The two charges were consolidated, and a hearing was held before an administrative law judge on June 20, 1985. The employer claimed, among other things, that 1) it had no duty to bargain prior to the union's actual certification, 2) it had no duty to bargain over the layoff because it was compelled by economic need, 3) the layoff was not a mandatory subject of bargaining, and 4) the actions of the Regional Director under the Federal Senior Executive Service compensation scheme of the Civil Service Reform Act, 5 U.S.C. Sec. 3131 et seq., 4311 et seq., violated its right to due process and equal protection. It also challenged the union's certification on the grounds that the television newscast interfered with the election and that the Village and Center were erroneously designated as joint employers for purposes of unit determination. The administrative law judge rejected all of these claims, and ordered the employer to bargain and to provide backpay to the employees who were laid off.

The Board affirmed the administrative law judge's findings and issued a bargaining order. Instead of requiring only backpay for the laid off employees, however, the Board modified the ALJ's order to include reinstatement. The Board now seeks enforcement of its order.

II.

The employer contends that it did not violate section 8(a)(5) by failing to bargain about the layoff. It argues that its duty to bargain did not arise until after its objections to the election were resolved, and the union was certified. We disagree.

In Mike O'Connor Chevrolet Co., Inc., 209 NLRB 701 (1975), remanded on other grounds, 512 F.2d 684 (8th Cir.1975), the Board held that, absent compelling economic reasons, an employer who unilaterally changes terms and conditions of employment during the pendency of objections may be charged with a section 8(a)(5) violation once the union is certified. The purpose of the rule is to prevent employers from postponing their bargaining obligation through dilatory tactics and spurious objections. Fugazy Continental Corp. v. NLRB, 725 F.2d 1416, 1421 (D.C.Cir.1984). Employers who make unilateral changes during the pendency of objections to a representation election thus do so at their peril. "If the election challenge proves fruitless, an order by the Board based on the refusal to bargain will be enforced." NLRB v. W.R. Grace & Co., 571 F.2d 279, 282 (5th Cir.1978); NLRB v. McCann Steel Co., 448 F.2d 277, 279 (6th Cir.1971). Such a rule recognizes that representation elections are entitled to a presumption of validity and that the choice of unit employees should be promptly effectuated. ¹

The employer argues, however, that the layoffs were permissible under an exception to the Mike O'Connor rule which allows unilateral action prior to certification for compelling economic reasons. Mike O'Connor, 209 NLRB at 703; Sunstrand Heat Transfer, Inc. v. NLRB, 538 F.2d 1257, 1259 (7th Cir.1976) (no duty to bargain prior to certification about effects of layoff where compelling economic considerations were present). Here, the employer failed to establish any compelling economic need for the layoff that would mitigate its duty to bargain.

Sandpiper claims that the testimony of Center administrator Philip Waters adequately established compelling economic need. Waters testified before the administrative law judge that Medicaid cuts decreased the facilities' income and made the layoffs necessary to absorb the loss and to "get our staff more in line with the other Nursing Homes in the Charleston Area and in the State." The administrative law judge found that, aside from Waters' bare assertion, the employer offered no evidence of the Medicaid cut or its impact on the business. In addition, it made no showing that Sandpiper's staff was oversized or otherwise out of line with other facilities in the area. The administrative law judge also found that Sandpiper hired two employees shortly before the layoff and hired numerous employees soon after it, including 13 employees in the same job classification as the laid off employees. These findings, affirmed by the Board, are supported by substantial evidence. ²

III.

We cannot accept the employer's related contention that the decision to lay off was not a mandatory subject of bargaining under First National Maintenance Corp. v. NLRB, 452 U.S. 666, 101 S.Ct. 2573, 69 L.Ed.2d 318 (1981).

Section 8(d) of the Act defines the duty to bargain under section 8(a)(5). It requires the employer to bargain over wages, hours and other terms and conditions of employment. 29 U.S.C. Sec. 158(d). Bargaining is mandatory for these subjects; an employer may not make changes in such matters unilaterally. NLRB v. C & C Plywood Corp., 385 U.S. 421, 425, 87 S.Ct. 559, 562, 17 L.Ed.2d 486 (1967). In First National Maintenance v. NLRB, the Supreme Court made clear that the detrimental impact of a managerial decision upon continued employment will not alone bring that decision within Section 8(d). 452 U.S. at 677, 101 S.Ct. at 2580. It held further that the employer had no duty to bargain over a management decision "involving a change in the scope and direction of the enterprise," a decision akin to the decision to stay in business itself. The Board has subsequently held First National Maintenance to apply to a corporate decision to close down one of its facilities as part of a consolidation effort. Otis Elevator, 269 NLRB 891 (1984). It has distinguished such fundamental managerial decisions, however, from those intended to reduce labor costs, concluding that a reduction of labor costs must be pursued through the collective bargaining process. Compare First National Maintenance, supra, with Fibreboard Corp. v. NLRB, 379 U.S. 203, 85 S.Ct. 398, 13 L.Ed.2d 233 (1964), and Otis Elevator supra, with Nurminco, Inc., 274 NLRB 264 (1984).

In this case, the employer failed to establish that the layoff represented a fundamental decision to close down any part of its business or to change its nature or scope. After the layoff, which involved but six of eighty-five unit employees, the employer continued to operate much as before, pursuing the same business, in the same manner, at the same locations. As its decision reflected more "a desire to reduce labor costs," First National Maintenance, 452 U.S. at 680, 101 S.Ct. at 2581, than an exercise of entrepreneurial prerogative or control, we agree with the Board that it was amenable to resolution through the collective bargaining process. The line may admittedly be a...